A rock and a hard place

Some 187 towns and cities throughout much of Maine are caught between the proverbial rock and a hard place as they ponder the future of municipal waste disposal after current contracts with the Penobscot Energy Recovery Center (PERC) expire in 2018. Those communities, members of what is known as the Municipal Review Committee (MRC), must decide whether to renew their relationship with PERC or to move ahead with an MRC board proposal to truck their solid waste to an as-yet-unbuilt $80 million plant in Hampden that would utilize a new – not entirely proven – technology to convert the waste into biogas and, potentially, other products. To get the plant ready to operate in 2018, the towns and cities must make that decision this year.

The MRC was formed in 1991 – three years after the PERC plant, located in Orrington, began operations – as a way to protect municipal interests in the area of waste disposal. Except for Ellsworth, Eastbrook and Deer Isle, all Hancock County communities are among the MRC members who own 23 percent of the PERC plant. MRC communities truck their trash to the PERC plant, which burns the waste to generate electricity that then is sold at higher-than-market rates imposed years ago by federal mandate to encourage alternative sources of power generation. The resulting revenue has enabled PERC to hold down municipal tipping rates and return rebates to the MRC towns. Those rebates now total about $24 million in a reserve fund. The federal mandate goes away in 2018. Tipping fees then will need to rise – though how much remains a matter of contention – to keep the PERC plant viable.

Municipal waste – currently about 170,000 tons a year – represents more than half of the 312,000 tons processed at the PERC plant each year. Whatever the MRC towns decide, the plant will remain open, according to Robert Knudsen, vice president of USA Energy, which is the majority owner of PERC. Even were the waste stream to drop as low as 200,000 tons a year, Knudsen said in a recent interview, the plant’s two units could continue operating efficiently “around the clock.” He took strong issue with “rumors that tipping fees will be $150” under a post-2018 contract. PERC proposes a tipping fee of about $84 a ton, subject to an annual percentage increase based on the performance of the Consumer Price Index (CPI). Knudsen has suggested that towns could hold down tipping fees by amortizing a portion of the reserve fund – projected to be about $30 million by 2018.

Knudsen noted that the PERC plant will be paid for in 2018, and its design life can be prolonged indefinitely as long as it is rigorously maintained.

But MRC officials, including board Chairman Chip Reeves of Bar Harbor and Executive Director Greg Lounder of Ellsworth believe that, as its revenues from the sale of electricity drop sharply, the tipping fees proposed by PERC are far too low for its continued operation to be economically feasible. In a recent letter, the MRC leadership “strongly advises charter municipalities not to sign the contracts in the form circulated by PERC.”

The MRC board appears convinced that a new plant in Hampden, to be built and operated by Maryland-based Fiberight, offers a more attractive long-term future to its member municipalities. Fiberight technology relies on more sophisticated trash sorting at the plant. An anerobic digestion process will convert the soluble portion of the waste stream into biogas and other products that could then be sold, leaving only a minimal amount of ash to be disposed of at a landfill.

Fiberight currently operates a pilot plant in Virginia. Two others, proposed in Iowa, have not yet been built. The Virginia plant operates on a smaller scale than would be the case in Hampden, but MRC officials have voiced confidence in a University of Maine review finding that the scale-up risk involved in processing a larger volume of waste is manageable.

Under its proposal, the MRC would own the land in Hampden and lease it to Fiberight. The MRC also would invest an estimated $5 million from the group-owned reserve to construct an access road, provide water and sewage services, a natural gas line and overhead utilities. But MRC officials say that to move ahead, a commitment this year from most of its 187 communities will be required to guarantee the 150,000 tons of waste necessary to make the Hampden plant cost effective. Once the plant is built and operating, Reeves and Lounder believe that the tipping fees paid by the towns could be significantly lower than those proposed by PERC.

For the Maine communities involved, the entire waste disposal scenario lacks clarity and direction. A split among MRC member communities could leave both the Fiberight and PERC with a less than adequate volume of trash to make the current proposals cost-effective. Hancock County towns – and other MRC member communities – have a tough decision before them with little time to become thoroughly informed. At least one MRC town has sought a third-party legal review of the contract proposals now in hand. The results of that review could be of immense benefit to municipal officials struggling to come to grips with an uncertain future.


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