Former finance & hydro chairs don’t believe project projections
By Mike Williscraft
Something does not smell right with Grimsby’s biodigester project, says former long-time alderman and chair of the Town’s Finance Committee Wayne Fertich.
In a Letter to the Editor this week, Fertich said, “While this $4.5 Million project has not garnered near the public scrutiny it deserves from both financial as well as environmental perspectives, it has become incumbent upon me to speak up on a project that has the likelihood of putting the Town’s finance’s and certainly that of Grimsby Power et al in serious jeopardy.”
The biodigester is a facility being built on a recently purchased Sobie Road lot which will generate methane gas which will, in turn, power hydro generators.
Hydro officials have said the 20-year FIT (Feed-In Tariff) contract will generate as much as $25 million over the life of the agreement.
But revenue is not so much Fertich’s concern as the expenses and business plan behind the project.
Among his concerns:
• He claims hydro officials have it wrong the technology purchased will not work in extreme temperatures. This would reduce productivity and resulting revenues below projections;
• The Town has not properly budgeted for staffing requirements or maintenance required for the site, and;
• Part of the business plan concerns are that depreciation was not properly applied to the document and loan interest was also underestimated, since the federal and provincial governments have not come through with anticipated grants to build the facility, a $3 million setback;
Grimsby Energy Board chairman James Detenbeck said Tuesday in an email to NewsNow the fears are unfounded.
“Our numbers were derived from 7 years of investigation and research into the business done in Ontario and Europe, and we selected this because they are so predictable. The expenses were included at market rates, and we have proven that we can even beat those numbers. The income through the FIT contract is a fixed number and the site will have no reason to not hit 85%, we were very conservative in our estimates,” Detenbeck said.
On the other issues, Detenbeck said:
• All of the European vendors insist that their technology will work in the Canadian climate;
• Staffing? “We are operating a 12×7 facility, and will staff accordingly. We are looking at those opportunities now, and depending on the automation in the facility will vary, and;
• Both debt interest and depreciation have been properly accounted for.
Former Grimsby Energy chairman Rob Hattin, however, agrees with Fertich.
“It’s double speak. First of all, the bio digested fuel has the lowest heating value of any fuel. That’s because hay etc. and putrefied poop has little calorific value,” said Hattin.
“I did some checking. More energy is spent in growing, gathering, converting into gas and converting into electricity than is received from the fuel. Its like eating celery and losing weight.”
Hattin said he believes Grimsby council did not have sufficient information when voting to guarantee the $4.5 million project costs.
“Draft documents were about 20 pages in length, what the current council got as four pages, I am told. How detailed could it have been?”
For Fertich, the bottom line concern is simple.
“What scares me is that Grimsby Power won’t have enough money to pay for the Interest on the Town’s Promissory Note that it receives each year which will increase taxes,” he said.
“Accordingly, either our taxes or our power rates increase dramatically. Given that Council was advised to get public input and a proper Investment Report before going ahead, but did not.”
“This just gets better.”