resource recovery plant implemented
guides for
municipal officials
"planning and overview
•technologies * risks
and contracts • markets
accounting format M
financing • procurement
* further assistance *
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This publication is part of a special series of reports prepared
by the U.S. Environmental Protection Agency's Office of Solid Waste
Management Programs. These reports are designed to assist municipal
officials in the planning and implementation of processing plants to
recover resources from mixed municipal solid waste. Alan Shilepsky
is responsible for overall project direction.
The title of this series is Resource Recovery Plant Implementation:
Guides for Municipal Officials. The parts of the series are as follows:
1. Planning and Overview SW-157.1)
2. Technologies (SW-157.2)
3. Markets (SW-157.3)
4. Financing (SW-157.4)
5. Procurement (SW-157.5)
6. Accounting Format (SW-157.6)
7. Risks and Contracts (SW-157.7)
8. Further Assistance (SW-157.8)
LIBRARY
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An environmental protection publication in the solid waste
management series (SW-157.6). Mention of commercial products does
not constitute endorsement by the U.S. Government. Editing and
technical content of this report were the responsibility of the Resource
Recovery Division of the Office of Solid Waste Management Programs.
Single copies of this publication are available from Solid Waste
Information, U.S. Environmental Protection Agency, Cincinnati, Ohio 45268.
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RESOURCE RECOVERY PLANT IMPLEMENTATION:
GUIDES FOR MUNICIPAL OFFICIALS
ACCOUNTING FORMAT
by David B. Sussman*
The economics of various types of resource recovery systems are
difficult to compare. System technologies vary, capital and operating
costs vary, revenues from the recovered products vary, the recovered
products themselves vary, and the cost accounting methods used to
analyze system economics vary. This paper proposed a method of
reporting costs and revenues to aid in comparing the costs of various
resource recovery systems. The proposed method includes a standardized
accounting format and a normalized accounting format.
The standardized accounting format facilitates comparison and
analysis of resource recovery plant costs and revenues by assuring that
all cost and revenue elements are included (or at least that the exclusion
of certain items is identified). Whether based on historical or projected
data, the standardized accounting format is designed to reflect the costs
and revenues of a system, incorporating all site-specific parameters.
*Mr. Sussman is an environmental scientist with the Resource
Recovery Division, Office of Solid Waste Management Programs, U.S.
Environmental Protection Agency.
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The normalized accounting format reflects all costs and revenues
for a system, but it is not site specific. General assumptions for
certain costs and revenues are used. Normalized accounting information
is used to compare systems when site specific information is unavailable,
or when one wants to compare costs of different systems. The normalized
accounting format preserves and highlights the differences resulting
from engineering design while eliminating differences resulting from
site-specific factors.
The accounting format is presented on the following seven tables.
Each item on the tables is explained in the notes following the tables;
the numbers in parentheses on the tables match the numbered notes. Those
costs that cannot be segregated (e.g., design, construction, real
equipment) should be combined and labelled accordingly.
The Office of Solid Waste Management Programs (OSWMP) has developed
these recommended cost accounting formats as a means of assisting planners,
designers, and decision making officials in their resource recovery
decisions. Other cost accounting formats available from OSWMP include
collection, incineration, sanitary landfill and shredding. OSWMP invites
users of these formats to forward the data developed along with a
designation of they system to OSWMP so that we will be able to compile
data from most of the systems for use by other planners.
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TABLE I
CAPITAL COSTS - ACTUAL
(COST IN 19 $) (1)
Land
Site Preparation
Design
Construction
Real equipment, including replacements
Other equipment, including replacements
Contingencies
Start up and working capital
Financing and legal
Total initial capital investment
Estimated useful life of facility
Total interest to be paid
Total capital cost
Average annual capital cost
Annual throughput (tons)
Capital cost per ton
(years)
(2)*
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(ID
(12)
(13)
(14)
(15)
(16)
(17)
(To Table VII)
Sources of capital (list):
Source
Amount
Interest rate or
return on investment
Period
Total
(18)
Throughput calculation: (16)
(Design throughput, daily) (% availability)
x 52 weeks per year =
(days per week)
(tons/year)
*Numbers refer to notes.
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TABLE II
ANNUAL OPERATING AND MAINTENANCE COSTS - ACTUAL
(COST IN 19 $) (1)
Salaries $ (19)
Employee benefits (20)
Fuel (21)
Electricity (22)
Water (and sewer) (23)
Maintenance (24)
Replacement equipment (25)
Residue removal (26)
Other overhead (27)
Taxes and licenses (28)
Insurance (29)
Management fees (30)
Professional services (31)
Total annual operating and
maintenance costs $ (32)
Operating and maintenance
cost per ton $ (33)
(To Table VII)
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TABLE III
PRODUCT REVENUES - ACTUAL
(REVENUE IN 19 ) (1)
Recovered Price per Shipping per Ton of material per (36)
material ton (34) ton (35) ton of throughput Revenue
Ferrous
metal $
Glass
Aluminum
Other non-
ferrous
Other (list)
X
X
X
X
X
- $
=
=
=
=
Material revenues per throughput ton
Recovered
energy
(38)
Price per
unit
(39)
Shipping per
unit
Energy revenues per throughput ton
Total revenue per throughput ton
$
Units of energy per
ton of throughput
Net
Revenue
(40)
(41)
(To Table VII)
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TABLE IV
CAPITAL COSTS - NORMALIZED
(COST IN 1975 $)
Land
Site preparation
Design
Construction
Real equipment, including replacements
Other equipment, including replacements
Contingencies
Start up and working capital
Financing and legal
Total initial capital investment , "N" $_
(42)
(43)
(44)
(45)
(46)
(47)
(8)
(9)
(48)
(49)
Estimated useful life of facility
(years)
Total interest to be paid
Total capital cost
Annual capital cost
Annual throughput (tons)
Capital cost per ton , "N"
Sources of capital (list):
Source Amount Interest Rate
$
(12)
(50)
(51)
52
16
(53)
(To Table VII)
Length of
financing period
Municipal
bond
(49)
20 years
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TABLE V
ANNUAL OPERATING AND MAINTENANCE COSTS - NORMALIZED
(COST IN 1975 $)
Salaries $ (54)
Employee benefits (55)
Fuel (56)
Electricity (57)
Water (and sewer) (58)
Maintenance (59)
Replacement equipment (25)
Residue removal (60)
Other overhead (27)
Taxes and licenses (61)
Insurance (62)
Management Fees (63)
Professional Services (64)
Total annual operating and maintenance
costs, "N" $ (65)
Operating and maintenance cost
per ton, "N" $ (66)
(To Table VII)
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TABLE VI
PRODUCT REVENUES - NORMALIZED
(REVENUE IN 1975 $)
Recovered Price per
Material ton (67)
Ferrous metal $
31ass
Aluminum
Dther non-
ferrous
Dther (list)
Shipping per Ton of material per
ton (68) ton of throughput
X
X
X
X
X
Material revenues per throughput ton
Recovered Revenue Shipping Units of energy per
energy per unit per unit ton of throughput
(70) (70) - (71) x (36)
Energy revenues per
Total revenues per
throughput ton, "N"
throughput ton, "N"
(36) Net
Revenues
=
=
=
=
=
$
Revenues
$
$
(69)
(72)
(73)
(To Table VII)
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TABLE VII
SUMMARY
($ PER THROUGHPUT TON)
Actual
Normalized
Capital costs
Operating and
maintenance costs
Total cost
Revenues
Net operating
cost/profit
$
(From Table I)
$
$
$
(From Table IV)
$
(From Table II) (From Table V)
$
(From Table III) (From Table VI)
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NOTES
(1) State what year dollars are used.
(2) Total cost of land acquired for the resource recovery facility.
Include transfer station land if essential part of total system.
Include the capital cost of the disposal site that will take the
systems residue or is required as disposal backup. This site
must be large enough to dispose of all the unrecovered components
of the waste stream during the lifetime of the facility. If this
disposal site is used for other solid waste disposal, include only
that portion chargeable to the resource recovery system.
(3) Cost of site preparation: Include cost of relocating present
tenants, if applicable. Include cost of disposal site preparation.
(4) A and E or consultant costs for preliminary design, feasibility
studies, final designs, checking of shop drawings, inspections
during construction, preparation of operating manuals, operator
training, and assistance during start-up. Explain what items are
covered in this category.
(5) Construction costs: Include construction management. (Example:
buildings, structures, and foundations) do include cost of
replacement equipment. See Item 25.
(6) Real Equipment: Include costs of all real property installed
equipment. (Example: processing equipment). See Note 25 for
explanation of replacement equipment.
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(7) Other Equipment: Include cost of all ancillary equipment like
bulldozers, loaders, office equipment, and trucks that are necessary
for plant operation. Include operating spares. Include total
cost of any leased equipment, if equipment is leased in lieu
of purchase.
(8) State how much capital is reserved for contingencies.
(9) State how much capital is reserved for start up and for working
capital.
(10) State cost of bond counsel, legal fees, financial management
consultants, etc. Also include interest on capital during
construction less anticipated short term return on unspent capital.
(11) Total initial capital investment. (Sum of item 2 through 10).
(12) Designer's estimate; may be longer than financing period, but in
no case will it be less.
(13) Out-of-pocket payments of interest on all debt and fair return
(dividends) on equity (stock) when incurred and discounted back
to the year in which the data is stated.
(14) Sum of (11) and (13).
(15) Item (14) divided by item (12).
(16) Cost per throughput ton. To determine the throughput per year
take design capacity per day (indicate operating hours per day)
times system design reliability or availability (percentage of
available capacity) times number of days of planned operation per
week times 52 weeks. Example: 1,000 tons per day X .85 (system
availability) X 5 1/2 days per week X 52 weeks = 243,100 tons
per year.
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(17) Item (15) divided by item (16).
(18) Must equal item (11). Include both debt and equity. Interest rate
would apply to debt and fair rate of return to equity. Period
would be designer's life of facility for equity and length of
financing period for debt.
(19) Total annual salaries. Include all personnel that are necessary
for system operation. Include supervisory and administrative
personnel. Do not include any collection costs (garbage trucks,
etc.). Breakdown into operating personnel, maintenance personnel
and administrative personnel. If maintenance labor costs are charged
to maintenance so state and include in item (24).
(20) Includes employer contribution for PICA, health insurance,
pensions, etc.
(21) All system fuel costs. Process, space heat, auxiliary equipment,
bulldozers, loaders, etc. (an fuel usage that is charged to the
resource recovery system) List by usage and fuel type.
(22) Total electric bill. Process, office, lighting, heating, auxiliary
equipment, air conditioning, etc.
(23) Include process, cooling, sanitation, lawn care, wash down,
boiler feedwater, etc.
(24) Include all costs, both contractor and in-house. Labor costs may
be included in (19). Building maintenance should be segregated
from process equipment maintenance.
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(25) Include yearly expenses. Do not include inventory. Include
inventory in (7). If parts and supplies are included in
maintenance costs, so state. Include in this item funds that
are set aside for the replacement of depreciated equipment.
State what portion of this item is for parts, supplies, depreciation
and so forth.
(26) List the cost of disposing of the residue. Include hauling to
remote disposal site, and cost of disposal. Do not include
capital cost of disposal site. On site handling should be included in
items (5), (6), (7) and (19).
(27) List other overhead items.
(28) Include property tax or payment to the city in lieu of taxes,
operating licenses, occupancy and utility taxes, etc.
(29) Fire, liability, etc.
(30) Payment to system operator (if applicable).
(31) Audit fees, legal fees, data processing, etc.
(32) Total annual operating and maintenance costs. (Sum of items (19)
and (31).
(33) Item (32) divided by item (16).
(34) List the per ton selling price of the recovered material products.
Include information on escalator clauses or specifics, such as a
price that is linked to the market price of the material at a
specific location. If some recovered products are sold "mixed,"
ie. glass-aluminum fraction, so state and list revenue for whole
fraction.
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(35) Freight, handling and demurrage. List the cost of shipping the
product to the market. Include any cost that is charged to the
system that is associated with the sale of the recovered products.
Do not include those items of capital equipment such as trucks or
steam lines. This transportation cost may be reflected in the sale
price of the recovered item (F.O.B.). If so, state.
(36) Number of tons of each recovered product per ton of throughput.
(37) Sum of all material revenues.
(38) State what form the recovered energy is in (steam, gas, oil, shredded
fuel, etc.), and in what unit it is sold (BTU, ton, pound, gal.,etc.).
(39) List the revenue per unit. Indicate any excalators and state details
of how price per unit energy may be linked to a specific market,
another fuel, or another energy source.
(40) Sum of all energy revenues.
(41) Sum of items (37) and (40). If applicable, list revenues other
than for sale of products; e.g., charge for handling sludge,
industrial waste, oversized or bulky waste, or other special waste.
(42) Calculate minimum number of acres that is necessary for plant as
designed. Include disposal site as explained in item (2). Do
not compress, expand or refit design when calculating minimum
acres necessary. Assume $10,000 per acre.
(43) Assume 35 percent of (42).
(44) Design cost should be the same as listed in item (4).
(45) Actual construction cost adjusted to national average using
standard construction cost data and civil engineering index or
other standard indexes.
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(46) (47) All equipment prices should be F.O.B. the supplier. Assume shipping
charges are 10% of total and add to equipment costs.
(48) Assume 2% of capitalized costs.
(49) Total initial capital investment, normalized.
(50) Assume that all capital costs are financed with a 20 year municipal
bond at a 8% interest. Include in item (50) the total interest paid
over the 20 year period.
(51) Sum of (49) and (50).
(52) Item (51) divided by item (12).
(53) Item (52) divided by item (16).
(54) Take the total number of workers that are necessary to run the plant.
This should be the same as item (19). If not, explain. Multiply
this number by $15, 500 yearly salary. This cost includes employee
benefits.
(55) Included in (54).
(56) List fuel use as in item (21). Assume $.60 per gallon for gasoline;
$.40 per gallon for diesel fuel; $2.00 per million BTU for natural
gas.
(57) Assume $.03 per KWH.
(58) Assume $.50 per KGAL.
(59) Include all costs, both contractor and in-house, but do not
include in-house labor. Labor is already accounted for in
item (54).
(60) Include costs as in (26). Assume final disposal cost of $4.00
per ton of residue. Assume haul distance is 5 miles.
(61) Assume .75 percent of normalized capital cost.
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(62)(63)(64) Combine these items and assume $1.00 per throughput ton
for all three.
(65) Total annual 0 and M cost, normalized.
(66) Item (65) divided by item (16).
(67) Because of the wide differences in resource recovery technologies, the
output products from different systems may not at first seem comparable.
However, after applying the following assumptions a rough comparison
is possible. List the output material in the form that the system
design will produce, ie. - #2 ferrous, mixed color glass,
90 percent pure aluminum, mixed metals - 40 percent nonferrous,
etc. State the assumed solid waste composition that is used for
this determination and be realistic when determining how much of
aluminum, mixed metals - 40% non-ferrous, etc. Then assume the
material is worth 75% of the Chicago market as of 1 April 1975 for
similar material. This is the revenue earned. If there is no
Chicago market for the material a judgement as to what the material
is worth will have to be made. The rationale for this judgement can
be included along with Table VI. The determination of product worth
should consider the market price for similar products, possible letters
of intent, actual sale price (if product was ever sold) and the like.
Do not include shipping.
(68) Assume transportation costs of $6 per ton for glass; $12 per ton
for ferrous; $20 per ton for aluminum and other materials at
25 percent of expected revenues.
(69) Sum of material revenues.
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(70) Energy products are also difficult to compare. Assume the following
prices for energy products.
Steam: $1.50/1,000 pounds
Shredded Fuel: $.45 per million BTU
Pulped Fuel: $.50 per million BTU
Pyrolysis Gas (with useable sensible heat): $1.00 per million BTU
Pyrolysis Gas (no sensible heat): $1.10 per million BTU
Methane: $2.00 per million BTU
Pyrolysis Oil: $1.85 per million BTU
Other Chemical: Average market price as of 1 April 1975
Electricity: $.037KWH
(71) Assume shredded fuel transportation costs at $.11 per million BTU;
zero cost for steam, electricity, and gas (pipes and cables should
be included in construction costs); oil at $.03 per gallon.
(72) Sum of energy revenues.
(73) Item (72) divided by item (16).
uallSOd
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