By Zack Anchors
Staff Writer
    With revenues from recycling and the sale of electricity exceeding recent expectations and a new debt refinancing completed that will pay off standing debt in nine years, ecomaine (formerly known as Regional Waste Systems) appears well positioned to minimize costs for the 27 communities whose solid waste and recyclable materials it handles. By pooling their resources together, the member communities of ecomaine have established a waste-to-energy plant, the largest recycling program in the state, and a state-of-the-art landfill/ashfill–all in a manner intended to be both ecologically sound and cost-effective.
    But the benefits of waste management regionalization that ecomaine was founded thirty years ago to foster have not always been as apparent.  Just a few years ago RWS was facing a more than two million dollar budget shortfall and some member communities were unhappy with rising costs with the non-profit corporation and concerned the organization’s leaders were not doing all they could do to harness the partnership’s full potential. Revenues from the waste-to-energy plant were disappointing, the City of Westbrook had pulled out, and the lower tipping fees (the amount based on tonnage charged for waste drop-off) of some private waste management operations were beginning to look more attractive.
    “At that time the whole operation wasn’t as competitive as it could have been,” said Ron Owens, Scarborough town manager and ecomaine executive committee member. In 2003, the Scarborough Town Council even approved a town order requesting an independent audit of RWS’s finances, which led to an independent review an eventual restructuring of the organization over the next few years. But the challenges that RWS faced at that time and that it continues to negotiate, are in part a product of its history.
    Thirty-six years ago, spurred by a series of federal and state waste management policy changes, the municipalities of Portland, South Portland, Cape Elizabeth and Scarborough came together to form RWS, a cooperative designed to fulfill the state’s requirement that municipalities deal with the waste generated within their boundaries.
    Over the next decade RWS managed a landfill and accumulated member communities from Ogunquit to Pownal, all accepting shared responsibility for the costs of operations and formally incorporating in 1985. By the time Gorham joined on in 1991 RWS had 21 corporate members and, with the encouragement of new federal energy policies, had built their European-designed, state-of-the-art waste-to-energy incinerator. Although the capital costs of building the incinerator were substantial, the capacity of RWS’s landfill was diminishing and a new state law designed to encourage the construction of such plants allowed the municipalities to require that haulers take their loads to the plant, providing a steady stream of waste, and therefore, a steady source of electricity and revenue. The aim of the the state “flow-control” law was to make sure that such incinerators could generate enough revenues to pay off the bonds that were taken out to finance their construction.
    But when the Supreme Court declared “flow-control” ordinance unconstitutional in 1994, RWS was left in a tough situation. Commercial haulers were no longer required to take waste to RWS and would instead take it to wherever they could pay the lowest in tipping fees. This led RWS to offer lower commercial rates and to place more of their financial burdens on the member communities. Financial challenges were exacerbated by a restructuring of electric utilities that led to RWS ending up in a new contract for the sale of their electricity that was much lower than they had before. The $3.3 million in revenues collected from the sale of electricity in fiscal year 2002 was 40 percent less than the $8.4 million collected in fiscal year 2000. Because of the need to maintain a steady flow of waste for the waste-to-energy plant, RWS also began to rely more on the “spot-market”–commercial waste haulers to whom they offered lower tipping fees. This was in part because of the gap in waste supply left by Westbrook’s departure. All of these factors, as well as substantial debt from the establishment of the recycling program and the waste-to-energy plant, led to budget shortfalls and the looming threat of increased assessments.
    It is the member communities of ecomaine who are ultimately responsible for paying for its operations and its debt, and these costs come to them in the form of tipping and assessment fees. While tipping fees are charged based on how much tonnage of waste a hauler brings to ecomaine, assessment fees are based on a five-year rolling average of the amount of waste the communities produce. There are separate tipping fees for corporate municipal members, commercial haulers and associate municipal members, but only corporate members pay assessment fees.
    “As an owner, Cape Elizabeth is responsible for some costs regardless,” said Cape Elizabeth Town Manager Mike McGovern. “Even if we went somewhere else, we’d still have to pay our share of the debt.”
    In 2005, after a comprehensive independent strategic review by the consulting firm Camp, Dressler and McKee, RWS’s board of directors began the process of engineering a major restructuring of the organization. Members passed a new set of by-laws, eliminated a sunset clause that would have dissolved the partnership in 2014, created an executive committee to oversee RWS’s management, established a new makeup of the board of directors that would give every participating community a voice, refinanced the debt, and changed RWS’s name to ecomaine. They also hired a new General Manager–Kevin Roche--who brought with him extensive experience in establishing innovative recycling programs in other parts of the country.
    “We came up with a whole new plan,” said Owens of the restructuring. “We changed managers, came up with executive committee, a new set of by-laws.”
    Since those changes, RWS has seen surpluses in its recycling revenues, an improved contract for electricity, the addition of Saco as an associate member and is negotiating a change to single-stream recycling that is expected to ultimately increase revenues.
    “Ecomaine has been through a Renaissance in recent years,” said McGovern. “The management is doing a wonderful job.”
    Roche too believes that ecomaine is well-positioned and prepared to provide its members cost-effective waste management.
    “I think the board and management feel we’re in pretty good shape right now,” he said. “We’re putting surpluses into savings to mitigate rises in rates and making progress towards paying off debt.”
    But with the likelihood that improvements to infrastructure will be needed and with unforeseen circumstances--like a change in electricity or recycling markets--likely to arise, ecomaine is more likely to stabilize costs for its members rather than actually lower them.
    “We’re definitely getting ready to slide down the hill, in terms of debt management,” said Owens. “But the tipping fee is not likely to go down very significantly. Down the road a few years, we’re probably going to have to do something with the plant.”
    In the last three years, tipping and assessment fees for corporate members have not changed, remaining at a total of $158 per ton of solid waste–$88 for the tipping fee and $70 for the assessment fee.
    Even if costs at ecomaine are not always the lowest, Roche said he believes that the broader goals of ecomaine are worth committing to.
    “Certainly we’re not always the cheapest game in town,” said Roche. “That’s not what we’re about. We’re about an environmentally sustainable regional approach.”