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Back in (the) black: After rocky start, finances stabilize for county’s waste processor

After a rough start, the Perham Resource Recovery Facility, once known as the Perham incinerator, is getting onto solid financial ground.

Last April, Becker County had to kick in an unexpected, unbudgeted $200,000, it's share of an incinerator bond payment that the joint powers facility was too broke to make on its own.

The "dirty mixed-waste processing facility" takes in truckloads of raw garbage from Becker, Otter Tail, Clay, Todd and Wadena counties and runs it through a system of conveyor belts and centrifugal force cylinders.

Metals and other recyclables are separated from the burnables, which feed two boilers that produce steam purchased by two big food processors in Perham—Bongard's Creameries and Tuffy's Pet Foods Inc.

Fine material like glass fragments and similar material is used as daily capping material at the Fargo landfill.

The county is financially committed to the Perham facility, of which it is part owner via a joint powers agreement. Becker County Commissioner Larry Knutson represents the county on the Prairie Lakes board.

Plagued by boiler problems, low steam prices and low commodity prices for recyclables, the Prairie Lakes Municipal Solid Waste Authority saw its 2015 budget hemorrhaging money and had to turn to its member counties to make a nearly-$1 million bond payment last May.

There were fears that Becker County would face another $210,000 payment when the next bond payment came due in November, but that didn't happen.

Instead, things turned around, said Mike Hanan, executive director of the Prairie Lakes Municipal Solid Waste Authority.

A big part of the problem was that a new boiler never performed as it was supposed to, said Hanan. Seeking improvements, Prairie Lakes went to mediation with the boiler contractor, that dispute went to arbitration, and Prairie Lakes won reimbursement for the money it paid to improve the boiler. It was not reimbursed for lost revenue from the down boiler, however: Its tipping fee revenue suffered whenever the boiler was shut down to do the modifications.

And while it was shut down, it also had to buy natural gas for its gas boiler to meet its obligation to provide steam for industrial users, he said.

The biggest losses came from after the facility was launched in August 2014 through September 2015, he said. "From September 2015 we started making tweaks to the system,"' he added. "Through August-September of 2016 it was better than the year before, but still struggling. Since September it's been better—now we have to make up for those couple of (poor performance) years in the past."

It helps that there has not been much unscheduled downtime this year, which is costly both in repairs and loss of revenue.

The facility is supposed to be able to process 73,000 tons of waste per year, but because of the boiler problems only handled 45,000 tons in 2015. It now processes about 62,000 tons of waste per year, with 45,000 to 50,000 of that being burned in the facility's two boilers.

The newest boiler is now at about 75 percent capability when it comes to steam production. "We've done some internal things, but we're still not getting the total steam out of the unit that we believe we ought to get out of it," Hanan said. "We're now looking at modifications to the superheater in that south unit," he added. The work is technical and complex and a specialized contractor will likely be used for it.

Financially, the situation has improved this year because the five member counties have committed 100 percent of their waste streams, and are paying on a monthly basis based on that commitment. The budget may be reconciled by the joint powers board at the end of the year based on actual amounts delivered. Becker County is slightly ahead of its goal, said Environmental Services Administrator Steve Skoog.

"In the past, if they weren't processing as much, or if the counties didn't deliver enough, they missed their revenue stream," Skoog said. They now have a stable revenue stream, which is good, because their costs don't fluctuate month to month."

With the financial situation improved, the facility is able to stretch its $5 million annual budget to make its bond payments and other expenses, put some money aside for capital improvements, and start paying back a $2.5 million loan from Otter Tail County.

"We feel we're heading in the right direction," Hanon said.