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County Purchase of Waste-to-Energy Plant Expected to Face Opposition

Statement from Covanta attached

Last week Fairfax County completed its public sessions regarding the potential purchase of the Covanta Waste-to-Energy plant off Furnace Road in Lorton. The previous week County Executive Anthony Griffin had endorsed the purchase, at a cost of approximately $417.5 million, which would be paid for by bonds secured from tipping fees.

at South Secondary Secondary School. It was hosted by Mount Vernon Supervisor Gerry Hyland and the County’s presentation was led by Charlie Forbes, Assistant Director of the County’s Waste Management Program.

The presentation focused on the many parts of the existing arrangement with Covanta, who owns and operates the plant and has done so since 1990 (Some of the highlights of the presentation have been attached to this article. Detailed information is viewable at the County’s website here and here). Aside from the financial implications, the other aspect of the deal that county executives have emphasized is the ability to control the flow of trash once the current service contract with Covanta expires in 2016. The lease agreement with Covanta runs through 2031. A loophole in the existing contract gave the County the option to explore purchase in 2011, which has brought about the current decision.

The deadline for a decision was originally set for the first week of March but has been extended to the first week of April. The Fairfax County Board of Supervisors is expected to vote on the matter in their February 22nd session.

y Hyland announced he is in favor of the county’s purchase of the facility. Springfield District Supervisor Pat Herrity has declared his opposition citing, among other reasons, the amount the purchase would add to the County's debt obligations. Lee District Supervisor Jeff McKay has been outspoken in criticism of supervisors who are discussing the specifics of the deal while negotiations between the County and Covanta are taking place, which they are.

On a larger scale, the purchase of the plant, which takes in 3,300 tons of trash per day, measures a preference for public ownership versus private ownership, government run versus corporate run, both particularly sensitive issues in the current political environment.           

At the meeting last Thursday in Lorton several residents expressed unease about the deal. Many of the factors that could affect taxpayers will not be known specifically for several years, decades even. Factors such as hauling fees, energy costs and rates of recycling are projected figures, any one of which could affect the viability of the deal from a financial standpoint.

Furthermore, Lorton area residents expressed concern about the purchase. Attendees at last week's meetings pointed out, on and off the record, that Lorton already has a wastewater plant (the Noman M. Cole facility) and a solid waste facility, in addition to having been home to a prison for nearly a century, a burden that no other town in Fairfax County shares. Some feared that if the profitability of the plant should change, the economic turnaround that has taken place in Lorton the last five years might be jeopardized.

In the background to a large degree thus far has been Covanta itself. The company released the following statement to Lorton Patch regarding operations, negotiations and projections of the facility (italics added):

Covanta Energy is a world leader in the Energy-from-Waste business and we would like to continue as the owner/operator of the Covanta Fairfax Energy-from-Waste facility. Our expertise allows us to maximize opportunities and efficiencies at state-of-the-art Energy-from-Waste facilities like Covanta Fairfax.

Covanta values our 22 year public-private partnership with Fairfax County and we have respectfully tried to negotiate a new long term agreement with County staff to continue our successful public-private partnership since 2005. We have made very fair and cost-effective offers to continue the partnership and believe that it provides the lowest cost option for the County as well as stable and predictable disposal costs into the future. Covanta continues to seek good faith discussions toward finalizing a contract that is good for the County and good for Covanta Energy.

We believe some of the assumptions that have been publically disclosed by the County in their analysis of the purchase are not realistic. We also believe that some statements made publicly have been inaccurate. Below are a few examples.

•Projecting energy revenues of $100 million annually to pay debt service is very aggressive. This assumes that energy prices will increase at a rate of 4 to 5 % annually over the next 20 to 30 years. This has never happened and energy experts are not predicting increases of this nature.

•Assuming that the County will always have legal control over the County’s waste (Flow Control) is risky. If flow control laws are dissolved, as they were in the mid 1990s and the County’s optimistic energy revenue projections do not materialize, the County could be required to support the debt service with general funds or increases on citizen waste collection fees.

•The new long term agreement that we have proposed provides the County with the same controls they have had over our 22 year partnership, with even more flexibility. The County will still be responsible for ~90% of the waste brought to the facility. In our new contract proposal, we have even provided the County with the ability to adjust that ~90% of facility capacity to encourage increases in recycling and to protect the County in cases of decreased waste generation.

•Whether owned by Covanta or Fairfax County, the facility will continue to process waste from outside the County. The County currently brings ~200k tons per year of waste from outside the state in an agreement with Washington, DC. Covanta’s latest offer limits the waste under Covanta’s control to only ~10% of the facility capacity.

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