$10 Million Later, Trash-to-Energy Plant Is Still Just Talk

“The construction of a privately operated, trash-fired power plant in northern San Diego County was approved Tuesday night by the San Marcos City Council following 27 hours of debate and testimony over seven nights of hearings. . . .

“The plant’s developer said construction of the $217-million project would begin within weeks and that the plant, promised to be the most advanced in the country because of environmental safeguards, could be operating within 2 1/2 years.”

--The Times, Jan. 31, 1985

“NCRRA (North County Resource Recovery Associates) officials say they hope to begin actual construction in the spring, and for the plant to be operating by 1990.”

--The Times, Dec. 18, 1987

“By a 3-2 vote that reflects continued divisiveness over the controversial issue, the Board of Supervisors on Tuesday agreed to enter new negotiations with the would-be developer of a trash-to-energy plant in San Marcos.”

--The Times, Jan. 24, 1989

Eight years after the county first talked about building a sophisticated trash incinerator next to its San Marcos landfill--a plant that would recycle some of North County’s trash, burn much of the rest of it and even generate electricity for San Diego Gas & Electric Co.--the county is, well, still talking about it.

More than $10 million has been spent so far for a project that still exists only on paper. The environmental reports, the lawsuits, the correspondence, the consultants’ studies, the proposed contracts and the financial spread sheets take up not just files, but entire file cabinets. Not only have several people been put in charge of the project’s development, but it has changed between entire corporations.

The trash-to-energy plant was supposed to be operating by now, reducing the county’s urgent need to develop another landfill in North County. It was supposed to cost $120 million, according to the first estimates. And it was supposed to be a totally private capital venture, with millions of dollars of perks and revenue earmarked for the county and the city of San Marcos.

But now, at best, construction may begin late this year or early next year for just one phase of the project--a recycling operation that is designed to remove between 20% and 25% of the incoming waste as recyclable material.

If the entire project is built--complete with huge boilers, a 300-foot-high smokestack and technology to keep pollution to a minimum, but still measured in tons--it may cost $300 million, some officials say. Maybe more.

And, unlike the first draft of the project, in which the plant was to be designed, built and operated solely by a private company, the county is now being asked by the developer to accept some of the financial risks of maintaining and operating the plant.

Already, the county has agreed to hire a consultant, at a cost of $60,000, to help the developer--Thermo Electron Corp. of Massachusetts--secure private financing for the project. Three other companies that previously were financial partners in the project have backed out, citing increasing costs and reluctance to spend more money on a project that may never be built.

The extent of the county’s direct financial interest in the trash plant is still being debated in negotiations that have been continuing, off and on, for months behind closed doors.

Not the least of the project’s critics is county Supervisor John MacDonald, in whose North County district the plant would operate and who is one of the county officials negotiating with the would-be developer.

“Environmental issues aside--and I can see both points of view--the economics of this plant are very bad for the county,” MacDonald said. “Although there is a penalty if the developer backs out, the county is still exposed to a very costly liability. If the operation is not successful, the county will have to pick it up and try to run it, and I don’t think we should be in that position.”

Said MacDonald: “This project started out to be entirely built, operated and funded by the private sector. But now it’s been wiggled around so the county is undertaking some of the financial risks.”

Among those is a proposed contractual term that, should new environmental laws require the plant to be retrofitted with new air-pollution control equipment, the expense of buying and installing that equipment would be borne by the county.

Supervisor Brian Bilbray, who represents the southern part of the county and sits on the county’s negotiating team with MacDonald, enthusiastically endorses the North County trash plant and shrugs off the financial concerns as the cost of the county tending to its solid-waste disposal crisis.

Bilbray says that, although the financial figures were significantly more favorable to the county in 1982, when officials first pitched the idea of a trash-to-energy plant, the county has little option but to pursue the project.

“The mistake that was made in 1982 was that both the city and county of San Diego placed all their bets on one technology--trash-to-energy--and they abandoned the pursuit of landfills. In ‘82, trash-to-energy was the environmental option. But everyone stopped pursuing landfills as an alternative . . . and today, we don’t have either.”

The existing San Marcos landfill is scheduled to reach capacity next summer, unless--as expected--the city of San Marcos gives the go-ahead to the county to enlarge it, thereby providing several more years of use. Meanwhile, the county is trying to decide where to put one or more new landfills in North County. The soonest that one could be open is 1994.

Three sites are under consideration by the county Planning Commission--one in Fallbrook, another alongside California 76 in the Pauma Valley and a third near Warner Springs--but all have been criticized for a host of environmental concerns, including fear of contaminating ground water beneath the sites.

Bilbray says that North County, because of its aquifers and geology, does not easily accommodate landfills and that, if the region is to responsibly deal with its own waste, the trash-to-energy plant is its best alternative.

In the mid-’80s, many environmentalists urged the adoption of sophisticated trash incinerators, saying airborne pollutants were less a risk than those posed by landfills, and because landfill sites were becoming increasingly difficult to acquire.

County officials at first embraced the trash-to-energy plant as a better alternative than landfills, as well as a source of income to the county, through the county’s share of royalties in the sale of recyclables and the generation of electricity.

In 1983, SDG&E; signed a contract with North County Resource Recovery Associates to buy electricity generated by the burning of trash in San Marcos, because of the utility’s desire at the time to encourage alternative power sources and because of the relatively high cost of energy at the time. Since then, however, energy costs have decreased and SDG&E; will now end up paying NCRRA more for electricity than it would if it entered a similar contract today, officials say.

The county would receive about $20 million a year for its 90% share of the electricity revenue--but, in turn, SDG&E; would end up paying nearly three times the actual cost of the electricity the plant would produce, based on the contract’s language.

Meanwhile, because of the delays in building the plant and increasing costs of installing pollution-control devices to meet new state standards, the cost of the plant has doubled from the initial estimates. Bilbray, however, still vouches for the project’s viability and blames the increased cost on North County municipal politicians and local landowners who have tried to block its construction through litigation.

“The very people we’re trying to serve in North County are the ones who are suing us, and who are being the obstructionists. They’re suing us now because of the cost of the plant--but it’s been their lawsuits that have pumped up the price of the project every day,” Bilbray said. “If they don’t want this plant built, where do they think they’re going to handle their waste stream? I don’t see them coming up with any better answers.”

Trash plant critics note that they proposed greater recycling of North County’s garbage when the trash plant was introduced, but that the county rejected the notion of a wholesale recycling operation in its 1985 environmental impact report. Why now, critics ask, has the county done an about-face on recycling?

There may be one obvious answer: Thermo Electron has gotten nowhere with the project, stymied by lawsuits, the difficulty in finding financing, escalating costs and the need to renegotiate its contract with the county.

To get the project off the dime, San Marcos Mayor Lee Thibadeau in February suggested that Thermo Electron at least be allowed to build the so-called “front-end,” or recycling component, of the project. Thermo Electron officials agreed with the notion, and, despite criticism from opponents that the recycling-only component was simply a maneuver to gain momentum for entire project, the county agreed to consider the half-project.

Now, county officials and Thermo Electron are discussing a contract that calls just for a recycling project, but both sides agree that, eventually, they want an entire trash-to-energy plant built. To that end, an updated draft environmental impact report on the project was released by the county Friday, opening a 45-day public review and comment period.

“We were at a stalemate, and these (critics) had been saying since Day 1 that recycling is the way to go, so let’s start off with that,” Thibadeau said. “The opposition says recycling will put Thermo Electron’s foot in the door, but I say it’s at least an effort to compromise and start addressing the problem of solid-waste removal.”

Thibadeau has been the most vocal supporter of the trash-to-energy plant, having suggested time and again that, if the county doesn’t approve the project, he will recommend that his city provide landfill space to serve only San Marcos and other North County cities--he names Vista and Oceanside--which have not tried to block the plant’s construction in court.

“We’ve been sued by Carlsbad, Encinitas and Escondido, even though those cities are responsible for generating 46% of the trash that goes into the landfill in my city,” Thibadeau complained. “It would be real easy for me to tell them to go to hell, and to go forward with our own landfill and let them deal with their trash on their own.”

Thermo Electron officials, meanwhile, say they are ready to spend $80 million to $90 million to build the recycling component of the project. If construction begins by the end of the year, it would be operating within 21 months, said Jerry Davis, president of the company’s energy systems division.

“But if we’re not ready to go by the end of the year,” he said, “we’d all reevaluate where we are and recontemplate our navels.”

The end-of-the-year construction start-up is critical because the company has already been assured $185 million in bonds through the California Pollution Control Financing Authority. The bonds have already been sold, and the proceeds for Thermo Electron’s use are being held in escrow.

But some officials worry that if the project is not under way by December, the bond funds, which because of their tax advantages are the single most critical element of the project’s financing, would no longer be available to Thermo Electron, thereby dooming the project.

Financing issues aside, the plant would still have to pass muster from the county’s Air Pollution Control District, which approved the plant’s pollution control technology five years ago but, because of changes in state law, will now have to meet a newer and tougher set of environmental standards.

In particular, California now has ozone standards that are 25% tougher than when the trash plant was first approved by the air district, agency spokesman Bob Goggin said. The plant is expected to emit about 300 tons of nitrogen oxide, a precursor to ozone, every year.

Among the most difficult challenges facing the NCRRA, Goggin said, will be a requirement that the company reduce the county’s air pollution by 1.2 tons for every ton of pollution that escapes from its San Marcos emissions stack. “We’ve been ordered to reduce pollution in San Diego County, so NCRRA will have to clean up something else to a greater degree than it pollutes through this plant,” he said.

“I don’t know if they can do that,” Goggin said, explaining that the California Clean Air Act requires that no new emissions be generated from new or modified sources of pollution. “NCRRA will have to do that through offset mitigations. It’s a very complex issue, but they’ve hired a very successful consulting firm in finding those kinds of offsets.”

Project opponents, who note that they’ve successfully stalled the project so far, say they are increasingly confident that the trash-to-energy plant will never be built, either because the state’s financing assistance will dry up and the company will be unable to find other, independent financing once the county Board of Supervisors is frightened off by the risks of associating with the plant, or because the plant will fail to meet environmental restrictions.

Among the still-pending lawsuits against the project are ones that contend that the county should have put the entire public works project out to competitive bid, that the environmental impact reports are flawed and that the state acted illegally in extending its bond financing offer.

Vince Biondo, Carlsbad’s city attorney, calls the trash plant “an incredibly bad business deal” in addition to being a case of “bad planning, because they’ve put a major industrial use right next to the La Costa residential area, and without any regard to regional interests.”

Biondo said residents throughout the county should oppose the trash plant because the cost of operating and maintaining it--which will be paid by the county, through the fees it charges trash haulers--will eventually be picked up by residents countywide.

“The Board of Supervisors should say this was an OK deal when it was first made in 1982, but that things have since changed,” he said.

The supervisors are next expected to publicly discuss the trash plant in November--at the same time they discuss the expansion of the San Marcos landfill.