The answer has been revealed to the "mystery settlement" announced yesterday by City Attorney Dennis Herrera. And as soon as we saw Supervisor Sophie Maxwell and Public Utilities Commission head Ed Harrington in the City Hall elevator, we guessed it -- it's Mirant!
Herrera this morning signed off on a settlement that ends years of legal wrangling with the owners of the smoke-belching Potrero Hill power plant -- and "shuts it down irrevocably" by Dec. 31, 2010. What's more, the company will pay the city $1 million to "help address pediatric asthma in nearby communities" and another $100,000 to cover city attorneys' costs.
Should the Board of Supervisors and Mayor sign off on the settlement, it will nullify all existing litigation in place against Mirant. It will also nix, once and for all, the notion of city-operated "peaker plants" -- so-called because they'd only switch on when needed to generate additional Megawatts during peak hours. You may recall the brouhaha regarding those peakers, which pitted environmentalists against public power advocates
The city's plan to sell off the four G.E. combustion turbines it purchased with the notion of erecting peaker plants will move ahead.
"There can never be any fossil-fuel generation on that site," Herrera said. "The retrofitting of any [combustion turbine] units, whether they be Mirant-owned or city-owned is not on the table. It's done."
At some future date -- the city attorney's office is not sure when -- a city delegation will make its case to the California Independent System Operator, the state agency responsible for determining the California's power needs. PUC-head Harrington outlined the city's argument for being permitted to shut down the Mirant plant -- which is capable of generating 200 of the roughly 900 MW of power consumed by the city daily.
Harrington argues that the completion next year of the transbay cable, plus PG&E transmission lines on the Peninsula will pick up most of the slack -- as will reduced power needs due to the recession. What's more, Herrera feels that Mirant itself stating it wants to close the plant will sway the state regulatory body.
Harrington added that Cal-ISO's determination of how much reserve power generation San Francisco needed was "overly cautious." A shortage of 25 MW was "hypothetical, if two major power transmission cables went down on the peak hour of the peak day and no one ever made any change in their behavior when it happened."
Our messages for Mirant spokesman Chip Little querying what Mirant got out of this deal have not yet been returned. Herrera said the company determined that, facing ongoing political and legal pressure, Mirant ruled that this settlement -- and payout -- was "in the company's best interest."