BILL ANALYSIS
AB 151
Page 1
Date of Hearing: April 1, 2003
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Sarah Reyes, Chair
AB 151 (Vargas) - As Amended: February 25, 2003
SUBJECT : Air pollution: importation of electrical energy:
mitigation fee.
SUMMARY : Requires any person that imports electricity into the
state from northern Mexico to pay a 1 mill ($0.1 cent) per
kilowatt-hour air contaminant emission mitigation fee for the
electricity. Specifically, this bill :
1)Requires any person that imports electrical energy into the
state, or causes electricity to be imported into the state, to
pay an electrical generation fee to the state Air Resources
Board (ARB) to mitigate the air pollution caused by the
electricity generation.
2)Provides that the mitigation fee is applicable if the
electrical generating facility meets all of the following:
a) It is located in Mexico, within 100 kilometers of the US
border, and within an air basin shared by a state air
district and Mexico.
b) Was not constructed using the best available control
technology (BACT) for air contaminants.
c) First produced electricity after January 1, 2003.
3)Specifies that the fee collected by ARB shall not exceed 1
mill per kilowatt-hour, and shall not exceed the costs ARB
determines is necessary to mitigate the environmental or
health impacts of the air pollution.
4)Provides for distribution of the mitigation fees to the local
air district that ARB determines is directly impacted by
emissions of the offending electrical generating facilities.
5)Makes clear that electrical generating facility means every
generating unit of a powerplant that is located at a common
site in Mexico, and that if more than one unit exists at a
powerplant project, all of the electrical generating units are
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deemed part of one electrical generating facility.
EXISTING LAW :
1)The Federal Clean Air Act [42 U.S.C. 4701 et seq.]:
a) Requires states to implement all feasible measures to
achieve and maintain federal ambient air standards under
their state implementation plans.
b) Requires new and modified stationary sources to undergo
new source review as part of the permitting process, which
includes the application of BACT and pollution offsets.
c) Defines "BACT" as the most up-to-date methods, systems,
techniques, and production processes available to achieve
the greatest feasible emission reductions for given
regulated air pollutants and processes.
2)The California Clean Air Act and related enactment's requires:
a) States to implement all feasible measures to achieve and
maintain federal ambient air standards under their state
implementation plans.
b) Air districts to consider cost-effectiveness,
technological feasibility and other factors prior to
adopting control measures affecting stationary sources of
air pollution, and requires districts to consider, and make
available to the public, their findings related to cost
effectiveness of a control measure.
FISCAL EFFECT : Unknown, however there is an increase in
mitigation fee revenue to the ARB, and passed through to local
air districts.
COMMENTS : Mexican authorities have approved construction of
three (3) electric power generation projects near Mexicali,
located about 3 miles south of the international border and
about 12 miles southwest of Calexico, California.
Termoelectrica de Mexicali, owned by Sempra Energy, is a
500-megawatt (MW) facility. InterGen owns and operates the La
Rosita 750 MW plant and an expansion to an existing InterGen
plant in the Complex that is 329 MW. The Sempra project
produces electricity for export into the US. Half of the
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electricity produced by InterGen is generated for use within
Mexico and the remaining half will be produced for export into
the US.
InterGen entered into a bid process with the Mexican government
and was awarded a bid to produce electricity for Mexico for
fixed price guaranteed for 25 years. The plant producing this
power meets Mexican, but not California clean air requirements.
The author and the sponsor state that InterGen's La Rosita Power
Complex will emit 1900 tons of nitrous oxide annually, but that
the Sempra plant in Mexicali will produce only 190 tons
annually. The County of Imperial is classified as a moderate
non-attainment area for ozone (for which nitrous oxides are a
precursor). They further state that, if not mitigated, the
emissions from the power plants would have a significant adverse
impact on the air quality in their air basin.
InterGen counters that its bid on a contract to supply power to
Mexico was based on the requirement that bidders must comply
with Mexican air regulations, and now that the contract has been
awarded, no changes are allowed to the contract except as
specifically provided in the contract. Thus, it would be
difficult to shut down its operation to install BACT, and cost
prohibitive given the circumstances under which the contract was
bid.
InterGen further contends that its Mexicali plant is one of the
cleanest in Mexico and is cleaner than more than 50% of the
plants currently operating in the US and California.
Federal Legislation: On January 9, 2003, Senators Feinstein and
Boxer introduced S. 107, the Southern California Border Air
Quality Protection Act. The bill would prevent power plants
along the California-Mexico border from using natural gas from
the United States unless these plants agree to comply with
California emissions standards.
According to Senator Feinstein's office, the legislation was
placed on hold after InterGen announced plans, on January 28th,
to install pollution control technology on all four units of its
new power plant in Mexicali.
The North American Commission for Environmental Cooperation,
created pursuant to the North American Free Trade Agreement
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(NAFTA), projects that the demand for electricity this decade
will increase by 66% in Mexico, 21% in the United States, and
14% in Canada.
REGISTERED SUPPORT / OPPOSITION :
Support
American Lung Association of San Diego & Imperial Counties
City Council of El Centro
El Centro Chamber of Commerce & Visitors Bureau
Imperial County Air Pollution Control District
Imperial County Board of Supervisors
Opposition
InterGen
Analysis Prepared by : Paul Donahue / U. & C. / (916) 319-2083