Trades barbs with GBB
GERSHMAN, Brickner & Bratton Inc. (GBB), the court-appointed solid waste receiver, and Guam Resource Recovery Partners (GRRP), the would-be developer of a waste-to-energy plant, are embroiled in a war of words over the recently released draft contract that would allow GRRP to build a waste-to-energy facility which has been renegotiated and is now under review.
In a press statement issued yesterday, GRRP representative David Sablan described the contract to build a waste-to-energy facility as a “relief from the high cost of service being charged by the receiver.”
Sablan said the waste-to-energy facility will burn solid waste to produce electricity which can then be sold to reduce the cost of the solid waste disposal service.
Reacting to GBB representative David Manning’s March 24 special report to the federal District Court, Sablan said the report is “full of half-truths meant to mislead the public.”
Sablan also questioned the motives of the receiver in attacking the waste-to-energy project, saying the incinerator is a U.S. Environmental Protection Agency-approved way to manage solid waste and would reduce the volume of the waste by 90 percent, thus extending the life of a landfill eight to 10 times longer than currently projected.
“Why is David Manning saying GRRP’s (waste-to-energy) plan is not good for Guam when his own company, Gershman, Brickner & Bratton, promotes incineration waste-to-energy facilities in the U.S. mainland? Manning is being hypocritical,” Sablan said.
“We are an island, and we cannot continue to build landfills every eight years, which is all the receiver wants to do, for how much longer? He has already been with us for about six years, and has cost us millions of dollars in his fees alone,” Sablan said.
Sablan explained that once the waste-to-energy contract is approved, the Layon landfill is not going to be operated in the receiver’s business-as-usual manner because GRRP will propose to assume $102 million of GovGuam’s current debt to buy Layon and to use the landfill to deposit the ash from the waste-to-energy facility.
Sablan said Sen. Ben Pangelinan filed a lawsuit on July 31, 2001 to prevent the waste-to-energy project from starting, claiming the contract violated the procurement laws of Guam. But in November 2001, Judge Steven Unpingco found the contract does not violate procurement law or the Organic Act of Guam.
When opponents of the waste-to-energy passed P.L. 25-175, the Incineration Law, subsequent rulings were made to repeal the law deemed inorganic and unconstitutional.
The final case brought by Pangelinan was an issue with liquidated damages. The Supreme Court declared that the agreement is enforceable.
When the Camacho administration refused to negotiate a new contract, GRRP filed a lawsuit under the Government Claim Act which resulted in the current lawsuit.
According to Sablan, GovGuam will not have to fund any future cells at the Layon landfill once the waste-to-energy facility is operational, because only ash will be deposited there, and ash is about 10 percent of the volume of solid waste before it was burned in the furnace.
“That opportunity cost or savings would be approximately $227 million, for not needing to build cells 3-11 at the Layon landfill over the estimated time of 37 years. Cells 1 and 2 at Layon currently would still be in use in 37 years, because of the low volume of ash to be deposited there from the waste-to-energy plant,” GRRP said.
Lower tipping fees
In fact, Sablan said that had Layon not been built, and instead the waste-to-energy plant with the Guatali landfill were built, the monthly residential tipping fee would probably be about $16 per month at 300 tons of acceptable solid waste being received at the waste-to-energy facility; and $12 per month per household if the acceptable solid waste is around 600 tons per day.
Assuming 300 tons of solid waste is received each day (which is what is going into the Layon landfill each day) at the waste-to-energy plant, Sablan said the monthly residential fee for service would be about $32 per month, while it would be $150 per ton for the commercial operators.
“GRRP believes around 600 tons of acceptable waste can be received at the waste-to-energy facility each day once our people can see some value benefit for the service, which would make the monthly residential fee around $25 per household; and for commercial operators it would be approximately $130 per ton,” he said.
Sablan called the receiver a “carpet-bagger” who doesn’t stay on Guam but collects his $200,000-a-month payment.
“If he was concerned, he would stay on Guam instead of just coming in every few months to report to the court on things his local staff actually does here in Guam – the epitome of a carpet-bagger,” Sablan said.
The receiver, when contacted by Variety, said he will limit his comments to the issues, saying “it serves no purpose to respond to the name-calling.”
Manning said Sablan’s latest statement did not change his basic analysis that the waste-to-energy contract is way too expensive and can put GovGuam into a high-risk and high-cost situation.
“The statements made by GRRP are completely unsupported by any detailed calculations or information backing up their statements,” Manning told Variety.
When Manning said the cost of any bond issue needed for the project for the $200 million construction cost will be higher, Sablan explained that bond sales will have no impact on creditworthiness or the liability of GovGuam.
“GRRP states that their method of financing is 100 percent private yet the new GRRP Agreement in Sec. 403 (g) explicitly states that by the financing date the government shall have obtained all requisite legislative approval to the issuance by GEDA or other political subdivision of the government of an aggregate amount of bonds in an amount sufficient to finance the sum of the facility price and financing costs less the amount of equity required to be provided by the company under Sec. 6.04 (f),” Manning explained.
He said GRRP’s contribution to the project can be no more than $10 million and the government of Guam agrees to give GRRP a 22 percent after-tax profit on any equity contribution to the project it makes.
When Manning said the GRRP agreement would obligate GovGuam to pay, in addition to all operating and maintenance cost, a monthly amount that will pay in full the debt service on the bonds, Sablan said the receiver has made several unsupported “guess-timates” to arrive at his erroneous conclusions.
GRRP said it will build a state-of-the-art waste-to-energy plant that will convert Guam’s solid waste into electricity which the Guam Solid Waste Authority can sell to the Guam Power Authority for 23 cents per kilowatt hour, about 12 cents less than what the people of Guam pay for electricity today using fossil fuels.
“Even in the unlikely event that it was sold for 23 cents per kilowatt hour, the revenue from electricity does not offset the increased costs from the new contract with GRRP,” Manning said.
The receiver insisted that despite the 75 percent decrease in operating costs for the Layon landfill and the complete elimination of the hauler-only transfer station, the cost would still skyrocket under the GRRP contract.
Close Ordot Dump
GRRP said the receiver should not worry about any other service of solid waste management on Guam and should just concentrate on closing Ordot Dump.
“When the waste-to-energy plant is constructed, GRRP will work with the Solid Waste Management Authority to dispose of the solid waste in the waste-to-energy facility to be built in a few years at a much more economical cost to the people of Guam,” Sablan continued.
The GRRP contract is now with the Legislature for review and consent. After the review, the contract will be submitted to the governor’s office and the Office of the Attorney General for their signatures.
Sablan said GRRP will submit a formal rebuttal to the receiver’s special report to the District Court of Guam within 10 days.
Trades barbs with GBB