A Honolulu City Council bill that would potentially exempt a westside landfill from millions of dollars in city fees is generating pushback from the director of the city’s Department of Environmental Services, who says it gives preferential treatment to a single company and could result in a significant loss in city revenue.
Bill 47, scheduled to be heard by the City Council Budget Committee on Wednesday, would in effect exempt PVT Land Company in Nanakuli from tipping fees at the city’s waste-to-energy plant, called H-POWER (Honolulu Program of Waste Energy Recovery), which is operated by Covanta Energy.
“We believe that the city should continue to charge fair and equal disposal charges for all waste and to all customers,” said Lori Kahikina, director of the environmental services department in a July letter to the council. “Therefore, we cannot support a waiver of fees for a particular waste stream or a particular customer and do not support the passage of Bill 47.”
Kahikina also wrote that the measure could end up exempting waste streams already being processed at H-Power, requiring the city to dip into the general fund to support operations.
Bill 47 was introduced by Council Chair Ernie Martin on behalf of PVT Landfill, according to Albert Shigemura, the company’s president.
Shigemura said that he wants to donate stockpiled construction debris to the city’s H-POWER plant because it is operating below capacity and PVT Land wants to showcase its focus on recycling.
“It’s a good PR thing for us,” he said.
The city charges companies $91 a ton to deposit waste at the facility. H-POWER then burns the trash, converting it into electricity, which Covanta Energy sells to Hawaiian Electric Co.
Martin, who received $4,000 in campaign contributions from the company in April, didn’t return a call for comment for this story.
Councilwoman Kymberly Pine, who represents the district that includes Nanakuli, said that she has concerns about the bill and the only reason it has sailed through two votes by the City Council is because council members are still awaiting critical information from the Department of Environmental Services. In the meantime, the council wants to keep the bill alive, she said.
The city could actually end up saving money by exempting the company from tipping fees, said Pine, because the city is supposedly being penalized for not supplying enough trash to H-POWER since the facility underwent a major expansion in recent years.
But the Department of Environmental Services has yet to show the numbers to the council, she said, so it’s not clear how much the city is being fined by the H-POWER operator and how much accepting PVT Landfill’s waste could offset that.
“I don’t know if we are going to benefit or be hurt in the long run,” she said.
In 2013, the city needed to supply H-POWER with a minimum of 800,000 tons of trash, but only supplied about 680,000 tons, according to the Department of Environmental Services.
UPDATE: Markus Owens, a spokesman for the Department of Environmental Services said that the city is expected to be billed by Covanta, the private company that operates H-Power, for the 120,000 tons of waste that it didn’t deliver, but he didn’t know how much it will ultimately cost the city.
Owens said that the city is expected to deliver enough waste this year, so shouldn’t face any penalties for 2014.
The history of PVT Landfill’s stockpiled waste dates to 2011, when state regulators approved a power purchase agreement between Hawaiian Electric Co. and Honua Power for a gasification plant in Campbell Industrial Park.
PVT had an agreement with Honua Power to sell it about 200 tons of processed construction debris a day, according to past media reports, which the plant would convert into electricity to sell to HECO.
To satisfy investors that the project would have an adequate supply of waste to burn, PVT Landfill began processing and storing large quantities of construction debris, said Shigemura.
But now it’s not clear if or when the Honua gasification plant will move forward. Company President Tim Mobley didn’t return calls for comment. HECO spokesman Peter Rosegg would only say that “we are currently communicating with Honua Power to determine the status of this project.”
Shigemura said that the project has been delayed and will likely be up in a couple of years. However, state documents indicate that the company doesn’t have that long. Honua Power’s gasification plant is required to be in service by next June, according to documents filed with the Hawaii Public Utilities Commission.
Shigemura said that Honua’s troubles are not behind the company’s sudden decision to try to dispose of the construction debris, which it had initially intended to sell for an undisclosed price.
“I’m not saying we need to get rid of it,” he said. “We thought there was a need on the city level as far as H-POWER production. We understand that they didn’t have enough trash.”
PVT stands to reap significant savings if the bill passes.
The company may want to dispose of 200 tons of material a day for as much as six months, Shigemura told Civil Beat. That would total more than $3 million in savings for the company if it’s exempted from the $91 per ton tipping fees.
The company had previously appealed directly to the Department of Environmental Services for the exemption, but was rebuffed, according to Kahikina.
“PVT has been processing, specifically separating and shredding, wastes destined for its landfill to provide fuel for a new gasification operation,” wrote Kahikina in her letter to the council. “Because that project has been stalled, PVT was seeking an outlet for the processed waste/feedstock that it had already produced.”
Kahikina said that PVT’s feedstock may also contain treated lumber, which can’t be burned at H-Power because of toxic air emissions.
If Bill 47 passes the Budget Committee, it will go to the full council for a final vote.
Correction: A previous version of this story stated that Covanta is expected to bill the city for $120,000 for under-delivering waste to H-Power. However, Markus Owens, a spokesman for the city’s Department of Environmental Services said that he didn’t have an estimate for how much the city is expected to be billed, noting that it will be calculated based on a complex formula. (The 120,000 figure referred to the tons of waste that the city under-delivered to H-Power, not how much the city would be billed.)