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Officials Consider Pollution Angle by H. Josef Hebert, Associated Press The Oregonian, January 26, 2001

The Bush administration says it will let California bend air pollution requirements, but the state says that's unnecessary

WASHINGTON -- Hoping to ease California's electricity crisis, President Bush is prepared to let the state roll back its air pollution requirements on power plants, administration officials said Thursday.

Senior advisers also are exploring ways Mexico might increase electricity shipments into the state, although that might not be possible immediately.

California pollution control officials said environmental restrictions have not interfered in power plants operating at maximum capacity. They said the state already has made some adjustments in air rules -- when needed -- to keep power flowing and does not need a waiver.

White House press secretary Ari Fleischer said the administration was "reviewing a number of options" that might be helpful to California. The state has been reeling under high electricity prices, intermittent blackouts and the threat of utility bankruptcies.

He declined to elaborate.

But other senior officials said one idea was an Environmental Protection Agency waiver for California on air pollution standards, if one is requested to ease emission controls from 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 denied that environmental rules hinder energy production but said he would ask President Bush if the need should arise to relax regulations. "I believe we can get more plants on line and still respect the environment," Davis said through a spokesman.

Jerry Martin, spokesman for the California Air Resources Board, said about 40 percent of the plants have been used only sporadically and have no controls. For others, the state has made adjustments in air rules when needed to keep power flowing without requiring waivers, he said.

The state air board also has asked local air pollution control districts, which regulate power plants and other stationary pollution sources, to look for ways for plants approaching their emission limits to keep operating.

Separately, two senior federal officials said that Bush is expected to raise California's power problems with Mexican President Vicente Fox when the two leaders meet Feb. 16, in an attempt to spur construction of power plants in Baja California.

Possible expansion of electricity shipments from Mexico to California also might be discussed, but energy experts said Mexico faces its own growing power demands and probably will not want to expand shipments north.

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.

Senior Bush advisers have emphasized all week that there is no "federal panacea" to the California energy crunch and that a solution has to be crafted by state officials. Bush has rejected requests, including some from California's GOP lawmakers, for price controls on wholesale electricity.

While critics have blamed California's stringent air pollution regulations for some power problems, state officials insisted Thursday that the smog requirements have not kept power plants from running at full throttle.

"Air quality has been a small bump in this energy crisis road," Mike Scheible, deputy executive officer of the California Air Resources Board, said in an interview. "Plants are operating and air quality permit restrictions are not limiting their production."

In recent weeks as power generators faced pressure to produce as much power as possible, some California plants were close to violating air restrictions. But Scheible said arrangements were made to keep the plants from having to power down.

For example, he said, when a plant owned by the AES Corp. exceeded allowable smokestack emissions, an agreement was reached to keep the plant operating in exchange for a commitment to install new pollution control equipment in the future. However, the company also was fined $17 million for pollution violations.

A similar arrangement was made involving a Los Angeles Department of Water and Power plant and several other plants, Scheible said.

Such arrangements needed no federal waiver because they will produce cleaner air in the future and not jeopardize federal requirements for reducing smog by 2010, officials said.

As for the prospects of more electricity from Mexico, energy experts viewed that as being of little immediate help. Mexico sends a small amount of electricity into southern California, but it also imports power from the state to meet its growing demand, especially in Baja.