City Selects Private Company to Create Energy From Trash : Landfill: Innovative system will use methane gas produced by rotting refuse at Scholl Canyon. It could save city $350,000 a year.

After two years of study, Glendale has selected a private firm to build an innovative waste-to-energy system that will use methane gas produced by rotting trash at the Scholl Canyon Landfill.

The City Council on Tuesday selected Palmer Capital Corp. of Massachusetts, financiers and the nation’s leading developers of landfill gas projects, to build a five-mile pipeline from Scholl to the city’s Grayson Power Plant, where methane will be substituted for natural gas to produce electricity for an estimated 30,000 homes.

Gas at the landfill is currently burned off by flares. But it represents the equivalent of 544 barrels of oil a day and could save the city at least $350,000 a year in the purchase of natural gas used to produce electricity, according to a report released last week.

Mayor Ginger Bremberg and Councilman Carl Raggio wanted the city to build its own system in partnership with the Los Angeles County Sanitation Districts, which operates the landfill.

That plan, voted down by the three other council members, would have cost taxpayers at least $8.7 million and posed risks of significantly higher costs, although it would have provided a potentially greater return to the city than private proposals, according to the report and city consultants.

The alternative motion to hire Palmer Capital over the only other private bidder, Cambrian Energy Systems of Santa Monica, was approved by a 4-1 vote, with Councilman Larry Zarian against.

Palmer’s proposal offered a slightly higher return to the city, and officials also indicated they were more confident of the Massachusetts firm’s experience.

Under a proposed agreement to be made final within three months, Palmer Capital will build the pipeline and install equipment necessary to operate the system at no risk to the city, which will derive income from lease payments. The city will pay Palmer for the methane, at a cost lower than natural gas.

The system could be in operation within two years, said consultant Richard Mandeville of Pasadena.

Methane, developed through the natural decomposition of refuse, is expected to produce only half the noxious emissions caused by burning natural gas at the Grayson plant at 800 Air Way in the industrial zone in southwest Glendale.

The gas was originally burned at Scholl Canyon to produce energy for homes. But that operation was halted several years ago because the system caused air pollution and odors. The city has since replaced a series of wells and pipelines used to collect gas from the ever-shifting landfill. That gas is now being wasted.

New technology would allow the gas to be piped to the power plant, where it could be used under stringent air quality regulations. The pipeline would be routed underneath Glenoaks Boulevard from the landfill to the Verdugo Wash, then above ground along the wash to the power plant.

Council members had met for hours with consultants and experts in two study sessions in the last week to consider the alternatives and proposals by competitors.

While the city stood to reap profits of $110 million or more over the next 20 years by building the system itself, it can still earn an estimated $18 million to $20 million under the Palmer proposal, Councilwoman Eileen Givens said.

But much of the debate over public versus private development centered on whether the city would be eligible to receive federal tax credits for development of an energy-saving system, as private enterprise is allowed.

City officials said that question has not been settled by the Internal Revenue Service. An adverse ruling could seriously jeopardize the city’s potential profits.