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Denton PUB agrees mining dump for recyclables too expensive, recommends ending program

The city of Denton's Public Utilities Board agreed Monday that a program to mine an old part of the city dump for recyclable materials is too costly for the benefits it might have provided. 

The fate of the program now rests with the City Council, which is expected to consider the issue later this month. 

If council members agree to end the program, the decision could help stabilize local trash bills for the long term. In 2016, Denton homeowners paid 45 percent more for their garbage, recycling, yard and hazardous waste collection than in 2011. After five consecutive years of increases, the rates leveled off for the first time this year.

Neither the PUB nor the City Council ever saw detailed financial projections for the so-called “landfill mining,” according to Ethan Cox, the city’s new director of solid waste.  

The council first approved the program in 2015. Mining has not yet begun, despite an investment of more than $3.5 million in equipment, staff and other expenses.

Previously, the Solid Waste Department estimated the project would net the city about $16 million over the life of the program. Some of that value would come as revenue from selling the recyclable materials. Other value would come from recovered space — where trash could be buried again.

“We’re not sure where the numbers came from,” Cox said.

With a consultant's help, the department put pen to paper again to calculate the costs and benefits of the program. The department now expects to lose about $14 million on the project. Previous estimates overvalued both the cost of recovered space and the sales value of the recyclables for Denton.

“Other landfills don’t count on revenue to float the project,” Cox said. “The value is in the recoverable air space and other environmental benefits.”

Cox told PUB members the city government's investment in equipment and people would not be lost if the city ended the program. Both could be put to work in other ways.

The city will still manage the old part of the dump against long-term environmental risks, Cox said.

One reason the old part of the landfill was a good candidate for mining was because it was constructed and sealed under old standards that kept many items from decaying quickly. However, those same old standards came with long-term risks; specifically, the lining could fail and seepage from the dump could eventually contaminate groundwater.

The city still has options if it doesn't mine the landfill. As part of the financial analysis, the staff considered what it would cost to move the buried material, if needed, to repair the liner, Cox said.

City Manager Todd HilemanDRC
City Manager Todd Hileman
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City Manager Todd Hileman told PUB members that the city could decide it was important to reclaim the space and recycle the materials.

“That’s valid,” Hileman said.

However, to do so, the department would have to build in a loss of $1 million to $2 million each year into the rate schedule, he said.

The PUB voted unanimously to recommend ending the program.

Denton Municipal Electric

The PUB heard two other reports from consultants working with Denton Municipal Electric that offered a bit of good news Monday morning: Denton was in a good spot to purchase more renewable energy at a competitive price and DME’s trading group is saving money for ratepayers.

Analysts with Enterprise Risk Consulting, an Austin-based consulting firm, told PUB members that DME was in a good position to buy more wind and solar energy that would complement what the city has now.

In addition, the city can buy a special kind of market hedge that will insure DME doesn’t pay too much for electricity when it needs to buy more from the Texas grid.

The group is expected to present the full plan to the PUB and the City Council in October. The plan will include steps to make enough money to repay the $265 million in financing for the city's controversial new natural gas-fired power plant. 

Deb Armintor, the newest PUB board member, called DME’s previous plan to buy renewable energy “bare bones” compared to what Enterprise Risk Consulting was setting up for Denton.

Hileman agreed DME was missing a formal plan.

“It’s also good to have outside voices to bounce ideas off of,” Hileman said.

Analysts in the office of the Energy Management Organization at Denton Municipal Electric on Friday monitor screens with various information to help them determine when to buy and sell electricity at the best price. Friday, July 28, 2017, Denton Municipal Electric in Denton, Texas. Jake King/DRC ORG XMIT: txderDRC
Analysts in the office of the Energy Management Organization at Denton Municipal Electric on Friday monitor screens with various information to help them determine when to buy and sell electricity at the best price. Friday, July 28, 2017, Denton Municipal Electric in Denton, Texas. Jake King/DRC ORG XMIT: txder
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Deloitte has been examining the small group inside DME that buys and sells electricity on the Texas grid. DME used to contract with an outside company for those services. Deloitte agreed the group has been saving money for ratepayers for the past two years, according to Deloitte analyst Stephen Engler. Deloitte recommended a new, more robust way to measure the group’s productivity in the years to come, Engler said.

Deloitte is expected to bring another analysis in October that will show how to best manage the risk of having the group, rather than contracting for the work, Engler said.

The analysts hadn't seen anything so far that concerned them, Engler said, “but like any hedge, you trade one risk for another.”

PUB members agreed the risk assessment was needed and Deloitte will make a similar presentation to the City Council on Tuesday. 

The council  meeting begins at noon Tuesday at City Hall. Council work sessions are live-streamed on the city's website

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881.