The pellets produced by the city-owned plant off Frederick Street are a byproduct of the sewage treatment process that can be used for fertilizer.
The city has received at least $67,043 in pellet sale revenues since the plant opened in the summer of 1990, but the market for sludge has been a rocky one.
The pellet plant was not built under the assumption it would pay for itself and city officials were told that the market would be risky, said Rick Thomas, Water Pollution Control Department manager.
When the plant started operating, the city was selling pellets for about $50 to $60 per ton, Thomas said.
"But, that didn't last very long," Thomas said. There wasn't much competition when the plant went into operation, but that changed when plants in Baltimore and New York came on line.
Hagerstown's smaller supply of sludge makes it more difficult to fill the fertilizer industry's needs, Thomas said.
In 1996, the city receive no pellet sale revenue. The market was so tough that Wheelabrator gave the pellets away to local farmers, Harris said.
Giving away the pellets has helped Wheelabrator break into the local fertilizer market, because it gave local farmers a chance to test them, Harris said.
The city receives 70 percent of any profits from sales, and Wheelabrator gets 30 percent.
"Everybody knew up front that the market for pellet sales isn't something you want to depend on" when deciding whether to build a pellet plant, Thomas said.
Building the pellet plant was the right move because it has accomplished what city officials wanted, Thomas said.
Except for a setback last fall, the plant has helped control odor and has more than enough capacity to treat the city's wastewater, Thomas said.
About 12 to 14 tons of pellets are produced daily with the capacity to increase to 15 tons a day, Harris said.
As of June 30, 1996, the city owed $1 million of the original $2.1 million plant cost, said City Finance Director Al Martin. The plant should be paid for by 2000.
The wastewater treatment operation, including the plant's debt, is fully funded by rate payers, allowing the operation to cover its costs, Martin said.