TOPICS > Economy

Power Plays

January 2, 2003 at 12:00 AM EDT


JEFFREY KAYE: In the northwest Mexico state of Baja, California, construction workers are completing two huge power plants three miles south of the U.S. border. One belongs to Sempra Energy, the largest energy distributor in the U.S. The bigger plant a mile away is owned by Intergen, a partnership controlled by shell oil. The plants are expected to start generating electricity– enough for a million and a half homes– next summer. But they’re already generating a cross-border dispute between environmentalists and big power companies. Donald Felsinger, chairman of san Diego-based Sempra Energy International, sees opportunity as Mexico opens up its utility markets to private investors.

DONALD FELSINGER, Sempra Energy: You look at the major power plant developers that are looking at building power plants, the number of gas companies that are looking to build gas infrastructure and to provide gas to cities and communities around the world today, as I look at, Mexico provides the most opportunity.

JEFFREY KAYE: At latest count, there are 22 proposed energy projects along the U.S./Mexico border. Baja, California, markets itself as a workshop of the global economy. Officials want Baja to attract heavy manufacturing, and that will take more energy. Mario Juarez is an official with Baja’s economic development department.

MARIO JUAREZ: We are looking at private companies in different sectors, aerospace sector, metal mechanic, the automotive sector. We want to provide to the community more and better jobs.

JEFFREY KAYE: Those jobs and opportunities are needed by northern Mexico’s mushrooming population of the desperately poor, who live in ever-growing shantytowns and often lack the basics, including electricity. But there’s a question about how much Mexico’s economy and people will benefit from the two power plants under construction near the border. Most of the electricity they generate won’t flow into Mexican homes and factories. Instead, half of the power from Intergen and all the electricity from the Sempra plant, at least initially, will be sent across the border to the power markets of California and the western United States. U.S. and Mexican environmentalists accuse the power companies of evading stricter American environmental laws by building south of the border. Their border power plant working group is suing the Bush administration for backing the projects. Engineer Bill Powers is a director of the group.

BILL POWERS, Border Power Plant Working Group: The Sempra energy project, the only part of it that’s Mexican is the fact that it’s physically located across the border. The fuel, the energy going out, is exclusively United States, and any observer of the process would have to say that the only justification for physically moving it slightly south of the border would be to avoid a much more rigorous environmental review and permit processing timeline that you would encounter in the United States.

JEFFREY KAYE: Sempra doesn’t dispute the contention that it’s easier to locate in Mexico. The company says it is being environmentally responsible by voluntarily installing pollution control devices in its Mexican plant that would meet strict California standards. But by being in Mexico, Sempra does avoid so-called “offset” payments. These are funds for emission control programs that owners of new California power plants must pay as a condition of construction. Intergen is outfitting only half its Mexico plant, called “La Rosita,” with the latest emission control equipment, so it will emit ten times more pollution than the same size plant in California.

Intergen declined our requests to shoot on the property and for an on-camera interview, but in a written statement to the NewsHour said: “As currently configured, La Rosita will be one of the most environmentally advanced power facilities in Mexico, and a great deal cleaner than a number of facilities currently operating in California and elsewhere in the United States.” When the plants are both up and running, together they’ll pump out nearly 5,000 tons of pollutants a year. 90 percent of those emissions will come from the Intergen plant.

JOE MARUCA: Well, they’re going to mean dirty air. They’re going to putrefy our air more than it already is.

JEFFREY KAYE: Joe Maruca is a supervisor in California’s Imperial County, just across the border from the power plants. The largely agricultural county has the poorest population in California, and Maruca says the plants will only add to his constituents’ troubles.

JOE MARUCA: And when they do come on line, it’s going to even worsen our air quality in Mexicali, Calexico, El Centro, Imperial, and the whole county, and that’s the bottom line. And you can’t trade clean air for economics under any circumstances.

JEFFREY KAYE: Imperial County already has some of the most polluted air in the state, thanks to the dust churned into the sky from farming and unpaved roads on both sides of the border. Additional pollution comes from trucking and from burning trash in Mexican slums. The county’s poor air quality contributes to some of the highest asthma and bronchitis rates among children in the U.S.

JOE MARUCA: My son is one. And I live 15 miles from the border.

JEFFREY KAYE: Your son is one what?

JOE MARUCA: Well, he has this huge, hacking cough every morning. You know, almost like sputum. You know, and we give him all medicines, and here he is four and a half years old and he’s already on medication. It’s something that we can’t control.

DONALD FELSINGER: Imperial Valley has an air pollution problem, but it’s a problem of their own doing. They have dirt roads, they have automobile emissions, they’ve got crop burning and crop dusting. And 70 percent of the time, the air blows from the North to the South, so Mexico is really a recipient of the problems in the Imperial Valley.

JEFFREY KAYE: The battle over these desert power plants is just one front in a growing conflict between big energy and environmentalists. Another is 100 miles to the west, on Baja’s rugged Pacific Coast. Here Sempra, Shell, and other companies plan to build four liquefied natural gas, or LNG terminals. They would supply the U.S. and Mexico with billions of gallons of gas, piped from South America or shipped from the Far East. Environmentalists and business leaders fear the plants could be a beachhead for industrialization and a threat to the area’s multimillion- dollar-a-year tourism industry.

CARLA GARCIA ZENDEJAS, Environmental Attorney: What’s wrong with this is that this coast has been promoted and dedicated to tourism for years and years.

JEFFREY KAYE: Mexican environment attorney Carla Garcia Zendejas says Baja, California, is a convenient site for energy projects that would be far more difficult to approve in the United States.

CARLA GARCIA ZENDEJAS: I would like to ask san Diego people if they would like another power plant or even an LNG plant. Then, of course, they’re going to say no. It’s about people wanting to not be the U.S.’s backyard. “We’re not… we don’t want to be the backyard anymore where you just put anything you want and have the benefit and the revenue on your side of the border.

JEFFREY KAYE: Sempra’s Felsinger says environmentalists should praise his company for bringing cleaner-burning fuel to Mexico.

DONALD FELSINGER: All future power plants built in Mexico in my estimation will run off of natural gas, and so when you look at the industries that have switched from oil to gas, the power plants from oil to gas, these are all very positive things for… for Baja.

JEFFREY KAYE: Environmentalists say they don’t oppose energy development for Baja, California. As pipelines, power lines, and power plants bind Mexico and the U.S. closer together, they want the two countries to also share the same environmental standards.