Fallbrook, CA – The Rainbow Municipal Water District (Rainbow) today announced that its Board of Directors unanimously approved a Water Purchase Agreement with Poseidon Resources Corporation.  Under the agreement, Poseidon will provide the District with 7,500 acre-feet per year of water from its Carlsbad desalination plant, representing 23% of the District’s total annual need of 32,000 acre-feet per year (AFY).

Poseidon is building a 50-million-gallon-per-day (56,000 acre-feet annually) desalination plant at the site of the Encina Power Station in Carlsbad. The proposed $300 million desalination project is scheduled to be completed as early as 2010.

Rainbow provides water and sanitation services to the unincorporated communities of Rainbow, Bonsall, and a portion of Fallbrook.  Because the surrounding area has many agricultural uses that are coping with some of the highest agricultural water rates in the nation, water usage in the area is extremely efficient and conservation is a way of life.  San Diego County is the 12th largest farm economy among all counties in the nation and the local agriculture industry ranks as the fifth largest industry in the county, contributing more than $1.4 billion to the local economy and sustaining more than 6,000 farmers. 

Water is a precious and scarce resource.  The only way for agriculture to continue to be viable in San Diego County is to take steps now to ensure its availability and affordability,” said Gene Buckley, Interim General Manager and Finance Manager for Rainbow Municipal Water District.  “This Water Purchase Agreement will provide the communities we serve with a reliable, local supply of water at a guaranteed price.  The board’s decision today will provide a hedge for our customers against drought conditions and the anticipated water shortages and cost increases.  The 7,500 AFY of water represents over 80% of our residential usage,” said Buckley.

Rainbow Municipal Water District is the fifth San Diego county public water agency following Carlsbad, Valley Center, Rincon del Diablo and Sweetwater to approve long-term water purchase agreements with Poseidon Resources, totaling 43,400 acre-feet per year.  With the addition of Rainbow, The Carlsbad desalination project’s 50 MGD capacity is 80% subscribed through long-term water purchase agreements with local public water agencies.

In September, a federal court is expected to determine how much water from the State Water Project can be pumped to Southern California without further impacting the endangered delta smelt.  Some water managers are forecasting as much as one-third of the water pumped from the Sacramento San Joaquin Bay Delta to Southern California could be cut off permanently.

“Each of the areas from which San Diego County draws its water supplies are suffering through a severe drought,” said Poseidon Resources Vice President Peter MacLaggan. “Drought conditions coupled with anticipated cut backs in our imported water supply leave the region vulnerable to a water supply crisis. The action Rainbow’s board has taken ensures that their customers are guaranteed to receive a locally-controlled, drought-proof supply of water that will never exceed the price of water it would otherwise have paid for imported water,” said MacLaggan. 

Highlights of the Water Purchase Agreement include:

• Rainbow will receive 7,500 acre-feet per year of drinking water over a 30-year period, with the unilateral option to extend the agreement for two additional 30-year terms. 
• Rainbow’s price of water paid to Poseidon will not exceed that which would have been paid for the imported water supply from the San Diego County Water Authority.
• Poseidon will be responsible for all costs and risks associated with the financing, development, construction, and operation of the plant. 
• The water will meet or exceed all drinking water regulatory standards under the law, and Rainbow will never be obligated to accept or pay for water that does not meet the quantity, quality and reliability standards specified in the Agreement.
• Poseidon will bear the costs for the delivery of the Water to Rainbow, and water deliveries will be indirect via exchange arrangements with another water agency.

Since 1953, the Rainbow Municipal Water District has provided water and sanitation services to the unincorporated communities of Rainbow, Bonsall, and a portion of Fallbrook.  The district supplies water service or sewer service to over 7,300 households and businesses, covering approximately 49,800 acres.  For more information, please visit www.rainbowmwd.com.

Poseidon Resources specializes in developing and financing water infrastructure projects, primarily seawater desalination and water treatment plants.  These projects are implemented through innovative public-private partnerships in which private enterprise assumes the developmental and financial risks.  For more information on Poseidon Resources, please visit our website at www.carlsbad-desal.com.