Categorized | Opinion

Former alderman raises biodigester concerns

Letter to the Editor

Dear Editor,

As a former long-term alderman and chair of Finance, I have become troubled by the bio-digester fiasco that has erupted.

While this $4.5 million project has not garnered near the public scrutiny it deserves from both financial as well as environmental perspectives, it has become incumbent upon me to speak up on a project that has the likelihood of putting the Town’s finance’s and certainly that of Grimsby Power et al in serious jeopardy.

In June 2010, as an alderman I was given a document that detailed the project. I am sure that not much has changed to its viability, except the costs of the project have gone up, while the meagre income projections are even more dubious.

What was amazing is the poor degree of accounting and planning that the directors of Grimsby Energy (Power) were expecting us to swallow.

The science of bio-reactors is public knowledge, and therefore well cautioned up front in this document.

Bio-reactor technology is NOT for extreme cold or hot climates, as no bio-reaction can take place. This means simply this machine will NOT work in the dead of winter or July-August, essentially 4–5 months of the year. The basic operating use is about 65 per cent. The vendor uses 85 per cent, which is overly optimistic. Deduct 20 per cent of the projected revenues – to no more than $800,000. And the contracted revenues can never increase.

From there, proper expenses have to be accounted for. They say three full-time people. The local dump has over 20 people daily, and its not a complex power plant that requires staffing 24/7, so staffing goes from three to at least 10 people, $800,000 or more in wages. It’s a break-even proposition at best. But no, it gets worse.

Annual expenses are: fuel costs, $300,000, an admitted guess.

The Vendor again hopes that maintenance on a powerplant to be $50,000 – not credible – more like $200,000.

“Interest only” at 7.5 per cent on a loan is said to be $300,000 (it will be higher now because the feds and province did not approce grants).

So now the plant could have a recurring LOSS of ($800,000), and the LOSS could grow every year, as expenses grow.

But what is amazing is Grimsby Power directors have NOT accounted for two very BIG financial obligations.

Depreciation – $450,000 per year; debt repayment should be $638,000.

The total annual loss could be as high as $1.6 MILLION per year. It is unclear if security, insurance, licences, taxes and benefits have been accounted for.

What scares me is that Grimsby Power won’t have enough money to pay for the interest on the Town’s promissory note that it receives each year which will increase your taxes.

Accordingly, either our taxes or our power rates increase dramatically. Given that council was advised to get public input and a proper investment report before going ahead, but did not, this just gets better. More to come.

Wayne Fertich
Former Alderman &
Chair of Grimsby Finance Committee (2003 – 2010)

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