A private project that might bring the construction of the state's largest desalination plant to San Diego County hinges on a decision by the Carlsbad City Council.

The municipality is scheduled to decide Tuesday night whether or not to approve an agreement to purchase 25 million gallons per day from a desalination facility built in Carlsbad by private developer Poseidon Resources.

Approving the deal would mark a successful culmination of discussions between Poseidon and the city that began in 1998.

According to the proposed agreement, Poseidon would supply as much as 25 million gallons per day of desalinated water to Carlsbad at a price that is equal to or less than what is currently paid for water provided by the San Diego County Water Authority.

The agreement states that the water will meet a stringent set of regulatory standards -- or the city will not be obligated to accept or pay for it.

The contract will last for 30 years and also have a five-year buyout option, allowing the city to purchase the plant within that time frame.

The Carlsbad Chamber of Commerce is endorsing the agreement.

The Poseidon project would produce 50 million gallons of desalinated water per day. The company is currently courting other cities, including the cities of Oceanside, Vista and San Marcos, to purchase the remainder of the water, said Peter MacLaggan, vice president for Poseidon.

The decision also spotlights the role of the San Diego County Water Authority, which recently re-entered negotiations for the construction of a desalination facility in Carlsbad and has its own interest in building and operating a plant at the site.

In August, noting the recent success of Poseidon and Carlsbad talks, the water authority board of directors voted to re-enter in the negotiations for a "regional project."

Carlsbad Mayor Claude "Bud" Lewis has repeatedly stressed the need for the three-party involvement and that the approval of the purchase agreement would still allow for water authority participation. Lewis is a member of the water authority and Metropolitan Water District board of directors.

Both Poseidon and the water authority, however, are currently working on environmental impact reports for their own project on the site.

The water authority recently budgeted $668 million in their new long-range financial plan for the construction of a plant yielding 80 million gallons per day by 2015 with a larger pipeline to allow for expansions in the future.

Poseidon is planning a 50 million gallon per day plant for about $270 million. The company has already invested more than $10 million in studies and technology for the project, according to Poseidon officials.

The water authority also has its back against the wall because it set a deadline of 2006 to make a decision on how to provide an extra 50 million gallons per day to meet the region's growing water supply needs.

The decision is crucial because the water authority is responsible for meeting the needs of San Diego ratepayers and one of two projects -- a desalination project or the construction of Pipeline 6, a transmission pipe that would deliver water from Northern California -- is needed to meet those supply margins, said Robert Yamada, seawater desalination program manager for the water authority.

The county is also in a position to block a series of subsidies that both Poseidon and the city of Carlsbad need in order for the water price portion of the purchase agreement to work.

The Metropolitan Water District, the major water supplier to the water authority, offers a subsidy of $250 per acre-foot for water produced at desalination facilities.

One acre-foot is equivalent to about 325,000 gallons.

In order to access the funds, the project's environmental impact report must make grade and the lead water agency in the area -- the San Diego County Water Authority -- must sponsor the project.

MacLaggan said this is a concern because the water authority has repeatedly expressed an interest in owning a project on that site.

When asked if the board would sponsor the Poseidon project for the subsidy, Yamada said the water authority's board of directors would have to make that decision.

Yamada noted, however, that the Poseidon project at this point would only bring 25 million gallons per day onto the system, while 50 million gallons per day is needed to meet the regional need.

MacLaggan said the proposed purchase agreement leaves the door open for the water authority or other member agencies to purchase the remainder of the water.