MODESTO -- Garbage bills throughout Stanislaus County would shoot higher in coming months to stop a sudden financial hemorrhage at the garbage-burning plant owned by the county and Modesto.
Higher garbage rates — estimated at up to $1.50 per month for homeowners initially, with a possible additional bump in the near future — also are needed because of new state air pollution laws, say county and Modesto officials.
Elected representatives from both agencies are expected today, in separate public meetings, to vote on pursuing a new contract with the garbage-burning plant's private operator.
That would set in motion higher bills for residents of Modesto and unincorporated areas. Because garbage haulers in the county's eight other cities also fuel the waste-to- energy plant, higher tipping fees are expected to result in garbage rate increases there as well.
"Our residents are not going to be very happy," said John Lazar, mayor of Turlock, the county's second-largest city behind Modesto. "It's hard for families trying to get along. We in government need to be a little compassionate."
Modesto and the county own the plant, which is next to the county's landfill on Fink Road, and the agencies pay Covanta Stanislaus Inc. to run the plant. Covanta sells power generated by burning garbage to Pacific Gas & Electric Co. under a separate contract and shares proceeds with the city and county, which built up reserves worth more than $19 million as of a year ago.
When Covanta balked at signing a new deal with the agencies, their share of revenue plummeted under terms of a provisional contract with PG&E, and the agencies' account quickly took a nose dive to $13.5 million.
The agencies also fear having to pay as much as $4 million per year when the state's new emissions laws go into effect under so-called cap-and-trade rules.
Modesto and county negotiators worked out a tentative deal with Covanta, with radical changes. The company, which has zero exposure for "unforeseen circumstances" such as changes in state law, would assume 75 percent of the risk in exchange for all revenue from selling power, up from its 10 percent share.
To make up some of that loss, Modesto and the county would raise the plant's tipping fee, or what it charges haulers to dump waste, from $28 per ton to as much as $39 per ton, according to reports. That's what will drive up rates paid by homeowners, business owners and everyone else with a garbage bill.
Landfill a cheaper option?
Besides selling electricity, a main idea behind burning trash is diverting waste from landfills. But jacking the plant's tipping fee to $39 per ton would exceed the $33-per-ton fee charged at the landfill next door — in theory driving more business toward the landfill because it's cheaper.
To fix that, Modesto and the county could subsidize the landfill, but their joint garbage account is being depleted quickly. They expect to lose up to $2 million more by the time a formal agreement with Covanta is signed.
An option is raising the landfill's tipping fee — in turn forcing yet higher bills paid by all customers. That potential increase was not factored into the county's estimate that a typical homeowner could pay 50 cents to $1.50 more per month, according to a county report.
"We're going to do our very best to keep them at the lowest level possible," said Sonya Harrigfeld, the county's environmental resources director, who is on the agencies' negotiating team.
Modesto Councilman Dave Geer said he is pleased Modesto would reduce its liability, but he said he wants to see solid information on how the deal would affect garbage rates.
The county and Modesto would be required to continue delivering 243,300 tons of waste per year to the plant, with a price break for bringing more. Also, the county, which owns the adjacent landfill, would charge $26 per ton to dispose of the plant's ash, up from the $16 per ton rate.
Other terms would prevent the agencies from transporting garbage elsewhere, and would prevent Covanta from "pursuing more lucrative contracts with other agencies," although the company could market excess capacity under some conditions.
Other cities conceivably could haul their waste elsewhere to save money. But all agencies in California are required to divert substantial amounts from landfills and the plant provides attractive diversion credits.
Chris Vierra, mayor of Ceres, the county's third-largest city, said: "I understand they have to make ends meet, but we're very concerned. We'll have to weigh our options."
If approved today in separate county and city meetings, the consulting firm of Sidley Austin LLP would be paid $110,000 to broker the new contract. The company already has been paid about $52,700, a report says, for help with the draft deal.
