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New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa Pugh, Director, Environmental Services, APPA Alex Hofmann, Senior Energy & Environmental Services Engineer, APPA

New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

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Page 1: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

New Environmental Regulations and the Implications for the

Electricity Power Sector

APPA 2011 National ConferenceJune 19, 20111:30-5:00 p.m.

Theresa Pugh, Director, Environmental Services, APPA

Alex Hofmann, Senior Energy & Environmental Services Engineer, APPA

Page 2: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Agenda

1:30 p.m. Welcome -Theresa Pugh and Alex Hofmann

1:45-1:55 p.m.APPA’s Environmental Regulatory Priorities & Background (Theresa)

1:55-2:10 p.m.The Challenges to Existing Generation (coal) (Theresa)

2:10-2:50 p.m.Clean Air Act Regulations (Theresa)

-Regional Transport

-Will my utility trigger NSR?, Utility/EGU/Mercury MACT for >25MW

-Tighter ozone & PM2.5 Regulations

-ISI Boiler MACT for <25MW

2:50-3:05 p.m.BREAK

3:05-3:30 p.m.Anticipating CO2 Regulations (Theresa)

3:30-3:45 p.m.Coal vs. Natural Gas: Looking at Feasibility, Operational Issues & Cost (Theresa)

3:45-4:00 p.m.Coal Ash or Coal Residuals (Alex)

4:00-4:15 p.m.Cooling Water Intake Structure (CWIS) or 316(b) Regulatory Changes

4:15-4:20 p.m.Review of APPA’s Top Regulatory Priorities (Alex)

4:20-5:00 p.m.Q & A (all)

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Page 3: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Many Rules Driving Electric Utilities to Gas3

Implications of Greater Reliance on Natural Gas 3

Page 4: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

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Page 5: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Jan.

EPA Final GHG Reporting Guidance (actually Dec 24 2010)

Mar. 31st

TRI Reporting (Regulation in place since 2000)

May 3rd

EPA proposes EGU or utility MACT for mercury and acid gas control; comments due July 5, 2011

Summer

Proposed rule on setting New Source Performance Standards (NSPS) for all GHGs (including CO2 and SF6)

AugustGHG Reporting (delayed from March 2011)

Sept.

EPA to convene regular air quality modeling conference with states and regulated industries to establish protocols for background and better weather information for SO2, NOx,

ozone and PM 2.5 NAAQs

Dec. 31st

EPA public welfare periodic review and consideration of tighter secondary NAAQs for SO2 and NOx to reduce

aquatic acidification (cross media regulation)

Unknown Date

Triggered by construction of new power plant or significant improvement at existing plant: BACT for new power plants of significant modifications triggering BACT where states have lower PSD thresholds or where Federal EPA assumes BACT process

Air

2011 2012 2013 2014 2015 2016 2017 2020

Anticipated Timeline of Major EPA Regulations (as of May 9, 2011)

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Page 6: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Water

Waste

Feb. 1st

Implementation of new EPA NPDES water permit for construction and development

July 1st TRI Reporting Mar. 29th

EPA announced re-proposal of 316(b) Impingement/ entrainment mitigation or prevention (not published as of April 5, 2011) Link to EPA’s 316(b) site - http://water.epa.gov/lawsregs/lawsguidance/cwa/316b/index.cfm

April 20th

EPA proposed CWA 316(b) rule for entrainment/impingement reduction. Comments due July 19, 2011

July 1st TRI Reporting

July 1st TRI Reporting

July

Final 316(b) Phase II and Phase III Entrainment and impingement rule

July 23rd

Proposal of revised effluent guideline revision ("ELG") at all utilities. Expected to control mercury, chlorine, other hazardous air pollutants or metals. Might include temperature limits for discharge under 316(a) in this rulemaking although the EPA has not been announced

Unknown Date

Possible EPA regulation on thermal

July 1st TRI Reporting

Jan. 31st

Final effluent guideline rule for new and technology to reduce chlorine, boron, etc.

Jan. 31st

Final implementation of Final 316(b) Phase II and III rule requirements at each utility (triggered by NPDES permit renewals between 2012 and 2015)

July 1st TRI Reporting

June – Sept.

Toxics Substances Control Act (TSCA) IUR report on chemicals “manufactured” (including import) such as coal ash sale to wallboard manufacturers for calendar 2010 activities. Next reporting year 2015 for calendar year 2014. This TSCA regulation covers utilities that send coal ash byproducts sent into commercial or beneficial use. Disposal is not covered.

July 1st TRI Reporting

February

EPA expected to promulgate final rule addressing coal combustion residuals (CCR).

May

U.S. EPA to propose possible changes to the PCB use authorization at utilities (and industry) under Resource Conservation and Recovery Act (RCRA)

July 1st TRI Reporting

Unknown Date

EPA final rule on coal ash/beneficial reuse under RCRA

July 1st TRI Reporting July 1st TRI Reporting

2010 2011 2012 20142013

Anticipated Timeline of Major EPA Regulations (as of May 9, 2011)

November

EPA deadline for coal combustion residuals (CCR) regulation (“coal ash”). Rule expected Feb. 2012

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Page 7: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Some Environmentalists’ Arguments Against the Trainwreck

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Page 8: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

What this Pre-Conference Seminar Will Cover

• Overview for EPA regulations to utility sector• EGU MACT – Tough choices ahead

• Special focus on NSPS or New Source Performance Standard for CO2 from power plants

• How will states implement NSPS for existing power plants after mercury or other controls trigger major renovations

• Focus on how Best Available Control Technology (BACT) will affect new coal and gas power plants

• Focus on all the other water & coal ash regulations (some likely in 2012)• GHG Reporting• Discussion of 316 (b) proposed rule• Q & A

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Page 9: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

What are the Challenges for Coal Fired Generation?

EPA

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Page 10: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

1. Hazardous Air Pollutants (Mercury MACT) for coal-fired and nickel for oil-fired generation)

2. Regional Transport Rule (Implementation deadline is in 2014 for 31 states and D.C.)

3. Best Achievable Control Technology, or BACT, state determinations for new and modified coal-, oil- and gas-fired generation and New Source Performance Standards (NSPS) for GHGs at fossil fuel-powered plants—this could range from fuel switching to natural gas or requiring carbon capture and sequestration for existing or new coal-fired generation or some other “standard.” No one knows what will qualify for NSPS or BACT for coal plants yet.

(Continued on next slide)

APPA’s Ranking Of The Most Critical Upcoming EPA Regulations For The Power Sector Are:

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Page 11: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

4. Promulgation of a final rule on coal ash or coal combustion residuals (often used for beneficial reuse) by the EPA to determine whether the coal ash is hazardous or may continue to be regulated as non-hazardous.

5. Revisions of cooling water intake structure or “Section 316(b)” of the Clean Water Act regulation for existing utilities (impingement and entrainment devices or cooling tower installation requirements).

6. Revisions to the existing utility Effluent Guideline Limitation (ELG) under the Clean Water Act for new effluent controls on metals, chlorine, etc. The EPA also might opt to revise the utility sector’s effluent or discharge thermal temperature allowance under Section 316(a) of the Clean Water Act to <90° F, which would be extremely difficult or impossible for utilities in southern or coastal communities. (Not expected to be proposed until 2012 due to EPA budget restraints.)

APPA’s Ranking Of The Most Critical Upcoming EPA Regulations For The Power Sector Are:

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Page 12: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

APPA’s April 2011 – Fall 2011 Priorities

• EPA’s proposed EGU Mercury MACT rule for coal & oil-fired generation– Scrubbers -- Activated Carbon Injection (ACI)– Baghouses -- Need more time for installation– Need more subcategories– Need GACT control options

• NSPS Standards for Utilities – July 26, 2011– All sources nationwide– BACT must be at least as stringent as NSPS– May consider best management practices where actual controls

on pollutant is not commercial– Could include energy efficiency at the utility’s generation

• Section 316(b) impingement and entrainment (cooling water intake structure vs. traveling screens, etc.)

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Page 13: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Overview*

• Cumulative impacts of air, water, and waste rules will require coal plants to make significant environmental control investments to continue operating.

• Size and timing of these expenditures could result in many retirements.

• Three major adverse impacts could result:– Regional reliability and reserve margin requirement shortfalls– Misallocation of financial resources and stranded investments– Likely very large increases in use of natural gas by the power sector

• Timing, sequencing, and other regulatory parameters are critical.– HAPs, water, CCBs, and CO2 are significant issues; juggling and

sequencing these regulatory tracks may be the most important challenge.

• EPA’s analysis can take specific steps to reflect these issues

The cumulative impact to power plants from overlapping regulations around 2015-2017

* These slides excerpted from a presentation by a group of utilities to EPA on 2/10/10

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Page 14: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

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Multi-Media Compliance Challenges over the Next Decade*

2010 2020

HAPs (MACT): Coal and oil units – ACI/FGD/SCR/BH (capital plus O&M)

Air Quality (new CATR, NAAQS, Visibility): All fossil plants – FGD/SCR (capital plus O&M)

Water (New Effluent Guidelines): All plants/coal focused – Treatment/dry ash disposal (capital plus O&M)

Cooling Water Intake Structures (316(b)): All plants – Fine screens/cooling towers (capital plus O&M)

Ash Management: All coal units – Monitoring/dry ash disposal/new landfills/liners (capital plus O&M)

Climate Change, Renewables and End Use Efficiency: All fossil units – Gas or biomass conversion; retirements; demand loss (capital + conversion cost + O&M + retire & replace + RECs or ACPs + CO 2 allowances)

Rulemakings & Implementation Compliance Required Maintaining Compliance & New Standards

• Need final rules to commit to a specific technology or compliance strategy. Retrofit technologies, selection and cost, are dependent on unit design, fuels, age, & location. Technologies to reduce GHGs (e.g., CCS) are in early development.

There is a cumulative impact to power plants from multiple regulations. * These slides excerpted from a presentation by a group of utilities to EPA on 2/10/10

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Page 15: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Decision Timelines for Existing Coal Units*

Timeframes vary by unit--Fleet considerations may extend the time needed for any specific unit conversion

Unit

Continue to operate on coal

Convert to gas operation

(if possible)

Convert to biomass (limited controls)

Retire and Replace

Retire

3-5 year FGD/SCR engineer/construction timeline

4 year conversion timeline

3-4 year conversion timeline

3-6 year combined cycle develop/construct timeline

Transmission Implications 5-10 years

5-10 year dry ash conversion timeline

2-5 year cooling tower eng./const timeline

Final rule

Key investment decisions and resource allocations cannot be made until rules are final. Some regulated companies must obtain commission approval for emission control projects. Most must obtain commission approval for new generation. Financing relies on final EPA regulations.

Compliance deadlines preceding the construction/conversion completion could lead to early retirement.

Decisions for a single unit are further complicated as we consider multiple units, plants, fleets, NERC regions and the nation.

* These slides excerpted from a presentation by a group of utilities to EPA on 2/10/10 15

Page 16: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Skip to slide number 18

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Page 17: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Reliability Concerns: The Issues*

• Numerous and costly compliance requirements for air, water and CCBs could lead to significant number of retirements.

• Timing may result in many units being taken off-line at the same time to complete needed retrofits.

• Regional planning/reliability requirements must be coordinated to maintain the reserve margin (e.g., retirements, outages, etc.).

• For regulated utilities, concentrated rate case hearings coupled with rate shock concerns may prohibit timely resolution by state utility commissions.

• Concerns are applicable to most regions, especially those with significant coal generation.

* These slides excerpted from a presentation by a group of utilities to EPA on 2/10/10

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Page 18: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

*Includes generation by agricultural waste, landfill gas recovery, municipal solid waste, wood, geothermal, non-wood waste, wind, and solar.

** Includes generation by tires, batteries, chemicals, hydrogen, pitch, purchased steam, sulfur, and miscellaneous technologies.

Sum of components may not add to 100% due to independent rounding.

Source: U.S. Department of Energy, Energy Information Administration, Power Plant Operations Report (EIA-923); 2008 preliminary generation data.

January 2010

© 2010 by the Edison Electric Institute. All rights reserved.

Reliability Concerns: Geography Matters*

* These slides excerpted from a presentation by a group of utilities to EPA on 2/10/1019

Page 19: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Tough Choices Ahead

Considerations:

• Is the investment in additional scrubbers, bag houses, and other pollution controls (including water/waste) worth the investment on older units?

• How much parasitic load will eat into the power plant’s capacity?

• How fast could NSR be triggered?

• Does the plant have the physical space surrounding plant for additional pieces of equipment?

• Will the power plant need to decide on narrowing coal type choices or decide to blend coal more frequently?

Retrofit $$$

Fuel Switch

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Page 20: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Some Projections By Others On Retirements

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Page 21: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

U.S. Coal Fleet Demographics*

• Size– Over 75 GW that are <250 MWs

• Age– Over 45 GW >50 years old today– Another 67 GW between 40 and 50 years old

• Environmental Controls– Over 190 GW do not have FGD– Over 190 GW do not have SCR or SNCR– Over 280 GW do not have FF– Only 9 GW have all three installed-- FGD,SCR/SNCR,FF– 38% (275 GW) of fossil fuel fired units at risk of cooling towers

retrofits– 169 GW with wet ash handling/disposal of CCBs1

Notes:*Coal Unit Data: Energy Information Administration (www.eia.doe.gov/cneaf/electricity/page/capacity/existingunitsbs2008.xls)*Air Emission Control Data: EPA Clear Air Markets Division (http://camddataandmaps.epa.gov/gdm/)1EIA 767 data, 2005

Total US coal MW: 333,018MW at Risk**: 137,248

**MW at risk: MW without both an FGD and an SCR.

* These slides excerpted from a presentation by a group of utilities to EPA on 2/10/10

What is at Risk?

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Page 22: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Environmental Control Cost Assumptions*

Retrofits, replacements and investment in low carbon or other technologies will compete for capital.

Required Technology Cost per kW or facility

AIR (coal plants 300 –1,000 MW)

FGD $300 – 500/kw(EPA using $120 – $240/kW)1

SCR $200 – 400/kw (EPA using $110 – 120/kW)1

FF Additional costs

WATER Cooling tower retrofit ~$185/kW (EPA used $58 - $62/kW)2

CCBs Impoundment closure >$50 million/facility

Note: Cost estimates do not include capital for replacement generation or transmission. This table does not include the uncertain costs of carbon regulation/legislation.1 EPA’s CAPA Proposal Analysis, 2009.2 DOE’s comments in Phase II rule, 2002 and EPA, http://www.epa.gov/waterscience/316b/phase2/devdoc/ph2toc.pdf

* These slides excerpted from a presentation by a group of utilities to EPA on 2/10/1023

Page 23: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

*Slide reprinted with permission from SNL Energy

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Page 24: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Why predicting new environmental regulations for utility sector is complicated:

  EPA Regulations for utility sector are driven by population density, human health, and tightening smog (ozone), Particulate Matter 2.5, SO2 and NOx standards from 2011-2020

2000 U.S. population density within each county, in persons per square mile (lower 48 states only): Light to dark (yellow to blue): 1-4 (y), 5-9 (light green), 10-24 (teal), 25-49 (dark. teal), 50-99 (blue-green), 100-249 (blue), 250-66,995 (black).

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Page 25: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Why predicting new environmental regulations for utility sector is complicated:

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Page 26: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

First out of the box-for 31 StatesRegional Transport Proposed Rule

• EPA’s Regional Transport Rule (Proposed July, 2010 and published Aug. 2, 2010)

• Replaced “CAIR” but with tighter budgets & more obligations for states

• Proposal must be read by each utility—and consider state budget, existing controls etc

• APPA/NRECA/EEI and EPA held webinar in July• New coal? Check your state allocations for impact • APPA did not file comments on NODA dealing with

allocations

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Page 27: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

States Impacted by Proposed Transport Rule

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Page 28: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

EGU MACT/Mercury MACT/NSPS Proposed Rule

5/31/1129

Page 29: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

EGU MACT/Mercury MACT

• Announced March 16, 2011• Proposed May 3, 2011• Comments Due July 5, 2011• APPA held two webinars on the issue• APPA’s summary of issues• APPA to file comments June 28 before the holiday

weekend• APPA urges member utilities to file comments• APPA sought extension to July 5, 2011 comment period

deadline (no response as of 6/1/11)

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Page 30: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Skip to slide number 34

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Page 31: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

2011 PROPOSAL:PROPOSED MACT STANDARDS

PM limit● Total PM (filterable and condensible) no higher than: (i)

0.04 lb/MMBtu for existing sources; (ii) 0.0056 lb/MMBtu for new sources

● Actual filterable PM standard based on initial compliance test

HCI (surrogate for acid gases)● Existing sources: 0.002 lb/MMBtu (~1.4 ppm)● New sources: 0.030 lb/GWh (~0.023 ppm)

*Used with permission34

Page 32: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Skip to slide number 38

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Page 33: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

2011 PROPOSAL:PROPOSED TIMELINES

What are rulemaking/compliance schedules?Rulemaking schedule:

● 60 days for comment from Federal Register notice (July 5)● Nov. 16, 2011 deadline for final rule● Rule effective 60 days after publication in Federal Register

Compliance schedule:● Three years from effective date (or Fed. Reg. publication?)● One one-year “case-by-case” extension (Rare)● Two-year “national” security extensions (Never done before)

*Used with permission – Text in Yellow is from APPA38

Page 34: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

2011 PROPOSAL

What are the MACT impacts according to EPA?311 GWs of coal generation

Required coal plant retrofits● Baghouses – 166 GWs● DSI – 56 GWs● FGD – 26 GWs● SCR – 5 GWs● ACI – 93 GWs

Annual costs● ~ $11 Billion

Unit retirements by 2015● 9.9 GWs

*Used with permission39

Page 35: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

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Page 36: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

<25MW ICI Boiler MACT Rule Emission Limits

MACT I MACTII MACT II revised*

PM, lbs/mmBtu 0.07 0.02 0.039

Hg, lbs/mmBtu 9.0E-06 3.0E-06 4.6E-06

HCl, lbs/mmBtu 0.09 0.02 0.035CO, stokers/PC

(in PPM by volume, dry basis @3% 02) none 50/90 270/160Dioxins/Furans (Total TEQ), stokers/PC(in ng/dscm @7% 02) none 0.003/0.004 same

HBCA for HCl No HBCA for HCl same*NOTE: EPA allows any unit with enforceable limits on operating hours less than 876 hours per year to comply with this rule by conducting a tune up every other year.

For details, go to: www.epa.gov/airquality/combustion/actions.html** Used with permission from Jeff Brediger, Orrville Utilities

• Announced 2/23/2011, 25MW or smaller

Expected to be Re-proposed

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Page 37: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Ok, Just When I Thought it Could Not Get Worse

• The EPA will prepare to regulate the electric utility sector for CO2 (It is already counting benefits from reduced CO2 in other regulations.)

• Process to likely involve BACT triggering in June timeframe when a utility makes a non-routine maintenance decision and triggers a Prevention of Significant Deterioration (PSD) /(NSR) review. This likely will result in the state or EPA claiming what constitutes BACT—Best Achievable Control Technology

• BACT once triggered then is set for the entire utility sector

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Page 38: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Coming to a State Agency Near You

• State by state BACT make regulators seek simple solution –

• Environmentalists prefer natural gas over coal –• Regulatory pressures on old coal plants &

enforcement push retirements – • PUCs might want to regulate municipals – • Natural gas advocates claim cheap gas, green

jobs, & tax revenue for state• Response by 39 states to “public trust doctrine”

lawsuits/petitions

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Page 39: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

What is the Process for CO2 Regulation-How to See Through the Chaos

PSD Permitting will be triggered –approx end of 2010: Jan 2, 2011

GHG Reporting Rule – Reporting not tied to any regulatory requirements – Sept. 30, 2011

EPA could propose a New Source Performance Standard (NSPS) that considers feasibility, cost, commercial demonstration, etc.

States to require Title V permits to cover CO2 and GHG’s

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Page 40: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

NSPS for CO2 – July 2011

Utilities Timeline

Proposal July 26, 2011

Final May 26, 2012

Refineries

Proposal December 10, 2011

Final November 10, 2012

*EPA will hold teleconference with states/NGOs only regarding status.

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Page 41: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

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Page 42: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

NSPS: A Section 111 Primer

• Requires EPA to issue NSPS for categories of sources that are determined to cause, or contribute significantly to, air pollution reasonably be anticipated to endanger public health or welfare.

• EPA may distinguish among classes, types, and sizes within categories of sources.

• Performance-based standards

• Apply to any affected source constructed, reconstructed, or modified after the date of proposal (beginning upon promulgation).

• Existing sources trigger new source standards if they:

• Modify: Make a physical or operational change and increase hourly maximum emission rate achievable in the last 5 years.

• Reconstruct: Defined as spending more than 50% of cost to replace affected facility.

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Page 43: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

NSPS: Five Key Distinctions with PSD

1. NSPS are organized by source categories

2. NSPS are based on “Best Demonstrated Technology” (BDT)

3. NSPS apply at the time of proposal4. NSPS requires endangerment from

“source category”5. NSPS can reach existing sources

through 111(d)

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Page 44: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

49

NGO Perspective

Used with permission from Roger Martella, Sidley and Austin; Outside Counsel to APPA

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Page 45: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Skip to slide number 61

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Page 46: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Some of the EPA’s BACT Options – None Good

• EPA Workgroup to Advise EPA on GHG BACT (9/09-2/10) TO DIRECT EPA ON NEEDED GUIDANCE

– Phase 1 Report to EPA 2/2/10 – Phase 2 - 8 White Papers on Unknown

Topics by 2/19/10• Phase 1 Report Reflects General

Disagreement Between Stakeholders and Asks EPA for Guidance On:

– Changing the Definition of Source for Purposes of Applying BACT

– Guidance for Determining When Energy Efficiency Constitutes BACT

• To date - BACT applies to the unit at which a physical change occurs

• Must change traditional notion of where BACT applies in order to--

– Allow Fuel Switching (require a coal plant to become a gas plant)

– Provide for Energy Efficiency measures at other plant units

– Accommodate Demand Side EE?• See BACT Determination for 612 MW

gas-fired Calpine Hayward, CA– BACT Analysis excludes CCS – BACT = ENERGY EFFICIENCY OF

7,730 Btu/KWH at that unit

Page 47: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Could BACT Force Fuel Switching?

EPA’s Dec. 2009 - Feb. 2010 BACT Decisions:• Change in BACT by pushing consideration of

IGCC technologies & asking why natural gas wasn’t considered

• Kentucky Cash Creek Case• Arkansas AEP Case• Northern Michigan biomass case (not power

plant)• Rumors of a 3rd BACT utility case for summer

2010?

Page 48: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

63

2:50-3:05 p.m.

Phew!

Page 49: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Coal Ash Regulation

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Page 50: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Coal Ash

• Electric utility industry supports federal non-hazardous waste regulation of coal ash

• According to a recent study, the Kingston coal ash spill did not cause significant health impacts

• Regulating coal ash as hazardous waste will impact power generation and impose additional coal ash disposal costs upwards of $100 per ton

• Proposed rule June 21, 2010 • 450,000 comments received on the proposal • Final Rule expected mid-to-late 2012

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• Significant industry pushback on hazardous waste regulation under RCRA subtitle C due to costs

• Interaction with new air emissions control technology

Coal Ash

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Page 52: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Greenhouse Gas Reporting

• 25,000 metric tons CO2 per year reporting threshold

• Report due September 30 (extension granted)

• APPA members engage in testing activities

• CO2 data publicly reported

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Page 53: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Greenhouse Gas Reporting – And Open Government

• EPA’s commitment to “Open Government” may follow TRI reporting path for CO2 in the future

• myRight-to-know is an EPA Web application designed for mobile devices. This application takes existing EPA toxics release information and gives it to mobile devices and mobile users.

• Data can be incorrect, so check it!• EPA updating and promoting eGRID database that

contains CO2 information. To help “Americans understand the health and environmental impacts of electricity generation”

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Page 54: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Lessons From TRI Public Data

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Page 55: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Water Regulations

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Page 56: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

“316(b)” – Clean Water Act Proposed Rule

• Announced on March 28, 2011• Proposed on April 20, 2011• §316(b) of the Clean Water Act requires that the location, design,

construction and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact

• For past 20 years, up to state discretion• Comments due July 19, 2011• Final rule expected by July 27, 2012• EPA proposed rule (http://www.publicpower.org/files/PDFs/316b%20proposed%20rule%204.20.11.pdf)

• APPA’s summary of issues (http://www.publicpower.org/files/PDFs/316b%20Proposal%20Summary.pdf)

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Page 57: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

APPA’s 316(b) Priorities

• Retain best permit writer’s judgment for site specific controls• No cookie cutter requirements for cooling towers everywhere (this

was a good part of proposed rule)• Raise 2 MGD threshold back to 50 MGD threshold• Threshold should be based upon actual flow, not allowable flow• Try to minimize number of studies required & independent 3rd party

review• Keep options open for compliance up to 8 years after rule is

finalized in 2012. (Enviros want compliance on faster track.)• Cover replacement power issues (gas, etc.)• Entrainment is still too stringent

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Page 58: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Quick Summary

• Sets separate standards for impingement mortality and entrainment

• Recognizes case-by-case entrainment limits based on site-specific analysis (discretionary use of cost-benefit analysis)

– Requires maximum entrainment mortality reduction warranted (after consideration of 9 factors)

• Uniform numeric impingement standards for all facilities over 2 MGD or reduction of intake velocity to 0.5fps

– Assumes modified traveling screens & fish return systems – No flexibility

• Closed-cycle cooling may not meet all requirements

• Doesn’t penalize rebuilt, repowered or replacement units

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Page 59: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Impingement & Entrainment Technologies

Impingement Control:• Physical Barriers

– Barrier nets, fixed screens, coarse wedge wire, velocity caps*

• Collection Systems– Ristroph like buckets (band, rotary, vacuum,

molded plastic)

• Diversion Systems– Louvers, angled screens, modular inclined

screen

• Behavioral Barriers– Sound, light, electric fields, bubbles, induced

flow

• Operational Changes– Velocity reduction

• Intake location

Entrainment Control:• Physical Barriers

– Cylindrical wedge wire and aquatic filter barrier (filters & substratum systems)

• Collection Systems– Fine mesh screens

• Operational Changes– Scheduling & variable speed pumps

• • Intake location

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Impingement – Traveling Screens

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Entrainment Technologies

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Skip to slide number 89

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Page 63: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

APPA’s Ranking Of The Most Critical Upcoming EPA Regulations For the Power Sector Are:

1. Hazardous Air Pollutants (Mercury MACT for coal-fired and nickel for oil-fired generation)

2. Regional Transport Rule (Implementation deadline is in 2014 for 31 states and D.C.)

3. Best Achievable Control Technology, or BACT, state determinations for new and modified coal-, oil- and gas-fired generation and New Source Performance Standards (NSPS) for GHGs at fossil fuel-powered plants—this could range from fuel switching to natural gas or requiring carbon capture and sequestration for existing or new coal-fired generation or some other “standard.” No one knows what will qualify for NSPS or BACT for coal plants yet.

4. Promulgation of a final rule on coal ash or coal combustion residuals (often used for beneficial reuse) by the EPA to determine whether the coal ash is hazardous or may continue to be regulated as non-hazardous.

5. Revisions of cooling water intake structure or “Section 316(b)” of the Clean Water Act regulation for existing utilities (impingement and entrainment devices or cooling tower installation requirements).

6. Revisions to the existing utility Effluent Guideline Limitation (ELG) under the Clean Water Act for new effluent controls on metals, chlorine, etc. The EPA also might opt to revise the utility sector’s effluent or discharge thermal temperature allowance under Section 316(a) of the Clean Water Act to <90° F, which would be extremely difficult or impossible for utilities in southern or coastal communities.

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Page 64: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

APPA Electronic Discussion (“Listservs”) for Utility Employees

• Of Particular Interest:– Environmental– Generation & Fuels– New Generation– Energy Services (efficiency, etc.)

• Sign up at (and see list of others available):

http://www.appanet.org/discussion/listservjoinform.cfm

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Page 65: New Environmental Regulations and the Implications for the Electricity Power Sector APPA 2011 National Conference June 19, 2011 1:30-5:00 p.m. Theresa

Contact Information

Theresa Pugh

Director, Environmental Services

[email protected]

(202) 467-2943

Alex Hofmann

Senior Energy & Environmental Services Engineer

[email protected]

(202) 467-2956

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