Air Board May Delay Collecting AB 32 Fee

By Published On: August 28, 2009

California plans to raid other state funds rather than levy an AB 32 fee to collect more than $60 million this year from power plants and other emitters of carbon dioxide and greenhouse gases. The California Air Resources Board also is preparing changes to its proposed fee that would affect the power industry when it is collected next year. On August 25, the agency’s staff revealed that the Air Board may not collect the first AB 32 administrative fee this year as originally planned. “We may delay invoicing fee payers until the 2010-11 fiscal year,” announced Jeannie Blakeslee, the Air Board lead staff member on the proposed levy. Power industry representatives had no immediate reaction to the latest delay or to the proposed fee changes. However, at least one public health group questioned the announcement. The global warming program should be funded with a dedicated fee “as soon as possible” to avoid short-changing other environmental programs in California, according to Bonnie Holmes-Gen, American Lung Association of California senior policy director. Blakeslee argued it was more convenient for the state to begin collecting the fee at the outset of a new fiscal year than at the midway point. Under the revised fee proposal, the Air Board would levy its administrative fee on the power industry based on a “first deliverer” approach, according to Blakeslee. A fee averaging 8.8 cents/MWh would be collected both for imported power and electricity made in state when it crossed the busbar, the Air Board noted. Previously, the agency planned a fee on each MWh of imported power, but was going to base its fee for in-state power on fuel use. Co-generators would continue to pay a fee based on fuel use. Originally, the vote on fees was set for June. Under pressure from business representatives who questioned whether the proposed fee is fully justified by actual AB 32 expenditures, the California Air Resources Board delayed action on the levy (Circuit, June 26, 2009). AB 32 authorizes the Air Board to collect enough money through fees on greenhouse gas emitters to cover the costs of implementing the state’s climate change program. However, the Air Board and other state agencies involved in AB 32 plan to borrow $35 million from the state’s Beverage Container Recycling Fund. That’s up from last fiscal year’s loan of $32 million from the recycling fund. In the first year of the AB 32 program, fiscal 2007-08, the state borrowed $15.5 million from the Motor Vehicle Account. It also reprogrammed $8.5 million from the Air Pollution Control Fund. The Air Board and other agencies involved in AB 32 must pay back the borrowed money to the other state funds with interest. The state uses the Beverage Container Recycling Fund to promote conservation of glass, metal, and fossil fuels used to make plastic by encouraging recycling and developing markets for recycled products. The AB 32 fees--which also would be levied on gasoline, diesel, natural gas, and the small amount of coal used in California--are aimed at raising $63.1 million in fiscal 2010-11, including $36.2 million to cover projected program costs, plus $26.9 million to begin repaying the money borrowed from state funds. Under the Air Board’s plan, loans for the AB 32 program from other state funds would be fully repaid in 2014. The Air Board is set to adopt the fee after a public hearing slated for September 25.

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