Rising profile for Tampa desal plant operator
Wake up and good morning. We're running low on water and it runs Tampa Bay's desalination plant, the largest in the country. Yet we don't pay much attention to a company responsible for supplying up to 10 percent of our metro area's water needs. American Water Works, the largest investor-owned water utility, based in Voorhees, N.J., went public just over a year ago (ticker symbol: AWK) and is continuing to wean itself from former owner and still major investor RWE, a large German utility.
American Water Works recently reported earnings and had its first shareholders meeting since going public. The company lost $413 million, or $2.58 per fully diluted share, due to a goodwill impairment charge of $450 million before taxes. The charge was required because of the impact of the stock-market decline on the company’s share price.
At its annual meeting, CEO Donald Correll told a small group of shareholders that the biggest challenge for management of a $2 billion international water company is not supply, environmental regulations that vary from state to state or aging infrastructure. It's teaching people not to take water for granted, he said, according to the Cherry Hill Courier Post newspaper in New Jersey. Noted Correll:
"The ideal is to file for a rate increase with a regulatory body and nobody comes to the public hearing, because there is no controversy. Our job is to educate."
When a stockholder questioned the money being spent on desalination in Tampa Bay and Monterey, Calif., Correll said: "When you have no alternative -- that is -- no water, the cost doesn't matter."
After a history of turbulence, Tampa Bay's seawater desalination plantis up and running -- good timing in this severe drought. Because of design and financial problems with the original contractor, the facility never fully went online. Tampa Bay Water shut down the plant in June 2005 and hired a new contractor to correct the processes.
With an expected lifespan of 30 to 50 years, the facility can supply about 25 million gallons per day. The average unit cost of the water produced is less than a penny per gallon. The water is distributed to Tampa Bay Water's six member governments, which supply the water for more than 2.5 million residents in the region.
The plant removes salt from seawater through reverse osmosis, which uses high pressure to force pretreated water through semi-permeable membranes that trap salt and other minerals. The treated water is combined with water from other sources at Tampa Bay Water's facilities. The salty water residue created by the process is diluted with water used at a local power plant and re-enters Tampa Bay at near-normal salinity.
American Water sells water and wastewater treatment services to approximately 15 million people in 32 states and Ontario, Canada. It employs 7,000 people.
In a new analysis of the water business, highlighted in The Wall Street Transcript, Timothy M. Winter of Jesup & Lamont Securities Corp. has high hopes for American Water Works. Said Winter:
"Over the long term, given their size, their expertise, they're going to be one of the biggest consolidators and they're going to be able to exploit the infrastructure needs of the country. So I think that one is very attractive."
-- Robert Trigaux, Times Business Columnist