In March it was Flagler County. Last month it was Bunnell. On Tuesday it was St. Johns County’s turn to bail, although not entirely, from the desalination consortium led by Palm Coast and the St. Johns River Water Management District.
The fewer partners remain in the consortium, which goes by the name of Coquina Coast Seawater Desalinization Project, the more expensive it will be for those that do remain to continue developing a projected $1.2 billion desalination plant.
Other than the management district, which is contributing some $18 million for the project (most of it for construction), St. Johns was Palm Coast’s largest partner. Its decision to reduce its role to little more than a seat at the table, without a vote and without most of its money (St. Johns will still contribute $50,000 for the privilege of sitting at the table), will vastly increase the amounts Palm Coast taxpayers will have to pay not only to stay in the consortium, but to keep it viable.
The cost for each government agency in the consortium is calculated according to a bewilderingly confusing set of formulas. But it comes down to this: As a full partner with a vote in the consortium, St. Johns would have had to pay $500,000 to $600,000 just for phase two of the project, which entails environmental studies. Actual construction, several years from now, would increase each partner’s costs exponentially.
But virtually every local government in Florida, and in Northeast Florida especially, where unemployment is running higher, is cutting budgets. The desalination project would be too heavy a burden to sustain. The cost for Palm Coast will be far higher than when the consortium was initially formed, unless the desalination plant itself is scaled back considerably. But a desalination plant is expensive whatever the size, which explains Palm Coast Manager Jim Landon’s reaction when he heard the news of St. Johns’ retreat at a lunch meeting on Wednesday.
The exchange he had with Sam Cline, the general contractor who just finished building the expanded Old Kings Road for the city, sums up Palm Coast’s predicament:
Cline: “Front page of the St. Augustine paper today, says St. Johns County is moving out of the Coquina water consortium.”
Landon: “Did they really? Oh, don’t tell me that.” He sighs. “Those guys. I’d heard a rumor to that effect. OK. And your question is?”
Cline: “Is that a pretty serious blow to it happening?”
Landon: “They were our largest partner.”
Cline: “So it’s a serious blow.”
Landon: “Yeah. We had a number of small ones like Bunnell” that left the consortium. “I was not surprised, actually agreed with that decision. Now, St. Johns. Once again I’d heard it might be coming so from that standpoint I’m not surprised but I’m disappointed. Interesting decisions. But I think it’s short-sighted.”
The water management district and Palm Coast take it as fact that desalination is the only option that can meet projected water demand by 2020 and after. But that assumption was based on growth trends set last decade and through the real estate bubble, when Flagler County led the nation in the rate of growth. That trend has reversed course, and with it projected water consumption. Still, Palm Coast continues to plan for vast new developments, including two colossal developments of regional impact (DRI). The desalination plant is, in essence, a way to enable further growth.
The inevitable necessity of a desalination plant is based on the assumption that growth is equally inevitable. The political history of water and development justify that assumption: There is no desire on the Palm Coast city council and no will on the water management board to slow down growth as a means of slowing down water consumption.
But desalination is the nuclear-plant equivalent of water production: it’s enormously costly to build, and it’s enormously energy intensive to run, leading to costs at the consuming end far higher than for water drawn from surface or ground sources. Coquina estimates that desalinated water will cost $4.5 per thousand gallon, as opposed to $1.50 for groundwater. Those are likely conservative estimates. As Palm Coast finds itself increasingly isolated on the desalination project, the pressure will grow on the city council to decide whether they’re willing to take on the mounting costs–and pass them on to rate payers and voters.
The political implications of desalination’s future in Flagler County are barely beginning.
Frank Meeker says
Pierre,
I’m not sure I agree with the costs you mentioned above. I suspect it came from the Coquina Coast fact sheet [http://www.coquinacoastdesal.org/Uploads/Coquina_Coast_Project_Overview_FINAL_3.1.10.pdf ] because it states that the estimated cost to produce water from the desal project will be about $4.50 per 1000 gallons, including capital. The $1.50 per 1000 gallon figure is often quoted, probably from some old study from up north, but doesn’t represent the cost of groundwater down here.
We do not have any studies to compare the cost to produce drinking water from our groundwater, but I can tell you that in Palm Coast, it is much higher than $1.50. As you know, our current residential retail rate is on a block schedule ranging from $3.61 to $6.49 per 1000; however, if you use the General and Multi-Family rate, we charge $3.70 per 1000, delivered. Of that $3.70, we estimate the cost of production to be over $2.00 not including capital. The remainder of our rate is used for things like water distribution, billing, debt service and overhead. Debt service is a big one as you remember, the entire system could have been purchased years ago before we became a city for what, less than 40,000,000 dollars and because of political indecision we had to fork out 90,000,000 years later when we did become a city.
The other thing to keep in mind is the desal water will be blended with groundwater so the higher cost desal will be diluted by the lower cost groundwater. I would expect our consumptive use permit modification to have been completed by then increasing our allocation substantially from where we are today. Again, too early to know what that blended rate will be but our current projections have our average demand at 12 million gallons per day when this plant starts up. We plan to meet 4 million gallons of that demand with water from Coquina Coast. Our additional freshwater capacity will be utilized to meet max day and peak flows. Those who opt out now will pay the bulk rate which right now, just using groundwater, is 125% of our normal rate. What it might be when this comes on line, I don’t know but it’s pretty clear suppliers will pay less than customers.
As you know, we have been at this for a few years now and have determined the Coquina Coast Seawater project to be our best alternative for meeting the future demands for drinking water. If there was a more viable – cheaper option, we would be headed in that direction instead.
Frank Meeker