Patriot-News, The (Harrisburg, PA) (pg. D01), October 12, 2003

MONEY TO BURN?

By Frank Divonzo

Where there's an incinerator, you'll find a smoke screen.

Why are Dauphin County Commissioners determined to support the Harrisburg incinerator despite its lengthy history of underachievement and noncompliance?

Why would the commissioners dismantle the waste disposal menu available to municipalities and residents thus undermining consumer choice and private market competition in favor of a big-government solution and a public monopoly?

Could this decision rest upon the $1 million fee the county expects to receive for guaranteeing the $125 million in bonds needed to build the incinerator?

That paltry sum is hardly enough to justify the project's risks, which I believe the commissioners have severely underestimated.

Harrisburg's ill-conceived incinerator has contributed to a dramatic rise in city residents' trash rates and property taxes and soaring budget deficits and indebtedness. In order to stave off defaults on the incinerator bonds and to provide cash to plug the deficits, the debt has been refinanced multiple times resulting in the overall obligation increasing from $41 million in 1993 to $104 million in 2003.

The incinerator's financial viability weighs heavily on revenues from waste tipping fees and steam and electricity sales.

To maximize revenues and optimize burning efficiency, incinerators must process as much waste as possible. The new Harrisburg incinerator could burn around 263,000 tons per year. Dauphin County generates about 270,000 tons of waste per year, 70,000 tons of which is recycled and 20,000 tons of which is obligated to the York incinerator.

The commissioners aim to increase the county's recycling rate to 35 percent thereby reducing the amount available to burn by another 20,000 tons, resulting in a heightened reliance on imported waste or a reduction in available waste and losses in tipping fee, steam and electric revenues.

Where else will the waste come from?

The authority's existing waste disposal agreements with Cumberland and Perry counties do not obligate any minimum amount of waste to be sent to the incinerator. The authority has offered 118,000 tons of capacity to Waste Management at $38 per ton, well below cost.

Oddly, this would allow Waste Management to import waste to the incinerator for less than the $50 per ton rate the authority has offered to Dauphin County.

Furthermore, the authority's steam contract does not obligate NRG Harrisburg to purchase any steam if it can meet customer demand through its existing sources. The authority's electricity contract with PPL Corp. expires in 2010, after which the authority will have to enter a market already glutted with lower-priced alternatives.

The Dauphin County Commissioners recently approved a long-term waste agreement with the authority and its guarantee of the incinerator bonds will prove to be at odds, if the incinerator continues its losing ways.

The commissioners will be compelled to choose between allowing the bonds to default or agreeing to increase tipping fees. My guess is that we will be charged more so that investors are protected.

The commissioners claim opening the incinerator would eliminate the need for additional landfills in the county. However, upper Dauphin County officials and residents have noted that the Dauphin Meadows landfill might be reopened.

Ironically, if flow control to the incinerator is implemented, the Meadows' neighbors would be compelled to send their waste south to Harrisburg, while the Meadows would receive waste from outside the county. In addition, the Meadows also could receive the incinerator's bypass waste and ash.

However, the county's waste plan is being challenged. Future legal challenges, particularly to flow control, are likely. These challenges will cost county residents attorney fees and consultant fees.

If the county loses these legal battles and private competition is restored, the numerous and less expensive waste disposal facilities already approved to accept county waste could undermine the incinerator's supply, exacerbate the facility's monetary losses and heighten the risk of bond default. The county would be thrown into a financial tumult far greater than Forum Place could ever achieve.

There is too much uncertainty associated with the Harrisburg incinerator plan.

The consequences could be devastating and far-reaching. It is time the commissioners elevate the broader public interest above the interests of a few individuals who stand to gain from the project.

FRANK DIVONZO of Harrisburg is an anti-incinerator activist.

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