2014-12-04 Cost of Government Commission Minutes

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ton to waste management who runs the landfill goes down, but you’re shortening the life of the landfill by increasing the amount that goes in there. So you’re hastening the point in time when you have to build a new landfill on that side of the island. So you have to do something and one of the reasons we were looking at a waste reduction technology is the clear direction from the County Council was thou shalt not haul rubbish to the other side of the island. And the feedback we were getting from basically from State Department of Transportation and also FFA is that you will not be able to build a new landfill within six miles of the airport and that’s because of bird strikes. So if you take a landfill off the table and you take hauling rubbish to the other side of the island off the table, then what you’re left with is either shipping it on a barge to Honolulu or the Mainland which people have tried, we seriously had to evaluate that once upon a time. Honolulu tried, they were never able to get the permit, and they had a year’s worth rubbish in some warehouse that they got fined for because they were never able to get the permits to barge it out of the state. Recycling has a cost because you don’t have the markets here for recycling. You got to ship it so typically we pay to have stuff recycled because it’s got to be shipped out of the state and that’s, and the vendors that bid on those contracts have to calculate in their operating expenses in their cost of shipping stuff out. The recycling’s not free, yes it creates jobs, but it creates jobs because we pay for the recycling. So we decided to go and take a look at waste reduction technology. Waste reduction technology has the potential to produce electricity based on the PPA, you would have the potential to offset some of the costs of the facility through the sale of energy. The sale of energy will not pay 100% of the cost of that facility, but you are going to have to manage or compare that against what would the other costs be. What would the cost be to haul it? What would the cost be to build a new landfill? If you can build another landfill, but you can’t build it within six miles, then are you building a landfill somewhere in Puna? Are you building a landfill somewhere in Ka‘ū which is nice and dry or are you just going with the one landfill? So it’s, you have to look at what are your avoided costs as well as the actual cost of a waste reduction technology and a landfill will be more expensive because it wouldn’t be more expensive upfront because you build the landfill in increments. We build a cell this year, so many months from now we build another cell. So over a 30-year period you would have construction costs every single year with the landfill. With a waste reduction technology, all of that construction cost is upfront and so on paper you would look and say oh, well we’re going to have to pay $10 million initially for the landfill and then we’re going, and I’m pulling these are not real numbers, I’m just pulling these numbers as an example, say $10 million for the initial construction and then you’re going to spend $2 million every year or $3 million every year for the life of the landfill, for construction, and then you have the post closure costs of a landfill because you’re required to close it and monitor it and test the ground water for 30-year period after you close a landfill. So you have to put all those costs in. With a waste reduction technology, if the plant, let’s say has a usable life 40 to 50 years, your construction costs are upfront, you’re going to amortize that over 25 to 30 years and then after that your numbers change dramatically, because once you’ve paid for the construction, then your electric sales either pay for the facility or actually make you a profit and that is what happened to H Power on Oahu, is that it actually generates revenue. Of course it’s a much larger facility and the question is whether when we get actual bids in from the potential vendors, we’re going to have to take a look at those costs and compare those costs against other options and then the County Council’s going to have to decide. I don’t have numbers to date, back in 2007 based on the Wheelabrator proposal I think they were looking at a cost of about $11 14