Idle Sydney desalination plant draws flak on cost

A seawater desalination plant constructed following the Australian drought in the mid 2000s has drawn renewed sharp Green party criticism as it emerged recently that it was costing taxpayers more than A$ 0.5 million (US$ 470,000) a day to lie idle.

The US$ 1.7 billion plant, in Kurnell, was turned off in mid-2012 as Sydney’s dams refilled once the rains returned.

Water levels have remained high ever since so the desalination plant has never been switched back on at a cost of some US$ 370 million in “service fees” to stay on standby.
The payments to the plant’s owners, a Canadian pension fund and an Australian fund management company, are set by the Independent Pricing and Regulatory Tribunal under a deal struck when the plant was privatized on a 50-year, US$ 2 billion lease in 2012.
New South Wales’ water minister, Kevin Humphries, said: “To switch it on would cost about another $50 million.”

Under current arrangements, the desalination plant would be turned back on again once Sydney’s dam levels drop to 70% Greens MP John Kaye has described the desalination plant as a “white elephant” and wants the threshold at which the plant is switched on again reduced to about 40 per cent. He warned that restoring the plant to operation with dams at 70% could fill them back up swiftly “Then if we have a reasonably sized deluge, all the water that we’ve paid for from the desal plant will spill over and be wasted.”

Humphries confirmed that reduction of the 70% threshold was under consideration. But D&WR understands that this will entail significant compensation for loss of income payable to the desalination plant’s owners. “These operating rules are being reviewed as part of an overhaul of the Metropolitan Water Plan, which will be complete in mid-2015,” Humphries said.