PITTSFIELD, Mass. — Covanta plans sell its waste-to-energy facility on Hubbard Avenue in the coming month.
The company announced its intentions to sell both the Pittsfield and Springfield locations to Community Eco Power during a conference call with investors on Friday. The company expects the sale to be completed by the end of May. The sale comes after the company opted to close another facility in New Jersey.
"While all three plants were well run, they suffered from relatively small sizes and we saw limited opportunities for improved economics under our ownership. We're pleased to have found a new owner for Springfield and Pittsfield, who will focus solely on their operations and will continue to support the local communities," President and CEO Stephen Jones said in a conference call.
According to Director of Communications James Regan, the new buyer intends to continue the plant's operations.
"We saw great value for our employees and the communities we serve," Regan said. "We felt this was the best outcome for our employees and our customers."
The agreement to sell both plants is in place but the closing has not yet occurred. Regan believes the employees currently working at the plant will stay under new ownership, but ultimately, that decision will be left to the new owners.
"It is our understanding that they are happy with the employees," Regan said.
The deal has been worked on for about a month or so, Regan said, but he would not disclose the price. Convanta has been going through a process of "asset rationalization" to improve efficiencies throughout the company and this deal is part of that plan.
The facility is of huge importance to the city of Pittsfield as it is where the city's trash is burned to make steam energy for Crane & Co. and Neenah Technical Materials. The facility was at the brink of closure in 2016 and the city administration estimated it would cost an additional $889,987 to haul the trash elsewhere. The city agreed to fund $562,000 worth of capital repairs at the facility to keep it operating.
On Tuesday, Mayor Linda Tyer said city officials have been at the table with Covanta regarding the sale of the property to both protect that investment as well as to ensure the new owners plan to keep the facility operating.
"Covanta called and asked for a meeting with us and talked about what they've been working on. We were pleased that they let us know well in advance," the mayor said.
"We want to make sure there is no interruption of service in our collection and disposal of our trash. We want to make sure our economic development fund agreement is honored. Those are the things we are focused on and it is my hope that at some point, if the negotiations are successful between Covanta and the new buyer, that we have an opportunity to meet with the new buyers and welcome them to our city."
The agreement in 2016 to release the funds from the GE Economic Development Fund came with a stipulation that the facility remain open for four years or else the company needs to return the money. There is still time left under that agreement.
At the time of the city's investment, the state Legislature included new tax incentives for waste-to-energy facilities in its omnibus energy bill. And Crane & Co., which subcontracts the steam energy with Neenah, renegotiated its contract with Covanta to provide the plant with more revenue.
Covanta officials said at the time that the operations of the plant weren't problematic but rather required capital repairs, particularly repairs to the boiler and a state mandate that recyclables be enclosed, posed a challenge. The city's money was eyed to help with those upgrades.
Tyer said those efforts to keep the plant running are part of what made the facility viable to stay open.
"What we've learned is this particular buyer is especially interested in environmentally sustainable, small-scale facilities like ours. We are lucky that Covanta remains viable and profitable because of the investment we made to help them make those upgrades that were necessary. That is what makes, among other things, the facility a viable option for a new buyer," she said.
Regan agreed, saying the plant was in a different condition when the company first eyed closure. The facility has much improved since that first decision.
Tyer said she has not met with the new buyer yet but that she isn't worried, noting that other entities owned the facility before Covanta.
"These kinds of transitions happen. Before Covanta owned it, it was owned by another entity. It doesn't concern me so much that there is a sale taking place, especially because we are at the table," Tyer said.
The facility is one of the smallest and oldest that Covanta runs. It incinerates about 85,000 tons of waste per year. During the conference call, Jones said the benefit of the company divesting in the Pittsfield plant is to allow Covanta to focus on its larger plants.
"This is an opportunity to really focus, and one of the things I've been pushing is focusing on our bigger, more profitable plants with our management talent," Jones said.
The local facility was built by Vicon Construction Co. Inc., which was affiliated with Enercon Systems Inc., on the 5.8 acres of land. The city had then sought out a facility for trash and, at the same time, Crane & Co. was identified as a buyer for the energy. It went into operation in 1981 and in 1994 it was sold to Energy Answers.
In 2007, Covanta Energy Corp. purchased Energy Answers and the facility. Covanta has operated it since.
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