Support for PERC unfounded

By Chip Reeves

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 respond to the recent editorial titled “Let’s stick with PERC,” which serves to mislead the public severely. The editorial characterizes Fiberight’s tipping fees as “pure speculation, based solely on conceptual cost estimates.” Nothing could be further from the truth.

The dedicated municipal officials on the MRC 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 and Fiberight post-2018 project economics. 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 suggestion that this group suddenly makes recommendations on pure speculation defies the straight face test and common sense.

The editorial appears quite certain in its ability to opine on PERC’s ability to operate after 2018 stating “The bottom line is … PERC operates with a proven technology and has established a lengthy history and record that can be readily examined.” Trouble is, PERC 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 the towns accept that deal and save ourselves all of 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, and as a result, when it ran into economic trouble, they were 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 in 2002 titled “An Analysis of Competition in Collection and Disposal of Solid Waste in Maine.” The report states, “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).”

The MRC always has had a decent bargaining position in dealing with PERC, and the post-2018 era should have been no different. The problem is, there is simply no way to run PERC after 2018 without tip fees well in excess of what they are proposing and what communities are willing and able to bear.

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 which that the partnership can continue under the law after 2018 is to wind up the existing business.

The MRC has a proven record of success in protecting municipal interests since 1991, 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.

The recently released detailed analysis of Fiberight’s economic and technical feasibility further confirms that we are on the right path. The report also makes it clear that the project is viable and profitable even at tonnages below the stated 150,000 ton minimum. We urge communities to review the analysis and make their commitment by June 30 to ensure access to the Fiberight facility. Those that 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 Bar Harbor’s director of Public Works and the MRC board president.

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