Coastal Plants’ Discharge Fees Soar

By Published On: September 23, 2011

To cover a State Water Resources Control Board budget deficit created by lawmakers, water-cooled power plant owners are to pay dramatically higher discharge fees. The Water Board Sept. 19 approved a 60 percent discharge permit fee hike for utilities and generators that own 17 once-through water-cooled coastal power plants. “That’s a lot of money to ask one industry to bear,” Jesus Arredondo, an energy consultant representing Dynegy, said. The Water Board—on a 2-0 vote, with one abstention—increased wastewater discharge fees for power plants from $250,000/year to $400,000/year for fiscal year 2011-12. Storm water permit fees and other related surcharges raise the costs another $100,000/year, boosting total fees to half a million dollars, according to Arredondo. Dynegy owns the 1,020 MW Moss Landing and 650 MW Morro Bay plants. The company has also been looking for a buyer for its assets for the last year. Southern California Edison pays double that amount for its 2,150 MW San Onofre Nuclear Generating Station. Its discharge fees rose to $800,000 because the facility has two permits on its two plant intakes, according to Paul Asti, Edison manager of corporate environmental policy. Charles Hoppin, board chair, said the permit cost increase “does weigh on me.” He and the other voting board member said, however, the budgetary transfer of funds left them little choice. The Water Board faces a $27. 6 million budget shortfall for fiscal year 2011-12, with a $19.7 million deficit in the board’s National Pollutant Discharge Elimination System permit program. The latest state budget approved by lawmakers eliminated General Fund money directed to the Water Board. That forced the agency to cover its costs solely through permit fees on regulated businesses. Coastal power plant owners “subsidize” discharge fees for other industries, according to Julie Gill, AES Energy director of regulatory affairs. AES has 3,900 MW of coastal power plants in Huntington Beach, Alamitos, and Redondo Beach Coastal power facilities bear about 30 percent of the cost for funding the shortfall in the Water Board’s National Pollutant Discharge Elimination System program. The annual permit cost revision is based on the millions of gallons/day of permitted discharges, but is capped at a specified flow. In previous years the caps were lower, except in 2008. Water-cooled power plants use far more flow than other permitted industries. The biggest dischargers are the state’s two operating nuclear plants—Edison’s 2,150 MW San Onofre facility, and Pacific Gas & Electric’s 2,160 MW Diablo Canyon. Those plants together are permitted to use 5 billion gallons/day of coastal water to cool spinning turbines. The Water Board’s new “fee for 2011-12 is $1,606 plus $2,840 multiplied by permitted flow, as measured in millions of gallons of discharge per day, with a maximum fee of $401,568 plus applicable surcharges,” according to agency spokesperson George Kostyrko. The fee is capped at a maximum flow of 140 million gallons/day with 23 facilities currently exceeding that level, he added. Discharges beyond the cap are not subject to the levy. The National Pollutant Discharge Elimination System permits for the once-through cooled power plants are out-of-date, but are extended on an interim basis annually. That’s because they’re intertwined with the Water Board’s policy to phase-out once-through cooling at state power plants. Last year, the board voted to require plant retirements or retrofits by set dates to curb the amount of flow pulled into the units by 93 percent to lessen their impacts on the coastal environment. The board’s discharge fee aimed at addressing the revenue shortfall may leave even more of a loss to the Water Board’s budget when, under state policy, power plants are upgraded or retired, thus reducing discharged water significantly. The permit fee for one of AES’ repowered units at Long Beach, for example, is expected to drop from $141,160/year to $10,408/year with the reduced intake, according to Gill. Power producers and the Water Board have disagreed over annual permit fee hikes since 2008. The average permit fee first soared from $100,000/year in 2007 to $700,000/year for generators when the fee cap was lifted in 2008, according to Arredondo. For instance, AES was hit with a 442 percent increase “while many permit holders enjoyed an 82 percent reduction,” Gill pointed out in a June 26 letter to the board. After the fee hike three years ago, a group of generators sued the Water Board. The board agreed to create a working group to delve into the matter and the lawsuit was dropped. After considerable stakeholder collaboration, the staff and board agreed to continue to base the fee on the amount of flow, i.e., gallons of coastal water released from the plants per day, over generators’ continued objections. Water Board member Tam Doduc’s proposal directing staff to audit and set up fee accounting criteria was adopted this week.

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