LOS ANGELES -- Major Southern California water agencies say desalted water is just too expensive for them to go ahead with plan for a $1.88 billion desalination plant on the coast of Mexico.

Three public agencies and one private company recently completed a feasibility study on the Baja California Desalination Project, a proposed plant that would produce 100 million gallons of desalted water per day from the Pacific Ocean. The co-sponsors launched the study in response to concern over a five-year drought that has sharply reduced existing water supplies in California.

Last week, however, various public officials said the technology appears too expensive for now.

"Looking 20 years or so in the future, seawater desalination could, and likely will, become part of the water resource for Southern California," said Carl Boronkay, general manager of the Metropolitan Water District of Southern California, in a recent report to a district ad hoc committee.

But Mr. Boronkay observed that other water resources make more sense now than pursuing a largescale seawater desalination project. He also suggested pursuing a smallscale pilot desalination plant in Southern California.

He added that more pressing solutions include transfer of water from agricultural use, completion of the State Water Project, wastewater reclamation, conservation, and additional storage facilities.

Other co-sponsors of the Baja study included the Los Angeles Department of Water and Power and the San Diego County Water Authority. Bechtel Power Corp. and Coastal Pan-American Corp. developed the concept of a combined power and desalination plant in Baja California, using natural gas as fuel.

Public officials knew desalinated water is much more expensive than existing water supplies. But they have noted that blending desalted water with cheaper water, still the bulk of supplies, could make the technology usable. The feasibility study indicates that the Baja plant could produce water for $1,200 an acre foot. But it would cost another $300 to $485 an acre foot to transport the water to an existing interconnection in San Diego County, the study notes.

Those figures compare to existing wholesale treated water costs of about $261 an acre foot charged by the Metropolitan Water District. An acre foot meets the annual residential water needs of two typical families.

Partial financing by industrial development bonds that carry more favorable financing terms could lower the price for desalinated water to $815 an acre foot at the plant, the feasibility study says.

As proposed, the project is expected to require $1.88 billion in capital, with 20% of this amount provided by equity investors.

Analyses showed that the project "is most sensitive to changes in capital costs and changes in financing assumptions," the study says. "The debt structure for a project of this magnitude will be as complex as the equity structure," and terms of the various loan agreements "will be unique to the ultimate credit arrangements and are difficult to predict in advance," the report says.

Siting the plant in Mexico made sense because permits and a site can be acquired more rapidly than in California, thereby lowering the project's cost, the study said. The plant also would help to satisfy growing demand for water and power in Mexico, the report says.

Major desalination plants have yet to catch on in the United States, although the technology is used extensively in water-proof areas such as the Middle East.

Santa Barbara, Calif., and a limited number of other localities that face particularly severe water shortages are moving forward with seawater treatment plants on a smaller scale.

"While the current water price resulting from a desalination facility may be higher than most current average water costs, desalination offers a new water resource free from variations in rainfall and increased competition for dwindling natural water resources in the region," the Baja study concludes. It noted that early planning and commitments are critical because a large-scale facility takes at least five years to develop and complete.

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