County raises garbage rates for unincorporated areas
by Jonathan Partridge | Patterson Irrigator
Jul 05, 2012 | 1922 views | 0 0 comments | 4 4 recommendations | email to a friend | print
The Covanta Waste-to-Energy facility at the Fink Road Landfill in Crows Landing incinerates much of the garbage that comes into the landfill from Stanislaus County. Garbage rates are slated to rise as a result of higher service fees to use the facility, following a vote by the county board of supervisors last week.--Photo by Lisa James/Patterson Irrigator
The Covanta Waste-to-Energy facility at the Fink Road Landfill in Crows Landing incinerates much of the garbage that comes into the landfill from Stanislaus County. Garbage rates are slated to rise as a result of higher service fees to use the facility, following a vote by the county board of supervisors last week.--Photo by Lisa James/Patterson Irrigator
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A close-up look at Covanta
Vaporized water is pumped out as steam from the cooling towers at the Covanta plant Friday, June 29.--Photo by Lisa James/Patterson Irrigator
view slideshow (5 images)
Increased use fees for an incinerator at the Fink Road Landfill prompted supervisors to unanimously raise garbage rates throughout the county’s unincorporated areas June 26, including by 10 percent in the unincorporated West Side.

Those rates went into effect Sunday, July 1.

Supervisors also approved a separate 15-year leasing agreement with Covanta Energy, allowing it to continue burning garbage and producing electricity in its facility at Crows Landing’s Fink Road Landfill.

The agreement includes higher service fees for Covanta that supervisors approved last month and allows the company to continue incinerating garbage for a joint powers authority formed by Stanislaus County and the city of Modesto, as Covanta has done since 1989.

Stan Risen, an assistant executive officer for the county, worked on negotiating the deal with Covanta.

“It’s taken us several years to negotiate the legal documents that are before you today,” Risen said June 26, “but we are confident that these agreements will go a long ways toward removing risks and providing stable and predictable tipping fees for years to come while minimizing the use of landfill space.”

The “tipping fee” is the price Covanta charges to process waste.

The supervisors’ approval of the new garbage rates allows Bertolotti Disposal to charge $23.62 per month instead of $21.45 per month for a 90-gallon cart, the most common service. Bertolotti handles garbage pickup throughout the unincorporated parts of the West Side.

The company’s two-yard commercial bin service will rise from $78.15 to $85.83 per month, and its 20-by-29-yard drop box hauling charge will jump from $195.83 to $204.24 each month.

Increases in residential customers’ monthly garbage bills throughout the county’s unincorporated areas will range from $1.66 to $2.17 as a result of the supervisors’ decision.

On May 22, supervisors agreed to raise the service fee charged for dropping off waste from $28 to $39 per ton at the 26-year-old Covanta Waste-to-Energy Center, which burns 250,000 pounds of solid waste on average each year to create electricity.

Under the agreement with the waste-to-energy facility that supervisors approved June 26, the city of Modesto and Stanislaus County guarantee to send 243,300 tons to Covanta each year. If they fail to provide their contracted amount of waste, they must pay a 15 percent commission on the service fees paid by third-party waste providers.

The service fee for hauling waste would drop from $39 per ton to $2 per ton for the first 10,000 tons above the 243,000-ton guaranteed minimum. The fee would be $4 per ton for anything above 253,000 tons.

Covanta will continue to pay $198,000 a year to lease the land from the county.

The county and city of Modesto generally will no longer receive any of the electricity revenue and revenue from other services conducted at the facility. In the past, they kept 90 percent of that revenue, as well as all disposal fees, half of metal recycling revenue and 30 percent of revenue from materials that require special handling, such as guns, drugs and documents.

Though those contracting communities will still collect a disposal fee to pay off Covanta's service fee, they will only share revenues with Covanta if they provide more than than their guaranteed tonnage to the Waste-to-Energy facility. If that happens in a given year, Covanta will retain 60 percent of the revenue from electricity, recycling and processing of special materials, while the county and Modesto will receive 40 percent.

The city and county will bear only 25 percent of the financial risk associated with unforeseen costs under the new agreement; under the previous contract, they bore all risks.

Covanta, which will accept the remaining 75 percent risk, will also pay 75 percent of the costs associated with a statewide cap-and-trade program approved in October that seeks to reduce emissions from businesses.

Electrical utilities and large industrial facilities must comply with the program starting in 2013, while distributors of transportation, natural gas and other fuels will need to do so starting in 2015.

The county expects that the waste-to-energy facility will have to pay $10 to $40 per ton for emission credits for the 80,000 tons of carbon dioxide and nitrogen oxides it produces annually, totaling $800,000 to $3.2 million per year.

A trust fund shared by the city of Modesto and the county lost $3.5 million in fiscal year 2010-11 under its previous agreement after a contract between Covanta and Pacific Gas & Electric Co. expired in 2010, forcing Covanta to sell electricity on the open market. Covanta officials have said they hadn’t sought a new contract with PG&E because it would be hard to get favorable terms without a long-term agreement with Modesto and the county.

The city and county have spent about $8.9 million in reserves from their trust fund during the past two years, leaving a cash balance of $10.6 million as of June 1.

The agreement contains a provision that allows Covanta to opt out in 2016, but the company would have to give two years’ notice to the city and county before doing so. In that case, the county could either take over the waste-to-energy plant or require Covanta to remove it.

However, Jill Stueck, Covanta’s vice president of corporate communications, said by phone last week that such a situation was highly unlikely.

“We have had a really outstanding partnership with the city (of Modesto) and the county for many years,” she said. “Our plan is to continue our partnership.”

Covanta’s fee hike will also lead to higher costs for Bertolotti Disposal to provide garbage services within the city of Patterson. However, Patterson’s public works director, Mike Willett, said those fees might not be passed on to ratepayers.

He noted that the City Council approved a five-year garbage rate structure in 2009 and would look at new rates within six months. The city staff will evaluate the consequences of the higher waste drop-off fees and recommend to the City Council whether to raise rates.

Patterson residents will pay $25.93 per month for a standard tote this fiscal year, which kicked off Sunday, and are slated to pay $28.01 in fiscal year 2013-14.

• Contact Jonathan Partridge at 892-6187, ext. 26 or jonathan@pattersonirrigator.com.

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