• AQMD Adopts Pollution Reduction Plan for Power Plants
• Slightly Increased Budget Adopted for Coming Fiscal Year
• Selection Procedure Adopted for Clean School Bus Funds

Responding to the state's power crisis, air quality officials adopted several changes today to the region's pollution credit trading program to allow power plants to generate more electricity while minimizing their impact on the environment.

"We are doing our part to keep the lights on in California," said William Burke, chairman of the South Coast Air Quality Management District. "We are granting additional flexibility to power plants so they can help meet the tremendous demand for energy.

"In return, power plants will be put on a fast-track schedule to reduce their emissions by installing state-of-the-art pollution controls."

At its regular monthly meeting Friday, AQMD's Governing Board unanimously adopted several changes to its RECLAIM credit trading program to ensure the program meets its pollution reduction goals and to provide relief from the high emission credit prices many businesses have faced since last summer.

Specifically, AQMD took the following actions:

• Power plants will be separated from the rest of the RECLAIM market until at least 2004;
• Power plants will be put under enforceable plans that require them to install pollution control equipment over the next two to three years;
• Power plants will pay into a mitigation fund for any excess emissions at the rate of $7.50 per pound of pollution; and
• AQMD will use this money to reduce pollution by cleaning up equipment at the ports and other areas – like tug boats, yard hostlers used to move containers in shipping yards, trash trucks, and agricultural water pumps. This will provide permanent reductions in emissions of both smog-forming pollution and cancer-causing diesel soot.

"This mitigation fund will allow us to start cleaning up some of these dirty diesel trucks and equipment that have so far escaped air pollution regulations," Burke said.

AQMD adopted RECLAIM, the REgional CLean Air Incentives Market, in 1993 as an innovative way to reduce emissions from the Southland's largest facilities. There are currently about 360 facilities in RECLAIM including power plants, oil refineries and other manufacturing plants.

At the outset of the program, each facility was given an annual emissions limit, which decreases each year through 2003. Firms that emit less than their respective limit may sell RECLAIM Trading Credits to firms that emit more than their limit. As long as total emissions from all of the firms stay under the aggregate limit, the region’s air becomes cleaner and businesses gain regulatory flexibility and potential cost savings.

All went well until last summer when the supply of emissions credits grew tight as power plants in the region operated at record levels to meet the state’s demand for electricity. Power generators purchased most of the available credits, causing prices to rise and become unaffordable for some other businesses in the region.

Today's changes to the RECLAIM program are designed to increase the supply and reduce the price of credits, as well as minimize any emission increases due to power plants increasing electricity production in response to the energy crisis.

"These changes to RECLAIM will preserve the regulatory flexibility and cost-savings of our region's innovative market-based pollution control program, while assuring that we meet our air quality goals," Burke said.

For further information, see the Board item or contact Elaine Chang at (909) 396-3186

The Board adopted a $96.1 million budget for the upcoming 2001-02 fiscal year, an increase of about $800,000, or 0.8%, over the current year’s budget, including mid-year amendments. Key priorities for the coming year will be to:

• Improve efficiency and productivity;
• Carry out Board initiatives; such as the environmental justice program and senior’s and children’s air quality agendas;
• Implement the fleet rules;
• Reduce the permit backlog;
• Continue to carry out the regional clean air plan; and
• Address air quality issues related to the energy crisis.

For the first time in a decade the budget projects a balance between expenditures and revenues. AQMD has operated at a deficit by tapping reserve accounts since a major downsizing the early 1990’s. This year’s budget provides for salary increases between 2% and 2.5% for AQMD’s various employee classes. A staffing level of 811 positions is authorized for next fiscal year.

To support the balanced budget, the Board adjusted AQMD fees in four major ways by:

• Increasing fees across the board by 3.7%, consistent with the California Consumer Price Index for 2000;
• Establishing a flat annual emissions fee of $75 for all facilities holding AQMD permits for the first 4 tons of emissions (The Board agreed not to increase this fee more than the California Consumer Price Index for at least three years.);
• Adjusting permit application fees to fully recover the cost of permit processing, as recommended by the California State Auditor in 1998 and again by the 1999 Fee Structure Study, carried out by the independent auditing firm Thompson, Cobb, Bazilio & Associates, PC; and
• Adjustments to gasoline station fees.

The Board approved a ranking and selection process for school districts applying for state funding to replace older diesel school buses with new compressed natural gas (CNG) and low-emitting diesel models.

AQMD also will re-open the application period for school districts applying for the funds from today until May 29.

Applications will be ranked on a point system that considers the severity of air pollution in the community, community income levels and other factors such as the local availability of compressed natural gas fueling stations. Funds will be distributed to Los Angeles, Orange, Riverside and San Bernardino counties in proportion to each county's population.

The state has provided $16.6 million for replacement of pre-1987 buses and AQMD has matched that funding with an additional $1.66 million. That is enough for about 100 CNG buses and 60 lower-emission diesel buses.

So far, 46 school districts and one joint powers authority have submitted applications for 454 CNG buses and 440 requests for low-emitting diesel buses.

The Board will consider approving applications at its June 15 meeting.

AQMD Home Page
This page updated: August 12, 2004
URL: http://www.aqmd.gov/news1/Governing_Board/Bs5_11_01.htm