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Bush May Turn to Mexico for Energy by Associated Press Environmental News Network, January 26, 2001

President Bush is likely to bring up California's power problems in discussions with Mexico's president next month in hopes that Mexico will expand power plant construction so that more electricity can flow into the United States.

Officials acknowledge such initiatives will do little to address California's current electricity shortages. But it will be key to a broader Bush administration effort to promote a North American energy policy involving both Mexico and Canada.

Bush had said on several occasions during the presidential campaign that he viewed U.S. energy policy as transcending national boundaries. Two senior Bush aides said Thursday that Bush might suggest that Mexico allow more private U.S. capital to help build electricity plants and transmission lines, especially in Baja south of California.

Separately, officials said the Environmental Protection Agency was prepared to temporarily waive some federal air quality standards if they interfere in the full use of California's power plants. Such a waiver would be granted only if California requested it to ease some of its current air pollution rules affecting power plants.

The administration "would be favorably disposed" to such a request "if that's what they think they need," said Larry Lindsey, the president's chief economic adviser.

California Gov. Gray Davis said the state's air pollution requirements — some of the toughest in the country — have not hindered power production so far, but that he would ask for a waiver if the need should arise.

"I believe we can get more plants on line and still respect the environment," Davis said Thursday through a spokesman.

The state has made adjustments in air rules when needed to keep power flowing without requiring waivers, said Jerry Martin, a spokesman for the California Air Resources Board.

"Air quality has been a small bump in this energy crisis road," said Mike Scheible, the board's deputy executive officer. "Plants are operating and air quality permit restrictions are not limiting their production."

Two senior federal officials said Bush was expected to raise the issue of more energy imports from Mexico — including electricity into California — when he meets on Feb. 16 with Mexican President Vincente Fox, the first foreign trip Bush will make as president.

Some power already flows across interconnecting lines between Baja and Southern California, moving in both directions depending on circumstances. But Mexico's own power demands and little excess capacity has left little room for additional exports, energy experts said.

Maximum power plant production in Baja currently is 1,600 megawatts, but domestic demand is 1,200 megawatts, according to the North American Electric Reliability Council, an industry-sponsored group.

But U.S. power generating companies have expressed an interest in building electricity plants in Mexico, where some environmental regulations and permitting requirements are less stringent than in the United States.

While Mexico's electricity system is government-owned and operated, the Mexican government has eased its restrictions on allowing private development of generating plants. With growing electricity needs, Mexico wants to build 16 new power plants, some of which will export to the United States, according to Alfredo Elias Ayub, director of Mexico's electricity commission.

Construction on one of those plants is under way six miles south of the border in Baja, where a Boston-based conglomerate, InterGen Corp., is building a 765 megawatt power plant with about a third of the electricity for export. On average, one megawatt can power about 1,000 homes.

The natural gas plant is expected to be ready by 2003, although with the current power problems in California "we're looking possibly at accelerating" the schedule, said John Foster, InterGen's senior vice president for Latin America.

Bush and Vice President Dick Cheney, both former energy company executives, have said in recent interviews that they would like to see U.S. capital help develop more such plants in Mexico as well as expand shipments of Mexican natural gas into the United States.

Even with the less stringent permitting requirements in Mexico "it takes about two years to complete a major generating facility like this," Foster said in a telephone interview.