The Board of Supervisors will soon consider legislation authorizing a contracting and financial structure proposed by SFPUC staff for the development of four natural gas-fired combustion turbine generating units (each, a "CT unit") owned by the City and County of San Francisco (the "City"). The purpose of pursuing the development of the CT units is to improve environmental quality while maintaining electric system reliability. Successful construction and operation of the CT units has been identified by the California Independent System Operator as a prerequisite to the removal of reliability/must run status from the Mirant Potrero Power Plant. Under a term sheet agreed to by Mirant Corporation, such removal is the key step in securing the closure of the Potrero Power Plant.

This proposal leverages the City's tax-exempt borrowing capacity and the favorable power purchase agreement with the California Department of Water Resources ("CDWR") to allow the project to pay for itself within 18 years of commencing operations under conservative financing assumptions. The SFPUC proposes this structure as the most efficient means to achieve the goals set forth in Commission Resolution No. 07-0188 and Board of Supervisors Resolution No. 6 17-07, which both called for the approval, construction and operation of the four CT units at the earliest practicable date (together, the "Resolutions").  READ the complete Staff Report in the attachment below.