Lodi official outlines peaker plant lease terms and city’s electricity payments to the general fund

Utility staff told the council that a peaker plant near Lodi Lake is leased to Enchanted Rock under a contract that began in 2023 and pays the city about $2.8 million per year under the initial five‑year term. The contract includes an option for the state to extend the lease for an additional three years starting in 2028; any extension would include a CPI adjustment.

Jeff (utility staff) said the city has a first right of refusal to acquire the plant if the state elects not to extend the lease, but taking ownership would require detailed analysis of deliverability into energy markets, capacity value, resource adequacy and operational costs. Staff estimated the plant’s replacement cost in the $50–$75 million range and said the asset life of the modular engines could extend 20–40 years with proper maintenance.

The presentation put the peaker plant in context of the city’s revenue mix: the electric‑utility payment‑in‑lieu contributes roughly $7,000,000 annually to the general fund (a line item staff called out in the fiscal presentation), and lease revenue from several city‑owned properties contributes about $6,000,000 per year.

Council members asked about the lease length, CPI indexing and the plant’s likely operational life. Jeff said the lease term is five years with a three‑year option and estimated annual CPI increases of roughly 3–5% post‑2028. He added there are hurdles and policy choices the city would have to weigh before exercising purchase rights.