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Councilors seek update on two county projects with Anaergia

Concerns expressed over proposal changes, deadline extensions

Doug McLeod, energy consultant and vice president of Maui Tomorrow, testifies Tuesday afternoon on Anaergia Services renewable energy projects with the county in Council Chambers in Wailuku. The Maui News / CHRIS SUGIDONO photo

WAILUKU — Maui County council members and a former county energy commissioner had questions Tuesday about the county Department of Environmental Management’s relationship with renewable energy company Anaergia Services and the company’s two projects with the county.

Council Member Elle Cochran, chairwoman of the Infrastructure and Environmental Management Committee, requested an update on county projects with the company. They include the long-awaited waste-to-energy project at the Central Maui Landfill and the sewage conversion and renewable energy project at the Wailuku-Kahului Wastewater Reclamation Facility.

“There’s just so many moving parts here, and I think it’s really hard to encapsulate it all because it’s been drawn out for so long,” Cochran said. “That’s why I’m calling for this update. It’s not even incomplete, it hasn’t even started.”

In 2014, California-based Anaergia signed a 20-year contract with Mayor Alan Arakawa’s administration to build a waste conversion facility at the Central Maui Landfill. Current project plans call for using anaerobic digestion to produce methane gas from waste at the landfill with the county paying Anaergia by tonnage for disposal. Recyclable materials would be diverted from the process.

Environmental Management Deputy Director Michael Miyamoto said at the meeting that Anaergia has secured customers for the methane gas and a different location for the project. He told The Maui News earlier this year that Anaergia had secured a lease with Alexander & Baldwin for land next to the landfill.

At the meeting, Miyamoto said that the company has begun the environmental permitting process.

Doug McLeod, energy consultant and former county energy commissioner, questioned why the county has given Anaergia “free” extensions on their contract and why plans are continuously changing. He said the extensions have cost the county money and appear to be favoring the company.

“This one company is being treated differently than others,” McLeod testified Tuesday.

When the contract for the landfill project went to bid, it appeared like the county “cared about deadlines,” McLeod said. He said the county put in provisions that opened up bidders to liquidated damages of $750 per day if it missed a deadline.

“The county essentially gave a two-year extension on the project for free,” he said. “If other people had known the county was really viewing the obligations as just options, and you actually had five years rather than three years, you might have seen very different bids.”

McLeod explained that the extensions cost the county money because the Central Maui Landfill produces about 2 to 3 megawatts of methane gas, which have a lifespan of less than two years. He said the methane energy potential is equal to the largest solar project on Maui but is not being used.

“This value of free methane is being lost and squandered,” he said.

No representatives from Anaergia Services were present at the meeting and an email seeking comment from officials Tuesday evening was not immediately returned.

Deputy Corporation Counsel Richelle Thompson said at the meeting that the request for proposal and procurement processes are “very broad and complex.” She said there were a dozen “solid contenders” for the landfill project and some proposed similar technologies.

“Once the proposer (Anaergia) was selected, you’re going to end up with a contract based on the proposal,” Thompson said. “But it was not possible to fit it into a cookie-cutter contract because we didn’t know what contract we were going to have at the end of the day or what timeline that project needed to come online.”

Council Member Kelly King, a nonvoting member of the committee, said Tuesday that there were many things in the proposal that were not in the final agreement. This could expose the county to lawsuits, she said.

“I worry about how we’re selecting a contractor and allowing them to refashion a proposal after the fact,” King said. “Having known some of those flexibilities upfront, we may have had similar proposals or better.”

She referenced the lawsuit filed recently by the Sierra Club Maui Group and Maui Tomorrow that challenged the approval of an environmental impact statement for Anaergia’s sewage conversion and renewable energy project. That project drew only one bid, from Anaergia, a point of concern for the groups filing the lawsuit.

The renewable energy conversion and sludge processing project calls for installation of an anaerobic digester to produce methane gas from energy crops grown on former Hawaiian Commercial & Sugar Co. lands. The natural gas would be refined on-site and fuel a combined heat-and-power engine to generate electricity for the sewage treatment plant.

The county would pay 29 cents per kilowatt hour for electricity produced at the plant.

Waste heat from the plant’s engine would dry biosolids, or digested sewage sludge, produced by the plant.

County officials have said Anaergia would develop the facility at the treatment plant next to the ocean on Amala Place in Kahului at no construction cost to the county.

The project would essentially shut down Maui EKO Systems, which has processed the island’s green waste and county sewage sludge into compost for about 25 years at the Central Maui Landfill. The company’s contract with the county ends July 1, but the county will likely extend it for another year.

EKO Plant Manager Rubens Fonseca said after Tuesday’s hearing that he met with the county and Anaergia over the possibility of continuing to process green waste at the landfill. He said there has not been much progress.

“They got their hands full,” Fonseca said.

Miyamoto said the new plant would decrease the county’s processing fees for sewage sludge from the current $103 per ton with EKO to $80 per ton with Anaergia. He acknowledged that EKO’s higher cost is attributed to a shortened contract period; previous contracts have been for five years.

When Fonseca was asked if he would be able to charge the county a comparable amount to Anaergia if they had signed a five-year deal, he answered: “absolutely.”

He added that it may cost the county more than $80 per ton to process the sewage sludge because it will have to pay for the energy to dry it. Currently, EKO uses the undried sludge.

No action was taken at Tuesday’s meeting.

* Chris Sugidono can be reached at csugidono@mauinews.com.

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