BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 151 - Vargas Hearing Date:
June 22, 2004 A
As Amended: July 1, 2003 FISCAL B
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DESCRIPTION
This bill imposes an import fee of $0.001 per kilowatt hour on
electricity from a specified power plant in Mexico to fund air
pollution control in adjacent California air districts.
Specifically, this bill :
1.Requires any person importing electricity from a power plant
located in Mexico, within 100 kilometers of the U.S. border,
that first produced electricity after January 1, 2003, and
that was not constructed using best available control
technology, to pay to the Air Resources Board (ARB) a
mitigation fee of $0.001 per kilowatt hour of imported
electricity, not to exceed the environmental or health impacts
of the power plant and any associated administrative costs.
2.Permits the ARB to impose a lower fee beginning in 2006 if it
determines a lower fee would further enhance reductions in air
contaminant emissions.
3.Requires the fees collected to be deposited in the Imported
Electricity Air Pollution Mitigation Subaccount in the Air
Pollution Control Fund and made available upon appropriation
by the Legislature.
4.Requires the ARB to distribute the fee revenues
proportionately to air districts impacted by emissions of air
contaminants from the specified Mexican power plant.
5.Requires air districts to use fee revenues for in-district
projects the district determines will mitigate the
environmental or health impacts of the specified Mexican power
plant.
BACKGROUND
The electric grid is interconnected between California and Baja
California so electricity generated in Mexico can be delivered
to California, and vice-versa. New power plants in California
are subject to stringent permitting requirements, including
requirements to install "best available control technology"
(BACT), such as selective catalytic reduction (SCR), to reduce
air emissions and to obtain offsets to mitigate emissions. New
power plants in Mexico are subject to less stringent
environmental standards, are not required to meet BACT standards
or install SCR, and are not required to offset new emissions.
The criteria in this bill limit its application to one existing
power plant, InterGen's 1000 megawatt La Rosita power plant in
Mexicali. InterGen built La Rosita pursuant to a contract with
the Comision Federal de Electricidad (CFE), Mexico's federal
utility. The plant has excess capacity, beyond what is
committed to CFE, that's available for delivery to California.
Originally, InterGen installed SCR on two of the plant's four
units. In January 2003, Senators Feinstein and Boxer introduced
S. 107, the Southern California Border Air Quality Protection
Act, which would prevent power plants along the
California-Mexico border from using natural gas from the United
States unless the plants agree to comply with California
emissions standards. S. 107 was dropped after InterGen agreed
to install SCR on all four units of the La Rosita plant. Even
with the SCR, the plant will not be as clean a comparable new
plant in California, which would be required to obtain offsets
and meet BACT standards.
Imperial County, immediately north of the plant, is classified
as a moderate non-attainment area. Imperial County officials
indicate the plant's emissions will have a significant adverse
impact on air quality in the air basin.
COMMENTS
1.Should application be limited to just one plant? While La
Rosita is not as clean as a new power plant located in
California, InterGen points out it's significantly cleaner
than the typical existing power plant in this state.
The author and committee may wish to consider whether a
mitigation fee for existing power plants that do not meet
current BACT requirements should also be applied to power
plants in adjacent states, if they share an air basin with
California, and/or whether such a fee should apply to the many
existing in-state plants which do not meet current BACT
standards.
2.Fee provisions unclear. The first sentence of subdivision (b)
of the bill directs ARB to assess a mitigation fee of not more
than $0.001 per kilowatt hour beginning in 2004, which
indicates that it could be set at a lower level. However, the
next sentence authorizes ARB to impose a fee less than $0.001
per kilowatt hour beginning in 2006, which indicates that the
fee must be $0.001 between 2004 and 2006.
The author and committee may wish to consider clarifying the
fee amount, whether it is the maximum fee, and whether ARB has
discretion to set the fee at a level sufficient to cover
mitigation costs.
3.Who pays the fee? This bill requires the fee to be paid by
the person who imports electricity. This suggests that the
fee would be paid by the buyer, rather than the generator. It
could also be read to apply to the transmission owner or
operator.
It's also unclear how the fee will be calculated and
collected. Although it is charged with assessing the fee, the
ARB has no way of knowing how much electricity is transmitted
into California from the La Rosita plant. It's unclear
whether there would be a disinterested party able to verify
the amount of electricity imported.
To ensure the ARB is able to collect the fee effectively, the
author and committee may wish to consider clarifying whether
the buyer or generator is supposed to pay the fee, and
identifying the entity, such as the Independent System
Operator, responsible for tracking the amount of electricity
imported.
The author and committee may wish to consider replacing the
complex fee structure with a provision simply giving ARB
authority to levy a fee on generators not meeting BACT
sufficient to fund mitigation measures.
4.Reconsideration vote. This bill failed 1-2 in this committee
on July 8, 2003.
PRIOR VOTES
Senate Energy, Utilities and Communications Committee
(1-2) (failed passage)
Senate Environmental Quality Committee (5-1)
Assembly Floor (45-31)
Assembly Appropriations Committee (17-7)
Assembly Natural Resources Committee (7-4)
Assembly Utilities and Commerce Committee
(9-5)
POSITIONS
Sponsor:
Imperial County Board of Supervisors
Support:
American Lung Association of San Diego
California Air Pollution Control Officers Association
City Council of the City of El Centro
City of San Diego
Clean Power Campaign
Coalition of California Utility Employees
El Centro Chamber of Commerce
Environmental Working Group
Imperial County Air Pollution Control District
Latino Issues Forum
Sierra Club California
Oppose:
California Energy Commission
Howard Jarvis Taxpayers Association
InterGen
Lawrence Lingbloom
AB 151 Analysis
Hearing Date: June 22, 2004