Extended to December 31, 2001

WHEREAS, District Rule 118 authorizes the Executive Officer to suspend all or part of any District rule or order for emergency activities in up to 10-day increments during a state of emergency declared by the Governor; and

WHEREAS, on January 7, 2001, the Governor proclaimed a State of Emergency resulting from the imminent threat of widespread and prolonged disruption of electrical power; and

WHEREAS, the Governor’s proclamation declared that a condition of extreme peril to the safety of persons and property within the state exists by virtue of the threat of disruption of electrical power, particularly disruption of power to emergency services, law enforcement, schools, and hospitals; and

WHEREAS, rapid availability of additional electrical power from facilities in the District is necessary to assure adequate power supplies to protect the safety of persons and property within the State of California; and

WHEREAS, on February 8, 2001, the Governor issued an Executive Order, D-22-01, which provides in pertinent part as follows:

IT IS FURTHER ORDERED that the Emergency Commission shall expedite to the extent feasible the processing of applications for certification for existing thermal powerplants that require retooling and a current license to operate. In order to bring such thermal powerplants online as soon as possible, the Energy Commission is authorized to reduce the time in which to conduct reasonable review of the application, consistent with the objectives of environmental protection and the protection of public health and safety.

IT IS FURTHER ORDERED that all local, regional, and state agencies involved in the licensing of proposed thermal powerplants in California shall work cooperatively and expeditiously with the Energy Commission and within its timeline to review all such Applications for Certification. All agencies shall diligently review such proposed license applications and provide timely comments to the Energy Commission as the Energy Commission requests, and

WHEREAS, the AES Huntington Beach Generating Station Units 3 and 4 Retool Project (AES) is one of the facilities referred to in the Governor’s Executive Order D-22-01, and the District has been working cooperatively and expeditiously with the Energy Commission to provide timely review of the project; and

WHEREAS, on February 8, 2001, the Governor issued an Executive Order, D-26-01, which provides in pertinent part as follows:

IT IS ORDERED that local, regional, and state agencies referred to in this Executive Order shall undertake the tasks described herein as expeditiously as possible for the purpose of accelerating the availability of new generation sources to the State.

IT IS FURTHER ORDERED that the Energy Commission shall take immediate steps as directed below and shall expedite its licensing process in the following ways:

The Energy Commission shall expedite the processing of Applications for Certification for peaking or renewable powerplants pursuant to Public Resources Code section 25705 for construction and operation by July 31, 2001 (later extended to September 30, 2001 under Executive Order D-28-01, issued on March 7, 2001).

IT IS FURTHER ORDERED that, in the interest of timely review and coordination, all local, regional, and State agencies involved in the licensing of proposed thermal powerplants in California shall participate to implement the State’s emergency energy facility siting process in an expeditious manner consistent with the objectives of environmental protection and the protection of the public health and safety.

WHEREAS, on April 20, 2001, the District amended Rule 1309.1 to allow powerplants to have temporary and limited access to PM 10 offsets from the District’s Priority Reserve bank provided such plants meet certain conditions, including reducing PM 10 pollution from other sources at the plant to BARCT levels, paying nonrefundable fees to enable the District to fund air pollution reduction projects, and entering into long-term contracts with the State of California to sell its power; and

WHEREAS, on May 10, 2001, the Energy Commission issued a decision approving final powerplant certification license to AES, which included a requirement to enter into long term contracts with the State; and

WHEREAS, on May 30, 2001, the District issued a final Permit to Construct to AES, which was conditioned to require AES to enter into long-term contracts for the sale of at least 50% of power generated by Units 3 and 4 to the State of California; such requirement necessarily having as a condition precedent the use of PM 10 offsets from the District’s Priority Reserve; and

WHEREAS, the State of California is presently no longer interested in entering into a long-term contract to buy power from Units 3 and 4; and the Energy Commission on July 11, 2001 has removed from its powerplant certification license condition requiring such long-term contracts; and

WHEREAS, AES has obtained the necessary PM 10 offsets and no longer requires use of the District’s Priority Reserve, thereby rendering any permit conditions based upon the use of the District’s Priority Reserve inoperable; and

WHEREAS, the District has not yet committed the fees paid by AES for use of the Priority Reserve PM 10 Offsets to any pollution reduction program; and

WHEREAS, the District intends to remove any permit conditions requiring AES to enter into long-term contracts with the State; and

WHEREAS, AQMD strongly encourages AES to negotiate mutually agreeable retail sales of power to local customers in the City of Huntington Beach, who could be directly affected by the emissions from Units 3 and 4; and

WHEREAS, AQMD is strongly committed to addressing the need by the City of Huntington Beach to assure that NOx emissions from AES are properly accounted for, and therefore AQMD agrees to timely provide the City of Huntington beach copies of the NOx annual and Quarterly Certification Emission Reports submitted by AES to the AQMD; and

NOW, THEREFORE, pursuant to the authority vested in me pursuant to District Rule 118(d)(1), and with respect only to AES Units 3 and 4 (Facility Permit ID No. 115389), I hereby suspend the requirement of Rule 1309.1(a)(4)(B) that fees paid by AES for use of PM 10 Priority Reserve offsets is non-refundable, provided that:

1. Until October 1, 2002, AES shall make existing simple cycle peaking gas turbines (Unit #5) available for power production only during periods in which the California Independent Systems Operators (ISO) has declared a Stage 3 electrical emergency and has specifically called-up Unit 5 to avoid an imminent blackout. After that date, Unit 5 shall be permanently removed from operation and permits surrendered unless it has been controlled to a NOx emissions limit of 5 ppmv at 15% oxygen on a dry basis or to a lower limit; and
2. AES agrees that the District will incorporate in the Facility Permit for Units 3 and 4, the Energy Commission’s license conditions AQ-2, AQ-6 and AQ-7, verbatim unless the City of Huntington Beach otherwise determines this to be unnecessary; and
3. AES shall perform additional source tests on Units 3 and 4, as approved by the District, four years after commencement of operation of Units 3 and 4 at two specified operational rates pursuant to the District permit conditions 29-1 and 29-3; and
4. AES shall have the continuous monitoring systems (CEMS) for Units 3 and 4, as required under district permit conditions No. 82-1 and 82-2, installed and operational as soon as practicable, but no later than 30 days from the date of initial commercial operation to sell electricity of each one of the Units 3 and 4; and submit to the District protocols for Units 3 and 4 CEMS certification testing as soon as practicable, but no later than 60 days from the date of initial commercial operation of each one of the Units 3 and 4; and complete all testing necessary to obtain CEMS provisional approval for Units 3 and 4 as soon as practicable, but no later than 30 days from the date of protocol approval; and
5. AES shall provide annual reports to the District stating the total amount of NOx emissions for the previous 12-month period from the Huntington Beach facility, the projected NOx emissions from the facility for the next 12-month period, and the allocation of NOx emissions under RECLAIM for the same reporting period.

This Order expires on August 27, 2001 at noon. However, it is the intent of the Executive Officer to renew this Executive Order until the State of Emergency declared by the Governor on January 17, 2001, ceases to exist.

IT IS SO ORDERED.

Executed at Diamond Bar, California, on August 17, 2001.

Barry R. Wallerstein, D.Env.

Executive Officer

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