SCMUA to expand methane production

Agency hopes to triple gas generated at landfill, By Tom Hoffman Lafayette — The Sussex County Municipal Utilities Authority (SCMUA) is on the verge of dramatically expanding methane production from its landfill. Since 1996, Lafayette Energy Partners LP has been extracting methane gas from a section of SCMUA’s landfill off Route 94 here. Lafayette Energy Partners uses generators to convert the gas to electricity, which it then sells on the open market, according to SCMUA Administrator John Hatzelis. Lafayette Energy Partners pays SCMUA about $70,000 a year for its methane gas, said Hatzelis. But Lafayette Energy Partners’ production capacity is limited and the company can only withdraw a portion of the methane gas available from SCMUA’s solid waste operations, he said. SCMUA is now in negotiations with three companies and expects to award a 20-year contract within two months to a winning bidder under a forthcoming production agreement that could triple the annual amount of methane production from SCMUA’s solid waste facilities. The three finalists were selected by SCMUA from bidders in November, said Chief Engineer Tom Varro. The winning bidder would rent or lease a space of less than one acre on SCMUA’s Lafayette property, bring in generators and build a substation to connect to the local power grid. Additional methane production is expected to go online by the end of 2010, said Hatzelis. The costs to SCMUA and Sussex County taxpayers for a new production facility would be zero, said Hatzelis. The winning bidder would pay an estimated $7 million to make the necessary capital investments to operate an expanded production facility on SCMUA’s solid waste site. Those costs include permits from the New Jersey Department of Environmental Protection as well as costs associated with connecting the facility to the power grid. SCMUA’s annual operating cost to run its solid waste facility is roughly $11 million, said Varro. Slightly more than half of that goes toward paying debt, he said. Varro said he wasn’t sure how much additional revenue the new production agreement would generate for SCMUA. But he said any increase would enable the utility to become more self-sufficient in meeting its debt service payments and operating costs. The state of New Jersey currently contributes $1.8 million to fill a “hole” in SCMUA’s annual budget, said Varro.