What fantastic weather we have been having for the fall fairs. Last weekend, Midhurst Autumnfest was a great success due to many volunteers working hard and great turnout for this fun event. The Elmvale Fall Fair this weekend will be much fun, as always.
Environmental Resource Recovery Centre (ERRC)
OPF Preliminary Business Case – Presented at County Council last week, this report, undertaken by Ernst & Young consultants (EY), assesses the business and operational impacts, risks and cost/benefit of 5 various options for a County-owned Organics Processing Facility, proposed to locate at 2976 Horseshoe Valley Road West, Springwater. The options include “status quo” (continued export to AIM in Hamilton) and three technology options and as well, export to other facilities owned and operated by a merchant partner. Of these options, EY and County staff recommend development of a County-owned organics processing facility utilizing dry anaerobic digestion (AD) with in-vessel composting technology. This option has the lowest 20-year nominal capital and net operating cost estimates of all five options, of a total of $79.4 million, with a Net Present Value (NPV) in today’s dollars of $54.6 million. This compares to the original estimate for the OPF in 2015 of $25 million, for several reasons cited. Other options presented in the EY business case range from nominal capital and net operating costs over 20 years of $84 million to $114 million for the OPF alone.
The report noted that while the status quo option to transport waste is convenient in the short-term, it is expected that increasing pressure on municipalities in the form of waste-related regulations and legislation (such as the Waste Free Ontario Act, WFOA) could lead to market capacity and availability of location issues.
EY noted that, moving forward to the next Request for Prequalification and Proposal stages, the County would benefit from a “technology neutral” procurement process for the OPF that would allow proponents greater flexibility in the development of a solution to meet the County’s organics processing needs. Although there appears some advantage to pursuing dry AD with in-vessel composting technologies, it is recommended that the procurement process not eliminate any technology option at this stage in project development. Before this occurs, planning approvals are required to be completed by Springwater Township. Springwater is awaiting County responses and reports following the comments and questions arising from the public meeting regarding this held on June 19, 2017.
MMF Updated Business Case – This Materials Management Facility business case, also presented at County Council last week, was prepared by County staff and its consultant, GHD Limited, for the same proposed location as the OPF.
The recent Waste-Free Ontario Act changes propose to transition responsibility for the blue box recycling program from municipalities to the Producers, resulting in no long-term capacity to manage transfer of this material after 2022. Three options were examined in the business case over an assumed 20-year period – continue contracting externally, develop the MMF with long-term capacity for garbage and develop the MMF with long term capacity for garbage and blue box capacity until 2023. The third and final of these options to manage the long-term transfer of garbage and blue box recycling until 2022 is recommended by Staff. The estimated capital and net operating cost over 20 years for this option is $21.7 million and this assumes receiving a $2.2 million Community Improvement Fund contribution to get to this cost. The estimated 20-year cost to continue contracting externally is $24.4 million assuming 2% annual increases in rates. This compares to the original estimate for the MMF in 2014 of $6 million with a payback estimate of 5 years. This has changed significantly due mainly to the blue box changes resulting from the WFOA changes. Now the payback periods of the second and third options above are assumed to be 36 and 33 years.
Therefore, the combined OPF and MMF presently recommended by Staff and consultants has a nominal capital and net operating cost over 20 years of $101.1 million. The net present value of this in today’s dollars is $72.7 million.
I believe that the options examined of continuing to contract externally for 20 years are wrong in the business cases. It might not be the right time now to consider investing this great sum of money to build an OPF and MMF facility, but to assume status quo for 20 years is unrealistic. I voiced at County Council my thoughts on this and recommended that the OPF and MMF ongoing project be put on pause until detailed research is completed with all possible service providers to see what the next contract terms can be negotiated after the current ones expire in 2020. With that information, we can intelligently decide whether to proceed with the development of an OPF and MMF facility now or whether to contract out for another 5 to 7-year term, with an extension option, structured to “freeze” gate fees for the contract term, lock in capacity and consider the impact of pet waste and diapers during that period and other standard contract features.
This might require a new site selection because of the many challenges faced with the selected site, such as no servicing, the sensitive receptor factors, natural habitat considerations, roads issues, water, and the significant fire risks for these facilities, especially in a forest, with the inherent risks to surrounding residents with limited exit options in case of fire in some cases.
By that time there will be more advancement in the technology options and experience with them in Canada (including dealing with pet waste and diapers), the Simcoe diversion rates will be higher, and the implications and roll out of the Growth Plan 2017 and the Waste Free Ontario Act will be clearer, as will the regulations surrounding the Climate Change Action Plan, producer responsibility and dealing with after products such as biogas.
After raising this at Council, I was informed that this detail will form part of the final business case being prepared some time in 2018. I believe this exercise should be completed now.