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HomeMy WebLinkAbout1990-04-11 90-151 ORDERCaroli ]btfOn mr a_u_9g Item tb. 90-lsl Io Ue past fax aoMim the PaoUsrot &� Facility has nctffied area twain and ca:mmitiss that Ue PFrd facility is aperati g ata sua-.tsm:s: lose. The operators have fuxY ar indicated t t this simatim camot crnR.imre, and that they intact to close to the Facility unlass sono interim arra q� ran. D . msia to provide a highac cash flow. Gfva; this Situation, The Panbamt valley. Faliaml Pefoae Disposal uiatrict as wall as o cmmaLLtiea etdch utilise U PFPC facility hired a oomult to anzd s the PI is operation and fL and aJzred f o ne[ptiatima with slat P= Ol tors in an attmp[ to keep t Plant operating. mho C ttee to lhmlywa Pets hes pees ed the �ts of tree mgotiatirnm. The Comfttee has ra®mtled Hat an intim agremmt ba established 'betas Ue eamumad es and Ue FM Plant which would provide an fntfm fee usrasss of $19.00 per ton. skis fax irocease evld not go directly to the PepC Plant; it would ba Placed in an escrow acmim[ h.ld and managed by Baetern Afaim Dw4elcp•t Corporation and would be paid to the P P1 only upon presartatfon and y� of ,o,«...=n;e costs of eperatien. Given U City'S current optiam in the aro of wets disposal, it ie in our iMarast to attempt at least to kaep Un F Plant aperatu . Tim proposed interim agreesatt would cover a nudmmu sdx-mnm period, atd Ude period ce d carretly allow Ue City of Ba as well as o disti t wino mut to rere fully. aoa yin the cpt which aro available to us. The closure of tlx: Fera Facility would lilmly result in a nom rapid of rico avell remaining landfill capacity available to the City at Kittredge Ihffi. While no ore ie !appy with the fLmoial situation of Uue P0C Plant and wim Uc aTra aed need to mTdity long-term contracts, I exuld reccorva d Uat Um Caumcil approve this interim agremem. in order to provide the nexsaery titin to dmmlW a more tlemilal and loty-tams solid :mar disposal. strategy for m City of BanxAr and tie en•++n Pan�smt Valley %gion. eroe[al working sesai®re have bean held o: this been a aro I . I that all the gu you Sup which }ou have which can ba anawowd have been armored. I :,m1U eek that ism mPPm't [his proposal. Maweger'e,re: City Wanarr Associated TnRmmeY:,m Mdar, ONer, W.aR InteLim !rye®a:t Budget Apnoel: Pdittioul Uaee-monM cost for this Fiscal year will be apps tely $60,000 This mrmR will have m orae from operating budgets, if availffile, or fan an alpmpriatim fan the City's CouttngPnoy Fad or m Credit l�erw Fvrl. Legal Approval: City $olfci In re ed pix X Dasa _ First Paadi g nafe 90-151 Auigrodto Co clm Saxl. April ll. 1990 CITY OF -BANGOR (TITLE.) (Orbtrteis1",-m-� An interim-sWaoatt F1ill LtC P2(5l1ECGC. ffiICLgf PAVRlf Cly w I(I6W.@' InheLl91� pf Operation of the POC Facility BpWCUVCaaxaJefB atvofBan . ORDERED, TFWT the City DWis retry mmt it to exxvte m went wlt the Perubuvt Fnenry Recovery Cody W inaum mntvmeti cpemt of t F Facility for tic tw�2 three m six yr t pedirg reryvGiations of a mom lorg-term aliment. Thin appraal is contmg� opm sim r a,-tmna by sofflrlaR other somicipalities to ireure that tle PEpL Facility will mrRvme m opamta for this in = period. t� � 90-151 ORDER IN CITY COUNCIL T1ue April 11, 1990 Passed g/ Authorizing City Manager to Enter Into n Interim Agreement inth the Penobscot 0111 ULERIJ Energy Recovery Company to Insure Interim tbnk " 6tibn'bE'Dpe}S}ion'oE'S "'PERc Facility Aes*M to Comcilman 90-151 /� INTERIM TIPPING PEE AGREEMENT DRAFT This agreement ("Agreement") amenx••) is entered into by and between Maine, a corporation limited Partner) and Penobscot Energy Recovery Company, a Maine limited Partnership ("PERC-); WHEREAS, PERC owns a waste to energy plant in Orrington, Maine for the reductionand disposal into electrical energy, unprocessible residue and ash, of .the municipal: solid waste ('MSW") of approximately ninety (90) Maine communities, plus spot market waste generated both within and without the State of Maine; WHEREAS, approximately one-halfof said ninety,.(90) communities have contracts with PERC and the remainder of said communities have contracts with Tom Sawyer, Inc. ("Sawyer") which, in turn, has a contract with PERC for the processing of the MEW generated by said Sawyer communities; WHEREAS, PERC has requested a new, long termcontractual relationship with the MUNICIPALITY and the other municipalities it serves, including adjusted tipping fees, recycling provisions and flexibility in waste commitments. WHEREAS, the communities have reviewed a report on the conditions of the plant, its operations and the costs of processing MSW from their consultant which report shows that the plant is technically viable; WHEREAS, the communities and Sawyer have been negotiating with PERC under the auspices of the Committee to Analyze PERC ("CAP`) as the negotiating agent for the communities and Sawyer; WHEREAS, the communities and PERC have had the benefit of observing the operations of the facility and the coat of operations attendant thereto; WHEREAS, CAP and PERC believe that they havearrived at a solution to the situation in the near term which will lead to a longer term restructuring of the relationship between PERC and the communities that will be in the beat interest of PERC and the communities which it serves; WHEREAS, PERC, CAP, the MUNICIPALITY:by Its execution of this Agreement and certain ether Schedule A Municipalities (the municipalities and entities listed on Schedule A hereto being Schedule A Municipalities") by execution of similar interim tipping fee agreements are all parties to a certain Escrow Agreement dated March , 1990, and in the form attached hereto as Exhibit A. . NOW, THEREFORE, in consideration Of the foregoing and other municipalities entering into agreements similar to this Agreement, MUNICIPALITY and PERC agree as follows; 1. In addition to the tipping fee provided for in. the Existing Contract, as heretofore and hereafter adjusted under the terms of the Existing Contract, MUNICIPALITY agrees to make payments to the Escrow Agent under the Escrow Agreement for deposit in the escrow account maintained under the Escrow Agreement ('Escrow Account') in the amount of .$19.00 per ton of Acceptable Waste coveredtby this Agreement, including Acceptable Waste that exceeds Guaranteed Plant Capacity for the MUNICIPALITY under the Existing Contract ("Interim Tipping Deposit'). In no event shall any Schedule A Municipality be charged more than $39.00 per ton of.MSW,delivered to the PERC'. plant during the period of. time that this Agreement remainsoperative. Further, during the duration of this Agreement PERC shall not charge less than $39.00- Per ton for MSW generated within the.5tate of Maine and delivered to the PERC plant by anybody (other than a Schedule A Municipality) except for MSW delivered pursuant to existing contracts. operative at April 1, 1990. Any subsequent extensions of such contracts shall. be in writing and at a rate of. not less than $39.00 per ton.' CAP shall be provided On request copies of all contracts which PERC has outstanding for. deliveryof NEW, including any subsequentextensions thereof. CAP ishereby-. authorized by the Municipality to waive any of the provisions of this paragraph.. During the term of -this. Agreement -PERe agrees not tocharge MUNICIPALITY, in addition to the Interim Tipping. Deposit, any increase in cost resulting from any Change in Law as provided in the Existing Contract occurring prior to April 1, 1990, other than those budgeted prior to April. 1, 1990, aspresented in the calculation of the Interim Tipping Fee Deposit. Interim Tipping Deposit will be held and disbursed or returnedas provided in the Escrow Agreement. By its execution hereof, MUNICIPALITY hereby joins in the Escrow Agreement and becomes a Subscribing Municipality thereunder. 2. Effective Date; Term; Billing and Payment Terms. (a) The Interim Tipping Deposit applies with respect to all Acceptable waste delivered to and accepted by PERC •under the. Existing Contract on or after April 1,. 1990, and will continue in. effect to include waste delivered to and accepted by PERC on or before June 30, 1990 or the effective date of any termination pursuant to Section 5 hereof. (b) Unless terminated as provided in Section 5 below,this - Agreement will be automatically renewed as to waste delivered i each of the calendar months after June, 1990, but in no event shall this agreement extend later than September 30, 1990. The parties intend to use their best efforts to negotiate and enter into the long term agreement modifications referred to in paragraph 6 hereof by June 30, 1990. (c) Separate written statements: for interim- .Tipping .Deposits will be issued by PERC Weekly to reflect the interim Tipping Deposits payable in escrow with respect to deliveries of Acceptable Waste accepted at the PERC plant during the preceding week;.. provided, however; that statements. for each oftheweeks.. ending before the date on which this Agreement is executed will be sent by PERC to the MUNICIPALITY promptly following such elate of execution. (d) Payments of Interim Tipping Deposita Will be made to the Escrow Account. Payment by the. MUNICIPALITY of,the-Interim Tipping Deposit to the Escrow Account shall discharge the MUNICIPALITY's obligations hereunder with respect to such interim payment. The MUNICIPALITY shall have no obligation to PERC with respect to disbursements from the Escrow Account. (e) interim Tipping Deposits will be due to be paid in escrw within 30 days after the date of the MUNICIPALITY'S eipt of said statement; provided, however, that payment in sow of amounts shownon statements for weeks ending prior to the date of execution of.. this. Agreement shall be due within the later of 15 days following the date of receipt of such statement or 30 daysafter the end of the week to which such .statement relates. Neither CAP nor the Escrow Agent will be responsible for enforcing payment of the :Interim -Tipping . Deposits by the - MUNICIPALITY. 3. Escrow. All Interim Tipping Deposits shall be made payable to "CAP/PERC Interim Fee Escrow Account" and sent to Eastern Maine Development Corporation, One Cumberland Place, P. O. Box 2579, Bangor, Maine 04401 ("EMDC"), as Escrow Agent, for deposit in the Escrow Account, and MUNICIPALITY shall concurrently advise PERC of such payment. (a) No .deficiency in the Escrow Account will create any liability in the MUNICIPALITY to pay more than the $19.00 per ton Interim Tipping Deposit for each ton of Acceptable Waste covered by this Agreement. (b) Upon thetermination_a8 this Agreement, the MUNICIPALITY will continue tomakeInterim-Tipping Deposits to the Escrow - - Account with respect to Acceptable Waste delivered to and accepted at the PERC plant prior to the effective date of such termination, but will have no such obligationwith respect to. deliveries, if any, occurring after such date.. 4. other Agreements. During the term of this Agreement (a) PERC agrees to (f) accept MSW from MUNICIPALITY in accordance with the operative terms of MUNICIPALITY'S Existing Contract including without limitation the provisions related to calculation of damages for failure to accept waste and in the event the liquidated damages provision of the Existing. Contract. shall be applicable, the tipping fee for purposes of that calculation shall be the -tipping. -fee under,the Existing,. Contract andnot the interim Tipping Deposit with-respect.to Acceptable Waste covered by this Agreement; (if) make no distributions to any partner in PERC; '(iii) make no payments on account of the General Partners' annual management fee; (iv) afford CAP, and its consultants; accountants or other agents, reasonable access to the PERC Facility and to all books and records, of PERC; (v) not prepay any payments owing to a party related to PERC or to a partner in PERC; (vi) not terminate, modify or amend in any way any agreement now in effect between PERC and any partner in PERC to increase payments to the partner or decrease obligations of the partner to PERC; (vii) promptly notify CAP of all Interim Tipping Fee Agreements and new municipal or commercial waste disposal agreements with respect to the PERC plant when and as such contracts are executed and promptly forward copies of the same to CAP .upon request by. CAP. (b) The MUNICIPALITY agrees to make payments to the Escrow Account as outlined above with respect to deliveries of: Acceptable waste covered by this Agreement. (c) PERC covenants that it will: - (1) continue to operate the Facility through the termination date of this Agreement in accordance with the Existing Contract, using its beat efforts to comply with good engineering practice, all applicable environmental permit conditions and standards, and the Power Purchase Agreement. (2)u a best efforts to maximize electricity revenues consistent with the availability of MSW and wood as fuel, and consistent with the performance of scheduled maintenance and scheduled retrofits reasonably required to maintain long-term operations. (3) use best .efforts to operate the Facility at costs. that are within the levels established inthe PERC operating budget for 1990 as approved by its Management Committee unless additional costs are reasonably incurred in order to sustain. long-term operations. (4)a best efforts to operate the Facility at performance $ levels that are at or exceed the levels established in the PERC operating budget for 1990 as approved by its Management Committee unless lower levels are reasonably required in order to sustain long-term operations. 5. Termination. (a) The MUNICIPALITY may terminate this Agreement effective with respect to Acceptable. Waste to be delivered o and after the first day of July, 1990 or of any month thereafter,, by giving written notice of termination. to PERE and. CA1,. at least 20 days_ prior tothe first 'day,of :the month in whichSuchtermination. will first be effective.. (b) PERC may terminate this Agreement (5) if it also terminates all Interim Tipping Fee Agreements with the Schedule A Municipalities effective with respect to Acceptable waste to be delivered on and after the first day of July, 1990 or of any month thereafter, by giving written notice of termination to the MUMICIPALITy at least 20 days prior to the first day of the month in which such termination will first be effective. (c) Except as otherwise provided in paragraphs (a) and (b), this Agreement may be terminated only upon the breach by either party in the performanceof its obligations under either the Existing Contract or this Agreement which remains uncured for more: than. 60 days after. written'. notice of default isgiven to;the .. defaulting party; provided, in the case of non-payment of the Interim Tipping Deposit,when due, or the failure. of PERC to accept Acceptable waste as required under the Existing Contract, theforegoing noticeperiod will be five (5) days. 6. Long Term Agreements. CAP and PERC Intend to enter, or have entered, into negotiations for a modification or replacement of the long term waste disposal agreements with the Schedule A Municipalities, including the Existing Contract with the MUNICIPALITY, addressing the issues set forth in Exhibit B attached hereto. Nothing in this Agreement shall be construed to create any obligation on the MUNICIPALITY or PERC with respect to the negotiation of any long term agreement or modifications. I. Miscellaneous. (a) This Agreement shall not be assignable by either. party for any purpose, nor may rights hereunder be pledged as collateral for, or otherwise. secure, any obligations. of PERC.' (b) All capitalized terms thar.are not otherwise: defined. herein shall have the definitions set forth in the .Existing Contract or the Escrow Agreement unless the context in which such term isused hereinclearly requires a. different interpretation. (c) No amendments to this Agreement may be made except in writing signed by both parties. No waiver of any term or provision of this Agreement shall be effective unless in writing signed by the party granting such waiver. In the event any provision contained in this Agreement shall be w fved: by any party, suchwaiver shall be limited to the particular instance to which the waiver related and shall not be deemed to waive such.:. provision in any other instance. (d) Nothing herein shall be deemed to modify or amend in any way the respective rights -and obligations:cf.the. parties -as, provided in the Existing Contract, all of which rights and obligations are hereby mutually reserved. Without limiting the generality of the foregoing, it is the understanding of the parties that the Existing Contract spall continue in effect during the effective period of this Agreement, and that the tipping fee to be applied in computing soy additional fee due PERC under the Existing Contract because of a shortfall below the Guaranteed Annual Tonnage provided in the Existing Contract is the tipping fee stipulated in the Existing Contract. After the termination of this Agreement, the tipping fees stipulated in the Existing Contract shall again be the sole compensation due from the MONICIPALITY�for disposal of its Acceptable Waste, except to the extent this Agreement or such Existing Contract is modified or replaced. (e) The laws of the State of Maine shall govern the validity, interpretation,: constructionand. performance hereof. (f) All notices herein required or.. permitted to be given or furnished under this Agreement by eitherparty to. the other shall• be in writing, and shall be deemed sufficiently given and served upon the other party if sent by certified or registered mail, return receipt requested, postage prepaid, addressed as follows: If to PERC: PENOBSCOT ENERGY RECOVERY COMPANY Route 15 Orrington, Maine 04474 With a Copy. to: Lynn C. Johnston Ruhr Technologies, Inc. Rod a Copy to: Charles J. Micoleau, Esq. Curtis Thaxter Stevens Broder 6 Micoleau Me Canal Plaza. Portland. Maine 04112 I£ to MUNICIPA ITYi With a Copy to: Thomas M. Brown, Esq.. Eaton, Peabody, Bradford 6 veague. P. O. Box 1210 Bangor, ME. 04401 Each party shall have the right,from time to time to designate a different person and or address by .notice given in conformity with this section. (g) This Agreement shall be binding upon and inure to the benefit of the parties hereto. (h) This Agreement may be executed in more than one counterpart, each of which shall be deemed an original and all of which together shall constitute the same agreement.. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day of , 1990. WITNESS MUNICIPALITY PENOBSCOT ENERGY RECOVERY COMPANY By: PERC MANAGEMENT COMPANY,_ Managing. General Partner By: PING, INC., its Sole General Partner. By: ENERGY NATIONAL, INC., General Partner CJM/9I550/.AG2 3/26/90 - DRAFT 90.151 3/26/90 EXHIBIT B to INTERIM TIPPING FEE AGREEMENT Basis for Renegotiating Existing waste Disposal Agreements PERC seeks to renegotiate existing long term waste disposal agreements (Existing Contract-) with each.of-.the. Schedule -A . municipalities. The Schedule A municipalities and Sawyer have designated CAP as their negotiating agent. PERC proposes a new, long term contractual relationship with the municipalities, including insed tipping fees, recycling provisions and flexibility in waste commitments. CAP has indicated that, if there are to be negotiations on the point of tipping fees, there are other issues in the Existing Contract which should be considered by the parties for possible modifications. As a starting point for the negotiations, CAP and PERC are focusing on the following major points, recognizing that there may be additions, deletions or modifications to these items. For each point, it is -the objective of CAP and PERC to seek that any modifications ta.the Existing.Contract assure, at an. acceptable cost; predictability of: tipping.' fees and the stable; long-term operation of the facility, while also to fully explore possible financial safeguards tothe communities in the event of any future operating difficulties. The goal will be to minimize the risk or need of any future requests'. by PERC to renegotiate the communities' disposal agreements. 1. Fixed Tipping Fees - Provisions for fixed tipping fees with adjustments (described below), with a return to the owners, . to be negotiated, commensurate with any change in their risk position and with the longer term value and utility of the facility. Tipping fees will have two components: a fixed dollar per ton component, .adjusted annually.accotding to a mutually agreed upon index of inflation; and variable component providing for a pass-through of costs- associated with the following: a. Changes in law, with a mutually agreeable.definition of that term and mechanism for its application; b. Changes in thecost of disposal ofspecified quantities of process residue and ash; C. Other items' tobe mutually agreed uponand specifically identified as pass-through coatsthat are outside the range of risks reasonably controllable by or taken by the parties. 2. Option to Pursue Alternatives - In recognition of the uncertainties surrounding certain future costs, such as ash disposal and environmental compliance, provision for the municipalities to be relieved of their obligations under the Agreement in the event of cost escalations in excess of established projections; . subject to con sideration ofcapacity commitments necessary for economical plant operation to serve customer communities -g: to fulfillpower sales agreements, and to satisfy minimum contract commitments:. established by PERC's lending institutions. 3. Financial Assurances - Provisions for PERC to have funds available, without recourse to the municipalities, in the event of future operating shortfalls due to specified circumstances to be negotiated. Such assurances include the followings a. Maintenance and equipment replacement: - Provision for adequate reserves for emergency maintenance and capital replacement costs over the term of the modified contracts. b. Fixed finance costs - If appropriate, exposure to increased interest costs due to the present variable interest rates on the facility debt will be eliminated by conversion to fixed rate bonds at a mutually agreed and advantageous time.. C. Further operational assurances: - Provision for continued tl i t ed 1 without further financial h lits th event of faulty equipment performance, non-compirance with environmental permit conditions, and against other operational or performance risks. 4. Liquidated Damages - Provision for liquidated damages which are commercially reasonable, and secured in a mutually agreeable form. 5. Non-Processible waste - Provision for coordination and management of the disposal of non.processible. waste with the goal of reducing non-processible waste delivered to the facilities. 6. Recycling - Provision for recognition of municipal recycling efforts and for adjustment of the delivery obligations of the Schedule A municipalities to account. for -recycled non- combustible materials. CJM/47550/.AS6 3/26/90