Economics

The capital and operating costs are given in the MMWD Pilot Plant Engineering Report, pp. 18-20

The projected cost of water from the desalination plant is $2,023 per acre-foot, or $4.65 per 100 cubic feet.

Note that this unit cost is based on dry year operation with the capital component being spread over 365 days of production. The unit cost would be greater in wet year operations when the continuing capital and standby operations costs must be spread over a smaller annual production volume.

The above unit cost may be compared to the current tariff rates which are: (Note: Subject to 8% increase effective 5/5/09.)

Tier 1: $2.88 per 100 cubic feet
Tier 2: $5.62
Tier 3: $11.24
Tier 4: $16.86

Although there is some argument that additional costs should not be charged to Tier 1 users, who are not responsible for the future total water requirements being in excess of existing sources, the author has not seen any plans of how this new cost would be distributed to current water customers.

Contribution of power consumption to the unit cost of water.

The above costs are based on an assumption of being able to purchase power at a unit price of 12 cents per kWh.

This is the average cost of base load electrical power for industrial usage in California in 2008.

The average cost for residential and commercial power, respectively, was 14.76 and 12.78 cents per kWh.

As noted under the discussion of power consumption the cost of power, when the plant is intentionally either not operated or operated at a substantially reduced power level during the winter season when overall power consumption is less, is more likely to be higher than base load power prices since the power supplier will not be able to recover his capital and standby operating costs due to a lack of market.

It is noted that the annual cost of power - at the assumed rate - is 56 per cent of the total Operation and Maintenance costs during dry years, as shown in this figure taken from the MMWD Engineering Report.

Thus, an increase in power costs could be significant with respect to product water unit costs.