Why an idle incinerator could cost the city a pretty penny
Published: October 27, 2010
As we were going to press Tuesday, there was still no word regarding the fate of Detroit's waste-to-energy incinerator. As we reported recently, the facility shut down after its owners were unable to agree on a steam contract with Detroit Thermal, which, in turn, supplies steam to a large chunk of central Detroit. Meanwhile, the parent company of Detroit Thermal, Thermal Ventures II, and a potential partner, Atlas Holdings, have still not worked out a deal to buy the place.
Opponents of the facility see this as an opportunity for the city to seriously reconsider how it disposes of municipal waste. A coalition made up of what appears to be every environmental group in the region would like to see the city seek bids from operators willing to manage a comprehensive, high-impact recycling program as well as landfills.
The enviros think that such a combination would be both more cost-effective and environmentally friendly than the incinerator. One catch is that the facility's owners — whoever they might be — would be able to force the city to continue burning, should the facility reopen and be able to at least match the price or recycling or landfilling.
But there is another issue: For years, the city has been paying into an escrow fund managed by Detroit Edison. The purpose of the escrow is to help ensure that Edison would continue to have access to the electricity generated by the incinerator until 2024.
At this point, there's about $26 million in that fund. The city has been attempting to get the Michigan Public Services Commission to authorize the early release of that money, which otherwise would be paid back over a period of eight years beginning in 2016, according to a report.
The catch here is that, according to a memo sent to City Council from Albert Fields, a group director in Mayor Dave Bing's administration, the MPSC has informed the city that continued operation of the facility is a prerequisite for release of the escrow money. So, if the facility were to close permanently — even though such a closure might be beyond the city's control — the city could lose a huge chunk of money it is counting on.
It's just another way in which the whole deal with the incinerator stinks.
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