Energy suppliers competing for garbage on competitive spot marketThe stateÂs half-dozen waste-to-energy incinerators compete daily for residential and commercial garbage, fighting between themselves, with their counterparts in neighboring states and with landfills. That competition has enabled an informal spot market for municipal waste to emerge, with per-ton prices fluctuating by the day.
Covanta Energy, the operator of a 560,000-ton waste-to-energy facility in Rahway, gets only about 410,000 tons of its raw material municipal waste from within Union County. It makes up for the shortfall by procuring about 120,000 tons of such waste annually from the spot market, said Rick Sandner, CovantaÂs Newark-based vice president of business administration for the region.
ÂWithout the spot market, we would not be able to run the plant at full capacity,Â said Sunil GargSimilarly, Camden CountyÂs waste-to-energy incinerator gets 90 percent of its municipal waste from within the county, but relies on the spot market for the remainder Â about 100 tons of its 1,050-ton capacity, said John Londres, deputy director of the Pollution Control Financing Authority that owns the facility.
The sellers in the municipal waste spot market are the so-called Âhaulers,Â which include big corporations like Waste Management Inc. and Republic Services Inc., as well as smaller operators. They collect trash from residences for a fee and sell them to incinerators, landfills or larger operators for a so-called Âtipping fee.Â The difference between the two is the haulersÂ profit.
Waste-to-energy facilities are these days charging lower prices for accepting municipal waste because of a shortfall in overall waste collection, Sandner said. Londres agreed, saying his Camden facility accepts waste Âat a few dollars belowÂ its $64-a-ton rate for supplies from within its county.
Both said the recession has hurt volumes of trash generation by between 8 percent and 10 percent, as households get more frugal with purchases, but Sandner is convinced Âthere is upside in the marketÂ over the long term, and that the Rahway facility will be able to charge higher tipping fees for the waste it procures from the spot market. That is because he expects awareness to increase over time about the benefits of converting trash into energy, instead of sending it to landfills.
Haulers like A&S Sanitation, in Fanwood, are not happy with the current pricing system, said Fabio Araneo, owner and president. By law, all of Union CountyÂs municipal waste must go to the county-owned Rahway plant, for which haulers pay $94 a ton, he said. But the plant procures waste from the spot market from out-of-county haulers for as low as $44 a ton, he said.
Garg said haulers pay a higher price for trash from within Union County because of a state-approved mechanism that includes a debt-service component for the Rahway plant. Also, the county guarantees to accept all the trash from its county, whether or not its waste-to-energy facility needs it, he said.
Araneo is not convinced that is a fair argument, but meanwhile continues to ply his 10 trucks and cart in 250 tons each month. ÂI never skipped a beat, and always brought my garbage to the [Rahway] incinerator,Â he said.
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