November 19, 2004

U.S. Environmental Protection Agency

1301 Constitution Ave., N.W.

EPA West, Suite B-102

Washington, D.C. 20460

# RE: Docket ID NO. OPA-2004-0008

FR Vol. 69, No. 181, 9-20-04

## Sent Via EPA EDOCKET System

To Whom It May Concern:

Xcel Energy is a publicly held electric utility that operates electric
generation, transmission, and distribution systems in the midwest and
southwest United States. Xcel Energy's 75 electric generation facilities
are comprised of wind farms, hydro-electric plants, fossil-fueled
plants, nuclear generating plants, natural gas fired plants, and solar
power facilities. Xcel Energy also owns and operates 1,085 substations
throughout our service territories. These generation, transmission and
distribution facilities serve just over 3,000,000 customers in 11
states.

Northern States Power Company (NSP) is one of the operating companies
within Xcel Energy. NSP serves customers in the Dakotas, Minnesota,
Wisconsin, and Michigan. NSP owns and operates 37 electric generating
plants and 492 substations. The data contained in this letter, except
where noted, is from NSP and is representative of all of Xcel Energy.

### Xcel Energy's Response to the NODA

After reviewing the information presented in the Notice of Data
Availability (NODA) regarding alternate regulatory requirements for
facilities with oil-filled and process equipment, Xcel Energy believes
that there is insufficient evidence to support the need to regulate
either category of equipment (oil-filled electrical equipment and
oil-filled operating equipment). It is interesting to note that the
information published in the NODA supports this since information dating
back to the 1970's clearly shows a lack of need for SPCC regulation of
these types of equipment.

If regulation is going to be pursued despite the lack of supporting
evidence, the tiered approach offered by the Utilities Solid Waste
Activities Group (USWAG) in their submissions listed as Documents 8 and
9, where each piece of equipment would be viewed as a separate facility,
would be the most appropriate given the lack of risk that exists with
oil-filled electrical equipment and oil-filled operating equipment.

Also, if EPA is going to pursue regulation of OFEE, EPA needs to address
its expectation of the regulated community with respect to electrical
equipment prior to rulemaking establishing a new regulatory framework
for this equipment. While agency official have repeatedly stated that
EPA des not expect the regulated community to expend significant
resources to comply, the regulated community has not received assurances
that failure in the interim would not be treated as non-compliance
subject to enforcement action. The agency needs to either issue an
interpretation of the 2002 amendment to the SPCC rules which resolves
the conflicting statements and actions regarding the applicability of
the 1973 SPCC rules to electrical equipment or grant interim relief form
the current SPCC requirements.

Xcel Energy's data supporting this position is contained on the
following pages. Please call me if you have any questions or need
clarification. I can be contacted 612-330-6278.

Sincerely,

Patrick Flowers, ASP, CHMM

Environmental Analyst

Xcel Energy

Encl.

### **Background and Supporting Information**

1.  **[Oil-Filled Electrical Equipment]{.underline}**

#### Background {#background .unnumbered}

Within the NSP service territory, Xcel Energy owns and operates 492
electrical substations and another 42 sites contain oil-filled
electrical equipment (OFEE). This equipment is built to a different, and
more rigorous, standard than storage tanks. OFEE must be able to
withstand both vacuum conditions and low pressure without failure.

Most of large transformers are monitored electronically so that
operating conditions exceeding acceptable operating parameters are noted
and investigated. Other OFEE are essentially self-monitoring since a
loss of dielectric fluid results in an interruption in the transmission
of electrical power and an prompt response by the company to correct the
outage.

Besides electronic monitoring, Xcel Energy routinely inspects
substations visually and with other technologies. Visual inspections
involve checking equipment for normal operation and for evidence of
dielectric leakage. Discrepancies are reported and managed promptly. In
addition to visual inspections, certain equipment is inspected using
infrared scanners to determine if the unit may be in the early stages of
failing. The infrared evaluation is used to identify OFEE that requires
maintenance to prevent an outage.

Xcel Energy's spill history with 1085 substations in 11 states shows
that in the last four years (2001 to 2004), there has been only one
spill that has required reporting to the National Response Center. The
spill was of 350 gallons into a wetland from which it did not escape.
The industry spill data presented by Piper, Marbury, Rudnick & Wolfe
(Document 16) for facilities with between 1000 and 1300 facilities is
representative of Xcel Energy's spill history prior to 2001.

NSP's electrical substations are typically surrounded by a gravel bed,
which serves to control a fire in the event that an OFEE fails and
ignites the dielectric fluid. The gravel bed also serves to restrain oil
movement and limit the distance the fluid migrates and reduce the
likelihood of a discharge. One interesting note...a failure in one piece
of equipment does not necessitate a failure in other nearby equipment.
Even in large catastrophic failures of transformers, neighboring
equipment was not damaged to the point of container failure and release
of dielectric.

#### Conclusions {#conclusions .unnumbered}

Given these facts, and the information submitted in the NODA by USWAG
and others, there does not seem to be a reasonable threat presented by
OFEE to cause the kind of pollution to navigable waters that originally
spawned the SPCC rules. The risk from these types of facilities is
extremely low and additional regulation by SPCC will do little to
nothing to improve what is already an enviable spill history.

If regulation is pursued, then the tiered approach presented by USWAG
(Document 9) would be the most appropriate. USWAG's proposal is for:

2.  Individual oil-filled electrical equipment are viewed as individual
    facilities,

3.  Oil-filled electrical equipment that contains \< 1,320 gallons would
    not be subject to regulation,

4.  Oil-filled electrical equipment that contains 1,320 up to 20,000
    gallons would have to have an emergency response plan, and

5.  Oil-filled electrical equipment that contains \> 20,000 gallons
    would be subject to full SPCC regulation.

    If EPA is going to pursue regulation of OFEE, EPA needs to address
    its expectation of the regulated community with respect to
    electrical equipment prior to rulemaking establishing a new
    regulatory framework for this equipment. While agency official have
    repeatedly stated that EPA des not expect the regulated community to
    expend significant resources to comply, the regulated community has
    not received assurances that failure in the interim would not be
    treated as non-compliance subject to enforcement action. The agency
    needs to either issue an interpretation of the 2002 amendment to the
    SPCC rules which resolves the conflicting statements and actions
    regarding the applicability of the 1973 SPCC rules to electrical
    equipment or grant interim relief form the current SPCC
    requirements.

6.  **[Oil-Filled Operating Equipment]{.underline}**

#### Background

> Within the NSP service area, Xcel Energy operates 37 electric
> generating plants. These plants are fossil-fueled, natural gas,
> nuclear, hydro-electric, and wind. For most power plants, the largest
> assemblage of oil-filled operating equipment (OFOE) is comprised of
> lubricating oil systems used for turbines, generators, and other large
> pumps and rotating equipment. There are also hydraulic systems, seal
> oil systems, compressors, backup diesel generators, oil conditioners,
> coal mills, conveyor systems, and large mobile equipment at the plants
> that could potentially be affected by the definition of "using" in the
> SPCC amendments. NSP has at least 262 individual fixed pieces of
> equipment that would qualify as "using" and be in excess of 55 gallons
> (only 16 pieces of equipment are below 1,320 gallons).
>
> Since the equipment is essential for generating electrical power, it
> is designed for reliability and maintained by an aggressive
> maintenance program. Unplanned equipment failures result in added cost
> for the company both for repairs and for providing replacement
> electricity while the equipment is being repaired. The company has a
> substantial incentive to prevent equipment failure and the subsequent
> loss of electrical capacity.
>
> OFOE are subject to either continuous monitoring or frequent
> inspections by rovers during operation. Almost all the equipment
> discussed above is located indoors and any release would be collected
> in floor drains and routed to a sump system or oil/water separator.
> Sudden or unusual deviation from normal operating parameters results
> in immediate investigation and response by plant personnel since it
> typically results in loss of generating capacity by the plant. Since
> 1997, NSP experienced 1 spill that required notification to the
> National Response Center (a spill which entered a holdup pond and did
> not enter any navigable waterway).

#### Conclusion

Xcel Energy supports the recommendation by the U.S. Small Business
Administration Office of Advocacy (SBA) as represented in Document No. 3
with a few adjustments.

> In the 2002 amendments, EPA already adopted an exemption from the
> definition of "bulk storage container." SBA proposed to exempt OFOE
> from oil storage calculation which is a somewhat indirect way of
> achieving a full exemption. Xcel Energy proposes that EPA amend
> section 112.1(d) to clearly state that OFOE is not subject to SPCC
> regulation.
>
> SBA's description of the range of equipment encompassed by the term
> "manufacturing process systems/operational equipment" as "tanks and
> conveyances (including piping and other structures) that are used in
> the course of changing raw, feedstock, and intermediate materials into
> finished products." For the utility industry, if electric power is
> equated with a "finished product", then this definition would be
> acceptable. But if electric power is not equated with "finished
> product" then the definition must be modified to include the OFOE used
> to generate electric power.
>
> If EPA is not able to fully exempt this equipment from SPCC
> regulation, an reasonable alternative regulatory approach should adopt
> a unit specific concept that utilizes the same tiered approach
> proposed by USWAG for Oil-Filled Electrical Equipment where:

1.  Individual operating equipment are viewed as individual facilities,

2.  Oil-filled operating equipment that contains \< 1,320 gallons would
    not be subject to regulation,

3.  Oil-filled operating equipment that contains 1,320 up to 20,000
    gallons would have to have an emergency response plan, and

4.  Oil-filled operating equipment that contains \> 20,000 gallons would
    be subject to full SPCC regulation.

> This would make some allowance for the low risk experience of the
> utility industry and Xcel Energy.