BILL ANALYSIS
AB 151
Page 1
Date of Hearing: April 21, 2003
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Hannah-Beth Jackson, Chair
AB 151 (Vargas) - As Amended: February 25, 2003
SUBJECT : Air pollution: importation of electrical energy:
mitigation fee.
SUMMARY : This bill requires any person who imports electricity
into the state from northern Mexico to pay a 1 mill ($0.01 cent)
per kilowatt-hour air contaminant emission mitigation fee for
the electricity.
EXISTING LAW :
1)Pursuant to 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 quality standards
under their state implementation plans (SIP).
b) Requires new and modified stationary sources to undergo
new source review as part of the permitting process, which
includes the application of Best Available Control
Technology (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)Pursuant to the California Clean Air Act (Health and Safety
Code Section 39000, et seq.):
a) Requires air districts to consider cost-effectiveness,
technological feasibility and other factors prior to
adopting control measures affecting stationary sources of
air pollution.
b) Requires air districts to consider, and make available
to the public, their findings related to cost effectiveness
of a control measure.
AB 151
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THIS BILL :
1)Requires any person who 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) It was not constructed using the BACT for air
contaminants.
c) It 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
deemed part of one electrical generating facility.
FISCAL EFFECT : Unknown.
COMMENTS :
1)Background
According to the author's office, California and Mexico border
communities face severe air pollution challenges from a variety
of sources. Power plants are among the most recent sources of
air pollution that have developed in the region. These power
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plants, located in Mexico, may not meet California's air quality
standards, but import electrical energy for sale in California.
The Mexican Government has recently approved the construction of
three 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 that produces electricity for export into the United
States. La Rosita, a 750 MW facility across the street, is
owned and operated by InterGen. In addition, InterGen also owns
Energia de Baja California. Half of the electricity from the La
Rosita plant will be sold to Mexico, the remaining half will be
exported into California. According to the author's office,
while Termoelectrica meets California clean air requirements,
the La Rosita plant meets Mexican, but not Californian clean air
requirements.
According to the author's office, the La Rosita plant will emit
1900 tons of nitrous oxide annually, while the Termoelectrica de
Mexicali plant will only produce 190 tons annually. 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 California.
2)Imperial County Air Emissions
Imperial County has been designated as a federally
"transitional" status for ozone and federally "moderate"
non-attainment for PM10 (particulate matter fewer than 10
microns in size). The County as a whole is also designated as
state "moderate" non-attainment for both PM10 and ozone (for
which Nitrous Oxides (NOx) are a precursor). If emissions from
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generating facilities in Mexico do not mitigate to BACT emission
control levels, the emissions have the potential to violate the
National Ambient Air Quality Standards (NAAQS) for exceeding
legal emission rates in Imperial County. Further NAAQS
violations could result in a federal re-designation to a more
serious level of non-attainment. If this should happen, past
emissions reductions in the county and future growth and
expansion would be threatened. Businesses wishing to locate in
the County would be required to offset their emissions at a
higher ratio (2:1 instead of 1:1 under current regulations), and
they would be required to meet more stringent rules and
regulations. According to the Imperial County Air Pollution
District, years of gains in stationary source Nox reductions in
Imperial County will be lost if emissions from these plants are
not controlled.
According to the author's office, by implementing a mitigation
fee, the bill will act as a deterrent to power plants in Mexico
that want to sell power to California, but do not meet
California air emission standards.
3)Does the Bill Set a Bad Precedent ?
This bill provides that power plants located in northern Mexico
that do not meet BACT standards may pay a mitigation fee to the
state and continue to sell their energy to California. While it
is true that California purchases energy from a number of power
generators out of state that do not necessarily meet BACT
standards, it may be more appropriate for the state to look at a
nondiscriminatory fee or policy that targets pollution from all
competitors seeking access to California's electricity market,
but do not meet California's emission standards. To not
establish a standard for all out-of-state importers of
electricity may give competitive advantage to older, relatively
dirty plants with access to California's market over plants that
already meet BACT standards.
4)Federal Legislation
On January 9, 2003, Senators Feinstein and Boxer introduced
S.107, the Southern California Border Air Quality Protection
Act. That 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
emission standards.
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According to Senator Feinsten'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 America Free Trade Agreement
(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
Imperial County Board of Supervisors
Imperial County Air Pollution District
City of El Centro
El Centro Chamber of Commerce
Sierra Club California
Clean Power Campaign
Environmental Working Group
Coalition of California Utility Employees
Opposition
None on file
Analysis Prepared by : Kyra Emanuels Ross / NAT. RES. / (916)
319-2092