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Boulder City council unanimously extends SDG&E lease, adds hydrogen and storage uses and approves related water contract
Summary
The council approved a 20-year extension to the city's lease with San Diego Gas & Electric and an amended water service contract for the Desert Star plant, and staff said the agreement updates permitted uses to include hydrogen combustion generation and energy storage.
Boulder City's council voted unanimously to extend the city's lease with San Diego Gas & Electric and to approve a related water-service contract that will keep the Desert Star natural gas plant on its current site and add new permitted energy uses.
Brock Grama, the city's contracts and real-estate manager, told the council the amended and restated lease (agreement 97-438H) would extend the current term by 20 years and add hydrogen combustion generation and energy storage as permitted uses on the site. Grama said the amended agreement incorporates a recent appraisal and that the annual lease payment remains consistent with the current amount.
The council then moved to approve Bill 2073 to enact the lease extension. The motion was made and seconded and passed by a unanimous voice vote.
In a separate but related action, staff presented Resolution 79-26, an amended and restated water service contract (97-439D) that will provide water to the Desert Star plant for the duration of the new lease term. Contracts manager Grama said the water contract ensures the plant will be treated similarly to other city water customers and extends through the plant's lease period. The council voted unanimously to approve the resolution.
The city and SDG&E representatives said the changes are intended to allow the site to evolve as technology changes. "We would love to stay here and continue to operate in this community," Scott Kreider, who identified himself as president of San Diego Gas & Electric, told the council during public comment, asking for support on both the lease extension and the water contract.
Council members and staff said the appraisal and finance review found the amended lease terms consistent with the city's revenue objectives. The presentation noted the underlying appraisal and that staff expects to continue to collect similar lease revenue while enabling potential new uses such as hydrogen and battery storage.
With both votes, the council authorized staff to finalize contract documents and continue negotiations needed to implement the extended lease and associated service terms.
