Powerful developments
The grid could be stronger than feared, there's money for conservation, and Mirant is facing problems – but can public interest advocates seize these opportunities?

By Shadi Rahimi

THE INDEPENDENT SYSTEM Operator (ISO), backpedaling from a report issued just last month, has done new calculations indicating the Hunters Point power plant could be shut down by 2005. This surprising development reverses claims that the power grid was riddled with problems that could have forced the plant to stay open indefinitely.

That information comes out as the city and Pacific Gas and Electric Co. were awarded funding for an energy-efficiency program that could reduce the need for the plant. At the same time, Mirant Corp. seems to be facing new hurdles in its bid to build another plant near Potrero Hill, just a mile from the Hunters Point site.

Taken together, this trio of new developments creates what activists hope will be an opportunity to reduce pollution and attack big power interests. But without strong community pressure to spend the conservation money in the public interest and heed residents' concerns about the dirty air around Hunters Point, this may turn out to be just be another "street shell game," says Ross Mirkarimi, who directed the city's public power campaigns in 2001 and 2002 and has been involved in the fight for public power for 18 years.

"San Franciscans are forced to always follow the moving hands of PG&E to find out where the pea is under the shell. We keep throwing money down on the table, and they keep snatching it away from us," he said. "But now, instead of playing their shell game, we need to chop their hands off."

While these recent developments could be a hopeful sign, Mirkarimi and other public power advocates are warning San Franciscans not to lose sight of their long-term goals to create public power. "San Francisco needs to take a deep breath," said Barbara George, executive director of Women's Energy Matters, "and use this moment to take charge of its own energy future."

The ISO's new position

The ISO released a draft report March 26 that revealed deficiencies in San Francisco's electricity grid so serious that it seemed the shutdown of PG&E's Hunters Point plant would have to be delayed indefinitely (see "Power Plant Row?," 4/2/03).

But at the end of an April 10 community meeting, ISO officials backpedaled, announcing that the city's grid may not be in such bad shape after all. In fact, they revealed that San Francisco may be able to close the Hunters Point plant if new power lines and transformers are built and four 50-megawatt natural gas-fired backup generators (which were given to the city as part of a 2002 state settlement with the Williams Corp.) are installed. This has been the contention of city and community energy experts for some time.

ISO spokesperson Greg Fishman told us the ISO changed its position after receiving "more information" from PG&E, which had made "additional upgrades" to the power grid. Yet neither the ISO nor PG&E would provide details on what changed the calculations. Fishman said a more comprehensive report would be released in the next few weeks.

Greg Karras, senior scientist for Oakland-based Communities for a Better Environment, told us, "It looks as though we can actually close the Hunters Point plant and stop [Mirant Corp.'s push for a] massive, polluting Potrero Hill expansion, all while increasing the reliability of the existing power grid. It's totally doable. We want to make sure it gets done."

Fishman is much less optimistic. He told us that to say the city's grid is in good shape is "going way too far. We have committed to close down Hunters Point as quickly as we possibly can, but we also need to make sure we can reliably serve San Francisco."

But George, who has fought for public power for more than 25 years, says the ISO is holding the city to market standards, which may not be in the people's best interest.

"The ISO wants to gold-plate the system so that if a one-in-a-million chance happens, we will be ready," she said. "But the ISO is a creature of the economic system – it is influenced by markets and doesn't know nothin' about shutting anything down; it just wants to build more transimission lines. A 'reliable system' may mean that you have two to three times the energy you need. Can we pay the price for that kind of system?"

Using less power

The California Public Utilities Commission approved $16.3 million for a two-year energy-efficiency pilot program for San Francisco April 17. Even though city energy officials and public power advocates agree the pilot program could allow the closure of the Hunters Point plant, they disagree on how the funds should be spent.

In the $8 million draft budget for the program's first year, only $1 million is to be spent on residential homes, while more than $6 million is to be spent mostly in the downtown corridor – predominantly on office buildings, hotels and motels, retail stores, and restaurant and food services.

To community members, that's backward, because PG&E, not the city, controls the funds. "Their plan literally screws the community and looks out for big business," said Maurice Campbell, of the Community First Coalition. "The Department of the Environment [is] under the false impression that the downtown corridor was going to give them more bang for their buck."

Campbell said a greater portion of the funds should be spent on energy efficiency in the low-income communities of the southeast corridor, to ensure that residents' bills are lowered and the Hunters Point plant is finally shut down – ending the suffering of many who believe they are "paying the price of environmental injustice with their health."

Besides, businesses already have lower rates than individuals, George adds. Residential customers pay an average of 22.1¢ a kilowatt-hour, while commercial customers pay 16.7¢ a kilowatt-hour. "Why should the public's money go to businesses that [pay less than] the amount residents are paying?" she asked. "This budget is out of proportion – businesses are getting practically all the money."

San Francisco Department of the Environment spokesperson Mark Westlund told us the city has targeted the downtown corridor because it draws the most power from the Hunters Point plant. "We looked at the areas that were going to give the most relief to the plant so that we can shut it down," he said. PG&E spokesperson Paul Moreno confirmed the Hunters Point plant does generally serve the downtown corridor.

But Marshall Hunt, project director for an energy-efficiency program in Davis, told us that ideally, the budget should be split between the two interests, then evaluated after a year. "A more appropriate balance should be found in order to have the greatest long-term benefit," he said.

Stopping Mirant

The shifting energy picture could also affect Potrero Hill plant operator Mirant's efforts to build a 540-megawatt generating plant (see "Mirant's Morass," 10/16/02). Although Mirant looks to be moving full-speed ahead, it no longer has the ISO behind it and could face a challenge at the California Energy Commission over its cooling technology.

Just last year the ISO provided testimony in support of Mirant's proposal for a new generating plant at a CEC hearing, on the basis that it would be a suitable replacement for the Hunters Point plant. Mirant officials have consistently used that argument to garner community support. But on April 18, ISO president Terry Winter sent a memo to PG&E and the San Francisco City Attorney's Office that said the four Williams backup generators could replace the Hunters Point plant.

That alternative is the lesser of two evils, Mirkarimi says. "At least on the blueprint level the generators will be under our control," he said, "but on a political level, who knows?"

Prospects for the Mirant plant are also being hurt by a ruling expected to be issued at the end of this month by the CEC regarding a similar project. The ruling could set a new policy direction for the commission.

Duke Energy Corp.'s proposed generating units in Morro Bay, like the Mirant proposal for Potrero Hill, would suck in huge quantities of estuary water to cool down spinning turbines, wreaking havoc on their sensitive ecosystems. The outdated, "once-through" cooling technology faces strong opposition because it pulls in and grinds up millions of aquatic critters and spits out heated wastewater, further harming the bay.

Theresa Mueller, San Francisco's deputy city attorney who specializes in power issues, said of the water-cooling technology, "It cannot happen here."

Commission staff took the unusual step of urging commissioners to not certify the hefty Morro Bay project unless a less environmentally harmful method was chosen. "It is not precedent-setting from a legal perspective because each license must be decided on the merits of the case, but may indicate a policy direction," said a commission staffer.

The CEC's determination of what kind of cooling technology will be permitted could make or break Duke's project – and Mirant's as well. Duke said it would drop plans to upgrade the Morro Bay plant if forced to switch to a newer cooling technology because of higher costs, estimated at $100 million.

Mirant officials we contacted wouldn't say that being forced to use more expensive cooling technologies would kill the Potrero Hill project, but the company is already on shaky financial ground, and switching technologies would boost the $300 million cost by anywhere from $30 million to $90 million, depending on what technology it is required to use.

In its latest Securities and Exchange Commission filing, the Atlanta-based firm reported a net $227 million loss and the sale of many overseas assets. Further exacerbating its financial woes were the stacks of documents the Federal Energy Regulatory Commission released in late March, revealing information about possible antitrust behavior, market manipulations, and document shredding. A settlement of those issues in still pending. Shortly thereafter Mirant announced it would delay filing its financial update, which was due to the SEC April 15.

Keeping up the fight

Now is the time to act, public power advocates say.

"People are being forced to run down the path that the utility companies and their friends want, rather than them asking the community what they want to make of the system," George said. "Although we can shut down the Hunters Point plant today based on the ISO's data, I can see someone moving the bar again."

The recent power developments may be an "opening point in a negotiation," but there is much work to be done, George said. There is still the possibility that if the city uses the four backup plants to close the Hunters Point plant, it can upgrade the Potrero Hill plant and run it forever, she said.

"We need to have an open discourse. We need to have a full smorgasbord of all the options," Mirkarimi said. "These are all very time-sensitive issues, which is why we should not lose sight of neighborhood battles that are all part of the larger public power fight. Right now we have all the promises we need to inch forward, but we also face the danger of losing any gains if we don't continue to fight."

What's next: Public Power Forum May 12, noon, International Federation of Professional and Technical Engineers Local 21, 1182 Market, S.F. (415) 864-2100. Elizabeth McCarthy and Rachel Brahinsky contributed to this report.

E-mail Shadi Rahimi