Unless the Connecticut Resources Recovery Authority remakes itself into a more modern business model, the quasi-state agency in charge of trash disposal will be running a $10 million deficit by mid-2015, according to a report commissioned by the state Department of Energy & Environmental Protection.
New York consulting firm Cohn Reznick performed an overview report – not a detailed audit – of the CRRA as Connecticut officials look to modified how the state handles its waste stream, including increasing the recycling rate and continuing to burn, rather than bury, garbage.
“We’re pleased that the audit report has validated what we’ve been saying for years – that low power prices are going to impact the trash-to-energy industry – and we’re gratified the audit found no financial irregularities,” said CRRA President Thomas Kirk. “Next week we’ll present our transition plan to the Resource Recovery Task Force and show how we can make our business sustainable.”
The report found CRRA will run a $4.3 million deficit by the end of this fiscal year, which ends on June 30. In the coming fiscal year, the report projects a $9.2 million deficit, followed by $9.6 million in the fiscal year starting July 1, 2015.
DEEP Commissioner Daniel Esty called the report a solid first step toward making CRRA a viable entity, as a part of the state’s long-term recycling and trash disposal goals.
CRRA handles trash disposal and recycling for about 70 cities and towns in Connecticut, competing with private firms like Covanta Holding Corp. and Wheelabrator Technologies.
The deficit largely will be caused by falling electricity prices, which CRRA did not account for in its original budget projections. Those prices impact how much CRRA will be paid for generating power at its trash-burning facilities. The study also believes CRRA will start to see more towns move toward the private companies.
To make CRRA a viable agency, the report suggests the organization look at other revenue streams like food waste-to-electricity systems, encouraging more recycling by offer municipal incentives, having executives set budgets instead of middle managers, and partner with other agencies to lower transportation costs.
