BILL ANALYSIS
AB 2037
Page 1
REPLACE -5/10/10 Changes per consultant.
ASSEMBLY THIRD READING
AB 2037 (V. Manuel Perez)
As Amended April 13, 2010
Majority vote
UTILITIES & COMMERCE 10-4 NATURAL
RESOURCES 6-3
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|Ayes:|Bradford, Buchanan, |Ayes:|Chesbro, Brownley, De |
| |Carter, Fong, Fuentes, | |Leon, Hill, Huffman, |
| |Furutani, Huffman, Ma, | |Skinner |
| |Skinner, Swanson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Knight, Tom Berryhill, |Nays:|Gilmore, Knight, Logue |
| |Fuller, Villines | | |
| | | | |
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APROPRIATIONS 10-5
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|Ayes:|Fuentes, Ammiano, Coto, | | |
| |Davis, Bonnie Lowenthal, | | |
| |Hall, Skinner, Solorio, | | |
| |Torlakson, Hill | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway, Harkey, Miller, | | |
| |Nielsen, Norby | | |
| | | | |
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SUMMARY : Prohibits utilities from entering into a long-term
financial commitment with a new electric generating facility
that does not meet best available control technology (BACT)
standards, and has not obtained air pollution offsets in the
California air basin if the facility was constructed outside of
California in a shared pollution area. Specifically, this bill :
1)Prohibits a load-serving entity or local publicly owned
electric utility from entering into, and prohibits the
California Public Utilities Commission (PUC) from approving, a
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long-term financial commitment with or for a new electrical
generating facility constructed in California or in a shared
pollution area if that facility does not meet the following
criteria:
a) If the facility was constructed in California, the
facility was constructed to meet BACT standards, and
offsets to mitigate air pollution from operation of the
facility were obtained by the U.S. Environmental Protection
Agency (EPA) in the air basin in which the facility was
constructed.
b) If the facility was constructed outside of California in
a shared pollution area, the facility was constructed to
meet BACT standards, and offsets to mitigate air pollution
from operation of the facility were obtained by the U.S.
EPA in the air basin in California adjacent to the
facility.
2)Requires the PUC, California Energy Commission, local air
pollution control districts and air quality management
districts, and the State Air Resources Board to explore with
federal agencies and with other governments, methods to
encourage the recognition by all relevant agencies of offsets
achieved anywhere in a shared pollution area, and the use of
cross-border trading of offsets, emission reduction credits,
and available mitigation funds.
EXISTING LAW :
1)Requires air districts to adopt and implement local and
regional programs to reduce air pollution and to achieve state
and federal ambient air standards.
2)Prohibits PUC from approving a long-term financial commitment
by an electrical corporation, unless any baseload generation
supplied under the long-term commitment complies with CEC's
greenhouse gas emission performance standards.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Minor ongoing costs to PUC, in the range tens of thousands of
dollars, to review proposed long-term financial commitments
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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 : According to the author, the purpose of this bill is
to deter the building of powerplants that do not comply with
California's air pollution standards, when the powerplant shares
an air basin with Californians. Mexico has more lenient
building and air-emission standards than California. There is
concern that California's growing demand for electricity will
encourage more powerplants to be built in Mexico, where the
regulations are less stringent.
Some power plants located in Mexico reside in the same air basin
as California's border region. As a result, the adverse air
emissions generated from the Mexico-based power plants affect
California residents. By disallowing a California utility from
engaging in a long-term contract with dirty-burning power
plants, it might provide an incentive for any new powerplants on
the Mexico side of the border to comply with California's BACT
and air pollution control standards.
Three electricity generation facilities are located near
Mexicali, about 3 miles south of the international border and
about 12 miles southwest of Calexico, California. The
Termoelectrica de Mexicali plant, owned by Sempra Energy, is a
500-megawatt (MW) facility that produces electricity for export
into U.S. InterGen owns and operates the La Rosita 750 MW plant
and Energia de Baja California, which are located on a common
site and referred to as the InterGen Complex. Half of the
electricity from the InterGen Complex is generated for use
within Mexico and the remaining half is produced for export into
the U.S. InterGen contracted with the Mexican utility to produce
electricity for Mexico for a guaranteed fixed price for 25
years. The InterGen Complex producing this power meets Mexican,
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but not California, clean air requirements.
InterGen's Complex emits about 1,900 tons of nitrous oxide
annually, but the Sempra plant in Mexicali produces only 190
tons annually. InterGen counters that its bid on a contract to
supply power to Mexico was based on the requirement that bidders
must comply with Mexican air regulations, and now that the
contract has been awarded, no changes are allowed to the
contract except as specifically provided in the contract. Thus,
the company claims that it would be difficult to shut down its
operation to install BACT, and it would be cost prohibitive
given the circumstances under which the contract was bid.
InterGen further contends that its Mexicali plant is one of the
cleanest in Mexico and is cleaner than more than 50% of the
plants currently operating in the U.S. and California. As such,
this bill does not apply to existing power plants and only to
new plants constructed after January 1, 2011, or plants that add
incremental capacity after January 1, 2011.
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083
FN: 0004304