Downsizing the Proposed Bottled Water Plant

Nestle has been working to site and build the nation's largest water bottling plant near McCloud CA (close to Mt. Shasta).  The plant would provide jobs to a rural area that's suffered with the decline of the timber industry.  However, there are a range of concerns about the possible impacts on the watershed, environment, local roads, etc. 

The McCloud Community Services District board (the town is unincorporated) agreed to sell spring water to Nestle in 2003.  Yet here we are and still no plant.  So, Nestle has decided to scale back its plans.

Monday's press release from Nestle states that the company wants to reduce both the physical size of the plant and the amount of water it would use each year by 60 percent.

The previously planned 1 million square-foot facility is being reduced to 350,000 square feet, and the 1,600 acre-foot per year cap on the maximum amount of water usage would be reduced to 600 acre-feet.

However, Nestle is tied by a contractual agreement with the McCloud Community Services District to build the originally agreed upon plant specifics.

David Palais, Nestle's natural resource manager and project manager for the McCloud plant, said in a telephone interview Tuesday morning that Monday's press release is actually a proposal to the MCSD for the stated changes.

Lots of renegotiations to follow.

The contract, signed in 2003, is for 50 years with a possible 50 year renewal, according to Palais. He said that if Nestle hasn't broken ground on the project by the agreed upon date in 2010, the company will be required to pay the district for extensions.

...

Under the contract, Nestle agreed to pay a negotiated set price for the amount of water used, not to exceed 1,600 acre-feet per year.

Borrowing a paragraph from the first link:

McCloud would receive about $305,000 the first year, based on residential water tariffs, which equals $191 per acre foot, or 15.5 cents per cubic meter. By comparison, Nestle is paying $2,183 per acre foot to Pure Mountain Spring in Maine for its water, according to an economic study conducted by ECONorthwest, a consulting firm.

Here's a link to the ECONorthwest study.  That price per acre-foot of water in Maine is definitely not the most expensive example in the survey (see page 32).  FYI, one of the examples is from just a few miles south of McCloud...the Dunsmuir Bottling Company pays $1,629 - $3,258 per acre-foot to the city. 

Back to the original article...

Palais said because of rising fuel and transportation costs, along with another bottling plant Nestle has built in Denver, a plant of the size first proposed in McCloud no longer makes economic sense to the company.

"Our need for the bottling capacity in this location has changed since the inception of this project five years ago," he said.

Palais said that if the proposed changes to the contract are accepted, the agreed cost of the water would have to be discussed or renegotiated. He also said that construction of the new plant would be a minimum of three years away.

He said Nestle has agreed to two years of environmental studies on Squaw Creek in order to assess the impacts the plant might have.

Nestle has 23 water bottling plants in the U.S.  Several of them are west of Denver...six in California (the furthest north being in Calistoga--Napa Valley) and one in Phoenix.  Yet, the plant in Denver is the reason for scaling back the McCloud proposal?  Sure.  Nestle is retreating, hoping to get something rather than nothing.   

Comments

[Betsyphair]

I am a McCloud resident and have learned that you have to read between the lines of the Nestle/Arrowhead propaganda. They were never going to open the Arrowhead bottling facility at 1 million square feet. It was always going to start out at about 250,000 square feet. So, when Nestle/Arrowhead has come out publicly and stated that they are going to scale back, give me a break. Nothing about their approach and propaganda is to be trusted until the contract is amended to reflect those changes. Earlier Nestle made a public announcement that they were not going to drill bore holes in McCloud. Ok. Did that mean that they would amend the contract that stated they would do that? When asked that question they said "No, they were not going to amend the contract". Nothing has changed. They can spit any words out of their mouth. It means nothing! They are taking advantage of the town of McCloud. Fortunately, the numbers in McCloud and through-out the US are building against Nestle taking any water. It's no longer going to be a slam dunk.