County Executive's Statement on Buying the Waste-to-Energy Plant
Jan. 27, 2011
By Anthony H. Griffin
Most people may not consider what happens to their garbage after they put it on the curb, but in Fairfax County, it’s used to generate electricity that’s sold. We turn trash from something that’s worthless into something that’s worth $26 million dollars a year.
We now have an opportunity to buy the waste-to-energy plant that processes most of the trash collected in the county. This is a wise investment that won’t cost a cent in tax dollars, reduces costs for the county, and generates money—$26 million today and up to $100 million in the future. This is why I am recommending to the Fairfax County Board of Supervisors that the county purchase the plant which is currently owned and operated by Covanta Energy.
This is a significant investment, and it’s important to ask tough questions about the purchase. The public and elected officials deserve an honest accounting of the costs and benefits. However, some who oppose the purchase have been repeating factually incorrect and misleading information. Here’s what taxpayers should know about why buying the plant is the right decision:
- Not a single cent of tax money will be used to pay for the plant.
- The purchase will not affect the county’s ability to fund schools, new fire and police stations, libraries, or other public facilities.
- It costs more to renew our contract with Covanta than it does to buy the plant—more than $100 million in fact.
- We will get all the money generated from energy sales if we own the plant—up to $100 million per year in the future.
The plant won’t be paid for with a single cent in tax dollars because the county will use revenue bonds to make the purchase. This means that these bonds are guaranteed by revenue collected from the fees that trash collection companies already pay the county. Revenue bonds also are not backed by the full faith and credit of the county. In other words, not a single cent of tax money will finance these bonds, and taxpayers won’t be liable for one penny if we are unable to make our loan payments.
There’s another important fact to understand. The purchase will have no affect on the county’s stellar credit rating since revenue bonds aren’t financed or guaranteed with tax money. For the same reason, these bonds will have no impact on the county’s ability to pay for schools and new public facilities like fire and police stations.
Just as important to know, we believe it will cost $100 million more to renew our contract with Covanta than to buy the plant. Based onour conservative analysis, the cost to buy and operate the plant is $432 million compared to $556 million to renew the contract. Why?
We pay Covanta now to dispose of garbage collected. We pay our bill from fees we charge trash collection companies, as well as our share of money generated from energy sales.
However, Covanta plans to hike its rates and reduce the profits shared with the county if we renew our contract with them. The fee they will charge the county will increase by 30 percent initially, with additional increases to 50 percent in the next few years. Covanta also will cut by 15 percent the money we receive from the energy sold by the plant. The bottom line is that it’s more expensive to renew the contract than buy the plant.
County residents should benefit from the money produced by their own garbage. If the county owns the plant, we will receive 100 percent of the money from energy sales. In today’s market, the energy sold is worth $26 million dollars per year. In the future, the plant is projected to generate up to $100 million per year in energy sales. These revenues currently help pay for important services for residents, such as recycling, hazardous waste disposal, and recycling consumer electronics, batteries and fluorescent bulbs. Today, these services are provided without using tax dollars.
There’s another factor to consider. Fairfax County might become the dumping ground for out-of-state garbage if we don’t buy the plant. Covanta could decide to truck in trash from New York, New Jersey or Pennsylvania. As energy prices continue to rise, it’s understandable that Covanta will want to maximize profits for its shareholders by trucking in more garbage.
Fairfax County residents should control what happens at this plant, which is part of our community. If we aren’t owners, we can’t control what might happen to the plant and our community.
The bottom line is that buying the plant is the best deal for county residents. If the county owns the plant, garbage will still continue to be collected and disposed of as it always has been. Nothing will change—except that the county will have more control over what happens at the plant, pay less for trash disposal, and generate more money for county services.