August 20, 2019
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Waste doesn’t stop: How PERC plans to adapt after a regional trash war

After months of debate about the future of trash disposal post-2018 across central and northern Maine, state environmental regulators and town officials in Hampden have cleared the way for construction of a trash-to-energy facility that could cost up to $69 million.

The Municipal Review Committee and Maryland-based Fiberight LLC have secured commitments from towns across the region to send about 107,000 tons of trash annually to the facility, far short of their original 150,000-ton goal, according to a Bangor Daily News analysis. But they argue the plant still can be viable.

With the Fiberight plant moving ahead, the post-2018 solid waste landscape will look much different for the Penobscot Energy Recovery Co., currently the state’s largest waste-to-energy processor, which has accepted trash from the MRC’s 187 member towns for three decades. But only a handful of the MRC’s member towns opted to continue sending their trash to the facility in Orrington after their contracts expire in 2018.

Even with the substantial loss of tonnage, PERC officials maintain their facility can remain viable with a shift toward processing more commercial trash.

“We have absolutely every intention of keeping this running,” said Bob Knudsen, the vice president of USA Energy Group, the majority owner of PERC. “We’re not going to go away just because we don’t quite have enough tonnage.”

Attempts to stave off an exodus of tonnage during its months-long match against MRC and Fiberight leaves PERC with the need to tap new waste sources.

In December 2015, PERC announced a partnership with WasteZero, Casella and Exeter Agri-Energy to offer towns that stuck with the facility options for waste-reduction programs such as pay-as-you-throw and organics diversion in order to help them reduce disposal costs, according to a memo sent to PERC’s municipal customers.

PERC championed this plan as a way to give towns more control over their trash in contrast to Fiberight, whose biogas production depends on organic material in trash. Organics account for almost 43 percent of what Mainers throw away. Towns that send waste to the trash-to-energy plant in Hampden would need Fiberight’s approval before implementing initiatives to divert organics from the waste stream.

But even offering flexibility with waste-reduction programs and eliminating its minimum tonnage requirements and associated penalties didn’t prove successful in helping PERC retain a critical mass of MRC member towns.

Only about 23,200 tons of trash from 23 towns and the Penobscot County Unorganized Territory had been committed to PERC as of Tuesday, according to a BDN analysis. Just 22 towns with about 15,400 tons have not yet committed to a trash processor for after 2018.

PERC had sought to retain 50,000 to 60,000 tons from the 180,000 tons the MRC towns sends annually to Orrington, Knudsen said.

Even with that tonnage, PERC still would fall short of the full amount it aimed to secure, meaning the facility will have to rely on tapping new sources of trash to make up for this shortfall.

PERC argues it can offset its lost tonnage through contracts with commercial waste haulers, but it’s not certain there’s enough commercial trash to go around.

In 2018, PERC expects to scale down the load of trash it processes from more than 300,000 tons to 210,000 — a level at which PERC forecasts it can operate profitably, according to a financial projection it prepared.

Knudsen said commercial trash would make up the majority of this amount.

“We fully expected when we started this that the municipal side would be smaller than the commercial side,” Knudsen said.

He declined to specify the tonnage PERC has so far secured from commercial sources, citing confidentiality agreements, but he said it will be able to secure the tonnage needed to stay viable. In April, PERC announced an agreement with Casella to deliver commercial trash from across the region to its facility to cover capacity not met with tons from towns. But with its supply of municipal trash set to drop from 180,000 to 23,000 tons, PERC would need to expand the tonnage of commercial trash it processes above what it has processed historically.

In 2014, PERC took in 108,488 tons of commercial trash, according to the Maine Department of Environmental Protection. About 50,000 tons came from out-of-state sources, most from Massachusetts.

It’s unlikely PERC will continue to take in out-of-state trash because PERC won’t be able to compete with the cost of trash processors located between Orrington and Boston after the expiration of its lucrative power-purchase agreement with Emera Maine, according to Knudsen. The power-purchase agreement guarantees PERC above-market rates for the electricity it produces.

That means that PERC will need to grab a larger share of the commercial trash supply from within Maine.

But PERC won’t be the only trash processor in the region competing for this business. Fiberight, its chief regional competitor, also is eyeing commercial tonnage in the region, and it would charge about $70 per ton, according to Craig Stuart-Paul, founder and CEO of the trash-to-energy company.

PERC developed its financial projection under the assumption it would charge at least $84.36 per ton of trash delivered to its tipping floor. This could limit its ability to compete with competitors who offer lower tipping fees and hauling costs, especially in southern Maine, which has been the source of a growing amount of trash for PERC since the Maine Energy Recovery Co. incinerator in Biddeford closed in 2013.

“With commercial waste, it follows the money,” Stuart-Paul said. “Waste will always follow whoever has the lower tipping fee.”

What happens if PERC can’t get enough tons of trash from commercial sources?

Before town councilors in Hermon committed their town’s trash after 2018 to PERC, they questioned officials from the company about what would happen if it wasn’t able to secure enough tonnage from public and commercial sources to keep the trash-to-energy operation viable.

The loss of a major trash processor could leave towns such as Hermon with the need to find a new waste solution. In Orrington, where PERC is located, the town estimated in late 2014 that PERC’s closure could result in a net loss of up to $1 million from lost tax revenue and having to pay for trash disposal, which it currently doesn’t pay for as the host community.

The revenue that PERC generates after 2018 is forecast to come from the trash processing side of its business rather than electricity production, according to its financial projection.

Knudsen said that the facility in Orrington can remain operational even in the “extreme circumstances” that the electricity side of the business is no longer viable. In response to questions from the Hermon Town Council, PERC said it had a contingency plan: continue to accept trash from towns but function instead as a mixed-waste materials recovery facility, also known as a “dirty MRF.”

Under this plan, PERC would separate remaining recyclables and other material that isn’t combustible from the waste stream. What is left over is a product that PERC could sell to other trash-to-energy plants, Knudsen said.

The sorting machine in the front of the facility already can separate out large materials that can’t be incinerated, glass and grit, and some metals. New equipment would be needed to remove soft metals such as tin and aluminum, Knudsen said.

Any recyclables recovered during the sorting process could be sold on the marketplace, while trash that can’t be sold as fuel to a trash-to-energy plant or to a recycler would be landfilled at either Juniper Ridge in Old Town or another Casella-owned landfill, such as one in Bethlehem, New Hampshire.

“One thing you have to remember is that a real ugly characteristic of trash is it doesn’t stop,” Knudsen said. “It just accumulates, and it has to go somewhere.”

 



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