Board approves sale of CTs - but there's a twist


By Rebecca Bowe

On Tuesday, the Board of Supervisors voted unanimously to approve the sale of four city-owned combustion turbines, with a final vote on the matter still pending. But an amendment to the ordinance built in some wiggle room for the San Francisco Public Utilities Commission to reconsider as strategies advance to shut down the Potrero power plant.

The CTs -- which can be used to produce electricity during periods of peak demand -- were nearly used to develop in-city electric generating facilities last year that would have replaced the existing Potrero power plant. Those plans were ultimately abandoned, the units have been sitting in storage in Texas ever since, and the Potrero plant has continued running 24/7. When Mayor Gavin Newsom introduced his interim budget in June, he included the sale of the turbines for $10 million -- much lower than market value, but the maximum amount the city is entitled to under the terms of a settlement agreement that turned them over to San Francisco in 2003.

During last year’s debate over the construction of the city-owned power plants, it seemed like the city had no choice but to live with either the Potrero plant or the city-owned peaker plants in order to satisfy the requirements of the California Independent System Operator, a quasi-governmental agency that oversees the electricity grid and determines the amount of power needed to ensure reliability during worst-case scenarios. But in May, Newsom, SFPUC General Manager Ed Harrington and several others sent a letter to the Cal-ISO outlining a plan to have it both ways: They proposed closing down the entire Potrero plant and employing upgraded transmission lines, instead of in-city generation, to bridge the electricity gap.

If that plan is accepted by the Cal-ISO, all four CTs can be sold off, and the Potrero plant could finally be shut down. But whether or not the Cal-ISO is open to that idea remains up in the air.

According to SFPUC spokesman Tony Winnicker, a staff-to-staff meeting occurred between the SFPUC and the Cal-ISO to discuss reliability requirements, but no clear answers have emerged yet. "We expect decisions in September or October," Winnicker told us. "The Mayor has expressed interest in meeting with Cal-ISO CEO Yakout Mansour" to try and bring him around to the transmission-only solution, he added.

Meanwhile, a spokesperson from the Cal-ISO told us a few weeks ago that Mansour had spoken with Newsom regarding the letter, but that he wasn’t allowed to discuss what was said. A person familiar with the situation told the Guardian that Mansour essentially rejected the plan during a brief telephone conversation with Newsom. We contacted Newsom’s Office of Communications half a dozen times to ask, but no one responded. The lack of clarity presents a possible worst-case scenario: If the Cal-ISO does formally reject the transmission-only strategy, selling off the combustion turbines could leave San Francisco stuck with the Potrero plant.

"If we've learned anything in this multi-year process, it's that you don't always know the game ahead," Winnicker said when we asked about this possibility. "We're not willing to ever concede that Mirant will have to operate in perpetuity. There's no reason to believe that we can't have a transmission-only solution."

In late June, the city’s Power Plant Task Force forwarded a resolution to the Board indicating that the sale of the CTs was a bad idea without a guarantee in place that the Potrero plant could be shuttered. “Resolved, that the PPTF recommend that the Board of Supervisors of the City and County of San Francisco not authorize the Public Utilities Commission … to sell the four combustion turbines transferred to the City … until, and unless, the California Independent Systems Operator removes the ‘RMR’ status from the entire Mirant Potrero facility including Potrero Plants 4, 5 and 6,” the resolution states.

The amendments approved by the Board on Tuesday are sort of a nod to that position, but they aren’t nearly as strong as the language the PPTF used. NRG, an energy company, has expressed interest in utilizing the city’s existing steam plant at Jesse Street and one proposed in Mission Bay to cogenerate electricity for local consumption, a project that might involve the use of one or two combustion turbines. According to the ordinance, "this electricity production could add to the reliability of the San Francisco electric system and help remove ISO requirements for the continued operation of the Potrero Power Plant."

The ordinance directs the SFPUC to look into the feasibility of those cogeneration projects while it’s preparing the turbines to go up for sale, and to report back. “It simply says that concurrent with our work on selling them, if we have something where it can be used, we would have to come back to the Mayor and the Board to see if someone wanted to make a different decision. Absent that it would go forward with the sale of the CTs,” SFPUC General Manager Ed Harrington told members of the Budget and Finance Committee recently.

Sups. Ross Mirkarimi and Chris Daly -- who both disagreed with the idea of building the power plants -- nonetheless supported the amendments, because they said the provisions could give the city a modicum of leverage in the push to close the Potrero plant. “I just want to make it clear it's really my unwavering position we should get rid of the CTs, yet I think there's logic in the amendments that have been made at budget and finance committee about having at least some kind of contingency through the P.U.C.,” Mirkarimi noted.

Daly said, “I have also vigorously pushed for the sale of the CTs. I also think that ... we do need to figure out how to leverage whatever we can at Cal-ISO to force the closure of the very, very dirty plant.”