ORRINGTON, Maine — Two trash-to-energy facilities — one established nearly 30 years ago, one in the planning stages — are at the center of a heated competition to handle the waste disposal needs of nearly 200 Maine towns beginning in 2018.
Both facilities — Penobscot Energy Recovery Co., a plant in Orrington that burns trash to make electricity, and the Municipal Review Committee’s planned solid waste recycling and processing facility in Hampden that will turn trash into biofuel — need the waste-disposal contracts in order to operate.
The reason the contracts are surfacing now is because a 30-year power purchase agreement between PERC and what is now Emera Maine expires in early 2018, which gives the operators of the facilities less than three years to line up suppliers of trash and customers for their energy products. Emera says it will not continue to purchase electricity from PERC once the contract ends because it is too expensive.
The MRC represents the waste-disposal interests of 187 Maine towns that currently send trash to the PERC incinerator. The MRC doesn’t believe PERC can remain solvent after the Emera contract expires without significantly raising the costs to the towns, which is why it is planning to operate its own biofuel plant as early as 2017.
Now, PERC is fighting to retain its customers.
The company that owns a controlling interest in PERC, Minneapolis-based USA Energy Group LLC, this week began actively soliciting MRC-member towns to stay with the established plant rather than go down a new road in Hampden.
Under the draft PERC waste disposal contract mailed Monday, communities that sign up to drop off trash for 15 years, between 2018-33, will see a tipping fee of $84.36 per ton, and those that sign up for a 10-year contract will be charged a tipping fee of $89.57. Any contract term that is less than 10 years would be priced on a case-by-case basis based on current market pricing.
“The above [tipping fee] schedule is designed to allow each community time to review, comment and discuss these proposed new agreements prior to their annual town meetings or council meetings,” John Noer, president of USA Energy, stated in a letter to MRC member communities and others. “Furthermore, these agreements are being extended to all current customer communities and partners, as well as any communities seeking to utilize PERC’s services for the first time. PERC is not capacity limited and will service all prior agreements as well as new ones.”
USA Energy controls about 52.7 percent of the plant, PERC Holdings owns 24.3 percent, and the other 23 percent is controlled by the original member towns and cities that became part of the Municipal Review Committee Inc. before 1998.
Knowing that the Emera contract would expire, the MRC board of directors started looking for lower-cost alternatives about five years ago. In February, they signed an agreement with Maryland-based Fiberight to develop a solid waste recycling and processing facility in Hampden that is scheduled to open in 2017, if enough communities sign contracts to supply trash.
“The new Fiberight facility in Hampden … will maintain post-2018 tip fees at or below current levels,” Greg Lounder, MRC executive director, said Tuesday in an email. “Our development agreement, which has been public for five months, commits to a tip fee in the $57-$70 per ton range, which will keep costs to our communities stable going forward.”
Fiberight’s technology changes organic materials in trash into biofuels, called Trashanol, after the glass, metals, papers and plastics are recycled. Research also is underway on using the fibrous material left over from the distilling process to make other products, such as fuel pellets that can be used for heating. The facility needs 150,000 tons of trash to operate in the black, the MRC development agreement states.
To run at capacity, PERC’s 25 megawatt incineration plant needs 300,000 tons of materials to burn, and the MRC typically contributes about 180,000 tons annually, or about 60 percent, with the rest coming from southern Maine or out of state.
The post-2018 PERC tipping fees are based on the plant taking in 200,000 tons of trash annually, Robert Knudsen, vice president of operations for USA Energy, said last week. The PERC contracts would take effect on March 1, 2018.
The MRC board does not believe the new PERC tipping fees are a bargain.
“These numbers confirm that even in the best case scenario, PERC would cost towns an additional $5.4 million over current rates annually after 2018 and won’t work for the MRC communities,” Lounder said. “We have extensive knowledge of PERC’s operating costs, and our review suggests that even this increase in the tipping fee underestimates how much additional revenue will be needed to viably operate PERC. By our estimates, the added costs to the towns could rise to more than $11 million a year in increased costs.”
There is a history of PERC tipping fees rising sharply. Shortly after PERC went online in 1988, financial problems surfaced and the $10-a-ton trash tipping fees promised to communities at the outset increased. The renegotiated price in 1991 tripled the fee to $30 a ton, which upset community leaders who felt unrepresented, and led to the creation of the MRC.
The PERC contract mailed this week also has two clauses that indicate there will be annual increases in the tipping fee based on the Consumer Price Index, and for any “Change-in-law” expenses that exceed $100,000 for PERC, the draft document states.
PERC wants to hear from communities by the end of October, and to have waste disposal agreement contracts signed by December, which is when the MRC’s annual meeting is held and is when it plans to update member communities about the status of the Hampden biofuels project.
The MRC has developed “Joiner Agreements” for communities that sign up before January 2017 to send their trash to Hampden that include terms and discounts that reduce costs, documents given out at the April MRC meeting state.
Neither PERC nor the MRC are requiring a guaranteed annual tonnage, known as GAT, which has been a point of contention for communities that struggle with penalties for increasing recycling. They do both include an estimated tonnage that requires written notice by the communities to change.
A Nebraska-based engineering firm hired by USA Energy to study PERC’s operations released a report last month that states the facility can survive for 20 more years, “provided that appropriate capital repairs and replacements are completed.”
The proposed 90,000 square foot biofuel plant in Hampden is estimated to cost $60 million.