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Terre Haute turns to sludge to shore up finances

TERRE HAUTE, Ind. - A western Indiana community is turning to sewage to shore up its finances.

Terre Haute has signed a contract to provide sludge from its wastewater treatment plant to Powerdyne Terre Haute Holdings, which will convert the sludge into diesel fuel. The company will then sell 12 million gallons of that fuel to Terre Haute for $2.46 per gallon, and the city will then sell that fuel to Indianapolis-based Sodrel Fuels for $2.50 per gallon.

Mayor Duke Bennett, who has been promising about $3 million in new revenue this year and another $3 million in 2015, said city officials have been working on the plan for a couple of years. He said he hopes it will make Terre Haute a model for other cities to follow.

The city is essentially serving as the middle man in the deal, he noted.

"This is just a pass-through contract," Bennett told the Tribune-Star. The city is "not going into the fuel business."

The agreement amounts to $480,000 in income for the city per year, but officials indicate much more income is likely. The city can provide more sludge than the contracted minimum, said Waste Water Utility Director Mark Thompson. That will produce more income because the city will be paid for that extra sludge, he said. The city also expects to receive money from other cities to take their sludge, he said.

Under the contract with Powerdyne, the city also will provide 200 tons of "green waste," such as downed trees, limbs and leaves, every day for 20 years. That material will also be converted into diesel fuel.

To meet that goal, the city will allow residents to place downed branches and trees from their own property for city pickup, Bennett said. Currently, the city only hauls tree waste from trees on city-owned property.

Bennett said the city negotiated "up front" payments from its partners that guarantee $3 million this year and $3 million next year. After that, the agreement is expected to generate at least $2 million a year, he said.

"We're not on the hook for anything except to pay someone to haul away our sludge, which we already do," he said. In fact, the city will be paying less for sludge removal under this deal, he said. Currently Terre Haute pays about $5 million for sludge removal per year; the new agreements will reduce that by at least $1 million per year, he said.

Board of Works President Bob Murray said the contracts contain "outs" for the city if things don't go as planned. As a result, the city will lose little or nothing if the projects fail, he said.

Construction of the Powerdyne plant is expected to take nearly two years.

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