Gray Skies

If Gov. Davis has his way, California soon will have dozens of new power plants -- a lot of them in the wrong places, some of them unnecessary, and very, very few of them based on renewable energy

Perched atop the peak it's named after, the Potrero Hill Neighborhood House is one of San Francisco's least-known architectural treasures. Designed by Hearst Castle architect Julia Morgan, the clubhouse first appears -- when approached from the south, via De Haro Street -- to be a large wooden cabin. The rustic feel dominates inside as well. In the barnlike community room used for plays and public hearings, however, there's a stunning dash of modernity: an enormous panoramic window with a view that stretches across the eastern edge of the San Francisco skyline, over both spans of the Bay Bridge, and clear into downtown Oakland and the hills beyond. You can also trace the city's eastern shore south, looking straight down into the bleacher seats at Pacific Bell Park and into the adjacent sailboat-laden marina at South Beach.

From this vantage point -- where Morgan may have been at her most prescient -- you can see only a slice of the burgeoning industrial wasteland to the right of the frame, a hodgepodge of perpetual construction, power and sewage plants, and heavy machinery that describes so much of the city's southeast.

Just hidden from view, for instance, is the stubby, red-brick smokestack attached to the Mirant Co.'s Illinois Street power plant, which happens to be the reason the community room of the clubhouse is packed on this evening early in June. More precisely, the crowd is gathered for a public hearing on Mirant's plan to more than double the size of the facility. The crowd -- a mix of residents from the Potrero Hill and Bayview- Hunters Point neighborhoods, some environmental activists, a handful of Mirant employees, several California Energy Commission staffers, and six police officers providing security for the meeting -- is not at ease. For two days, Energy Commission bureaucrats have been explaining a preliminary report that examines the impacts of the power plant expansion and that can generously be described as shoddy.

Environmentalist Mike Thomas is fighting the new Potrero Hill plant.
Paul Trapani
Environmentalist Mike Thomas is fighting the new Potrero Hill plant.
Activist Medea Benjamin symbolically seizes Mirant's power plants in the name of public power.
Paul Trapani
Activist Medea Benjamin symbolically seizes Mirant's power plants in the name of public power.
Energy Commission project manager  Marc Pryor.
Paul Trapani
Energy Commission project manager Marc Pryor.
Public-power activists have urged Gov. Davis to have the state seize power plants, but so far he's used his political stroke to encourage private power-plant construction.
Paul Trapani
Public-power activists have urged Gov. Davis to have the state seize power plants, but so far he's used his political stroke to encourage private power-plant construction.

The mood grows particularly testy when environmentalists ask the bureaucrats why their discussion of cumulative environmental impacts did not include any reference to a large, dirty power plant that has long operated at Hunters Point, less than a mile from the Potrero power station.

"Well," says incredulous environmentalist Anne Simon, "where did Hunters Point go?"

"You're right," the bureaucrat in charge of the land-use evaluation answers. "We were mostly focused on new or proposed projects."

Simon, a senior attorney for the group Communities for a Better Environment, all but screams that this section of the report is meant, very specifically, to focus not on new projects, but on the cumulative impacts of all polluting activities in the area. Among other things, the report also ignored the polluting effects of a large sewage plant, Interstate 280 (which bisects the neighborhood), a gravel yard, an animal rendering plant, and the epically polluted former naval shipyard in Hunters Point.

After a 10-minute break, the residents' groups are still seething, and a new Energy Commission flak-catcher gets thrust into the fire. The bureaucrat, Amanda Stennick, is expected to deal with what has become known as "environmental justice," a top issue for residents of southeast San Francisco, especially those who live in Bayview-Hunters Point, the heavily black and Hispanic neighborhood that has borne the brunt of the city's pollution for years. In 1994, President Clinton signed a federal law prohibiting the disproportionate polluting of minority neighborhoods. There's no question that the minority neighborhoods in question had been disproportionately polluted long before there was talk of expanding the Potrero power plant.

The bureaucrats who preceded Stennick at this meeting -- who specialize in public health, land use, and water quality, among other things -- have deferred all questions about environmental justice to her. She first explains her methodology, which relies on a "screening tool" that will be applied to people living near the Potrero plant. "We want to take a look at the minority populations surrounding the project to see if there's a disproportionate impact on them," she says.

"Well," asks Mike Thomas, another environmentalist, "is there?"

"I don't analyze that," Stennick explains.

"Well who does?" Thomas asks.

"You know, public health, land use, water quality ...."

It's now clear to everyone in the room that a "screening tool" for examining environmental impacts on minorities has been developed -- but no environmental justice analysis has actually taken place. That realization is sufficient for another room-enveloping eruption.

Two Energy Commission higher-ups, both within a few feet of Stennick, turn ashen. Commission project manager Marc Pryor, a preacher's son with a minister's presence, tries to stop the shouting. "It seems that maybe we need to go back and look at environmental justice some more," he says.

This placates no one.

"How's this for a screening tool?" bellows Simon. "How about you go walk around those neighborhoods and open your damn eyes?"

Stennick, increasingly agitated, still alone in the spotlight, pleads to Pryor, "Marc, help me here? What do I do?"

When she gets no real answer, what she does is ... beg for mercy. "You all need to understand what a fractured process this is," she explains softly.

To hear Gov. Gray Davis tell it, California's energy crisis is, in large part, a crisis of supply. The state has about 42,000 megawatts of power capacity; it needs closer to 50,000.

Couched in those terms, it's a crisis Davis is solving.

The state -- which didn't build a single major power plant between 1995 and 1999 -- has approved 26 new plants since April 1999, with 16 more projects pending approval, and at least 10 more applications expected to be filed. By approving power plants at an unprecedented rate, the governor, clearly, is doing something about the electricity crisis, and he's taken great strides to let people know this. Every installment in the "Flex Your Power" conservation advertising campaign, which has been almost impossible to avoid on network television, closes with a reminder that "California is building 16 major new power plants."

Likewise, during a May interview for a PBS Frontlinedocumentary on deregulation of electricity markets, Davis boasted of building more power plants than any governor in the state's history. "In the 12 years before us, not a single major plant of consequence was built," he said. "I've approved 13 major plants. Eight are under construction as we're talking."

But a glance inside the process for examining new power-plant proposals suggests that the agency in charge, the California Energy Commission, is overwhelmed. In the highly political atmosphere created by the power crisis, the commission appears to be well on the way to approving unnecessarily large plants and allowing needed plants to be built in what are probably the wrong places -- particularly in minority neighborhoods that already are home to power plants. More worrisome, environmentalists, engineers, and economists say, is the lack of a statewide energy plan. Because the Energy Commission has rushed to approve power plants without such a plan, nearly all of the new plants expected to be built will be fueled by natural gas, a commodity that is prone to supply shortages and price spikes that would be reflected in shortages and price spikes in the electric market. Meanwhile, many observers of the commission say, proven alternative energy sources, especially solar and wind power, are being essentially ignored.

Nowhere is the collapse of California's power-plant licensing process more obvious than in southeast San Francisco, where a minority community that believes itself to have been an industrial dumping ground is trying to fight off a massive expansion to an existing power plant on Illinois Street, near Potrero Hill. The Potrero expansion is just one of three huge power plants being plotted in the area with basically no consideration to possible supplies of renewable energy. If all three are built, the city would wind up with more electrical generating capacity than it will need, according to projections, for the next 40 years. Meanwhile, southeast San Francisco's older, dirtier plants -- which were supposed to be rendered unnecessary by newer projects -- will probably continue polluting for years, in part because the operator of the state's electrical grid views them as necessary to keep a new, "deregulated" electricity market operating properly.

A crisis of insufficient supply, it now seems, is morphing into a crisis of indiscriminate supplying.

Founded in 1974, the Sacramento-based California Energy Commission is the state agency in charge of siting and approving new power plants. The commission is apparently very good at its job. It has never rejected a power-plant application.

Historically, though, the commission hasn't been all that busy. Between 1979 and 1997, the commission licensed about 5,400 megawatts of new electricity generation in the state, enough power for about 5.4 million homes. That averages out to one or two major power plants in a typical year. Between 1994 and 1997, when the industry was holding its breath about the state's jump into the deregulation of the electric power market, the commission didn't license a single major power plant.

But the CEC is busy now. Since April 1999, it has approved 10,000 megawatts of new electricity. That number includes neither the 16 major power plants currently being reviewed by the commission, nor the 10 proposed major plants expected to enter the approval process soon.

Nor does it include the 12 "peaker" plants -- nearly 880 more megawatts -- approved since 1999, lately with the help of a 21-day "emergency siting" process that Davis mandated with an executive order in April. (Peakers are quick-starting, oil-burning facilities that only run during periods of peak demand. Because they tend to spew far more pollution than natural gas-burning plants, peakers are limited in the amount of time they can run.)

"It's definitely been hectic," says Rob Schlichting of the CEC's siting department. "This is an unprecedented feat in the history of California."

Pointing to a raft of newly hired staffers and consultants, Schlichting contends the state is up to the task of overseeing a massive power-plant construction program. The San Francisco experience suggests otherwise.

Southeast San Francisco is a definite contender for the title of Most Polluted Neighborhood in California. Starting the catalog of industrial poisoning is the Hunters Point Shipyard, home to an amazing stew of chemical and nuclear contaminants and easily one of the most polluted parcels of property in America. (Ongoing attempts to clean up the shipyard spew dust into the already particle-filled air of the nearby Bayview-Hunters Point neighborhood.) Also, the area has been (and will continue to be) beset by dust from the construction of the UCSF Mission Bay campus (which is expected to last 20 years), as well as from the construction of the Third Street light-rail Muni line, which will run through the heart of the Bayview neighborhood. In addition, there are the standard, everyday emissions from Interstate 280 and the area's countless industrial sites. And lately, pollution in the area has been even worse: Davis has ordered Mirant to run its dirtier, oil-burning peaker units at Potrero Hill in excess of state pollution standards, sparking a city lawsuit against both Mirant and the Bay Area Air Quality Management District. An old, inefficient, highly polluting power plant in Hunters Point, owned by PG&E, has been running hard as well.

Residents of the city's southeast side have long felt they've been polluted enough. They were hoping that a new, state-of-the-art power plant planned to replace the aged Potrero Hill station could help spark a cleanup of the area.

Back in July 1998, before electricity stories were on the front page every day, PG&E and San Francisco Mayor Willie Brown signed a contract guaranteeing the closure of the Hunters Point plant as soon as it was no longer needed for what is known, in power industry terms, as "reliability."

An area of the electric power grid is considered reliable if it can withstand a certain number of glitches -- a transmission line break, or a power-plant breakdown -- and still continue delivering power. Because San Francisco's transmission system has always been limited by its location on a peninsula, its reliability has long been an issue of concern for grid operators. The contract between Mayor Brown and PG&E spelled out two separate ways to close the Hunters Point plant and still conform to reliability standards: 1) a new, larger plant could be built at Potrero, or 2) significant upgrades could be made to the area's transmission system.

After the Hunters Point contract was inked, PG&E sold most of its Bay Area power generation plants to the Mirant Co., an Atlanta-based firm, as part of the state's deregulation plan for electric power. But PG&E kept, and still expected to close, the Hunters Point plant.

Then, this spring, amid the political nightmare of the power crisis, Gov. Davis signed a bill prohibiting the shutdown of any power plants -- no matter how filthy and unnecessary -- until 2006.

In May, Supervisor Sophie Maxwell, who represents southeast San Francisco, sent the operator of the state power grid, the Independent System Operator, or ISO, a letter inquiring as to what it would take to shut down Hunters Point. The director of planning, Armando Perez, responded that two issues had to be resolved before the plant could close. Predictably, the ISO wanted to be sure that the Peninsula would have reliable service without the plant. But Perez also wrote that ensuring "cost-effective" electricity was now an ISO concern.

In other words, the grid operator liked having a PG&E plant in San Francisco, to prevent Mirant from having a local monopoly on supplying power in the new world of power deregulation.

"I couldn't believe it," says Maxwell, whose heavily industrial district has the city's highest rates of asthma and cancer. "It's like they were using us for leverage."

The about-face on Hunters Point is just a small indication of the chaos and arbitrariness that seems to inhabit the state's power-plant approval regime.

When electric power was provided solely by tightly regulated electric utility monopolies such as PG&E, the process for approving new power plants focused on local need and reliability concerns. Under the state's deregulation law, however, the Energy Commission is explicitly forbidden to consider whether a plant is actually needed. Under deregulation, the market is supposed to regulate the number of power plants in operation. After all, the theory goes, if a power plant were not needed -- if the power it produced could not be sold -- no one would propose building it.

As it stands, then, the Energy Commission will examine the environmental impacts of a new, larger Potrero Hill power plant, but it cannot look at alternatives to Mirant's Potrero Hill proposal -- perhaps a smaller gas-fired plant, augmented from solar or wind sources -- without violating the law. So proposals by Supervisors Tom Ammiano and Mark Leno that could bring the city as much as 150 megawatts in solar and wind generation won't even be considered when the Energy Commission decides on the Potrero Hill power plant proposal.

"What you don't have now is what's called "integrated resource management,'" says Alan Ramo, an environmental law professor at Golden Gate University. "In the end, the best thing might be to have a smaller Potrero plant, with the older units shut down, and with reliability maintained with some wind and solar power. Instead, though, the Energy Commission plays this game. They hold up a 500-megawatt plant, and they hold up solar alone, and they ask, "Which is better?'"

Solar, obviously, cannot always provide power. Sometimes the weather is cloudy. So solar loses, and the 500-megawatt gas-fueled plant wins -- even if a combination of energy sources would provide much of the needed power and cut pollution.

If environmental reasons weren't enough to push the state toward using renewable energy resources to shrink the gas-fired plants now in the planning pipeline, there are economic reasons that should. Stanford economist Frank Wolak says consumers should be wary that nearly all of the new plants burn natural gas. "Gas isn't as volatile as electricity, but it's prone to supply shortages that can have that kind of effect [on prices]," he says. "In California, I don't think it's environmentally possible to consider nuclear or coal plants, so you'd probably want to do as much with renewables as you can."

As it considers a new and larger Potrero Hill plant, the Energy Commission is ignoring not just renewable energy sources, but also two other huge electric power plants may be built within 12 miles of Potrero Hill.

San Francisco's municipal power entity, Hetch Hetchy Water and Power, is seeking a developer for a 520-megawatt plant at San Francisco International Airport. (A contract dispute between the airport and the original developer, Texas-based El Paso Corp., has put the project on hold.) The Energy Commission is also supposed to ignore Virginia-based AES Corp.'s hopes to proceed with a 570-megawatt plant in South San Francisco. (That plant is pending review by the commission, according to its spokesman, Aaron Thomas.)

San Francisco's current electrical demand is a little more than 900 megawatts; its projected demand for the year 2010 is about 1,200 megawatts. The proposed plant-building boom would seem to give the San Francisco area a huge power surplus, especially in light of the ISO's unwillingness to commit to shutting Hunters Point before 2006, and Mirant's staunch refusal to shut its older, dirtier units if or when its new plant comes online.

And yet the Energy Commission's preliminary report on the Potrero project featured no mention of either project. Why?

For one thing, because the state's deregulation law forbids the Energy Commission from considering need for electricity when reviewing a power plant proposal; the commission's review of the new Potrero Hill station in southeast San Francisco cannot take into account other projects that would provide new power to the area.

The Energy Commission should be considering environmental impacts of all plants in its review pipeline. But Susan Lee, the commission bureaucrat in charge of "alternatives" analysis of the Potrero project, says, "We started this work before this so-called "energy crisis' started. Keeping up with all these developments is really difficult."

Answers like that aren't endearing the CEC to the people who live next to the proposed Potrero plant, projected to operate for 40 years.

"There's a lot of compartmentalizing of responsibility, and citizens don't like it," says Cal Broomhead, of the city's Department of the Environment. "At some point, you need to elevate these things above the partitions. But I don't know where in the process that's going to happen."

The uncoordinated planning efforts of the Energy Commission raise an increasingly plausible scenario for the southeast section of San Francisco: The expanded, 900-megawatt Potrero facility and the plant at Hunters Point could run simultaneously from 2003, the expected online date for Potrero, until at least 2006, when Davis' moratorium on power-plant closures ends. And in the meantime, huge power plants could be built just down the road in South San Francisco and at SFO.

Maxwell says that scenario is "unacceptable" to the community she represents.

But does it matter what the community thinks?

Davis made headlines statewide when, in spite of local government and resident objections, he endorsed Calpine's Metcalf Energy Center in San Jose, effectively ordering his appointees on the Energy Commission to approve the plant. Politically pinned, Mayor Ron Gonzalez and the San Jose City Council eventually supported the project. But the message was clear: We brake for nobody.

And the message was received. At the Board of Supervisors meeting on May 29, Maxwell made something of a pre-emptive strike: a city ordinance designed to give the supervisors more control over energy matters. "The practicalness of it is that we don't want more pollution," Maxwell says. "This makes all city departments that deal with energy answer to us, so when we ask the [Public Utilities Commission] how much we need as a city, and Mirant tells us it wants to build a 540-megawatt plant, we can say, "Is that 540 megawatts for us, or for you to make money?'"

To this point, however, the ordinance hasn't meant much. Even though the legislation was issued before the Energy Commission released its preliminary assessment of the Potrero Hill project, the commission opted not to incorporate the city's new law into the analysis of the Potrero plant, except for a cursory mention.

That is, the Energy Commission proceeded as though nothing had changed.

By the evening of June 23, when the workshops on the Potrero expansion have reached their final installment, it's clear that the community groups of southeast San Francisco and the California Energy Commission are pretty much sick of each other.

The neighborhood groups are agitated because the commission staffers presented a preliminary analysis that, to them, completely skirted the sensitive issue of environmental justice. And, from the looks of it, the CEC folks are tired of being hounded about the admitted incompleteness of their report.

Susan Lee, the bureaucrat in charge of the alternatives analysis, has already finished summarizing her report when Alan Ramo -- the Golden Gate University law professor, who also works with the Southeast Alliance for Environmental Justice -- stands at a microphone to the right of Lee's podium. He gets angrier as he goes through what seems to be a list of grievances, beginning with state waffling on whether the Hunters Point power plant will be closed, and culminating with the Energy Commission's refusal to consider a scenario that would actually reduce pollution in the southeast -- the combination of a smaller gas-fired plant than is being proposed with city supervisors' plans for renewable energy, some transmission upgrades for reliability's sake, and the closures of the Hunters Point plant and the Potrero Hill peaker generators.

Ramo's not the only person supporting this mix of power options -- Supervisor Maxwell says her ordinance is aimed, in part, at producing an outcome where the net pollution in the southeast is reduced.

Frustrated with what he sees as circular reasoning behind the Energy Commission's unwillingness to consider a smaller power plant combined with renewable energy resources, Ramo cracks, "What you've said is, "Well, it doesn't have as big an environmental impact -- but, on the other hand, it's not as big.' That's some intense analysis!"

This sets off Bill Westerfield, a CEC lawyer who has been silently fuming ever since one of the public speakers -- dressed in a green cape and mask -- responded to his curt request for a name with "The Green Avenger." He has a trim build and a stern, righteously wounded expression that evokes the prosecutor Jack McCoy on NBC's Law & Order.

"Mr. Ramo! You're using time to insult staff!"

"I'd like to finish."

"Let him finish!" about 15 people shout in unison.

"Can we have a break?" Westerfield asks.


"Let's talk about solar," Ramo says, wading into the benefits of integrated resource planning for a few seconds before being cut off again by the increasingly combative CEC lawyer.

"This time is not intended to criticize the report," he booms, thoroughly puzzling everyone in the room. This was, after all, regarded as the public's last chance to comment on the staff's work before a final assessment of the project -- most probably an endorsement -- is offered to the commissioners.

An old lady chimes in from the cheap seats: "You're the one who's wasting time!"

Time, as it turns out, is what the public and the city are pleading for more of. On July 1, the city, along with three environmental groups, formally asked the Energy Commission to slow down. More specifically, it asked the commission to redo its preliminary report to include: more information about environmental impacts on both nearby communities and bay waters, which will be used to cool the plant down; the impact of the city ordinance the original report ignored; and the impact the new plant would have on Mirant's power over the local electricity market, of which it already controls a sizable chunk.

"[The pace] is clearly a big problem for them," says Maxwell aide Greg Asay. "The first report was clearly data inadequate. ... We want to extend this process, because the load is obviously overwhelming their staff."If Gov. Davis has his way, California soon will have dozens of new power plants -- a lot of them in the wrong places, some of them unnecessary, and very, very few of them based on renewable energy

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