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By Chris Frost
Oxnard--City Manager Alex Nguyen has taken the initiative to improve the environment and aesthetics at Ormond Beach and reached an agreement with GenCo to dismantle the facility.
In his report to the Oxnard City Council, Jan. 21, he thanked Assemblywoman Jacqui Irwin for her encouragement and City Attorney Stephen Fischer for creating the language in the agreement.
In exchange for removing the city's objection to keeping the plant open for another couple of years, GenCo will contribute $25 million to a fund that will dismantle the plant, plus remediate the soil and water in the area.
Nguyen pointed out that many plants have been decommissioned and closed, but there is no requirement in place to dismantle them. He showed a photo of the plants and called them "Monuments to the 20th Century."
The council set a goal in the past to reclaim Ormond Beach and return it to a natural state.
The plant GenCo was scheduled to close at the end of the calendar year, he said, but the California Public Utilities Commission wanted to extend its operation. Oxnard, along with "many other cities," opposed the extension. The public utilities commission decided they would need one more year.
"Given their circumstances, especially with PG&E, there is no certainty that the state will have its reliability issues resolved in the next 12 to 24 months," Nguyen said. "It's possible that the state could again next year, order another extension."
Nguyen cares about the once-through cooling technology issues, but he and the council also care about the community.land and what's going to happen at Ormond Beach, once the plant closes.
"There's an opportunity here," he said. "We have negotiated with GenOn that if we can go to the state and support that it can stay open for a few more years that they, in exchange, would set aside up to $25 million in a trust fund at the Ventura County Community Foundation. The trust fund is essentially a lockbox intended only to be used to dismantle the plant and remediate the dirt underneath."
In exchange, the city will withdraw its opposition at the CPUC (California Public Utilities Commission) for the extension and would advocate letting the plant operate until 2023.
"We would support their efforts to get the resource adequacy contracts through 2023," he said. "We (the city) would work with them to get those agreements and also obtain additional funding, public or private, for the trust fund for post-demolition work."
The city will work with GenOn for post-demolition ownership and use of the land.
"If the state approves this, GenOn will ultimately dismantle the plant, as well as remediate the soil and groundwater at their site," he said.
The trust fund for GenOn will begin during the extension period, and they will make monthly deposits into the trust fund.
"We want the money to come into the trust fund every month," Nguyen said. "If the state grants them the extension, what the city council is accepting tonight is an agreement between the City of Oxnard and GenOn for the outcome of that power plant. It's not relevant to what the state is considering, in regards to the reliability of the electricity grid."
The demolition and remediation will need to be completed by 2027. If GenOn can't get contracts in exchange for Oxnard advocating at the state level, GenOn will still dismantle the plant.
If the state sustains many more wildfires that cripples the state power grid, he said the state might need the power plant to stay on longer.
"That can happen, regardless of whether or not we have this agreement with GenOn," Nguyen said. "The end game is to reclaim the beach and have a beach where it is meaningful to have public access and have a functional beach for that part of the city in their backyard."
The deal is not final, as that falls upon the state as the State Water Board and Public Utilities Commission make the final agreement.
"Those agencies may or may not care what happens to the physical plant after the closure," he said. "I know this seems like it's moving fast, and I'm sorry that there hasn't been as much public outreach as we would have liked to, even though we have had initial public outreach to talk to stakeholders, but the timeline is not in our control. We've been negotiating for the last month-and-a-half with GenOn, but we're stuck with the state water board's schedule."
The deal's value diminishes, he said, they miss the deadline.
"If you think about this in the timeline of our public policy initiative, and our end-goal, this is a significant step to achieve that end-game," he said. "This is the next step."
Nguyen reiterated the state doesn't have a penny set aside to dismantle the plant once it decommissions the GenOn Power Plant.
"There has been no plan up until now, and not a penny in place up until now," he said.
During public comments, Alicia Percell said she is happy the city is, at least, working with the GenOn, but the details worry her.
She cited the Mandalay Bay Power Plant and said that because of the city's lack of willingness to work with the owners, they have a decaying plant and a problem with water quality in the harbor.
"Let's call that improvement, but I can't be the only one who is uncomfortable with the details," she said. "When the harbor was expanded to add the Seabridge neighborhood, the developer made a deposit for mitigation of some future costs. The deposit was made with the city. When the time to use the funds came, the city released them. In the meantime, those funds were subject to public scrutiny, at least."
With the GenOn project, she said the funds would be deposited with a third-party non-profit, and Mayor Pro Tem Carmen Ramirez sits on that board.
"It's a little strange," Percell said. "I don't know why the money won't be deposited with the city where it's subject to public oversight. That's how it was handled in previous situations. When you have options, why pick the one that even raises an eyebrow?"
Ramirez interjected that she has not been on the community foundation board for "at least a year."
During council comments, Councilman Bryan MacDonald said no matter where the money is placed, the money belongs to GenOn that will be set aside.
He called it a "huge opportunity" for the city.
"If they give the money to the city, in my mind, the city is on the hook for the demolition, and I don't think that's where we should be," he said. "I think GenOn should be the one doing the demolition since it is their property."
Ramirez thanked everyone that did what they could to preserve Ormond Beach for the community.
"We have an opportunity to remove this," she said. "I go to Sacramento frequently, and when you travel from Burbank north along the coast, you see our beautiful islands, the coastline, the Santa Clara Valley, but you also see two power plants that say where Oxnard begins and ends. It's unfortunate. I want to thank, again, all the people who helped us and recognize the value of Ormond Beach to the community."
Councilman Bert Perello people will remember that the city was in trouble in the past with the auditors, in the past, and how it handled money.
"I feel very comfortable having the money go outside the City of Oxnard," he said. "When it's here, it's too tempting to have things happen and spent. We have nothing to do with that money. It's not our money."
He also appreciates the staff's forward-thinking, and that is something new for the city during his term on the council.
"We did not address this with shutting down Mandalay," he said. "We were successful, but this is a big difference. The fact that my city manager shares the credit with an elected state official, and the city attorney, the only other person this council hires, is a credit to the staff that this council has working for them."
Councilwoman Gabriela Basua also thanked the staff for moving the project forward.
"It is not, probably, what everybody expected, but it is a step in the right direction," she said. "We don't know what's going to happen a few years down the road. At least we can say that there's money there to start something. It's going to be a long process, but I am happy with the progress we are making."
Council Member Vianey Lopez said it's a huge opportunity.
"It's much better than the alternative, which is do nothing," she said.
Mayor Tim Flynn called it a major accomplishment.
"Despite what was said about Mandalay, there are options that I know the city manager has been working on to remove that power plant," he said. "I am hopeful in the next decade that both of these plants are gone."
The action passed unanimously.