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Environmental > News Hits

Getting steamy

The lowdown on a possible sale of the incinerator

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Published 7/7/2010

At this point there are as many questions as answers, but one thing is certain: The owners of Detroit's incinerator are negotiating sale of the facility to the company that provides steam for heating and cooling buildings to 104 downtown and midtown customers — including the city of Detroit.

Leland Bassett, spokesman for Detroit Thermal, confirmed that the company's parent corporation, Thermal Ventures II of Akron, Ohio, is negotiating to buy the controversial waste-to-energy plant that burns garbage to produce steam and electricity.

The facility, located at the juncture of Interstates 94 and 75, is co-owned by Energy Investors Funds (EIF) and Covanta Energy Corp. Covanta also operates the facility. The city owned the facility before selling it in the early 1990s, and it continues to own the land where the massive incinerator is located.

Currently Detroit Thermal buys steam from the facility, then distributes it to customers though an underground system. The company also has the capacity to produce steam itself by burning natural gas.

Environmental watchdogs attending last week's meeting of the Greater Detroit Resource Recovery Authority (GDRRA) — the quasi-governmental agency that oversees disposal of Detroit's municipal waste — were told that a sale was being discussed, but officials claimed they didn't know who the potential purchaser was.

Terms of the agreement, as outlined in a confidential letter of intent obtained by News Hits from a couple sources, include discussion of an escrow fund containing about $28 million. That money, paid by GDRRA to Detroit Edison, was intended to help ensure that the waste-to-energy plant would continue to provide electricity to Detroit Edison through 2024. GDRRA is scheduled to stop making annual deposits to the fund this year. As long as the electricity continues to flow, Detroit Edison is to release the money back to GDRRA in eight yearly installments starting in 2016.

The letter of intent, though, anticipates applying to the Michigan Public Services Commission for their approval to have Detroit Edison release that money to current owners EIF and Covanta. If that approval is not given, Thermal Ventures would be obligated to try to get the city to have the money released to EIF and Covnata.

Why the city would even consider doing that is one of the big unanswered questions in all this.

The letter of intent also discussed the need to negotiate a deal with GDRRA regarding the price the authority would pay to dispose of its garbage at the incinerator beginning July 1.

"So, all these things involving the city and GDRRA were part of the letter of intent, but no one with the city or GDRRA was talked to about this?" says Brad van Guilder of the Ecology Center in Ann Arbor. "I'd be very surprised if that's true."

Noting that it was only last year that Covanta bought a one-third share of the incinerator, van Guilder, who has long questioned the financial viability of the facility, says that the proposed sale only increases those concerns.

Adding to the intrigue is the fact that Robert Buckler, the retired president and chief operating officer of Detroit Edison, was appointed by Detroit Mayor Dave Bing to be the city's chief operating officer earlier this year. Bing recently also appointed Buckler to the GDRRA board; those board members, all employees appointed by Bing, elected Buckler as board president at last week's meeting.

Bing previously served on the board of DTE Energy, parent company of Detroit Edison.

News Hits is edited by Curt Guyette. Contact him at 313-202-8004 or NewsHits@metrotimes.com.

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