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CRAIG PITTMANTampa Bay Water says its settlement with Covanta won't affect water rates for now.
CLEARWATER - After three months of legal wrangling, Tampa Bay Water decided Monday to pay its desalination plant contractor nearly $5-million to go away.
The utility plans to hire someone else to fix the plant by 2005 and run it for the next 30 years.
Tampa Bay Water officials said the settlement with Covanta won't affect water rates. But, they said, it is possible that replacing Covanta could cost more money, which could boost rates for customers.
At this point, "I just can't predict that," said Tampa Bay Water general manager Jerry Maxwell.
The plant recently had been producing up to 27-million gallons of water a day, but Tampa Bay Water wants to shut it down. The reason: Utility officials fear Covanta is damaging the filters crucial to the plant's operation.
Thanks to the recent rainfall, the temporary shutdown won't hurt the supply of drinking water, Tampa Bay Water officials said. But while the utility decides which of three companies replaces Covanta, the plant that was supposed to be completed a year ago won't be finished until sometime next year.
Utility officials said they had to cut a deal with Covanta because they were spending $100,000 a month battling it in court. Going to trial might take too big a bite out of Tampa Bay Water's budget.
The settlement, which still must be approved by a federal bankruptcy judge, ends any association the utility had with the company that was hired in 2001 to build the plant in Apollo Beach and operate it for the next three decades.
Losing a 30-year operating contract worth more than $300-million is not easy to deal with, said Covanta vice president Scott Whitney.
"That's kind of a difficult thing for us to come to grips with," said Whitney. Still, he said, both sides "did what was right for the long-term."
The dispute with Covanta was "an unfortunate hiccup," said Tampa Bay Water chairman Bob Stewart, a Pinellas County commissioner. Board member Susan Latvala, also a Pinellas commissioner, made the motion to settle, saying, "This is the closing of an unpleasant chapter in our history."
So far the $110-million desal plant, the largest in the United States, has had to overcome three bankruptcies, a series of missed deadlines and a dispute that resulted in 80 tanker trucks full of soapy water being parked around the plant's site.
Launched with great fanfare in 1997, the desal plant was seen as the solution to the Tampa Bay region's problem of overpumping drinking water from underground, damaging lakes and swamps.
The plant is supposed to take 40-million gallons of seawater each day from Tampa Electric Co.'s Big Bend power plant next door and force it through 10,000 tightly woven membranes to produce an average of 25-million gallons of potable water and 15-million gallons of brine.
The water goes to Tampa Bay Water's 2-million customers, while the brine is mixed with the electric company's regular discharge into Tampa Bay.
The plant's original contractor, Stone & Webster, went bankrupt in 2000. A year later its replacement, Covanta Energy, filed for Chapter 11, too. Still, Tampa Bay Water stuck with it, which Maxwell has defended as the only way to keep construction going.
At Tampa Bay Water's insistence, Covanta created a subsidiary that would continue building the plant. That subsidiary, Covanta Tampa Construction, had just one asset: the desal plant contract.
But last year the company missed deadlines for a test that would show the plant was finished.
The filters clogged more frequently than expected, which required cleaning more often and with a stronger solution.
The need to change and increase the cleaning solution for the membranes caused a bigger problem. Hillsborough County balked at allowing large quantities of the cleaning solution to be disposed of in its sewer system, so Covanta was forced to store 2-million gallons in tankers parked around the site - a glitch Covanta blamed on Tampa Bay Water.
Tampa Bay Water was on the verge of firing Covanta Tampa Construction when the subsidiary filed for bankruptcy in New York, noting that it was about to lose its only asset. The bankruptcy blocked the utility from taking any further action against the company, or taking control of the plant.
Between tests, the desal plant did produce water.
For missing its deadlines, Covanta's contract required it to give the utility thousands of gallons of free water. The plant produced that free water and hundreds of thousands of gallons more, utility officials said. However, the maker of the membranes warned that Covanta was forcing the water through at such a high pressure it was damaging the filters, a charge Covanta denied.