City scores $10 million in power plant equipment sale 

San Francisco’s battered general fund will receive an expected $10 million injection of funds this fiscal year after it sold power plant equipment.

The equipment – four combustion turbines – was secured in the early 1990s in lieu of a $13 million energy crisis lawsuit payment.

The turbines were planned to be used in a publicly-owned Bayview neighborhood power plant, but those plans were nixed after opposition grew to San Francisco’s investment in fossil-fuel power generation.

The equipment sold on Monday at an online auction for $44 million, San Francisco Public Utilities Commission power official Barbara Hale told SFPUC commissioners on Tuesday.

Under the terms of the settlement agreement, San Francisco is entitled to $10 million from the proceeds of the sale, according to Hale. The money will help plug a city budget deficit that exceeds $500 million.

California will receive $33 million and the marketing agent that sold the equipment will receive roughly $1 million.

SFPUC General Manager Ed Harrington characterized the sale as the “final chapter” in a prolonged discussion over whether or not San Francisco should build a power plant.

The plans to build the power plant were designed to help shut down Mirant Corp.’s aging Potrero Power Plant. State regulators had said a power plant was needed in San Francisco to protect it against blackouts.

But that plant is now expected to be shuttered this year through a variety of rewiring projects, including some that are being undertaken by Pacific Gas & Electric Corp., which fought with The City to convince regulators to allow the plant to shut.

Mirant and PG&E compete with each other as power producers.

City Attorney Dennis Herrera previously agreed to drop lawsuits against Mirant if it agreed to shut the plant as soon as regulators removed its “must-run” designation.

PG&E sold the plant to Mirant in 1999 and agreed to remove contaminants left behind by its historical use of the site for power operations, which dated back to the late 19th century.

PG&E plans to remove toxic material from the site by 2015. That could help clear the path for Mirant to redevelop the site, which is next to Pier 70, for which the Port of San Francisco-owned is crafting redevelopment plans.

In a statement released Tuesday, Mayor Gavin Newsom said the sale of the equipment “turns the page on dirty, polluting power plants” in San Francisco.

“The sale will help keep our general fund in balance this year and is symbolic of our City’s commitment to a future of clean energy,” Newsom said. “It’s a win-win.”

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Staff Report

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A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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