HomeCity Government NewsCouncil Approves $471M in Grayson Funding

Council Approves $471M in Grayson Funding

The Glendale City Council voted to approve new contracts and amendments to existing contracts for the Grayson Repowering Project, totaling $471.6 million in new funding and $58 million in new contingencies, at its Nov. 14 meeting.

Since its inception in 2018, the Grayson Project has undergone a number of design changes to fall in line with new environmental regulations, a push toward electrification and to take advantage of newer — and greener — technological developments in the power industry.

Because of these design changes, project delays, supply chain issues and the increased interest rates for bonds, the project’s initial estimated budget of $500 million has increased to $550 million, according to Scott Mellon, assistant general manager for Glendale Water & Power.

To mitigate this increase, GWP is in the process of getting citywide electricity rate increases finalized and approved by the City Council. While the general rate increases were approved in late September, the Council will vote to approve the specific increases for each customer class over the course of three years at a Nov. 28 meeting.

The proposed increases will raise residents’ bills by 18.6% in 2024, 14% in 2025 and 13.8% in 2026. Small businesses will see increases of 18.2%, 13.5% and 12.6% and medium businesses’ rates will increase by 9.7%, 7.5% and 7.4%. Lastly, large businesses will see increases of 12.1%, 9.4% and 9.5%.

“The two major lump sum values for Grayson are still contingent upon the rate increases, because our bond issuance is contingent upon that also, meaning we can’t issue bonds unless we have the rate increase,” Mellon told the News-Press.

Without repowering Grayson, the city only has enough energy to supply about 14% of its electrical system. Glendale relies on transmission lines to bring energy into the city from outside sources, however, during high peak conditions such as heat waves, it becomes more difficult to rely on these transmission lines, according to Mellon.

Thus, if transmission lines are restricted, the city could be forced to implement rotating power outages because it would not have enough energy to cover the entire city’s electrical load. The plan to repower Grayson includes increased natural gas burning units through reciprocating internal combustion engine generators as well as energy storage through lithium ion batteries.

“We’re going to be taking advantage of stored energy to help us over these high peak conditions,” Mellon said. “So, it is critical that we have that combination of firm dispatchable energy in the Wartsila engines and then that supplemental energy is coming from storage.”

Since the announcement of the impending electricity rate increases, the City Council and GWP have faced criticism from the public. Councilwoman Paula Devine gave the increases some context at this week’s Council meeting, adding that “this is not the time to play the blame game.”

“This is a serious decision, it’s an important decision and it’s a painful decision,” Devine said. “If we vote against this rate increase, we’re voting against repowering Grayson which will supply reliable and sustainable energy to our residents for years to come.”

The Sierra Club, a grassroots environmental organization, filed a lawsuit against the city of Glendale in February 2022 to stop the fuel engines from being built at Grayson, alleging that the engines will hinder California’s clean energy goals. Following the court’s ruling that Glendale can continue plans to build the engines, the Sierra Club filed an appeal to the decision on Oct. 26. Teresa Cheng, a field manager with the Sierra Club, commented on the increased budget for the Grayson Project following this week’s Council meeting.

“This is not the first time GWP has come back to the Glendale City Council to ask for even more money for the polluting Grayson gas plant, which will cost ratepayers hundreds of millions of dollars,” Cheng said in a statement to the News-Press. “GWP has consistently failed to accurately represent the consequences and costs of building out Grayson.”

Regarding Sierra Club’s appeal, Mellon said, “I respect their ideals and their goals are a little bit different than ours [at GWP]. We have obligations to our customers that we need to meet. So, I respect their perspective on it, but it differs from what our obligations are.”

Currently, the Grayson Project, which has three phases, is in its second phase of demolition and site improvement. That followed the completion of phase one, which separated one of Grayson’s units from the rest of the power plant to ensure its continued use as a power resource during phase two. Phase three, which will implement the battery energy storage system and the three generator engines, is set to be complete in 2026.

Mellon emphasized that he “fully understands residents’ concerns [over rate increases] and empathizes,” however, he stressed, it is necessary to spend some money on making improvements to Glendale’s energy system to accommodate renewable resources and “aggressive” codes to support electrification.

First published in the November 18 print issue of the Glendale News-Press.

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