Report:

Stationary Source Committee

Synopsis:

The Stationary Source Committee met on Friday, May 23, 1997. Following is a summary of that meeting. The next Stationary Source Committee meeting is tentatively scheduled for June 27, 1997, at 8:30 a.m., in Conference Room CC8 (please note this is a different time from what was previously noticed).

Recommended Action:

Receive and file this report.

Mee Hae Lee
Chair, Stationary Source Committee

Attendance

The meeting began at 10:45 a.m. Present were Committee Chair Mee Hae Lee and Committee Members James Silva (departed 11:38 a.m.) and Nell Soto (departed 11:40 a.m.). In the absence of Committee Members Marvin Braude, Norma Glover, and Ron Loveridge, and pursuant to the Procedures for Standing Committees of the Governing Board , adopted March 8, 1996, Board Chairman Jon Mikels appointed himself and Board Member Cody Cluff as ad hoc members of the Stationary Source Committee for the May 23, 1997 meeting only.

Summary

The Committee reviewed the items on its agenda (attached). Comments were noted on the following items:

1. Exempt Compounds for VOC Definition

Stationary Source Compliance Senior Manager Dr. Anupom Ganguli briefed the Committee on Proposed Rules 102, 1106.1, 1151, 1171, and 1302. He discussed the background of the proposed amended rules, explaining that VMS and PCBTF compounds were added to the list of Group II Exempt Compounds in November 1995. The use of VMS and PCBTF compounds are restricted in Rules 1106.1 (Pleasure Craft Coatings), Rule 1151 (Autobody Shops), and Rule 1171 (Solvent Cleaning). In September 1996, Rule 1171 allowed VMS and PCBTF compounds for use.

In March 1996, the U.S. EPA delisted perchloroethylene as a VOC, and in November 1996 they delisted HCFC 225 ca, HCFC 225 cb, and HFC-43-10-mee as VOCs. In December 1997, NESHAP will apply to existing perchloroethylene degreasers.

Dr. Ganguli explained that, firstly, the proposal would amend Rules 1106.1 and 1151 to allow the use of VMS, PCBTF, and perchloroethylene and would amend Rule 1171 to allow the use of perchloroethylene. Secondly, the proposal would add perchloroethylene to the list of Group II Exempt Compounds (effective December 2, 1997), and add HCFC 225 ca, HCFC 225 cb, and HFC-43-10-mee to the list of Group I Exempt Compounds (effective the date of adoption). Thirdly, the proposal would transfer the "Clean Air Solvent" definition in Rule 1171 to Rule 102; and transfer the "Exempt Compounds, Ozone Depleting Compounds, and Volatile Organic Compounds" definitions in Rule 1302 to Rule 102. The last item is administrative in nature. Also discussed, was the elimination of Group I and II distinction for Exempt Compounds. This rule is scheduled for public hearing at the June 13, 1997 Board Meeting.

2. Green Carpet Permitting Program (12-Month Report)

A report on this program was given by Stationary Source Compliance Senior Manager Dave Schwien, who explained the AQMD’s success at expediting larger project permitting. The program is consistent with the Business Clean Air Partnership and Regulatory Reform initiatives for expedited permitting. Mr. Schwien said the AQMD worked with the California Council for Environmental and Economic Balance to develop the 12-month pilot program which was approved April 12, 1996.

Mr. Schwien said the proposal is providing an expedited permitting service for eligible large source projects. Project-specific AQMD/applicant teams (Green Teams) have been formed to establish schedules and standards and assess costs and savings. He further explained the service is available to specific large projects that meet future clean air standards, advance air quality technology, create jobs, or involve large capital expenditures.

Regarding implementation, the Committee was told that 20 inquiries have been received and five different companies have submitted 45 applications. These five projects represent an $83.3 million commitment to new construction. In addition, 172 new jobs will be created. Three of these companies have received Permits to Construct for their projects. Preliminary information indicates that AQMD costs exceed fees collected.

Mr. Schwien said staff recommends that the pilot program continue for another 12 months because the responses received from participants have been favorable, the area’s economy is improving, and several major projects are on the horizon. The low level of program participation to date has not provided adequate time to assess program performance and cost comparison data. In addition, there have been no submittals yet from Certified Permitting Professionals who are expected to produce more complete applications that may further reduce AQMP processing time and cost. The Committee recommends that this item be submitted to the full Board to consider program extension.

3. Advisory Committee for RECLAIM Progress Report

Stationary Source Compliance Senior Manager Pang Mueller reported on the establishment of the Advisory Committee for RECLAIM. Ms. Mueller told the Committee that pursuant to California Health and Safety Code Section 40440.2, "an advisory committee shall be established by the AQMD Governing Board on or before July 1, 1997. The committee will review the RECLAIM progress report for the first three years of program implementation, to be submitted to the Governing Board by July 1, 1998." The Health and Safety Code further states that this advisory committee be composed of representatives from specified industries and types of institutions. Staff’s preliminary proposed membership list for the committee was submitted. The Committee recommends that this item be submitted to the full Board to consider for adoption.

4. Report to the Board on the Permit Enhancement Pilot Program (PEPP)

This report on permit service improvements was presented by Stationary Source Compliance Manager Gary Dixon. Mr. Dixon said the first area for improvement was reducing filing errors. Simplified instructions, updated application forms, equivalence tables, and application checklists, as well as a fee calculation worksheet, were introduced to help minimize filing errors. In addition, technical and administrative assistance is available in the lobby Permit Services Center, and response letters are sent to the applicant updating them on the progress of their applications or notifying them of areas of deficient information.

Another improvement is providing over-the-counter (OTC) service, which includes filing and technical assistance for permit applications, CEMS certifications, help with AQMD Rules and Regulations, source tests, plan submittals, and walk-up help with individual problems to expedite processing.

Improvement has also been made by providing increased information to applicants. Mr. Dixon reported that application forms and instruction sheets have been included on the AQMD’s Home Page for remote access by applicants. The Web Actuated Request for Permits (WARP) programming was implemented to allow limited permit application filing over the Internet. Extensive public outreach activities helped inform applicants about PEPP and to encourage participation. Public consultation meetings and a fee calculation workshop have been conducted and a telephone survey is being conducted.

Mr. Dixon told the Committee that staff recommends continuation of PEPP through the end of calendar year 1997 to fully assess the following planned improvements: expansion of OTC permitting to include additional equipment and application types; further simplification of applications and instructions; establishment of customer-accessible computers in the lobby for permit and data entry; expansion of WARP to include a greater variety of equipment types; and to conduct an additional public consultation meeting in the fall to obtain further customer feedback. Staff will report back to the Board, in January 1998, on the effectiveness of PEPP, and provide recommendations on the program.

Committee Chair Mee Hae Lee asked staff if the forms and instructions are available in other languages and, if not, was this feasible. Staff agreed to look into this and report back. The Committee recommends that this item be submitted to the full Board for consideration.

5. Briefing on the Electric Industry Deregulation

Stationary Source Compliance Senior Manager Mohsen Nazemi gave a slide presentation regarding deregulation issues. The original intent of deregulation was to provide customers a choice of electric suppliers and create a competitive market to reduce electric rates. Negotiations took place with the California Public Utilities Commission (CPUC), and a final recommendation was provided in December 1995 by the CPUC and was subsequently codified into state law in September 1996 with Assembly Bill 1890. Mr. Nazemi said the reason the deregulation came about was the cost of electricity that’s generated for California customers. California is one of the top six most expensive states in terms of what it costs to supply or generate electricity to users. Also, California is the second largest per capita consumer of electricity. When these two considerations are looked at together, the customers in California pay the highest cost for electricity than any other state.

Mr. Nazemi explained that the suppliers of electricity in California are Southern California Edison (SCE), Pacific Gas and Electricity (PG&E), and San Diego Gas and Electricity (SDG&E), which make up approximately 80% of the supply. The deregulation was intended to open the market up and allow the competitive market to determine the cost of electricity. One thing to keep in mind, Mr. Nazemi said, is that the three largest suppliers in California do not always generate all their electricity themselves. They may also purchase some of the power they provide. He said that the utility deregulation applies to investor-owned utilities (IOUs); provides direct access for residential, commercial, agricultural, and industrial facilities (1998-2002); and anticipates reduced electric rates by 20% by 2002.

Restructuring of the utility industry, Mr. Nazemi continued, separates utilities into three groups: generation companies (Genco’s), transmission companies (Transco’s), and distribution companies (Disco’s). The deregulation encouraged utilities to sell off up to 50% of their fossil generation. The two largest suppliers in California (PG&E and SCE) have stepped forward and PG&E has offered four of their plants in California (about 50% of generation capacity) and SCE has announced that they are selling all 12 of their plants as part of this deregulation scheme. The CPUC will no longer be regulating generation rates and utilities may purchase power on the open market. Being formed as part of deregulation, is an entity named the Western Power Exchange (WEPEX). WEPEX is similar to a stock market where you can actually bid for power at the cost you can afford and they will do the bidding for you.

Transmission companies are being regulated by a new entity also, known as the Independent System Operator (ISO). The CPUC does not regulate transmission rates and ISO is responsible for transmission system operation and reliability (system dispatch). WEPEX and ISO are governed by an oversight board made up of five appointees (three Governor appointees, one member of the Assembly, and one member of the Senate). This oversight board appoints the ISO Governing Board and the WEPEX Governing Board. What is left for the CPUC to control are the local distribution companies. Each IOU is regulated as a local distribution company.

Mr. Nazemi explained that changes to expect are: utility plant divestiture (already explained), potential change in plant operations, potential change in types of new power plants, and potential change in the level of electrical demand. He said that consumers can expect lower rates, more choices for an electricity supplier, and aggressive marketing for business. Eventually, lower rates are expected (by 2002, approximately 10-20%). Utility customers’ options will include power generators, WEPEX, their present distributor, and power wholesalers. Further reports on this item will be brought back to the Board periodically, Mr. Nazemi said.

The meeting was adjourned at 11:45 a.m.

Attachment

May 23, 1997 Committee Agenda (without its attachments)