ReEnergy renews bid to buy SPSA

Published 11:00 pm Tuesday, July 7, 2009

A New York-based company has renewed its bid to purchase the Southeastern Public Service Authority.

ReEnergy Holdings, LLC submitted a proposal Tuesday under the state’s Public-Private Education Facilities and Infrastructure Act of 2002. The company, which initially put forth a less precise offer in August 2008, hopes to acquire, improve, finance and operate the solid waste management facilities currently owned and operated by SPSA, the regional trash disposal authority.

SPSA is mired in $248 million of debt and hopes to privatize the operation of its waste-to-energy plant in Portsmouth. ReEnergy, however, wants to take over the entire operation, including the waste-to-energy plant, the regional landfill in Suffolk, nine transfer stations and all the authority’s trash trucks.

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“We are formally expressing our proposal in the context of this PPEA process,” said Larry Richardson, principal executive officer of ReEnergy. “We have been talking with the member communities and the interested citizens over the last six months. We’re excited.”

Tom Kreidel, a spokesman for the trash agency, said the proposal was hand-delivered to SPSA headquarters in Chesapeake on Tuesday. It is up to the authority’s board members how much stock to put in the offer, Kreidel said. It could be discussed as early as the board’s next meeting, he added, or the Authority could choose to reject the offer outright.

ReEnergy proposes to purchase SPSA for about $243 million, which would allow the authority to retire all of its debt by April 30, 2010. During a three-year phase-in period, the tipping fees for the eight member communities would step up or step down from current levels to a target level of $87.50 per ton, which is about half the current level of $170 per ton.

Suffolk currently pays no tipping fee in exchange for hosting the landfill. That would change under ReEnergy ownership — all communities would pay the same tipping fee, but Suffolk would receive compensation for the landfill.

In addition, the ReEnergy proposal would transfer ownership of each transfer station to the member community in which it is located, and ReEnergy then would lease the facility from the locality for operation.

“This gives communities the ultimate control over their own destiny at the end of 20 years,” Richardson said. Should the localities choose not to renew the ReEnergy contracts at the end of 20 years, they would then have complete control over the transfer station, he added. The cities also would be able to better control the level of litter, noise, odor and other annoyances emanating from the stations.

In contrast to previous ReEnergy proposals, the new offer would allow SPSA to continue operating in a significantly reduced form and as a part of ReEnergy’s Hampton Roads operation. Richardson said that concession originated from talks with the chief administrative officers of the member communities.

“What we heard was a very strong desire to have a dramatically slimmed-down SPSA agency survive,” Richardson said. “We have embraced that concept here and listened to that desire.”

The new SPSA entity would be responsible for contractual oversight and perhaps educational programs, Richardson said.

ReEnergy would use a recycling-based approach to its program, providing financial and other incentives to encourage localities, businesses and individuals to recycle as much as possible. ReEnergy also would seriously consider bringing back yard waste recycling, which SPSA discontinued last year, and expanding the tire-recycling program, Richardson said.

ReEnergy’s prior offers to purchase the authority’s assets were more general and less formal than the current offer. The first, in August 2008, did not even include a possible purchase price. ReEnergy got more serious during the winter, renewing its offer and establishing a Web site,, to communicate with residents in the member communities. The company offered $205 million in that proposal. SPSA rejected the offers with little public discussion.

SPSA is nearing the end of the process to sell the waste-to-energy plant. Two companies — Covanta and Wheelabrator — have been asked to submit formal proposals by mid-July to purchase the Portsmouth facility. The authority has been in talks with the two companies for several months. SPSA has been using the sale of the facility as a reason for not giving consideration to ReEnergy’s previous proposals. No definite price tag has been placed on the facility yet, Kreidel said, because that is one of the things SPSA expects to get from the companies’ bids.

The PPEA is a process established by the state that allows private entities to become involved in various public projects. SPSA now must determine whether to accept the proposal for publication and consideration. If it accepts the proposal, it must invite competing proposals by way of public notice, and then proceed to consider each proposal.

That choice could realistically be expected to delay the negotiations between SPSA, Covanta and Wheelabrator.

The full ReEnergy proposal will be available for download later this week at and at