Rahway settles with Utilities Authority

By Paul Greulich, Staff Writer

RAHWAY— The Union County Utilities Authority, or UCUA, is cutting Rahway a check for $3 million for years of unpaid usage fees related to the waste incinerator located in the city.

The UCUA owns the incinerator and leases it to Covanta Energy, while Rahway is paid a fee as the host municipality. An agreement for the city to receive $4.50 per ton of waste for any tonnage exceeding  446,760 tons was not honored for several years.

Negotiations to recoup the money began two years ago after former mayor James Kennedy learned of the mistake through conversations with former UCUA director Sunil Garg. The UCUA owes Rahway a total of about $4.5 million, all of which the city expects to be paid.

The resolution accepting the settlement agreement was added to the Rahway City Council’s agenda following a closed session discussion at the Dec. 13 meeting. Local officials were relieved to see the matter being resolved without the need for litigation.

Business Administrator Peter Pelissier described the negotiations as “hard, honest and gentlemanly”.

UCUA Acting Director and Freeholder Dan Sullivan was also satisfied.

“I think it’s just about resolved at this point,” Sullivan said. “I think it was important to resolve this matter in an amicable way and we’ll move forward from here.”

Why the money was never paid out as planned remains unclear to local officials.

“I don’t know why they didn’t pay us. They just didn’t pay us,” Pelissier said.

Sullivan, who took over as acting director in August, was equally uncertain of the cause of the mistake.

“Why that occurred I honestly can’t say,” Sullivan said.

Rahway Councilman Samson Steinman said it appears to have been an honest, though very significant, mistake.

Pelissier said the issue did not hurt the working relationship with the UCUA.

“We look forward to continue working with the UCUA,” Pelissier said.

Sullivan said the $3 million payment will likely come through after the first of the year. The remainder is expected to be paid back in future installments. Pelissier said the money will possibly be split, with half being used to stabilize taxes for the calendar year 2012 budget. The other half will go to the surplus account.

Sullivan said the $3 million up-front payment does not have a serious impact on the finances of the UCUA, thanks in part to the refinancing of the UCUA’s lease agreement with Covanta.

“Fortunately the new agreement with Covanta provides some of those funds,” Sullivan said. “It will allow us to get that done in a timely basis.”

The extended lease approved by the UCUA will allow Covanta to continue to manage the energy-generating waste incinerator until 2031.

One of the major aspects of the deal is that the tipping fee will be lowered by $12 dollars a ton for all 14 towns that the UCUA contracts with. The authority will also provide $500,000 in solid waste grants to waste generators in the seven non-contract municipalities equating to an additional savings of $3 per ton.

Union County says the new agreement will save the county and local governments $100 million over the course of the lease, or $4 million each year.

Because the lease deal is in effect retroactive to Jan. 1, 2011, municipalities will receive rebate checks for their waste disposal costs during 2011.

According to the Authority, the following municipalities will immediately be receiving direct reimbursements, Elizabeth, $658,000; Garwood, $16,000; Hillside, $101,000; Kenilworth, $30,000; Linden, $148,000; New Providence, $41,000; Plainfield, $235,000; Rahway, $158,000; Roselle, $95,000; Roselle Park, $54,000; Springfield, $67,000; Summit, $90,000; Union, $69,000; Winfield, $9,800.

“What it does is recalibrate the whole deal we had with Covanta and provide for monies that go directly to the towns for whatever purpose they decide,” Sullivan explained.

Paul Greulich can be reached at 908-686-7700 ext. 121, or at thelocalsource@gmail.com.