In November 1985, the Town of Stonington entered into a Municipal Solid Waste Management Services Contract, as amended, (the "Service Contract") with the Southeastern Connecticut Regional Resources Recovery Authority (SCRRRA) pursuant to which it participates, with eleven other southeastern Connecticut municipalities, in the Southeastern Connecticut system. The System consists of a mass-burn solid waste, disposal and electric generation facility located in the Town of Preston, Connecticut and various improvements and facilities related thereto, including landfills. The Preston plant is operated by American Red-Fuel Company.
Under the Service Contract, the Town is required to deliver or cause to be delivered to the System, solid waste generated within its boundaries up to its minimum commitment of 10,149 tons for fiscal year 2000-01 and to pay a uniform per ton Disposal Service Payment therefore. The aggregate minimum commitment of the participating municipalities is 144,078 tons per year. The Town’s Service Payment commitment is a "put-or-pay" commitment, in that if the aggregate minimum commitment of the participating municipalities is not met by the total deliveries of all the participating municipalities in any year, the Town must pay the Service Payment for its full portion of the aggregate minimum commitment even if it did not deliver that full portion.
Service Payments are payable so long as the System is accepting solid waste delivered by or on behalf of the Town, whether or not such solid waste is processed at the Facility. The Town’s obligation to pay the Service Payment, so long as the Authority is so accepting the Town’s solid waste, is absolute and unconditional, is not subject to any set-off, counterclaim, recoupment, defense (other than payment itself) or other right which the Town may have against the Authority or any person for any reason whatsoever, and is not to be affected by any defect in title, design, fitness for use, loss or destruction of the System. The Town has pledged its full faith and credit to the payment of Service Payments and has also agreed to enforce or levy and collect all taxes, cost sharing or other assessments or charges and take all such other action as may be necessary to provide for the payment of the Service Payments. A cost equalization factor based upon per capita is given to those municipalities farthest from the facility.