The Town of Babylon will save almost $9 million a year after paying off its debt and signing a new service agreement with waste management company Covanta to operate its ash landfill for another 15 years.
The original 30-year contract for the facility between Edison Avenue and Patton Avenue in West Babylon was set to expire Friday.
The waste-to-energy facility turns at least 225,000 tons of solid waste into ash each year. That process creates steam to drive an electricity-producing turbine, and the electrical power is sold to PSEG Long Island.
Previously, the town paid Covanta an operation and maintenance fee to run the landfill, while the town got 85 percent of the revenue from the energy generation, with the remaining 15 percent going to Covanta.
The town and Covanta shared the revenue from metal sold to Gershow Recycling Corp. equally, and the town paid the entire cost of ash residue disposal.
Under the new service agreement, the town pays Covanta a per-ton “tipping fee” and the town gets a small portion of the revenue from energy sales and none of the recycling revenue, but it gets paid by Covanta for disposal of the ash residue.
In January, the town finished paying off $89 million in debt used to finance the construction of the facility between 1985 and 1989.
That, combined with the new payment structure — fewer expenses for the town and less revenue from the sales — will save almost $9 million annually, town officials said.
Some of those savings are already being passed on to taxpayers in the form of lower trash pickup fees.
Recent contracts with EnCon Industries Corp. for residential pickup and with Winter Brothers Waste Systems for commercial pickup have saved the town money.
In the beginning of 2018, the $499 per household annual fee was lowered to $263.
For commercial pickup, businesses pay $1,600 a year for up to 1½ cubic yards of trash weekly. In 2018, each additional cubic yard was priced at $17, and in 2019, that rate was lowered to $11.
“People ask, ‘How can Babylon cut taxes, lower its debt, and receive a AAA bond rating, all in the same year?’” town Supervisor Rich Schaffer said in a statement. “Well, there is no magic formula, it’s exactly this type of project that makes it possible — long-term planning, being fiscally conservative, and negotiating aggressively on behalf of our taxpayers.”