AQMD Seeks Pollution Abatement Order for AES Powerplants.

Business Editors

DIAMOND BAR, Calif.--(BUSINESS WIRE)--Nov. 16, 2000

The South Coast Air Quality Management District last evening filed a petition for a pollution control order for three AES Corp.'s electric powerplants operating in the Southland that are exceeding their pollution limits.

Under the order, AES would be able to operate the three facilities to ensure an adequate supply of electricity to the region during any stage one, two, or three alert declared by the California Independent System Operator, which manages the state's deregulated power grid. Stage one, two, and three alerts are when excess generating capacity falls below 7%, 5%, and/or reaches 0%, respectively.

"We want to ensure that all Californians have an adequate supply of electricity," said AQMD Executive Officer, Barry Wallerstein, "So our order will allow the company's plants to operate whenever their electricity is needed for power alerts until needed controls are installed and the company is in compliance with air pollution control regulations. Then the company will no longer be subject to an abatement order."

AQMD is petitioning its Hearing Board -- an independent administrative law panel -- for an order of abatement that ultimately will require AES to install catalysts or equivalent controls to reduce emissions of nitrogen oxides. Powerplants produce nitrogen oxides when they burn natural gas to generate electricity.

Nitrogen oxides are primary components of the region's air pollution, contributing to nitrogen dioxide, ozone during the summer months, and fine particle pollution throughout much of the year. An ongoing health study by the University of Southern California shows that breathing fine particles and acidic gases stemming from nitrogen oxides diminishes the lung function of children growing up in the region.

AQMD is seeking the abatement order after reports filed last week showed that AES exceeded its emissions limits during the summer quarter ending Sept. 30. Under AQMD's Regional Clean Air Incentives Market program, major facilities must either keep emissions under their respective limits, which decline each year through 2003, or purchase credits from excess emissions reductions at other facilities. The market-based pollution reduction program was adopted in 1993.

"Electric utility operators have known for years that they would need to install control equipment, but have waited until the eleventh hour," said Wallerstein. "Lack of advance planning is not an excuse to emit excessive levels of air pollution."

AES exceeded its nitrogen oxides emissions limit at the company's Los Alamitos generating plant by 199 tons. Credits to cover excess emissions at the company's Redondo Beach and Huntington Beach facilities are virtually depleted. AQMD expects that, by next summer, the three AES plants will have exceeded their aggregate nitrogen oxide emission limit by more than 1,000 tons.

Immediately after filing the petition for an abatement order, AQMD issued a notice of violation to the company's Los Alamitos facility for exceeding its nitrogen oxide emissions limit.

Pending the efficacy of a compliance plan AES is expected to submit tomorrow, AQMD may file a civil lawsuit in Los Angeles Superior Court seeking some $20 million in civil penalties for the health and environmental damage caused by excess emissions from the Los Alamitos plant over the summer.

"Unless AES comes into compliance expeditiously," Wallerstein said, "AQMD may issue additional notices of violation to the other powerplants and seek additional penalties."

Since the late 1980's, AQMD has had the region's electric utilities under requirements to control nitrogen oxide emissions. In 1993, the original 1996 retrofit requirement was subsumed under AQMD's Regional Clean Air Incentives Market program -- which allowed flexibility in meeting emissions reduction requirements and allowed emissions trading.

However, as the program's emissions reduction cap has declined and the final cleanup deadline nears, the supply of credits has become tighter and more expensive.

This past summer, Wallerstein noted, AQMD placed the Los Angeles Department of Water and Power under a mutually negotiated abatement order requiring emissions controls. AQMD also won substantial penalties for the DWP's excess emissions that will be used in supplemental environmental projects to control pollution in the region.

In the AES case, AQMD anticipates its Hearing Board will consider an abatement order toward the end of November. The hearing date will be announced.

The electric utility industry is a major source of pollution in the region, emitting up to 5,000 tons per year of nitrogen oxides, which is about 23% of total nitrogen oxide emissions from stationary sources covered by the Regional Clean Air Incentives Market program.

"With demand for electricity climbing, pollution from powerplants will increase unless the industry quickly installs controls," Wallerstein said. "That's why we're moving expeditiously to assure both adequate power and cleaner air."