2012-06-04 Work Session NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
WORK SESSION,JUNE 4,2012 PAGE 406
ASSEMBLY
The New Hanover Count-ti-Board of Commissioners met for a Work Session on Mondav, June 4, 2012, at
4:00 p.m. in the Assembly Room of the New Hanover County Courthouse, 24 North Third Street, Wilmington,NC.
Members present: Chairman Ted Davis, Jr.: Commissioner Jason R. Thompson; and Commissioner
Richard G. Catlin. Vice-Chairman Jonathan Barfield, Jr. arrived at 4:07 p.m.: Commissioner Brian M. Berger was
absent.
Staff present: County Attorney Wanda M. Copley; Assistant County Manager Chris Coudriet Deputy
Clerk to the Board Kymberleigh G. Crowell;Enviromnental Management Director Jolm Hubbard: Assistant County
Manager Avril Pinder; Senior Budget Analyst Beth Schrader: Clerk to the Board Sheila L. Schult; and County
Manager Bruce T. Shell.
Others present were: Solid Waste Management Consultant Bob Brickner with Greshnnan, Brickner &
Bratton, Inc., (GBB): and Brian Bahor, Vice President of Sustainability with Covanta Energy.
Chairman Davis called the meeting to order and reported that the purpose of the meeting is to discuss the
renovation and long-term operation of the New Hanover County Sustainable Energy Facility.
DISCUSSION OF RENOVATION AND LONG-TERM OPERATION OF THE NEW HANOVER COUNTY
SUSTAINABLE ENERGY FACILITY
County Manager Bruce Shell provided a brief overview of the steps New Hanover County has taken in
order to move forward in the decision process with the renovation and long-term operation of the New Hanover
County Sustainable Energy Facility.
Assistant County Manager Chris Coudriet provided the following information:
What is Driving Imperative to Act Now?
• Rapidly deteriorating asset:Retrofit costs poised to soar
• Preseive now($27.1 MM)or replace later($250-$260 MM)
Benefits of SEF Contract with Covanta
• Proposed SEF Contract ensures:
• Facility properly maintained throughout term of contract/No deferral of major maintenance
• Unexpected capital improvements paid by Covanta (except due to uncontrollable
circumstances such as changes in law)
• Long-term price certainty—price only escalates in accordance with CPI
• No commodity risk(e.g. diesel firel price)
• Guarantees of Performance
• Electricity production,throughput, emissions and ash quantity/quality guarantees
• Security for Performance
• Incentives for maximum production of electricity and Renewable Energy Credits (RECs) which
will benefit New Hanover County
• Typical emission levels significantly below Title V permit
Covanta estimates the capital costs to preserve the facility at approximately $27.1 MM. If delayed another
year, based on information provided by Solid Waste Management Consultant Bob Brickner with Greshnnan,
Brickner&Bratton, Inc., (GBB), capital costs will increase to approximately $49.6 MM as the repair/retrofit option
risks becoming replace/demolish and/or re-permitting due to firrther degradation of the facility. In response to
questions, Mr. Coudriet confirmed that if negotiations did not provide acceptable terms, there is the option to start
negotiations with Wheelabrator or start over from scratch with requesting new proposals from the solid waste
industi .
Discussion was held on incentives for maximum production of electricity and Renewable Energy Credits
(RECs). Requests were made for bids to include proposal of a level under which the County would receive 100%of
all the revenues generated from the electricity and any RECs if/when at such time ive are able to actually have
waste-to-energy qualified as allowable under REC. It was firrther explained that the State of NC has a renewable
energy portfolio that is basically an incentive program to encourage movement from fossil firels to renewable
sources. If qualified, there is the potential for rivo revenue sources: 1) selling the electricity to a buyer and 2)at the
same time for every kilowatt hour of energy produced ive receive a REC with a serial number and name which can
then be sold. This plan will be dependent on contract type chosen for negotiations as there is an option to sell the
electricity and REC combined or as separate items. Companies such as Progress Energy may want to buy both and
use it as part of their offset to meet requirement for certain percentage of energy they are required to produce. In
response to questions, staff stated if the facility generates electricity and uses it the County does not receive a REC
for it;it has to be sold to another company. It was reported that Senator Goolsby's Bill was on the N.C. Senate floor
for consideration to amend N.C.G.S. 62-133.8 to add to the definition of"renewable energy resources" waste-to-
energy facilities utilizing municipal waste. It was noted however,that it may be hard for the Bill to be passed during
the 2012 Short Session of the General Assembly.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
WORK SESSION,JUNE 4,2012 PAGE 407
In response to questions about the County's Title V permit, Covanta Vice President of Sustainability Brian
Bahor stated that the facility will run 24/7 and in regard to the permit, the title has to be renewed even five years.
The permit expires in approximately one year. This is a pace setting issue as it is required that permit renewal
applications be filed nine months before the expiration date to allow regulators review time. Mr. Bahor went on to
explain how Covanta operates facilities to maximize the reductions so it has minimum emissions. Request was
made for Mr. Bahor and staff to provide a comparison on what the County's permitted values is to what the
County's projected emissions are and what options are available to reduce emissions even ftirther as well as what the
impact is on our SO2 monitor.
Assistant County Manager Coudriet provided an overview of alternative options created by staff
recognizing the goal is to preserve landfill space:
Overview of Alternative Options
SUSTAINABLE ENERGY FACILITY+
LANDFILL TRANSFER STATION ONLY
Job Creation • 50-60 construction jobs(15 mos.) • —25 construction jobs(6-8 months)
• 46 local Rill time skilled facility • Net loss of at least 5 to 8 local Rill time
operators,managers,etc. Landfill jobs
Disposal • Local asset 100%under NHC control • Subject to market changes and potential
Independence • Maintains optionality changes in law
• Eliminates optionality—locked into
Landfill as on1v viable alternative
Price Stability • Fixed 20 year contract with CPI • $1 to$2 increase in tip fee based on$1/
escalator gallon increase diesel plus CPI escalator
on non-ftiel portion
NHC Negative • 2.0 million tons will be landfilled over • None(assuming ability to transfer out at
Landfill Space 20 years sustainable pricing over first 20 years)
Impact • After 20 years, 100,000 tons/year will • Potentially, 300,000+tons/year would
be landfilled (unless facility expanded) be landfilled thereafter
NHC • Local renewable energy available 24/7 • N/A
Renewable
Energy
Generation
Fuel • Reduced dependence on fossil ftiels • Diesel ftiel for long haul tracking
Dependency (270,000 gallons/year)
Compatibility • Ferrous metals recovery • Competes with recycling
with Recycling • Complements recycling program
Municipal Solid • One ton processed in 1 hour • Anaerobic process is not controlled—
Waste • Converts potential energy to useable and last for 100 to 150 years
Disposition energy • Generates landfill gas(LFG)with over
• Generates inert residue 170 known emissions
Management of • SEF processes 100%of flue gas with • No comparable air pollution control
Emissions modern air pollution control equipment system
• Incremental emissions from tracking
Testing and • Dedicated continuous monitors,manual • No comparable monitoring or reporting
reporting testing and reporting
Greenhouse • SEF provides reduction of GHG • Landfills are a major source of methane
Gas Emissions emissions even with LFGTE project(only—50%
• Avoids methane from landfills and collected)
fossil CO2 from power generation • Incremental tracking CO2
(4 million pounds/year of CO2E)
"Corporate" • NHC addresses its own MSW problem • How long will communities be willing
Responsibility to accept others waste?
Discussion was held about options for handling garbage with a facility in operation. The facility does not
have enough capacity to handle all the garbage: current capacity is 150,000 tons per year. New Hanover County
currently generates approximately 200,000—250,000 tons per year. If the southern expansion of the landfill is not
permitted and the current landfill is no longer usable, there will be a number of tons that would need to be disposed
of somewhere other than the waste-to-energy facility. It is currently unknown what actual costs would be to haul the
trash overage, including unused ash created by the facility, to another landfill. It is estimated that in 20 years we
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
WORK SESSION,JUNE 4,2012 PAGE 408
will generate approximately 300,000 tons a year of municipal solid waste. Based on that figured 150,000 tons could
be burned and 150,000 tons would have to be disposed of in some other form whether by transferring out, landfill
expansion or using a better tried and true technology in 20 years. It was noted that landfills such as Sampson
County will eventually reach maximum capacity and an option the Board may want to consider is having a transfer
station as well as a SEF. The costs presented do not include that option rather, it provides either/or options. Solid
Waste Consultant Brickner stated if decision was made to build a transfer station to use along with the SEF and
landfill,it could be built on a smaller scale than proposed two years ago due to less trash to haul out. Approximately
$6 million was proposed two years ago for transfer station constnrction. Cost today may be a third of that for a
smaller unit.
In response to questions about what the percentage of trash reduction would be in using the SEF, Senior
Budget Analyst Beth Schrader stated that in the last year of 20 years there will be about 100,000 tons going back to
landfill. The current facility is undersized for what the projected needs will be for a full 20 year time period. There
will be an estimated 2 million tons of waste going to the landfill over entire 20 years. As the goal is to save landfill
space and not get the County locked into a situation with no options when outside landfills reach maximum capacity,
staff was asked to provide costs for incinerator and small transfer station.
Solid Waste Consultant Brickner further stated that a long-term investment option that needs to be
considered is how to improve the County's recycling efforts. Out of 200,000 tons per year, only about 12,000 tons
is being recycled and means that the County is at about a 5% recycle level. The recyclables collection system is
very inefficient and expensive for amount brought in per year. Geographically in the U.S.when there is a waste-to-
energy facility involved there is a higher rate of recycling. In response to questions, Mr. Coudriet reported that
today's presentation does not include a recycling option and a revenue sharing agreement would be with companies
that work in recycling not Covanta. It would be the Board's decision to set policy on how to increase recycling
efforts: whether it makes sense to continue what we're currently doing, engaging in a program on our own, or
entering into a public-private partnership.
Discussion then moved into the tip fee comparison with staff explaining the impacts to residents and
businesses:
Tip Fee Comparison
SUSTAINABLE ENERGY FACILITY
NET COST +LANDFILL TRANSFER STATION ONLY
SEF $62.50-$65 • N/A
Transfer Station N/A • $67 -$72 **
Landfill/Admin $21 —$25.50 • $9.50—$12.50
Recycling/Indirect $2.50 • $2.50
Cost/Fund Balance
Estimated Total Tip Fee $86-$93/ton • $79-$87/ton
**For every$1/gal increase in diesel,tip fee will increase$1 -$2/ton
Annual SEF Impact to Residents
• Total cost to NHC residents at each tip rate remains lower than Duplin and Pender
• Incremental increase per household/month based on disposal cost ranges from $1.82 (at $86/ton) to
$2.30(at$93/ton)
Annual SEF Impact to Businesses
• NHC small retail business incremental increase based on disposal fee would range from$13.15/month
at$86 to$16.58/month at$93
• Typical NHC fast food—level business incremental increase ranges from$91.26-$114.92/month
Alternative Option(s)Not Risk-Free
• Permitting Southern Property is not guaranteed
• Lower-cost today#low cost in long-term
• Minimal negotiating power in future
• Subject to commodity price risk(diesel)
• Subject to political risk
• Landfill closure&post-closure obligations remain(currently $8.1 MM)
New Hanover County Waste Direction
• Direct placement via existing franchises
• In unlikely event waste direction is successfully challenged:
• Explore other economic, contractual,or legislative options
• If want 100%assurance of waste direction,NHC needs to assume collection role
NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 32
WORK SESSION,JUNE 4,2012 PAGE 409
• NHC operation or contract with 3 d Party
• 15 month notification or buy out option for existing franchisees
Covanta Vice President of Sustainability Brian Bahor reported on the comparison of stack SO2 conditions,
evaluation of stack emissions and the company's sustainability report:
Comparison of Stack SO2 Conditions
• The Title V permit currently contains the USEPA standard which is the Federal minimum performance
standard of 75%emission reduction or 31 parts per million(ppm). While Covanta guarantee is 23 ppm
its facilities are regularly operated at less than 23 ppm. It doesn't operate at limit rather well below
limit so goal of 100%compliance during all operating hours can be achieved.
Evaluation of Stack Emissions
• When Covanta facilities are on line,they achieve a nominal compliance rate of 99.9%,with emissions
well below legal limits.
Sustainability Report
• Covanta Energy's first Corporate Sustainability Report titled, "Energy-from-Waste — A Progress
Report," was among the finalists in the Ceres — Association of Chartered Certified Accountants
(ACCA)North American Sustainability Reporting Awards.
• Covanta has been named among the top eleven U.S. companies in the Maplecroft Climate Innovation
Indexes (CIIs), the single most exhaustive study of how U.S. — based multinational corporations
manage and adapt to climate change,with a special focus on innovation. This year, 360 of the largest
U.S. companies were rated on CIIs, and Covanta was ranked number one for energy, alternate sources
and eleventh overall.
ADJOURNMENT
There being no further business, Chairman Davis thanked everyone and adjourned the meeting at 5:30 p.m.
Respectfully submitted,
Kymberleigh G. Crowell
Deputy Clerk to the Board
Please note that the above minutes are not a verbatim record of the Neir Hanover County Board of Commissiorers meeting.
.4 copy of the Poll-etPoint presentation is available for rMeir in the Neir Hanover Count'llcnrager''s office.