Pollution threatens power project

Valley's lack of a plan to clean the air may delay San Joaquin plant.

By Mark Grossi
The Fresno Bee

(Updated Monday, January 13, 2003, 6:51 AM)

The San Joaquin Valley's murky air could foul the future of a $550 million power plant that would supply one-third of Central California's electricity needs.

The California Energy Commission's staff, concerned about adding more pollution to the Valley's air, won't recommend licensing the power plant near San Joaquin in west Fresno County.

A state spokesman says Valley and federal officials need to settle a dispute over air pollution reduction before the Energy Commission staff will recommend the project.

_____ Related item _____ • Last Gasp: A special report on air pollution in the Valley

The clash highlights the rising profile of air quality issues in the Valley, which ranks among the three dirtiest air basins in the country. The Valley already faces federal deadlines and possibly a delay in billions of federal road-building dollars over missed cleanup deadlines.

Now, at a time when a swiftly growing Central California needs more electricity, the issue has spilled into a crucial arena affecting expansion.

"We can't recommend [approval] at this time," said commission spokesman Chris Davis. "Air quality is at the heart of it."

The firm proposing the new natural gas-fired power plant, Calpine Corp., does not believe the recommendation will stop the project. Officials are optimistic that things soon will work out after discussions last week with federal regulators.

But federal regulators say they haven't decided yet if they buy Calpine's arguments, and the state Energy Commission staff won't budge until there is a green light over air concerns from the federal government.

What's the holdup? It's all about the common practice of buying rights to pollute -- emission reduction credits. The U.S. Environmental Protection Agency isn't sure all of the Valley's credits are valid.

The credits come from industry pollution reduction through cleaner technology, phasing out older equipment or other means. For instance, when an oil field business in Kern County installs new equipment and reduces several tons of pollution, the business receives a certain number of emission reduction credits. The credits can be sold to new or expanding businesses.

This tool is used throughout the country as a way to continue economic growth without exceeding a limit on air pollution. But the tool also helps clean the air because not every ton of reduction can be sold.

Large, new power plants must buy such credits to offset hundreds of tons of ozone-creating pollutants produced by even the cleanest natural gas plants.

Ozone, a corrosive gas that forms on warm, sunny days, is the main ingredient in smog. Over the past four years, the Valley violated the eight-hour or long-term ozone health standard more often than any other place in the country.

That's why the credits are in the spotlight.

Some Valley credits date back to the late 1970s, and they haven't been accounted for as part of a pollution reduction plan, said Matt Haber, senior energy adviser for EPA. Without a full accounting, federal officials worry about reintroducing pollution into the Valley's air.

According to the Clean Air Act, the accounting should be in an ozone cleanup plan, which has been a work in progress for years at the Valley district.

"We don't have a problem with Calpine's project -- there could be many ways to make it work," said Haber. "But we've been clear about what we want from the [San Joaquin] Valley Air Pollution Control District. Unless the district takes action on a plan, the old credits aren't usable."

The Valley's ozone cleanup plan could be months or years away from being completed, depending on a decision coming up this year. The district board must decide if it will volunteer for EPA's worst category of ozone offenders, which would give the Valley a few years to complete an acceptable plan.

If the district doesn't volunteer for the move, it will have to meet a series of deadlines starting in the next few months.

Either way, local officials say they have accounted for emissions credits in a rate-of-progress plan, another tool that demonstrates annual reductions in pollutants but is not as comprehensive as the ozone cleanup plan. The district approved a rate-of-progress plan in December.

The federal government's position amounts to an unwarranted sanction against the Valley, said Sayed Sadredin, director of permit services.

"They're basically saying you can't use these credits until you have an approved plan," said Sadredin. "That's not a sanction called for in law. It's their interpretation of the law."

EPA's position will affect about half of the credits in the Valley, Sadredin said. The Valley has banked about 7,300 tons of credits for ozone-making gases. The credits are currently selling for about $30,000 apiece.

Calpine purchased 600 tons of credits, but not all would be used for the San Joaquin power plant, project manager Mike Argentine said. He said he is confident the credits will pass muster with EPA, but he did not elaborate on how old the credits were.

Argentine said the proposed 1,060-megawatt plant would be capable of supplying 1 million homes, and it would help the Fresno area. Behind the San Francisco Bay Area, Central California is considered the second most vulnerable area in the state for electricity shortages, he said.

"We think we'll work through these issues," Argentine said. "We're hopeful we'll start the construction phase this spring."

The reporter can be reached at

mgrossi@fresnobee.com or 441-6316.