(Fwd) robbins

["Charlie Cray" <ccray@dialb.greenpeace.org>]

Incinerator burns up cash reserve

Analysts urge owner to dump Robbins site

Monday, August 3, 1998

By Eddie Baeb
Business Writer
Daily Southtown
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The future of the Robbins incinerator was called into question again
last week after the owner of the waste-to-energy plant announced it will
deplete a $60 million reserve set aside for anticipated operating losses
sooner than the company had expected.
Clinton, N.J.-based Foster Wheeler Corp. established the reserve last
year with the expectation that the money would last into 1999. But
during a conference call with stock analysts, the company said it
expects the $60 million will run out in October.

David Roberts, Foster Wheeler's chief financial officer, said depletion
of the reserve fund likely will reduce the company's earnings for the
fourth quarter and into 1999.

That, coupled with state legislation that may be unfavorable for the
incinerator, prompted analysts to lower their earnings estimates for
Foster Wheeler.

John McGinty, an analyst with CS First Boston who follows Foster
Wheeler, said he thinks the company should get rid of the incinerator.

Problems at the controversial incinerator, 13400 S. Kedzie Ave., have
persisted ever since it began operating last summer. In April, the U.S.
Environmental Protection Agency alleged that the incinerator violated
air pollution rules more than 779 times between the time it opened and
December 1997. The incinerator also is being investigated by the
Illinois attorney general's office because of fires on June 5 and July
2.

"In my view, they shouldn't continue to bleed with (the incinerator),"
McGinty said. "How they extricate themselves from (the incinerator) is
another question."

Analyst Jeanne Terrile of Merrill Lynch downgraded Merrill's
earnings-per-share estimate for Foster Wheeler in 1998 from a range of
$1.95 to $2.00 to between $1.65 and $1.70. For 1999, Terrile lowered her
estimate from between $2.20 and $2.25 per share to between $1.50 and
$1.60.

In a report Terrile wrote after the company's conference call, she said
Foster Wheeler likely will have to take a charge to create another
reserve fund for Robbins or "write down," or devalue, the facility.

Roberts' secretary said Foster Wheeler officials would not discuss the
incinerator. But during the conference call, Roberts said the company
will "continue to assess the longer-term profitability" of the
incinerator.

Roberts also addressed a new state law that could affect Foster
Wheeler's lawsuit against the state of Illinois. The lawsuit, which is
at the appellate court level, challenges the legislature's 1996 decision
to repeal a state subsidy that incinerators were to have received under
the so-called Retail Rate Law. Foster Wheeler counted on the subsidy to
make the incinerator profitable.

On Saturday, Illinois' new electricity deregulation law went into
effect. That law repeals a similar subsidy for facilities that convert
natural gas from landfills into electricity.

According to Alexander Ewing, attorney at the Chicago-based
Environmental Law and Policy Center, that means Foster Wheeler likely
would have to argue against the deregulation law as well. That would
hurt the chances of the company's lawsuit succeeding, he said.

Roberts said attorneys are looking into the deregulation bill's impact
on its lawsuit.

The deregulation bill "does create yet another layer of uncertainty," he
said.

Ewing said Foster Wheeler also won't be helped by a recent Illinois
Supreme Court ruling that state laws do not establish contractual rights
that cannot be altered. Instead, the court maintained, laws "declare a
policy to be pursued until the legislature ordains otherwise."

Ewing said Foster Wheeler has argued that the Retail Rate Law
established contractual rights the legislature could not take away.

The incinerator also has suffered because it charges more for garbage
disposal than most landfills, and reportedly is operating below capacity
because so few municipalities bring their trash to the incinerator.Jeff
Tangel of the South Cook County Environmental Action Coalition, a
longtime opponent of the incinerator, said his organization would like
to see the $385 million facility sold and converted into a natural-gas
electric plant and a recycling center.

But, like analyst McGinty, Tangel said he does not know what Foster
Wheeler plans to do about the incinerator.

"I think Foster Wheeler is in a state of denial about what's going on at
Robbins," Tangel said.






Ben Lilliston
Sustain: The Environmental Information Group
920 N. Franklin, Suite 206
Chicago, IL 60610
312-951-8999
ben@sustainusa.org



Charlie Cray
Greenpeace US Toxics Campaign
417 S. Dearborn Suite 420
Chicago, IL 60605
Ph: (312) 554-1027
Fx: (312) 554-1224
e-mail address: Charlie.Cray@dialb.greenpeace.org
Greenpeace International's new Toxics Web site:
http://www.greenpeace.org/~toxics
Greenpeace US Toxics Web Site:
http://www.greenpeaceusa.org/campaigns/~toxics