Tyrone Borough is considering an increase for the American Eagle Paper Mill’s sewage rate.
The borough and mill officials currently have an agreement that caps the facility’s costs at $429,000 per year. That agreement is due to expire at the end of 2005.
The borough is seeking an increase of up to 65 percent that would raise the costs for the paper mill to $953,000 per year as part of a proposed five-year agreement. The amount reflects the increase and about $45,000 per year to allow the borough to recoup money the borough would have received the last two years had a cap not been place. Without the $429,000 cap the borough would have taken in additional $229,000 from the mill based on actual usage.
Previously, the borough had passed on a 65-percent increase to residential and commercial users that took effect in 2004.
The mill had attempted to extend the original agreement and increase its capacity earlier this year, but the borough turned down the request. The borough and mill officials held a meeting yesterday to discuss a new agreement, but no decision was reached.
A representative of the mill and operator of Team Ten, LLC, John Ferner, attended last night’s council meeting and heard consulting engineer Ray Meyers address council on the issue.
Meyers outlined some other options to council that could include lowering the rate for residential and commercial customers, but under those scenarios, the mill’s increased rate would also be less.
Meyers noted the borough along with other municipalities throughout the state had been notified in 2003 they would no longer receive a subsidy to defray sewage operating costs. He said because of that and the paper mill reopening, the borough decided to pass along a rate increase to residential and commercial customers. Meyers said the borough is now faced with some choices on what to do regarding the mill’s rate with the agreement due to expire at the end of the year.
Meyers said some of the information he presented to council last night was new information that he developed after borough and mill officials met yesterday. He said a memo previously given to council recommended the 65-percent increase.
Meyers noted the mill mentioned a cost-of-service study regarding sewage had been done in 1990 when the facility operated under different ownership. Both parties used different consultants and Meyers said, “there was a meeting of the minds” that resulted in a sewage rate ordinance. Current mill officials are now suggesting another such study be conducted now.
After Meyers’ comments, Ferner addressed council and said the proposed rate increase was “extremely troubling.”
Ferner said, “We feel the cost-of-service study should be obtained and is required by the ordinance that is in existence.”
He said Team Ten would “bear the burden” of part of that study.
“No business should be expected to absorb a rate increase of this magnitude,” said Ferner. “We want to pay our fair share of the sewer costs, (but) we are concerned the borough considers us a deep pocket and an easy target for a rate increase. We want to work with the borough for a fair resolution.”
Mayor Patricia Stoner took exception to Ferner’s comment and said council did not see the mill that way.
Councilman Bill Fink asked Ferner to what extent an increase would affect the mill. Ferner said, “…it wouldn’t be good.” The mill representative offered no further comment when The Herald questioned him as he was leaving the meeting.
Fink also thought the borough could consider giving the mill some increased capacity to defray the additional costs of an increase. Meyers said there is some capacity available, but it was “not limitless.”
Councilman Bill Latchford pointed out the 65-percent increase had been imposed on two other major industrial operations, Chicago Rivet and Albemarle.
Meyers also noted a “wild card” existed regarding the rate issue. He said Team Ten had been awarded a grant to help aid it in the cost of pretreatment facilities.
“It would give them some excess capacity and help to lower their costs,” said Meyers. “How successful the pretreatment would be and when it would precisely occur, not even Team Ten knows the final answer to that.”
Council took no action last night on the proposed rate increase. However, the borough is expected to schedule a special meeting regarding the issue.
