Herrera, Mirant Reach Accord to Close Potrero Power Plant in 2010

Energy Giant Also Agrees to Pay $1 Million to City for Pediatric Asthma Program, Neighborhood Improvements

SAN FRANCISCO (Aug 13, 2009) — City Attorney Dennis Herrera has reached an agreement with Mirant to permanently shutter the company’s Potrero power plant by the end of 2010, and to secure the Atlanta-based energy giant’s unprecedented commitment to join the City in actively pushing for the plant’s closure should state or federal energy regulators attempt to delay it. Under terms of the agreement signed by Mirant officials today, the company will also pay at least $1 million to the City to help address pediatric asthma in nearby communities and to initiate other mitigations in neighborhoods adjacent to the fossil-fueled facility. Mirant will pay another $100,000 to the San Francisco City Attorney’s Office for legal fees and costs.

The groundbreaking accord follows nearly a decade of often bitterly contentious legal, political and regulatory maneuvering by Herrera, Supervisor Sophie Maxwell, former Board of Supervisors President Aaron Peskin, the S.F. Public Utilities Commission and many other community leaders to finally close the City’s last remaining large power plant. Efforts in recent years to speed the closure of the nearly 50-year-old facility have included opposing the renewal of the state permit for its antiquated “once-through” cooling system, and working to install cleaner, municipally-owned replacement generators that had been secured in a 2002 legal settlement to meet state-mandated electricity generation requirements. Earlier this year, Herrera also filed a civil lawsuit against Mirant for violating the City’s Unreinforced Masonry Buildings ordinance at the Potrero site.

“This is a major step forward for a San Francisco that will be cleaner, greener and healthier because of what we’ve achieved today,” said Herrera. “Notwithstanding the occasionally unkind words we’ve exchanged in years past, I must today commend Mirant for its cooperative spirit and forward-thinking leadership. In working with us to forge an agreement that few would have thought possible even a few months ago, Mirant ultimately proved its commitment to being a good neighbor and a willing partner. This is testimony to their hard work as well as ours, and it is vindication for the efforts of all the leaders throughout the years who’ve worked to close this power plant. I am particularly grateful to Supervisor Sophie Maxwell, former Board President Aaron Peskin, PUC General Manager Ed Harrington, and former PUC General Manager Susan Leal for being such effective partners every step of the way. My own office also lent considerable expertise throughout the case, but I’m especially thankful to Chief Assistant City Attorney Jesse Smith and Energy Team Chief Theresa Mueller for their tireless work.”

Under the terms of the proposed settlement agreement, which must be approved by the Board of Supervisors and Mayor Gavin Newsom, Mirant has agreed to permanently and irrevocably shut down the entire plant — including the large once-through cooling plant known as Unit 3 and all three combustion turbines known as Units 4-6 — as soon as the plant is no longer needed for reliability purposes. Mirant further committed to additional steps to ensure the plant’s closure by the end of 2010, including to actively support the City’s efforts with the California Independent System Operator and other government regulators to approve shuttering the facility by Dec. 31, 2010, and to refrain from seeking renewal of its “Reliability Must-Run” contract with CalISO beyond that year. In exchange, the City has agreed to support interim operating permits for the plant through the end of 2010 if the plant is required to continue operating, consistent with Mirant’s plant shut down obligation Mirant agreed that once the plant is fully closed, the property will not be used for fossil fuel generation under any reuse plan for the site — a provision that will be binding on successive owners of the parcel. The City has agreed to priority processing of Mirant’s reuse plan. Mirant and the City also agreed to a stipulated injunction involving the City’s UMB Ordinance lawsuit and Mirant’s counter-suit. Within five business days after court approval of the stipulated injunction resolving the outstanding litigation, Mirant will pay the City the nonrefundable, all cash sum of $1,100,000. Of that amount, the City will use $1,000,000 for measures that include pediatric asthma education and remediation programs and neighborhood improvements. The remaining $100,000 will reimburse the City for some of the fees and costs of the City Attorney’s Office relating to its UMB ordinance lawsuit and the negotiation of the settlement agreement.