The South Coast Air Quality Management District held its third working group meeting yesterday for the District’s proposed Rule 1304.1. The proposed Rule would impose substantial new fees on developers repowering electrical generating facilities within the District, which encompasses Orange County and parts of Los Angeles, Riverside, and San Bernardino Counties. Under the proposed Rule, the District would charge developers market rates for emissions offset credits from the District’s Priority Reserve account, which developers can access if they replace an electric steam boiler with a combined cycle gas turbine or other advanced gas turbine. Power producers looking to undertake boiler replacement projects continue to staunchly criticize the proposed Rule. The District, however, maintains that it is not a question of if there will be a fee, but the amount and payment structure of the fee. Developers are concerned not only that the annual fee will add millions to the cost of repowering aging facilities, but also that the Rule, if adopted, would require a prospective developer to pay five years worth of fees upfront, with limited refunds available if a project does not go forward. The fees could also substantially increase the cost of power, if this new cost burden is passed through to ratepayers. Read our February 11, 2013 Alert for more background on the proposed Rule. The next working group meeting is currently scheduled for March 13, 2013. The District could consider adoption of the Rule as early as April 5, 2013.