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Garbage Trucks May Carry PG&E Unit to Power Plant

Energy: Subsidiary will earn pollution credits by helping Waste Management run its vehicles on cleaner-burning fuel.

November 09, 2000|CHRIS KRAUL | TIMES STAFF WRITER

A PG&E Corp. subsidiary has struck a deal to outfit garbage trucks in San Diego to run on clean-burning liquid natural gas to gain pollution "credits" critical to erecting a proposed new power plant. The novel plan illustrates the lengths to which power producers will go to meet California's pressing need for electricity.

Generators seeking to meet the state's gaping electricity shortfall often confront a major obstacle: California's strict air-quality laws disallow power plants and heavy-industry factories unless their builders can offset the pollution the facilities produce.

Usually, polluters do that by buying so-called emissions credits from other companies that have reduced their pollution. Such credits have become increasingly valuable commodities and as such are traded over public exchanges where buyers and sellers come together to make a market, much as with gold, pork bellies or oil.

But PG&E's National Energy Group, the utility holding company's power plant development arm, proposes to gain its pollution offsets in a unique way: by balancing out the new plant's projected emissions by reducing vehicular pollution in San Diego County.

PG&E has proposed a $30-million program to replace 120 garbage trucks operated by Houston-based Waste Management Inc. with new models that use liquid natural gas instead of diesel fuel. The vehicles would be the first of potentially thousands that Waste Management could put in service as it replaces its diesel-powered fleet of 25,000 trucks nationwide.

The new vehicles would be built by Mack Trucks Inc. of Allentown, Pa., which Renault of France is in the process of selling to Swedish truck maker Volvo. PG&E's investment would include funds to build an LNG fueling station in El Cajon.

"There are a lot of challenges siting power plants in California but especially in San Diego," said Sharon Segner of PG&E, who said pollution levels there are heightened by winds that bring emissions to the region from the Los Angeles Basin.

Under terms of the program, PG&E would claim the pollution reduction resulting from the trucks as credits that it could then apply toward its proposed power plant, a 500-megawatt facility on San Diego's Otay Mesa. The credits have been dubbed "mobile emission reduction credits," or MERCs, and would be the first in the state derived from nonstationary polluters.

The LNG-burning garbage trucks would in essence create a credit for the 37 tons of nitrogen oxides per year they would no longer be emitting. That would give PG&E one-third of the emission credits it needs; the rest would come from offsets purchased from Solar Turbines Inc. and San Diego Harbor Excursions, a ferry boat operator on San Diego Bay.

Under terms of the San Diego proposal, 120 of Waste Management's 300 trucks in the county would be replaced gradually in the next two years, during which time PG&E hopes to get its power plant operating near the U.S.-Mexico border. The facility, big enough to light half a million homes, is one of 13 seeking approval from the California Energy Commission, the state agency responsible for licensing new power plant construction.

PG&E hopes to win the commission's approval for the project next month and begin construction immediately.

Speeding the power plant permitting process in California has become a high priority given the state's continuing electricity crisis. During the summer, wholesale electricity prices skyrocketed to as much as four times year-earlier levels, in large part because of a shortage of in-state power generation.

But the pollution offsets issue has become a complicating and time-consuming factor in plant licensing because of their increasing scarcity and high cost. Power plants that must buy credits to operate beyond permitted schedules are at times paying up to 100 times what they did a year ago. That run-up in prices in turn drives up the cost of electricity, while making it more difficult for new plants to get beyond the drawing board.

State officials are looking to the PG&E-Waste Management program, which came about through the cooperation of four state and federal agencies, as an innovative way to address the shortage.

"This is a precedent-setting program," said R.J. Sommerville of the San Diego Air Pollution Control District.

PG&E first proposed the new power plant in 1996; the facility would be the first major new source of electricity to be built in the county in 30 years. But the company was stumped by a shortage of credits, because San Diego-area businesses tend to keep them as a hedge for future growth, said Sommerville, an air pollution control officer.

Segner, the PG&E project developer who is leading the Otay Mesa program, said the company realized it would have to "charter an environmental precedent, to basically develop a new kind of program."

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