ITEM:

DISCUSSION ITEMS

 

3.

RECEIVE AND DISCUSS THE KENEDDY/JENKS CONSULTANTS REPORT “EVALUATION OF THE DEEP WATER DESALINATION PROJECT COSTS”

 

Meeting Date:
September 18, 2014

Budgeted: 

N/A

 

From:

David J. Stoldt

Program/

1-11-1

 

General Manager

Line Item No.:     N/A

 

Prepared By:

David J. Stoldt

Cost Estimate:

N/A

 

General Counsel Approval:  N/A

Committee Recommendation:  

CEQA Compliance:  N/A

 

SUMMARY:  At its April 21, 2014 meeting the Board directed staff to enter into a cost-sharing relationship with Soquel Creek Water District to evaluate capital and operating cost projections of the DeepWater Desalination project and to determine the approximate cost-per-acre-foot of delivered water was.  The firm of Kennedy/Jenks has completed its third party review which is attached as Exhibit 3-A.

 

RECOMMENDATION:  The Committee should discuss the report and direct the General Manager to address any follow-up questions with the consultant.

 

DISCUSSION:  The consultant performed an evaluation of the DeepWater Desal (DWD) Group’s projected unit water cost (capital and O&M) costs for the a “Joint Powers Authority” (JPA) Desalination Facility part of the overall DWD Project. They also provided estimated O&M costs for the treated water distribution pipelines to develop a unit cost of water delivered to the Cal-Am system.

 

The table below compares the projected total unit water costs for the JPA Desalination Facility providing 6,000 AFY of water to MPWMD. The unit cost of the JPA Desalination Facility component is based on 10,000 AFY production and relies on full JPA Member subscription to a take or pay contract. If the project is not fully subscribed, the JPA Desalination facility would have a higher unit cost.

 

Kennedy/Jenks opinion of probable total unit water cost for the JPA Desalination Facility part of the DWD Project is approximately 15 percent higher than the projected DWD unit water cost, primarily due to the higher unit energy costs ($300 per AF for renewable energy) and the higher percentage of contingency. With a focus on project cost control during construction, and a low energy rate obtained through the City of Salinas, it is reasonable that the proposed JPA Desalination Facility could provide delivered water to Cal-Am’s service territory in the range of $1,700 to $2,100 per AF.

 

 

 

Project Cost Component                              Kennedy/Jenks Estimate      DWD Estimate         

Desalination Facility Annual Bond Payments               $600                                        $500              

Desalination Facility O&M                                            $800                                        $500              

Intake/Outfall O&M Share                                              $65                                          $50              

JPA Desalination Facility Subtotal, $/AF                   $1,465                                     $1,050              

Distribution System Annual Bond Payments                $500                                        $500              

Distribution System O&M                                             $120                                        $120              

Distribution System Subtotal, $/AF                              $620                                        $620              

Total Unit Water Cost ($/AF)                                     $2,085                                     $1,670            

 

 

EXHIBIT

3-A      Report: Evaluation Of The Deep Water Desalination Project Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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