TITLE
Recommendation to authorize City Manager, or designee, to execute all documents necessary to amend the Southeast Resource Recovery Facility (SERRF) Operations and Maintenance Agreement No. 23336 (Agreement) with Covanta Long Beach Renewable Energy Corporation (Covanta), of Long Beach, CA, to adjust the commercial structure such that Covanta will take responsibility for all SERRF revenues and expenses for a contract period beginning February 1, 2023, until the end of the existing contract term of June 30, 2024. (Citywide)
DISCUSSION
City Council approval is requested to amend Agreement No. 23336 (Agreement) with Covanta to adjust the commercial structure to allow for the continued operation of SERRF through the existing contract term of June 30, 2024.
The passage of State Assembly Bill 1857 (AB 1857) in late August of 2022 removed the AB 939 waste diversion credit for jurisdictions that delivered municipal solid waste to existing Waste-To-Energy (WTE) facilities in California beginning January 1, 2023. Previously, a jurisdiction could deliver up to 10 percent of its annual municipal solid waste generation to a WTE facility and receive a 100 percent recycling credit for that waste. Approximately 148 different jurisdictions brought their municipal solid waste to SERRF for the diversion credit, which accounted for approximately 50 percent of the waste tonnage processed annually at SERRF and is a significant revenue source for its operations.
Beginning January 1, 2023, it is highly unlikely that those other jurisdictions will continue to bring their municipal solid waste to SERRF as they will no longer receive any diversion credits and landfill disposal costs are significantly less than the disposal costs they would pay to SERRF. The loss of nearly 50 percent of the waste tonnage processed at SERRF, along with the corresponding loss of revenue, introduces significant financial risks to the City of Long Beach (City) for SERRF’s continued commercial operatio...
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