September 23, 1997

Mr. Bruce Kaneshiro
Project Manager
c/o Environmental Science Associates
225 Bush Street - Suite 1700
San Francisco, California 94104

Re: Mitigated Negative Declaration and Initial Study, California Public Utilities Commission, Pacific Gas & Electric Company's Application No. 96-11-020, Proposal for Divestiture, Dated August 25, 1997, and Prepared by Environmental Science Associates

Dear Mr. Kaneshiro:

The Port of Oakland ("Port") has reviewed the above-referenced Mitigated Negative Declaration and Initial Study ("Initial Study") and respectfully submits the following comments.

1. Port's Jurisdiction

[Begin PO-1]
The Port's July 2, 1997, comment letter on the Draft Initial Study needs to be emphasized. The Oakland Power Plant is located within the Port Area, and therefore under the Charter of the City of Oakland the Board of Port Commissioners has the complete and exclusive power and duty on behalf of the City of Oakland to exercise planning and permit jurisdiction over the plant. In other words, the Port is the City within the Port Area. Accordingly, the CEQA lead agency and permitting authority and responsibility, which the Initial Study (p. 4.11.8) notes will be assumed by the Port with respect to the Oakland Power Plant.
[End PO-1]

2. Hazardous Materials

[Begin PO-2]
The Port's July 2 comment letter on the Draft Initial Study pointed out the failure of the Draft Initial Study to address the potential environmental effects, particularly regarding hazardous materials, of undertaking the $620,526 of Necessary Capital Expenditures needed at the Oakland Power Plant. The Initial Study, for example, notes that 15 "recognized environmental conditions" and at least nine impaired conditions constituting "material recognized environmental conditions" exist at the site. (p. 4.9.4) The proposed Purchase and Sale Agreement for the site provides hat the Necessary Capital Expenditures must be made. The port has requested, but has not been provided, the Phase II report on the site. The Initial Study improperly fails to address the hazardous materials impacts that may result from undertaking the Necessary Capital Expenditures.
[End PO-2]

3. Misleading and Incorrect Statements in the Initial Study Concerning Repowering or Other Substantial Changes or Increased Use at Oakland Power Plant

[Begin PO-3]
Any expanded use of the Oakland Power Plant for power generating purposes raises serious land use and environmental questions in view of the recent substantial changes in the immediate vicinity of the plant. The plant site is immediately adjacent to major new retail, commercial and public facility developments that have been developed in Jack London Square over the past 10 years. Many additional similar developments are proposed in Jack London Square in the near future. (See, for example, p.4.16.8 of Initial Study.) Similar new developments, including live-work facilities, have occurred recently and are planned in the areas near Jack London Square and the Oakland Power Plant. The Initial Study concedes "that overall there are incentives that create a tendency for the new owner of a divested plant to operate at higher levels than PG&E would operate that plant in the future." (p. 3.5) However, the Initial Study analyzes only the difference between (1) PG&E operations without divestiture (capacity factor of 0% for Oakland Power Plant) and (2) "technically feasible maximum operations (capacity factor of 10% for Oakland Power Plant). (pp. 3.5-3.6; Table 3.1) The Initial Study "does not consider the environmental effects that might arise from repowering." (P.C.16)

The Initial Study states on p. 4.1.6 and p.4.1.7 that:

"There is no anticipation that such a [Port of Oakland] land use or zoning code will be adopted in the near term, however, the Port does have the authority under the Charter to do so. The Port has accepted the land use for the power plant and assumes that it will continue so long as the facility remains in operation. (Heffes 1997)" (p.4.1.6; emphasis added) (See also p.4.1.9. which refers to "the Port of Oakland's acceptance of the site for heavy industrial use.")

"The Port of Oakland anticipates that the land use designation for the Oakland power plant [Heavy Industry] will remain unchanged so long as the facility is operational. (Heffes, 1997). Therefore the project would not be expected to cause conflicts with the Port of Oakland's planning or land use designations and would have a less-than-significant impact." (p.4.1.7.; emphasis added)

The foregoing statements in many important respects are incorrect and misleading:

• The Port may adopt a land use plan for the Jack London Square area, including the Oakland Power plant site, in the near future as the result of the Estuary Planning process being undertaken jointly with other agencies of the City of Oakland. Both the City's General Plan and the Port's land use plan may provide for commercial use of all or portions of the power plant site.

• The Port does not know what the Initial Study means by the phrases "Port has accepted" and "Port of Oakland's acceptance." The Port has not accepted, consented to or approved any changes in the level of operations or any physical modifications of the existing plant. Substantial modifications or changes in level of operations may conflict with both existing and proposed nearby retail, office, restaurant, entertainment, hotel and public uses in the Jack London Square area, and may create negative environmental impacts, which the Port does not accept, consent to or approve.

The statements on p.4.1.11 of the Initial Study, that "an established residential community is within one-half mile" but "95% of these residences are separated from the plant by an elevated freeway" fail to acknowledge the 288-unit residential project approved by the Port in Jack London Square, increasing numbers of existing and planned live-work facilities south (the Oakland Power Plant side) of the freeway, and the existing and proposed offices, restaurant, entertainment, hotel and public uses in the Jack London Square very near to the power plant. The statements on p.4.5.22 of the Initial Study, that "no sensitive receptors are located near the project site" and that "The closest sensitive receptors are located east [north?] of Highway 880," and similar statements made elsewhere in the Initial Study (e.g. pp. 4.5.29 and 4.10.7), are simply wrong. The Port is very concerned about future potential substantial modification or changes in the level of operations at the Oakland Power Plant because of the large number of "sensitive receptors" represented by the large numbers of workers, patrons, public and future residents in the immediately adjacent Jack London Square area who are located much closer to the power plant site than areas east or north of Highway 880.
[End PO-3]

[Begin PO-4]
Although the project, as defined in the Initial Study to include no more than "technically feasible maximum operations" of a 10% capacity factor for the Oakland Power Plant, may have less-than-significant impact, the Port believes that any increase of the capacity factor of more than 10%, and any other substantial changes to the plant, Amy have a significant impact, should be the subject of an Environmental Impact Report and may be an inappropriate land use.
[End PO-4]

4. Fuel Oil Use

[Begin PO-5]
The statement on p.4.5.30 of the Initial Study, that although a "foreseeable scenario" of divestiture includes a "tendency for increased use of the power plants, no increase in fuel oil use is expected as a result of divestiture." Since the Oakland Plant is oil fueled, and the foreseeable scenario is for increasing the capacity factor of the plant from 0% to 10%, the statement on p.4.5.30 is clearly untrue for the Oakland Plant.
[End PO-5]

5. Conclusion

The Initial Study fails to respond to the Port's comment letter on the Drat Initial Study in that it does not consider the hazardous material impacts of the $620,526 in Necessary Capital Expenditures a purchaser will be required to make to this documented materially contaminated site, and incorrectly assumes that the foreseeable scenario of divestiture would result in no increase in fuel oil even if the oil fueled Oakland Power Plant's capacity factor is increased from 0% to 10%. The Initial Study also incorrectly implies that the Port has accepted or approved heavy industry and/or power plant use of the site beyond the presently existing improvements at and level of use at the site. On the contrary, the Port believes that any substantial increase in the level of power plant operations at the site, or any substantial physical modification of the plant ,will require the preparation of an environmental impact report, and may not be an appropriate use because it will conflict with immediately existing and planning adjacent retail, office, restaurant, hotel, entertainment, residential and public uses.

Should you have any questions regarding the Port's response comments, please contact Steven Reiner, Port Environmental Planner, of my staff at (510) 272-1180

Very Truly yours,

James McGrath
Manager
Environmental Planning

cc: Andy Altman
Steven Reiner
Thomas D. Clark
Michele Heffes
Parties of Record in
CPUC Application 96-11-020