Trash decision time is approaching for towns throughout much of central and northern Maine. Some 187 towns and cities have to decide in the coming months where they’ll send their residents’ trash starting in 2018.
The organization founded in 1991 to look out for the towns’ waste disposal interests is pushing one option — a yet-to-be-built and yet-to-be-permitted facility in Hampden that would convert organic materials in household trash into marketable biogas. The Penobscot Energy Recovery Co. waste-to-energy plant in Orrington, meanwhile, is trying to persuade towns to keep sending their garbage there.
The Municipal Review Committee currently represents its member towns’ interests as part of the partnership that owns PERC. But in persuading its own members to choose one privately run trash facility over another, the Municipal Review Committee has changed its role in a big way — from objective advocate for the towns to advocate for one facility.
If the Hampden facility materializes, the committee would become its landlord and pay, using member towns’ money, to develop the site for plant construction. As towns and cities start to make their decisions, the Municipal Review Committee is the entity charged with securing enough waste commitments from towns to make the facility viable.
We have concerns with the facility the Municipal Review Committee is pushing its members to embrace and the terms it’s asking towns to accept.
Solid waste disposal is one of the largest line items in any municipal budget, and the Municipal Review Committee would have towns commit that substantial line item to a type of facility that has never before operated — much less proven its long-term viability — on a commercial scale.
The Fiberight-Covanta plant in Hampden would be the first of its kind in the U.S. To be sure, the technology offers exciting possibilities. But deploying a new technology on a commercial scale is inherently risky, and when taxpayer dollars are the main funding source for operations, that risk spreads to every taxpayer in the towns sending their trash to Hampden.
Fiberight and Covanta would cover the $67 million in construction costs. But before the facility is even built, the towns and cities that sign on would commit nearly $18.5 million of their money to the venture to cover the costs of preparing the site for development and to cover a range of contingencies — from the costs of transporting waste to Crossroads Landfill in Norridgewock if the facility doesn’t open on time to payments the towns could owe Fiberight if they fail to deliver enough trash.
That money would come from a fund projected to grow to $25 million by 2018 that has built up over time as towns that own a stake in PERC have shared in PERC’s profits. Each town’s share is proportional to its stake in the facility; Bangor’s share, for example, works out to more than $4 million.
Towns would start out paying $70 per ton of waste they send to Fiberight — an amount that would change annually with the Consumer Price Index — compared with the current net rate of $59 per ton.
If towns want to cut those costs substantially by reducing the amount of waste they send to the facility, they can — to a point. If the total amount of waste that goes to Fiberight each year falls below 150,000 tons, towns would be on the hook for “delivery sufficiency payments.” A town could implement a pay-as-you-throw program to encourage residents to cut down on waste, but if the town wanted to cut into the largest component of its waste — organics, such as food scraps, which account for more than 40 percent of household trash — it would need special permission from Fiberight. We find it hard to imagine Fiberight would say yes when its entire biogas production process depends on the organics in the wastestream.
The contracts towns sign to deliver their waste to Fiberight offer them protections against sudden, arbitrary and significant tipping fee hikes. But the contracts also allow Fiberight to request a tipping fee increase. The Municipal Review Committee would have to agree the company needs such an increase to continue operating, and each town would have to agree to amend the contract accordingly. But if Fiberight becomes the towns’ only waste disposal option, and it risks closure without a tipping fee increase, what choice would the towns have but to acquiesce?
Startup troubles plagued PERC in the 1980s, forcing significant tip fee increases, and PERC was far from the first facility of its type in the U.S. It seems inevitable that an even more experimental technology will encounter hiccups — some potentially costly — as it gets into gear.
There’s a lot riding on this town-by-town decision, from millions of dollars in taxpayer money to the waste disposal future for a significant portion of Maine. And the towns and cities that make up the Municipal Review Committee find themselves with two imperfect options.
The economics supporting PERC change in a big way in 2018, the expiration date for a contract with Emera Maine that guarantees PERC above-market rates for the electricity it produces. After 2018, the key component of PERC’s revenues — by necessity — would have to shift from the electricity side of the business to waste processing. As a result, the tipping fees PERC is quoting towns are above the starting rate for Fiberight — $84.36 per ton for a 15-year agreement or $89.57 for 10 years (both rates would change with CPI).
But one advantage for towns is that PERC would tie up none of the $25 million they have built up over the years, meaning towns could do with it what they want. If Bangor, for example, used its $4.2 million to defray disposal costs, it could reduce its net tipping rate by more than $14 per ton over 10 years. Bangor and the 86 other municipalities with a stake in PERC would continue to share in any profits. As limited partners in the PERC partnership, towns and cities aren’t on the hook for the business’ liabilities.
PERC has operated dependably for three decades, and its process results in less residual waste for the landfill (an 85 to 90 percent reduction by volume) than Fiberight’s (a 75 to 80 percent reduction). PERC is paid for, and the market for electricity is known.
There’s no minimum waste requirement as part of PERC’s updated municipal contracts, and no associated penalties. There are no restrictions on towns’ ability to aggressively cut their waste disposal costs by diverting organics.
But opting for PERC also entails risk. The PERC partnership expires Dec. 31, 2018, so towns with a stake in the facility would do well to plan for a post-2018 partnership and a structure that protects their interests and equity.
Deciding where to send their trash will be one of the most significant decisions towns and cities make this year. They would serve their taxpayers best by carefully considering the two proposals before them — and fully understanding the risks with each one.