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Committee endorses PG&E port term sheet in principle, forwards license and Hoe Downyard option to full Board
Summary
Port staff and PG&E presented a nonbinding term sheet for a three-mile submerged/underground 230 kV cable to add redundancy for downtown power; the committee endorsed the term sheet in principle, accepted amendments and forwarded it to the full Board without recommendation while flagging uncertainty over funding for a proposed enclosure of an open-air switchyard and an option to acquire the three-acre Hoe Downyard parcel.
The committee discussed and then forwarded to the full Board a nonbinding term sheet negotiated by the Port and PG&E to construct a submerged and underground 230 kV transmission connection between the Embarcadero and Potrero substations.
Brad Benson, Special Projects Director at the Port, said the project is intended to provide redundancy for downtown San Francisco—s electric supply; PG&E had initially studied three routing options and proposed a submerged route under port property to minimize disruptive construction in neighborhoods. Ontario Smith of PG&E explained the extra route would create an additional circuit so the Embarcadero Substation would not be in an "n minus 1" configuration during maintenance or after a seismic event. Staff said CEQA review had been completed by the California Public Utilities Commission but additional permits (BCDC shoreline band, Regional Water Quality Control Board, Army Corps) would be required for submerged work.
The term sheet describes a 40-year license (with a reduced-rent construction period) and staff reported a prepaid-rent appraisal-based estimate of about $15,275,205 for the initial 40-year term. The proposed package also includes an option for the Department of Real Estate (previously OEWD in earlier drafts) to acquire the Hoe Downyard parcel (three acres) from PG&E for a fixed industrial land-purchase price (transcript references $8,322,942 as a calculation example) and anticipates that rezoning and redevelopment could increase net proceeds (staff estimated net land proceeds could be as much as $11,000,000 under some scenarios). Staff also discussed the open-air Potrero switchyard and a term-sheet provision that PG&E would use commercially reasonable efforts to seek rate-based funding to screen or enclose the yard; if CPUC does not permit ratepayer funding, the term sheet contemplates infrastructure financing district (IFD) proceeds as an alternative funding source.
Several supervisors said they supported the submerged transmission redundancy but expressed concern about the Hoe Downyard option, potential private benefits versus public proceeds, environmental remediation constraints (deed restrictions and arsenic on the site), and the possibility of using IFD proceeds to fund a switchyard enclosure. Deputy City Attorney John Givner advised the Board has discretion to endorse the term sheet in whole or part, to express reservations in the resolution, or to continue the matter. The committee adopted circulated amendments and forwarded the amended term sheet to the full Board without recommendation so supervisors and staff could refine language about screening and financing before final approval.
