A system and method for treating flowing water systems with a plasma discharge to remove or control growth of microbiological species. The system and method protect other components of the water system from being damaged by excess energy from the electrohydraulic treatment. The system and method also recycle ozone gas generated by a high voltage generator that powers the plasma discharge to further treat the water. A gas infusion system upstream of or inside a plasma reaction chamber may be used to create fine bubbles of ozone, air, or other gases in the water being treated to aid in plasma generation.