----- Forwarded by Steven J Kean/NA/Enron on 02/28/2001 02:04 PM -----

	Mary Schoen
	02/27/2001 06:54 PM
		 
		 To: Steven J Kean/NA/Enron@Enron
		 cc: Janel Guerrero/Corp/Enron@Enron, Gus Eghneim/Corp/Enron@Enron, Marc 
Phillips/OTS/Enron@ENRON, Jeffrey Keeler/Corp/Enron@ENRON, Michael 
Terraso/OTS/Enron@ENRON
		 Subject: CA Emissions/Environmental Issues

Steve - We were hoping to provide a chart that plotted out the NOx emissions 
from existing fossil fuel generation vs, new cleaner generation.  This chart 
is not quite there.  However, it is a rough aggregate of the NOx generated by 
all of the existing fossil fuel generation over 50 MW in CA.  The data points 
were gathered from the EPA's Acid Rain CEMs (continuous emissions monitoring) 
database.  (I am working on a chart that's message is more clear.) As you 
will see, existing generation is significantly dirtier than what new, 
combined cycle plants would be.  In fact, of the utility units in CA 
reporting under Title IV, there are a number of steam plants with NOx 
emissions of 0.1 lb/MMBtu or in some cases more.  This corresponds to about 1 
lb NOx/MWh compared to 0.056 lb/MWh for a new gas combined cycle plant.  Even 
the cleaner boilers that are at 0.05 lb/MMBtu are 10 times higher than the 
new plants on an output basis.  

In otherwords, Dave Parquet is right that there is a lot of more polluting 
generation on line, while new plants have to meet ever tighter BACT 
requirements.



In the most recent version of SB 28 it looks like there are a lot of 
provisions focusing on the retrofitting of existing generation.  I suspect, 
the regulators are well aware of the discrepancies in emissions and would 
argue that the plants are going to have to clean up in the very near future.  
I am digging for more information on these timelines.

Gus, Marc, and I felt like the main short term fixes/solutions would be:

1.  Expanding the hours of operations for back-up generators.  (As I have 
previously stated, some of the local air districts have increased the 
permitted run hours for emergency generators from 200 to 500 at only 
"essential public services.")  

2.  CA requiring offsetting of emissions at only the ratios required by 
Federal regulations.  In many cases state requirements are more stringent.

3.  The EPA allowing the concept of the pollution mitigation bank - it is 
really going to be an issue of timing - once the CA government has the funds 
to start acquiring offsets they will be able to provide them prior to the 
operation of a new generation facility, However, there is going to be some 
initial lag time where the offsets aren't in the hands of the generation 
operators (which goes against the requirements of the Clean Air Act).

4.  The Feds working with the state and local permitters to create alternate 
sources of emission offsets.  There simply aren't enough in all the air 
districts.  As I stated, in my previous memo the USEPA has allowed, under the 
NOx SIP call, emissions allowances to be given to renewable and energy 
efficiency projects. CA is going to need guidance from the USEPA in how to 
create and count alternate sources of offsets in nonattainment areas.

5.  The USEPA better defining the nonattainment air sheds and pollution 
transportation pathways.  Apparently, there is not a central model of the air 
patterns in CA.  Thus, the 35 local air districts all having different 
requirements about inter-district offsets.

However, the real issues as Dave alluded to in his memo are going to require 
modifications to the Clean Air Act.  It is pretty prescriptive about what can 
and can't be done, and there is not a whole lot of flexibility.  

Let me know if anything in here is not clear.  I'm working on refining the 
data and presentation of the data.



Mary Schoen
Environmental Strategies
Enron Corp
713-345-7422