State Pushes to Decide Merger Before '91 : Pollution: The Public Utilities Commission has increased local officials' worries about an increase in smog.

By KENNETH R. WEISS

July 15, 1990 12 AM PT

TIMES STAFF WRITER

State authorities are rushing toward deciding if Southern California Edison can merge with a San Diego utility, despite expected increases in chest-burning, eye-watering smog in Ventura County and other places.

The state Public Utilities Commission wants to rule by the end of the year whether Edison can consolidate with San Diego Gas & Electric to become the largest privately owned utility in the nation.

By ignoring pleas of opponents for a lengthier review period, the PUC has intensified objections to the merger across Southern California. In San Diego, city and union leaders protest the loss of local control and thousands of jobs if Edison shifts generation of electricity from older San Diego power plants to more efficient ones in Los Angeles and Ventura counties.

In Ventura County, a growing chorus of city leaders and environmentalists complain about the extra electrical load at two power plants at Ormond Beach and Mandalay Bay, which would add hundreds of tons of pollutants every year to the county’s dirty air.

The county’s level of ozone, the primary component of smog, is already the fourth worst in the state and sixth worst in the nation--failing clean air standards set by the state and federal governments.

Any increase in air pollution from the merger is of particular concern to Simi Valley, Ojai and other cities that collect the highest concentrations of smog trapped between the mountains and the prevailing breezes off the ocean.

“We can’t get any worse,” said Simi Valley Mayor Greg Stratton, whose city has the worst air quality in the county. “We have to get better.”

Despite such concerns about air pollution, the PUC has said it is determined to decide the fate of the merger before January, when the terms of two of the five board members expire. The current board members were all appointed by Gov. George Deukmejian, and new members will be appointed by the new governor.

Ordinarily, the PUC gives all parties weeks to comment on every stage of a major project. But in this case, the commission tightened its schedule, prompting complaints from environmentalists and government agencies.

The hurried pace of the PUC spurred the Ventura County Board of Supervisors last month to sign a quick agreement with Edison on some pollution controls. In return, the county, which does not have veto power over the PUC’s decision but can influence it, lifted its objection to the merger.

If the merger goes forward, the agreement would allow hundreds of tons of additional pollutants to be emitted from the two local plants in each of the next four years. In exchange, Edison would help the county achieve long-term reductions in air pollution by paying companies to convert to cleaner sources of energy.

In the past few weeks, county air pollution control officers have been put in a awkward position of defending the agreement with Edison before various city councils. In the eyes of some environmentalists, the pact with Edison is the moral equivalent of dancing with the devil.

“It seems like the decision was politically wrong but technically right,” said Richard Baldwin, manager of the county’s Air Pollution Control District. Baldwin said he rushed through the decision so that at least some anti-smog measures would be considered for adoption by the PUC as a condition of approving the merger.

So far, the strategy has worked. On June 29, the PUC’s consultants incorporated the county’s agreement into their own proposed plan of pollution controls.

The PUC proposal also went one step further, requiring that the merger result in no net increase in pollutant emissions in Ventura County, even in the first four years.

“We’re delighted,” Baldwin said. “We see our agreement as the floor. Anything the PUC can add on to enhance the package, so much the better.”

But Baldwin said he doesn’t trust the PUC, particularly in what he sees as a headlong rush to make a decision. If the commission is predisposed to approve the merger, he said, it might shortchange environmental safeguards.

Edison promotes the merger by pointing out that it will save consumers $1.7 billion, a strong consideration for the PUC, which was established to protect utility consumers, not the environment.

“The merger doesn’t trigger the need for any air quality permits,” said Elaine Russell, supervisor of the PUC’s environmental section. “Edison is operating under the permits it already has.”

But under the California Environmental Quality Act, the PUC can require additional smog controls to reduce any increase in pollution to a “less than significant impact” as a condition of the merger, she said.

For that reason, the PUC had its environmental consultants draft a $103-million package of anti-smog measures for power plants across Southern California. For Ventura County, the package incorporates nearly all of the $11 million in pollution measures outlined in the county’s agreement with Edison.

If the merger is approved, the county’s agreement would have Edison take three separate steps to offset the additional hundreds of tons of nitrogen oxides that would be discharged from Edison’s plants at Mandalay Bay and Ormond Beach near Oxnard.

Nitrogen oxides react with another gas in sunlight to create ozone, a major component of smog. The other gas, known as hydrocarbon, is primarily expelled by automobiles or other gas and diesel engines. Both gases must be present for ozone to form.

In its contract with the county, Edison agreed to pay other companies to trade their polluting diesel and gas engines for clean electric motors as a way to offset increases of nitrogen oxides at the power plants. Such a strategy is far cheaper than installing pollution devices on the plants.

Primarily, Edison would target those engines used in the county’s extensive oil fields to pump crude from the ground and other industrial users. The county estimates that Edison would have to convert the equivalent of 25,500 horsepower of internal combustion engines to reach reductions of pollutants outlined in the agreement.

Edison will also make some minor modifications to combustion at one of the two units at its Mandalay Bay power plant and install a new chemical technology in both units at Mandalay Bay to reduce nitrogen oxide emissions as much as 35%.

Under that technology, now used in Edison’s Etiwanda plant near Ontario, the company injects a chemical, called urea, into the hot exhaust gases coming out of the boiler. When injected into gases at 1,800 to 1,900 degrees, urea reacts with nitrogen oxides to form nitrogen, water and ammonia.

Edison likes the technology because it is relatively inexpensive.

Although the combination of these measures would reduce more than 300 tons of nitrogen oxides emitted every year, it would not compensate for all of the expected increase in pollution from the merger. In 1994, for example, the anti-smog measures would eliminate 368 tons of nitrogen oxides from various sources. But that would not completely offset the projected 706-ton increase from the power plants. There would still be a net increase of 338 tons due to the merger.

“Any way you count it, 1994 is the worst year,” Baldwin said.

But he stressed that, overall, the county’s air quality has been slowly improving and will continue to do so in the long run. “Everyone thinks the merger will increase emissions dramatically, but it will only slow down our improvements,” he said.

The PUC’s proposed package of anti-smog controls goes one step further than the county to make sure the merger brings no net increase in emissions during any one year. That extra step would require Edison to install urea injection devices in its Ormond Beach power plant.

But Edison engineers believe the technology will not work at the Ormond Beach plant. “It’s not like a piece of equipment that you bolt on the back of a boiler to make it work,” said Nader N. Mansour, Edison’s manager of environmental regulations. “My engineers tell me that it would be very difficult to make it work.”

Gary Rubenstein, who drafted the PUC’s anti-smog package, acknowledged that urea injection might not work at the Ormond Beach plant.

But he said he will recommend that the PUC require this technology or some other measure to make sure the merger leads to no net increase in pollution in 1994 or any other year. “It may be that Edison will have to buy more internal combustion engines,” he said. “It’s only a question of economics.”

The Environmental Coalition of Ventura County criticizes the county and the PUC’s plan because it lets Edison slip out of installing the most effective and most expensive smog-devices on its power plants.

Those devices, called selective catalytic reduction units, act similarly to catalytic converters on automobiles and would eliminate most of the plant’s pollution. For nearly a decade, Edison has resisted installing these catalytic devices, which are estimated to cost between $150 million and $300 million.

Baldwin points out that the county is expected to adopt a new rule by the end of the year that would require Edison to install catalytic devices or other technology to reduce nitrogen oxides emissions by 85% to 87%.

Indeed, the county’s agreement is based on the assumption that by 1995 Edison will have installed devices to cut its pollutants by 90%.

But Pat Baggerly of the Environmental Coalition said the agreement should not make that assumption until the county officially adopts the stricter rule. In 1982, Edison won a court reprieve from similar restrictions imposed by Ventura County, she said, and its lobbyists have been very successful in delaying tactics ever since.

“Dick Baldwin and the supervisors cave in to industry all of the time,” Baggerly said. “There is no way we can match industry all of the time with their lawyers.”

Baldwin agrees that Edison is a tough negotiator. “This is going to be a major policy battle between us and Edison,” he said.

But he predicts that the county will tighten its rules on the two power plants, which are now the largest single source of nitrogen oxides in the county, about 18% of the total 25,700 tons a year. “The rule is going through, I’ll stake my career on it,” he said, adding that the county faces both state and federal mandates to clean up its air.

Madge L. Schaefer, chairwoman of the County Board of Supervisors, backs him up. “If Dick Baldwin wants this rule, it will pass,” she said.

Baldwin said the beauty of the county’s agreement with Edison is that the electric company would first pay for cleaning up other sources of pollution--by converting diesel engines to electric--and then have to reduce its own pollutants anyway.

By converting internal combustion engines to electric, Edison would eliminate 2,230 tons of hydrocarbons and 12,760 of carbon monoxide over the next 16 years, Baldwin said. “We tried to turn short-term losses into long-term gains.”

If the merger goes forward, the agreement could be enforced by court action, and fines of $10,000 could be levied for every ton of nitrogen oxides not eliminated.

The Environmental Coalition questions if Edison will find enough oil and gas companies or other industries willing to convert to electric motors for pumping and flushing out oil.

The group also criticizes the agreement for relying on Edison’s “good faith” efforts to convert the diesel engines that are the worst polluters and begin with those that pollute the entire county rather than those in isolated spots.

Baldwin defends the agreement, saying that Edison will have to pay other industries whatever it takes to convert polluting engines to electric. “I don’t care what it costs,” he said. If the merger is approved, he said, Edison would be committed to reducing tons of pollution no matter what the price.

Although the county government no longer objects to the merger, Oxnard, Ojai and Simi Valley have expressed concerns about increases in air pollution that would be allowed under the county’s agreement.

Oxnard and Ojai have sent letters to the PUC, and last week Simi Valley sent a representative to testify at ongoing hearings in San Diego.

On Monday, the Ventura City Council will consider its position on the matter.

Elaine Russell, the PUC’s top environmental officer, said she has some questions about the county’s agreement, but believes “technically, it can work.” She hinted that it could end up as part of the final package of anti-smog measures. “You get a lot more cleanup for the dollar,” she said.

Meanwhile, the American Lung Assn. has entered the debate, saying that increased pollution--even if it only lasts four years--is too high a price to pay.

“There are thousands of people in Ventura County--people with health disease, asthmatic children, pregnant women--who will be affected if we have an additional 200 tons of air pollution dumped into the county’s air over the next five years,” said Jerry Harris, chairman of the association’s clean air committee in the county.

MERGING POWER COMPANIES

WHERE THE PLANTS ARE

Southern California Edison and San Diego Gas & Electric own or co-own 17 power plants. If a merger is approved, Edison plans to generate 20% more electricity and pollution at Mandalay and Ormond Beach to offset planned reductions at San Diego’s older, less-efficient plants.

SOUTHERN CALIFORNIA EDISON PLANTS

Alamitos -- TYPE: Oil and gas; SIZE: 2,120 megawatts; STATUS: Partially active.

Big Creek -- TYPE: Hydroelectric; SIZE: 150 megawatts; STATUS: Active.

Coolwater -- TYPE: Oil and gas; SIZE: 726 megawatts; STATUS: Active.

El Segundo -- TYPE: Oil and gas; SIZE: 996 megawatts; STATUS: Active.

Etiwanda -- TYPE: Oil and gas; SIZE: 1,049 megawatts; STATUS: partially active.

Highgrove -- TYPE: Oil and gas; SIZE: 169 megawatts; STATUS: Inactive.

Huntington Beach -- TYPE: Oil and gas; SIZE: 1,008; STATUS: Partially active.

Long Beach -- TYPE: Oil and gas; SIZE: 586 megawatts; STATUS: Active.

Mandalay -- TYPE: Oil and gas; SIZE: 573 megawatts; STATUS: Active.

Mojave -- TYPE: Coal; SIZE: 1,818 megawatts; STATUS: Active.

Ormond Beach -- TYPE: Oil and gas; SIZE: 1,612 megawatts; STATUS: Active