San Diego County’s desal facility to get $170M federal loan to help with costly overhaul

The desalination plant in Carlsbad will receive $170 million in federal financing to upgrade its facility and meet environmental requirements, officials announced this week.

The low-interest loan is intended to help the plant’s owner, Poseidon Resources, satisfy state regulations for protecting fish and other marine life at the Claude “Bud” Lewis plant. The money, awarded by the U.S. Environmental Protection Agency, is estimated to save ratepayers about $54 million.

“As we continue to confront increasingly frequent and intense droughts, the EPA announcement is an exciting step in our efforts to provide sustainable, reliable water supplies for San Diego County,” Rep. Mike Levin, who helped secure the funds, said in a statement.

Part of the federal loan will help pay for the long-awaited rehabilitation of 125 acres of coastal wetlands in San Diego Bay. Poseidon is required by the state to complete the project in order to offset environmental degradation caused by the plant.

“Diversifying and stretching precious water supplies is essential in the water scarce West,” Radhika Fox, assistant administrator for water with the EPA, said in a statement. This loan will “help address water shortages, stretch precious water supplies, and protect critical marine habitats.”

A state-mandated overhaul of the desalination plant’s ocean-water intake system is estimated to cost roughly $274 million — and will add to the region’s rising cost of water.

The facility didn’t initially have to deal with such environmental regulations. The Encina Power Plant, which was decommissioned in 2018, previously pulled in water from the Agua Hedionda Lagoon for its cooling process, providing it to the neighboring facility as an afterthought.

But with the power plant now demolished, it’s up to Poseidon to meet strict rules for protecting ocean life as it sucks in roughly 300 million gallons of seawater a day, pumping up to its $1 billion reverse-osmosis facility on a nearby hill.

Poseidon plans to complete construction of the new intake system by the end of 2024. The plant provides about 10 percent of the region’s water.

The facility is the region’s most costly source of water. The region’s wholesaler San Diego County Water Authority is under contract to purchase the desalinated water through 2045, whether or not it needs the supplies.