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HomeMy WebLinkAbout02/19/2002, B5 - COOPERATIVE USE OF THE MORRO BAY DESALINATION FACILITY council j acEnba RePont ''®N. t3 5 CITY O F SAN LUIS O B I S P O FROM: John E. Moss SUBJECT: COOPERATIVE USE OF THE MORRO BAY DESALINATION FACILITY CAO RECOMMENDATION Direct staff to work with City of Morro Bay staff to evaluate the feasibility of a joint use of the Morro Bay desalination plant. DISCUSSION The City of San Luis Obispo has been seeking the development of additional water supplies to meet our General Plan goals for some time now. In this effort the City is seeking the development of a number of water supply projects including the Water Reuse project, the Salinas Reservoir Expansion, the Nacimiento Pipeline Project, and expanded use of local groundwater. Of all these projects, only the Water Reuse project has completed all the required environmental and regulatory requirements to proceed through to construction. Given the extremely complex nature of completing a new major water supply project,the feasibility of completing another project in a manner consistent with the timing requirements of the City is questionable. Additionally, the costs of our other supply options have increased significantly. Consideration of seawater desalination should now be considered as a cost competitive option for increasing the City's available water supplies. City staff have had preliminary discussions with staff from the City of Morro Bay relative to the possibility of cooperative use of their desalination plant. Morro Bay constructed the desalination facility during the last drought. The facility was last operated in 1995, however it has been well maintained since then and is fully operational. The plant has a current production capacity of 645 acre-feet per year and has been designed to accommodate expansion to slightly more than double that capacity. Staff's discussion does indicate that there may indeed be an opportunity to enhance the water resource availability to both agencies through a program of cooperative operation of the facility. A concept paper (attached) has been prepared by the staff from Morro Bay and San Luis Obispo for Council's consideration. This concept paper outlines a potential operating scenario and how the project could benefit both agencies. On January 28, 2002 the Morro Bay City Council considered this concept and provided direction consistent with that recommended for the Council in this report. At this time staff is requesting that Council consider the attached concept paper and direct staff to continue working with Monro Bay staff to evaluate the feasibility of jointly using the Morro Bay desalination plant to meet at least a portion of our future water supply needs. � S I I Council Agenda Report—Desalination Facility Cooperative Use Page 2_ FISCAL EVIPACT While there is no immediate impact associated with the recommended afu action, some minor nding may be required in the future for technical/legal support in the development of an MOU. At this time, staff feels there are sufficient funds available in the Water Administration operating program Contract Services account to cover any needed minor expenses. Funding for the actual project, should we proceed to that phase,will be identified in future Financial Plans. ALTERNATIVES 1 Council could direct staff to pursue evaluation and possible development of a desalination facility solely owned and operated by the City of San Luis Obispo. This alternative is not recommended at this time as it would not take advantage of the existing facility at Monro Bay, likely result in additional and unnecessary environmental and fiscal impacts, and would not provide the longer term and less tangible benefits of a cooperative project and relationship with a neighboring City. 2. Council could deny the recommended action and direct staff to continue with the development of our other water supply alteratives. At this time, staff is not recommending that we stop pursuit and development of our other alternatives. Staff feels it is important to continue to pursue all of our available alternatives, including desalination, until we are successful in obtaining the water necessary to.serve our General Plan goals. Attachments Desalination Facility Cooperative Operations Concept Paper ATTACHMENT Desalination Facility Cooperative Operations Concept Paper Concept Understandings: The City of San Luis Obispo and the City of Morro Bay are interested in evaluating the possibility of working together in the operation of Morro Bay's desalination facility. The facility is not currently being operated for a variety of cost and technical reasons, however it is fully operational. The present capacity of the facility is approximately 645 acre-feet per year (afy). The facility was designed and environmental studies completed to allow that capacity to be doubled. The current need for additional water resources for Mono Bay is to meet seasonal peaking requirements and for additional resource reliability as continued reliance on their groundwater resource is questionable. Additionally, with appropriative rights permit conditions reducing Mono Bay's ability to extract groundwater, Mono Bay will need to be able to access safe yield of about 700 acre-feet per year in dry years beyond that reliably available from State Water to meet the requirements of the General Plan goals. The current need for additional water resources for San Luis Obispo is annual safe yield to supply new development, and for additional resource reliability to see the City through drought or other catastrophic loss of a water supply. San Luis Obispo is able to meet its current needs for both yield and peaking with its current surface water supply resources, however is running critically low on supplies available for new development. How do the needs of Morro Bay and San Luis Obispo dovetail into a mutually beneficial arrangement relative to the operation of the desalination facility? Morro Bay's need for water at the present time is to meet seasonal peaking demands. For cost and operational reasons, it is not desirable to use the desalination facility to meet these needs. Operation of the facility on an as-needed or seasonal basis is both complex and costly as start-up costs for the facility are high. Mono Bay's other supply source, State water, is less expensive and includes a high capital cost component, which is paid whether or not the City actually takes water. Morro Bay does not currently have the requisite staffing available to operate the desalination facility on an as needed basis. Lastly, contract operations of the facility would likely require a more predictable operating scenario than is currently feasible given Morro Bay's current needs. San Luis Obispo needs additional safe annual yield in order to meet General Plan goals. Current supplies are adequate to continue growth for roughly 3 to 5 years at a 1% growth rate. San Luis Obispo is pursuing the development of additional supplies through water recycling, expansion of the Salinas Reservoir and participation in the Nacimiento Pipeline project. As these projects are proceeding through the study phase, the projected cost of the water has escalated to near that of conventional seawater reverse osmosis, making further investigation and evaluation of desalination as an option, reasonable. If 3 Desalination Facility Cooperative Operations ATTACHMENT Concept Paper Page 2 of 3 available, San Luis Obispo would likely take water from a new source, such as a desalination facility, at some level on a continuous basis, banking its surface supply resources to meet its seasonal peaking needs in addition to meeting ongoing demand. San Luis Obispo does have staff with the requisite state certifications to either operate or oversee the operation of a desalination facility. It is currently envisioned that San Luis Obispo could provide the base load (continuous operating) demand on the desalination facility, making it cost effective to operate. With the facility in operation, water from the facility would then be available on demand to meet the peaking needs of Morro Bay. Additionally, it may be possible to provide water from San Luis Obispo's surface supply sources to meet Morro Bay's seasonal peaking requirements. As both communities expand toward build-out, the desalination facility could be expanded to meet the additional yield needs of both communities. The facility could be staffed either with City of San Luis Obispo staff or by a contract operator.. Facility Status: The desalination facility has been operated as recently as summer 1995. Monro Bay is currently studying operational problems associated with an iron hydroxide material contamination of the process prefilters. Original plant capital construction cost was $3.9 million and debt service is due to be retired in June 2003. Current operation of the facility requires the simultaneous operation of the Duke power plant at Morro Bay, with seawater cooling, as the reject water from the desalination facility is discharged into Duke's outfall and is reliant upon the Duke discharge for dilution prior to discharge to the Pacific Ocean. Envisioned Operating Scenario: In order for the facility to provide water to San Luis Obispo, a new treated water line would need to be constructed up the Highway 41 corridor or other appropriate location where it would connect to the Whale Rock raw water pipeline. After being placed in the Whale Rock raw water line, the water from the facility would require re-treatment at San Luis Obispo's Water Treatment Facility prior to distribution to San Luis Obispo's customers. Additional improvements and controls would be required in order to use the Whale Rock raw water pipeline to deliver the water to San Luis Obispo, and some modification to San Luis Obispo's treatment facility would be required to allow for effective treatment of the water from the desalination facility. To provide for the needs of Morro Bay, water from the desalination facility would be placed directly into Morro Bay's water distribution system for use by Morro Bay residents. Morro Bay is also currently working with the California Men's Colony(CMC) in the rehabilitation of CMC's water treatment facility. This facility will give Monro Bay the requisite surface water treatment capability to allow Morro Bay to use surface water supplies, such as water from Whale Rock reservoir. Morro Bay could thus also be Desalination Facility Cooperative Operations ATTACHMENT Concept Paper Page 3 of 3 provided water to meet their seasonal peaking needs from Whale Rock Reservoir via an arrangement with either CMC or San Luis Obispo for an exchange of water. This concept of operating the Morro Bay desalination facility to provide additional yield for San Luis Obispo, while also being able to provide for the reliability and peaking needs of Morro Bay, either directly from the desalination facility or indirectly via an exchange of surface water, represents a potentially symbiotic relationship that can serve the needs of both communities, where those same needs cannot be effectively met individually. It utilizes a currently underutilized facility, provides an opportunity for cost savings and cost recovery, as well as potential environmental impact avoidance. An opportunity exists fora visionary win/win operating scenario for both agencies. � 5