Break for energy companies.

With energy supplies tight and getting tighter in Southern California, the South Coast Air Quality Management District is considering giving energy producers a break.

With so many electrical generating facilities and other energy related projects under construction or coming on line in the L.A. area, there's been a run on emission reduction credits for sulfur oxide, particulates and carbon monoxide emissions.

Emission reduction credits (ERCs) are purchased by companies in lieu of installing expensive devices to reduce emissions; the proceeds go to fund other emission control programs at the district.

The shortage has greatly driven up the cost of these credits--if they are available at all.

Of course, this is exactly what regulators had initially intended to accomplish with the emission reduction credit program. Over time, as the price goes up, companies have more incentive to actually make the improvements to their plants.

But there's now a competing imperative: ensuring adequate energy supplies for the region. The need for more electrical power was vividly demonstrated during the recent heat wave.

So, at its September meeting, the air district board will consider a proposal to open up its reserves of emission reduction credits. The idea is similar to what happens when President George W. Bush decides to open up the nation's Strategic Petroleum Reserve to offset potential oil supply crunches: by opening up the reserve, more oil comes onto the market, helping to stabilize the price.

The AQMD took similar steps at the height of the power crisis in early 2001 but came under criticism from environmental groups who called the move tantamount to giving polluters a big break.

BY HOWARD FINE

Staff Reporter