March 14, 2003 -- Under a 20-year contract, ECO Resources Inc. has designed, funded, built and now operates the second-largest reverse osmosis water treatment facility in Texas.
The project involved the construction, operation, maintenance, general management of a 4 MGD reverse osmosis (RO) plant for a rapidly growing area served by the El Paso County Water Authority (EPCWA), east of El Paso, Texas.
The 20-year lease purchase is tied to a 20-year renewal of existing management and operations contract. The partnership was initiated in 1994 for basic water services, and extended in 1999 to build the RO plant.
The partnership has solved initial drinking water challenges, which attracted businesses, builders and developers to the area, followed by residents and an enhanced tax base, ECO Resources said. In addition, it was the recipient of a 2001 National Council for Public-Private Partnership Award.
"Residents can now look forward to the Authority being able to provide water for future growth, with one of the latest systems available," commented James C. Taylor, Secretary of the Board for El Paso County Water Authority.
BACKGROUND
The EPCWA, a Texas municipal utility district, is responsible for water and sewer services to 9,000 connections in a 91-square-mile service area, or approximately 16,000 residents. In 1994 its water supply did not meet minimum government guidelines for water quality, but the district had less than $10,000 in its operating accounts.
Because the EPCWA's sewage treatment plant was nearing its design and permit capacity at the time, capital improvement funds were earmarked for wastewater projects, not drinking water.
Though there is a supply of groundwater in the area, most of the water has an extremely high mineral content, is brackish and is therefore undrinkable without extensive treatment. Even the name of the water-bearing aquifer, the Salt Basin, aptly illustrates the problems faced by the EPCWA.
To help solve this problem, the EPCWA contracted operations to ECO Resources, Inc. Focusing on identifying the lowest-cost option for bringing the district's drinking water into compliance with regulatory standards, ECO formed a public-private task force composed of the EPCWA officials and local developers.
With ECO's guidance, the group's recommendations were to raise water and sewer rates, institute a connection fee for each new meter and modify the distribution system to blend water from wells of varying quality to achieve the required standards.
With the drinking water issue solved, developers and builders took notice. The area began to grow at a rate of more than 400 connections per year. Now facing a water shortage that threatened to stifle future development, the EPCWA again turned to ECO for help in solving its long-term water supply challenge.
Based on demand surges in the summer of 1999, the district had proposed and budgeted for the construction of a single new well, a short-term solution that would produce only enough water to support an additional 300 connections.
ECO identified and recommended an alternative: build four wells in a nearby well field where the water was plentiful but quality was low, while also building a RO treatment plant nearby that could provide four million gallons of high-quality blended water per day.
The new facilities offered a longer-term solution and would serve 6,000 connections, but would cost $6.7 million. The EPCWA's board felt that the RO plant was a better investment for landowners.
The debt service on the required capital could be produced by the existing revenue stream. Operating the new plant would cost more than the original single-well approach, but no increase in customer rates would occur because 17 low-quality wells could be decommissioned, significantly reducing electrical costs. But to get construction started immediately, bridge financing was needed.
The Authority had already "gone to the well" with its citizens often enough to exhaust its bonding capacity without a new election, which would take more than a year. ECO Resources again stepped up. It offered to fund and build the project on behalf of the Authority, amortizing the cost of the facility through a 20-year lease-purchase agreement as part of a 20-year operations and maintenance contract. The EPCWA accepted ECO's proposal in 1999.
This solution provided high-quality water to support EPCWA's long-term growth and rewarded ECO Resources with a long-term partnership with the district.
Construction by Fluid Process Systems, ECO's prime contractor, began in late 1999 and was completed by December 2000. After extensive testing of the system, the plant, the second largest of its kind in Texas, was put into service in February 2001.
RESULTS
COST SAVINGS - The facility provides water at about 24 cents per 1,000 gallons cheaper than the U.S. average for treated water, which is slightly more than $2 per 1,000 gallons. In fact, the cost of the plant will not be passed on to ratepayers, whose tax rate has actually gone down, thanks to the 14 percent yearly growth rate and careful management of EPCWA's resources.
OPERATIONAL EFFECTIVENESS - A key feature of the plant's design is its expandability - as projected growth in the area occurs, treatment capacity can be tripled. Also, ECO added SCADA controls to the system.
ENVIRONMENTAL COMPLIANCE - The RO plant provides water about 35 percent cleaner than the regulatory indices. Regulatory compliance is guaranteed by the contract with the original equipment manufacturer. Problems that occur that are beyond the contractor's control are exempt, and EPCWA is covered by separate insurance. There have been no violations. The contract also includes financial incentives for reductions in electrical consumption.
LABOR MANAGEMENT - All 11 original employees, who are not members of a union, are still employed with the facility.
This case study was provided by the Water Partnership Council. To learn more, visit : http://www.waterpartnership.org/.
