By Zack Anchors

Staff Writer

    With revenues from recycling and the sale of
electricity exceeding recent expectations and a new debt refinancing
completed that will pay off standing debt in nine years, ecomaine
(formerly known as Regional Waste Systems) appears well positioned to
minimize costs for the 27 communities whose solid waste and recyclable
materials it handles. By pooling their resources together, the member
communities of ecomaine have established a waste-to-energy plant, the
largest recycling program in the state, and a state-of-the-art
landfill/ashfill–all in a manner intended to be both ecologically sound
and cost-effective.

    But the benefits of waste management regionalization
that ecomaine was founded thirty years ago to foster have not always
been as apparent.  Just a few years ago RWS was facing a more than
two million dollar budget shortfall and some member communities were
unhappy with rising costs with the non-profit corporation and concerned
the organization’s leaders were not doing all they could do to harness
the partnership’s full potential. Revenues from the waste-to-energy
plant were disappointing, the City of Westbrook had pulled out, and the
lower tipping fees (the amount based on tonnage charged for waste
drop-off) of some private waste management operations were beginning to
look more attractive.

    “At that time the whole operation wasn’t as
competitive as it could have been,” said Ron Owens, Scarborough town
manager and ecomaine executive committee member. In 2003, the
Scarborough Town Council even approved a town order requesting an
independent audit of RWS’s finances, which led to an independent review
an eventual restructuring of the organization over the next few years.
But the challenges that RWS faced at that time and that it continues to
negotiate, are in part a product of its history.

    Thirty-six years ago, spurred by a series of federal
and state waste management policy changes, the municipalities of
Portland, South Portland, Cape Elizabeth and Scarborough came together
to form RWS, a cooperative designed to fulfill the state’s requirement
that municipalities deal with the waste generated within their
boundaries.

    Over the next decade RWS managed a landfill and
accumulated member communities from Ogunquit to Pownal, all accepting
shared responsibility for the costs of operations and formally
incorporating in 1985. By the time Gorham joined on in 1991 RWS had 21
corporate members and, with the encouragement of new federal energy
policies, had built their European-designed, state-of-the-art
waste-to-energy incinerator. Although the capital costs of building the
incinerator were substantial, the capacity of RWS’s landfill was
diminishing and a new state law designed to encourage the construction
of such plants allowed the municipalities to require that haulers take
their loads to the plant, providing a steady stream of waste, and
therefore, a steady source of electricity and revenue. The aim of the
the state “flow-control” law was to make sure that such incinerators
could generate enough revenues to pay off the bonds that were taken out
to finance their construction.

    But when the Supreme Court declared “flow-control”
ordinance unconstitutional in 1994, RWS was left in a tough situation.
Commercial haulers were no longer required to take waste to RWS and
would instead take it to wherever they could pay the lowest in tipping
fees. This led RWS to offer lower commercial rates and to place more of
their financial burdens on the member communities. Financial challenges
were exacerbated by a restructuring of electric utilities that led to
RWS ending up in a new contract for the sale of their electricity that
was much lower than they had before. The $3.3 million in revenues
collected from the sale of electricity in fiscal year 2002 was 40
percent less than the $8.4 million collected in fiscal year 2000.
Because of the need to maintain a steady flow of waste for the
waste-to-energy plant, RWS also began to rely more on the
“spot-market”–commercial waste haulers to whom they offered lower
tipping fees. This was in part because of the gap in waste supply left
by Westbrook’s departure. All of these factors, as well as substantial
debt from the establishment of the recycling program and the
waste-to-energy plant, led to budget shortfalls and the looming threat
of increased assessments.

    It is the member communities of ecomaine who are
ultimately responsible for paying for its operations and its debt, and
these costs come to them in the form of tipping and assessment fees.
While tipping fees are charged based on how much tonnage of waste a
hauler brings to ecomaine, assessment fees are based on a five-year
rolling average of the amount of waste the communities produce. There
are separate tipping fees for corporate municipal members, commercial
haulers and associate municipal members, but only corporate members pay
assessment fees.

    “As an owner, Cape Elizabeth is responsible for some
costs regardless,” said Cape Elizabeth Town Manager Mike McGovern.
“Even if we went somewhere else, we’d still have to pay our share of
the debt.”

    In 2005, after a comprehensive independent strategic
review by the consulting firm Camp, Dressler and McKee, RWS’s board of
directors began the process of engineering a major restructuring of the
organization. Members passed a new set of by-laws, eliminated a sunset
clause that would have dissolved the partnership in 2014, created an
executive committee to oversee RWS’s management, established a new
makeup of the board of directors that would give every participating
community a voice, refinanced the debt, and changed RWS’s name to
ecomaine. They also hired a new General Manager–Kevin Roche--who
brought with him extensive experience in establishing innovative
recycling programs in other parts of the country.

    “We came up with a whole new plan,” said Owens of
the restructuring. “We changed managers, came up with executive
committee, a new set of by-laws.”

    Since those changes, RWS has seen surpluses in its
recycling revenues, an improved contract for electricity, the addition
of Saco as an associate member and is negotiating a change to
single-stream recycling that is expected to ultimately increase
revenues.

    “Ecomaine has been through a Renaissance in recent
years,” said McGovern. “The management is doing a wonderful job.”

    Roche too believes that ecomaine is well-positioned
and prepared to provide its members cost-effective waste management.

    “I think the board and management feel we’re in
pretty good shape right now,” he said. “We’re putting surpluses into
savings to mitigate rises in rates and making progress towards paying
off debt.”

    But with the likelihood that improvements to
infrastructure will be needed and with unforeseen circumstances--like a
change in electricity or recycling markets--likely to arise, ecomaine
is more likely to stabilize costs for its members rather than actually
lower them.

    “We’re definitely getting ready to slide down the
hill, in terms of debt management,” said Owens. “But the tipping fee is
not likely to go down very significantly. Down the road a few years,
we’re probably going to have to do something with the plant.”

    In the last three years, tipping and assessment fees
for corporate members have not changed, remaining at a total of $158
per ton of solid waste–$88 for the tipping fee and $70 for the
assessment fee.

    Even if costs at ecomaine are not always the lowest,
Roche said he believes that the broader goals of ecomaine are worth
committing to.

    “Certainly we’re not always the cheapest game in
town,” said Roche. “That’s not what we’re about. We’re about an
environmentally sustainable regional approach.”