The City Council has approved an agreement to pay up to $2.8 million if the Commerce Refuse to Energy Authority defaults on a future loan from Southern California Edison Co., a spokesman said.
The Refuse to Energy Authority administers the $50-million refuse-to-energy plant that is scheduled to begin commercial operation in June. Edison will be the sole buyer of energy from the plant.
Under an agreement with the utility, the Refuse to Energy Authority can charge an extra 2 cents per kilowatt-hour of electricity until it, in effect, borrows up to $5.6 million from Edison, said interim City Administrator Bob Williams.
The council voted 4-0 Monday to guarantee half that amount, Williams said. Mayor James B. Dimas was absent. The rest of the potential loan will be guaranteed by the Los Angeles County Sanitation Districts, Williams said.
Commerce and the Sanitation Districts jointly developed the 10-megawatt unit, which will be the first to operate in California. The Refuse to Energy Authority is composed of city and Sanitation Districts officials.
The plant will burn up to 300 tons of trash each day, enough energy to supply 20,000 homes.