Desalination: A Component of the Master Water Plan

Tampa Bay Water’s Master Water Plan is the blueprint to meet the region's water needs. The first configuration of Master Water Plan projects was approved for construction in October 1998. This first set of projects was needed to offset major reduction in groundwater pumping from long-producing wellfields and to meet the region's growing water needs through the development of geographically diverse, alternative drinking water sources.

To date, these goals have been met. New water supply development has enabled Tampa Bay Water to reduce groundwater pumping from a permitted average of 158 million gallons a day (mgd) to 121 mgd in 2003. Further reductions to 90 mgd annual average are required be the end of 2008. The Tampa Bay Seawater Desalination Plant will help the utility meet that goal by delivering a drought-proof, environmentally sound water supply.

The desalination plant creates a new source of drinking water by removing salt from seawater. When operating at full capacity, the plant will provide 25 mgd of new drinking water and can be expanded to provide 35 mgd in the future.

The desalinated product water is blended with water from other, less expensive water supply sources, reducing costs to member governments and consumers.

Construction of the facility created approximately 447 jobs, 370 of which were in Hillsborough, Pinellas and Pasco counties. Tampa Bay Seawater Desalination Plant directly employs 19 workers. According to a Tampa Bay Regional Planning Council economic impact study, construction and operation of the facility will add $550 million in economic activity statewide and $482 million regionally in the next 30 years. It is also expected to contribute $10 to $24 million annually to Florida’s gross regional product.

Independent studies commissioned by Tampa Bay Water and Hillsborough County have found both the desalination plant’s operation and discharge of concentrated seawater are safe for Tampa Bay, its marine ecology and the region’s environment.

“Governance Agreements” Create Tampa Bay Water

In 1998, Tampa Bay Water became a wholesale water supply utility created to develop, store and supply water for Hillsborough, Pasco and Pinellas counties as well as the cities of New Port Richey, St. Petersburg and Tampa. They, in turn, distribute the water they purchase from Tampa Bay Water to homes, businesses and other cities. Tampa Bay Water is a wholesale government supplier. It is funded through the sale of water and has no taxing authority.

In addition to being the region’s wholesale water supplier, Tampa Bay Water was also charged with reducing environmental impacts caused by concentrated water withdrawals. To accomplish this, a long-term Master Water Plan was adopted to develop diverse new water sources such as desalinated seawater, surface water and a regional reservoir to store surface water during wet times for use during dry times.

Partnership Agreement

In 1998, when Tampa Bay Water was formed, the agency and its member governments entered into a Partnership Agreement with SWFWMD. That agreement, along with the contracts creating Tampa Bay Water, call for reducing groundwater pumping from 11 long-producing regional facilities and replacing that water with a variety of alternative water supplies. To help offset the capital cost of replacement supplies, SWFWMD earmarked $183 million in ad valorem taxes for eligible non-groundwater projects, including the desalination plant, for which Tampa Bay Water will receive $85 million of the project’s eligible capital costs.

Project History

In 1995, Tampa Bay Water’s predecessor, the West Coast Regional Water Supply Authority, approved a Master Water Plan that included seawater desalination as one of several new sources of drinking water for the region. Deciding to take advantage of the private sector’s expertise by finding a commercial developer that would design, build, own and operate a desalination facility and sell the Authority its water at a predetermined price, the Authority issued a Request for Proposals (RFP) in 1997.

The RFP, which included the possible transfer of ownership of the plant to the Authority at a later date, envisioned a desalination facility that could produce 20 to 50 mgd of drinking water. The Authority would blend the desalinated water with drinking water from other sources and supply it to the agency’s member governments – Hillsborough, Pasco and Pinellas counties and the cities of New Port Richey, St. Petersburg and Tampa.

Developers who responded to the RFP were allowed to select their own plant site, facility size and operations and method of seawater desalination. Six developer teams submitted proposals and four finalists were selected with the Authority’s engineering consultant, PB Water, a division of Parsons Brinckerhoff Quade and Douglas, Inc., analyzing and ranking proposals based on a number of criteria including environmental impact, ability to meet water quality requirements, economic feasibility, permittability and design.

In August 1998, as negotiations with prospective developers continued, the Authority became Tampa Bay Water. The developers’ Best and Final Offers were submitted in February 1999. PB Water ranked developer teams using an evaluation criteria matrix.

In July 1999, Tampa Bay Water’s board of directors awarded the final water purchase agreement for the construction and operation of a 25-mgd seawater desalination plant that could be expanded to provide 35 mgd, to S & W Water, LLC, a partnership between Stone & Webster and Poseidon Resources Corp. In June 2000, Stone & Webster declared bankruptcy, after which Poseidon acquired 100 percent of S & W Water. Poseidon replaced Stone & Webster with Covanta (formerly Ogden) in 2001 and changed the consortium’s name to Tampa Bay Desal.

Facility Buy-Out

In December of 2001, Covanta Energy failed to post a required construction bond for the project. As a consequence, the sale of private bonds to fund the privately owned project was postponed. By March 2002, Tampa Bay Water determined that it was in the region’s best interest to accelerate the purchase of the project from Tampa Bay Desal. On March 22, 2002, Tampa Bay Water’s board of directors authorized the agency to purchase the project in order to secure long-term financing under its own name and excellent credit rating. At this point, the project was fully designed, permitted and construction was 30 percent complete. Tampa Bay Water finalized the purchase of the project from Tampa Bay Desal, a wholly owned subsidiary of Poseidon Resources, Inc. on May 15, 2002.

This means that the project, which began as a design-build-own-operate-transfer procurement arrangement, then became similar to a design-build-operate procurement where Tampa Bay Water, as owner, contracted with Covanta Tampa Construction to build the plant to a specified performance level and with Covanta Tampa Bay, Inc. to operate the facility.

Failed Performance Test and Covanta Tampa Construction Bankruptcy

Under the contractual agreement to design and build the plant, Covanta Tampa Construction and its principle subcontractor, Hydranautics, were obligated not only for the plant’s construction, but for the plant’s performance. To prove that the plant met specific contractual parameters for water quality, power use, chemical use and more, Covanta Tampa Construction was required to run a 14-day acceptance test. In May 2003, Covanta failed the required test due to a number of deficiencies. Tampa Bay Water extended Covanta’s deadline for completion of the acceptance test to Sept. 30, 2003 to allow the contractor time to repair the deficiencies and achieve a successful performance test. Over the summer of 2003, Covanta addressed 14 of the 31 identified deficiencies, but failed to meet the Sept. 30, 2003 deadline. As a result, Tampa Bay Water issued a notice of default to the contractor on Oct. 1, 2003.

Tampa Bay Water was prepared to terminate its contract with Covanta on Nov. 17, 2003, due to Covanta’s continued inability to remedy the plant,. However, Covanta Tampa Construction declared bankruptcy on Oct. 29, 2003, in order to prevent Tampa Bay Water from terminating its contract.

Settlement with Covanta Tampa Construction

Throughout January 2004 and facing a trial in bankruptcy court, Tampa Bay Water and Covanta Tampa Construction worked to find mutually acceptable terms to resolve Covanta’s bankruptcy during a court-ordered mediation. As a result, a settlement agreement was reached and approved by Tampa Bay Water’s board of directors on Feb. 9, 2004. The board approved the settlement because it protects the public’s investment in the desalination facility.

With the settlement agreement, Tampa Bay Water gained full control of the facility, including the operating contract, for less than the construction contract amount of $79 million. Overall, the settlement was a win for Tampa Bay Water as Covanta spent $91 million to build the plant, and Tampa Bay Water paid them $75.5 million for the plant, including the reported settlement amount of $4.4 million from the project’s $7.9 million retained reserves.

The settlement also included release of $550,000 from the project’s reserves to pay outstanding subcontractor invoices whose payment was frozen due to Covanta’s bankruptcy. Under the settlement, Tampa Bay Water retained its and Covanta’s rights to pursue the $24 million performance bond that guarantees the plant’s performance.

Plant Remediation

While the Tampa Bay Seawater Desalination Plant produced nearly 5 billion gallons of water since March 2003, it did not meet contractual design standards due to a number of deficiencies. 

Modifications to the plant were necessary to ensure adequate pretreatment and prevent filters and membranes from clogging too quickly. In addition to the deficient pretreatment process, there were also significant deficiencies in plant design, the manufacture of plant components, as well as the RO and post-treatment processes. 

In March 2004, two competing firms pilot tested alternative pretreatment processes. At the end of the testing period, each firm recommended possible remedies and capital costs and long-term operating costs associated with their solutions.  The two teams submitted proposals in July 2004.  Tampa Bay Water staff and consultants analyzed the proposals and ranked the American Water-Pridesa proposal highest.  After successfully negotiating a contract with the team, Tampa Bay Water’s board approved the contract in November 2004.

 

American Water-Pridesa Assumes Plant Operations

American Water-Pridesa operated and maintained the plant from January through June 2005, when it was taken out of service for remediation activities. Remediation construction was completed in Spring 2007, and afterward, American Water-Pridesa focused on start-up, testing and refinement of the various processes. The plant is now fully operational after passing a rigorous 14-day acceptance test.

 

Public/Private Partnership

Tampa Bay Water, Florida’s largest wholesale water supplier, providing drinking water to its member governments - Hillsborough, Pasco and Pinellas counties and the cities of New Port Richey, St. Petersburg and Tampa - owns the project. Drinking water produced at the plant will be blended with drinking water produced by other Tampa Bay Water projects before being delivered to the agency’s member governments. Member governments then provide the water to area residents and organizations through their water municipalities.

The Southwest Florida Water Management District, the agency responsible for managing the public’s water resources in 16 counties of west-central Florida, will provide $85 million in installments to Tampa Bay Water for eligible capital costs of the facility . [http://www.swfwmd.state.fl.us]

 

American Water-Pridesa leads remediation efforts and plant operations for Tampa Bay Water.  With a history of over 100 years, American Water provides high quality water, wastewater, and other related services, serving 18 million customers in 29 US states, and three Canadian provinces.  American Water is part of RWE Thames Water, and through their combined expertise, it continues the tradition of providing customers with superior quality service while gaining access to new technologies, research and development, and global experience in service, customer satisfaction and security. [http://www.amwater.com] Pridesa has designed and built over 50 desalination facilities around the world, and are currently operating over 30 plants.  www.pridesa.com

Tampa Electric Company, in Tampa, is leasing an 8.5-acre site to the project and will also provide electricity and source water for the desalination plant.  [http://www.tampaelectric.com]