
Date: Fri, 11 May 2001 04:24:00 -0700 (PDT)
From: david.parquet@enron.com
To: sandra.mccubbin@enron.com
Subject: Re: California says clean air not power crisis cause
Cc: paul.kaufman@enron.com, susan.mara@enron.com, jeff.dasovich@enron.com,
sandra.mccubbin@enron.com, hgovenar@govadv.com, bhansen@lhom.com,
sgovenar@govadv.com, ksmith@kdscommunications.com,
rlichtenstein@marathon-com.com, syamane@marathon-com.com,
jkradin@marathon-com.com, susan.landwehr@enron.com,
leslie.lawner@enron.com, jennifer.thome@enron.com,
richard.shapiro@enron.com, mark.palmer@enron.com,
james.steffes@enron.com, jeffrey.keeler@enron.com,
mary.schoen@enron.com, samuel.wehn@enron.com,
kelly.brodbeck@enron.com
Bcc: paul.kaufman@enron.com, susan.mara@enron.com, jeff.dasovich@enron.com,
sandra.mccubbin@enron.com, hgovenar@govadv.com, bhansen@lhom.com,
sgovenar@govadv.com, ksmith@kdscommunications.com,
rlichtenstein@marathon-com.com, syamane@marathon-com.com,
jkradin@marathon-com.com, susan.landwehr@enron.com,
leslie.lawner@enron.com, jennifer.thome@enron.com,
richard.shapiro@enron.com, mark.palmer@enron.com,
james.steffes@enron.com, jeffrey.keeler@enron.com,
mary.schoen@enron.com, samuel.wehn@enron.com,
kelly.brodbeck@enron.com

Kenny's comments are absolutely false or, at best,  grossly misleading.  We
need to respond to him.

The NUMBER ONE problem we have in California that is delaying our proposed
power plant developments is securing ERCs.  My discussions with Calpine
indicate that ERCs are their biggest problem as well.  (And in case someone
hasn't noticed, the two most active developers in CAlifornia are Enron and
Calpine.)  Air quality laws are definitely slowing us down, and slowing
others down, which keeps the new, cleaner plants from being developed.  As I
have mentioned before, this is actually making air quality worse in that the
older, dirtier plants are running more.  Further, if you do the math, we will
probably never make up for the dirty air that is created by keeping the dirty
plants in business because of grandfathering, while the clean plants don't
get done because of ever more rigorous BACT standards and lack of ERCs.

Having said that, I do not agree that we should send a message that we want
to relax or suspend the standards.  (However, getting 2ppm plants on line,
which will put out of business the 100+ppm plants - as Calpine indicated to
me happened in Texas - makes the point that maybe a relaxation or suspension
is the environmentally appropriate thing to do.)  All in all, though, I
believe that sucha common sense approach will go nowhere in California
because the little people in the regulatory positions as well as the public
will make sure that we pay for such a message.  Having said that, I will
repeat the key things that we should be promoting, in my opinion:  1.)  stop
the EPA from tightening the BACT standards to ever increasing levels of
insanity.  (GE will not guarantee the present, and new, EPA requirement of
2ppm, which EPA "determined" with no new operating data.  They just did it
because they could.)  2.)  Stop making up rules for RACT adjustments.  (Kelly
Brodbeck is working very hard, for example, to develop a program in the Bay
Area to retrofit boats with clean burning engines to create ERCs.  A high
level staff guy at BAAQMD "believes" that we should be RACT adjusted,
probably making the program uneconomic.  There isn't even unanimity for this
position on his staff.  However, this position if it sticks is irresponsible
in light of the fact that the boats can just keep on doing what they are
doing.  We are creating ERCs, which the BAAQMD will take a portion of in
their haircut, and in using the ERCs, we will eventually put out of business
the dirtier plants.  So, our program gets RACT adjusted and the air gets
dirtier...)  3.)  Allow for payment of mitigation fees in lieu of buying
ERCs.  There is precedent for that, but this has to be run through the SIP
and the EPA.  Again, the in-lieu fees can be used for gov sponsored ERC
developments (e.g., electric lawn mowers, electric water heaters, etc.),
which will clean the air.  I am aware that Sandy is working with the CA
legislature on this.  Go Sandy!




