San Francisco restaurants have started to sign up for a new program that will turn leftover grease into fuel to run The City’s vehicles.

Fats, oils and grease have been a significant problem for The City’s sewers, officials from the San Francisco Public Utilities Commission said. When not disposed of properly, the waste can form thick layers inside the pipes that constrict sewage flow, produce odors, attract rats and cause backups in the sewer system, all of which create costly cleanup problems.

On Tuesday, the commission approved a $550,000 amendment to expand the terms of an existing $220,000 three-year contract with Richmond-based BioSolar Group.

Starting this week, the SFPUC, along with BioSolar, will start collecting grease from the 40-plus restaurants that have already signed on to the program, SFPUC spokesperson Tony Winnicker said. The collected waste will then be converted into environmentally friendly bio-diesel fuel at Bay Area bio-diesel processing facilities. The SFPUC plans to build its own plant down the road.

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At least a million gallons of bio-diesel fuel could be eventually manufactured from the oil collected from The City’s 2,600-plus restaurants, Winnicker said.

The program will roll out in phases, with an initial plan to convert about 50,000 gallons of grease per month, according to SFPUC documents, enough to fuel the agency’s vehicles. The fuel would still be 80 percent diesel — with 20 percent bio-diesel — under a formula known as B20.

The eventual goal is to generate enough fuel to contribute the required 20 percent to power The City’s entire municipal fleet, including Muni buses. According to The City’s bio-diesel policy, the goal is to convert the diesel fleet to B20 fuel by the end of 2007.

The Public Utilities Commission set aside $1.3 million of the agency’s general fund budget this year to implement the bio-fuel program. The cost to manufacture the fuel will be partly offset due to the fact that The City is providing the raw materials — the fats, oils and grease.

On Thursday, the agency will announce more details about the program. The SFPUC will continue to do outreach to sign more restaurants up for the program, Winnicker said.

beslinger@examiner.com