Cleaner power, cleaner money

The choice facing us is between being smart about our energy policy or handing over that policy to a corporate boardroom in Atlanta
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OPINION Nine months ago neighborhood leaders from the Potrero Hill and the Bayview districts were invited to stand and applaud at a press conference at Mirant's Potrero Power Plant. As reported in the San Francisco Chronicle: "One of the state's oldest and dirtiest power plants ... could shut down as soon as 2009, city leaders announced.... The mayor said the signing represented 'an important day in the history of the city.'<0x2009>"

But now that signed agreement to close Mirant — through a decade-long effort to have the city run its own power-generating "peaker plants" as a replacement — is itself on the verge of extinction. Mayor Gavin Newsom, a probable candidate for governor and choosing political expediency over cleaner air, reversed field and claimed that the cleanest way to close Mirant ... is to keep part of it running. And a number of environmental activists backed him up, claiming that the city-owned peaker plants would bring more pollution to southeast San Francisco than retrofitted combustion turbines at the Mirant plant.

How can that be, when even conservative estimates admit that the newer city-owned turbines run 30 to 35 percent cleaner than the 40-year-old Mirant turbines?

The answer is money.

The argument goes like this: the city-owned peaker plants are funded by $273 million in revenue bonds and a contract with the state's Department of Water Resources that runs until 2015. After that, the debt remaining on the bonds would require the city to run the peakers for more hours and many more years of operation than retrofitted combustion turbines at the Mirant plant. The Mirant proposal would be financed by reliability contracts from the state's Independent System Operator (Cal-ISO) that essentially pay for the turbine capacity, not actual operation. That means fewer running hours, and no potential cost to the city's budget. Therefore, the Mirant retrofit is less polluting, and the generators can be shut down sooner.

That's been a persuasive argument so far, and it has stopped further consideration of the city-owned peakers. But the argument misses one important fact and one critical question. The fact is that the city-owned peakers don't cost $273 million anymore; Cal-ISO agreed in June that the fourth peaker plant (to be located at the airport) wasn't necessary, leading to savings of more than $110 million.

There's an even more important question: why don't we finance the city-owned peaker plants using Cal-ISO's reliability contracts instead of the bonds and the DWR contract? Apparently no one at the Mayor's Office, the Public Utilities Commission, or the environmental groups supporting the Mirant retrofit has asked this question. Yet it provides the cleanest answer to the dilemma of the peaker plants — it would give us the cleanest machines, under city control and policy, so they can only run when absolutely necessary and we can shut them down as soon as possible.

At the end of the day the proposal for a Mirant retrofit isn't really about a retrofit at all — it's a proposal to keep the city's energy future in the hands of others. The choice facing us — at City Hall, in the environmental community, and in the neighborhoods — is between being smart about our energy policy or handing over that policy to a corporate boardroom in Atlanta.

Tony Kelly

Tony Kelly is president of the Potrero Boosters Neighborhood Association.

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