California Energy Purchase Rules Challenged : Environment: Out-of-state coal interests say pollution in their areas shouldn’t be a factor in choosing resources.

As one lawyer for the Natural Resources Defense Council put it, the irony is “glaring and painful.”

Today, Earth Day 1992, out-of-state coal interests will be here to urge the California Energy Commission to ignore pollution created by energy-generation methods in other states that export electricity to California.

Environmental groups will be urging the opposite.

“California . . . should not be sending its neighbors the message that it values their environmental quality less than its own,” Ralph Cavanagh, a staff attorney for the NRDC in San Francisco, told the commission in a recent letter.

At issue is whether California utilities should take out-of-state environmental damage into account when choosing among electrical energy resources.

Environmentalists say global climate change, health care costs, crop damage and quality-of-life issues tied to plant emissions are among the ill effects that should be considered. Western coal states say they are operating as cleanly as they can, and that California’s rules will cost them sorely needed jobs--and boost energy costs for California ratepayers.

Last year, the California Public Utilities Commission began assigning per-ton dollar values to different types of pollutants, whether the emissions were generated within or outside California. The idea was that those dollar values would be added to the costs of any power project bidding to supply California utilities with electricity. The more pollution that a project expected to emit, the higher the total price it would be assigned.

That method of accounting for out-of-state environmental costs will be challenged at today’s hearing by other western states, particularly those with strong interests in fossil fuels such as coal, which generate the cheapest electricity but cause the worst pollution. These states--notably New Mexico and Wyoming--say the figures are arbitrarily high and that states should be allowed to set their own pollution costs based on regional air quality and standards.

The PUC is reviewing the cost-allocation structure as well.

Since 1989, utilities in a handful of states--including New York, Massachusetts, Nevada and California--have attempted to account in such ways for out-of-state environmental damage.

California--as the largest purchaser of electricity in the West by a wide margin--drives the development of energy resources in the region. States with a heavy economic dependence on sales of coal or electricity generated from coal-fired plants are concerned that they could lose business to “cleaner” resources such as wind, solar and geothermal.

The states point out that, on a strict dollars-and-cents basis, coal tends to be a cheaper source of energy than renewables.

New Mexico officials point out that thriving coal mining and power plant operations in the state’s Four Corners region employ 2,200 people with an annual payroll of more than $100 million. Concerned that some of those jobs could be lost if California turns to other sources for electricity, state Rep. Darla Whitney-Welles authored a resolution earlier this year urging California to reverse its policy.

“If they’re going to consider the negatives (of coal-generated electricity), they should also consider the negatives to the land, water and wildlife caused by renewables,” Whitney-Welles said.

Wyoming, which also has much at stake, is sending a representative to the Energy Commission hearing too.

“We’re the No. 1 coal-producing state,” said Bil Tucker, chairman of the Wyoming Public Service Commission. “We’re kind of a Third World nation. We run our government largely from tax revenues generated” from the coal industry.

While Tucker noted that Wyoming coal is low in polluting sulfur and that the state has invested heavily in reducing pollution from its power plants, Cavanagh countered that the coal is high in carbon dioxide, a pollutant that is increasingly being blamed for global warming.

Cavanagh said it is ironic that California, which in past years was harshly criticized for attempting to export its pollution, is being challenged for saying it will no longer do so.

In the long run, he and other environmentalists said, trading off jobs for dirty air will prove a costly policy. Efforts to take those costs into account now, Cavanagh added, are an attempt “to anticipate and avoid future costs.”