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Desal plant repair: $29-million

The winning bid goes to a German-Spanish consortium. The new deadline is 2006.

CLEARWATER - Despite concerns about unknown costs that could drive up rates, Tampa Bay Water will hire a German-Spanish consortium to fix its troubled desalination plant.

The consortium of American Water Services/Pridesa estimated the fix will cost $29-million, far less than the $50-million bid of its only rival, the French-owned Veolia.

The utility staff estimates the $29-million repair could increase the monthly cost of water for the average customer by 72 cents.

But Hillsborough County water officials say the price will likely be even higher.

The board voted 6-1 Monday to hire the company, though several members fretted the price could be higher than expected. How much, no one knows.

"I don't think we have a real cost here," said Dan Tipton, mayor of New Port Richey.

The utility's general manager, Jerry Maxwell, conceded that negotiations with American Water could produce a contract for the board's approval Nov. 15, but it could be more than $29-million. But he predicted it would be less than $32-million.

"I'm going to be surprised to see a very significant variance from the proposals you see in front of you," Maxwell said. "I'm talking about anything greater than 10 percent."

The lone dissenter was Hillsborough County Commissioner Kathy Castor, who said she uneasy is about the true costs.

It will be 2006 before the plant is fully operating again, three years after its original deadline.

The utility's staff hopes to claim a $15-million insurance policy and a $24-million performance bond posted when a company called Covanta was building the plant. Covanta and a subsidiary filed bankruptcy, as did the original contractor, Stone & Webster.

Getting that money would mean rates would not increase as much.

Last week an insurance company representative wrote to Maxwell contending that both bids to fix the plant are excessive.

The letter notes that two years ago, when Tampa Bay Water took over the project by ousting its original partner, Poseidon Water Resources, an attorney for the utility told the board the plant could be fixed for less than $10-million if anything went wrong.

"Now you have two proposals that are three to five times greater than the "worst case scenario' presented by TBW's own consultants," wrote Robert Burkholder Jr., assistant vice president of XL Insurance Environmental.

Burkholder asked the board for six to eight weeks to come up with a repair plan "far less than the exorbitant ... range currently being contemplated."

The board rejected that idea.

Launched with great fanfare in 1999, the desal plant in Apollo Beach was supposed to provide a drought-proof source of drinking water for the region's 2-million utility customers while providing an alternative to pumping water out of the ground, which harms lakes.

The desal plant, built next to Tampa Electric Co.'s Big Bend power plant, was supposed to use cutting-edge technology and be the largest in the Western Hemisphere.

Construction was completed last year and the plant did produce water. But it never operated properly because its expensive salt-filtering membranes have been damaged.

The plant's woes convinced board members that "being on the cutting edge is not a very comfortable position," said board chairman Bob Stewart, a Pinellas County commissioner. "You're left with limited alternatives and expensive solutions."

Initially the two companies vying to fix the plant said it could be repaired for less than $14-million. But then they got a good look at it.

"Too many corners were cut that should not have been," said Juan Crovetto of American Water/Pridesa.

The builders used cheap components unsuitable for the desal process, he said.

Utility board members balked at choosing between the two companies because of the higher costs because the plant has run into so many unforeseen problems.

"Tampa Bay Water and the desal plant can't afford to have another error," said board member Ann Hildebrand, a Pasco County commissioner.

Desal's woes affected a proposal for Tampa Bay Water to take over a small Pasco water system, Lake Jovita. Board members from Pinellas County strongly favor the proposal because it was cheaper than desal, but Pasco and Hillsborough representatives strongly opposed it.

Hillsborough Commissioner Jan Platt said the staff should focus on fixing the desal plant. She warned Maxwell against stirring up opponents: "I think you need all the support you can get."

Maxwell's recommendation to look into acquiring the Lake Jovita system failed, 5-3.