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July
14, 2000
To: Special Joint Meeting of Works Committee and Policy and
Finance Committee
From: Barry H. Gutteridge, Commissioner, Works and Emergency
Services
Subject: TIRM Disposal Project Requests for Further Information
Purpose:
The purpose of this report is to provide the Works and Policy and
Finance Committees with responses to requests for further information
identified by the Joint Committee at its meeting of June 22, 2002.
Financial Implications and Impact Statement:
There are no direct financial implications arising from this report.
Recommendations:
It is recommended that this report be received for information.
Background:
At a meeting on June 22, 2000, the Policy and Finance Committee
and Works Committee had before them reports related to the Toronto
Integrated Solid Waste Resource Management ("TIRM") Process.
The Policy and Finance Committee and the Works Committee jointly
deferred consideration of the aforementioned reports until a further
joint meeting of the Committees, to be held at the call of the Chairs;
and requested the Commissioner of Works and Emergency Services to
attain final and best pricing scenarios from the Respondents and
report back to the Committee on a series of related information
requests.
Discussion:
Below are our responses to each of the items identified by the Joint
Committee:
(1) Contact all of the Respondents, in writing, for confirmation
of the terms and conditions of their proposals and request that
they provide final and best pricing scenarios on their proposals,
including a separate price for dealing with the private sector (ICI)
waste, including consideration of road and rail options, by sealed
submissions to be made no later than June 30, 2000, at noon to the
Chief Financial Officer and Treasurer for further evaluation and
report thereon, in conjunction with the Commissioner of Works and
Emergency Services, to the aforementioned joint meeting of the Policy
and Finance Committee and the Works Committee;
Response:
All Respondents were contacted and have responded as requested.
The results of this process are contained in the supplementary report
from the Commissioner of Works and Emergency Services and in part
through an In Camera Report from the Chief Financial Officer and
Treasurer in order to provide analysis and supplementary recommendations.
Both reports form part of the July 21, 2000 agenda of the Joint
Committee.
(2) (i) Address consideration of the implications and feasibility
of advancing the contracts to 2001;
Response:
Each of the Respondents was asked to provide a response as to whether
or not they could advance their contract start date to 2001.
Republic, Green Lane and Essex-Windsor have advised that they can
provide disposal services as of January 1, 2001. Onyx is currently
operating under contract to the City until January 1, 2003. Rail
Cycle North has advised they cannot advance their start date to
2001.
(ii) Address development of a flexible disposal option that does
not include extending the life of the Keele Valley Landfill Site;
Response:
The supplementary report from the Commissioner of Works and Emergency
Services provides recommendations that would facilitate a closure
of the Keele Valley Landfill Site at the end of 2002.
(iii) Address staffs understanding of the Council direction with
respect to the closing of the Keele Valley Landfill Site;
Response:
Staffs understanding of Councils direction with respect to closing
Keele Valley Landfill Site (KVLS) is as follows: City Council, at
its meeting held on October 1, and 2, 1998, adopted, as amended,
Clause No. 1 of Report No. 8 of the Works and Utilities Committee,
headed "Keele Valley Landfill Site Filling Options". In addition,
Council directed that the financial implications and costs be referred
to the Budget Committee for consideration in the 1999 Budget.
Clause
No. 1 recommended:
(1) the adoption of Slow Fill Option "B" for filling the Keele Valley
Landfill Site, as outlined in the report dated August 28, 1998,
from the General Manager, Solid Waste Management Services; and
(2) the adoption of the aforementioned report.
By adopting Slow Fill Option B, Council authorized staff to export
450,000 tonnes per year to the Arbor Hills Landfill in Michigan,
which resulted in a projected target closure date for the Keele
Valley Landfill of late 2002. Council did not direct staff at any
time to close Keele Valley Landfill by a specified date.
(iv) Address the current balance of capacity of the Keele Valley
Landfill Site under Slow Fill Option B, adopted by Council on October
1 and 2, 1998, and various filling options to facilitate closing
the site at the end of 2002;
Response:
At the current filling rate of 1.4 million tonnes per year, and
based on the most recent settlement surveys, staff has projected
that KVLS will close at the end of March 2002. The actual closure
date may be any time in the first or second quarters of 2002.
There are basically two options for guaranteeing the extension of
KVLS to the end of 2002:
(1) export an additional 300,000 tonnes per year to other landfills
starting January, 2001; or
(2) ban all private sector waste from our transfer stations and
landfill (currently 610,000 tonnes per year) effective November
2001.
Option 1 is strongly preferred because the financial impact is approximately
$10 million less and it allows the City to retain its private sector
customer base. Once the private sector is cut off from using City
facilities, there is no guarantee that they will return. The TIRM
financial projections are based on retaining 500,000 tonnes of private
sector waste in our system after Keele Valley closes.
Address pricing of the various disposal options based on the City
reaching a 60 percent diversion rate by 2006.
Response:
The recommendations for award of contract contained in the supplementary
report of the Commissioner of Works and Emergency Services provide
the City with the ability to reach a 60 percent diversion rate by
2006 without financial penalty. A 60 percent diversion rate would
represent a 10 percent increase in diversion over the current Council
goal of 50 percent by 2006. An additional 10 percent increase in
diversion would equate to an additional 100,000 tonnes per year
diverted from disposal, above the 500,000 tonnes that would be required
to be diverted to reach the goal of 50 percent.
In the event the recommendations contained in the Commissioners
supplementary report were not adopted, the City could achieve a
60 percent diversion rate through a reduction in tonnages to a Respondent
awarded a contract. This could be achieved through the conclusion
of a contract at an option point or the curtailment of tonnages
to one Respondent which may require the City to pay for the loss
of value for purchased transport equipment after its declared surplus
and sold.
Address the position of Rail Cycle North with regard to the impact
of reduced tonnages that may be shipped to landfill sites in the
context of the Citys diversion efforts.
Response:
Rail Cycle North has submitted to the City a proposal under the
TIRM Process that has been identified as a "no put or pay" proposal.
This means the City can reduce the tonnages delivered to Rail Cycle
North due to diversion and engagement of new and emerging technologies,
without having to pay for waste that had initially been committed
to in a contract but was not delivered.
However, Rail Cycle Norths proposal for a "no put or pay" contract
has been qualified by Rail Cycle North in the following manner.
The City currently disposes 1.8 million tonnes of solid waste per
year. Rail Cycle Norths proposal is to manage a maximum of 1.3
million tonnes per year at the Adams Mine Landfill. The City would
therefore require one or more additional Respondents to dispose
of the additional 500,000 tonnes per year currently requiring disposal
above the 1.3 million that would be disposed by Rail Cycle North,
should they be awarded a contract. Rail Cycle North has advised
that before the "no put or pay" provision could be invoked by the
City, it would be required to divert all of the 500,000 tonnes of
additional solid waste it currently disposes of before tonnages
within Rail Cycle Norths 1.3 million tonne per year contract could
be reduced through diversion.
vii) Address other scenarios for transportation costs to Essex-Windsor,
one scenario to the Citys cost net of overheads;
Response:
The two options for transportation to the Essex-Windsor Landfill
site are:
(1) contracting with the private sector; or
(2) using municipal staff and equipment.
Based on a review of bid prices received and a review of internal
costs, staff have determined that a municipal operation of transportation
to the Essex-Windsor Landfill (round trip of approximately 780 kilometres)
is cost competitive with the private sector. Achieving the most
efficient transportation operation will require purchasing "highway"
tractors with improved fuel efficiency over our current fleet. Since
the highway tractors will not be available until 2002, staff have
factored into the cost estimates the use of the existing tractors
for the first year of operation. The highway tractors are critical
to achieving competitive transportation costs, and can be sold on
the used equipment market after the expiry of the disposal contract.
At the previous joint meeting of the Works and Policy and Finance
Committees, the issue was raised as to whether the Citys cost of
hauling waste to the Essex-Windsor landfill site could be adjusted
downward by excluding overhead costs. The cost estimates used in
the financial analysis included driver salaries and benefits, amortized
vehicle capital costs, fuel, maintenance, licence and insurance
costs and direct supervisory costs. No indirect overhead costs were
included in the cost calculation, and as a result we would not recommend
any adjustment to the cost estimates.
viii) Address increased rail opportunities in light of new rail
modalities presented to the Committees at the meeting;
Response:
At the close of the call for best and final pricing scenarios, Rail
Cycle North and Republic continue to offer rail based transport
to the City. A third Respondent, Onyx, has advised that they cannot
put forward a rail based option at this time but if given sufficient
time could develop a rail alternative. They have advised it would
require a higher price. The remaining two Respondents, Green Lane
Environmental Group and the Essex-Windsor Waste Management Authority,
are proposing truck based options.
Address possible COand other possible credits for transportation
by rail instead of by truck.
Response:
Our project consultant, Earth Tech (Canada) Inc., has advised us
that the emission reduction credit market is essentially an unregulated
futures market, with a limited number of purchasers currently active
in the market. However, they also advise us through a June 29, 2000
communication to the project manager of the following:
"The Ontario government is following up on its pilot emission reduction
trading program with a commitment to support and recognize trades
of emission reduction credits. It is moving ahead on plans to establish
requirements for registration and recognition of emission reduction
credits for 12 industrial sectors in 2001, in addition to requiring
reporting of emissions for several contaminants, including carbon
dioxide for selected sectors. This is in contemplation of establishing
a cap and trade system for each sector. The 12 sectors include the
transportation sector."
"It is, therefore, likely that a formal market for emission reduction
credits will be in place for the transportation sector within the
next few years, and there is a possibility that [the] transportation
sector will participate in the "informal" trading market."
During the course of its macro-environmental evaluation of TIRM
proposals, our consultant applied the following factors for transporting
one tonne of waste one kilometre, in regard to greenhouse gas emissions:
Truck 0.0275 kilograms of greenhouse gasses emitted.
Train 0.0104 kilograms of greenhouse gasses emitted
It thus can be seen that train transport reduces emissions by a
margin of greater than two to one over road transport.
(x) Address the balance of waste remaining in the Greater Toronto
Area after the 50 percent diversion by 2006;
Response:
As stated in our report entitled "TIRM Process Disposal and Diversion
Tonnage Projections" to the joint Works and Policy and Finance Committee
meeting, the amount of waste remaining for disposal in Toronto and
in the Regions of Durham, York and Peel is dependent on several
factors, including population growth, waste diversion performance
and, in the case of our GTA partners, the cost of alternative disposal
options. The projected amount of municipal waste available for disposal
in 2007 under the TIRM process, assuming Toronto, Durham, York and
Peel achieve their diversion targets, is 1,001,304 tonnes. Annual
tonnage projections for the entire 20-year planning period are provided
in Attachment 1 of the above-mentioned report.
(xi) Address the estimated cost of diversion programs by 2006;
Response:
One of the work tasks of the TIRM Diversion Request for Proposals
(RFP) consulting team was to develop a model to project the cost
of implementing the various integrated waste management systems
arising out of the Diversion RFP process. This task was later expanded
to include an analysis of the Wet/Dry system proposed by CUPE and
TEA.
The three alternatives modelled by the consultants to achieve 50
percent diversion by 2006 are described below:
Alternative 1: Recycling (fibre and containers) plus mixed waste
processing
This alternative is similar to the current system except that a
portion of the current mixed waste stream, presently being landfilled,
is processed for recovery of organic material and recyclables. Sufficient
mixed waste is processed in order to achieve the overall 50% diversion
target.
Alternative 2: Wet/Dry (single family) plus recycling (multi-family)
Under this alternative all the material from the single-family residential
sector is divided into a wet stream, which is aerobically or anerobically
composted, and a co-mingled dry stream which is processed to recover
recyclable materials. The current recycling program continues in
the multi-residential sector and the mixed waste from this sector
is landfilled.
Alternative 3: Three Stream Recyclables (fibre and containers),
organics plus mixed waste processing.
Under this alternative the current recycling program continues and
organic materials are separated out by single family householders
for separate collection and composting. To achieve 50% diversion,
all the mixed waste from multi-family residences plus a portion
of the mixed waste residue from single family households must also
be processed.
Although the consultants have not completed the modelling work task,
a summary of their preliminary system cost ranges for each of the
system alternatives is presented in Attachment 1. The system cost
information presented includes the estimated cost per tonne, annual
cost and annual cost premium over the current diversion system.
The systems provide for the management of all the residential materials
(recyclables, organics and waste) generated by the single family
and multi-family residential sectors of the City of Toronto. No
provision is made for managing municipally collected commercial
waste or waste from Torontos agencies, boards, commissions and
departments, although this material could be accommodated through
further system expansion.
The costs include estimates for collection, transfer, processing
and disposal of residue at remote sites. The estimates include both
operating and amortized capital costs and all costs are at current
(year 2000) price levels. The costs for mixed waste processing,
wet stream processing and organics composting are based on some
consideration of the bid prices received through the TIRM Diversion
RFP, as well as cost information from the City of Halifax and from
our Dufferin Mixed Waste Recycling and Organics Processing Facility
currently under construction. Dry processing costs for the Wet/Dry
system are based on a review of facilities currently operating in
the City of Guelph and Northumberland County, coupled with a consideration
of recent developments in dry stream processing technology.
As can be seen in Attachment 1, an estimated $13.8 to $26.2 million
annual cost premium is projected to achieve the 50% diversion target,
based on a preliminary analysis. It is possible that diversion system
costs could come down over time as new facilities are constructed
and advances in technology are made. Presently there is a very limited
track record in implementing diversion systems that achieve 50%
or more diversion within major urban centres.
Additional analysis is required to determine which diversion system
is appropriate for Toronto and the precise budget impacts.
(3) Communicate with the other interested regional governments in
the Greater Toronto Area requesting information, in writing, of
their participation in contracts for waste disposal; and submit
a report to the role of the Regions of York, Durham and Peel in
the partnership.
Response:
The ability to facilitate inter-regional GTA disposal planning has
been provided through a Memorandum of Understanding ("MOU") that
has been adopted by the City of Toronto and the GTA Regional Municipalities
of Peel, York, and Durham. It provides for a process of potential
partnership among the four municipalities to combine their residual
solid waste disposal needs under a common contract(s). Participation
under the MOU is voluntary on the part of the GTA Regions and the
City, and is therefore not a binding commitment on any of the parties.
York Region, for example, is currently engaged in its own separate
RFP processes for disposal and diversion services.
The Regional Municipality of Halton, the other GTA Region, has elected
not to adopt the Memorandum of Understanding because it has sufficient
capacity at its Regional landfill near Milton, Ontario to meet their
disposal capacity needs for several decades.
In addition to adopting the Memorandum of Understanding, Peel, York
and Durham have also provided to Toronto their final best estimate
of disposal needs on an annual basis through the course of the 20-year
planning period.
At this time Commissioners of Works for Peel, York, and Durham are
awaiting City Councils decision in regard to a GTA "shared solution"
option in order to undertake their own due diligence before reporting
to their respective Councils. We anticipate those decisions on partnering
with Toronto will be concluded by the GTA Regions by mid-September
2000. This will be followed by a staff report to a Joint Committee
meeting requested for late September incorporating the GTA decisions,
prior to Councils final scheduled meeting of October 2, 3, and
4, 2000.
(4) Further report to the joint meeting on expanding the study of
the CUPE/TEA (Toronto Environmental Alliance) Wet/Dry proposal to
consider the inclusion of commercial strips and/or condominiums
as well as single family dwellings which are currently being studied.
Response:
It is quite possible that a Wet/Dry system could be effectively
implemented in some residential condominium buildings and commercial
collection areas. However, based on the experience of the City of
Guelph, staff has modelled the wet/dry system for single family
households only. Once such a system was successfully implemented
in this single family sector, consideration could be given to expanding
to commercial strips and condominiums.
(5) Work with Enwave District Energy Limited and report to the joint
meeting on the exploration of anaerobic digestion of waste, particularly
organic wet waste, as a possible source of recovered energy in the
form of heat and/or electricity.
Response:
We have received a formal request from Mr. Juri Pill, P.Eng., President
and CAO of Enwave District Energy Limited ("Enwave") to meet with
him and to discuss opportunities for the provision of solid waste
to provide the feedstock for an anaerobic digestion plant that would
in turn produce steam heating. We will provide the Works Committee
with a report as part of the "New and Emerging Technologies" portion
of the TIRM Process.
(6) Request the consultants involved in advising the Committees
and Council on this matter to attend the next joint meeting to answer
questions that Members of Council may have, such meeting to be videotaped
and held in public session with respect to those matters normally
dealt with in public.
Response:
Our consultants are available to respond to questions from members
of the Joint Committee and Council related to their assigned work.
Report to the Policy and Finance Committee and the Works Committee
by September 2000 on the feasibility of achieving a higher diversion
rate through the use of new technology, and revising the diversion
rate set by City Council from 50 percent by 2006 to 75 percent by
the year 2010.
Response:
We will provide the requested report to the two Committees in September.
Conclusions:
This report has provided responses to a range of information requests
by the Works and Policy and Finance Committees related to the TIRM
Disposal project.
Contact
US:
Andrew Pollock
Director, Policy and Planning
Solid Waste Management Services
Works and Emergency Services
Phone: 416-392-4715
Fax: 416-392-4754
E-mail: apolloc@toronto.ca
Lawson Oates
Manager, Strategic Planning
Solid Waste Management Services
Works and Emergency Services
Phone: 416-392-9744
Fax: 416-392-4754
E-mail: loates@toronto.ca
Angelos Bacopoulos
General Manager, Solid Waste Management Services
Barry H. Gutteridge
Commissioner, Works and Emergency Services
List of Attachments:
Attachment 1 Residential Waste Diversion
System Alternatives
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