Incinerator operator will help pay for insurance // PHOTO GALLERY, VIDEO [The News Herald, Panama City, Fla.]

May 18--BAYOU GEORGE -- Bay County's incinerator has undergone large-scale changes since a fire knocked it offline in February 2012, including a new agreement requiring its operator to pay $150,000 to help cover the facility's insurance costs.

EnGen LLC of Lynn Haven previously paid nothing toward the premium, said Joe Tannehill, the company's managing partner, but that's all changed. Before the fire, the facility was under the county's overall policy -- covering buildings, vehicles, etc. -- but after the fire, there was a claim for tens of millions, and the facility took a standalone policy, which costs about $685,000</money> annually.

"As you can imagine, after a big claim the new premium to get new insurance for this facility went up," Tannehill said of the incinerator, which started operating again in January.

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EnGen was not negligent or at fault in the fire, but the company is "part of the team" and was running the facility when it happened, Tannehill said.

"As a sign of good faith and to acknowledge that this happened on our watch, we are contributing $150,000 [annually] toward the higher insurance premium," he said.

The County Commission approved the amended agreement earlier this month.

So far the county has received $33.8 million in claim proceeds following the fire, according to Eve Tooley, the county's director of risk management.

"Prior to the last claim, the premium portion for the incinerator [in the overall policy] was approximately $303,000 annually," Tooley said via email.

But, Tooley noted, the claim proceeds paid for new equipment and buildings, which means they are now more expensive to insure. So, the claim was not the sole reason for the dramatic increase in insurance costs. She said the county's premium -- prior to the last claim, with the incinerator on its policy -- was about $1.2 million.

"Again, our master policy is a fluid policy, with additions and deletions, as needed," she said.

EnGen contract

EnGen currently is under a 12-year contract with the county and receives $60,000 a month to run the facility. It will not receive additional money from the county for contributing to the insurance premium.

Still, Tannehill tried to put the situation in a positive light. He said the facility should run more efficiently now, so that will generate more power and thus more revenue to help cover the $150,000 expense. He also said the new premium essentially provides the same level of coverage.

The county also appears to have a strong position in the contract. It has an option to terminate for "any reason," including mere convenience, provided it gives EnGen six months notice, Tannehill said. EnGen has been operating the facility since the mid-2000s and has about 45 employees.

New safeguards

The incinerator is a sophisticated operation, which got a little more cutting edge following the fire.

Tannehill gave The News Herald a tour Friday, explaining the process by which it transforms trash into energy and what precautions have been taken following the fires.

After the shutdown, the county constructed a new 4,000-square-foot administration building a few hundred yards away from the incinerator, allowing any big future fires to be contained, while EnGen would manage it from the unattached building.

The county also added a second 500,000-gallon water reservoir, which connects to a sprinkler system and water cannons that would spray down any fires on the "tipping floor," where all of the trash is brought.

"We more than doubled the capacity of the fire suppression system," Tannehill said.

The old system turned on, during the last major fire, but it didn't put it out, Tannehill said. The hope is that the new system will more effective and fully extinguish such a fire.

Tannehill said fire is an "occupational hazard" for an incinerator, and often smoldering refuse can be brought in, and there's the potential for spontaneous combustion. And small-scale fires have the potential to grow into something larger.

EnGen's control room operator, Marcus Cowan, said since the incinerator has been back online there's only been one small fire. It was scooped up, taken outside the tipping floor building and extinguished.

Cowan said these small fires come along about every six months and it's a relatively simple procedure to get them outside and eliminate them. Larger fires would require using the sprinkler system and water cannons.

The tipping floor building also is brand new, after the old one was razed. The new building was essentially completed last fall, but its fire suppression system wasn't ready until January, Tannehill said.

"We weren't, obviously, going to run without a fire protection system," he said.

But, it's up and running now and generating electricity. On Friday morning, it was creating 10.7 megawatts. It takes about 2 megawatts to supply the facility's electricity needs, so the rest is surplus.

The goal isn't to make money on the incinerator; it's to keep the county's tipping fees competitive and extend the landfill life. Running trash through the incinerator means it will take up only 10 percent of the space it would have unburned, Tannehill said.

On an average day, the incinerator produces about 200 tons of ash, but takes in about 500 tons of trash. It also pulls about 15 tons of metal a day from the refuse, which is offered as scrap on the open market, Tannehill said.

"It's sold to the highest bidder, and yet it's another revenue stream for the solid waste department," he said.

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