BOARD MEETING DATE: March 5, 2004
AGENDA NO. 9

Approve Changes to Microturbine Program Funded by 1309.1 - Priority Reserve Mitigation Fees

SYNOPSIS:

The Board previously authorized the Executive Officer to purchase and install 63 microturbines using Rule 1309.1 - Priority Reserve mitigation fees. Forty-two were to be installed in Los Angeles County and seven were to be installed in each of the counties of Orange, Riverside and San Bernardino. This proposal would: 1) allow the Executive Officer to locate more microturbines in any of the four counties for worthwhile projects; and 2) return $1,000,000 back to the Rule 1309.1 - Priority Reserve Fund

COMMITTEE:

Technology, February 27, 2004, Recommended for Approval

RECOMMENDED ACTIONS:

1. Authorize the Executive Officer to locate more of the sixty-three microturbines funded by Rule 1309.1 - Priority Reserve mitigation fees at worthwhile projects in any county than the numbers previously authorized by the Board on October 19, 2001.
    
2. Transfer $1,000,000 authorized for microturbines back to the 1309.1 - Priority Reserve Fund

Barry R. Wallerstein, D.Env.
Executive Officer

Background

AQMD’s Rule 1309.1 -Priority Reserve allows new electrical generating facilities that meet certain criteria to offset their PM₁₀ emissions using PM₁₀ emission offsets from the Priority Reserve, upon payment of a mitigation fee of $25,000 per pound of PM₁₀ per day. On October 19, 2001, the Board authorized the expenditure of $6.2 million of these mitigation fees for the purchase and installation of 63 microturbines throughout AQMD. Forty-two of the microturbines were to be located in Los Angeles County, whereas seven would be located in each of the counties of Orange, Riverside and San Bernardino.

Eight potential sites in Los Angeles County have withdrawn from this microturbine program because of rising natural gas costs, and reduced electrical savings. Worthwhile projects exist in the other counties, such as at the University of California, Irvine in Orange County and the Eastern Municipal Water District in Riverside County, but they would exceed the limit of seven microturbines set for these counties.

Because of cost sharing of installation costs by the recipients of the microturbines, less than the authorized $6.2 million will be required to complete the program. At least $1,000,000 will be available for other projects.

Proposal

Staff proposes that for worthwhile projects, the Executive Officer be allowed to distribute more of the sixty-three microturbines in any individual county than the numbers previously authorized by the Board on October 19, 2001.

In addition, staff recommends that $1,000,000 of the Rule 1309.1 mitigation fee funds authorized for the microturbine project be returned to the Rule 1309.1 - Priority Reserve Fund for use in other projects.

Benefits to AQMD

Changing the distribution of microturbines will result in the same benefits to AQMD. Transfer of the $1,000,000 will enable additional emission mitigation projects to occur.

Resource Impacts

Changing the distribution of microturbines will have no resource impacts. Transfer of the $1,000,000 will reduce funding for microturbines, but make it available for other emission mitigation projects.

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