As the president of the Municipal Review Committee board and a municipal official with an obligation under Maine law to arrange and provide for municipal solid waste disposal for my community’s residents and businesses, I find it necessary to address several points that have been raised during the trash debate that communities have faced this spring.
Dedicated municipal officials serving their towns through the MRC since 1991 have compiled a proven record of meeting long-term projections of affordable tip fees. The board of directors spent countless hours with MRC’s technical and legal advisors evaluating the full body of complex technical, market, economic, legal and operating information that underlies both PERC’s and Fiberight’s post-2018 project economics.
The trouble with signing up with PERC is that it has never operated a day in its 30-year history in the manner it is proposing for after 2018. This new approach to operation is completely untried and unproven.
MRC knows this because it has been afforded full access to all of PERC’s financial and operating records since 1991.
MRC analyzed PERC’s publicly reported economics that purport to support an $84.36 tip fee. We found that there is no possible way they can sustain operations at that tip fee, much less make needed investments to keep the plant in sound, environmentally compliant condition. If such a tip fee were truly achievable, MRC likely would have recommended long ago that towns accept that deal and save ourselves the trouble of developing a replacement facility.
The reason it is so important for the towns to stick together and get this decision right is something called a bilateral monopoly. In 1990, PERC was the only game in town. As a result, when it ran into economic trouble, it was in a position to increase tip fees several hundred percent. However, concerned communities banded together in 1991 and formed the MRC to collectively bargain with PERC, effectively setting up a bilateral monopoly that continues to this day.
This relationship was defined and described in a report of the Maine attorney general’s office in 2002 titled “An Analysis of Competition in Collection and Disposal of Solid Waste in Maine.” The report stated, “The MRC was created precisely because the communities in eastern Maine wanted countervailing power in their dealings with PERC. For much of eastern Maine, PERC is essentially the only disposal option. The MRC and PERC have essentially been a bilateral monopoly (e.g. a single buyer and a single seller have no option but to reach agreement).”
Don’t be fooled; the PERC folks are not hard at work to keep municipal business at $84.36 per ton. They are hard at work to kill the MRC/Fiberight project and regain unchecked monopoly status, which would allow them to charge the true tip fee needed to operate the plant and ensure their profit.
We question whether PERC really has any intention of performing the $84.36 per ton contract after 2018 since the contract offer was made in the name of the existing partnership, PERC, LP. The existing PERC, LP partnership has a firm end date of Dec. 31, 2018. The only purpose under law that the partnership can continue after 2018 is to wind up the existing business.
The MRC has a proven record of success in protecting the municipal interest, and we have used this experience and knowledge to develop a post-2018 solution that offers the best odds of continuing the tradition of delivering affordable, stable and environmentally sound MSW disposal for the long term.
We have worked tirelessly to find a new way to continue to leverage the strength of the municipalities, which is by sticking together as a group. Those who vote to stick with the MRC will continue to enjoy the advantage of being a part of a bilateral monopoly with a strong municipal voice.
We certainly hope that all communities, by reconsideration or by upcoming decisions, make the right choice to commit to the MRC/Fiberight plan for 2018 by June 30. Monopoly is a painful game to lose, and decisions in the long-term public interest are no game.
Chip Reeves is the president of the Municipal Review Committee Board of Directors and the public works director in Bar Harbor.