South Coast Air Quality Management District

Approve Expenditure Plan for One-Time Revenue

SYNOPSIS: 

AQMD has settled two cases for a combined $31 million. This action is to approve the Executive Officer’s recommended expenditure plan for these one-time funds.

COMMITTEE: 

Administrative, February 9, 2001, Recommended for Approval

RECOMMENDED ACTION:

Approve the Executive Officer’s expenditure plan for one-time revenue of $31 million.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Last year, the Los Angeles Department of Water & Power (DWP) anticipated that it would deplete its reserve of RECLAIM NOx trading credits for the Cycle 1 compliance year due to sale of excess generating power. Such activities helped the California electric grid to reduce the risk of blackouts for the state. The California Independent System Operator requested this action. Consequently, DWP had insufficient remaining RECLAIM trading credits to both support the California grid and to serve its customers without violating District Rule 2004, which prohibits emissions in excess of a source’s annual RECLAIM allocation. DWP voluntarily entered into a stipulated Order for Abatement to resolve the matter. As part of that settlement, DWP is to pay a sum not less than $14,000,000 to be used entirely for supplemental environmental projects.

In December, AQMD and AES Alamitos, LLC entered into an agreement to settle violations by AES of the year 2000 RECLAIM NOx allocation as set forth in a Notice of Violation issued to the company. In addition to various obligations imposed on AES to install control equipment and permit changes, the agreed settlement included the payment of a civil penalty in the sum of $17,000,000, to be paid $13M within thirty days of the mid-December agreement, and $4M on or before July 1, 2001.

Proposal

The Executive Officer proposes the follow expenditure plan for the one-time revenues from the AES and LADWP settlements:

AES $17 Million

    Natural Gas Fueling Station Infrastructure with Public Access
        (Four County Region)                                                                                           6.0

    RECLAIM AQIP Pre-Funding (Loan)*                                                                    3.0

    Eliminate Permit Backlog (Hire Temporary Employees or Contractors,
        Senior Engineering Manager, Two Senior Engineers)                                            *2.5

    Litigation Defense and Prosecution Fund (Outside Counsel and
        Special Consultants)                                                                                              2.0

    Enhanced Education and Outreach to Black, Hispanic and Asian Communities,
        (Multimedia/Two-Year)                                                                                         1.5

    Adopt-A-School Bus Foundation Program                                                                 1.0

    Inland Empire Initiatives Reserve                                                                                0.5

    University of California Air Quality Fellowships
        ($166,000 Each to UCLA, UCI and UCR Graduate Students)                               0.5

    TOTAL                                                                                                                 $17.0**

*Returned monies from activities will be subsequently reallocated by the Board to other projects, including consideration micro-turbine commercialization in Orange, Riverside and San Bernardino counties.

**Interest earned on monies prior to expenditure will be allocated to a fund for completion of the third floor north to increase tenant space within AQMD Headquarters and to provide long-term additional revenue.

LADWP $14 Million

    Natural Gas Fueling Station Infrastructure with Public Access
        (LADWP service area)                                                                                            6.0

    Micro-Turbine Development and Commercialization Projects within the
        City of Los Angeles (e.g., Distributed Power Generation and Motor
        Vehicle Application)                                                                                                6.0

    Advanced Fuel Cell Demonstration Project to Charge a Large Electric Fleet
        (Site to be selected in July 2000)                                                                             1.4

    Cools Schools/Tree People Project (City of Los Angeles /
        San Fernando Valley)                                                                                              0.35

    Taxi Advertising Program (San Fernando Valley/Burbank Area)                                   0.25

TOTAL                                                                                                                         $14.0

Upon Board approval of an Expenditure Plan for the above one-time revenues, staff will proceed with contracting through the AQMD’s standard procedures.

Fiscal Impacts

Funding for the proposed projects is from an unanticipated increase in penalty and settlement revenue.

Attachments

None

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