BILL ANALYSIS
AB 2037
Page 1
Date of Hearing: April 28, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2037 (V. Manuel Perez) - As Amended: April 13, 2010
Policy Committee: Utilities and
Commerce Vote: 10-4
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill prohibits an electric utility from entering into a
long-term financial commitment with a new electricity generating
facility unless the facility meets certain air quality-related
standards. Specifically, this bill:
1)Prohibits an electric utility from entering into, and
prohibits the Public Utilities Commission (PUC) from
approving, a long-term financial commitment with a new
electricity generating facility, located within or without
California, unless:
a) In the case of a California-based facility, the facility
either (i) meets the best available control technology
(BACT) standards for air pollution control that applied at
the time construction began in the air basin in which the
facility was constructed, or (ii) obtained offsets for any
pollutant in nonattainment of federal standards of the air
basin.
b) In the case of a facility located outside California,
the facility either (i) meets BACT standards for air
pollution control that applied at the time construction
began in the air basin in California adjacent to the
facility, or (ii) obtained offsets for any pollutant in
nonattainment of federal standards in the air basin in
California adjacent to the facility.
2)Defines a "new electricity generating facility" as a unit,
including an addition to an existing facility, constructed
after January 1, 2011.
AB 2037
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3)Requires the PUC, the California Energy Commission (CEC), the
Air Resources Board (ARB) and air districts, in conjunction
with federal agencies and other governments, to encourage
recognition of all achievable offsets within a "shared air
pollution area," as defined.
FISCAL EFFECT
1)Minor ongoing costs to PUC, in the range tens of thousands of
dollars, to review proposed long-term financial commitments
between public utilities and generating facilities to ensure
compliance with BACT standards or possession of sufficient
offsets. Actual costs will depend upon the number of
facilities proposed to be built that fall under PUC
jurisdiction and that require additional review, a number
likely to be very small. In any case, PUC already reviews
proposed contracts between public utilities and generating
facilities, so any additional workload should be minor.
2)Minor, absorbable costs to PUC, CEC and ARB to explore with
federal agencies and other governments methods to encourage
recognition of offsets in a shared pollution area.
COMMENTS
1)Rationale . The author notes that growing demand for
electricity in California might lead to increased electricity
generation in Mexico, where electricity generating facilities
are not required to meet California's stringent air quality
standards. The author is concerned that air pollution
emissions from such-out-of-state facilities, which oftentimes
sit in air basins that span across political boundaries, will
lead to the deterioration of air quality, especially in the
Imperial Valley, an area already suffering from poor air
quality. The author contends this bill will protect
California's air quality by better ensuring that electricity
generating facilities operating in air basins shared by
California, including those facilities operating outside of
California, meet the state's air pollution control standards.
2)Background .
a) The Overlapping Interconnects of Electricity and Air .
The electricity grid interconnects California and Baja
AB 2037
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California to facilitate the availability of electricity
between the two areas. There are a number of electricity
generation facilities located near Mexicali, about 3 miles
south of the international border and about 12 miles
southwest of Calexico, California, that supply electricity
to California.
While some power plants operating in Mexico meet California
clean air standards, others do not. Nor are they required
to do so. As California's electrical demand grows, some
fear more power plants may be built in Mexico to supply
electricity to California. Because air basins, such as
that encompassing Imperial County on the state's
southeastern edge, do not coincide with political borders,
air pollution produced anywhere within the basin may spread
throughout the basin. Californians, therefore, have an
interest in ensuring electricity generating facilities
operating near the state's borders, such as plant operating
in Mexico, meet California's air quality standards.
b) The California Public Utilities Commission . The CPUC is
responsible for the regulation of privately owned "public
utilities"-oftentimes referred to as "investor-owned
utilities" or "IOUs"-such as gas or electric corporations.
The CPUC's primary objective is to ensure adequate
facilities and services for the public at equitable and
reasonable rates. The rates that IOUs can charge their
customers are determined by the PUC. In addition, PUC
regulates how IOUs provide electricity service to their
customers. As part of this work, PUC review proposed
electricity contracts between IOUs and electricity
generators.
3)Support . This bill is supported by numerous public health,
air quality control and environmental organizations, Sempra
Energy and San Diego Gas and Power, and the County of
Imperial, which is one of the bill's sponsors.
4)There is no opposition to this bill on file.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081