January 31, 2001

To: The Board of Supervisors - City and County of San Francisco
From: Potrero Power Plant Citizens Advisory Task Force
RE: Progress Report, Requests For Assistance, and Suggested Actions

Background
By Resolution 362-99, the Board of Supervisors created the 13 member Potrero Power Plant Citizens Advisory Task Force. Charged with providing the City with input regarding the Southern Company California's (recently renamed "Mirant") proposed expansion of the Potrero Power Plant, the Task Force is monitoring Southern's Application for Certification to the California Energy Commission (CEC) and researching the ramifications of increased generation. The Task Force is reviewing all issues relating to the power plant and the effects on the City and more directly on the neighborhoods of Bayview/Hunters Point (BVHP), and Potrero Hill/Dogpatch (PHD). The Task Force has held monthly meetings since June 2000, with administrative assistance from Jill Lerner of the office of City Administrator Bill Lee. In December 2000, Board passed Resolution 1055-00 extending the Task Force life to October 31, 2001.

Task Force Members

City Departments:
Angela Calvillo (Supv. Ammiano)
Larry Klein (PUC)
Richard Lee (Health Dept.)
Francesca Vietor (Mayor)

Designated Organizations:
Robert Boileau (Labor Council)
Claude Wilson (SAEJ)

Potrero Hill/Dogpatch Residents:
Sarah Ames, Vice Chair
John Borg
Joe Boss
Philip DeAndrade, Chair
Babette Drefke
James Firth
Richard Millet

Project Overview
Southern proposes to build a new 540 megawatt (MW) generation unit next to the existing Potrero Power Plant (PPP), located between 22nd and 23rd Streets at Illinois, which Southern purchased from PG&E in 1999. The existing PPP facility, marked by its towering smokestack on the central waterfront, generates up to 362 MW. The plant is adjacent to the Dogpatch neighborhood, at the Eastern base of Potrero Hill, and is located on a site that has historically been an industrial area. However, in recent years the area has attracted white-collar workers and hundreds of new residential/live-work units. Large loft developments are within 1000 feet of the site. The PPP is also adjacent to the Port of San Francisco's Pier 70 Opportunity Site, a 17-acre parcel that will be subject of intense development of both non-profit and for profit spaces through an RFQ/RFP to be release in March 2001.

The new Potrero Unit 7, as the proposed new plant is called, would be a natural gas-fired facility that would produce electricity to be sold into California's open electricity market. It will operate continuously throughout the year and utilize the San Francisco Bay for cooling. Unit 7 will increase the generation capacity of the existing PPP to 902 MW. It will include two natural gas turbine generators and one steam generator, two heat recovery generators, two 180-foot smokestacks, transformers, power transmission, control buildings, and ammonia storage tanks at an estimated cost between $260 and $320 million, and licensed to operate through 2043.

The California Energy Commission (CEC) reviews project to ensure compliance environmental laws. It approves or denies all electric power plants California, based on its findings. The year long permit process for the proposed Potrero facility began in October 2000 and examines public health and safety, air and water quality, hazardous materials, land use, and design. While the process is stringent, it is also moves very quickly. The CEC is already three months into siting process, and there is very limited time for the public to provide formal feedback and concerns.

The proposed new plant could allow closure of the nearby Hunters Point Power Plant, an inefficient facility that local citizens fought to close down a few years back due to health and environmental concerns. Closure of Hunters Point plant cannot happen until replacement power is available via a new power plant or new transmission into San Francisco. There are other options that include building a smaller plant, enhancing the grid into San Francisco, small distributed plants throughout the City, and building plants in away from residential populations.

The City Departments' Role
The City and County became Interveners in the CEC process through the City Attorney's office (Greg Wheatland) on December 1, 2000. Interveners are allowed to directly question Southern, present expert witnesses, cross-examine the applicant's supporting characters, and raise concerns not fully addressed by the staff of the CEC. The City has submitted the first of several Data Requests. Additionally, the City has retained a part time consultant (Diana Cardenas of Camp, Dresser, and McKee) to coordinate the City Departments' review of the project. Except the City Attorney's office and the Port, all relevant Departments are represented on the Task Force. Mark Paez, Pier 70 project manager for the Port, has attended meetings, but is now assigned to the Northern Waterfront Historical District project. Last month the committee began to utilize the Boards' Legislative Analysts and the first report is due very soon. The primary charge is to research recent mitigation settlements made between power plant operators and effected local communities in California.

Task Force Concerns
The task force recognizes the power supply crisis California now faces. But it must balance the welfare of the local community against the broader interests of enhancing San Francisco's power generation. There are obvious fears that come to mind when reflecting on the proposed PPP expansion. Health, noise and debris, worker and citizen safety, visual impacts, global warming, conservation and alternative energy solutions, electro-magnetic field increases, and demolition of historic buildings are just part of a long list. Unit 7 will generate 90 tons of new particulates in the air annually and health officials have still not determined total projected mortality and disease increases these emissions would cause. Theoretically, the CEC reviews all issues to ensure that the expansion is not harmful to the community and environment.

Regardless of CEC's findings, there are two concerns that must be addressed by the City:
1. The shutdown and de-commissioning of the Hunters Point Power Plant must be linked to the start-up of the PPP.

2. NO increase in emissions currently put upon our local community will be acceptable from the enlarged plant, operating expanded hours.

Any offsets and mitigations need to be realized locally, within the City and ideally within the neighborhoods closest to the proposed new plant. Because the Bay Area Air Quality District traditionally allows the mitigations from any sources within the nine (9) Bay Area Counties, it is an important local issue and one in which we must encourage creative local solutions.

Recommended Board of Supervisors Action
The Task Force agreed on the need for better communication with the City Attorney's Office, and the City's coordination consultant. This Board should make the formal request of those parties to include the Task Force in their communications and fully participate in our meetings.

In order to facilitate greater community participation and enhance the public information effort, expand the Task Force website to include a pro-active comment and suggestion functions, as well as enhancing the links from existing City span CCSF website and to related websites, such as the California Energy Commission. This Board should make the formal request of the City Webmaster in the Department of Communications.

Because the Port must grant certain easements to Southern regarding the PPP, we would suggest the Board make a formal request that the Port assign an appropriate person to attend the Task Force meetings and report any ongoing discussions.

In order to assist the Task Force's ability to get a complete and thorough understanding of issues, some funds are needed by the Task Force, in conjunction with the City Departments, to retain some outside consultants. Several Task Force members will prepare and make a presentation to the Public Health and Environment, Public Utilities and Deregulation Committee, Transportation and Land Use Committee, and the Economic Vitality, Small Business and Social Policy Committees of the Board of Supervisors as soon as requested.

Task Force Member Concerns
In addition to the two major concerns describe previously, a poll of the task force members at our last meeting is presented to give you a good idea of what is most important to each person. In conjunction with other community groups, the task force is currently evaluating some of these concerns. Additional issues may come up that we believe require further scrutiny. This list also serves as a starting point for gathering community input so that an appropriate settlement package can be recommended in the near future to both Southern and the CEC. We will follow up with more detail as it is developed. We look forward to the Board taking action on the time sensitive issues.

Sarah Ames
1. The Task Force needs to initiate a funded public outreach program. The City's mailing lists should be utilized to get timely updates to neighborhood organizations and the media. Information and reports must be made available to the community through the City's WEB site and any other manner utilized to advertise major projects.

2. Ask for reports from each Department to ascertain the in-house capabilities and resources currently available to fully understand the issues of the PPP and the City's short and long term energy needs. Fund the hiring of outside consultants to augment the Departments abilities with regard to this project.

John Borg
1. Ensure that there is no net increase in pollutants and other environmental impacts, such as air and bay water quality. The area surrounding the proposed plant expansion already has high levels of air pollution from nearby industries, diesel trucks, buses, and traffic. We need to be sure that cumulative impacts of local industrial emissions do not adversely impact the residential communities in Dogpatch, Potrero Hill, and Bayview.

2. Pursue any and all methods, politically and legally, to insure that mitigation offsets are for the City itself and not area wide. For instance, conversion of local garbage trucks to cleaner natural gas as opposed to conversion of a fleet in Oakland.

3. Seek funding for experts reporting to the Task Force and the City Departments, an expense to be recaptured as part of a mitigation package. For example, provide a third party expert to review scientific models and data provided by Southern Energy with impacts of the proposed PPP. This critical data is used throughout the project review process, but evaluating it is beyond the expertise of the task force and the expertise and specialty of City health and environment department workers. We would prefer data from a credible third-party rather than relying on the data provided by the developer.

4. Request an update on the Planning Department's vision for the Central Waterfront and the Neighborhoods 2002 project. It is critical that proper master planning be undertaken now. The area has been industrial, but with current development and the 3rd Street Light Rail project, the City must decide if location of a power plant in the neighborhood precludes its plans to re-zone the area residential and commercial.

5. By what method and format does this Board of Supervisors want the Task Force report? Monthly, quarterly, by need? Written or oral? To the full Board or to Committees?

6. Community information and workshop meetings scheduled by the CEC should be better publicized, and scheduled for evenings or weekends when local citizens can attend.

7. The task force is made of citizen volunteers who have limited time and resources. Additional support and coordination with various City agencies would be welcome.

Joe Boss
1. Immediately introduce Resolutions that address linkage between this project and the decommissioning of the Hunters Point Power Plant. The agreement between Pacific Gas And Electric (PG&E) and the CCSF to shut down HPPP is the following: "PG&E will permanently shut down the Hunters Point Power Plant as soon as the facility is no longer needed to sustain electric reliability in San Francisco and the surrounding area." Neither Southern or the CEC are a party to that agreement.

2. Instruct the San Francisco Public Utilities Commission to explore methods of metering the amount of power generated at the PPP that is sold outside the City. A portion of those sales should be returned to the BVHP/PHD on an ongoing basis.

3. Instruct the San Francisco Public Utilities Commission to explore the benefits of acquiring or building the new transmission link between the PPP and PG&E's Hunter Point distribution switchyard, giving the City an ongoing revenue stream.

Philip DeAndrade
1. The Task Force is planning a public meeting for March 15th. We would like the support of the Board and request their participation. We need help in getting the meeting information to the public through press releases and announcements.

2. Take immediate action to fund outside consultants where needed to ensure that Southern's modeling is accurate and the best technology available.

3. Work to insure Hunters Point Power Plant is shut down if the PPP comes online.

4. Southern stands to make billions of dollars by taking advantage of grandfathered zoning and usage rights acquired when the plant was bought from PG & E. This is a location that would never be approved by the City or the CEC if it were an application for a new generating plant, and Southern should therefore provide an ongoing stream of revenue to the City for mitigation of environmental justice. This is especially true when it sells power generated in the City to outside users. Options and warrants should be considered. Bonds to buy the transmission system from PG & E should be considered.

5. Should construction proceed, jobs for city residents, especially from the impacted economically disadvantaged adjacent areas (BVHP, PHD) must be guaranteed.

6. The Board should weigh in on this process and it must do so soon. The next three to four months are crucial. The Board has no current mechanism to influence the certification determination, other than this Task Force.

Babette Drefke 1. How much power generated at PPP will benefit San Francisco?

2. How much will be sold outside San Francisco?

James Firth
1. We understand the true need for San Francisco to improve its electrical supply. We need additional generating capabilities to ensure continued growth and enhanced reliability, but at the same time, we must insist that additional power plants do not cause any "net" increases in negative impacts to the City.

2. The City should ensure that construction and operation jobs from this plant directly benefit our own citizens' employment.

Richard Millet
1. Does Hetch Hetchy (HH) produce enough energy to meet current needs, if power from HH was not sold to other users, such as the Modesto Irrigation District? Does the Federal Energy Regulatory Commission require such a practice?

2. PG&E will distribute the electricity generated by Southern. For years, undergrounded utilities have been promised in our neighborhoods, and I believe some of the costs have already been funded. How can we be sure that utilities will be undergrounded, instead of stringing even more lines on poles?

Richard Lee
1. The Dept of Public Health is concerned about the potential impacts of the proposed power plant on the air quality in the City and its effect on public health in the City and particularly in the Potrero and Bayview/Hunters Point neighborhoods.

2. We are also concerned about the potential increase of hazardous materials that will be used at this facility and its transportation through the community.

Cal Broomhead for Francesca Vietor
1. We need to establish exactly what the City's current and future energy needs are, and how to meet them in a way that will not compromise public health and the environment. We may discover after analysis that the Potrero Hill Power Plant will not need to be built out to proposed capacity, especially if the proposed SFO power plant is brought on line, conservation activities increase, and renewable energy generation plans are implemented.

2. We also need to figure out how to shut down the Hunters Point Power Plant as quickly as possible. Again, there may be ways to provide replacement power without building-out Potrero Hill to proposed capacity. We would like to see aggressive renewable energy and conservation programs.

3. The potential for district heating should be exposed, especially in new development and construction projects.

4. It is important that in meeting its power demands, the city does not increase net emissions.

5. Sufficient fiscal and personnel resources need to be identified to analyze and meet San Francisco's energy needs, whether within the City structure, or by hiring outside agents. The Department of the Environment does not have resources to conduct a complete citywide analysis of current and future power needs.

Conclusion
We appreciate the opportunity to assist the Board of Supervisors in gaining an ongoing understanding of this proposed project. We all understand the need for energy, an awareness that has been heightened by the current apparent energy shortfall. However, we do not want to let the current but temporary difficulties cloud the City's long-term vision. This power plant will be licensed for 40 years, and we must diligently protect our citizens.

With a very short time line, we must be ready to ask the very technical questions and negotiate a meaningful mitigation package within the next 3-4 months. We could find the City has grown the local energy generation to the point that we become a large "exporter" of electrical power. We are hopeful that Southern Energy proves to be responsive to city, state and local community concerns, recommended modifications, offsets, and mitigations - which are considerable given the scope of this proposed project. This will make the process easier for all parties concerned, and will assure that the health, safety, and welfare of the people are as important as our mutual interests of enhancing local and statewide power generation capabilities.