SPSA to sell WTE plant, rejects offers

Published 8:58 am Wednesday, November 18, 2009

CHESAPEAKE—The Southeastern Public Service Authority Board of Directors on Tuesday voted to reject proposals to purchase all its assets and instead to sell only it Portsmouth waste-to-energy plant to Wheelabrator Technologies, Inc.

Wheelabrator, along with ReEnergy Holdings, LLC, had submitted proposals to purchase the authority’s assets for about $240 million.

The motion passed on a vote of 7-0, with one abstention. Board member Tim Oksman, Portsmouth city attorney, abstained from the vote, because he thought the public should be given more notice and opportunity to comment on the move.

“This needs to be done in a way that gives adequate notice to the public,” Oksman said. He added that passing the motion, which was not on the published agenda, would give ammunition to people who say, “SPSA operates in secret and makes arbitrary decisions.”

Other board members, however, said they felt the all-asset proposals had been properly vetted and that negotiations on the sale of the waste-to-energy facility had been going on for nearly two years.

“I think I’ve got my mind made up,” said Barry Cheatham, the representative from Franklin. He added the ReEnergy offer provides “no real cost savings” over SPSA continuing to 2018.

The Wheelabrator all-asset offer would have been conducted in two stages. The first would provide $150 million in cash for the purchase of the waste-to-energy plant. The second stage would have provided $90 million in cash for the purchase of the rest of SPSA’s assets, including the landfill, transfer stations and trash trucks.

The ReEnergy offer would have paid $240 million to purchase SPSA, which would have retired all SPSA’s debt. Suffolk would have had to pay tipping fees under ReEnergy’s plan, but would receive $3 per ton of trash delivered to the landfill plus 30 percent of the proceeds from the sale of landfill gas.

Several member communities indicated they would vote against a sale to ReEnergy.

“Our recommendation from a business perspective is that you reject both the proposals to purchase all your assets and continue working toward the waste-to-energy sale,” said Edward Donahue of Municipal and Financial Services Group, an independent consultant hired by SPSA to review the proposals.

Donahue added that SPSA could explore the sale of other assets after the waste-to-energy facility was sold, which would be impossible with an all-asset sale.

Suffolk City Councilman Jeffrey Gardy, like most SPSA board members, said he trusted the consultants.

“They all say, go with the short-term $150 million,” Gardy said, referring to the purchase price for the waste-to-energy plant.

The sale of the waste-to-energy plant is expected to close in early 2010.