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OP-ED | Why CRRA Has Been A Disaster

by | Nov 29, 2013 6:29am () Comments | Commenting has expired | Share
Posted to: Energy, Environment, Opinion, Quasi-Public, Hartford

Most capitalists have an abiding belief that the private sector operates with greater efficiency than the government. And they’re largely correct. Government doesn’t have to worry as much about the bottom line and thus is less oriented toward fiscal prudence. Government, for example, often offers above-market compensation packages to its employees.

But if there’s one area that seems even less efficient, it’s that gray area of government — the quasi-public agencies that seem to operate with limited transparency and accountability compared to their public- or private-sector counterparts. For the most part, these entities are expected to generate revenue as a business would, but they don’t attract the kinds of entrepreneurs who can run them as efficiently as the private sector, so invariably they run into problems.

CTNJ file photo One of 11 quasi-public agencies in the state, the Connecticut Resources Recovery Authority is a case in point. We’ve all heard about the massive problems associated with quasi-government federal agencies such the U.S. Postal Service, Fannie Mae, and Freddie Mac. Those organizations made huge mistakes that would have killed off comparable private-sector companies.

But even by those low standards, CRRA is a troubled agency. Established in the early 1970s under the leadership of Gov. Tom Meskill, CRRA operated under the commendable premise that the old “town dump” model wasn’t the most environmentally friendly way to process waste and promote recycling. CRRA moved aggressively into recycling and over the years has built three trash-to-energy incinerators that produce enough electricity to power 150,000 homes. Problem is, the more recycling the authority facilitates, the less energy it produces in its profitable incinerators. In other words, CRRA is at cross purposes with itself.

But CRRA has been plagued with problems for years. In 2001, the authority made an ill-fated $220 million unsecured loan to Enron, the energy trading giant that went belly-up after a widely publicized accounting scandal. When Enron went bankrupt, CRRA raised its tipping fees to cover its losses, resulting in a protracted and costly lawsuit from 70 member towns seeking compensation for the overcharging. Six years later, the arrogant CRRA, which did eventually recover the money from Enron, was nonetheless slammed with a $35-million judgement.

And the bullying tactics didn’t stop there. A couple of years before that, CRRA had begun forcing its member towns to let it cart away recyclables from local transfer stations without paying, even if those municipalities already had deals with other paying haulers that netted the towns tens or hundreds of thousands of dollars in revenues. This angered those towns to the point that they considered arbitration. The towns backed off but the resulting ill will no doubt set the stage for the Enron litigation.

Now we learn from the Courant’s Jon Lender that fully one third of CRRA’s employees earn six-figure annual salaries. CEO and President Tom Kirk, for example, makes $292,586 a year, almost twice what Gov. Dannel P. Malloy makes.

And the authority seems perpetually entangled in the odious lobbyist/lawyer/legislator soup that permeates the Capitol. Yes, CRRA has lobbyists. Why would CRRA hire lobbyists when government agencies don’t? Just another example of quasi-public efficiency, I guess.

I’m sure I’ve forgotten to include some of CRRA’s other missteps, but the final nail in the coffin could be that, as energy prices continue to drop, revenues from its trash-to-energy plants have plummeted, resulting in millions in losses per year, even as CRRA faces capital replacement needs that will increase its overhead by $13 million in 2015. And according to DEEP Commissioner Daniel Esty, additional losses have occurred because of “a reduced volume of solid waste as a result of the diversion of materials from the waste stream.” In other words, the increased recycling the authority was promoting reduced burnable solid waste and therefore eroded CRRA’s profits. Talk about a bad business model.

Consequently, there have been calls from lawmakers and the governor for CRRA to “reinvent itself” and find new revenue streams, or face dissolution.

I vote for dissolution or receivership. It’s difficult to see how such a dysfunctional organization could reform itself from within. If they’re looking for a new leader, I hear there are former Enron executives looking for work.

Contributing op-ed columnist Terry Cowgill blogs at ctdevilsadvocate.com and was an editor and senior writer for The Lakeville Journal Company. Follow him on Twitter @terrycowgill.

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(4) Archived Comments

posted by: SocialButterfly | November 29, 2013  12:47pm

What’s wrong with the State of Connecticut—where many business ventures turn into
wasteful, losing adventures—like CRRA?

posted by: Kathy Lauretano | November 29, 2013  11:59pm

Absolutely fantastic article on CRRA, Terry.  You nailed it in every way possible.  There ought to be a law against these quasi public/private “businesses” since I have yet to hear of one single example that has ever been successful.  They inevitably waste taxpayers funds and make a mess of whatever job they are supposed to perform.  Very well done.  Thanks for a great read.

posted by: Stingy Blue | December 2, 2013  11:20am

Perhaps oversight of state-level sanitation policy and administration should be increased.  But please, no more broadsides against the US Postal Service, which has made huge improvements over the last 20 years, serves as a lifeline to seniors and the poor, and would be a model of economic virtue, had the Republican House not required it to pre-fund its pension obligations (an unnecessary requirement imposed no other public or private entity).  If you believe in public education, you should believe in Ben Franklin’s progeny as well. I also have to take issue with the supposition that CRRA should be criticized for encouraging recycling because it cuts against its other “business line” of trash-to-energy.  To me, the willingness to do what is right (or, put another way, what will incur the greatest aggregate net benefit), instead of what is most cost-effective in the short run, is the principal virtue of a public or quasi-public entity.

posted by: Stingy Blue | December 3, 2013  10:36am

Aw, thanks for the response, Terry.  I can’t disagree with your point on the no-layoffs clause - Democratic negotiators tend to extract short term concessions from public sector unions in exchange for long-term promises that the negotiators will likely not be in office long enough to make good on.  That being said, the union-breaking of the last 40 years (the demise of the USPS would be one of the last nails in that coffin) has been an absolute disaster for the middle class, so if the USPS is a throwback to an earlier, more egalitarian time, I think we ought to hold on to it.  There is also a personal side to it for me - when I was in high school, I got a job at the post office as a seasonal letter carrier.  I remember having a job interview with the postmaster, and at the end of the interview I expressed some reservations about delivering letters to some of the more dangerous neighborhoods of my town.  His response?  “Everybody gets the mail.”  This concept - that the free flow of information should be available to all, regardless of station - is, to me, a bedrock principle of American democracy and that’s why it bothers me so much when people use the USPS as a punching bag for governmental incompetence.

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