AUBURN — After five years of financial losses totaling nearly $3.9 million, Auburn officials plan to close the city's landfill gas cogeneration facility.
The plant was designed to convert methane gas extracted from Auburn's landfill and convert it to salable energy. But with revenues falling well short of operational costs and debt service payments, lawmakers could officially pull the plug on the operation as soon as next week.
Members of the Auburn City Council will likely vote on the action next week, said Interim City Manager Jeff Dygert.
"Let's be done with it and move on," said Mayor Michael Quill.
Councilors met Thursday and reviewed the last half-decade of performance by the cogen facility, which was completed in 2010.
Since 2011, operational losses for the cogen facility have ranged as high as around $1.05 million, with a cumulative deficit of more than $3.7 million. Including debt service payments, the total financial loss over those five years amounted to around $3.9 million, according to a report prepared by Comptroller Laura Wills.
The losses were at their highest when the facility was owned and operated by CH Auburn — which was later bought out by Greenfield Energy — through a contractual agreement, but Wills said operational costs lowered considerably after the city reacquired the facility in 2014.
The city yielded a 64-percent lower deficit in 2015 than the year prior as a result, according to the comptroller. Nevertheless, operations have required general fund support through all of those years, with another payment — along with a projected maintenance cost of around $185,000 to service an engine — scheduled for the upcoming 2016-2017 fiscal period.
Officials have sought alternative avenues for relief. These included selling energy on the New England market or creating a city position to manage the facility as opposed to contracting those services at a $240,000 annual cost to third-party company Aria Energy.
For the latter, however, the city has not yet reached out for potential job candidates, while the training involved with that position could take anywhere from six months to a year, said Seth Jensen, director of municipal utilities.
"This facility is not contributing anything to its debt service," Wills said. "This facility isn't actually covering the cost of running it."
Councilors were presented Thursday with two options to decide the cogen's future: Close the facility or lease it.
Wills said closing it would involve using the building for sewer equipment storage, exercising the engines regularly and terminating the Aria contract, among other stipulations.
Leasing would require the city to maintain the facility in the search for a lessee and make payments on contractual costs incurred while the facility is idle, according to the comptroller. Further, the city would not want to retain liability with any sort of leasing agreement, Wills said.
Selling part or all of the cogen is not a viable option, she added, because the facility must remain intact under the city's ownership — hence the engine exercises — in order to be eligible for an around $130,000 annual subsidy in debt interest rates through financing with Clean Renewable Energy Bonds.
The city will owe debt service payments, with the federal CREBs subsidy, through 2038. Wills said there is around $5.7 million in total debt remaining.
In the end, councilors unanimously supported the option to shut down the plant. A greater majority of councilors agreed they would not consider the idea of leasing it out at this point.
"If we're going to lease this and we're going to try to cut our losses that way, I don't want the city and the taxpayers to have any liability for this," said Councilor Jimmy Giannettino. "We've paid enough."
Councilor Dia Carabajal added, "I look at it as we're bleeding and we need to stop it."