Mirant's Morass

The plan to build a massive new power plant in San Francisco -- once thought inevitable -- hits a few snags

The new year has not been kind to Georgia-based energy giant Mirant Corp. and its plan for a mammoth new power plant at the foot of Potrero Hill, in the city's Bayview District.

Early last summer, when California was battling blackouts and the political pressure to build new power plants was enormous, a new Potrero plant seemed inevitable. A series of public hearings in which state energy staffers appeared to be thoroughly unprepared did little to quell neighborhood anxieties that the new plant was being ramrodded through the system (see "Gray Skies," July 4, 2001). And, considering that industrial southeast San Francisco has the city's highest asthma and cancer rates, those concerns were far from unfounded.

The plant gained even more momentum in January, when the Bush administration ruled that the massive project actually wasn't a new plant at all (there are six other plants on the site, which produce fewer megawatts combined than the new facility will). As a mere expansion of an existing plant, Unit 7 wouldn't have to comply with the latest water pollution standards. It was yet another disappointment for the coalition of local pols, environmentalists, and neighborhood groups fighting the plant.

But, amazingly, nearly five months later, it was the last one.

In the interim, Mirant has been dealt a series of unexpected -- if nonbinding -- setbacks by local and state organizations. The blows to the project have the company frustrated at a time when its need for the new San Francisco facility is particularly great.

On a global level, Mirant has been limping ever since its bond ratings were slashed by Moody's Investor Service during the Enron hysteria in December. The company spent much of January and February killing projects and selling off assets.

But it never seriously considered giving up on Unit 7, which just might be -- from an energy-selling perspective -- the perfect power plant.

Like all major cities, San Francisco has an almost unquenchable thirst for power. But because it is isolated on a peninsula, it has significant limitations on how much power it can import. Since the city has given high priority to shutting down PG&E's ancient plant on Potrero Hill, whatever in-city generators remain -- and they're all owned by Mirant -- are almost guaranteed to sell every megawatt they can produce.

And Unit 7 will produce a lot of megawatts.

"We really want to build this plant," one Mirant insider says, "because it's so needed."

The city, of course, knows it needs more power. (It also needs to deal with its outdated and highly polluting plants at the Potrero site and, most notoriously, Hunters Point.) So in March San Francisco issued a draft document intended to be a master plan for the city's energy future.

Most observers figured Mirant's plant -- which is supported by Mayor Willie Brown -- to be a central feature of the city's vision. It wasn't. The document presented three energy scenarios, and two of them excluded the new plant altogether. While laying out these three options (essentially Mirant's plant, a bunch of new transmission lines, or a mixed bag of three small plants plus solar and wind projects), the plan clearly endorsed telling Mirant to get lost. It also clearly favored the third option: having the city build three much smaller, scattered power plants, and possibly shuttering the Hunters Point plant. The energy deficit created by the absence of Mirant's monster would be filled by already approved programs for solar and wind power.

In many ways, the city's plan is a dream scenario: The southeast would take a smaller pollution hit, public power advocates might be satisfied enough to shut their mouths, and one of the out-of-state generators that was alleged to have gouged California last summer would be sent packing.

Predictably, the anti-Mirant forces cheered.

"This confirms that there's a way to close [the plant at] Hunters Point without building Mirant's plant," says Greg Karras, a senior scientist with Communities for a Better Environment. "There's an option that is clean."

"We're obviously pleased that [the endorsed option] distributes the environmental impact," says Greg Asay, an aide to Supervisor Sophie Maxwell, who represents the southeast. "We need to get past centralized power and sewage."

Mirant seethed.

In an April 10 response, the company called the city's report "misleading" and "overly optimistic," and it asserted that the report overlooked a "critical step." On that last count, at least, there's no question Mirant is correct. The plan doesn't incorporate the opinions of the Energy Commission, which licenses new plants, or the Independent System Operator, which manages the power grid (and has total authority over power plant shutdowns).

"In the end, the responsibility lies with the ISO," says Mirant spokesman Pat Dorinson, who used to work for the grid operator. "So it's difficult to put together a plan without them."

Feasible or not, the city's report was just the latest in a series of setbacks for Mirant's plant. Only weeks earlier, both the Bay Conservation and Development Commission and the project staff of the California Energy Commission ruled that the planned method of cooling down Unit 7's turbines would prevent them from endorsing the project. As designed, the "once-through" cooling system would suck in 468 million gallons of bay water a day, discharging heated water and thousands of dead fish back into the bay. Both the BCDC and the CEC say alternatives that have less impact are feasible for the project.

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