1. Current GHG Mitigation Requirements for Power Plants in Washington and Oregon Presented by Liz Thomas at NIPPC Annual Meeting Sept. 7-8, 2005

2. Overview  Washington’s current law  Prior approaches in Washington  Oregon’s law  Observations

3. Application of Washington’s Current CO2 Mitigation Law  New projects:  > 350 MW: EFSEC - ch. 80.70 RCW  No EFSEC rules yet – no funding  25 MW – 350 MW: Ecology or Clean Air Agency applies ch. 80.70 RCW via RCW 70.94.892 and WAC 173-407  Expansion of existing projects:  If now > 350 MW, 15% increase in CO 2 emissions  If now 25-350 MW, 25 MW increase or 15% increase in CO 2 emissions  Mitigation required only for increment

4. Substance of Washington Requirements  Applicant must prepare a CO 2 mitigation plan to offset 20% of CO 2 emissions over 30 years  Theoretically, 3 paths available:  Pay third party $1.60/T  Purchase credits  Invest in CO 2 mitigation projects  No rules yet for Path 2 or Path 3 due to lack of EFSEC funding for rulemaking

5.  Prior Washington Practice  EFSEC required mitigation of CO 2 emissions on a case-base-case basis  PSCAA sought mitigation pursuant to SEPA authority

6. Application of Oregon Requirements  EFSC jurisdiction for all projects > 25 MW – no split implementation.  Per OAR 345-024-0500 et seq.  3 standards:  Base load gas plants: 0.675 lb. CO 2 / kWh  Non-base load gas plants: 0.675 lb. CO 2 / kWh  Nongenerating facilities (e,g., compressor stations): 0.504 lb. CO 2 / horsepower-hour

7. Substance of Oregon Requirements  Offset emissions in excess of standards, based on 30 years’ assumed operations  Complex formulae to calculate emissions and offsets  Paths:  Implement CHP to offset equivalent emissions  Offset projects – direct or 3 rd party  Monetary (Climate Trust) - $0.85/T

8. Observations  Rules address only CO 2, not other GHGs  Rules generally address only power plants, but both states are addressing car emissions  Seek “no lookback” protection  No WA offset projects until legislature appropriates funds for EFSEC rulemaking  How to integrate into regional trading program?