Message-ID: <21517634.1075840020012.JavaMail.evans@thyme>
Date: Mon, 18 Jun 2001 18:33:13 -0700 (PDT)
From: alan.comnes@enron.com
To: tom.alonso@enron.com, ray.alvarez@enron.com, robert.badeer@enron.com, 
	tim.belden@enron.com, f..calger@enron.com, jeff.dasovich@enron.com, 
	m..driscoll@enron.com, mark.fischer@enron.com, h..foster@enron.com, 
	mark.guzman@enron.com, c..hall@enron.com, 
	timothy.heizenrader@enron.com, paul.kaufman@enron.com, 
	elliot.mainzer@enron.com, chris.mallory@enron.com, 
	susan.mara@enron.com, matt.motley@enron.com, dave.perrino@enron.com, 
	phillip.platter@enron.com, jeff.richter@enron.com, 
	diana.scholtes@enron.com, chris.stokley@enron.com, 
	steve.swain@enron.com, mike.swerzbin@enron.com, 
	bill.williams@enron.com, greg.wolfe@enron.com
Subject: FW: FW: Davis Eases Power Plant Pollution Rules
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X-From: Comnes, Alan </O=ENRON/OU=NA/CN=RECIPIENTS/CN=ACOMNES>
X-To: Alonso, Tom </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Talonso>, Alvarez, Ray </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=ebe4476b-2d94882a-86256a14-75ff3b>, Badeer, Robert </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Rbadeer>, Belden, Tim </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Tbelden>, Calger, Christopher F. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Ccalger>, Dasovich, Jeff </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=da220740-3e85e661-86256962-4f9c13>, Driscoll, Michael M. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mdrisc3>, Fischer, Mark </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mfische2>, Foster, Chris H. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Cfoster>, Guzman, Mark </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mguzman3>, Hall, Steve C. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Shall4>, Heizenrader, Timothy </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Theizen>, Kaufman, Paul </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Pkaufma>, Mainzer, Elliot </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Emainze>, Mallory, Chris </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Cmallor>, Mara, Susan </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=8a20ece9-992cf340-8625697d-7146e9>, Motley, Matt </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mmotley>, Perrino, Dave </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Notesaddr/cn=13e30736-7885e1b0-86256a31-56095b>, Platter, Phillip </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Pplatte>, Richter, Jeff </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jrichte>, Scholtes, Diana </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Dscholt>, Stokley, Chris </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mstokle>, Swain, Steve </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Sswain>, Swerzbin, Mike </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Mswerzb>, Williams III, Bill </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Bwillia5>, Wolfe, Greg </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Gwolfe>
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Here is information on the ability of CA generators to run in excess of the=
ir orginal offset NOx quantities.

Alan Comnes

 -----Original Message-----
From: =09Schoen, Mary =20
Sent:=09Monday, June 18, 2001 3:23 PM
To:=09Comnes, Alan
Cc:=09Guerrero, Janel
Subject:=09Re: FW: Davis Eases Power Plant Pollution Rules

The following is more explanation about the recent Executive Order (EO) sig=
ned by the Governor of California on June 11, 2001.  In order to avoid futu=
re blackouts, Governor Gray Davis is waiving limits on hours of operation a=
nd the associated emissions for natural gas-fired peaker units if they adhe=
re to certain conditions.  He is requesting local air districts to allow na=
tural gas-fired peaker power plants to operate in excess of their hourly, d=
aily, quarterly and/or annual emission limitations if they do the following=
:

1.=09Agree to sell power to the California Department of Water Resources or=
 to a utility located in California=20
2.=09To serve an operating utility's own load
3.=09Agree to sell to another California-based utility

The gas-fired peaker units must also pay a mitigation fee to the local air =
districts of $7.50 per pound of oxides of nitrogen (NOx) and $1.10 per poun=
d of carbon monoxide (CO) emitted.  (The Governor set this number - it is, =
however, the same amount the South Coast AQMD is charging for NOx offsets i=
n the modifications it made to the RECLAIM program.) These mitigation fees =
will be used to clean up or retire other sources of pollution in the same a=
ir basin.  The Governor is ordering the California Air Resources Board to w=
ork with the Environmental Protection Agency to ensure that power plants wi=
lling to operate under this order obtain the necessary approvals.

As you know, there are many peaking plants that are close to exhausting the=
ir allowable operating hours.  Once these facilities exhaust the amount of =
allowable hours they would have to either shut down the units or negotiate =
an agreement with the local air agency to continue to operate.  With the ex=
ception of Mirant Potrero in San Francisco and Reliant Energy Mandalay in V=
entura County, no facilities have negotiated such agreements.  The EO issue=
d by the Governor gives the peaker facilities a blanket approval to operate=
 beyond the restrictions.  The Governor believes that waiving of the requir=
ements will also minimize reliance on backup diesel-fired generators, which=
 have even higher emissions than the natural gas peakers.  In my previous d=
iscussions with the US EPA Region 9, they did say they were willing to work=
 with the state to provide variances to power plants' operating limits.  Ho=
wever,  in the two instances mentioned above, the EPA required the plants t=
o agree to install pollution control equipment at a specific future date.  =
This aspect of the agreement was critical to EPA, because the increased emi=
ssions from the peakers with increased hours are now significant enough (ma=
jor source status) to trigger New Source Review which requires installation=
 of Best Available Control Technology (BACT).  The EO by the Governor makes=
 no mention of future controls.

According to municipal utilities and other generators, the Governor's actio=
n could provide up to 1,200 Megawatts of additional power this summer by ex=
panding the number of hours of operation at natural gas-fired plants.   The=
 EO will expire on October 31, 2001, unless revoked, modified or extended b=
y further executive order.  The air director of the Ventura air board has a=
lready sent comments opposing this order due to its negative air impacts.  =
Environmentalists will also no doubt object.  The EPA has not yet responded=
.  Despite the potential negative environmental effects, the political pres=
sure will be strong to let these plants operate.  I will keep my ears open =
for additional developments on this matter, please let me know if you have =
any questions.



From:=09Alan Comnes/ENRON@enronXgate on 06/12/2001 11:57 AM
To:=09Mary Schoen/NA/Enron@Enron
cc:=09=20

Subject:=09FW: Davis Eases Power Plant Pollution Rules=20


Mary,

Any insight into this latest change would be appreciated by the traders.  I=
s this order any different than the SCAQMD $7.50/ton program already implem=
ented?  Will EPA allow that state to do this?

Thanks,

Alan Comnes
 -----Original Message-----
From: =09Comnes, Alan =20
Sent:=09Tuesday, June 12, 2001 9:55 AM
To:=09Alonso, Tom; Alvarez, Ray; Badeer, Robert; Belden, Tim; Calger, Chris=
topher F.; Dasovich, Jeff; Driscoll, Michael M.; Fischer, Mark; Foster, Chr=
is H.; Guzman, Mark; Hall, Steve C.; Heizenrader, Timothy; Kaufman, Paul; M=
ainzer, Elliot; Mallory, Chris; Mara, Susan; Motley, Matt; Perrino, Dave; P=
latter, Phillip; Richter, Jeff; Scholtes, Diana; Swain, Steve; Swerzbin, Mi=
ke; Williams III, Bill; Wolfe, Greg
Subject:=09Davis Eases Power Plant Pollution Rules=20


=20
Tuesday, June 12, 2001=20
Davis Eases Power Plant Pollution Rules=20
 Electricity: Order will allow more production from heavily polluting 'peak=
er' facilities.=20


By DAN MORAIN, Times Staff Writer





     SACRAMENTO--Gov. Gray Davis agreed Monday to lift air emission limits =
on heavily polluting power plants and allow them to run at capacity this su=
mmer as long as the electricity they produce is sold in the state.=20
     State officials said the plants must be pressed into use to avoid blac=
kouts.=20
     Davis' executive order lets the generators build the cost of air pollu=
tion fines into the price the state pays for electricity produced by natura=
l gas-fired power plants, said Catherine Witherspoon of the California Air =
Resources Board.=20
     Municipal utility districts--including the Los Angeles Department of W=
ater and Power--and independent power companies could supply as much as 1,2=
00 megawatts from so-called peaker plants, facilities that generally are pe=
rmitted to operate for only a few hundred hours a year because they pollute=
 so heavily. That is enough power for more than 1 million homes.=20
     Other gas-fired power plants that have been shut down because of air p=
ollution restrictions also could be started up as a result of the order.=20
     In a news conference Monday, state officials said the order will have =
the effect of lowering air pollution by limiting the use of far dirtier die=
sel generators, which industry could use if power supplies are threatened.=
=20
     "If we don't get every last megawatt we can [from natural gas-fired pl=
ants]," said Witherspoon of the air board, "we will see people turning to d=
iesel more frequently."=20
     Added Kellan Fluckiger, a top energy advisor to Davis: "If you don't r=
un these, you're either going to have outages or you're going to run someth=
ing dirtier."=20
     Fluckiger said the order expands "the number of hours these things can=
 run and the amount of energy they can produce."=20
     New natural gas-fired power plants emit about half a pound per megawat=
t-hour of operation of ozone-producing pollutants. The plants affected by t=
he order emit between two and five pounds of oxides of nitrogen per megawat=
t-hour.=20
     If the plants are pressed into operation for 200,000 megawatt-hours th=
is summer, there will be between 400,000 and 1 million additional pounds of=
 oxides of nitrogen emitted into the air.=20
     The state probably will end up paying the fees associated with the ext=
ra pollution through higher electricity prices. The fees amount to $7.50 pe=
r pound of oxides of nitrogen--or $7.5 million if the plants operate for 20=
0,000 hours--and $1.10 per pound of carbon monoxide emissions. The money wo=
uld be used to reduce air pollution from other sources.=20
     "Under this order, dirty power plants can run as long as they want and=
 pollute as much as they want so long as they pay into a fund," said Gail R=
uderman Feuer, senior attorney with the Natural Resources Defense Council. =
"Our concern is that there's no guarantee that the fund will result in emis=
sion reductions any time soon."=20
     A Ventura County air pollution control official said that running one =
peaking power plant operated by Reliant Energy for one hour is the equivale=
nt of adding 20,000 new cars to Ventura County highways for an hour. Relian=
t Energy could not be reached for comment Monday night.=20
     "To the extent that they run when not needed for an emergency, it's go=
ing to put more air pollution into Ventura County skies and it's going to m=
ake our air dirtier," said Dick Baldwin, air pollution control officer for =
Ventura County.=20
     Los Angeles DWP Director David Wiggs hailed the order, saying it was n=
eeded so the city can sell the state as much as 1,000 megawatts of power th=
is summer.=20
     "This was the issue we had to have solved or we could not offer any of=
 our excess capacity to the state," Wiggs said.=20
     He added, however, that the city and state have not yet agreed on a pr=
ice for the power. Wiggs said the city is "negotiating to get our cost as l=
ow as we can legally charge" so that customers of the city utility district=
 are not subsidizing consumers in the rest of the state. Municipal utility =
districts elsewhere in the state also are expected to benefit from the orde=
r.=20
     Though the order was aimed at spurring municipal utilities to sell pow=
er to the state, it also applies to independent power producers such as Rel=
iant Energy of Houston and Duke of North Carolina--both of which have calle=
d on Davis to ease air pollution restrictions on their old natural gas-fire=
d facilities.=20
     "This puts more money in the Texans' pockets and more air pollution in=
 Ventura County residents' lungs," said Baldwin of Ventura County.=20
     Doug Allard, a Santa Barbara County air pollution control officer, als=
o said it seems as if the governor is giving private power generators much =
of what they had sought.=20
     "We have serious concerns about the order," said Feuer of the Natural =
Resources Defense Council. "It's taking the discretion away from local air =
districts to regulate power plants in their region."=20


* * *
     Times staff writer Nancy Vogel contributed to this story.=20
     RELATED STORY=20
     Utility: Edison plans to raise $1 billion in debt restructuring. C1=20
Copyright 2001 Los Angeles Times =20


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