1. Public Hearing Presentation October 19, 2006 BIDDEFORD – CASELLA DRAFT CONTRACT DOCUMENTS

2. Public Hearing - October 19, 2006 2 Background Biddeford and Casella have reached agreement in principle in an effort to negotiate a new Waste Handling Agreement and resolve outstanding litigation. This summary reflects nearly 2+years of negotiation between the City of Biddeford and Casella. The documents address comments / recommendations voiced during the March 2006 public hearing. Principally, the agreements have been shortened, legal language has been eliminated where possible, local control has been retained, and the tip fee calculations have been greatly simplified over past versions, and the buyout option stripped from the Agreement

3. Public Hearing - October 19, 2006 3 Public Concerns… Key Public Comments from March 2, 2006 – Retain regulatory authority (local control)  – $10/ton “penalty” is a disincentive to city to pursue valid legal action  – Fixing property value is a concern  – Term of contract  – Retain oversight and audit abilities  – Facility waste volume  – How are we dealing with back taxes?  – Change in law needs review  – Lawsuits are “unknown territory” – City pays too much in legal fees  – How do we know the plant is safe  – Plain language  – Retain ability to test  Tried to address all of these issues…

4. Public Hearing - October 19, 2006 4 The Big Picture Voters Declined Buyout Option MERC Continues Operation Under USEPA & MEDEP Licenses MERC Will Continue Regardless of Biddeford Agreement Proposed Contract: – Retains local control – Provides for additional testing – Resolves pending legal issues – Sets reasonable tip fees – Establishes single-stream recycling IF desired

5. Public Hearing - October 19, 2006 5 Approach… Global Settlement Two agreements: – Waste Handling Agreement Main provisions of the contract – Settlement Agreement Establishes resolution of litigation and contractual disputes Moving Forward – Distribute Agreements for review  – Hold public hearings Three: October 19 th, 23 rd, and 26 th – Council Vote on October 26

6. Public Hearing - October 19, 2006 6 Draft Waste Handling Agreement Summary Operations Weighing Waste Handling Tip Fees Defining Unacceptable Waste Regulations Insurance Damage or Destruction Term of Agreement Default Force Majeure Assignment or Transfer Environmental Change in Law Dispute Resolution Amendments Legal Sections Household Hazardous Waste Recycling

7. Public Hearing - October 19, 2006 7 Current Contract – End it ASAP

8. Public Hearing - October 19, 2006 8 General Financial Improvement (Art.VI, App. B) **All calculations subject to change based on municipal review and amortization schedule established by contract term. *Generic value, for reference only.

9. Public Hearing - October 19, 2006 9 Additional Financial Information **All calculations subject to change based on municipal review and amortization schedule established by contract term.

10. Public Hearing - October 19, 2006 10 Additional Financial Information (cont.) Agreement provides price protection even if Maine Energy closes or otherwise ceases operation. – Reimbursed for additional costs if facility or alternate facility cannot accept acceptable waste Term to be determined – 5.5 yr – 10.5 yr – 15.5 yr – 20.5 yr – “.5” captures partial year to terminate with fiscal year end

11. Public Hearing - October 19, 2006 11 Additional Financial Information (cont.) Tipping Fees – Fees vary depending on the length of contract – $41.06 in 2006 however this number does not include escalators due to ongoing tip fee dispute. Actual tip fee for 2006 ~ $61.39 (through 1 st Q ‘06) – Host community discount (CPI adj.) – Term discount 5 yr Discount = 0% 10 yr Discount = 5% 15 yr Discount = 7.5% 20 yr Discount = 10% – EVOD, HCB, cancellation credit, energy sales credit (optional), tax adjustment (+/-), tip fee dispute, Change in Law, GAT adjustment, most favored pricing, refundable appeal adjustment...

12. Public Hearing - October 19, 2006 12 Highlights Facility cannot accept more than 300,000 tons in any one year commencing January 1, 2007. (Art.III.I) – Currently there is no limit on waste processing Weights from scales reported to city on a monthly basis (our waste). Inspection with 24-hr prior notice. (Art.IV) – Used as verification for processing capacity – All waste over scales counts toward capacity limit except for FEPR and ash shipments out of the plant “$10/Ton Adjustment” – Waived through July’09, may be extended – Takes effect 6-months after municipal action – If municipality prevails, recoup money

13. Public Hearing - October 19, 2006 13 Environmental Highlights (Appendix D) (CEM) data available to Biddeford City Hall on a 24- hour basis. (Art.III.I) – “State” CEM data – Scrubber data – Negative pressure data

14. Public Hearing - October 19, 2006 14 Environmental Highlights (Cont.) City can conduct up to two (2) additional full compliance stack tests within a 2-year period. Tests are conducted with no less than 24-hours notice to company. (App.D.-Section 4) – Designed to provide “check” on facility emissions – Maine Energy to pay; no other notice or involvement Verify negative pressure on a continuous basis (App.D.-Section 11) – Prevents release of odors, which may also contain air toxics and VOCs, from facility other than through scrubber stacks and combustion stack – Consultants to evaluate and design system – Improve ground-level emissions and improve overall emissions control

15. Public Hearing - October 19, 2006 15 Environmental Highlights (cont.) **Local control retained as per public comments Odor Protocol (App.D.-Section 3) – Protocol makes it clear that the DEP Solid Waste Division retains ability to regulate odors through existing regulations – No more “industrial zone” exclusion. Industrial zone reduced significantly – Odor occurrence now greater than 2.5 on the N-butanol scale (previously >3.5) for areas outside industrial zone – Odor occurrence now greater than 3.0 on the N-butanol scale within the new industrial zone. – Significant improvement – Enviroline managed through Biddeford PD (New)

16. Public Hearing - October 19, 2006 16 Existing Odor Protocol

17. Public Hearing - October 19, 2006 17 New Odor Protocol

18. Public Hearing - October 19, 2006 18 Environmental Highlights (cont.) Sound Protocol (App.D.-Section 1) – Add four more sound measurement locations for a total of ten – Measurement at point of complaint corrected for distance. Currently measured at one of six designated locations with no distance correction or correlation to the actual site of the complaint Dust Control (App.D.-Section 2) – Maine Energy must control dust from operations – Maine Energy must remove dust within facility as needed – Biddeford may initiate clean-up of dust releases within the city if Maine Energy fails to respond in a timely manner

19. Public Hearing - October 19, 2006 19 Environmental Highlights (cont.) EnviroLine (App.D.-Section 7) – Transfer to city control through Police Dept. (New ~Jan 07) Penalties (App.D.-Section 9) – Penalty provisions for violations maintained Negative Pressure (App.D.-Section 11) – Install sensors to maintain negative pressure – Assessment tool – Prevent ground-level odor releases from facility Amendments (App.D.-Section 10) – Provision for mutual amendments to protocols if changes are needed

20. Public Hearing - October 19, 2006 20 Environmental Highlights (cont.) Unacceptable Waste Handling (App.D.- Section 5) – Notice to municipality – Ability to inspect Response Agents (App.D.- Section 8) – Municipal employee – Option to engage people from community with company approval – Training requirement

21. Public Hearing - October 19, 2006 21 Is the Plant “Safe”? Evaluate on many levels – Current licenses – Current compliance testing – HRA Update – Biddeford ATCO – Best available science Consider all available data Answer: Yes, based on what we know today Remain diligent

22. Public Hearing - October 19, 2006 22 Draft Settlement Agreement Summary Clean Air Act Lawsuit Property Tax Abatement Tip Fee Dispute EVOD Settlement

23. Public Hearing - October 19, 2006 23 Settlement Agreement Summary (cont.) Clean Air Act Lawsuit – City releases 60-day letter – Parties agree to resolve issue through determination by Maine DEP and USEPA – City authority: HAPs only – Testing shows % of HAPs are VOCs so ATCO and negative pressure help… concentrate VOCs at boiler for improved destruction

24. Public Hearing - October 19, 2006 24 Settlement Agreement Summary (cont.) Property Tax Abatements – Value of facility fixed at $51,576,000 plus personal property at $1,200,000 - no stipulations on Tax Assessor – Maine Energy to release property tax abatements – Tax increases apply for property improvements – Overpayment / Underpayment formula adjusts tip fees

25. Public Hearing - October 19, 2006 25 Settlement Agreement Summary (cont.) Variable Tip Fee Dispute – Terminated and released by both parties. – Tip fee dispute calculated as the midpoint between accounting methods – ~$ 395,000 and climbing – Biddeford to pay balance through tip fee increase until balance is paid ~ $3.14 ton for 78 months (~$395,00 3 rd Q ‘06) – Eliminated need for bond to repay – No more variable tip fee calculations **Variable Tip Fee subject to verification by municipality. Variable tip fee calculation remains “active” as long as the current agreement “1991 WHA” is in effect.

26. Public Hearing - October 19, 2006 26 Settlement Agreement Summary (cont.) Equity Value on Dissolution (EVOD)/Contract Case – Biddeford withdraws suit for EVOD. – Biddeford will receive $13.48 per ton discount for 78 months totaling $1,521,305 – Payable to City over 78 months or length of contract at $13.48/ton discount with **balloon payment of balance not achieved by the end of the contract term. – Exception: If 5 yr contract is selected, the EVOD credit will be $17.66/ton with similar balloon payment mechanism.

27. Public Hearing - October 19, 2006 27