GREEN CITY Mayor Gavin Newsom finally outlined what he calls a "more promising way forward than the current proposal" of building two publicly owned power plants in San Francisco.
The way forward: retrofit three existing diesel turbines at the Mirant-Potrero Power Plant, while simultaneously shutting down Mirant's most polluting smokestack, Unit 3.
Newsom wrote a letter to the Board of Supervisors just before a June 3 hearing on the power plants, describing a May 23 meeting that he convened with SFPUC General Manager Ed Harrington, City Attorney Dennis Herrera, California Independent System Operator President Yakout Mansour, California Public Utilities Commission Chair Mike Peevey, Mirant CEO Ed Muller, and Pacific Gas & Electric Co. CEO Bill Morrow.
"In the meeting, we vetted the possibility of retrofitting the diesel turbines [currently owned and operated by Mirant] and asked each stakeholder to give us the necessary commitments to advance this alternative," Newsom wrote. The board then voted to shelve the power plant plan until July 15 so the retrofit option can be vetted.
Most significant, Newsom's meeting with top dogs at energy companies, who stand to lose a lot from San Francisco owning its own power source — and the resulting correspondence — elicited a new response from Cal-ISO, the state's power grid operator, about exactly how much electricity generation San Francisco needs.
For the first time, Cal-ISO said it will allow Mirant's Unit 3 to close as early as 2010, when the 400-MW Transbay Cable comes online, saying that the city no longer needs to install a combustion turbine peaker plant at the airport.
Sup. Sophie Maxwell expressed frustration that the questions she, her staff, and other stakeholders have been asking for the past several years are suddenly getting different answers. "I think we're seeing a big movement by Cal-ISO. This is huge. Before, we asked all these questions, [but] they weren't saying what they're saying now," she told the Guardian after the hearing.
When asked why she thought this was happening now, she simply pointed to PG&E. "Who stands to benefit from us not generating our own power? Who sent out all that stuff?" she asked, referring to the flyers depicting filthy power plants that PG&E has been mailing to residents in an effort to drum up public sentiment against the city's plan to build peakers. "Have they been concerned about what's clean, about our people?"
Some environmental activists are hailing the change as a triumph. "David has just moved Goliath, but we need to keep pushing," said Josh Arce of Brightline Defense, which sued to stop the city's plan to build the two power plants. He said his organization's goal is ultimately to have no fossil fuel plants in the city. But when asked about the retrofit alternative, he said, "We don't support it; we don't not support it."
Cal-ISO has insisted that San Francisco needs 150 MW of electricity to stave off blackouts. This grid reliability is currently provided by Mirant-Potrero, but the plant's Unit 3 is the greatest stationary source of pollution in the city. Bayview residents, who have borne a disproportionate share of the city's industrial pollution, ...
The following are is my personal analysis of why I believe building a new fossil fuel power plant is not the way to go. The alternative of retrofitting three diesel units now on site will mean lower emissions than the Combustion Turbine route, will not burden or risk burending the CCSF with $200M white elephant, and offers the best hope for quicker shutdown of all fossil fuel generation in the city
The Retrofit Alternative
The following is a summary rationale behind the alternative of retrofitting the three diesel peakers at the Mirant site (Units 4,5,and 6) to the building of the new CT power plant at the property acquired from Muni.
I. What is the proposed alternative: Mirant would retrofit the three Diesel peakers at their site to burn natural gas, be fitted with the most modern (BACT) pollution control equipment and operate them under a RMR from CAISO purely for reliability purposes when called upon by CAISO. The cost for same would be between $50-70M, but the CCSF would not in anyway be responsible for any payments. Mirant would recapture its costs and profits from all the rate payers in California who would be billed by their local IOU with PGE taking the billing lead. Mirant would contract with the CCSF to run these units under a Condition 2 model which means they would only be run when CAISO orders so for reliability reasons. CAISO, PGE and Mirant estimate that this would be about 200 hours per year as compared to the CT alternative where the SFPUC proposal is that the new CTs will run about of 1900 hours per year. When CAISO determines the units are no longer needed for reliability reasons, Mirant would shut down and dismantle the units. Under the RMR format, Mirant would still recover its remaining costs although the units would not run. Mirant thus has no incentive to keep them alive and operating, and would in fact have contracted with CCSF not to do so.
II. Why does this Alternative make more sense than building the CT plant?
A. Nominal Cost: The total outlay for the retrofit would be between $50-70M as compared the $270 M for the CT facility.
B. Cost to CCSF taxpayers: Under the retrofit alternative there would be no cost nor risk of cost to the CCSF taxpayer. With the CT alternative CCSF would receive about $125M of payments from DWR during the first 5 years of operation. Half of this would go to pay interest on the $270M debt financing, paying the initial $273 million down to about $200M by 2015. DWR would recover this from the statewide rate payers. At the end of the DWR financing the remaining debt would still exceed $200M and CCSF would have to attempt to recover this over another 15-20 years by selling the capacity or the power generated by the CT units. SFPUC staff estimated the CTs would run around 1900 hours per year during this period.
C. Control as to when the units would run: Under the retrofit alternative the units would only run when CAISO called for them for reliability. This would be assured by the RMR agreement and a contract with CCSF. The CTs units, during the period DWR would be financing, would run on DWR call which could be for purposes of reliability or market sale. The estimate of run hours for the retrofits is 200 hours per year and for the CTs 1900 hours per year or more. After the DWR period is over CCSF could control when the units ran. SFPUC estimates the hours would be about 1900 per year. This would be driven by need to recover the still remaining $200M in debt. Projections show that the new CTs would need to run 3,000 hours per year in post-DWR period to be paid off during 18th year of operation.
D. Possible total Shutdown of Peakers: The retrofit peakers will be shutdown per contract with CCSF when CAISO determines they are no longer needed for reliability and withdraws the RMR. We don’t know when that date might be, but SFPUC may commission a study intended to give a reasonably accurate estimate of closure date for remaining units. SFPUC and PGE will undertake commitments in demand response, energy efficiency and renewable generating sources to try to demonstrate that coupled with the transmission capability will make the units unnecessary. In contrast the CTs will be active and alive from 18-30 years so the investment can be paid off.
E. Pollution: With ISO indicating that the Trans Bay Cable will allow us to shut down Unit 3, 94% of Mirant’s energy output goes offline in early 2010. The remaining retrofit units produce about 30% more pollution per run hour than the CTs. However on an annual basis the retrofits will produce about 1/6 the pollution of the CTs since they will run about 200 hours as compared to the 1900 hours for the CTs. This is true for NOX and PM emissions. The CT pollution will exist for the 20-30 year life of the units. The retrofit pollution will end entirely when the units are shutdown. Today Mirant’s total facility produces about 57 tons of NOX per year. After shutdown of Unit 3 and retrofitting of 4, 5 and 6 the estimated comparable number is 1.8 tons per year.
F. CAISO: As referenced above, CAISO states in the letter to the Mayor dated June 2, that Unit 3 at Mirant can be shutdown when the Trans Bay Cable comes on line. Under Point 1 of that letter some have read it to mean that no peakers are needed and a transmission alternative is sufficient. The language is a bit confusing but, I read it as assuming that either the diesel peakers are still on line or they have been retrofitted and are on line. Clarification from CAISO confirms this view. They have not yet agreed to eliminating all 150MW of the peaker generating capability in San Francisco. They agree they will review the need for any in city units annually. Thus getting shutdown will require the City and PGE to demonstrate that the demand response programs, new transmission enhancements, energy efficiency programs, and renewable generation make them unnecessary.
G. Timing: The retrofit units can be on line as soon as the CTs would have. Transbay completion, scheduled for March 2010, is key to
shutting down unit 3.
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