BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2037 - V. Manuel Perez - Hearing Date: June 15,
2010 A
As Amended: April 13, 2010 FISCAL B
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DESCRIPTION
Existing law prohibits a load-serving entity or local publicly
owned electric utility from entering into a long-term financial
commitment with or for a new electrical generating facility
unless it meets the state's greenhouse gas emissions performance
standard.
Existing law 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. Air district standards may include requiring power
plants to install "best available control technology" (BACT) to
control emissions and to obtain emission reduction credits, or
"offsets" to mitigate emissions.
This bill requires new electrical generation facilities, within
or outside of California, which enter into long-term financial
commitments with a California utility to meet BACT requirements
and to obtain offsets to mitigate air pollution for air
pollutants within a shared pollution area, as defined, in
California.
This bill requires the California Public Utilities Commission,
California Energy Commission, the Air Resources Board (ARB),
local air pollution control districts, and air quality
management districts, 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.
BACKGROUND
Power Plants Beyond California - Currently, two electrical
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 the U.S. InterGen owns and
operates the La Rosita 750 MW facility located on 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.
While both of these facilities were eventually retrofitted to
meet BACT standards, current law does not require new facilities
to follow BACT standards or procure regional air emission
offsets that would be required if those facilities were built in
California. Specifically, if the facilities were built in
California in 'non-attainment' areas, the offset program would
require the facilities to offset criteria pollutants produced
on-site by mitigating production of those pollutants off-site.
Imperial County, immediately north of the Mexicali power plants
is currently classified as a moderate non-attainment area and is
the recipient of transported pollution plants in Mexicali.
Non-attainment areas and criteria pollutants - The federal Clean
Air Act requires the Environmental Protection Agency (EPA) to
set National Ambient Air Quality Standards for six common air
pollutants. These commonly found air pollutants (also known as
"criteria pollutants") are found all over the United States.
They are particle pollution (often referred to as particulate
matter), ground-level ozone, carbon monoxide, sulfur oxides,
nitrogen oxides, and lead. EPA designates these pollutants as
"criteria" air pollutants because they regulate them by
developing science-based guidelines for setting permissible
levels.
A "non-attainment area" is defined as an area where air
pollution levels persistently exceed National Ambient Air
Quality Standards, or an area that contributes to ambient air
quality in a nearby area that fails to meet standards.
Designating an area as a non-attainment area requires a formal
rulemaking process, and EPA normally takes this action only
after air quality standards have been exceeded for several
consecutive years. Non-attainment areas are given a
classification based on the severity of the violation and the
type of air quality standard they exceed. Much of southern
California and the central valley of California are in
non-attainment areas for at least one criteria pollutant.
The North America Free Trade Agreement (NAFTA) - NAFTA allows
free trade area between the United States, Canada, and Mexico to
facilitate trade and the cross-border movement of resources and
services and to increase investment opportunities in the
territories of the parties. NAFTA provisions address energy
regulatory measures by stating that each party shall seek to
ensure that in the application of any energy regulatory measure,
energy regulatory bodies within its territory avoid disruption
of contractual relationships to the maximum extent practicable,
and provide for orderly and equitable implementation appropriate
to such measures." While this passage suggests that California,
and U.S., policy should not "disrupt" energy exchange within the
NAFTA members, it does provide a "practicable" clause. In this
case, the failure of California to meet federal and state
ambient air quality standards and the ARB's jurisdiction in this
regard may allow California to implement restrictions in order
to meet its state and federal requirements.
COMMENTS
1) Author's Purpose . The siting of new power plants
located just outside of California which deliver
electricity to the state can contribute to air pollution in
California air basins. Specifically, there is concern that
California's growing demand for electricity will encourage
more power-plants to be built in Mexico, where the
regulations including the air emissions standards are less
stringent. Emissions from some power plants located in
Mexico impact air basins within the State. As a result,
the adverse air emissions generated from the Mexico-based
power plants can affect California residents and increase
the state's air quality mitigation requirements. The
author's intent is to ensure that those power plants
serving California's electrical load and that share an air
basin with the state, meet the same air quality emissions
requirements as California-based plants.
2) Shared Air Basins . The net effect of the this bill
would be to compel energy producers to follow BACT and
offset protocols for facilities built across the border
that both export electricity to California and have a
"shared pollution area" with the state. As California's
population and electrical demands grow, more power plants
may be built on the Mexican side of the California-Mexico
border which has shared basins with California's Imperial
and San Bernardino Valleys. Many of these areas on the U.S.
side of the border are already considered "non-attainment"
areas for multiple criteria air pollutants. Although the
bill technically affects all of California's border
regions, from a practical perspective the border regions
encompassing the Imperial and San Bernardino border areas
would most likely be the primary areas affected.
This bill relies on the EPA to determine the shared
pollution areas to which this bill would apply. It is not
apparent why the state needs to rely on a federal agency
for this determination. It may be more expedient for that
determination to be made at the state level such as by the
ARB. This bill has been double-referred to the Senate
Environmental Quality Committee where the author may wish
to address this issue.
3) What Happens When a Contract is Renewed ? This bill only
applies to new financial commitments for electricity at
facilities outside of the state by a California utility.
The author has identified two specific plants that cause
adverse emissions for California's air basins. The author
may wish to consider amending this bill so that its
provisions also apply upon renewal of a contract for
electrical generation.
4) Double Referral . This bill has been double-referred to
the Senate Committee on Environmental Quality.
ASSEMBLY VOTES
Assembly Utilities & Commerce (10-4)
Assembly Natural Resources (6-3)
Assembly Appropriations (10-5)
Assembly Floor (44-26)
POSITIONS
Sponsors:
County of Imperial
Comite Civico Del Valle, Inc
Support:
County of Imperial (Co-Sponsors)
Comite Civico (Co-Sponsors)
American Lung Association
Breathe California
California Air Pollution Control Officers Association (CAPCOA)
California Rural Legal Assistance Foundation
Economic Research Institute-Imperial Valley/CEESEM
Imperial Irrigation District
Imperial Valley Clean Air Initiative
Institute for Socio-Economic Justice and Progressive Community
Development, Inc
San Joaquin Valley Latino Environmental Advancement Project
Seeley Citizens United
The Sierra Club
South Coast Air Quality Management District
Union of Concerned Scientists
Oppose:
None on file
Maurice Pitesky
AB 2037 Analysis
Hearing Date: June 15, 2010