A polluter could cash in

Gavin Newsom wants to give Mirant Corp. $2 million to shut down its power plant


Mayor Gavin Newsom wants to give Mirant Corp. a $2 million credit to shut down its Potrero Hill power plan and is offering to devote two full-time staffers to helping the company move forward a new development for the site, documents show.

An Oct. 30 agreement between the Mayor's Office and the Atlanta energy company, obtained under the Sunshine Ordinance, lays out a generous city program to encourage the shutdown — even though city officials say the pollution-spewing plant will almost certainly be closed anyway.

Negotiations are moving forward on the city's plan to construct a new fossil fuel–burning power plant with two "peakers" between the Dogpatch and Bayview neighborhoods — a project that supporters say will make the Mirant plant economically unviable and lead to its closure.

The 145-megawatt single-cycle natural gas–burning power plant, part of San Francisco's Electric Reliability Project, is necessary to meet a need for in-city energy reliability, according to the California Independent System Operator, a state agency that controls the power grid.

But the city's Public Utilities Commission argues that the peakers will obviate the need to keep the Mirant plant running — and Cal-ISO has agreed to pull the company's lucrative contract for providing power and transfer it to San Francisco once the new city-owned turbines are in place.

Critics are worried that the southeast part of the city could wind up with the worst of all worlds — that Mirant would keep its plant open and the peakers would operate too, increasing the level of airborne pollution in a neighborhood that has suffered environmental injustice for decades.

Now it appears the city has secured a solid guarantee that Mirant will shutter its Potrero plant — at a price.

"Mirant is committing to shut down once the plant is no longer needed for reliability," Jesse Blout, chief of staff of the Mayor's Office of Workforce and Economic Development, told us. "It's not economic to run that plant once our plant's in place."

The city is now seeking a legally binding agreement to secure that closure — and offering a sweet deal to get it.

According to a copy of the current term sheet that's being negotiated between San Francisco and Mirant, in exchange for the company agreeing to close the plant once it's no longer needed for reliability, the city "will agree to immediately designate a senior staff member from each of the Mayor's Office of Economic and Workforce Development and the Planning Department" and "agree to review and process on a priority basis a completed application for a proposed site plan."

Additionally, the term sheet reads, "In light of the public benefits associated with expediting closure of the Potrero Power Plant, the city will agree that ... Mirant will receive a credit of up to $2,000,000 — without interest — against certain city fees and costs, as described below, that would otherwise be payable in connection with review and approval of the site plan and any development project."

Felicia Browder, director of media relations for Mirant, confirmed that closure of the plant is imminent, once the state contract is terminated. However, she would not discuss details of the future use of the 27-acre site, as the deal is not finalized, something that's supposed to happen this week.

Blout told us a deed restriction prohibits residential use of the land, and he predicted some kind of light industry for the area. The property, located at the bay's edge between 22nd and 23rd streets, is also home to some of the toxic spoils of industry, which Pacific Gas and Electric Co., the original owner of the site, agreed to clean up to nonresidential standards when it sold its holdings to Mirant.

PUC members expressed satisfaction with the pending shutdown and voted unanimous approval of an Oct.