The Trash Blog

Milo Says: Buy High, Sell Low

One of the great wonders of modern literature is the egg-selling scheme of Milo Minderbinder in Catch-22. Milo makes a profit by buying eggs for seven cents a piece and selling them for five cents. Researching how Casella sold the $122 million MERC incinerator to Biddeford for $6.5 million, I felt like Joseph Heller was at my side.

In 1999, the State of Maine passed Renewable Portfolio Standard legislation mandating that 30% of total retail electric sales come from renewable sources such as fuel cells, tidal power, solar arrays and installations, wind power, geothermal power, hydropower, biomass power or generators fueled by municipal solid waste in conjunction with recycling. Sources conforming to this standard were designated as Class II Renewable Energy Credits (RECs).

In 2006, Maine legislated that by 2017 at least 10% of total retail electric sales come from new renewable energy sources, (not from the plentiful preexisting hydro-electric plants and biomass incinerators). Sources conforming to this new standard were designated as Class I RECs.

Under the new law, Municipal Solid Waste incinerators are not eligible for the Class I Renewable Energy Credits (REC) while landfill gas (LFG) plants are. So the answer to why Casella would sell a $122 million incinerator for the low, low price of $6.5 million has to do with REC legislation.

A woman named Hillary Lister, who has made herself something of an expert on the subject, points out that it is more profitable for a waste disposal company to put waste in a landfill where it will increase LFG generation than to burn it in a Waste-to-Energy plant because of the REC system.

Lister notes that the traded value for Maine Class II RECs was $0.20 per MWh in 2010, while the traded value for Class I RECs was $13.00 per MWh in 2011 (Source: MPUC RPS Report 2011 – Review of RPS Requirements and Compliance in Maine, January 30, 2012).

Unfortunately for Maine, their waste disposal hierarchy places landfilling at the bottom. So the state is in the awkward position of having legislation that mandates that landfilling should be the last resort (as evidenced by the recent passage of a moratorium on landfill expansion permits) and legislation that promotes the use of landfills as a waste disposal method.

Yes, we can buy eggs for 7 cents a piece and sell them for 5 cents a piece at a profit.

This entry was written by Philip and published on February 28, 2014 at 1:11 pm. It’s filed under Energy, Incinerators, Landfills, Laws and Regulations and tagged , , , , , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

2 thoughts on “Milo Says: Buy High, Sell Low

  1. Uncle Chris on said:

    Perhaps you can read my mind on this one. . .. . !

  2. Oh my gosh! It’s true! Milo wasn’t crazy after all…….. : )

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