A $500 million taxpayer-backed bond pays for the construction. With a 4% interest rate, we will have to pay $850 million over 30 years.
The LA Times recently revealed California utility companies have made false promises to residents about lowering bills. Utilities have said that power bills will go down with new or expanded power plants because they will sell electricity to other municipalities. The exact opposite has occurred time and time again. Utility companies can’t sell the excess energy and end up charging local residents more to offset the cost of building the updated plant. You can read all seven of the LA Times articles on the resources page.
The plant is near the Verdugo fault line and is in a liquefaction zone. The ground beneath it will liquefy during a major earthquake. This results in broken gas lines to the plant and possibly explosions. The plant will be offline in a disaster.
The plant is next to the Verdugo wash and the Los Angeles river which are expected to top their banks in the vicinity of the plant in a 100 year flood. The plant is in the flood plain of the Sepulveda and Hansen dams and will be destroyed if either of the dams fill and fail or have to release water to prevent failing. This recently happened in Houston. With climate change increasing the severity of weather events, this sort of catastrophic flooding is becoming more likely.
The plant financing depends on buying pollution offsets on the open market to compensate for the increase in pollution without accounting for the variation in the price of those offsets.
The old plant still has another decade left in it at least. A $2.5 million dollar retrofit on several of the existing units was completed in 2014. There is no reason to do this rebuild and expansion today. If we wait the price of clean alternatives will continue to drop.
We are under state mandate to provide 50% renewable energy by 2030. This plant is zero percent renewable so it will leave us in violation of the mandate and we may have to mothball parts of the new plant in order to be in compliance. SB100 almost passed this last session and it would have required 100% renewables by 2045. The financial plan requires that this plant run at 70 to 80% capacity 24/7 for 30 years so any reduced use to comply with the renewables mandate will make the plant even more expensive for the taxpayers.
The over-sized plant allows the utility to sell excess power to other utilities while there is a glut of power generation. LA recently mothballed several new gas plants due to price uncertainty.
If the plant fails to profit or is destroyed by a disaster, the taxpayers still pay the $850 million.