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