To The People
May 16, 2001
On April 24, 2001, in a Richmond City Council pre-meeting study session, City staff presented the “ City of Richmond Energy Plan by Isiah Turner,” which was a summery of a concept whereby the City of Richmond would build and operate an electric generating plant, possibly in some kind of partnership with Chevron and/or PG&E.
Some of the questions I raised included:
1. What would the fuel be for the proposed power plant?
2. How could a city-owned power plant prevent blackouts since the ISO controls all power that feeds into the grid and all determinations of who gets blacked out?
3. Are we talking about just a City-owned power plant or a city-owned utility?
4. If we do not control the fuel supply, how could we guarantee the cost of power?
5. If the City has a track record of not being able to run a marina, a wastewater treatment plant, or a port profitably, what makes us believe we can run a power plant?
6. Richmond already has more stationary pollution sources than most cities, and the community downwind is largely economically disadvantaged and consists of racial minorities. How can we as a City rationalize adding more pollution? Aren’t there serious issues of environmental justice?
7. Do we as a city really want to enter into a long-term partnership with PG&E and Chevron? What about conflicts of interest? I had to sell my Chevron stock when I was elected to the City Council in order to vote on Chevron related issues. How can a City Council that is a business partner with Chevron vote objectively on any matter affecting Chevron? And, do we really want to partner up with a bankrupt utility company?
8. With an anticipated build-out in 2005 and lots of new power plants in the pipeline, can we really count being a profitable competitor in the power business when we have no control over fuel costs?
We were told that the answers to these and other questions would be forthcoming in the future. Although no votes are taken in executive sessions, the “sense” of the City Council was to encourage the city manager to continue working on this plan.
I have to admit that I am somewhat skeptical of this power plant proposition. However, I am committed to remain open minded pending receipt of additional information. I have to admit that I am intrigued by any idea that could solve the energy crisis, at least locally, and make a lot of money for the City of Richmond. Who wouldn’t be?
I have received a large number of phone calls, emails and letters on this subject. All are opposed, or at least skeptical. Most demand answers that not yet available. One email from Chris Carillo [email@example.com ] addressed some of the environmental racism issues, and it is attached to this email as a WORD file.
I have heard that the “consultant” who originally pitched this to the City, Bill Roth, originally pitched it to Chevron. Apparently, Chevron was unconvinced of the investment value of the idea and suggested Mr. Roth go pitch the City. Apparently, Mr. Roth and Chevron have some kind of agreement that if the City bites, Mr. Roth has to remain as the consultant for the City.
I have also heard that when Chevron built their electrical cogeneration plant, they designed it for three generators but only installed two. If there is so much money to be made from power generation, why doesn’t Chevron install the third unit and enter the market?
An article in the West County Times today noted that the Contra Costa Board of Supervisors would oppose any more new power plants in the County (http://www.contracostatimes.com/news/contracosta/stories/nomore_20010516.htm):
“But it [the Board of Supervisors] rolled up the welcome mat Tuesday after county planners reported that Contra Costa ranks second in the state for most new power generators under construction or on the planning boards.”
“Two approved Pittsburg power plants and a proposed Antioch plant will take care of about 19 percent of California’s projected energy shortfall, county planners reported. In contrast, Contra Costa’s 948,000 people comprise 2.8 percent of the state’s population.”
“’We are doing more than our fair share of meeting the state’s energy crisis,’ said Supervisor John Gioia of Richmond. ‘I think it’s an environmental justice issue, too. Some areas in our county already have more than their fair share of oil, chemical and power plants.’”
Following is the text of the Power Point presentation presented at the April 24, 2001, city Council Study session. Since no minutes are kept of study session proceedings, this is the only written record of the content of the presentation.
· City of Richmond Energy Plan by Isiah Turner
· City of Richmond’s Energy Plan Analysis
2. Energy Solutions/Project proposal
3. Implementation Process
4. Organizational Structure
· Situational Analysis
1. California Crisis: Energy Shortages, Highest price in U.S.A, Negative impact upon state and local economy and Municipal utilities in CA have energy and lower prices
2. City of Richmond Options: No action and our citizens and city will pay higher prices with blackouts; Conservation only will not solve the situation and Pursue new, LOCAL energy supplies. Helps Richmond—Helps California.
· Richmond’s Opportunity
1. To create a distinctive and very attractive economic and community development opportunity based upon an electricity NETWORK (Georgia model) offering high reliability and attractive prices
2. WINDOW OF OPPORTUNITY, timely decision making is critical to success.
1. Build power plant with related transmission and distribution services offering attractively priced energy and world class electricity reliability.
2. Combined with specially trained local labor, business friendly local government, proximity to SF and Silicon Valley and fiber optics availability/highway access.
1. Economic solutions for our residential citizens
2. Significant new sources of revenue for the City
3. Business development: Placing Richmond at the forefront in the competition for relocating or growing businesses and retention of Richmond’s existing business base.
· Economic Solutions for Richmond’s Citizens
1. Option 1: Partner with PG&E to bring savings to citizens directly through reduced utility bills
2. Option 2: rebates to citizens issued by the City.
· Economic Solutions for City
1. New Source of Funds, $3-20 million of potential new annual revenues.
2. Factors Impacting Revenue Potential: Size of facility, Fuel supply, timing and revenue sources (sales to end users).
3. Georgia model
4. Economic Development Potential: Software/biotech users, high-tech manufacturing, data centers, food processors/refrigeration, horticulture and metal fabrication.
· Implementation Process
1. Predevelopment: define scope of project and secure revenue contracts that support project financing.
2. Project Financing: secure third party financing for project and refund City’s investment in predevelopment.
3. Construction: using project financing funds, build project on budget and on time.
4. Operations: operate plant to meet revenue goals.
· Predevelopment Scope of Work
1. Plant engineering/research
2. T&D engineering/negotiations with PG&E
3. CEC submissions (air, water. Geo, acoustics)
4. Negotiations with Independent System Operator
5. Contracting with Chevron
6. Negotiations with Ca Dept. of Water Resources
7. Contracts with customers
· Next Steps
1. Fund predevelopment activities
2. Funding options: Infrastructure bond issue, redevelopment bond issue or general fund reserves.
3. Hire developer.
· Project Financing
1. Funding: $3 million.
2. Reward: gives City total control/ownership of project
3. If successful get $3 million back plus: economic benefits for citizens, significant new source of funding for City and obtain a higher plateau of community and economic development success.
4. Risk: Lose $3 million due to discovery of presently unknown barrier to success.
· Construction - Developer Selection Criteria
1. Strong track record of signing customers to revenue contracts.
2. In depth knowledge on California’s energy markets and power plant development.
3. Relationship with Chevron.
4. Successful leadership experience in community and economic development.
5. Independent developer allowing Richmond full freedom to choose among competing engineering, construction, fuel and operating vendors.
· Time Table
1. Predevelopment: 18-24 month process
2. Project Financing: Conduit financing - May 2000, Jan-May. 2002, Peaker - ASAP
3. Operations Start-Up: 2005, Peaker - Summer 2002 or Summer 2003.
· Council Direction: City Manager pursue a power plant project in cooperation with Chevron and other parties as necessary.