BILL ANALYSIS AB 151 Page 1 Date of Hearing: May 14, 2003 ASSEMBLY COMMITTEE ON APPROPRIATIONS Darrell Steinberg, Chair AB 151 (Vargas) - As Amended: April 30, 2003 Policy Committee: UtilitiesVote:9-5 Natural Resources 7-4 Urgency: No State Mandated Local Program: Yes Reimbursable: Yes SUMMARY This bill imposes a per kilowatt hour fee on electricity imported into the state from northern Mexico in order to fund air pollution mitigation measures. Specifically, this bill: 1)Requires the Air Resources Board (ARB) to impose of fee of $0.001 per kilowatt hour on electricity imported into the state from any new power plants located in Mexico, within 100 kilometers (60 miles) of the border, which first produced electricity after January 1, 2003 and was not constructed using best available control technology (BACT) for air contaminants. 2)Requires the fee to be deposited into a newly created Imported Electricity Air Pollution Mitigation Subaccount, which is continuously appropriated for distribution by the ARB to impacted air quality districts for pollution mitigation measures. 3)Authorizes the ARB, after January 1, 2006, to impose a lower fee if it determines that this would further enhance emission reductions of air contaminants. FISCAL EFFECT 1)Revenue and expenditures from the new fee would depend on the amount of electricity imported into the state from plants meeting the bill's criteria. This amount is unknown, but could exceed $1 million annually. (If 300 megawatts (MW) were imported an average of 18 hours per day for 250 days per year, total annual revenue from the fee would be $1.35 million.) AB 151 Page 2 2)The ARB estimates one-time special fund costs of about $50,000 for a rulemaking to establish the disbursal of revenues to air the districts in the border region. COMMENTS Background and Purpose . The author argues that, if powerplants in Mexico generate power for California but do not meet the state's emission standards, then the air pollution created by this power generation should be mitigated. According to the author, the Mexican Government has recently approved the construction of three powerplants 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-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 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. On January 9, 2003, United States Senators Feinstein and Boxer introduced legislation that 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. 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. However, according to the author's office, this equipment will not represent BACT, and furthermore, will not be fully operational until 30 months after the plant's scheduled completion of June 2003. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081