Garbage-burning plant in Stanislaus County plagued by financial issues. Will it close?

The company that operates the garbage-burning plant in Stanislaus County says the facility is in serious financial trouble, and the county and Modesto are considering options to keep it open. Otherwise, the facility could close June 30.

An option for continued operation of the 36-year-old incinerator near Crows Landing is significantly higher fees on receiving garbage. Those costs would be passed on to customers in Modesto, other cities and the county, who have have been hit by sharp increases in garbage rates since 2022.

The myriad financial issues are outlined in a Dec. 1 letter from an executive of Covanta Energy Corp., which operates the facility, to the county Environmental Resources department. The letter stresses the Covanta Stanislaus facility is losing money on a monthly basis.

Stanislaus County officials released a copy of Covanta’s letter Wednesday, along with a statement.

“The county shared this letter with the city of Modesto and both agencies are meeting to analyze the information and engaging in conversations with Covanta to determine the best plan of action,” the county statement says. “We will refrain from making anymore comments until a final determination has been made with Covanta and the city of Modesto.”

The county said the Covanta letter included three scenarios as viable options for moving forward in 2024.

Two options are limited to raising the tipping fee charged to accept garbage at the plant and processing an increase in wastes that require special handling, such as medical wastes. The other scenario is closing the facility June 30 or earlier.

“We are assessing all of the issues they raised,” said Mani Grewal, county Board of Supervisors chairman. “We will have meetings discussing that. With the holidays, we don’t have a finalized plan.”

A Covanta spokesperson said the company continues to have discussions with the county on scenarios in the letter.

Covanta’s letter stresses that the operating environment in California has vastly changed since the company’s contract with the county and Modesto was renewed in 2012. For years, Modesto and the county have contracted with Covanta to burn household and commercial garbage collected from most of the county, rather than putting it in the landfill.

“State policies targeting waste-to-energy facilities in California have been designed to put the facilities at a serious disadvantage,” the letter says. Covanta said the costs of complying with newer air quality and cap-and-trade requirements are expected to exceed $23 million through 2027, when its contract with Modesto and the county is set to expire.

The county and city are now alone in defending waste-to-energy in California’s regulatory environment.

Covanta has terminated its contract with Long Beach for operating the only other garbage-burner in California, effective this week. According to Covanta’s letter last month, the company ended its agreement with Long Beach because of financial losses resulting from state regulations.

A change in state policies ended energy credits

State policies did away with renewable energy credits for the Crows Landing facility and imposed stricter regulations on the plant’s nitrogen oxide emissions. Covanta is permitted to burn 800 tons per day to generate electricity for Pacific Gas and Electric Co.

Another setback has to do with carbon dioxide emissions. The California Air Resources Board used to exempt the incinerator from cap-and-trade requirements but changed the policy in 2017. The facility now has to comply with the program by purchasing credits from other entities to offset emissions, though it receives some assistance in the transition through 2024.

Covanta’s letter adds that it’s possible the ash left over from burning garbage will be reclassified as hazardous waste, requiring costly disposal. The ash has been classified as nonhazardous for years.

Among the millions of dollars in costs cited in the letter are $7 million for air emission technology last year and $4.9 million in cap-and-trade costs since 2017. Those costs are expected to rise to an annual $4.2 million in 2025 and $5 million annually thereafter.

As a possible option, Covanta said the tipping fee “would have to be significantly increased to facilitate continued viable operations of the facility for the remainder of the contract.” No dollar figures were discussed in the letter.

The two-page letter doesn’t elaborate on how much additional “special waste” would be processed to offset costs and make the operation profitable again.

Modesto Mayor Sue Zwahlen declined to comment when asked if the city should keep relying on the facility for waste management. “The only thing I can say is we are working through the process,” she said. “We will go through the process and ultimately come to a decision. We are not there yet.”

Time for a new direction, environmental group says

Bianca Lopez, co-founder of Valley Improvement Projects, said the garbage-burning plant is no longer viable and it’s time for a new direction.

“We know the incinerator emits a lot of toxic material and the surrounding communities are breathing that in,” Lopez said. “The material falls on crops in the field. … It’s not a good sustainable practice.”

The environmental justice group has advocated for a zero-waste plan to encourage more recycling and reuse of waste products to relieve the burden on landfills.

Much more garbage would flow into the adjacent Fink Road landfill if there’s a decision to cease the waste-to-energy operations.

In news releases, Covanta has said waste-to-energy is a better option than landfills, which emit large amounts of greenhouse gas as garbage decays in the ground. In August, Covanta boasted that the Stanislaus facility reduces greenhouse gas by 176,000 tons every year.

The facility burns 250,000 tons of waste per year, generating electricity to power 13,000 homes, the company said.