Industrial Pretreatment Incentive Program
Rationale:
IPIP could provide a win-win-win for:
Council and its wastewater ratepayers (via
delayed need for facility expansion, and
avoided operating costs)
Private sector (by providing an economic
return to the participating industry, including
reducing or eliminating strength charges now
paid to the Council)
Society (via less energy use by the Council in
waste aeration, and possible energy
generation at the new facilities, and by
providing jobs and investments in Minnesota)
Above: biosolids digesters
The economics of pretreatment facilities are often financially prohibitive to the private sector, and the IPIP proposes
to share some of the public benefit to make the economics work.
Description:
IPIP will provide an incentive to help high-strength wastewater producers install pretreatment equipment (e.g.
anaerobic digestion facilities) on their industrial sites. If adopted, the incentive will provide: 1) Council financing for
eligible capital costs at low AAA-rated public financing rates, and 2) A capital lease over 10 years with possible
forgiveness of up to 30% of annual payments. Applicant must agree to design, build and manage pretreatment
equipment on their site, and in addition to making required annual lease payments, pay for all operating costs
including but not limited to: site and feedstock costs, permitting, operations and maintenance. Applicant also
agrees to take ownership of the equipment, regardless of its condition, at the end of the agreement term.
Proposed Process:
During the spring of 2015, MCES will solicit applications from industries interested in participating in this program.
Applications will be analyzed by MCES or its agents over about an 8-week period. Applicants will be required to
respond to clarification questions. MCES’s review will include determining the capacity impact at our affected
plants, technology review, financial review and a review of risks.
MCES will also determine an estimated public and private benefit for each responsible application, and will reduce
the potential 30% incentive (this is the forgiven portion of lease payments) as needed to make sure that expected
public benefit of the project in present value is at least equal to the expected private value of the project. Based on
preliminary financial analysis, it is unlikely that the incentive will be reduced for this reason.
If all qualified projects cannot fit within MCES’s financing budget for the program, a competitive ranking will be
done. Projects will be ranked and low-ranked projects will not be offered funds. Rankings will be based on the
amount of loading reduction (in pounds) expected to be achieved per dollar of MCES financing needed.
Industries that submit applications and are selected by MCES for participation in IPIP, will be notified by July 31,
2015, and if the proposed incentive level needs to be reduced, it would be made known at that time. Approved
industries can then proceed to prepare a full engineering design, which will be reviewed by MCES before final
approval is given. If the detailed design is consistent with the application and achieves objectives, but for some
reason MCES decides not to commit, MCES will reimburse the industry for half of the design costs, up to $100,000.
If approved, contracts will be executed before beginning construction.
At the end of each calendar year that the facility is in operation, a determination will be made for how successful the
facility has been at reducing wastewater strength over that year. MCES will then bill the industry for the annual
lease payment after adjusting the payment for the incentive amount forgiven, which is based on strength reduction.
The discount/incentive will be between zero and thirty percent (e.g., 30% if strength is
reduced 100%, 15% if it is reduced 50%, and 0% if no strength reduction is measured).
IPIP Information on Web
PowerPoint (from Public Hearing):
http://www.metrocouncil.org/Wastewater-Water/Publications-And-Resources/IPIP-Public-HearingPresentation.aspx
Flowchart of Process:
http://www.metrocouncil.org/Wastewater-Water/Funding-Finance/Finance-Pubs/IPIP-Process-Flowchart.aspx
Fact Sheet:
http://www.metrocouncil.org/Wastewater-Water/Publications-And-Resources/Industrial-PretreatmentIncentives.aspx
Service Contract (draft):
http://www.metrocouncil.org/Wastewater-Water/Funding-Finance-Pubs/Industrial-Pretreatment-ServiceContract.aspx
This URL will show a list of all the links above:
http://www.metrocouncil.org/SearchResults.aspx?searchtext=IPIP&searchmode=allwords#tab_Data_Publications
Or enter IPIP in the search box, and click on the Data & Publications (7) link.
Schedule:
January 14, 2015
Council approval of program
February 2015
Application Form sent to applicants and consultants
March-April 2015
Proposer meeting(s)
June 30, 2015
Applications due
July 31, 2015
Legal staff completes commitment offer letter
August 31, 2015
MCES completes reviews and offer(s) to proceed are made
Remainder of 2015
Design(s) are reviewed when received, then contracts are executed