Date: March 11, 2011
Source: News Room
The Lancaster County Solid Waste Management Authority (LCSWMA) has offered to buy nearby Harrisburg, Pennsylvania's troubled incinerator for $45 million in cash and the promise of lower tipping fees, along with an investment in the facility itself. The purchase would allow LCSWMA to forgo, at least for a while, a planned $175 million expansion of its own Waste-to-Energy facility near Bainbridge since it could divert its own waste to Harrisburg instead. It would also help the City of Harrisburg which has been struggling to pay off $288 million owed on the nearly 40-year-old plant. Much of the debt resulted from years of mismanagement and a failed upgrade of the facility after it was shut down by regulators in 2003. Covanta Energy came to the rescue with a $22 million investment to get the plant working and continues to operate it today.
The city guarantees the incinerator debt, but has skipped payments. Dauphin County and bond insurer Assured Guaranty Municipal have made payments on the debt when the city failed to do so. The county and insurer are suing the city to recoup their payments. Meanwhile, Harrisburg is under the state's fiscal oversight program for distressed municipalities, and is said to be considering bankruptcy.
LCSWMA Executive Director James Warner said he would lower tipping fees from $200 per ton to $78 per ton and is budgeting $5 million for capital improvements at the incinerator in its first year of LCSWMA ownership. He told the Intelligencer Journal that a $159 million valuation of the Harrisburg plant was unrealistic since it assumed the ability to escalate tipping fees, already at unsustainable levels, to $309 per ton for Harrisburg and $115 per ton for Dauphin County by 2031. He also said that "flow control" would have to be maintained for Harrisburg and Dauphin County. Nonetheless, LCSWMA is a large integrated operation and could certainly operate Harrisburg far more efficiently than it can as a standalone entity.
Other offers are likely to be proffered. Covanta would be a logical suitor. Wheelabrator might also be interested. ReEnergy Holdings (Latham, NY) which recently bought a scrap tire-to-energy facility in Sterling, CT and before that made a play for the waste processing and disposal assets of SPSA in Virginia might also be interested.
See also: "Harrisburg, PA Brush with Default Centers on Incinerator," (www.wasteinfo.com/news/wbj20100915A.htm).
See also: "Covanta Enters 10-Year Deal to Operate Harrisburg PA WTE Plant," (www.wasteinfo.com/news/wbj20070613J.htm).
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