BILL ANALYSIS
AB 151
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Byron D. Sher, Chairman
2003-2004 Regular Session
BILL NO: AB 151
AUTHOR: Vargas
AMENDED: July 1, 2003
FISCAL: Yes HEARING DATE: July 7, 2003
URGENCY: No CONSULTANT: Kip Lipper
SUBJECT : AIR POLLUTION: IMPORTATION OF ELECTRICAL
ENERGY: MITIGATION FEE
SUMMARY :
Existing law :
1) Requires the state Air Resources Board (ARB) to adopt and
enforce state ambient air standards for the control and
reduction of air pollution, and to enforce federal ambient
air standards for reduction of air pollution.
2) Requires air districts to adopt and implement local and
regional programs to reduce air pollution and to achieve
state and federal ambient air standards. These
responsibilities include the adoption and enforcement of
requirements for new and modified power plants to ensure
that emissions from such facilities are mitigated and are
in compliance with federal and state law and regulations.
3) Under the Warren-Alquist Energy Conservation and
Development Act (Division 15 (commencing with Section
25000) of the Public Resources Code), requires the
California Energy Commission (CEC) to certify thermal power
plants that generate 50 megawatts or more of electricity to
ensure that they have mitigated the adverse environmental
effect, including any air emissions, from those power
plants.
This bill :
1)Requires persons who import electricity into the state from
power plants located in Mexico within 100 kilometers (KM) of
AB 151
Page 2
the US border, which are located in air basins shared by a
California air district, and which did not install Best
Available Control Technology (BACT) when constructing the
plant to pay an electrical generation fee to mitigate the
effects of air pollution from the facility.
2)Requires the mitigation fee to be assessed at not more than
the cost of mitigating air pollution from the power plant as
determined by the ARB, and that it not exceed 1/100th of a
cent per kilowatt-hour (kWh) of electricity imported, and
after January 1, 2006, authorizes the ARB to reduce the fee
below 1/100th of a cent per kWh imported if it determines
that it will reduce emissions of air contaminants.
3)Requires that fees collected under the bill's provisions be
deposited in the Imported Electricity Air Pollution
Mitigation fund and to be made available for expenditure
upon appropriation by the Legislature to provide revenues to
affected air districts for projects to mitigate air
pollution from the power plants contributing to the air
pollution.
4)Specifies that districts may not expend more than 10 percent
of the funds received from the ARB under this program for
administrative costs.
COMMENTS :
1) Purpose of Bill . According to the sponsor of this measure,
Imperial County:
"California border communities face many air pollution
challenges from a variety of sources, including electrical
generation facilities. Presently, there are electrical
power generation facilities being constructed in Mexico,
near the California border that may not meet ARB's air
quality standards. The intent of AB 151 is to encourage
these and future power plants, which will send power to
California, profit from Californians, and impact
California's air quality, to meet the ARB's Best Available
Control Technology (BACT) standards for NoX, Carbon
monoxide, and particulate matter.
AB 151
Page 3
"Authorities in Mexico approved the construction of two
electric power generation projects in Mexicali, one built
by Sempra and one by InterGen. The InterGen project is
called "La Rosita." The Sempra and La Rosita projects are
located approximately 1.5 miles apart from each other, 3
miles from the international board, and approximately 12
miles southwest of Calexico in Imperial County."
2) Opponents State Bill Imposes Illegal "Tax" on Energy,
Fails to Address Real Air Pollution Problems In Imperial
Valley . Opponents to this measure, primarily anti-tax
groups and the InterGen Company which owns a powerplant on
the other side of the US/Mexican border, assert that this
measure imposes a tax that violates state law, federal law,
and treaties such as the North American Free Trade
Agreement (NAFTA) [It should be noted that the Legislative
Counsel has keyed this measure as a majority vote "fee"
measure and has issued a written opinion stating that the
bill is not preempted by the federal Power Act (16 U.S.C.
Sec. 791 et. seq.] .
The opponents state that the bill would impose a tax on
facilities located in Mexico that generate electricity in a
much less polluting manner than facilities from which
energy is generated both in the Imperial Valley and
imported from other areas.
They contend that the LA Rosita facility is the cleanest power
plant ever built in Mexico; one key reason why it does not
meet California BACT standards is that there are
differences between those standards and the ones required
by the Mexican Government in order to build the plant.
The opponents also state that the bill will discourage the
development of clean, reliable new generation at a time
when the state needs to face increasing power demands.
3) Importation of "Dirty Power" Key Concern; Should Bill Be
Expanded to Address other High-Polluting Imported Power ?
The premise of this measure appears to be that if utilities
and other parties wish to purchase electricity from
facilities that do not meet California air standards, they
should pay a fee to ensure that the air pollution from
AB 151
Page 4
those facilities is mitigated. If the premise is valid for
Mexican power plants, the author and committee may wish to
consider whether it is valid for facilities located in
other states from which California utilities import
electricity. For example, there are at least two
high-polluting coal fired power plants located in the
Southwest and Utah from which utilities purchase power.
These plants contribute significantly to visibility
problems, and other air quality problems in California.
4) Given that Fee is Paid By Persons Importing Electricity,
Should Fee Be Collected By Entity other than ARB? As
presently drafted, this measure imposes the fee on persons
who import electricity into the state from Mexican power
plants. Presumably, the persons paying the fee are
utilities or other electricity customers. Putting aside
the ratepayer implications of the bill (something that will
be reviewed in the second policy committee to which the
bill was referred) the ARB has little expertise or
information on who purchases electricity and how much they
purchase [Conversely, they do have a great deal of
information and expertise on the air quality side of the
issue]. In order to minimize administrative costs, and
reduce duplication of effort, the author and committee may
wish to consider whether another state entity (the CPUC or
CEC?) should collect the fee.
5) Criteria For Energy From Power plants Subject to Bill's
Provisions May need Clarification and Revision . The
language on page 3, lines 11-15, which sets forth
parameters for power plants generating electricity subject
to the fee raises several concerns.
First, it is unclear why the bill establishes distance
requirements (page 3, line 11), and limits on the date on
which a plant started generating (Page 3, line 12). If a
plant is operating over the border and contributing to air
pollution problems in the state presumably it should pay
the fee regardless of how close it is to the border or when
it started generating electricity.
Second, the requirement specifying the use of BACT may not
achieve the author's stated intent. BACT is a temporal
AB 151
Page 5
determination made by the ARB and districts at the time a
plant is constructed. What may have been BACT in the
1980's and 1990's is not BACT today. Therefore, it may
make sense to revise this provision to specify a date
certain by which the BACT was installed.
6) Criteria for Expenditure of Funds By Districts Should be
Tightened Up . As presently drafted, this measure allows
air districts to expend funds subvened to them by the ARB
under the bill's provisions "for the projects within their
jurisdiction that the district determines will mitigate the
environmental or health impacts" of subject Mexican power
plants (Page 4, lines 7-11). This provision raises several
concerns. First, the funds should not be spent on
retrofitting power plants owned by private parties in the
region or paying other costs that should be borne by
regulated entities (those entities should pay those costs).
Second, the funds might otherwise be spent on programs
administered by the board to reduce pollutants,
particularly for sources in the Imperial Valley. (For
example, the Carl Moyer Program helps fund diesel retrofits
and replacements for heavy-duty engines.) The author and
committee may want to clarify and refine the district
expenditure provisions to address these concerns.
7) Technical Amendments Needed . This measure needs several
technical amendments:
a) On page 3, line 18 the bill specifies that the fee
may not exceed 1/100th of a cent per kWh. On page 3,
lines 23-28, the board is authorized to lower the fee to
below that amount if it determines that it would further
enhance reductions in air emissions. Given that the
first provision already allows the ARB to adopt a lower
fee, it is unclear why the second provision is needed.
b) On page 4, line 3 the bill limits funds to districts
"directly" impacted by pollution from Mexican power
plants. Depending upon how this adjective is read, it
may effectively limit the bill to two districts; San
Diego and Imperial County. Current state air laws allow
consideration of "indirect" contributions of air
pollution to districts. This term should be clarified.
AB 151
Page 6
c) On page 4, line 12, the bill authorizes up to ten
percent of the funds to be used for district
administrative costs. While districts do need funds to
implement clean air programs, a ten percent cap seems
excessive. Most programs have a two percent cap or
something similar.
8) Double Referral to Energy, Utilities and Communications
Committee . The Senate Rules Committee has referred this
measure to this committee and the Senate Utilities, Energy,
and Communications Committee. Should this measure be
approved by this committee, the do pass motion should
include the action to re-refer the bill to the Senate
Energy, Utilities and Communications Committee.
SOURCE : Imperial County Board of Supervisors
SUPPORT : American Lung Association of San Diego and
Imperial Counties, California Air Pollution
Control Officers Association, Clean Power
Campaign, Coalition of California Utility
Employees, El Centro, El Centro Chamber of
Commerce, Environmental Working Group, Imperial
Valley Air Pollution Control District, Imperial
and Mexicali Clean Air Stakeholders, Latino
Issues Forum, San Diego, Sierra Club California
OPPOSITION : California Taxpayers' Association, InterGen