A polluter could cash in - Page 2

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

31 resolution authorizing the commission's general manager, Susan Leal, to move forward with the plan. The resolution also includes clauses banning the sale of energy for profit from the three combustion turbines at the in-city facility and exploring whether two instead of three CTs could meet reliability needs.

The financing and control of the peaker project is also changing. Initially, the city negotiated a public-private partnership with JPower, a Japanese energy company with an Illinois subsidiary, to finance the $230 million project for two plants — the 145 MW in-city facility and another 48 MW plant located at San Francisco International Airport. Under the original deal, JPower would own and operate both plants for a period of some years before turning them over to the city. Now, however, the city is committing to financing the project and owning it outright, and the contract with JPower will be for operation and maintenance. "It makes more policy sense," Blout said, adding that after 12 to 14 years, "we will own the units free and clear." He said the city plans to issue tax-exempt bonds but at this point was uncomfortable stating how much they would be for.

Though JPower will be staffing the plant for the city, it will not be making a profit. "In the contract it will stipulate they can only run when Cal-ISO calls for them for reliability," the PUC's Tony Winnicker said.

However, the 48 MW plant located at the airport will still be owned and operated by JPower for a 30-year period, and that plant is licensed to operate for 4,900 hours a year. "JPower will be able to operate that unit up to its limit," Winnicker said. "That's part of what makes the deal profitable for JPower."

A mixed bag of environmentalists, social justice advocates, and Bayview and Potrero residents who are neighbors of the new and old plants still opposes the city building any new fossil fuel power plants. The Brightline Defense Project is currently representing the A. Philip Randolph Institute, Californians for Renewable Energy, and two citizens in litigation seeking to halt the building of the new plant.

Eric Brooks of Our City, a local public interest group, expressed skepticism of the plan to swap one power plant for another. "We would send the worst possible message to the world by building a fossil fuel power plant in our city limits at the very beginning of what must be a renewable-energy century," he told us. He's also urging the city to let lapse Mirant's water and air permits, which are set to expire in 2008 and 2010, respectively.

Other opposition to the city's power plants has come from PG&E, through the Close It! Coalition, a group the utility company founded and financially supports. "These new plants will further our reliance on fossil fuels and contribute to global warming," the group states on its Web site. However, PG&E has a 20-year contract with a similar peaker plant under construction in Fresno and is building three new fossil fuel plants of its own in Antioch, Eureka, and Colusa. PG&E, of course, also wants to keep any hint of public power out of San Francisco.