PUBLIC WORKS DEPARTMENTSANTA CRUZ COUNTY

Jesus J. Valdez, P.E.County Engineer

March 1,2012

Christine Vineyard

U.S. Mexico Border Coordinator

Air Division

U.S. Environmental Protection Agency - Region IX

75 Hawthorne St. (AIR-4)

San Francisco, CA 94105

RE: Status Report No.3 (Final)TAA Number TAA10-065Project lD No. 20166Rio Rico Landfill Gas to Energy Project Phase II, Rio Rico, AZ

Dear Ms. Vineyard;

Enclosed please find our third and final quarterly progress report. The plans are enclosed in the

diskette for your convenience.

Should you have any question or concerns regarding enclosed, please feel free to contact me via

email atkmoyers@co.santa-cruz.az.us or leave me a message at our main office (520) 375-7830.

/

'''-..--?T / f/

~" Karl O. MoyersOV' Solid Waste Division Manager

Public Works Department

KOMIap

Enclosure

CC: Mario Modesto

Abril QuirozP.O. Box 1150 Nogales, Arizona 85628 (520) 375-7830 Fax (520) 375-7846 TDD (520) 761-7816

BORDER 2012 PROJECT

FINAL REPORT

I. SUB-GRANTEE/CONTRACTOR NAME: Santa Cruz County

II. Title of Project: Rio Rico Landfill Gas to Energy Phase 2 - Rio Rico,

AZ

III. Starting date: 1/1/11

IV. Total Project Duration: 18 Months

V. Date of Final Report: Feb 15, 2012

TABLE OF CONTENTS

1. IntroductionlBackgroundlldentified Problem: describe the project'slocation main features, as well as the identified problem. Explain theformer or existing efforts to solve the problem.

The Project main features were to design, engineer a landfill gas collectionssystem expansions necessary for a landfill gas to energy project. Preparedraft Interconnection and Power Purchase Agreements.

The problem was that the County lacked the financial resources to completethe next phase of the landfill gas to energy project on its own. The Countyrecognized that according to EPA LANDGEM modeling that the RRLF wasproducing approximately 26,045 tons of C02, of which 50% was beingdestroyed by a candle stick flare and the rest escaping to the air shed.

As is well documented C02 is a greenhouse gas that is detrimental to thehuman health and can be collected and properly destroyed. However,because 88% of this C02 is contributed by methane CH4, which can beutilized to produce electricity and is considered a renewable energy source.The County wanted to implement a landfill gas to energy project.

Previous work included a Landfill To Gas To Energy and Carbon Creditfeasibility study to determine the viability of capturing methane gas andconverting it to renewable energy confirmed that the RRLF presents an idealopportunity to reduce air pollution cause by GHG and produce renewable

energy. The Feasibility Study was funded by BECC and completed in Nov.,2009.

2. Objectives: Describe the project's approach to solve the identifiedproblem/environmental condition

The RRLF LGE PP2 meets the requirement of Category i, Goal 2; ReduceAir Pollution by improving the efficiency of landfill gas collection at the RRLFby 96% (captures an additional 13,022 tons carbon dioxide) and generates800 Kwh of renewable electrical energy. This objective clearly meets theprimary goal of the Methane to Markets goal of reducing global methaneemissions in order to enhance economic growth, strengthen energy security,improve air quality, improve industrial safety, and reduce emissions ofgreenhouse gases from landfills.

The completion of Phase 2 of the project gives the County 100% design andengineering plans along with an economic proforma that can be used tofurther negotiations on the ICA and PPA with the local utility company. Italso, facilities the County in finding a way to develop, finance andconstruction the LFGE Project.

The completion of Phase 3 will improve the environmental performance ofthe RRLF gas collection system by preventing air pollution, promoteenvironmental stewardship and reduce the risks to human health. Increasingamounts of greenhouse gases in the atmosphere and global warming couldalso lead to more health concerns. A statement released from theIntergovernmental Panel on Climate Change (IPCC) said, "Climate changeis likely to have wide-ranging and mostly adverse impacts on human health,with significant loss of life."

:So Methods or work description:

• The County developed a Scope of Work CW Williams and his subcontractor Stantec to prepare the design and engineering plans.

• Mr. Williams was instrumental in coordinating meetings with the County,CW Williams, Stantec, Citizen Utilities/Unisource Energy (CU/UE).

• In depth negotiates with the CU/UE conceming the PPNICA has reSUltedin the draft ICA that is currently undergoing internal review in the County.These meetings also allowed the County to clarify the $/Kwh necessaryto the project to economical feasible.

4. Results:

The results of this project are a 100% set of design and engineer plans thatcan be used to construction the GCCS expansion and LFGE project.

A draft ICA is currently undergoing in house review.

A draft PPA was not prepared because the County has not forwarded a$/Kwh offer to CU/UE for their evaluation and consideration.

5. Discussion: discuss results and define if project's goals andobjectives were accomplished

100% design and engineer plans were prepared and paid for with the grantfunds.

The cost estimate of the project was $249,606 ($120,000 NADBANK +$129,606 County).

To date CW Williams has been paid $209,636.94. The County also spent$10,421.23 on SCS Engineer to reconnect the interior extraction wells # 14and 15 to the perimeter GCCS, prepare a design capacity report, andperform analytical and TCUP analysis on the landfill gas being generatedwithin the landfill from these wells. This information was critical to verify thepotential of the landfill gas to be used for the LFGE project.

The County also procured the services of Green Hub Advisors for $3,000 tofacilitate a work session with the Board of Supervisor at which BECC andNADBANK were also present. The purpose was to convey information aboutNADBANK financing, various environmental benefits of the project anddevelopment options.

As a result of this meeting the County has decided to issue a Request forQualifications (RFQ) to qualify a private developer to either form a publicprivate partnership or develop the LFGE project. The RFQ notice will bepublished in March 2012, with a 4 bid and selection process. Then it allowsthe parties 6 months to develop a contract for financing and constructing theLFGE Project.

It is the opinion of the County that it would inappropriate to negotiate a PPAwithout the concurrence and support of the Developer.

The remaining balance of $26,547.83 will be utilized to facilitate:• The RFQ review process by hiring outside experts to assist in

evaluating the Developers proposals.• To further ongoing negotiations with CU/UE on the ICA and PPA.• It may be used to hire outside legal counsel to assist the County in

the Developer Negotiations.

6. Recommendations: define action items to implement as a result ofproject's outcomes, as well as follow up projects if needed

Actions items include:

• Continuing negotiations with CU/UE on the ICAIPPA.

• Issue the RFQ for Developers and completed the contractnegotiations.

• Obtain financing for the GCCS and LFGE project.• Continue to investigate grant opportunities such as NADBANK CAP

2012 funding to construct the GCCS expansion and other grants todecrease the amount of debt service.

Attachments:

• 100% Design Plans and Specifications.• Draft ICA.• Analytical Samples from the GCCS.• Presentations to the BOS by Green Hub and NADBANK.• Invoices from all Contractors.

INVOICE FINAL REPORT

Border Environmental Cooperation Commission Santa Cruz County

P.O. Box 221648 2150 N. Congress Dr., #117

EI Paso, TX 79913 Nogales, AZ 85621

Attn: Karl O. Moyers

Invoice No: # 3 - Final Report

Date: 2/21{12

TAA No. TAA10-o65

Project Rio Rico Landfill Gas to Energy Project Phase 2 - Rio Rico AZ

For Professional Service Rendered for the Period 3/31/11 - 12{31{11

Percentage Quantity

Contract Completed [or Completed to Less Previous Amount Due

Task Decscription Amont/Unit Cost Milestones) Date Billing This InvoicePreliminary Design, Kick ott meeting and Site

1 Visit $ 4,594,00 10096 10096 $ 4,594,00 $ -2 Gas Sampling and Camasitian Analysis $ 2,720,00 10096 10096 $ 2,720,00 $ -3 Design Drawings and Bid Documents $ 112,655,00 10096 100% $ 101,389,50 $ 11,265,50

Total $ 119,969,00 $ 11,265,50Total Amount Due This Invoice