San Diego – The Board of the Carlsbad Municipal Water District last night enacted the landmark Water Purchase Agreement with Poseidon Resources. On September 28, the Board of the Carlsbad Municipal Water District voted unanimously to tentatively approve the Water Purchase Agreement.

The vote clears the way for the public-private partnership between the City and Poseidon Resources to build a 50 million gallon per day desalination plant at the site of the Encina Power Station.  The proposed $270 million desalination project is on track to be completed by 2008. The key provisions of the Water Purchase Agreement include a multitude of taxpayer protections:

- Poseidon Resources will deliver to the City of Carlsbad its entire daily requirement  - up to 25 million gallon-per-day, but never more or less than its variable seasonal needs - and assume all risks associated with the financing, development, construction and operation of the project. 

- The water will be “appropriated for public use” by the city, guaranteeing that all drinking water developed using Poseidon’s professional expertise will remain in the public domain. 

- Poseidon will provide Carlsbad with all water produced by the plant needed to meet its entire daily requirement for a period of 30 years, with the City having the unilateral option to extend the agreement for two additional 30-year terms. 

- Carlsbad has the option, but not the obligation, to purchase the desalination plant after the initial 30-year term expires, and has the right of first offer to purchase the plant should Poseidon wish to sell.

- Water produced by the desalination plant and delivered to Carlsbad will meet or exceed all drinking water regulatory standards under the law, and Carlsbad will never be obligated to accept or pay for water that does not meet the quantity, quality and reliability standards specified in the Agreement.

- The City will retain land-use control over the project site; gain $2 million in new property tax revenue from the redevelopment area and gain three key parcels of land near Agua Hedionda Lagoon and Terra Mar Beach that will maximize public access to the beach, lagoon and open space and recreational opportunities.

- Poseidon Resources has a long-term lease agreement with Cabrillo Power I LLC to operate a desalination plant at the site of the Encina Power Station.