TITLE
Recommendation to authorize City Manager to execute an amendment to the Southeast Resource Recovery Facility (SERRF) Operations and Maintenance Agreement No. 23336 with Covanta Long Beach Renewable Energy Corporation. This amendment will extend the term of the agreement from December 8, 2018 to June 30, 2024, provide a discount to the operating fee, and recognize a change in the name of the operator. (District 2)
DISCUSSION
On March 1, 1994, the City Council authorized a contract with Montenay Pacific Power Corporation, which later became Covanta Long Beach Renewable Energy Corporation. The operator is experienced in the operation of waste-to-energy facilities and specifically the operation of SERRF. The operator has provided specialized professional, technical, and scientific services to the City under the current agreement.
The term of the existing contract expires December 2018. This proposed amendment will allow for continuous operation of SERRF for a period of five years beyond the current term, while the City explores the long-term financial feasibility of operating SERRF well beyond 2018. To continue long-term, it is expected that SERRF will face some major financial and regulatory challenges post 2018, including factors such as the need for a new power purchase agreement, new partnership opportunities, legislation and regulatory changes, competitive landfill tipping fees, and capital investment for improvements to the existing facility.
This proposed amendment will be beneficial to the City in that a longer term commitment with the current operator will help facilitate long-term planning with a contractor that intimately knows the operational, regulatory, and business needs of the facility, as well as make possible about $4 million in annual major maintenance and capital replacement to the facility by the contractor to extend the life of SERRF. The proposed amendment would discount the operations fee that is paid by the City to the contr...
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