Lake pays Covanta an average $6 million a year to use the incinerator. The county has spent $2 million in legal fees to date.

When the 25-year contract expires in 2014, Covanta, not Lake County, will still own the plant, a fact that is infuriating Lake's current board of elected officials.

At the same time S&P was lowering the Lake bonds ranking, the firm took Covanta off its CreditWatch after the company successfully argued its cash flow could be affected by being branded publicly as a questionable credit risk.

“The ratings were removed from CreditWatch because Standard & Poor's believes that Covanta's core business position would be adversely affected if it were to take any action that would negatively affect project cash flows, including debt service payments,” S&P says in a statement prepared by analysts Edward R. McGlade and Colleen Woodell.

In January, however, the same analysts said in a prepared statement, “All ratings remain on CreditWatch with negative implications.” The ratings were placed on CreditWatch Dec. 28, 2001.

Another New York bond-rating firm, Moody's Investors Service, lowered the rating on the power generation company's senior unsecured debt to Ba3 from Ba1 on Jan. 11 of this year.

Covanta filed for Chapter 11 protection under the U.S. Bankruptcy Code in April, 2002. The company's debt load at the time was $149 million and had to be repaid by year end 2002, according to court-filed papers. The Lake plant is one of 26 incinerators operated nationally by Covanta.

The Lake bonds downgrade “reflected the increasing uncertainties surrounding the project's operations and the county's ongoing attempts to invalidate the service agreement,” the new S&P statement says.

Additionally, “the uncompetitiveness of the project heightens concerns that waste flows may be diverted to more economical disposal alternatives, mainly a nearby landfill,” the analysts conclude.

On Jan. 16 of this year, citing “a liquidity crisis,” S&P lowered Covanta's corporate credit and senior unsecured ratings to single B from triple B. S&P also lowered the company's subordinated debt rating to single B-minus from triple B-minus and removed Covanta from its MidCap 400 index.

Officials at Covanta and Lake County couldn't be reached for comment at GlobeSt.com's publication deadline. Ogden Corp. changed its name March 14, 2001, to Covanta Energy Corp. Covanta's stock is no longer traded on the New York Stock Exchange.

In one of its last tradings, Covanta's common closed Jan. 17, 2002 at $1.61 per share, up eight cents from $1.53 Jan. 16. Trading volume was 3.79 million.

The company had 49.8 million shares outstanding and a market capitalization of $80.2 million. Its earnings per share were a negative $1.44. The stock's 52-week high-low was $22.85 and 92 cents per share.