The San Francisco Board of Supervisors will soon decide the fate of the Trans Bay Cable (TBC), a privately financed, underwater power line that would plug the city’s electric grid into power plants in the East Bay.
Backers call the cable the best way to avoid blackouts, like those the city saw in the wake of the energy deregulation debacle of the late 1990s. But green power activists argue that the developer of this 57-mile extension cord is cashing in on California’s blackout fears and that approving the project would go against the city’s commitment to finding sustainable sources of energy.
Australian financial firm Babcock and Brown has staked $300 million on the cable’s construction and offered more than $28 million for a community benefits package if the project is approved. The developer plans to profit on its investment with a guaranteed 13.5 percent rate of return, granted to it by the Federal Energy Regulatory Commission for the sale of power running through the cable. Power plants in and around Pittsburg would generate most of the juice going though the 400-megawatt-capacity line. Ratepayers across the state would foot the bill.
The California Independent System Operator (Cal-ISO), the public benefit corporation in charge of the state’s electric grid, has asked for San Francisco supervisors to approve the cable as soon as possible so that it can begin service by 2010. Cal-ISO’s sole mission is to keep the lights on, and when there isn’t enough power in the system, it coordinates the dreaded rolling blackouts that most Californians remember from the energy crisis. CAL-ISO representative Larry Tobias brought up those dark days at a San Francisco Port Commission meeting Feb. 27. "Without the Trans Bay Cable project," he warned, "we will be back in that situation again." Electricity from the TBC, Tobias told commissioners, will give the city’s system the "reliability" to prevent blackouts.
Tobias said if supervisors reject the cable project, CAL-ISO will have to seek alternative proposals. At a January meeting of the city’s Local Agency Formation Committee (LAFCo), Tobias brought up a plan previously put forward by Pacific Gas and Electric Co., which looked to bring power across the bay from a substation in Moraga. In 2005, PG&E asked for more time to finish its design. CAL-ISO rejected its request and chose the TBC instead.
But some local activists say the city does not need the cable, or any other privately funded power line. Steven J. Moss of San Francisco Community Power told the Guardian a 400-megawatt cable would flood the power grid with "an enormous oversupply" of electricity. "That would be a waste of resources," he said. Moss claims CAL-ISO is understandably obsessed with reliability but the probability of its doomsday blackout scenarios is incredibly small. How small? At the Port Commission’s March 13 meeting, Moss said his calculations indicate there is only a "0.0002 percent chance that the [TBC] will be needed."
Even in the worst-case scenario, Moss told us, the city is only "looking at a 50- to 60-megawatt gap [in energy supplies] 10 years from now." His figures, he said, are based on Cal-ISO’s own estimates, adding, "The real way to plug that gap [is] demand management solar, wind, all the things that San Francisco talks about constantly and that are good for us."
At the January LAFCo hearing, Sup. Ross Mirkarimi questioned officials from the San Francisco Public Utilities Commission (SFPUC) about the city’s plans to acquire its own power line from the Hetch Hetchy Reservoir’s hydroelectric stations. The city already owns most of the 200-mile transmission route from the Yosemite power stations, but PG&E possesses the last 30 miles and charges the city fees to bring electricity up the Peninsula from Newark. "Why can’t we have our own cable?" Mirkarimi asked SFPUC staffer Barbara Hale. She said the agency has been "studying the feasibility" of the proposed city-owned line but cannot yet commit to a firm "coming online date" like the TBC’s developer can.
For years the city has been seeking a way to secure full ownership of the Hetch Hetchy lines as a step toward forming a public power utility, independent of PG&E control. Ironically, if the TBC is built, a public power agency would own the cable and profit from it, just not San Francisco’s power agency. Pittsburg’s municipal utility is slated to take over the line once Babcock and Brown finishes its construction.
At the same hearing in January, Moss pointed to such projects as the proposed Hetch Hetchy line, as well as the city’s evolving plans to implement more renewable power sources, as proof that supervisors should reject the TBC. Calling the cable a "potlatch," Moss said, "Time is our friend" in power matters. "Technology will change and improve, [and] we’re potentially rushing into a very expensive project." Mirkarimi did not return calls for comment, but at the hearing, he indicated he is still studying the cable and has not yet formed a position on it.
Philip DeAndrade, chair of the city’s Power Plant Task Force, expressed concerns that Pittsburg’s power plants burn "very available fossil fuels" for their generation and that these cheaper sources of electricity "might take out of the market mix" more renewable energy. DeAndrade also brought up the four gas-fired combustion turbines, known as peakers, that the city is in the process of bringing online. With these generators scheduled to go into service in 2009, as well as several PG&E transmission projects either in the works or already operational, DeAndrade said, "I’m not convinced [the TBC] is a good deal for San Francisco. What it looks like is a good deal for Babcock and Brown and the City of Pittsburg."
CAL-ISO insists that the TBC is the best reliability option for the region. Spokesperson Gregg Fishman said the peakers and other local energy projects will allow the system operator to stop relying on the inefficient Potrero Hill Power Plant. "But all that really does is keep us even in San Francisco. It doesn’t improve the reliability of the system at all and in fact, with load [demand] growth we are actually falling slowly behind." Fishman later mentioned the added benefits of having power come in from a different direction. Currently, all power lines feeding the city travel up the Peninsula.
On March 13 the TBC cleared its first local regulatory hurdle when the Port Commission approved a licensing agreement for the cable’s facilities. Port officials, along with staff from the Mayor’s Office and other city agencies, spent weeks negotiating the terms of the deal with Babcock and Brown. The agreement grants the port annual rent payments in excess of $1 million, a needed cash infusion for the strapped agency.
The community benefits package gives the port an additional $5.5 million, with an as yet undetermined portion of those funds to be spent on open-space and energy-related projects on port-owned land. In addition to payments to the port, Babcock and Brown pledged more than $23 million to the SFPUC for sustainable energy programs, such as solar, wind, and tidal power initiatives.
Despite passing the licensing and benefits packages, port commissioners and their staff said they were not ruling on the project’s merits in terms of energy policy. Port special projects manager Brad Benson, who spearheaded the negotiations, told us, "Port staff does not believe we have the required expertise to rule on energy policy aspects [of the TBC]. We believe the Board of Supervisors is the preferred venue" to settle those questions.
Reached for comment, several San Francisco supervisors, either directly or through staff, told us they are still making up their minds about the project. Sup. Sophie Maxwell told us even if the cable is built, the city will not allow the new power line to sidetrack its efforts to use more environmentally friendly energy. "The city’s policy is renewable energy. Fossil fuel is not our first and primary desire." But, she added, Cal-ISO "determine[s] our power needs, and so we have to go along with that. We can’t say, ‘No … you’re wrong.’ "
Babcock and Brown vice president Dave Parquet praised the Port Commission for approving the licensing agreement and benefits package, telling us, "We are very pleased with the port’s [approval] and look forward to the Board of Supervisors’ decision." Samuel Wehn, the TBC’s project manager at Babcock and Brown, said, "I don’t think San Francisco [officials are] going to put their city in the position where they’re not going to be able to provide the kind of energy that’s needed to keep this city running."
Moss said those kinds of arguments are "business as usual" for the state in terms of energy policy. "Here [we] go again with another large infrastructure project that doesn’t contribute to solving climate change or moving our energy agenda forward."
He added, "It’s classic political science. Out of [the average ratepayer’s bill] it’s pennies per month, so nobody cares about it … but that doesn’t mean it’s not an expensive project. It is." Babcock and Brown, he said, "saw an opportunity to make a very fat profit margin, and they went for it like any good profiteer." *