Pinellas approves new contract for waste-to-energy plant

Despite a lawsuit from the plant's current operator, the commission moves ahead.
Published November 3 2014
Updated November 4 2014

Pinellas County could spend up to $477 million to run its waste-to-energy plant over the next decade, under a contract awarded Monday.

The County Commission voted 6-1 to approve a 10-year contract that will pay Covanta Projects $19.49 for every ton of garbage processed at the plant on 114th Avenue N in St. Petersburg. That portion of the contract is expected to yield the New Jersey-based company at least $158 million in revenue.

Covanta also will receive a 10 percent share of annual revenue from electricity sales and 30 percent from the sale of metals recovered from the waste, provisions that together are worth about $3.2 million a year. And the county will pay the company a $10 million management fee to oversee capital projects with a maximum budget of $150 million.

Commissioners took the advice of County Administrator Mark Woodard, who urged the board to approve a staff recommendation and set aside the pleas of employees of GCS Energy Recovery, the company that has run the plant since 2012, to delay the decision. GCS filed a lawsuit this year claiming the company was unfairly shut out of the bid process.

"This was our process," Commissioner Susan Latvala said just before Monday's vote. "We approved it, and GCS didn't make the cut."

The commission put off the contract decision last month after a parade of GCS executives and rank-and-file employees implored the board to allow the company to submit a bid.

The board asked Clerk of Circuit Court Ken Burke's inspector general to review the bids submitted by Covanta and Wheelabrator Technologies Inc., as well as a cost comparison put together by staff. Burke's chief auditor concluded that the data and calculations supporting the bids and analysis were solid. The estimated total cost of Covanta's contract, based on its bid, could reach $477 million, compared to $537 million for Wheelabrator. County staffers calculated the cost of a GCS contract to be $568 million.

That figure is too high by at least $130 million, GCS representatives told the board Monday.

All but one board member said they were satisfied with the recommendation and audit. Commissioners noted Covanta has vowed to keep qualified GCS staff on board. Commissioner Norm Roche cast the no vote.

The plant burns garbage to produce steam that powers turbines. Duke Energy buys about 475,000 megawatts of electricity each year, paying the county a $3.5 million monthly "capacity" fee on top of roughly $12 million annually, bringing the total yearly revenue to about $50 million.

GCS took over the plant in December 2012 after Veolia Environment, a French company, sold its contract. The plant was in dire need of repair. When conditions continued to deteriorate and the production rate continued to drop — threatening the county's contract with Duke — the county agreed in December to cover GCS' operating costs to help boost production and reduce the plant's emissions. In return, GCS agreed that its contract, which was set to run through 2024, would end Dec. 31, 2014, and the county would put the operation contract out to bid.

GCS plans to proceed with its lawsuit, company consultant Todd Pressman said after the vote.