MWRD faces $42 million recycling dilemma

Construction is finished on the Metropolitan Water Reclamation District of Greater Chicago's new biosolids processing plant, which converts sewage-treatment byproducts into nutrient-rich pellets that can be used as fertilizer. But officials are far from celebrating. 

That's because the plant presents them with a vexing choice: Proceed with testing and opening the plant, which will cost millions more than officials had anticipated, or abandon it at a cost of $124 million.

The latter, the Commissioners now realize, is the cheapest option.

“The lowest cost option at any particular time is to abandon the facility,” says an internal district memo. 

The district contracted with Metropolitan Biosolids Management to build and operate the plant for 20 years at a cost of $217 million. The contractor is now seeking an additional $42 million in payments from the district, mostly because of rising fuel costs. 

The contract allows the district to buy the plant outright. In that case, officials say, the district could abandon the plant and use existing methods to process sludge left over from its sewage treatment operations. 

“When do we tell taxpayers we won’t use the pellitizer plant because it’s too expensive?” asked district Commissioner Frank Avila.

Completed three years behind schedule, the facility is part of MWRD’s biosolids processing program, which decades ago began looking for alternatives to hauling sludge left over from wastewater treatment to landfills. 

Existing methods of processing biosolids include eight lagoons and five drying sites. The pelletizer plant relies on heat-drying technology, which produces  a more condensed product, limiting the volume of material that needs to be transported.

MBM's $217 million bid was the lowest to build and operate the plant. Its contract calls for MBM to build the facility at the Stickney Water Reclamation Plant and operate it using recycled oil for a period of 20 years. At the end of 20 years, the pelletizer plant’s ownership would convert to the District.

The plant was expected to be completed by spring 2006, according to MBM's website. The District plans to levy nearly $2 million in liquidated damages to date against MBM because of the delays.

MBM recently informed the District that the pelletizer plant is ready for a 60-day test run, after which it could begin churning out 150 tons of biosolid pellets a year. But the company also advised that it would need an additional $42 million to operate the plant over the next 20 years, due to the higher cost of fuel, an issue which is further complicated by the contractor’s request to switch fuel sources from recycled oil to natural gas. Natural gas is approximately twice as expensive as recycled oil.

“We want to use reclaimed oil. The problem is that the market is changed. The difference is in the inflation of gas,” said Bart Lynam, a partner with MBM. According to MBM, recycled oil is not available in the necessary quantities, but this fuel change is not responsible for the increased cost because under the contract, MBM must split the cost of the new fuel with the District, 50-50, so as to incur no extra cost on the District.

Under the terms of the contract, MBM is permitted to switch fuels, as long as it can prove that the fuel it used in the bid is not available. The switch must be approved by the Board of Commissioners, which has thus far withheld its approval. 

The District is awaiting proof from the contractor showing that it must change fuels. MBM is expected to provide such documentation by the end of March.