September 15, 1998

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

Dear Mr. Kaneshiro:

Pages S-16 and 6-28 of the draft EIR state that a combination of Alternative 2A, the bundling of Potrero, Contra Costa and Pittsburg and Alternative 3, the sale of the Geysers plant to the steam field operators is the "environmentally superior alternative". The logic for selection of this alternative as superior seems to be based on the EIR author’s assumption that, if one company owned all three fossil fueled power plants, the company would not operate the plants at their maximum generating capacity. The assumption on which the alternative selection has been made would appear to conflict with the most basic precept of free enterprise: obtaining maximum profit from investments. The plants will be operated according to market demand, not according to plant ownership.

The conclusion in the EIR that it is unnecessary to scientifically model the project as proposed by PG&E (to sell the plants in four packages: Pittsburg and Contra Costa together, Potrero separately, the Sonoma Geysers units and the Lake County Geysers units) seem to conflict with the recommendation of an alternative to the proposed project formulated on the basis of a dubious market assumption. ARCADIS Geraghty & Miller, Inc. recommends that this conflicting language in the Draft EIR be rectified before issuance of the final EIR. If the Public Utilities Commission allows PG&E to proceed with the sale as proposed, while the EIR appears to recommend a different approach, the ambiguity may cause some consternation among the public. We recommend the Draft EIR be amended to delete the reference to the "environmentally superior alternative" because there is no empirical evidence to support selection of that alternative and the statement itself is misleading.

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Sincerely,
/s/
Donald M. McArthur
Associate, Officer Manager