The Valley Center Municipal Water District and Poseidon Resources Corp. (News) announced Tuesday the district's approval of a water purchase agreement.

Under the agreement, Poseidon will provide Valley Center with 7,500 acre-feet per year of water from its Carlsbad desalination plant when the plant is operational. The district will pay $700 per acre foot under the deal, after a $250 Metropolitan Water District of Southern California subsidy. The district currently pays $575 per acre foot for municipal water.

Poseidon is building a 50 million gallon-per-day (56,000 acre-feet annually) desalination plant at the site of the Encina Power Station in Carlsbad. Earlier this month, Poseidon announced the Final Environmental Impact Report (FEIR) for the Carlsbad desalination plant had been published by the City of Carlsbad. The proposed $270 million desalination project is scheduled to be completed by 2008.

The Valley Center Municipal Water District is the largest agricultural water district in the county. The district's board of directors unanimously approved the water purchase agreement at its regularly scheduled Monday meeting.

"Seawater desalination is an important part of the solution to the region's long-term water reliability needs," said Valley Center Water District president and San Diego County Water Authority board member Gary Broomell.

"The Valley Center Water District is now ensured a locally-controlled, drought-proof supply of water," said Poseidon Senior Vice President Peter MacLaggan. "The water purchase agreement guarantees Valley Center will receive a reliable supply of water at a cost never to exceed the price of water it would otherwise purchase from the San Diego County Water Authority."

Under the terms of the agreement, the district will receive a certain quantity of drinking water that is delivered reliably over a 30-year period, with the district having the unilateral option to extend the agreement for two additional 30-year terms.

Poseidon Resources said it will deliver the district's non-agricultural requirement -- up to 7,500 acre feet per year, and assume all risks associated with the financing, development, construction and operation of the plant.

Water produced by the desalination plant will be delivered to a coastal water agency that will then enter an exchange agreement with the district. The water will meet or exceed all drinking water regulatory standards under the law, and the district will never be obligated to accept or pay for water that does not meet the quantity, quality and reliability standards specified in the agreement.

The agreement will not reduce the district's access to reduced pricing offered by the Metropolitan Water District to qualifying agricultural customers, according to a statement.