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Enron Mail |
On Friday, May 11th, the SCAQMD approved several significant changes to the=
=20 RECLAIM Program. The key elements of these modifications are as follows: For existing large power plants (greater than 50MW): bifurcation from the= =20 rest of the RECLAIM market, requiring installation of Best Available Retrof= it=20 Control Technology (BARCT) through compliance plans (to be installed no lat= er=20 than 2003 for boilers and 2004 for turbines), and a temporary mitigation fe= e=20 program. Any emissions in excess of their allocation can be offset by the= =20 payment of a mitigation fee of $7.50 per pound ($15,000 per ton) to the=20 District, which will in turn invest the money in NOx emission reduction=20 projects to mitigate the air pollution effects. These rule changes includ= e=20 an environmental dispatch provision which requires prioritization of the us= e=20 of cleaner emitting equipment first; Initiation of a temporary, limited, pilot RECLAIM Air Quality Investment=20 Program (AQIP) for new power plants and structural buyers, allowing access = to=20 mobile and area source credits;=20 Development of four new pilot credit generation rules which are voluntary a= nd=20 are applicable to a specific type of mobile or area source emission reducti= on=20 project, as summarized below:=20 - Rule 1631 applies to diesel-fueled captive marine vessels where the=20 existing marine engine is repowered or replaced with a new diesel-fueled=20 marine engine.=20 - Rule 1632 applies to marine vessels that are anchored in district harbors= =20 or ports that use electric power in lieu of auxiliary diesel engines to=20 provide power for lights, ventilation, loading, offloading, and other=20 "hotelling" operations.=20 - Rule 1633 applies to truck or trailer refrigeration units that are mounte= d=20 on a truck body or trailer container that use electric power in lieu of=20 auxiliary diesel engines while at distribution centers.=20 - Rule 2507 applies to diesel-fueled engines that are replaced with electri= c=20 motors that are used to power agricultural pumps.=20 Summary of Impact of Modifications: The South Coast Air Quality Management District (SCAQMD) introduced these n= ew=20 rules to reduce the impact of CA's electricity crisis ( the need to increas= e=20 generation) on the RECLAIM trading credit (RTC) market and to do their part= =20 to facilitate increased electricity supply. These amendments are intended = to=20 stabilize RTC prices by increasing supply, reducing demand, and increasing= =20 trading information and accuracy. =20 There is one major "IF" built into these rules. It involves the mitigation= =20 fee program for existing large power plants. IF the AQMD fails to produce= =20 adequate reductions for the mitigation fee program, power producing=20 facilities would have allowances deducted from future year allocations to= =20 cover their emissions. In otherwords, they would be able to run at higher= =20 levels this year, but may face severe curtailments in future years. I do think there are a couple of noteworthy precedence within these rules. = =20 One is the increased validity and recognition of need of alternate source o= f=20 emission offsets. This rule development had active participation by CARB a= nd=20 the USEPA, who bought off on these provisions The second is the use of the= =20 mitigation bank for generators. CARB has developed a similar bank for new= =20 peaking turbines, but this program has much broader application. And,=20 finally, this is the first time I've seen environmental dispatch provisions= =20 codified. =20 For those of you that want more details see below. I also have summaries o= f=20 the rules and comments on the rules. Please give me a call if you have=20 questions or want the documentation. Please forward this to anyone I've=20 missed. Mary Schoen Environmental Strategies 713.345.7422 Power Producing Facilities The proposed rule changes will separate power producing facilities from the= =20 rest of the RECLAIM market while energy supply issues are being addressed.= =20 Existing power plants will not rejoin the full RECLAIM program unless the= =20 Governing Board, in a public hearing prior to July 2003, determines that=20 their re-entry will not result in any negative impact on the remainder of t= he=20 RECLAIM universe or California=01,s energy security needs. The proposed rul= es=20 would require a compliance plan for power producing facilities with capacit= y=20 < 50 megawatts and require installation of best available retrofit control= =20 technology at the earliest feasible date, but no later than 2003 for boiler= s=20 or 2004 for turbines. In addition to the initial compliance plans, power=20 producing facilities are required to update information annually for 2001= =20 through 2005 Compliance Years. Annual update reports provide AQMD with the= =20 necessary information to access the impacts of emissions from these=20 facilities on the RECLAIM program and anticipate future demands of credits= =20 from the Mitigation Fee Program. The proposed rules also include=20 environmental dispatch, which requires prioritization of the use of cleaner= =20 emitting equipment first.=20 Trading would also be limited to isolate the rest of the market from credit= =20 demands from power producing facilities. RTC purchases after January 11, 20= 01=20 could only be used to reconcile facility emissions if the RTCs are from=20 facilities under common ownership or have been generated from approved mobi= le=20 source credit generation programs. Power Producing Facilities could sell=20 credits back to the District for a price not to exceed $7.50 per pound. Any= =20 emissions in excess of their allocation can be offset by the payment of a= =20 mitigation fee of $7.50 per pound ($15,000 per ton) to the District, which= =20 will in turn invest the money in NOx emission reduction projects to mitigat= e=20 the air pollution effects.=20 ??????? Compliance Plans and Forecast Reports for other Facilities For facilities other than large power producing facilities, compliance plan= s=20 are proposed for facilities with 1999 or any subsequent year emissions=20 greater than or equal to 50 tons per year (tpy). These compliance plans=20 provide flexibility by including options for installing controls or=20 purchasing credits. The plans are being designed to allow as much flexibili= ty=20 as possible, while requiring timely, enforceable commitments to be made to= =20 ensure compliance. Facilities may provide several options in their original= =20 plan submittal and can amend their compliance plans at any time. The Board= =20 resolution directs staff to expedite review and approval of compliance plan= s=20 and plan modifications (60 days for plans and 30 days for modification).=20 Facilities between 25 and 50 tpy emissions in 1999 will be required to subm= it=20 informational forecast reports and update forecasts annually. Compliance=20 plans and forecast reports from the large and medium facilities will help= =20 ensure adequate advance planning by facilities to meet the overall RECLAIM= =20 program emission targets.=20 ??????? Mitigation Fee Program A temporary mitigation fee program through compliance year 2004 is proposed= =20 for power producing facilities that exceed their RTC holdings. The facility= =20 would pay $7.50 per pound of NOx to the District, which uses the funds to= =20 achieve emission reductions from a variety of mobile source or other credit= =20 generation avenues. The current rules require that excess emissions be=20 deducted from the subsequent year allocation to ensure that the environment= =20 is not impacted by additional emissions. In this proposed amendment, staff= =20 recommends the deduction of excess emissions from the second year to accoun= t=20 for the lead time necessary for installation of control equipment at the=20 power producing facilities. When emission reductions are secured for the=20 Reserve by the District, the deduction would be credited back to the=20 facility. In addition, if the mitigation fee program achieves emission=20 reductions equal to at least 75 percent of those requested, in aggregate, b= y=20 the second compliance year, an additional year can be granted to generate= =20 reductions, thereby minimizing the need to further deduct future year=20 allocations.=20 ??????? RECLAIM Air Quality Investment Program (AQIP) Another short-term credit assistance program, the RECLAIM AQIP, is being=20 proposed for use by certain facilities through the 2004 compliance year. Th= is=20 program would be available for structural buyers, such as new facilities an= d=20 small facilities with installed controls at a minimum of BARCT. The RECLAIM= =20 AQIP would provide structural buyers additional compliance options to reduc= e=20 the overall demand for RTCs from the RECLAIM trading market. Facilities tha= t=20 request participation would pay $7.50 per pound of NOx to use the RECLAIM= =20 AQIP, if reductions are available. No deduction from allocations is propose= d=20 for this program since emission reductions must be available prior to use.= =20 The District is pre-funding the AQIP program with emission reduction credit= s.=20 The Governing Board has allocated $2 million from the AES Settlement Fund t= o=20 use to obtain emission reductions from marine vessels.=20 ??????? Other Rule Changes To help improve trade information, the proposed rules would require=20 identification of both the seller and buyer of RTCs after the completion of= a=20 trade. The rule includes registration requirements for pooled trading and= =20 contractual agreements for future transfer of RTCs. In addition, timely=20 filing of trades is proposed to help facilitate market information.
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