The 407 million dollar question for Hennepin County

photoBY LARA NORKUS-CRAMPTON, RN

Is Hennepin County quietly rebuilding the aging downtown HERC Garbage Incinerator? Would this be the best investment of hundreds of millions of public dollars? Why not invest more in recycling programs? Shouldn’t the public be part of this discussion?
A recent item appeared in the 12/10/13 Hennepin County Board, Public Works, Energy & Environment Committee Agenda. It sounded innocuous enough: 13-0443. Amd 5 to Agmt A03625 with Covanta Hennepin Energy Resource Co., Limited Partnership, related to system replacement projects at HERC, no change in term or NTE
http://board.co.hennepin.mn.us/sirepub/agdocs.aspx?doctype=agenda&itemid=43503
The supporting documents had a link that stopped working after a few days. An online search turned up a pdf file with documents supporting the agenda item.
Current request
Amendment 5 with Covanta Hennepin Energy Resource Co., Limited Partnership, for the period Dec. 17, 2013, through March 2, 2018, with no change in the NTE amount, will add the turbine to the list of system replacement projects. This will permit the county to reimburse Covanta for the repairs made to the turbine this past spring due to the stress corrosion cracking on the turbine blades.
This amendment also allows the county to direct system replacement projects and other improvements at HERC. This includes the right to install signage, structures, appurtenances, improvements, additions, elements and other enhancements to the facility or facility site. In addition, this amendment grants authority to the county administrator to add system replacement projects …
The term “system replacement projects at HERC” caught my eye. NTE turns out to stand for Not to Exceed. In this case the replacement projects were Not to Exceed $407,163,484.00!
Attachment A in this document lists 8 pages of equipment and mechanicals that the county would be potentially responsible to Covanta for reimbursement in any replacement costs. While it is good to see that there is some kind of upper limit, $407 million seems like quite a chunk of change for replacing aging incinerator parts!
Revealing numbers on HERC from a graduate thesis
A graduate student from Muncie, Ind., Kevin Kroll, recently published a thesis that was very enthusiastic about garbage incineration for energy use.
http://cardinalscholar.bsu.edu/bitstream/123456789/197209/1/KrollK_2013-2_BODY.pdf
Most of the paper reads like the standard industry-sponsored propaganda that is readily available. More interestingly, he used HERC as a case study and was able to get more recent detailed information from Hennepin County on the business model of the Burner.
According to the author, “Dr. Andrew Leith, the head of HERC’s Air and Energy Unit … revealed that HERC was originally built by the Blount Development Company, which has since gone bankrupt. After that it was owned and operated by General Electric until 2004 when it was purchased by Hennepin County, which owns the facility today … The electricity the facility produces is sent to Xcel Energy, and is routed to Xcel’s Aldrich substation through a county-owned transformer and transmission line, this power purchase agreement is set to expire in 2018. Excess steam from the combustion process is sent to the downtown energy district owned by NRG, which has a similar power purchase agreement also through 2018.” (Page 25) Hennepin County’s contract with HERC also ends in 2018.
With the capacity increase for the Burner still being requested by the county and the contracts and agreements all expiring in 2018—it seems like now should be the logical time to seriously evaluate our city’s resource/waste management practices and to determine whether or not garbage power is the best choice for the region from an economic, environmental, and public health perspective.
He continues: “The Hennepin Energy Recovery Center was constructed for a total capital cost of 160.5 million dollars in the late ’80s … It was funded primarily by a bond debt of $134.5 million … Because the company that developed the project in the ’80s went bankrupt, Dr. Leith was not sure how the rest of the project was financed, although he said it was not through any federal grants. A similar plant constructed today would cost in the neighborhood of $300 million.”
First question: If the construction of a brand new garbage incinerator would cost $300 million, then why has the county asked for up to $407 million for “replacement projects”?
The existing agreement which locks the Burner into incinerating the current contracted amount of 1,000 tons per day regardless of our recycling or composting rate ends in 2018. Covanta and Hennepin County continue to fight for a permit from the city to burn even more refuse that could otherwise be recycled and composted. But many others are arguing for Zero Waste practices that save energy by conserving and re-using valuable material instead of destroying these resources for their caloric (heat) value and creating toxic emissions and toxic ash in the bargain.
Second question: There may be different points of view on garbage incineration but shouldn’t the public citizenry be part of this conversation before millions more dollars are invested into this aging incinerator rather than on more comprehensive recycling and composting programs?
Longtime HERC promoter Commissioner Peter McLaughlin insisted that Hennepin County was regarding the HERC garbage burner as an “interim measure until we can get recycling rates up” (KFAI Truth to Tell, 6/10/13) while still pushing for the capacity increase—claiming that this would not lock our region into diverting even more recyclables to feed the Burner under the new proposed contract.
Third question: If garbage burning is an interim measure and the HERC contract ends in 2018, then why should there be such a financial commitment to HERC system replacements to the tune of hundreds of millions of dollars?
After McLaughlin made these statements, the press reported that the county was proposing to expand the district heating system from HERC to the North Loop. Kirk reminds us that this Downtown energy district was previously fueled by natural gas (page 26) and was switched to garbage power from HERC beginning in 2008. This plan to expand the district energy system to the North Loop is apparently nothing new and would appear to be another way that Minneapolis could be locked into the long-term use of the Garbage Burner for energy. It would also work to keep the facility in the heart of the city since there is a loss of heat unless the buildings are very close to the source of energy.
Fourth question: Is it responsible to encourage more population density and intensity of uses so close to a significant regional polluter?
Kroll goes on to state HERC’s operating costs for 2010 as $28.97 million, and the revenue coming from tipping fees, garbage power going to Xcel, steam heat going to parts of Downtown and the “open air” Twins Stadium “122 feet away” from the Burner and any other sources of revenue totaling $27.2 million. This meant the County/tax payers had to provide a $1.8 million annual subsidy—which boils down to a subsidy of $4.95 per ton. According to Kroll, “This has been relatively consistent with previous years, with the county providing a subsidy to make up the difference between operating costs and revenues.”
So at minimum the county has been paying almost $2 million a year to subsidize HERC (on top of tipping fees and any other waste management fees charged to the city) since 2004. According to the author, the bonds were paid off in 2012 so years of this outright county subsidy are now ended. (Page 28)
Fifth question: Why did the county decide it was better to pay for the privilege of incinerating recyclables rather than collecting them and selling them at a profit?
Was 2012 seen as the magic date that would start making the county clear profit from incinerating recyclables since the bonds would be paid off? Who benefits and who pays from turning valuable recyclables into air pollution and toxic ash? It is well known that incinerator emissions are dirtier than coal. Is this what we want? Is anyone asking us?
Final question: What have been the opportunity costs and public health costs of diverting investments away from sustainable resource management and toward simply feeding and growing the Burner?
Now that the bonds are paid off—It is time to divest from, not reinvest in, this incinerator and focus on building state of the art recycling and composting programs. There have been many health studies published in this paper pointing out the health dangers of incinerator emissions. Any new 2018 contracts should call for a decrease, not an increase, in burning recyclables with a contract mechanism to eventually phase out garbage burning altogether.
We have four years to prepare for the end of this contract. With a city and county commitment to Zero Waste practices rather than this obsession with incineration, maybe we could even join the rest of the civilized world and get our recycling rate consistently above 20%!

3 Comments:

  1. Generally I don’t read post on blogs, but I wish to say
    that this write-up very compelled me to take a look at and do so!
    Your writing style has been amazed me. Thanks, quite great post.

  2. Nolikey Trashburning

    Good write-up on an important topic, maybe the most important environmental one facing the city. The public was due to comment on the expansion of garbage burning in July of 2009, but that was delayed and delayed once they found out there was an informed constituency mounting opposition against the expansion. Using things like facts, cogent writing, and the like. The $400 million price tag for “repairs” is just plain ole ridiculousness. The public needs to be part of this discussion. We need to be able to evaluate the health risks, environmental risks, and opportunity costs. Just think if we spent $400 on clean energy instead? On expanding recycling projects? We would have the greenest and cleanest City in the nation.

  3. This article misinterprets the recent board action requesting to repair a turbine at HERC, suggesting the county is spending $407 million for this repair project. The $407 million figure is the not to exceed amount of the county’s service agreement with Covanta that spans many years. When a service agreement is amended, it is standard county procedure to reference the not to exceed amount. This repair is expected to cost the county $2 million, which is covered by the service agreement.

    County staff is available to meet with or provide data on HERC to any individuals that request it. To request data, please contact David McNary, assistant director of Hennepin County Environmental Services at David.McNary@hennepin.us or call 612-348-5906.

    Posted by Carl Michaud,
    Director of Hennepin County Environmental Services

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