Decision Granting Certification Adopted on March 4, 1996, however, the Decision Never Became Effective

Project Manager: Sean Pittard

Staff Counsel: Jeff Ogata + Caryn Holmes, Arlene Ichien, David Mundstock and Dick Raliff

Hearing Officer: Garret Shean

Presiding Member: Vice-Chair Sally Rakow

AFC Filing and Data Adequacy

San Francisco Energy Company filed its AFC on July 29, 1994, for a 240 MW cogeneration facility to be located in the Bayview Hunters Point area of southeast San Francisco. The Commission accepted the AFC as data adequate on September 7, 1994 after the applicant provided a supplemental filing. (A 50% owner of San Francisco Energy was AES (formerly Applied Energy Services, the Placerita applicant, Docket No. 84-SPPE-1.)

Project Description

The BRPU

On January 10, 1994, the PUC had declared San Francisco Energy to be the winning competitive bid in the PG&E phase of the Biennial Resource Plan Update (BRPU) proceeding. This meant that the PUC found San Francisco Energy to be economically superior to the repowering of PG&E’s existing Hunters Point units.

The BRPU, then in its fourth year, was an effort by the PUC to identify the most efficient and economical resources for electricity generation which the utilities were to acquire under a final standard offer contract. As the BRPU winner, San Francisco Energy was then expected to sign a contract with PG&E by which the utility would purchase the facility’s power under a Final Standard Offer 4 Contract.

In reality, the BRPU was collapsing. The utilities challenged the BRPU results as illegal and uneconomic. SCE and SDG&E would later obtain a FERC ruling invalidating the BRPU. Applicability of that ruling to San Francisco Energy and PG&E would be an issue in this AFC. Meanwhile, PG&E refused to sign any contract with San Francisco Energy, creating a second demand conformance controversy to be decided in the AFC. The BRPU framework would play a decisive role in the actions taken by applicant, the CEC, and many other players in this proceeding.

Two Alternative Sites

San Francisco Energy’s powerplant had been originally proposed for an industrial site owned by the Port of San Francisco near the Islais Creek Channel and Piers 90 and 92. The Port Site’s immediate neighbors were industrial and commercial. However, applicant and the Port had been unable to agree on the terms of a lease for this site. (The issue of the unfinished lease would eventually control the AFC’s outcome.)

Under the BRPU milestones timetable for a successful bidder, San Francisco Energy needed to quickly demonstrate site control to the PUC and PG&E. Unable to lease the Port Site, applicant turned to a nearby, privately-owned parcel called the Innes Avenue Site, which could be leased. Applicant now had site control at Innes Avenue, south of India Basin, although this site was directly adjacent to a residential neighborhood.

Based upon the potential for significant adverse environmental impacts, Innes Avenue was greatly inferior to the Port Site. Applicant still hoped to lease the Port Site, but felt it had to achieve site control under the BRPU. The San Francisco Energy AFC was thus filed with the facility located at both the Innes Avenue Site and the Port Site. The AFC designated Innes Avenue as "the proposed site" and the Port Site as "the alternative site." (Page 1-2 of the AFC.)

The Power Plant

The cogeneration plant itself was to be a modern, natural-gas burning combustion turbine facility, with a transmission connection to the nearby PG&E Hunters Point Substation. The thermal host (at the Port Site) was originally to be a wastewater reclamation facility. The new thermal host became San Francisco Thermal, a steam heating company providing hot water and other services to 200 San Francisco companies through 11 miles of steam pipelines and mains.

Local Opposition - the Intervenors

San Francisco’s Bayview Hunters Point is a minority, low-income neighborhood, whose primarily African-American residents believed they had long been discriminated against by government at all levels. The community felt it received the pollution and undesirable heavy industrial land uses that richer parts of town always managed to avoid. The existing PG&E Hunters Point Powerplant was already an unpopular facility, together with many "noxious and unhealthy industries" (Final Staff Assessment, Vol. I, p. 465.), including wrecking yards and junk shops, which historically congregated in the area.

To many Bayview Hunters Point residents, the proposed San Francisco Energy powerplant, especially at the Innes Avenue Site, was unacceptable. The neighbors formed organizations, such as the Innes Avenue Coalition and the Morgan Heights Homeowners Association, to intervene and fight the powerplant. Greenpeace and other environmental groups joined the anti-powerplant coalition. The controversy quickly generated media attention, much of it hostile to the applicant and its San Francisco Energy project. The powerplant became a political issue, opposed by two of the three leading candidates for mayor, including Willie Brown, while the incumbent, Mayor Frank Jordan, remained undecided on the facility. Brown defeated Jordan.

Public interest attorneys from Golden Gate University’s Environmental Law and Justice Center and the Environmental Law Community Clinic in Berkeley represented the major intervenor groups without charging any fee. The intervenors and their attorneys had the legal and political resources to challenge San Francisco Energy in multiple forums, not limited to the AFC proceedings.

The PSA and Suspension of Innes Avenue Site Review

CEC staff issued data requests, held numerous public workshops in the Hunters Point Bayview neighborhood, provided notices in languages besides English, and coped as best it could with various uncertainties surrounding the project, including confusion over the thermal host, lack of a firm water supply (later corrected), lack of a signed contract with PG&E, lack of a lease for the Port Site, and delay in the Bay Area Air Quality Management District (BAAQMD) issuance of the Preliminary Determination of Compliance.

The Preliminary Staff Assessment (PSA) was issued on April 14, 1995, and was over 1,000 pages in length. The PSA provided an objective comparison between applicant’s two alternative sites, recommending "against certification of the Innes Avenue site in the following technical areas: land use, socioeconomics, and visual resources." (PSA Executive Summary, page 2.) Of these, land use was perhaps the most severe, since a cogeneration plant at the Innes Avenue site conflicted with various San Francisco plans and would exacerbate a conflict between residential and industrial land use designations. (Pages 439-450 of the PSA.)

However, the PSA, by itself, did not dispose of the Innes Avenue site. An April 17, 1995 applicant letter to the air district, docketed on May 4, 1995, disclosed that San Francisco Energy had directed BAAQMD to only analyze air quality impacts for the Port Site. BAAQMD’s preliminary Determination of Compliance would ignore Innes Avenue entirely. (This saved applicant the cost of separate air district permit fees for Innes Avenue.)

The Committee immediately issued a May 5, 1995 Order to Show Cause, demanding that San Francisco Energy explain why CEC review of the Innes Avenue site should not be suspended, so long as certification remained impossible in the absence of BAAQMD’s air quality analysis.

San Francisco Energy responded on May 9, 1995 by agreeing "that the Commission suspend review of the proposed Innes Avenue site and proceed expeditiously with the review only of the Port site at this time." The Innes Avenue site was not withdrawn, as the letter went on to say: "Should the Port site subsequently be determined by Applicant to be infeasible, Applicant requests that the Commission recommence review of the Innes Avenue site[.]"

There would be no further consideration given to Innes Avenue, as the San Francisco Energy AFC would now be treated solely as a proposal for the Port Site (even though applicant still had no lease from the City and County of San Francisco.)

The intervenors continued to oppose the project at the Port Site after review of the Innes Avenue site was suspended. Many intervenors wanted the powerplant out of their area entirely.

Major Adjudicated Issues.

Overview

The June 16, 1995 Final Staff Assessment ultimately concluded that the environmental impacts of San Francisco Energy’s Cogeneration Project could be mitigated at the Port Site, though staff and applicant still disagreed over some proposed conditions of certification (such as in air quality). (Executive Summary, page 3 of the FSA.) Staff’s June 23, 1995 position on Demand Conformance allowed for certification of the project.

Intervenors adjudicated a large number of disciplines. Through cross-examination and their own testimony, intervenors sought to establish a record showing significant, unmitigated adverse environmental impacts from the proposed facility and applicant’s failure to establish Demand Conformance. Intervenors tried to convince the Energy Commission that San Francisco Energy’s cogeneration plant was dangerous. However, the February 8, 1996 Revised Presiding Member’s Proposed Decision would declare at page 4: "This powerplant is state-of-the-art when it comes to pollution control. There are no pathways to significant health impacts from this facility."

Thus, if intervenors hoped to ultimately prevail, they would have to build a record for a court challenge to a CEC decision granting certification. Intervenors stated their intention to file a lawsuit against the Energy Commission if San Francisco Energy was certified. The lengthy adjudication process (13 days of hearings) amounted to intervenors’ foundation for impending litigation against both the CEC and San Francisco Energy.

Demand Conformance

San Francisco Energy successfully maintained that it was needed under Public Resources Code section 25523.5(a), which directed the Commission to make an affirmative demand conformance finding for the PUC’s BRPU competitive bid winners.

Applicant’s evidence of its status included a PG&E announcement on January 10, 1994, designating the project as the final winning bidder. (7/6/95 RT 134:4, page 21 of the Revised Proposed Decision.) San Francisco Energy thus asserted it was "needed" as a matter of law.

Intervenors, CEC staff, and the Committee itself all expressed uncertainty at one time or another over demand conformance, revolving around the following two serious and complex concerns:

FERC’s Invalidation of the BRPU

Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) had challenged the BRPU before the Federal Energy Regulatory Commission (FERC), Docket Nos. EL95-16-000 and EL95-19-000. On February 23, 1995, FERC issued an order striking down the BRPU as a violation of the Public Utilities Regulatory Policy Act (PURPA). According to FERC, the BRPU required utilities to pay higher prices for electricity (above avoided costs) than legally permitted by PURPA. However, PG&E had not sought relief from FERC, whose decision only directed SCE and SDG&E not to enter into BRPU contracts. (Page 37 of the CEC Revised Proposed Decision.)

FERC’s order failed to invalidate other California QF contracts that were not part of the challenge before it. Nor had the PUC taken any decisive action to nullify San Francisco Energy’s winning bid in the PG&E auction.

The Committee and Commission therefore concluded that FERC’s order had not negated San Francisco Energy’s claim as the BRPU winner. (Pages 37-40 of the CEC Revised Proposed Decision.)

Lack of a Signed Contract With PG&E

Pages 132-133 of ER 92 required applicants such as San Francisco Energy to file "prior to certification" a "fully executed contract" with the utility that would purchase their electricity.

However, PG&E had failed to sign San Francisco Energy’s BRPU contract. PG&E testified that there was (and would be) no fully executed contract because San Francisco Energy had failed to meet certain BRPU prerequisites (milestones): identifying two sites instead of one, and never achieving control over the Port site. (7/6/95 RT 191:24 - 192:2, 196:2-16, pages 25-26 and 35 of the Revised Proposed Decision.)

Intervenors argued that lack of a signed contract with PG&E precluded certification under ER 92. CEC Staff recommended a Condition of Certification requiring applicant to obtain an enforceable contract prior to beginning construction. (Pages 24-25 of the Revised Proposed Decision.) Applicant claimed that, under the BRPU process, it already had a valid unilateral contract with PG&E, despite the utility’s refusal to sign. (Page 19 and pages 31-34 of the Revised Proposed Decision.)

The CEC determined that applicant and PG&E had a dispute regarding the legal existence of their contract. (Pages 30-31 of the Revised Proposed Decision.) In all likelihood, the dispute would lead to litigation. However, as a BRPU winner, Public Resources Code section 25523.5(a) conclusively established need for San Francisco Energy, without the added requirement of a fully executed contract. The statute thus created an exception to ER 92’s general provisions. (Pages 28-29 of the Revised Proposed Decision.) Alternatively, for AFC purposes, the Committee and Commission concluded that San Francisco Energy had made "a sufficient showing of an executed power purchase agreement to satisfy the requirement of ER 92." (Page 37 of the Revised Proposed Decision.)

San Francisco Energy was found to be needed. (Pages 46-48 of the Revised Proposed Decision.) However, the Commission adopted a Condition of Certification preventing construction of the powerplant until applicant produced evidence of an enforceable contract, either as the result of PUC action, successful negotiation with PG&E, or judicial ruling. (Page 49 of the Revised Proposed Decision.)

Socioeconomics

Applicant developed a plan to maximize employment opportunities for Bayview Hunters Point residents. The resulting August 24, 1995 Labor Agreement Memorandum of Understanding, an appendix to the Revised Proposed Decision, established the goal of hiring community residents for fifty percent of construction jobs and apprentice positions. It included applicant’s pledge to contribute a total of 13 million dollars for community empowerment during the life of the facility, including support for economic development, and quality of life improvement programs. Several community organizations, such as the NAACP, signed the Memorandum of Understanding. (Pages 72 and 80 of the Revised Proposed Decision.)

Intervenors argued that applicant’s promises were unenforceable and insufficient. However, the Committee and Commission found tangible benefits to the community from the agreement, whose operative provisions became part of the Socioeconomics Conditions of Certification at pages 86-90 of the Revised Proposed Decision.)

Visual Resources

Several intervenors testified that the cogeneration plant at the Port Site would cause them adverse visual impacts. (Pages 99-100 of the Revised Proposed Decision.) CEC staff and applicant witnesses disagreed, demonstrating with simulations that the project, as mitigated, would have a minimal effect upon an already industrial viewshed. (Pages 94-99 of the Revised Proposed Decision.)

The Committee and Commission concluded that while the powerplant might have symbolic significance to the community, its visual impacts were less than significant, given the mitigation measures proposed by staff and applicant. (Pages 100-102 of the Revised Proposed Decision.)

Environmental Justice

The intervenors viewed San Francisco Energy’s selection of Bayview Hunters Point as an example of the problem to which the concept of environmental justice was a response. The philosophy of environmental justice challenges established land use patterns that disproportionally place noxious and dangerous facilities in minority and/or low income communities.

Environmental justice was a new topic for the CEC. The Committee and Commission responded by evaluating the CEC’s licensing process in terms of the principles of environmental justice. Their conclusion was that the CEC’s open process maximized public awareness of and participation in the siting process. Rejection of the Innes Avenue Site (and substitution of the far more benign Port Site) was offered as a demonstration of independent CEC staff analysis and Commission responsiveness to community concerns. (Pages 170-173, 180-184 of the Revised Proposed Decision.)

The Commission thus concluded that the CEC’s process satisfied environmental justice by its thorough review leading to acceptance of the Port Site: "The Staff and Intervenors have left no stone unturned in identifying every potential impact and adequate mitigation measures to assure that none will be significant." (Page 184 of the Revised Proposed Decision.)

Intervenors’ legal claim that the CEC violated Title VI of the 1964 Federal Civil Rights Act (prohibiting racial discrimination) by approving this AFC was rejected. The Commission did not view Title VI as an applicable standard to be reviewed for power plant licensing conformity. Nor did the Commission believe that licensing the San Francisco Energy project amounted to a prohibited discriminatory act under Title VI. (Pages 191-192 of the Revised Proposed Decision.)

Alternatives

CEC staff performed a comprehensive alternatives analysis in accordance with CEQA seeking to determine if another site, technology, or the "no project" alternative, could achieve the project’s objectives while avoiding unmitigated, significant adverse impacts associated with the proposed Port Site. After starting with 150 potential alternative sites, then narrowing them down to 39, and finally eleven alternative sites, no significant benefit was found compared to the Port Site. (Pages 202-205, 229-234 of the Revised Proposed Decision.)

The Committee and Commission independently reviewed staff and applicant alternative sites, including the alternative of using PG&E’s existing power plant site at Hunters Point. All such sites were either infeasible or offered no meaningful advantage over the Port Site. (Pages 235-245 of the Revised Proposed Decision.)

The "no project" alternative failed because, contrary to intervenor assertions, the evidence showed a need for new generation to provide San Francisco with reliable electric service. (Pages 205-296, 215-219 of the Revised Proposed Decision.) Additional conservation failed because it had already been accounted for in ER 92 and the BRPU. Furthermore, Public Resources Code section 25305(c) expressly prohibited the use of conservation as an alternative to a powerplant in the CEC licensing process. (Pages 223-225 of the Revised Proposed Decision.) Nor were alternative technologies feasible. (Pages 245-251 of the Revised Proposed Decision.)

Intervenors also offered the alternative of PG&E transmission upgrades, which in theory could bring additional electricity to San Francisco from distant locations. The Committee and Commission rejected this approach on the grounds that San Francisco’s unique geography, at the tip of a peninsula, required a critical supply of local generation which San Francisco Energy was expected to help provide. Local powerplants were essential for reliability, protecting the city against loss of transmission from the peninsula or elsewhere. (Pages 225-228 of the Revised Proposed Decision.)

After this exhaustive review, the Commission summarized its CEQA findings that, with all project impacts at the Port Site mitigated to a level of insignificance, none of the alternatives merited further consideration. (Pages 251-253.)

Air Quality

Air Quality produced a voluminous adjudication, primarily focusing on alleged hazardous impacts from ozone and PM10 attributable to the cogeneration plant. Intervenor witnesses seeking to prove the existence of significant adverse impacts were opposed by applicant and the Bay Area Air Quality Management District, while receiving partial support from CEC staff on the issue of PM10.

The air district offered its Preliminary Determination of Compliance, finding that the project met all regulations and standards, including use of Best Available Control Technology, which was selective catalytic reduction (SCR). As far as the district was concerned, all air impacts had been properly mitigated to insignificance, and any remaining concerns were speculative and unsubstantiated. (Pages 255-260 of the Revised Proposed Decision.)

Based on its worst-case conditions modeling, CEC staff recommended that the applicant mitigate their PM10 impacts, preferably with emission reductions within the community area. Although the applicant did not agree that the PM10 impact identified by staff was significant, they nevertheless did offer to provide PM10 emission reductions within the community. These reductions were in the form of the re-sodding of two playground/soccer field areas that had deteriorated to large dirt play areas. After considerable deliberation, staff agreed to accept the applicant’s proposal for re-sodding of these two playgrounds as an appropriate PM10 mitigation measure. (Pages 262-265 of the Revised Proposed Decision.)

Applicant also sought to refute the staff analysis, arguing that particulates are a regional problem, and that San Francisco Energy’s facility would actually reduce impacts by displacing less efficient powerplants. (Pages 267-275 of the Revised Proposed Decision.) Nevertheless, applicant would agree to offer its proposed resodding as "PM10 mitigation beyond that required by CEQA." (Page 274 of the Revised Proposed Decision.)

The Committee and Commission rejected the assertions of intervenors, finding that the project produced no significant adverse ozone or PM10 impacts. The positions of applicant and the air district were adopted at pages 277-290 of the Revised Proposed Decision. Applicant’s voluntary resodding of the two local playgrounds was retained as a "community benefit" (Socioeconomics Condition of Certification 5). (Pages 88-89, 288, and 290, Finding and Condition 20, of the Revised Proposed Decision.)

Public Health

Intervenors’ witnesses argued that Bayview Hunters Point was already inundated with hazardous and toxic sites, resulting in a disproportionate level of health impacts. Therefore any additional pollution, such as PM10 from the cogeneration plant, would be a significant health impact. (Pages 317-320 of the Revised Proposed Decision.) After evidentiary hearings, intervenors submitted a San Francisco Department of Public Health Report showing a higher than average rate for certain cancers among Bayview Hunters Point residents. The report suggested an association between environmental contaminants and the cancer rates. (Page 320 of the Revised Proposed Decision.)

Applicant, the air district, and CEC staff all presented witnesses refuting intervenors’ testimony, arguing that project emissions, as mitigated, would not cause significant public health impacts. (One exception: CEC staff's belief that additional PM10 mitigation was required, discussed under Air Quality.)

The Committee and Commission concluded, based upon the evidence, including applicant’s health risk screening analysis, that the cogeneration plant would help to abate PM10 and would not cause any significant increase in cancer or any other risk to public health. (Pages 322-330 of the Revised Proposed Decision.)

Site Remediation

Intervenors raised concerns regarding the handling of contaminated soils on the site. The Committee and Commission concluded that "uncontroverted evidence shows that contaminated soils can be contained on-site and that the potential for migration is minimal or non-existent." (Page 397 of the Revised Proposed Decision.)

Facility Design/Geologic Hazards

Intervenors adjudicated the seismic safety of the proposed powerplant in the event of a major earthquake. The Port Site was reclaimed land (artificial bayfill) in an area with several known major earthquake faults.

Applicant, CEC staff, and Port of San Francisco engineers testified that the cogeneration plant’s final project design would meet all appropriate seismic criteria. The Committee and Commission agreed, rejecting intervenors’ request that even more stringent seismic design criteria be imposed. (Pages 436-442 of the Revised Proposed Decision.)

The Presiding Member’s Proposed Decision

Vice-Chair Sally Rakow issued her Presiding Member’s Proposed Decision on October 24, 1995, recommending that San Francisco Energy Company’s Cogeneration Project be certified. She also issued a press release announcing the decision and summarizing its contents.

The press release, combined with Vice-Chair Rakow’s willingness to publicize her Presiding Member’s Proposed Decision, was interpreted by the intervenors as evidence of bias against them. Intervenors filed an October 30, 1995 motion with the Energy Commission to disqualify Vice-Chair Rakow from any further participation in the San Francisco Energy AFC. The motion was heard at the December 13, 1995 Business Meeting and denied.

The Revised Presiding Member’s Proposed Decision

Reconsideration Contingent Upon the Signed Lease

After reviewing a multitude of comments, the Committee issued its Revised Presiding Member’s Proposed Decision on February 8, 1996. The Committee again recommended that the AFC be certified.

However, the Committee inserted a major procedural change related to the absence of a lease between applicant and San Francisco for the Port Site. To date, San Francisco Energy had only obtained agreement on a draft lease with the Port of San Francisco staff. Neither the Port Commission nor the San Francisco Board of Supervisors had ever been asked to vote on the lease, although approval by both bodies was necessary for any lease to take effect.

The Committee now inserted language in paragraphs 3-5 of the Order granting the AFC which required the applicant to obtain approval of the Port Site lease from both the San Francisco Port Commission and the San Francisco Board of Supervisors prior to docketing of the AFC decision. These provisions meant that the AFC decision would not become effective, and thus could not be reconsidered under Public Resources Code section 25530 until the lease had been approved. Without reconsideration, intervenors were precluded from filing their lawsuit pursuant to Public Resources Code section 25531.

The Committee was thus forcing San Francisco Energy to obtain the lease before the Commission subjected itself to the inevitable intervenor lawsuit challenging AFC approval. Vice Chair Rakow explained her position in a March 1, 1996 written statement:

"The Committee seeks to toll the commencement of a reconsideration process since without the City and County’s approval of the site lease, the Applicant could not construct its project on the Port site, which may make reconsideration of the Decision moot."

"The Committee believes that no party is prejudiced by avoiding an inappropriately early commencement of reconsideration or litigation. Should the City and County of San Francisco approve the site lease, the Applicant’s filing of the approved lease would begin the standard 30 day period for filing petitions for reconsideration. Should the City and County disapprove the site lease, no party nor the State would have incurred any expenses related to potential litigation."

Adoption

At the March 4, 1996 adoption meeting, the Energy Commission heard a debate over the merits of both the cogeneration project and the Committee’s new procedural device to force lease approval prior to any litigation.

Intervenors favored the procedural device, since they had argued many times that the project could never be certified until San Francisco Energy obtained control of the Port Site. (3/4/96 RT 43-44.) CEC staff favored immediate certification, without the Committee restrictions, so as to provide a final decision in accordance with staff’s reading of the Warren-Alquist Act requirements. (3/4/96 RT 36-37,82.) Applicant accepted the fact that certification would come with the Committee’s procedural strings attached, asking only that the Decision be effective as a CEQA-equivalent document. (3/4/96 RT 21-27.)

The Energy Commission unanimously certified the San Francisco Energy Cogeneration Project AFC on March 4, 1996, subject to the Committee’s restrictions. The AFC decision would only be docketed, go into effect, and become subject to reconsideration when applicant submitted a lease for the Port Site approved by the City and County of San Francisco

The San Francisco City and County Board of Supervisors

Opponents of the San Francisco Energy plant voiced their opposition to the project at the June 17, 1996 meeting of the San Francisco Board of Supervisors. Supervisor Angela Alioto introduced a resolution rejecting the cogeneration plant on environmental and public health grounds, directing all city agencies to have nothing further to do with San Francisco Energy’s project, including the proposed lease, until such time as the San Francisco Public Health Department determined that the project was safe, following a health and environmental assessment of the Bayview-Hunters Point community. The resolution passed unanimously and was signed by Mayor Willie Brown, effectively precluding any lease within the foreseeable future.

This Board of Supervisors action denying the Port Site lease meant that the AFC Decision would not be docketed or go into effect, and the Energy Commission was spared unnecessary litigation. The San Francisco Energy Cogeneration Project was dead, but not at the hands of the Energy Commission.

AES vs. PG&E

On August 26, 1996, AES (the San Francisco Energy Company applicant) sued PG&E in San Francisco County Superior Court seeking a determination that AES had a valid Power Purchase Agreement with the utility for PG&E to purchase power generated by the proposed cogeneration project. On December 3, 1996, the court sustained PG&E’s demurrer, meaning that AES had failed to assert a proper cause of action for relief by the Superior Court. The case was dismissed and AES appealed. In an unpublished opinion filed May 19, 1998, the Court of Appeal affirmed the judgment of dismissal.

AES was never able to persuade a court or the PUC that it had a valid power purchase contract with PG&E, although it did spend years trying.

Aftermath

San Francisco Energy had kept the Energy Commission busy during a lengthy period when it was the only pending AFC. Lack of "site control" would now be recognized as a potential powerplant killer, especially if the City and County of San Francisco was involved. No other BRPU facility ever filed with the CEC and the utilities eventually paid BRPU "winners" not to build their plants. (Over 1,000 MW were lost in the BRPU collapse, an overlooked factor that contributed to the supply shortage of 2000-2001.) With electric industry restructuring (de-regulation) pending before the PUC and then the Legislature for several years, every potential powerplant developer (except San Francisco Energy) was waiting for the new system to be finalized before moving forward. Thus, no other AFCs were filed in 1994, 1995 and 1996, another ignored source of later supply problems. The first AFC proposed under de-regulation bears a 1997 docket number, and then the deluge of new powerplants came to the Energy Commission.

Both AES and the City and County of San Francisco were among a host of potential buyers for PG&E’s existing Hunters Point power plant units, which the utility was putting up for sale under PUC-ordered divestiture as part of electric industry restructuring.

However, under a 1998 San Francisco/PG&E agreement, Hunters Point was excluded from divestiture. Instead, PG&E promised to eventually close the facility, which would have meant a great deal to the Hunters Point residents with their health concerns.

The energy supply crisis of 2000-2001 put such closure on indefinite hold, as the Independent System Operator (ISO) declared continued operation of PG&E Hunters Point plant as essential to the prevention of rolling blackouts.

PG&E's other San Francisco plant, Potrero, had been divested. The new owner, Mirant, proposed to re-power the old facility, increasing capacity by 540 MW. (Potrero Power Plant Project, Docket No. 00-AFC-4, currently under CEC review.) Hunters Point remaining on-line, contrary to expectations and an agreement, made Potrero more unpopular. The highly controversial, still pending Potrero case has rekindled many of the San Francisco Energy issues, such as environmental justice, while raising the question of whether the City and County of San Francisco will ever support a new powerplant to provide the city with a reliable source of electricity.