Proposed Carlsbad Desalination Project to Cost Up to Three Times More Than Claimed

Water produced at Poseidon
Resources proposed desalination facility in Carlsbad, Calif. could cost up to
three times more than previously claimed by the company, according to an
independent expert analysis released today by Food & Water Watch, a
consumer advocacy group. This finding comes as the Metropolitan Water District
is poised to decide whether to grant Poseidon $350 million in subsidies for
their proposed $534 million, 50 MGD desalination facility in Carlsbad.

Records obtained by Food & Water Watch from Tampa Bay
Water, the public utility that owns the Poseidon-built desalination plant in
Tampa, Fla., have yielded new information about the cost and reliability of
Poseidon's desalination projects. Analysis conducted based on data from the
Tampa Bay facility reveals that if Poseidon's proposed Carlsbad desalination
project performed at the relative same level that the one in Tampa Bay has over
its seven year operational life, the marginal cost of the water produced would
be $3,507 per acre-foot. This estimate is more than three times higher than the
$950 per acre-foot claimed by Poseidon to the California Coastal Commission in
2008.

"Poseidon Resources is dramatically underestimating its
costs," said Mark Schlosberg, Food & Water Watch western regional director.
"Ratepayer money is better spent on robust conservation programs that will
provide real water savings and benefit consumers - not subsidies for Poseidon's
absurdly expensive water."

"Even under the best-case scenario - with the proposed
project performing as well as the one in Tampa Bay has over the past two years
after major rehabilitation of design and construction flaws, and with no cost
overruns - cost would still reach $1910 per acre-foot," noted James Fryer, a
respected environmental scientist and water management expert who performed the
new analysis for Food & Water Watch.

On November 9 and 10, the Metropolitan Water District
Board of Directors will decide whether to guarantee $350 million in subsidies
for Poseidon's desalted water. Later this month Poseidon is expected to submit
an application to the California Debt Allocation Limit Committee for $534
million in tax-free bonds. A coalition of over 25 groups is opposing public
subsidies for the proposed facility due to its high costs and expected
environmental impacts. Energy intensive and polluting, desalination has been
shown to harm marine environments and contribute to global warming.

"Poseidon claims that their Carlsbad desalination water
will come at 'no expense to the region's taxpayers,' yet they are counting on
Metropolitan Water District ratepayers and taxpayers to underwrite the
project," said Renee Maas, water program organizer for Food & Water Watch.
"Policymakers should learn from Poseidon's failed Tampa Bay facility and only use
public funds for effective and responsible projects."

Cost over-runs and bankruptcy marked Poseidon's previous
foray into the desalination business. The Tampa Bay plant opened over a year
behind schedule, and then required immediate rehabilitation. As a result, he
project ran 44 percent over projected capital cost and has never produced the
25 MGD originally promised by Poseidon.

Fryer's analysis of the proposed desalination facility in
Carlsbad is based on detailed capital, operations, maintenance, energy,
financing, and relevant local water-quality data to develop a marginal cost
analysis of the water produced by the Tampa Bay facility. This information was
used to develop cost projections for the proposed Carlsbad desalination project
based on local conditions in Carlsbad. It is available online at:
https://documents.foodandwaterwatch.org/carlsbad-desal-analysis.pdf