San Francisco Bay Guardian - March 4, 1998



SF PUC chief Victor Makras blocks move to buy power plants and expand Hetch Hetchy.


By Savannah Blackwell



For once, the staff at San Francisco’s Public Utilities Commission was actually urging the commission to set good public policy and do something that would help city residents at the possible expense of Pacific Gas and Electric Co.


It was a historic moment, but it did not last long. Last week a faction of commissioners led by PUC President Victor Makras killed a proposal by the PUC’s Hetch Hetchy Department of Water and Power to expand its operations by getting control of two local power plants that generate key backup electricity for San Franciscans and providing cheap hydropower directly to residents.


Commissioners Makras, Robert Werbe, and Ann Moller Caen also derailed a move toward municipal aggregation, which cities throughout the state are exploring (see “Power to the People,” 1/28/98). Municipal aggregation involves organizing residents into buying groups, which in Hetch Hetchy’s case would mean supplying the city’s cheap hydropower to residents.


At the behest of the Southeast Alliance for Environmental Justice, a neighborhood and environmental group based in Bayview-Hunters Point, Hetch Hetchy general manager Larry Klein proposed on Feb. 24 that the PUC authorize staff to find a business partner through competitive bidding to help it explore purchasing from PG&E the Hunters Point and Potrero Power Plants, in the Bayview-Hunters Point area. As part of the deregulation of the electricity industry, PG&E is selling most of its power plants, including the Hunters Point and Potrero Power Plants. The sale is expected to take place by fall. Klein’s recommendation also called for the business partner to assist Hetch Hetchy in municipal aggregation.


The goal would be to shut down the aging plants, both of which are major Bay Area polluters (see “Poison Power,” 1/28/98), once Hetch Hetchy could replace them with a more environmentally friendly power source.


SAEJ and members of the Bayview-Hunters Point community had asked Hetch Hetchy staff to present a proposal to the board to buy the plants because, they said, it is unlikely that a private, corporate buyer would be committed to minimizing health impacts from the plants.


The Hunters Point and Potrero plants provide critical backup power to San Francisco when the regional system is down. Klein said having a local energy-generating facility in San Francisco is key to ensuring reliable electricity service.


“This would be a first step toward securing the city’s electric future,” Klein told the commission. “[The power plants] represent the single biggest opportunity we can find at this point [in the new deregulated environment].”


Klein told the commission that taking on a private business partner would enable the city to avoid having to come up with some $85 million for both plants up front and reduce its financial risk. The plants could generate $40 million a year, he said.


But Makras, a real estate broker, seized on Klein’s comment that the staff “was not at the point where we would recommend writing a check.”


“You indicated in a sort of flip statement that you wouldn’t write a check for this,” Makras said at the meeting. “I read into that [that we] can’t afford it….The community says it is concerned about the environment, but I’m not willing to buy a plant because of that.”


Makras has a long history of opposing public control of the power system. As a PUC commissioner under Mayor Art Agnos, he voted against a public-power feasibility study, and on Feb. 24 he cited a failed pro-municipalization ballot initiative in the mid-1980s as proof that San Franciscans would not support the city’s buying power plants.


“This town has thrown out municipalizing,” Markas said.


But commissioners Dennis Normandy and Frank Cook tried to save the recommendation by pointing out to Makras that the proposal was merely to study buying the plants.


“With all due respect, I think we’re getting ahead of ourselves here,” Normandy said. “Staff has said this has great potential. When we get a partnership lined up, then we will get a definite set of figures. I want to go down that road and make a decision based on facts.”


Cook caught on to a key component of the recommendation, that owning, or partly owning, the plants was the best means to control how, and how much, energy they generate.


“This is only a mechanism of being in control of our own destiny,” Cook said. “There’s risk in life and business. It’s something we do every day.”


But Makras would not budge.


“Is this smart for us to buy these plants? Do we want to put San Francisco’s resources behind it? I fundamentally believe we shouldn’t be involved in a business involving risk,” he said.


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