San Marcos, CA – The Vallecitos Water District (Vallecitos) 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 37.5% of the District’s total annual need of 20,000 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.

Since 1955, Vallecitos has provided water, wastewater, and reclamation services to San Marcos, the community of Lake San Marcos and parts of Carlsbad, Escondido, and Vista. Formed initially as a water-only district by a group of local citizens to address the shrinking water table in the San Marcos and Twin Oaks valleys, the San Marcos County Water District grew as an independent, special district. Today, Vallecitos currently serves a population of 85,000 within a 45-square-mile boundary in north San Diego County.

“We have a responsibility to provide our ratepayers with a reliable and high-quality supply of water,” said Darrell Gentry, President of the Board of Directors for Vallecitos Water District. “The District relies heavily on imported water supplies that are increasingly threatened by drought conditions and environmental regulations. Water from the Carlsbad desalination plant will provide the District’s ratepayers with a drought-proof supply that helps mitigate the impact of cuts to our imported water supply,” said Gentry.

Vallecitos is the sixth San Diego county public water agency following Carlsbad, Valley Center, Rincon del Diablo, Sweetwater and Rainbow to approve long-term water purchase agreements with Poseidon Resources, totaling 50,900 acre-feet per year. With the addition of Vallecitos, the Carlsbad desalination project’s 50 MGD capacity is 90% subscribed through long-term water purchase agreements with local public water agencies.

This month a federal court ruled that the state will have to significantly curtail water pumped to Southern California from the Sacramento-San Joaquin Bay Delta state in an effort to protect the endangered delta smelt. Approximately 40% of San Diego’s water supply is imported from the delta. As a result of the court ruling, some water managers are forecasting as much as one-third to one-half of the water pumped from the Sacramento-San Joaquin Bay Delta to Southern California could be cut off.

 “We are pleased that the water reliability benefits associated with the Carlsbad desalination plant are being spread around the County of San Diego,” said Poseidon Resources Vice President Peter MacLaggan. “Drinking water supplied by the desalination plant is a critical component of our region’s water diversification strategy. As anticipated, the Carlsbad plant will be fully subscribed before we reach the Coastal Commission hearing in November,” said MacLaggan.

Poseidon Resources is entering the final phase of the permitting and approval process for the Carlsbad desalination plant. The State Lands Commission is scheduled to approve the plant’s lease agreement in October followed by the Coastal Commission hearing in November.

Highlights of the Water Purchase Agreement include:

• Vallecitos 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.
• Vallecitos’ 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 Vallecitos 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 Vallecitos, and water deliveries will be indirect via exchange arrangements with another water agency.

Since 1955, Vallecitos has provided water, wastewater, and reclamation services to San Marcos, the community of Lake San Marcos and parts of Carlsbad, Escondido, and Vista. The District currently serves a population of 85,000 within a 45-square-mile boundary in north San Diego County. For more information about Vallecitos, please visit our website at www.vwd.org.

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