ORRINGTON, Maine — Even trash takes a hit when the economy sours.
When people have a reduction in income, they make fewer purchases, which results in less garbage. Fewer trash bags to carry out to the curbside or to take to the landfill might be a blessing for most homeowners, but for the 187 Maine municipalities that have long-term contracts with the Penobscot Energy Recovery Company in Orrington, less trash could mean additional costs.
Click here for a complete list of towns that contribute to PERC.
“The charter communities as a group are running about 6.5 percent behind the pace that they had set [in their contracts],” Greg Lounder, executive director of the Municipal Review Committee Inc., said recently. The committee represents communities dealing with PERC from Mars Hill to Machias, Boothbay to Winthrop and points in between.
“It’s clearly linked to the general economic downturn we’ve experienced across the state and the nation,” Lounder said of the decline. “There’s a link between the general economic activity and the amount of municipal solid waste that ultimately requires disposal.”
Regardless of the economy, those communities whose waste deliveries fall below their contracted annual tonnage could be at risk of financial penalties at year’s end, according to Lounder. Any penalty will be determined by a “complex” formula that takes into consideration the aggregate tonnage of the group and each commu-nity’s contracted tonnage, he explained.
“It’s looking like it’s going to be real close,” Dover-Foxcroft Town Manager Jack Clukey said on Sept. 17 about his town’s regional facility, which includes Sangerville, Atkinson, Bowerbank, Sebec and Barnard. Dover-Foxcroft alone pays about $118,000 a year to PERC, Clukey said.
Bangor delivers about 32,000 tons of waste a year to PERC, a third of which is residential and is paid through taxes. The remainder is commercial waste paid for by the commercial firms. Bangor’s total tonnage is down about 5.6 percent for the first six months of this year compared to the same time last year, according to Bob Farrar, assistant city manager. He said recently he expected less of a decline once the solid waste tonnage for the summer months is reported. He guessed that by year’s end, the city could be down in tonnage by a little less than 5 percent.
Other communities aren’t worried about the penalties. “We are below last year’s tonnage, but our commitment [in the contract] was conservative,” Mars Hill Town Manager Ray Mersereau said on Sept. 17. “We’re in good shape.” He said he was actually glad the tonnage has decreased in his hometown because it had been in-creasing at a rapid rate. “I couldn’t believe the recession would show up in this manner,” he said.
James Smith, Brewer’s assistant city manager, said his community will not be affected since the city reviews and adjusts the tonnage when necessary.
The town of Guilford, a member of the Mid Maine Solid Waste Association in Dexter, also expects to escape the penalties.
“It seems a bit ironic at first blush that not producing enough trash would be detrimental,” Guilford Town Manager Tom Goulette said earlier this month. The lack of tonnage is a reflection of an ailing economy; trash is a by-product of consumption, he said.
To date, the decline among the member communities has been absorbed on a short-term basis by the acceptance of solid waste from outside the service area, Lounder said. He said the PERC operator had the foresight to make arrangements to bring in solid waste from other parts of the state and out of state to cover the shortage.
Peter Prata, PERC plant manager, said earlier this month that accepting additional solid waste has helped PERC have a good year. Last year, PERC received 314,000 tons, and this year he expects the same amount. Prata said he does not believe penalties will be incurred by member towns this year.
Each of the charter communities signed contracts running through 2018 obligating them to meet a minimum guaranteed annual tonnage each year, according to Lounder. If the charter communities as a group deliver less than the guaranteed annual tonnage, then the individual communities that did not meet their contract amounts would see penalties at the end of 2009, he said.
The combined tonnage the towns ship to PERC is between 192,000 and 194,000 tons a year.
The guaranteed annual tonnage commitments initially allowed PERC to get favorable financing and supported a favorable restructuring of the waste disposal agreement for the charter municipalities in 1998, Lounder said. The commitments also have allowed PERC to operate economically and at capacity, which has led to a sta-ble net of $45 and $54 per ton disposal cost since 1998.
The original 86 members receive the $45-per-ton cost, and the 46 members that joined later pay $54 a ton. Some of those members represent several towns. The actual tipping fee is $72 a ton, but through profit sharing, the communities receive a quarterly rebate check to get the reduced per-ton cost.
Lounder said no penalties have been imposed under the system since 1991 because the contracts allow the communities to pool their tonnage. As long as they deliver in excess of the guaranteed annual aggregate tonnage, the pooling provision helps those communities that might have had a shift in the community, such as a mill closing, he said. As long as the member communities met the total guaranteed tonnage, then no one was penalized, he said.
Another element that worked in favor of the communities was the flexibility allowed for guaranteed annual tonnage trading, according to Lounder. “We open up a trading period annually to allow individual charter communities to make adjustments to the contract guarantee consistent to community trends,” he said. That has al-lowed adjustments to be made to help towns avoid situations like the committee is facing in 2009.
The trouble this year, Lounder said, is that the economic downturn dropped the tonnage downward more quickly than has been the case in prior years.