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BEFORE THE ILLINOIS POLLUTION CONTROL BOARD 

AMEREN ENERGY RESOURCES, ) 

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) 

) 

) 

) 

) 

) 

) 

) 

Petitioner, 

v. 

ILLINOIS ENVIRONMENTAL 

PROTECTION AGENCY, 

Respondent. 

NOTICE OF FILING 

To: ALL PARTIES ON THE A IT ACHED SERVICE LIST 

PCB 12-126 

(Variance- Air) 

PLEASE TAKE NOTICE that we have today electronically filed with the Office of the 

Clerk of the illinois Pollution Control Board a MOTION FOR WAIVER OF PAGE 

LIMITATION and PETITIONER'S POST-HEARING BRIEF, copies of which are herewith 

served upon you. 

Dated: August 15, 2012 

Renee Cipriano 

Gabriel Rodriguez 

Amy Antoniolli 

SCHIFF HARDIN LLP 

233 South Wacker Drive 

Suite 6600 

Chicago, illinois 60606 

312-258-5500 

12- - - AlTACHMENT----

cERTIFICATE OF SERVICE 

I, the undersigned, certifY that on this 15th day of August, 2012, I have served 

electronically the attached MOTION FOR WAIVER OF PAGE LIMITATION and 

PETITIONER'S POST-HEARING BRlEF, upon the following persons: 

John Therriault, Assistant Clerk 

Carol Webb, Hearing Officer 

illinois Pollution Control Board 

James R Thompson Center 

Suite 11-500 

100 West Randolph 

Chicago, lllinois 60601 

and electronically and by first class mail, postage affixed, upon: 

Gina Roccaforte 

Assistant Counsel 

Division of Legal Counsel 

illinois Environmental Protection Agency 

1021 North Grand Avenue, East 

P.O. Box 19276 

Springfield, lllinois 62794-9276 

Renee Cipriano 

Gabriel Rodriguez 

Amy Antoniolli 

SCHIFF HARDIN LLP 

233 South Wacker Drive 

Suite 6600 

Chicago, lllinois 60606 

312-258-5500 

a~ ~ Amy Antoniolli 

., 
SERVICE LIST 

(PCB 12-126) 

John Therriault, Assistant Clerk Gina Roccaforte 

Carol Webb, Hearing Officer Assistant Counsel 

Illinois Pollution Control Board Division of Legal Counsel 

James R. Thompson Center lllinois Environmental Protection Agency 

100 West Randolph Street, Suite 11-500 1021 North Grand Avenue, East 

Chicago, lllinois 60601 P.O. Box 19276 

therriaj@ ipcb. state.il. us Springfield, lllinois 62794-9276 
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD 

AMEREN ENERGY RESOURCES, ) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

Petitioner, 

v. 

PCB 12·126 

(Variance- Air) 

ILLINOIS ENVIRONMENTAL 

PROTECTION AGENCY, 

Respondent. 

MOTION FOR WAIVER OF PAGE LIMITATION 

Now comes the Petitioner, Ameren Energy Resources ("AER"), by and through its 

attorneys, and for its Motion for Waiver of Page Limitation for Petitioner's Post-Hearing Brief 

before the Pollution Control Board ("Board"), states as follows: 

1. Section 101.302(k) of the Board's prOcedural rules states as follows: 

Page Limitation. No motion, brief in support of motion, or brief may 

exceed 50 pages, and no amicus curiae brief may exceed 20 pages, without 

prior approval of the Board or hearing officer. These limits do not include 

appendices containing relevant material. 35lll. Adm. Code 101.302(k). 

2. In order to fully and fairly present Petitioner's variance request before this Board, 

Petitioner respectfully requests a waiver of the applicable 50-page limitation. The Board held a 

hearing in this matter on August 1, 2012. At that hearing, Hearing Officer Webb received 

questions from Board Members and heard oral public statements from nearly 100 people. In 

addition, the Board has received a voluminous 2,565 written public comments into the record to 

date. AER cannot adequately address the numerous questions, public comments, both oral and 

written, and the various issues raised in those questions and comments, in the 50-page limit 

provided in the Board's procedural rules. 
3. AER, therefore, moves this Board to grant a waiver of the 50-page limitation 

applicable to the Petitioner's post-hearing brief and accept the Petitioner's Post-Hearing Brief 

filed concurrently with this motion. 

WHEREFORE, the Petitioner respectfully requests that the Pollution Control Board grant 

this motion for waiver and allow the Petitioner's post-hearing brief to exceed the 50-page 

limitation set forth in 35 Ill. Adm. Code 101.302(k). 

Dated: August 15, 2012 

Renee Cipriano 

Gabriel Rodriguez 

Amy Antoniolli 

SchiffHardin, LLC 

233 South Wacker Drive, Suite 6600 

Chicago, lL 60606 

Respectfully submitted, 

AMEREN ENERGY RESOURCES, Petitioner. 
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD 

AMEREN ENERGY RESOURCES, 

Petitioner, 

v. 

ILLINOIS ENVIRONMENTAL 

PROTECTION AGENCY, 

Respondent. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

PCB 12-126 

(Variance - Air) 

PETITIONER'S POST -HEARING BRIEF 

On May 3, 2012, Petitioner filed with this Board a request for variaoce relief from both 

the 2015 and 2017 sulfur dioxide (S02) emission rate provisions of the Illinois Multi-Pollutaot 

Standard ("MPS"), 35 Ill. Adm. Code § 225.233,1 specifically the S02 emissions staodards set 

forth in Section 225.233(e)(3)(C)(iii) and (iv). At the time of the filing, AER sought relief from 

Section 225.233(e)(3)(C)(iii) for five years beginning Jaouary 1, 2015, and ending December 31, 

2019, aod relief from Section 225.233(e)(3)(C)(iv) for four years, beginning Jaouary 1, 2017, 

and ending December 31, 2020. 

AER has requested additional time to comply with the 2015 and 2017 S02 emission rates 

because, among other things, declining power market prices have resulted in an insufficient cash 

flow necessary to finaoce and ·maintain the construction completion schedule of flue gas 

desulfurization ("FGD") equipment at the Newton Energy Center ("Newton FGD Project"). The 

installation aod operation of the Newton FGD is necessary for the Ameren MPS Group to meet 

the 2015 aod 2017 MPS emission rates. As described more fully in the petition and at hearing, 

1 Hereinafter, citations to the Board's regulations will be by section number only. 
AER comes to this Board now, in 2012, seeking the requested relief because the relief is critical 

from both a timing standpoint, as well as from a variance length standpoint. From a timing 

standpoint, coming before the Board now will allow AER to conserve cash flow and stave off 

draconian operational measures. From a variance length standpoint, the length of time of the 

relief period is critical to ensuring that the stability of the marketplace will have time to return 

thereby allowing the completion of the Newton FGD Project. Absent time to recover, AER will 

be left with no choice but to cease operations at additional energy centers as its only other viable 

compliance alternative. This point is worth repeating. Absent time to recover, AER will be left 

with no choice but to cease operations at additional energy centers as its only other viable 

compliance alternative. This is not an idle threat as has seemingly been suggested. The 

shuttering of plants is not a decision that AER, or any company for that matter, would chose as 

its "preferred" or "easy" option nor would AER or any other company, publicly announce such a 

possible consequence without exploring fully other compliance options. Indeed, the shuttering 

of any of AER's plants would be a blow to the core of AER's business and would be devastating 

to its employees, the local communities, equipment suppliers and contractors, state taxing 

authorities and already struggling local school districts. As Representative Phelps shared with 

the Board, "Joppa supports 164 well paying jobs for southern Illinois. You put that in 

perspective in Chicago, that's like 10,000 some odd jobs in southern Illinois." (Tr. 60). The 

additional time AER seeks due to hardship is necessary to allow recovery of the power market 

and the orderly planning, mobilizing and completion of the Newton FGD Project. 

There has been much discussion in the written public comments as well as at hearing that 

AER should have foreseen or anticipated its hardship (Tr. 188, etc.) and should not, therefore, be 

able to rely on it now. AER struggles to respond to such hollow accusations in light of the wide 

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spread financial challenges seen throughout the world. AER has also tried to minimize the 

hardship it faces by instituting a variety of measures to conserve cash. AER further shuttered 

two of its energy centers so it could focus resources at its other operating units on the System. 

All of its efforts, however, could not prevent AER from having to choose its least-preferred 

approach to conserving cash through deceleration of the Newton FGD. As explained by Mr. 

Gary Rygh of Barclay's Bank PLC, "from an investor's perspective, it appears no one wants to 

complete the Newton FGD system project more that AER[G] itself'. (Tr. 49). As presented, 

AER will continue various limited construction activities at the Newton Energy Center. By 

continuing limited construction activities, AER will be in a better position to respond quickly 

once power market prices, the economy and cash flows improve. 

AER is only asking for relief that is absolutely necessary to get it through these trying 

economic times. In doing so, AER has been able to offer a compliance plan that provides a net 

environmental benefit with respect to S02 emissions. By agreeing to make S02 emissions 

reductions earlier than anticipated, AER will have emitted fewer tons of S02 that it would under 

the current terms of the MPS, resulting in a discernible benefit to human health. In response to 

comments regarding the impacts of S02 to human health, AER requested that expert analysis be 

performed addressing this issue and has attached it to this post-hearing comment for the Board's 

consideration. 

I. RELIEF REQUESTED BY AER 

In AER's petition filed with the Board on May 4, 2012, AER voluntarily offered to meet 

an overall annual S02 annual emission rate in 2012 through 2019 of 0.38 lb/MMBtu, declining to 

a rate of 0.25 lb/MMBtu by January 1, 2020 and 0.23 lb/MMBtu by January 1, 2021. (Pet. Pg. 8-

9). Also as part of AER' s compliance plan, AER must continue to burn low-sulfur coal from the 

3 
Powder River Basin and manage operations as necessary to maintain compliance. (Id.). Further, 

consistent with cash flows, AER will maintain a continuous program of construction at the 

Newton Energy Center so as to be in a position to have the Newton FGD Project completed and 

operational to meet compliance obligations. (Id.). 

In its recommendation ("Recommendation"), the Illinois Environmental Protection 

Agency ("Agency") proposed an alternative mitigation S02 emission rate of 0.35 lb/MMBtu to 

apply during the calendar years 2013 through 20192 (Rec. 11). As explained in AER's first and 

second set of responses to the Board's technical questions, AER agrees to meet this revised S02 

emission rate. AER also responded to the Illinois EPA's request that the variance time period be 

shortened by agreeing to comply with the 0.23 lb/MMBtu beginning on January 15, 2020, rather 

than on December 31, 2020 as proposed in the Petition. The return to compliance with the 0.25 

lb!MMBtu rate will remain on the date proposed by AER in its Petition (January 1, 2020). As 

explained in its Response to the Hearing Officer's Questions dated July 30, 2012, and by 

Michael Menne through his testimony atthe August I hearing, AER will comply with the more 

stringent so2 emission rate during the calendar years of 2013 through 2019 by operating flue gas 

desulfurization ("FGD") systems at the Duck Creek and Coffeen Energy Centers at a higher level 

of control. Mr. Menne went on to explain that"[ e ]ven at those levels, [the] compliance margins 

remain very low and AER will need to employ operational strategies such as low sulfur coal 

procurement and generation utilization in order to comply with the proposed rate." (Tr. 26). The 

0.35 lb/MMBtu emission rate for S02 through calendar year 2019 also commits AER to not 

operate the Hutsonville and Meredosia Energy Centers during the pendency of the variance. 

None of these steps--maintaining the shuttering of Meredosia or Hutsonville, operating the FGD 

2 The Recommendation will be cited to as "Rec. at " 

4 
systems at Duck Creek and Coffeen Energy Centers, procurement of lower sulfur coal-none of 

them, are required by the laws on the books today. (Tr. 26). Thus, in answer to the question 

posed by the Environmental Law and Policy Center ("ELPC") "[i]f all those things are done 

now, how close does that bring the company to compliance with the [MPS]?" --the answer is an 

emission rate of0.35lb/MMBtu. (Tr. 119). 

AER also wishes to confirm again its willingness to meet certain conditions as part of its 

compliance plan, should relief be granted: 

I. AER agrees not to operate the Hutsonville or Meredosia Energy Centers for 

power generation purposes during the pendency of the variance; except that the 

FutureGen project which is currently proposed for the Meredosia Energy Center 

site is exempt from this restriction. 

2. During the term of the variance, AER agrees to file progress reports with the 

Board and the Agency as to the status of construction activities relating to the 

Newton Scrubber annually by the end of each calendar year. Furthermore, in the 

event the completion of the scrubber project becomes financially infeasible, AER 

agrees to advise the Board and the Agency of alternative plans for compliance 

during the remaining term of the variance. 

II. AER HAS MET ITS BURDEN AND IS ENTITLED TO RELIEF 

Section 35(a) of the Illinois Environmental Protection Act (415 ILCS 5/35(a) (2010)) 

provides that, "[t]o the extent consistent with applicable provisions of the* * *Clean Air Act," 

the Board may grant individual variances where it is shown that "compliance with any rule or 

regulation, requirement or order of the Board would impose an arbitrary or unreasonable 

hardship." The petitioner bears the burden of proof. 415 ILCS 5/37(a) (2010). 

5 
Several public.commenters stated during the course of the hearing that AER's variance 

request was somehow "unfair" since others would have to comply with the MPS. However, the 

Board created the variance procedure specifically to allow individual petitioners to seek 

temporary relief from rules of general applicability. The purpose of a variance has been stated 

many times by the Board and Illinois courts. The Appellate Court, citing to Monsanto in City of 

Mendota v. Pollution Control Board, 112 Ill. Dec. 752, 757, 514 N.E.2d 218 (3'd Dist. 1987), 

stated "[t]he variance provisions of the Act are intended to afford some flexibility in regulating 

the speed for compliance." The Appellate Court in Celotex Corporation v. Pollution Control 

Board, 65 Ill. App. 3rd 776, 22 Ill. Dec. 474, 382 N.E.2d 864, 866 (4th Dist. 1978), phrased the 

purpose as "[t]he issues in a variance proceeding focus upon whether compliance should be 

excused for a period of time." AER's decision to opt-in to the MPS was not an "agreement" or 

the "functional equivalent of a contract" as characterized by the ELPC advocating on its own 

behalf and that of Environment Illinois, Natural Resources Defense Council, Respiratory Health 

Association, and Sierra Club (collectively, "Citizens Groups") (PC# 2409, at 23), but rather a 

decision to be subject to one Illinois regulation as opposed to another. AER's .request, 

accordingly, fulfills the purpose of the variance process and there is nothing "unfair" about 

asking for more time to comply. In fact, it is the responsible thing to do with respect to local and 

State economies especially given that AER' s compliance plan offsets any potential adverse 

impacts to human health and the environment. 

Given the temporary nature of a variance request, site-specific rulemaking analyses 

regarding environmental impact such as those raised by ELPC are not applicable. In posthearing comments, ELPC cites to Proposed Site Specific Rule Change for City of Mendota: 35 

Ill. Adm. Code 306.304, R88-6 (Apr. 6. 1989); aff'd by City of Mendota v. PCB, 192 Ill. App. 3d 

6 
704 (3'd Dist. 1990), but that comparison is without merit. The Board highlighted the inherent 

difference between granting a site-specific rulemaking and temporary relief in a variance 

proceeding by explaining that if the Board were to grant the relief, the proponent would have no 

incentive to investigate or pursue alternatives and "the potential for environmental improvement 

would be forfeited." City of Mendota, R88-6, slip op. at 7. The same cannot be said for AER. 

With the short-term relief allowed under a variance, AER must continuously proceed towards 

compliance. 

Also, as explained in more detail below, AER's hardship is not self-imposed and simply 

cannot be likened to situations where the Board has found that the petitioners' own business 

decisions led to noncompliance. ELPC cites to Ecko Glaco Corp. v. !EPA, 186 III. App. 3d 141, 

150-51 (I" Dist. 1989), for an example of where the Board has found that a company's own 

business decisions were responsible for its noncompliance. AER' s situation is inapposite. AER 

did not delay either in choosing a plan to comply with the MPS or in deciding to seek relief from 

the Board. AER committed to installing a wet FGD system at Newton to comply with the MPS. 

The project is now more than half complete. Within a few short months of the CSAPR stay and 

the sharp decline in power prices due to lowest demand in decades because of the recession, the 

exceptionally mild weather this past winter, and an increased supply of natural gas, AER knew it 

did not have the cash flows necessary to complete the Newton FGD project. The company 

petitioned the Board for more time which would allow it to continue to progress towards its goal 

at a sustainable rate. AER never "lacked a firm compliance plan," or "lacked diligence in 

pursuing compliance" as the Board found in Ecko Glaco. To the contrary, AER acted swiftly 

and responsibly to ensure that it could remain in compliance and keep energy centers open. 

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AER has consistently provided a clear plan to bring it into compliance with the MPS 

requirements. 

A. AER Has Demonstrated that it is Facing an Arbitrary and Unreasonable 

Hardship. 

AER has explained more fully in its petition"the circumstances that have led it to face the 

hardship it faces today. During 2012, the market prices for power collapsed, falling to levels not 

seen since 1978. (Pet. 19). The sharp decline in power prices is due to lower demand because of 

the recession, the exceptionally mild weather this winter, and an increased supply of natural gas 

from shale gas that has contributed to lower natural gas prices. Given these conditions, AER' s 

financial health and access to capital have both been severely impaired and the current outlook 

for the next several years is no better. AEG's operating proceeds are now insufficient to fully 

fund large-scale capital projects, in particular the Newton FGD System. (Pet. at 21). 

During the August I hearing, the ELPC offered Mr. Rob Kelter to testify as to the 

background of the Electric Service Customer Choice and Rate Relief Law of 1997 ("1997 Law") 

as it relates to AER's current position and AER's petition for variance. (Tr. 68). ELPC argues 

that the economic conditions and compliance obligations AER is facing today were somehow 

foreseeable in 1997 when the Electric Service Customer Choice and Rate Relief Law of 1997 

was enacted. (Tr. 71 ). ELPC also contends that in transferring generation assets into merchants 

companies, Ameren took a calculated and knowing risk that deregulation would be advantageous 

to shareholders. (Tr. 70). In support, ELPC relies on a dated and irrelevant report created by the 

Citizens Utility Board ("CUB") in early 2006 to demonstrate that "lays out just how well 

Ameren performed." (Tr. 71). 

1. AER's Hardship Was Neither Foreseeable Nor Self-Imposed. 

8 
AER's predecessors did not "seek" deregulation. PC# 2409, pg 30. Rather, it was one of 

the primary purposes of the Electric Service Customer Choice and Rate Relief Law of 1997 to, in 

fact, incent the utilities to move their generating plants into either affiliates or third parties, 

where they could no longer be controlled by the utilities and would, instead, compete in a 

wholesale power market to provide power to retail customers at prices determined by 

competition. The General Assembly intended to incent this change by enacting a streamlined 

process with reduced "tests," available only for a finite time period. Mr. Kelter's prior employer, 

the CUB, was a strong advocate for this outcome. The law was purposely crafted to encourage 

transfer by requiring limited approval requirements and making more onerous the decision to 

stay within the regulated entity. Why? Because the goal of the 1997 Law was to give customers 

significant rate relief-and that it did. Indeed, if the 1997 Law was enacted to provide the 

utilities with some advantage, it would be doubtful that CUB would have been the Law's 

champion. 

Contrary to ELPC's assertion, the 1997 Law did not "facilitate Ameren's creation." (PC# 

2409, pg. 30). CIPSCO Incorporated and Union Electric agreed to merge in 1995, had already 

filed for approval from the Illinois Commerce Commission under the pre-1997 Public Utilities 

Act, and were in the process of merging when the 1997 Law was passed. 

Mr. Kelter overinterpreted the statutory language of the Public Utilities Act by pointing 

to the words "an electric utility may" in Section 16-111(g) and asserting that Ameren was not 

compelled by the deregulation legislation to effectuate the transfer of its generating plants. The 

phrase "an electric utility may" simply signaled that during the "mandatory transition period" 

created by the 1997 Law, an electric utility could transfer assets either by using the procedure 

created by Section 16-111 (g), or by using existing procedures already in the Public Utilities Act 

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(and which had been used prior to the 1997 Law to obtain approval to transfer assets). The 

broader statutory picture missed by Mr. Kelter is that the General Assembly, by creating an 

expeditious process for transferring generating plants that would only be available for a limited, 

finite amount of time (the mandatory transition period), the 1997 Law intended to incent the 

electric utilities to divest their generating plants into wholesale power supply companies - which 

was one of the overriding structural changes that the 1997 Act was intended to foster, namely, 

the separation of generating plants from the regulated distribution utilities. While it is true 

Ameren was not compelled to effectuate this transfer, there was at the time a much greater 

incentive to do so than Mr. Kelter portrayed in this testimony. 

In any case, AER does not argue it is the deregulated market alone that creates the 

hardship it now faces. Current economic conditions go beyond any price declines that were 

foreseeable when the 1997 Law was passed or even when the MPS was enacted in 2006. The 

new methods of gas extraction are a "game-changing" technology that have fundamentally 

altered the outlook for gas supplies and pricing. The general recessionary economic conditions 

have also depressed the demand for power and therefore power prices. Further, mandatory 

requirements that certain percentages of the total retail electric supply come from renewable 

resources, enacted in Illinois in 2007, have also reduced the demand for power from traditional 

sources, and consequently prices. In sum, the MPS was in fact premised on the expectation that 

the power market would continue to support the capital expenditures necessary to meet the 

proposed emission rates. Market conditions and new technologies and policies that have come 

about since that time were not self-imposed and simply not foreseeable. It is the convergence of 

these factors that amount to the arbitrary and unreasonable hardship AER now faces. 

10 
Nonetheless, AER does not, nor could it, seek to undo in this variance proceeding, the 

legislative mandate that resulted in a deregulation of power generation in Illinois. Rather, AER, 

in setting forth the realities of the marketplace in its petition for relief, is simply providing 

context for the financial hardship that it faces today, will face in the coming years, and to explain 

why creditors are unwilling to provide capital funding to merchant companies as compared to 

regulated utilities. AER further pointed out deregulation to explain why a funding mechanism of 

passing on the cost of pollution control equipment to the rate base is not possible for merchant 

plants. 

2. The Retail Customers, Not the Power Companies, Have Been the Greatest 

Beneficiaries of the Deregulated Market Structure. 

The 2006 study provided as Hearing Exhibit 2 was done before Illinois had established 

the current process for providing power to retail customers through the Illinois Power Agency 

Act ("IP A Act") enacted in 2007. Prior to the IP A Act, AER could sell power to Ameren 

Illinois, for example, to use for Illinois retail customers at "frozen" retail rates. Since 2007, AER 

must compete with other _power suppliers in wholesale bidding process run by the Illinois Power 

Agency in order to sell its power in Illinois. 

The 2006 study was also done before 2007 legislation requiring Ameren to pay $185 

million in rate relief to customers and other payments. In 2007, Illinois electricity prices 

increased sharply. In response, General Assembly enacted Section 16-lll.5A of the PUA, 

which specified that Ameren would provide $488 million in rate relief (refunds or future reduced 

rates) to its retail customers over the 4-year period 2007-2010, with specific dollar amounts of 

rate relief provided in each year as stated in the statute. (220 ILCS 5/16-lll.5A(f)). Through 

separate agreements, the Ameren utilitie"s were reimbursed a majority of this amount. Ameren's 

unaffiliated generating and energy marketing companies (including AER) had to provide $85.5 

11 
million of the amount, and Ameren utilities were responsible for the balance of $95 million. The 

statute expressly provided that none of the $488 million could be recovered through rates 

charged to customers. The statute also provided that a group of generating companies, including 

AER, would provide $25 million to the State to be used, essentially, as start-up funding for the 

IP A, of which the Ameren generating companies share was $4.5 million. Therefore, in total, the 

Ameren companies were required to pay $185 million ($85.5 + $95 + $4.5). The CUB study 

depicts Ameren's financial results purportedly due to deregulation as of 2006 but fails to include 

the impact to Ameren of subsequently having to provide $185 million in rate relief to customers 

and other payments as the result of the 2007 legislation. Again, since 2007, it is the retail 

customers in Illinois who are the great beneficiaries of the market structure in Illinois following 

the 1997 and 2007 acts--not the power generators like AER. 

Moreover, projections from a 2006 study of the 1997 rate relief law done before Illinois 

established the current process for providing power to retail customers through the Illinois Power 

Agency Act enacted in 2007 simply· have no bearing on the ability of unregulated companies 

such as AER to operate profitably. Ameren's stock traded in the $50 to $54 range at the end of 

2007. Today it hovers around $34. As the chart below clearly reflects, Ameren stockholders 

have not seen growth due to investment in unregulated generation. 

12 
Ame.ren Corpon~~tlon Common Stock 

.AEE 

JomOB Jan 09 Jan 10 Jan 11 Jan 12 

"' "' 

45 

25 

20 

20.0 

AEG's return on equity in 2011 was 4.3% and for 2010 it was -3.9%. AER's assets are 

not paying returns, and there is currently uncertainly about when the economy will recover and 

AER's current financial predicament will improve. As a merchant generator, "it has significant 

exposure to market prices, swings in load demand and commodity price volatility." (Tr. 46). 

Current power market conditions remain depressed. 3 "As it now stands, AEG' s credit quality is 

poor" (Tr. 4 7) and investors simply do not place funds into assets that have no prospects for 

repayment. 

3 There are three large fossil electric generating unit (EGU) systems in Illinois. Dynegy filed for 

bankruptcy protection on July 6, 2012 (Dynegy Files for Bankruptcy as Part of Settlement, Azam 

Ahmed, New York Times, July 6, 20 12) and press reports indicate that Midwest Generation may 

soon follow. Illinois coal plant owner weighs Chapter 11, Julie Wernau, Chicago Tribune, July 

31, 2012. 

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3. Ameren Corporation Will Not Support the Capital Needs of AER. 

As both Mr. Ryan Martin and Mr. Gary Rygh described, neither the $500 million 

revolving credit facility that it shares with its parent nor the "Put Option" Agreement provide any 

financial haven or support for completion of the scrubber project. It is important to note that the 

$500 million revolving credit facility is due to expire in the middle of2013. (Tr. 51). This credit 

facility, however, much like the Put Option Agreement, serves as a source of liquidity and is not 

put in place for purposes of funding long term projects like the FGD project. Even if you ignore 

the purpose of the revolving credit facility, however, anything borrowed by AEG must be repaid 

upon expiration of the facility. AEG simply is not in a financial position to do so. Further, the 

Put Option Agreement was put in place "effectively [as] a replacement for some form of 

liquidity when the current facility expires." (Tr. 51). As Mr. Rygh went on to explain, the "Put 

Option" is basically "just an emergency rainy day fund" so there is "some semblance of liquidity 

there." (Tr. 51). 

Lastly, the Office of the Illinois Attorney General ("Attorney General") criticizes Ameren 

Corporation's decision to require its subsidiaries to "stand on its own in terms of maintaining a 

viable cash flow" and attributes such a policy to "investor relations motivations." (Tr. 90). 

These statements demonstrate a misunderstanding of parent/subsidiary corporate relationships 

and are simply unfounded. Ameren Corporation owns the common stock of its subsidiary 

companies. It does not directly operate any of its busmess units and therefore cannot, on its own, 

generate revenue. In order for Ameren Corporation to act as an ongoing funding source to AER 

that cash flow would need to come from an operating unit such as one of the regulated utilities. 

The subsidization of merchant generation by a regulated utility such as Ameren Illinois 

Company would most certainly be challenged and criticized by the Illinois Commerce 

Commission and the Attorney General. Further, the rates of regulated utilities are set under 

14 
traditional regulation to recover only the operating and capital costs of those regulated utilities. 

Lastly, the "severe negative reaction would adversely impact Ameren Corporation's own credit 

quality and access to capital." (Tr. 4 7). Ameren Corporation must balance tbe credit and 

lending needs of all its businesses, and similar to third party lenders, it cannot assume additional 

unsecured debt on behalf of AER where there is not a secure revenue stream to support such an 

obligation. (Pet. 22). 

B. AER has Considered all Feasible Compliance Alternatives and Costs. 

To comply with the 2017 MPS emission rate, AER estimates tbat it must reduce 

emissions by approximately 16,000 tons. The installation of two scrubbers at Newton would 

reduce emissions by approximately 17,500 tons of S02. No other commercially available 

technology produces that level of removal efficiency. Furthermore, it is important to note tbat 

compliance witb tbe MPS S02 and NOx requirements is based on a system average basis. 

Accordingly, when approaching compliance on a system-wide basis, tbe most economical and 

effective approach is to control tbe larger units first; That is the exact approach used by AER. 

AER has evaluated a series of technologies under a myriad of potential state and federal 

compliance scenarios. Third-party engineering firms such as tbe Shaw Group were retained to 

assess the viability of dry sorbent injection at tbe Joppa Energy Center. In 2011, AER retained 

URS Consulting to perform Air Quality Control Technology (AQCT) assessments on the cost 

and appropriateness of a host of technologies at Joppa and E.D. Edwards Energy Centers. Each 

plant has unique site characteristics tbat must be considered when assessing tbe feasibility of 

retrofitting a facility witb pollution control technology. The cost of installing DSI plus fabric 

filters at Joppa (6 units) and E.D. Edwards (2 units) was $433 million and $280 million, 

respectively. A cost table from the URS report is appended hereto as Exhibitl. 

15 
Contrary to the Attorney General's and ELPC's conclusory assertions, AER has 

considered all viable compliance alternatives. The measures suggested by the public 

commenters are either (a) ineffective because they do not allow AER to achieve compliance with 

the MPS emission standards and/or trigger excessive co-pollutant emissions and requiring costly 

additional controls; or (b) would affirmatively worsen AER's financial predicament. The 

technological and operational measures proffered by ELPC and the Attorney General are 

discussed below. 

Curtailment of Generation. Coal plants have extraordinarily high fixed operating costs 

due to around-the-clock operations and the need to continually maintain equipment and manage 

coal inventory and daily shipments. As has been explained in AER's petition, in response to 

questions posed by the Board and at hearing, while curtailing generation does reduce emissions, 

it also siphons off AER's sole source of revenues which are derived from the sale of power. 

Indeed, the de-rating of a unit means less power to sell, less revenue generated, and therefore 

reduces the amount of cash available to cover AER' s fixed operating costs to run the units in the 

first place. Significant curtailment of generation under any market circumstance would 

exacerbate the precarious fmancial condition of AER in that insufficient cash flow would be 

generated to cover needed and certain operating costs. However, even faced with this reality, 

AER did evaluate the viability of reducing operations at the Newton, E.D. Edwards, and Joppa 

Energy Centers at varying degrees. That evaluation revealed that in order to comply with the 

MPS S02 emission rates, AER would need to lower capacity factors on such units to between 

22% and 38%.4 In such scenarios, fixed operating costs would essentially remain the same 

4 Target utilization for the A.ER system is between 80 and 90%. Recessionary conditions have 

lowered such system utilization to between 65 to 75% (not including specific unit outages). 

16 
because the units are still operating, even as generating levels are reduced. The result was as 

suspected: negative cash flow and an inability to fund ongoing operations. In fact, the 

curtailment of operations puts AER as a whole in greater financial peril than unit or plant 

shuttering thereby jeopardizing the system's viability and resulting in greater job loss. 

Operational curtailment is simply not a viable compliance alternative. In this power market and 

under the regulatory landscape, if relief is not granted AER' s only viable option to maintain 

compliance would be to take one or more energy centers out of operation. The Attorney General 

should note this reality is supported by affidavits in the record. 

Optimization of Scrubber Performance. AER has and continues to implement 

operational measures to reduce emissions. AER has been doing this voluntarily at a cost even 

prior to coming to this Board to ask for relief. (Tr. 39). Further, as a part of AER's proposed 

compliance plan, the operation of FGD systems at the Duck Creek and Coffeen Energy Centers 

will have to be fully maximized in order to maintain compliance on a system-wide basis with the 

proposed mitigation rate of 0.35 lb/mmBTU. The removal efficiencies for these FGD systems 

will range between 98-99%.5 Even at those high removal efficiency levels, compliance margins 

remain narrow and AER will need to employ additional operational strategies such as low-sulfur 

coal procurement and reduce generation utilization as needed to comply with the proposed 

mitigation emission rate. (Tr. 26). Mr. Gignac's testimony at hearing seems to imply that this 

commitment had not been made by AER. (Tr. 88). AER is not sure what more can be asked of 

it when it is committing to a rate that requires maximization among other things to maintain 

compliance. 

5 See page 8 of AER' s First Set of Responses for the associated capital and operating and 

maintenance costs associated with achieving and maintaining such high FGD removal 

efficiencies. 

17 
Alternative Technology - Dry Scrubbers. In its post-hearing comments, the Attorney 

General appears to confuse dry scrubber technology with Dry Sorbent Injection ("DSI") and 

seems to suggest that AER has failed to consider properly both technologies. As described more 

fully below, DSI has comparatively low capital costs (approximately $19 million) because 

relatively minor pieces of equipment are needed to feed the sorbent material into ductwork. In 

contrast, a dry scrubber requires the construction of multi-storied building and spray tower to 

house equipment that "treats" the flue gas before it leaves the stack. The cost of wet FGD 

systems installed at Duck Creek and Coffeen total $258 million for one unit at Duck Creek and 

$568 million for the two units at Coffeen. Wet FGDs allow for greater chemical reactions and 

have a higher removal efficiency. As a result, wet FGDs can accommodate the use of a variety 

of coals including the higher sulfur content found in Illinois basin coal. Dry scrubbers have 

removal efficiencies in the low 90% range and therefore are typically used with low sulfur 

Powder River Basin coal. The Joppa facility's configuration consists of six units whose flue gas 

is routed through three separate stacks. To achieve reductions approaching those projected for 

the Newton FGD project, AER would need to install 6 dry scrubbers at Joppa at an estimated 

cost of $460 million. 

Further, the United States Environmental Protection Agency ("USEPA") recently 

finalized federal requirements regarding mercury and hazardous gases. Dry scrubbers may be 

ineffective in addressing hazardous gas emissions and, without additional add-on controls, could 

adversely impact particulate emissions. The cost of constructing a dry scrubber system at Joppa 

would be nearly twice the cost of completing the FGD project at Newton. Clearly, the use of dry 

scrubbers at Joppa is neither the best economic or environmental alternative for complying with 

the MPS. 

18 
Alternative Technology - Dry Sorbent Injection. Both the Attorney General and the 

ELPC believe that AER has not given DSI adequate consideration as a compliance alternative. 

Specifically, ELPC suggests, through the public comment of Professor Kimberly Gray, that "dry 

sorbent injection (DSI) is an economically feasible strategy to reduce S02 and other acid gases" 

at the E.D. Edwards and Joppa Energy Centers. (Tr. 119, 120). ELPC also relies upon a DSI 

study report performed by the Shaw Group6 at the Joppa facility (an abbreviated version of the 

report was provided to the Agency as part of a construction permit reporting requirement). 

However, neither ELPC nor the Attorney General adequately account for the impact that such 

pollution control technologies would have on pollutants other than S02. Specifically, due to the 

size of the existing particulate control equipment and the use of ACI for mercury control, the use 

of DSI would result in a significant increase above threshold levels of PM. Accordingly, 

additional controls (and capital expense) would be needed to reduce PM emissions. We explain 

further below. 

DSI is a process by which chemical materials are injected into the flue gas stream of a 

boiler. The injection of calcium or sodium sorbent reagents can occur directly into the boiler 

furnace or into duct work location near a component called an air heater. Both types of sorbents 

have been tested on Ameren's Illinois and Missouri units. Calcium based reagents were deemed 

ineffective for S02 removal at tested load levels at Hutsonville. Sodium re-agents were used at 

6 In the report submitted to the Agency, Joppa included only those portions (31 pages) necessary 

to support the reporting conditions set forth in the construction permit. (Final Report dated 

September 24, 20 I 0) Appended hereto as Exhibit 2 is the complete Executive Summary of the 

Shaw Group Report (55 pages; Tables 2-1 through 3-29). The Executive Summary addresses the 

potential compliance and permitting issues associated with DSI and the impact on particulate 

emissions and ESP performance. It also recommends additional assessments and studies. The 

complete version 9f the report includes Trona test data and calculations supporting the test 

program that total well over I ,000 pages. AER did not submit this data due to the volume, but 

will do so at the Board's request. 

19 
the Joppa Energy Center and resulted in 50% S02 reductions at tested load levels. However, 

AER's preliminary permitting analysis reflects that the use of such materials in the quantities 

required to comply with the 2015 and 2017 S02 emission rates would exceed applicable 

particulate requirements thereby triggering significant additional capital and maintenance 

expenses to address such emission requirements.7 

Professor Gray, the ELPC and the Attorney General simply ignore and therefore 

understate the significant annual operating and maintenance ("O&M") costs associated with DSI. 

(In fact, other than noting the cost differential between types of sorbents, Professor Gray 

provides neither capital nor O&M cost estimates as part of her public comment). The Shaw 

Group Report (attached as Exhibit 2) provides estimated annual cost of dry sorbent ranging from 

$15 million to $44 million depending upon the type of material used and the location of injection 

(before or after the air heater): 

7 Professor Gray acknowledges that "some modifications of existing ESPs may be required, 

such as changing the location of the combustion air preheater" or installing high frequency 

power upgrades. Neither the cost of such plant modification nor DSI's attendant ash disposal 

costs appear to have been included in her "economically feasible" assessment. 

20 
.. Table 3"29- Estimated Annual Cost of Dry Sorbent . 

. 

.. ·. Dry LbS02 

Sorbent remQvedper 

. Injection Cost lb of Dry Yearly Cost of Dry 

DrySorbent Location ($/ton) Sorbent Sorbent (1) 

Un-milled Trona Before Air heater $I 75 0.093 $ 23,483,829 

Milled Trona Before Air heater $ 175 0.10 $21,839,961 

Milled Trona After Air heater $ 175 0.049 (2) $ 44,571,349 (2) 

SBC Before Air heater $200 0.16 (3) $ 15,599,972 (3) 

SBC After Air heater $200 0.12 $20,799,963 

Additional O&M costs would be required to address disposal related and material 

handling costs. On the AER system, the use of DSI is not a "cheap and easy" compliance 

alternative. 

As the sorbent is exposed in the flue gas, it reacts with the S02 to form dry particles 

which are captured and removed as the gas stream passes through pollution control devices 

called electrostatic precipitators (ESP). The ESPs at Joppa and E.D. Edwards were designed and 

constructed more than forty years ago. While the ESPs have been maintained over time, it is the 

original sizing of the ESPs that greatly impacts its performance capability. In fact, due to the 

size of the ESPs at Joppa, and while DSI resulted in a 50% reduction of S02, it also triggers PSD 

permitting requirements if the sorbent injection rate exceeds 10%.8 The Shaw Group Report 

specifically notes in the Executive Summary and Section 3.4.2, that DSI will trigger PSD 

permitting requirements for particulate matter (see Tables 3-25 through 27). The next step in the 

Shaw Group Report, as outlined in the Executive Summary and in Section 4.2 

Recommendations, references the need to evaluate helper ESPs or a fabric filter (baghouse) (see 

8 Based on this assessment and the size of the ESPs at Edwards, PSD concerns would also be 

similarly triggered at comparable injection rates at that facility. 

21 
Table 3-28). In contrast to Professor Gray who bases her opinion largely on a literature review, 

the Shaw Group Report is site-specific to Joppa. 

As a result of the MPS mercury requirements, in July 2009, ACI systems were installed 

at virtually every non-scrubbed unit in the fleet. Just as there is a limit to the particulate loading 

a house furnace filter can absorb, the same is true with the ESPs at Joppa and E.D. Edwards. 

Accordingly, due to the size of the ESPs and the use of ACI, the injection of additional reagents 

from a DSI system results in additional mass loading and would overwhelm the current 

effectiveness of the ESPs. To comply with both the S02 and PM emission limits applicable to 

these facilities, AER would need to install additional particulate controls such as a fabric filter. 

The Shaw Group observes in Section 4.1. Conclusions as follows: 

"[t]he addition of DSI will increase the amount of particulate matter leaving the stacks. 

The Joppa facility will trigger PSD due to injection of dry sorbent and DSI material 

handling unless the control efficiency of the existing particulate control is increased" 

ELPC, apparently in possession of an abbreviated version of the report, has taken out of 

context two sentences from the Shaw report. As Shaw makes clear, "[s]ignificant modifications 

to the plant's ESPs would be required to limit the additional particulate emissions." Shaw Group f 

Report, Section 3.4.1, pg. 37. 

In addition, due to the sodium reagents solubility in water, the resulting waste stream 

would exceed effluent limits and therefore could not be routed through the existing ash pond 

water treatment system. Accordingly, particulate material from the ESP would need to be 

disposed of in permitted landfills. Such operational and associated capital costs would include 

the use of storage silos, transportation and landfill expenses. Shaw Group Report, Section 4.1.3, 

pg. 54. The comments provided by ELPC simply ignore the total cost associated with the use of 

DSI. The total cost of installation of DSI systems at E.D. Edwards and/or Joppa, along with the 

22 
attendant costs required to address corresponding increases in particulate matter emissions and 

ash disposal and O&M, would exceed the approximate $200 million to $250 million needed to 

complete the scrubber at Newton. 

AER's Proposed Mitigation Rate Incorporates a Multitude of Compliance 

Alternatives. AER' s proposed mitigation rate of 0.35 lb/mmBtu S02 imposes significant 

restrictions on the management of the business. The scrubbers at Duck Creek and Coffeen will 

need to be operated at maximum levels and ultra-low sulfur coal and PRB coal will need to be 

procured on an ongoing basis. In addition to these measures AER has evaluated, through the use 

of production modeling, the impact Of DSI and operational curtailment. Even with the above 

measures and the use of DSI at Joppa operated at a 50% removal efficiency and the retirement of 

one unit at Edwards, the overall system rate is estimated to be 0.28 lb/mmBtu S02 emission rate, 

above MPS requirements for 2015 and beyond. This alternative is not deemed viable because 

(a) it does not result in compliance; and (b) it would increase emissions associated with PM and 

require additional capital expenses needed to address those emissions. Such expenditures would 

be equivalent to that needed to complete the scrubbers. In short, there is no cost effective or 

otherwise viable alternative that "minimizes the deviation." 

Natural Gas. ELPC seemingly suggests that conversion to natural gas may be a viable 

compliance alternative. (Tr. 118). AER has performed a screening analysis with respect to the 

feasibility of natural gas conversion ofE.D. Edwards and Joppa Energy Centers as a compliance 

alternative to the MPS. That assessment however, is preliminary in nature and ongoing. The 

conversion of a generating facility from coal to gas combustion represents a fundamental and 

permanent change in business operation. Under current market conditions, natural gas 

conversion at Joppa would adversely impact the current capacity levels and current operating 

23 
regime of this facility would be reduced to the point where it would operate on a seasonal basis 

only9 The resulting drop in utilization would reduce the revenue that AER is able to generate to 

cover fixed cost at this facility and across the system. It also would result in a reduction in 

workforce. 

Before such a decision could be properly made, detailed engineering and operational 

assessments would need to be evaluated under a range of technical and economic variables. 

(URS provided an order of magnitude estimate of $634 million to convert the Joppa plant to a 

combined cycle facility.) In addition, while natural gas pipeline facilities exist in the vicinity of 

Joppa, it is unknown whether there is sufficient transport capacity on such pipeline. With respect 

to the E.D. Edwards Energy Center, natural gas pipelines are not located within the vicinity of 

plant and the cost of developing such pipeline infrastructure is simply prohibitive. Lastly, the 

. conversion of . a facility to gas greatly reduces existing staffing levels and would have 

corresponding adverse impact on local communities. For example, at Grand Tower, AER 

employs a handful of people to run the energy center. 

Coal procurement. The Attorney General questions whether AER could "provide sworn 

testimony that it has fully procured the lowest sulfur coal possible." (Tr. 88). AER expects to 

burn approximately 15 million tons of coal per year. AER buys coal on a portfolio-wide basis 

for all of its Illinois facilities. Coal procurement is a continual process whereby fuel contracts 

roll off and are replaced on a staggered timeline. The proposed S02 mitigation emission rate of 

9 Traditionally, AER's natural gas combustion turbine generator ("CTG") fleet operates at very 

low capacity factors. In 2011, Grand Tower operated at a 21% factor while the rest of the CTG 

fleet (Elgin, Gibson City and Joppa) were at 3%. In 2010, Grand Tower was at 4% with the 

remainder of the fleet at 3%. The extreme heat this summer resulted in an increase of utilization 

through July at Grand Tower (62%) although those capacity factors were not seen across the rest 

of the fleet (2%). If natural gas were economical and market conditions favorable, these 

facilities would operate more frequently. 

24 
0.35 lb/mmBtu will require more than careful management and execution of coal purchases. As 

part of its compliance strategy, AER will direct the higher sulfur coals (i.e. Illinois Basin at 6.2 

lb/mmBtu and PRB a 0.8 lb/mmBtu) to its Duck Creek and Coffeen facilities. The FGD systems 

at these facilities will remove the higher sulfur content contained in these coals from the flue gas 

prior to leaving the stack. The premium ultra-low sulfur coal (e.g. 0.55 lb/mmBtu) will be used 

at the E.D. Edwards, Joppa and Newton facilities. 

To comply with an S02 rate of 0.35 lb/mmBtu, AER will limit the use of Illinois Basin 

coal (roughly 6.2 lb/mmBtu.) and the higher S02 content Powder River Basin Coal (roughly 0.8 

lb/mmBtu) to the Duck Creek and Coffeen Energy Centers. Ultra-low sulfur coal (0.55 

lb/mmBtu) will be used at the Edwards, Newton and Joppa Energy Centers. AER currently has 

17 million tons of ultra-low sulfur coal under contract through 2014. 10 

C. AER Crafted its Relief to Provide a Net Environmental Benefit 

With respect to variance relief, Section 104.204 (g)(3) of the Board rules requires AER to 

describe "the measures to be undertaken during the period of the variance to minimize the 

impact of the discharge of contaminants ... ". AER has proposed a compliance plan that exceeds 

that objective. Specifically, AER has proposed a mitigation emission rate of 0.35 lb/mmBtu that 

would take effect in 2013, resulting in the reduction of S02 emissions earlier than required by the 

MPS. As a result, AER has exceeded the legal standard of "to minimize the impact," AER has 

offset the impact resulting in a net environmental benefit. The Agency concurs: 

The Illinois EPA agrees with petitioner that there will be a net environmental 

benefit if the Board were to grant the requested relief subject to the terms and 

1

° Coal producers have assessed a price premium ranging from 5 to 20% over the standard 0.8 

lb/mmBTU S02 PRB coal depending upon the market for the base price and S02 allowance 

pricing. 

25 
conditions contained herein. The Illinois EPA does not believe that any 

environmental harm would result thereji·om. (Rec. 22). 

Over the course of the entire variance period, between now and 2020, the total tons of 

S02 reduced in the atmosphere will be greater if the variance is granted than if it is not. The 

mitigation emission rate ensures that AER (a) cannot resume operation of coal-fired power plants 

shut down late last year; and (b) must maximize removal efficiencies from existing pollution 

control devices and to procure low sulfur coal to maintain compliance. In response to questions 

from the Board, AER has demonstrated this net environmental benefit by both including 

Hutsonville and Meredosia in the calculation (Table 3) or excluding those facilities (Table 4). 

Under either scenario, a net enviromnental benefit exists. 

In order to respond more completely to questions presented at the August 1, 2012 

hearing, AER requested an independent review of the AER' s variance request and potential 

health effects relating to S02 emissions. AECOM Senior Consulting Toxicologist Lucy Frasier, 

Ph.D. and Senior Toxicologist Lisa Bradley, Ph.D prepared a letter report analyzing the potential 

health effects of S02 from the requested variance ("Letter Report"), attached hereto as Exhibit 3. 

Dr. Frasier obtained her Ph.D. in toxicology from the University of Texas, Austin. She has 21 

years of experience in the areas of human health risk assessment, with a specialization in the 

conduct of human health assessments for toxic air pollutants and persistent organic pollutants. 

Dr. Frasier has acted as Health Risk Assessment Team Leader or Project Manager for numerous 

human health and ecological risk assessments of air pollutants emitted from facilities including 

power plants. Because of this experience, she was invited to develop USEPA training materials 

on various aspects of the U.S. National Emissions Standards for Hazardous Air Pollutant 

(NESHAPs) regulations for Hazardous Waste Combustors and to teach the site-specific risk 

26 
assessment component of the training in 2008. These are only a few of her extensive 

qualifications and accomplishments in the field of toxicology. 

Dr. Bradley has 25 years of experience in risk assessment and toxicology and is certified 

by the American Board of Toxicology. Dr. Bradley received her Ph.D. from Massachusetts 

Institute of Technology. She has managed risk assessments for numerous hazardous waste sites 

in many USEPA regions, and under many state programs. These are also just a few of her array 

of qualifications, awards, and accomplishments in the field of toxicology. 

The figure below from the AECOM toxicology report illustrates AER' s projected S02 

emissions under the provisions of the MPS and the S02 variance. 

Ameren Energy Resources Variance 502 Limit Comparison to the Current MPS 

:::::: ''=~=~m,·:s.-~::'G:; ~-:-~--:~-.. --?-~;--~-:--~-~--:;---~-~~==================== 160.000 70,000 +E;;-~:::g~;_; ,.. 

:s~-· •• ·.j·•{·§. 

. ~}~"c·.~I·>,~.······"'~ ~,~'' .. -~~-- ( ~~-" ~;;;~;;~~~ E 50,ooo 

I \ ·~ 40,000 

w Net difference overtime bet\:Jeen 

0 .. 30,000 +------------1 · · '· d 1 <n S01 emiSSions uase on t 1e Ameren 

20,000 variance rate and SO:: emissions based 

10,000 on the MPS baseline rate is a decrease 

by 60,699 tons. 

0~--------~-----~==~==~======~~--------~--~--~ 2010 2011 2.012 2013 2014 2015 2016 2017 2018 2019 2020 

Year 

~Allowable Emissions Based on MPS Ba~elineRate ....... Total Future Emissions Based on Ameren Variance Rate 

The blue line represents AER' s baseline emissions under the MPS and the black line 

represents emissions under the S02 variance. As can be seen in the figure, AER's emissions 

under the S02 variance are considerably lower than the MPS emissions between 2012 and 2014 

and are slightly higher from 2015 to 20 19. However, the area representing the difference 

between the MPS and SOz variance emissions is larger than the area between the MPS and S02 

variance emissions illustrating the greater reductions of S02 earlier in the variance period. 

Overall, there is a net reduction in S02 emissions under the variance. 

27 
The regulatory language does not say, as suggested by the Attorney General, that AER 

must "minimize the deviation [from the applicable regulation]". (Tr. 85, PC# 2240, pg. 5). 

Notably, the Attorney General provides no legal authority that requires or recognizes such a 

suggested regulatory standard. At any rate, a complete offset of emissions more than satisfies 

the standard articulated in the regulations and applied by the Board in other variance 

proceedings. The Attorney General's concept of "excess" emissions is equally flawed. (PC# 

249, pg. 1, 3, 5, 7). If the variance were granted, a new stringent emission rate would be 

temporarily substituted for the regulatory rate. "Excess" implies unauthorized. AER is seeking 

authorization. Lastly, in its tabulation of "excess" emissions, the Attorney General completely 

ignores emission reductions that will commence immediately and takes issue (again, without 

citation to any legal authority) with the concept of the "offset" of emissions. However, as the 

Agency noted in its Recommendation: 

In regard to concerns about whether emzsszon reductions due to 

shutdowns should be allowed to offset potential delays in emission 

decreases and/or emission increases, it is important to note that providing 

credit for actions (e.g., unit shutdowns) that result in emission reductions 

is an acceptable part of the established regulatory process. As an 

environmental regulator, Illinois EPA is accustomed to recognizing and 

allowing such reductions to offset potential emission increases under the 

New Source Review and Prevention of Significant Deterioration 

permitting regulations. (Citation omitted). The Illinois EPA believes that 

is the requested relief if granted under the terms and conditions contained 

herein, the emission reduction offsets that Petitioner is seeking are 

creditable and allowable. ( Rec. 21). 

D. AER's Commitment To Shutter Hutsonville and Meredosia During the 

Variance Period is Real and Meaningful. 

There is no real dispute that the closures of Meredosia and Hutsonville have an 

environmental benefit. Rather, ELPC in public comments believes that such emission reductions 

should not be considered by the Board in reviewing the merits of AER's variance petition. 

28 
(PC#6). The Hutsonville and Meredosia Energy Centers are fully permitted and could lawfully 

reopen. Furthermore, such status is not compromised by the FutureGen project as is seemingly 

suggested at the August I Hearing. (Tr. 121). FutureGen project planning is still underway, and 

can be characterized as being at its very early stages. There will be years of work ahead before 

that project can be considered a reality and it therefore, would not impact operations at 

Meredosia during the years covered by the variance period. 

Despite its ability to lawfully reopen these plants, AER does agree not to operate the 

facilities during the pendency of the variance period as a condition of the relief granted. As 

pointed out in the Agency's Recommendation, "there is currently no regulatory requirement for 

Meredosia or Hutsonville to remain shut down" and that AER makes this commitment in spite of 

the associated constraints and operating requirements necessary to mitigate any potential 

negative environmental impacts resulting from the variance. (Rec. 19, 21). AER's commitment 

is real, with real benefits to the environment. 

The commitment is especially real when you consider AER' s commitment to a. lower 

mitigation rate during the pendency of the variance relief. The overall annual S02 emission rate 

from the Ameren MPS Group in 2011, prior to the closure of the Meredosia and Hutsonville 

Energy Centers, was 0.46 lb/MMBtu. To calculate an estimated 2012 emission rate based on 

comparable utilization of the fleet, AER used 20 II as a baseline and removed the contributions 

of the Hutsonville and Meredosia Energy Centers from the S02 emission rate. AER used this 

methodology to calculate the annual S02 emission rate after the closure of the Meredosia and 

Hutsonville Energy Centers as 0.40 lb/MMBtu. Many assumptions are needed to predict 

emissions and utilization in the future, so AER chose the last actual compliance period to 

illustrate the reduction achieved by not"operating those plants. As noted, even with maintaining 

29 
the closure of these two plants, AER will still need to do more to meet the 0.35 lb!MMBtu 

emission rate. Presented differently, AER cannot achieve the mitigation emission rate without 

maintaining the current shuttering status of the plants and running the scrubbers harder during 

the calendar years of2013 through 2019. 

Further, putting aside the clear case that the commitment made with respect to 

Hutsonville and Meredosia is real, the fact is they are shut down and the benefit to the 

environment resulting from those shutdowns is meaningful. Why shouldn't AER be able to 

recognize the benefit? The MPS was based on these two energy centers operating and now they 

are not. Throughout the hearing commenters focused on the increase in S02 emissions that 

would result during the years of 2015-2019 as opposed to what would be allowed under the 

MPS. (Tr. 86). These same commenters, however, conveniently ignore the S02 emissions that 

would have been allowed under the MPS without the variance and its compliance plan and 

without the shut downs of Hutsonville and Meredosia Energy Centers. (Tr. 86). Indeed, this 

approach to environmental benefit seems to be a case of "wanting your cake and eating it too" 

and should be dismissed as unfair. 

E. AER has "Walked the Walk" with Pollution Control Investments and 

Technology Advancements. 

As Mr. Menne testified at hearing on August 1, 2012, AER has achieved a steady and 

significant decline in S02 emissions across the fleet--79% since 1990 and 23% over just the last 

four years. (Tr. 15-16). AER has achieved these reductions through a number of investments in 

pollution control equipment and continuing efforts to improve and maximize efficiencies and 

operating performance. With respect to NOx, AER likewise achieved a steady and significant · 

drop in NOx emissions since 1990. (Tr. 16). A key element of these reductions is that they 

· occur despite a significant increase in coal utilization at these power plants over the years. (!d.). 

30 
ELPC and several public commenters have criticized AER's environmental efforts and 

suggest that the company had taken a "no investment" approach. (Tr. 130, 200). This could not 

be further from the truth. As explained in the petition and at hearing, AER has spent over $1 

billion on pollution control equipment across the fleet. (Pet. 17, 18; Tr. 16). Specifically, in 

order to meet the MPS, AER has already installed scrubbers on three of its generating units at a 

cost of over $813 million and has started construction of the fourth and fifth at a cost of over 

$237 million. (Id.). For the scrubbers that have been installed, AER has been voluntarily 

operating those scrubbers at an S02 removal efficiency much greater than necessary to meet the 

current MPS and Federal requirements. (Tr. 17). As previously explained, maximizing the 

scrubber operations at Duck Creek and Coffeen will be required in order for AER to meet the 

mitigation rate of 0.35 lb/MMBtu proposed by the Agency and accepted by AER if the relief is 

granted. In addition, selective catalyst reduction equipment to reduce NOx emissions has been 

installed at three of AER's plants at a cost of over $177 million. (Id.). Operating costs total over 

$7 million annually for this equipment. (Jd.). AER has also advanced mercury reduction. AER 

has installed activated carbon injection technology ("ACI") on 12 units at four plants at a capital 

cost of well over $20 million with operating costs totaling about $17 million to date. (Id.). AER 

continues to test and evaluate a number of methods to enhance mercury removal. Most of the 

AER generating units are very close to meeting the Federal mercury standard established in the 

recently issued Mercury and Air Taxies ("MATS") regulations. (Id.). Newton Unit 2 currently 

meets the MPS mercury control requirements-which will be more stringent than the Federal 

standard-ahead of schedule. (Tr. 17-18). 

In fact, investing in pollution control equipment on its system was exactly what AER was 

doing when it began the construction of the new scrubber at our Newton Energy Center. Even 

31 
though AER knew the forecast was looking grim, AER committed the capital dollars to begin the 

very costly installation of the scrubbers in order to be prepared to meet the very stringent 2015 

MPS S02 rate. (Tr. I 8). Set forth below is a chart that details the various pollution control 

devices installed at the Coffeen, Duck Creek, E.D. Edwards, Joppa and Newton Energy Centers. 

As the chart reflects, the suite of S02, NOx, mercury and PM controls across the system is 

extensive. Capital investments were made even as the economy and market conditions eroded. 

AER has complied with all the mercury and NOx requirements set forth in the MPS. 

Furthermore, if variance relief were granted, AER would implement a compliance plan that 

results in a net environmental benefit and mitigates the environmental impact represented by 

extending the S02 compliance dates set forth in the MPS. 

S02 Control 

NOx Control 

U2 

COFFEEN Ul 

Mercury Control U2 

Matter 

32 

· WFGD 

AER uses refined fuel for 

enhancement for mercury 

removal. 

enhancement for mercury 

• removal. 

2009 

2012 

2010 
DUCK CREEK 

EDWARDS 

EDWARDS (cout'd) 

Mercury Control 

NOx Control 

Mercury Control 

Particulate 

Matter 

Ul 

U2 

U3 

Ul 

Ul 

33 

'LNB 

• LNB/OFA 

LNB 

· SCR 

LNB/OFA 

• ACI 

1993 

2008 

1994 

2003 

2008 

Jul2009 
NEWTON 

JOPPA 

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F. AER's Request is Consistent with Federal Law and Will Not Jeopardize 

Illinois EPA's BART Compliance Demonstration. 

The Board may grant the variance consistent with federal law and, specifically, with the 

Clean Air Act, 42 U.S.C. 7401 et seq. USEPA approved revisions to the Illinois State 

Implementation Plan ("SIP") addressing regional haze on July 6, 2012. The Clean Air Act 

section 169A and Regional Haze Rule require States to address the best available retrofit 

technology ("BART") requirements for sources with significant impacts on visibility. BART is 

defined as follows: "an emission limitation based on the degree of reduction achievable through 

the application of the best system of continuous emission reduction for each pollutant which is 

emitted by an existing stationary facility." 40 C.P.R. §51.301. USEPA approved relevant 

sections of the MPS and Illinois Combined Pollutant Standards ("CPS"), and two permits and 

incorporated them into the SIP as satisfying BART requirements for the affected Illinois power 

plants and refineries. Accordingly, the MPS, as of August 6, 2012, 30 days after the date of 

publication in the Federal Register, is federally enforceable. USEPA noted in response to public 

comments that Illinois' plan would achieve greater reasonable progress - meaning greater 

emissions reductions and greater visibility protection - by the BART compliance deadline (in 

2017) than the application of BART on BART -subject units. 

If the Board grants AER' s requested relief, the Agency must seek an amendment to the 

Illinois SIP to incorporate the revised S02 emission limits applicable to the AER fleet. When 

compared to emissions reductions by AER' s energy centers under the MPS, the variance, as 

proposed by the Agency, imparts even greater emissions reductions by the BART compliance 

36 
deadline in 2017. Accordingly, such an amendment would only serve to enhance Illinois' ability 

to comply with the Clean Air Act and Regional Haze Rule. 

AER will also comply with the CSAPR, which is not yet effective, and the MATS 

through the use of a combination of existing FGD systems and sorbent injection technologies. 

III. RESPONSES TO BOARD QUESTIONS RAISED AT HEARING 

During the public hearing of August I, 2012, there were a number of questions posed by 

the Board members and Alisa Liu from the Board's technical unit. Several questions were 

answered during the hearing, and several were deferred and will be addressed herein. To aid the 

Board in its review, AER will address each of the questions individually in this section. 

1. "My first question, in Ameren 's responses to the hearing officer dated July 6, 

2012, question No. 2, it provided a more detailed compliance plan on page 6. However, there 

is no estimated timeframe for the phases of the compliance plan. AER states, quote: 

"Engineering design will continue through 2012." AER then refers to other activities that, 

quote, "will occur through-out this period as well." Did AER intend for the reference to this 

period to indicate the variance period or just between now and 2014?" "Can AER be more 

specific regarding the time frames or the cost for phases of the compliance plan?"(Alisa Liu, 

TR. 32) 

The Newton scrubber project entails integrated work packages ranging from engineering 

and design, to construction and procurement. Each of these categories has literally hundreds of 

specific tasks that must be executed in order to complete the project. AER has invested $237 

million in the scrubber project and believes that one day finances will improve such that the 

project can be completed (AER has every incentive to complete the project and it cannot even 

begin to recoup its financial investment unless and until the project is completed). 

The deceleration of the project has resulted in a re-focusing of effort. The primary 

objective has been to unwind construction tasks in manner that allows the project to resume 

rapidly and with minimal planning delay. Virtually all components that require advance 

37 
fabrication have been completed and are being delivered to the site. Foundation work, site 

preparation, and engineering design work will continue. As indicated, AER has budgeted $16 

million annually to keep these efforts moving forward. AER is in continual discussions with its 

general contractor Advatech to define work tasks that can occur within this $16M envelope. 

Everything that can be done on the ground including the construction of the new chimney stack 

will be performed. What will not occur is the massive scaffolding and mobilization of outside 

labor forces needed to support the "up in the air" mechanical work and electrical connections. 

Assuming relief is granted, the Company's current budget projections call for greatly 

increased capital expenditures commencing in 2018 and 2019 so that AER will be in a position 

to comply with the MPS once the proposed variance term expires on January 15, 2020. A 

specific timeline that establishes construction and project milestones cannot be provided until an 

in-service date is fixed. Once the Company "green lights" the project, AER project management 

and its general contractor Advatech will reestablish a hard and fixed schedule that "backtracks" 

from the service date and takes into account work already completed. While AER can certainly 

provide progress reports, it is difficult to provide a specific and targeted prospective schedule 

beyond the categories of work provided previously to the Board. 

2. "And then in table 3, we're wondering whether or not you could check the 

numbers in this table. In particular, I wasn't able to follow the calculation for the last column 

cumulative S02 variance reduced tons." (Board Member Burke, TR.. 35). 

AER apologizes for any confusion resulting from the tables presented. In order to allow 

a better review and understanding of the Cumulative Reduction in S02 Variance Tons, AER is 

providing two additional columns of data: the "S02 Reduced Tons" and "Net Variance S02 

Tons." A new Table 3 is provided as Exhibit 4. AER also provides some explanatory notes to 

aide in the review. Specifically, the tons shown for 2010 and 2011 under "Variance S02 Tons" 

38 
are based on actual emissions. For the remaining years in that column, Exhibit 4 must depict 

projections since actual emissions have not yet been measured. Also, tbe "S02 Reduced Tons" 

depicted in Exhibit 4 for tbe years 2012 through 2020 are based on the result of not operating 

Hutsonville and Meredosia less the emission accounted for the FutureGen Project (as discussed 

more fully in our answer to Question #3 below). 

Contrary to ELPC's assertion (PC# 2409, pg. 38), AER does not understate tbe amount of 

S02 emissions that would be allowed under the proposed variance. AER maintains, as it always 

has, that it is appropriate to calculate projected emissions under tbe MPS using a baseline heat 

input tbat includes Meredosia and Hutsonville. Simply put, Meredosia and Hutsonville are part 

of tbe Ameren MPS group. Table 4, attached to AER's responses to tbe Board's second set of 

questions, shows tbat even when removing Meredosia and Hutsonville from the heat input, the 

variance will still provide a net environmental benefit of 7, 770 tons S02 when compared to the 

S02 emissions tbat tbe Ameren MPS Group is allowed under tbe current MPS. 

3. "I am wondering if you could explain in more detail what you meant by 

factoring two times the projected emissions from the Future Gen project for the Meredosia 

Energy Center, and I am on page 9 of the first set of questions?" (Board Member Burke, Tr. 

36) 

As presented in our Petition, the Meredosia Energy Center is being considered as the 

location for the zero emission coal plant project known as FutureGen. AER is proud to be a part 

of tbis advancement in environmentally friendly technology. The current plan is to use the oilfired unit at tbe Meredosia Energy Center site for the project. Since emission offsets may be 

required for permitting of tbe project in the future, Illinois EPA wanted to make sure that any 

such offsets were not "double counted" in our calculations of net environmental benefit. As 

such, AER was overly conservative and factor-ed, by deducting from the reduced tons total, two 

times the projected emissions to ac~ount for FutureGen project (two times tbe projected 

39 
FutureGen S02 emissions 1s an estimated 590 tons). The projected emissions from the 

FutureGen project were factored into Table 4 as well. 

4. "Is there a last possible date at which point AER will know if it will not be able 

to complete the FGD before the proposed January 15, 2020 compliance date." (Alisa Liu, Tr. 

37). 

At hearing, Mr. Menne expressed the difficulty with providing the Board with a date 

certain by which AER will know if completion of the scrubber project is feasible. (Tr. 38). 

AER' s compliance plan, however, is premised on the commitment that meaningful engineering, 

procurement and construction activities will continue through the variance period. In support of 

the proffered compliance plan, Mr. Menne indicated that AER is "committed to spending 

roughly $16 million a year on continued activities at the Newton scrubber between now and 

2020." (Tr. 32). With the investment of over $237 million made to date and further commitment 

of $16 million dollars each year, AER is invested in completing the project and would only 

abandon completion under severe financial circumstances. 

5. "Could Ameren please comment on human health and environmental impacts 

of S02 emissions in general?" (Board Member Burke, Tr. 38) 

In its petition, AER examined whether any injury would result to the public or the 

environment from the granting of relief. (Pet. 25-29). As explained, AER specifically crafted its 

mitigation and compliance plan to address any environmental impact that may have resulted 

from the structure of the variance relief. Further, when asked by the Agency to reexamine the 

mitigation rate and length of the variance period, AER challenged its expert staff to try to do 

even better than the relief structure originally presented to the Board. AER did exactly that when 

it came back before this Board in answer to questions presented to AER in the July 5, 2012 

Hearing Officer Order and agreed to both a tighter mitigation rate as well as a shorter variance 

period. Assuming the alternative approach to the variance relief, the Illinois EPA agreed with 

40 
AER that "there will be a net environmental benefit if the Board were to grant the requested 

relief subject the terms and conditions" contained within the Agency's Recommendation. (Rec. 

22). The Agency further stated that it "does not believe that any environmental harm would 

result." (!d.). 

At hearing, however, AER was confronted by a number of commenters accusing it of 

"killing people" and suggesting that the proceeding "will determine whether Illinois residents 

will live or die." (Tr. 101). The Attorney General presented a letter to the Board with its 

conclusion that "harm" will result because emissions during the 2015 through 2019 period will 

be higher and "that harm cannot be undone or offset through earlier or later reductions." (PC# 

249). The Attorney General does not provide or describe the methodology employed or the 

analysis it used to reach these conclusions. 

As stated above, AECOM prepared a Letter Report addressing the potential health effects 

relating to S02 emissions under the requested variance. As expressed by Mr. Menne at hearing, 

he is not a health expert "and he did not feel comfortable going into health consequences, 

although he observed that overall more tons of S02 will be "out of the air." (Tr. 39). AER feels 

strongly that any review of potential health impacts must be presented to the Board by a 

toxicologist with expertise in the area of air impacts and not by someone without the appropriate 

qualifications. 

The Letter Report prepared by Dr. Fraiser And Dr. Bradley is attached as Exhibit 3. In 

the Report, AECOM examined the transcript and documents surrounding AER's variance 

request. AECOM first observes that over the course of the entire variance period, between now 

and 2020, the total tons of so2 reduced in the atmosphere will be greater if the variance is 

granted than if it is not. (Letter Report, pg 3). The Drs. attribute this reduction in emissions to 

41 
certain terms of AER's compliance plan, namely its agreement to a tighter mitigation emission 

rate during 2012-2014 and AER's commitment to keep two of its coal-fired power plants shut 

down during the variance period, which will result in less coal being burned. (Id.). 

AECOM also provides a graph which illustrates the comparison of AER's S02 emissions 

under the provisions of the MPS and the revised variance request. (Id.). 

Ameren Energy Resources Variance SOz limit Comparison to the Current MPS 

!60,000 :::::~~ 1=! ' ~___. ~~~~ =~~~:!S·:~'~·~·····~··•·,+,i/:~.-·••"•n·~,-·.::i~>-:~_/r~~ ' ~-·~:·2 .... -..•. r ••. ~~~~·· : ... ·.·.·~··· ; ··"""~· .. ,~>·,,"--------------- ~~~~~~~~~~i~~~~~~~i~~~~ .; 

R 

~ 40,000 50,000 I 

! 

~ ~~~~m ~~ ~~:::::::= E i Net difference overtime bet.veen 

O

WN30,000 +'------------1 ' ' b d " <ll 502 ernlsSJons ase on 1e Ameren 

20.000 variance rate and 502 emissions based 

lO,OOO on the MPS baseline rate is a decrease 

by 60,699 tons. 

·~-~--~--~~-~-=7--~-~,--------~-~ 2010 2011 2012 20H 2014 2015 

Y~ar 

2016 2017 2018 

-+-AUowableEmi~s:ions Eased on MPS Ba~eline Rate ......,. Total Future Eml~~!ons &a sed on Ameren Variance Rate 

2.019 1020 

The blue line represents AER's baseline emissions under the MPS and the black line 

represents emissions under the revised variance request. As Dr. Fraiser and Dr. Bradley point 

out in the graph, AER's emissions under the S02 variance are considerably lower than the MPS 

emissions between 2012 and 2014 and are slightly higher from 2015 to 2019. (Jd.). However, 

> the area representing the difference between the MPS and revised variance emissions from 2012 

to 2014 is greater than the area between the MPS and S02 variance emissions from 2015 and 

2019. They also note that AER has voluntarily operated at lower S02 emission rates since 2010, 

and if those reductions are taken into account, the positive difference is even larger. (Letter 

Report, pg. 3 .). 

42 
AECOM challenges within the Report the assumption that S02 emissions from the AER 

coal fleet are at levels that could potentially result in off-site ambient concentrations high enough 

to cause adverse health effects even under the current provisions of the MPS. (Id.). For 

purposes of responding to the accusations presented through public comment and the Attorney 

General, however, the Drs. treat the methodology employed to correlate S02 emissions and 

health effects directly from power plants as not flawed and determines that granting the variance 

would result in an overall net benefit in terms of health effects. For example, if the hypothetical 

risk relationship of one additional asthma-related emergency room (ER) visit per 100 tons of S02 

emitted is assumed, there will have been 77 fewer ER visits over the duration of the variance 

period than if AER complies with the MPS on its current schedule. (Id. at 3-4). AECOM 

stresses, however, that this assumed risk relationship is purely hypothetical, as risk relationships 

of this nature are typically expressed on a per capita per ton basis, taking into account the size of 

the potentially exposed population. (Id. at 4). AECOM further stresses that although it can be 

universally agreed that respiratory effects such as asthma attacks and chronic obstructive 

pulmonary disease (COPD) represent adverse or harmful effects, simply establishing that a 

person who has been exposed to S02 experienced bronchoconstriction or a reduced expiratory 

volume is not proof that the exposure caused the effect. (I d.). This is because in any individual, 

these effects could have been caused by a number of different factors, for example, indoor or 

outdoor allergens, smoking or passive exposure to cigarette smoke, or viral pathogens. 

Likewise, the fact that a power plant may emit S02 does not necessarily mean that off-site air 

concentrations will be high enough to elicit adverse health effects. (Id.). 

AECOM goes on to address a number of the public comments presented at the hearing. 

It begins with the comments presented by the Attorney General. Dr. Fraiser and Dr. Bradley 

43 
dispute the Attorney General's statement that additional harm would occur despite the overall 

reduction in tonnage of S02 emissions over the term of the variance. AECOM concludes that 

there would be fewer adverse health effects overall and, therefore, the health benefits of 

approving the variance requested by AER outweigh the health costs when considering the entire 

variance period. Even this conclusion, is based on the assumption that there is a causal 

relationship between S02 exposures and adverse health effects. AECOM states that "more 

studies than not have failed to find statistically significant associations between long-term and 

short-term S02 concentrations and adverse health outcomes." In fact, it references a USEPA 

report prepared in support of the most recent S02 National Ambient Air Quality Standards 

review, which fmds no causal relationship between long-term exposure to S02 and asthma, 

bronchitis, or respiratory symptoms. The report did find a causal relationship between 

respiratory morbidity and short-term exposure to S02 . However, the studies USEPA relied on 

found either no association or very small positive associations. Even those that showed weak 

positive associations raised questions about whether exposure and effect were causally 

associated. (ld. at 4-5.). 

The Letter Report also contradicts the statement by a representative of Sierra Club 

implying that S02 is responsible for the increase in asthma over the last several decades. 

AECOM explains that exposure to outdoor pollution is probably the least likely culprit. The Drs. 

say, for example, that nationwide S02 concentrations fell 32% between 1980 and 1990 alone. 

There are a number of explanations for the increase in asthma cases, but the insinuation that S02 

emissions are significant contributors to the rise in reported asthma cases is not supported by the 

evidence in literature. (Letter Report, pg. 6). AECOM' s responses to public comments 

consistently showed that generalized comments claiming S02 caused respiratory illnesses 

44 
including asthma relied on studies that either did not show statistically significant results or 

could not isolate the effects associated with S02 from confounding co-pollutants. 

In response to a number of public commenters who made generalized statements such as 

"Coal power plants kill people" and "Hundreds of people in Illinois die from what comes out of 

coal-fired power plant stacks," AECOM stated "the public debate on air pollution coupled with 

the sensationalized air pollution health stories in the media have created the appearance that 

harm from air pollution is much greater and more certain than suggested by the underlying 

scientific evidence." Dr. Fraiser and Dr. Bradley attached an article by Dr. Joel Shwartz, which 

demonstrates that misinformation about air pollution is wide spread. 11 A closer review of the 

studies looking at the health effects of low levels of air pollutants relied upon by activists, health 

scientists, and even governmental agencies show their claims are based on observational studies 

that do not control for co-pollutants, lifestyle variables, or even contemplate regional disease 

patterns that have nothing to do with air pollution. !d. at 10. The AECOM Letter Report directly 

contradicts the Attorney General's statement that any harm done cannot be offset through earlier 

emissions and shows the lack of evidence supporting claims that the variance will determine 

whether Illinois residents will live or die. 

6. "If CSAPR does go into effect, does Ameren have a compliance plan?" (Board 

Member Zalewski, Tr. 41) 

At hearing Mike Menne explained that on the S02 side, AER would still have to take 

some additional measures in order to meet the Cross State Air Pollution Rule ("CSAPR"). (Tr. 

11 Dr. Joel Schwartz is Professor of Environmental Epidemiology in the Department of 

Environmental Health at the Harvard School of Public Health in Boston, Massachusetts. Dr. 

Schwartz received his Ph.D. from Brandeis University in Statistical Physics in 1980. He was 

formerly employed as a staff scientist and senior scientist for USEPA. 

45 
42). He mentioned options including bringing in lower sulfur coal and additional sorbent 

injection. (!d.). Mr. Menne was clear, however, that none of these additional measures would 

help the company achieve the MPS rates at issue. (!d.). As further explained, by committing to 

the mitigation S02 rate of 0.35 lb/MMBtu, AER will need to employ these additional measures 

to achieve compliance with that lower rate. (Tr. 25). 

Determining AER' s CSAPR compliance plan requires a bit of forecasting because we can 

not necessarily assume that the rule will be upheld in its full and current form. However, based 

on the substance of the currently stayed rule, AER' s compliance strategy for CSAPR and the 

MPS do overlap. As indicated by Mr. Menne at hearing, the company will continue to procure 

low sulfur coal and maximize the operation of its FGD systems to reduce S02 emissions. 

Alternative technologies such as DSI and operational measures such as management 

modifications of utilization rates of units will also continue to be evaluated and employed, if 

appropriate. However, the compliance mechanisms under MPS and CSAPR contain several 

significant differences, but two are worth highlighting. First, CSAPR is implemented according 

to state allowance budgets. These budgets are developed by USEPA as part of the rulemaking 

process. Second, CSAPR contains a mass emission limitation whereas the MPS is a ·rate based 

compliance limitation. Depending on how the state budget allowances are determined post 

appeals, AER could procure allowances as one of its compliance techniques. Assuming the 

second phase of CSAPR ultimately goes into effect, AER anticipates that it would need to 

implement additional technology measures such as completing the Newton scrubber or 

installation of a sorbent injection system or modify the utilization rates at certain units. That 

decision cannot be made, however,' until the appeals are resolved, the compliance deadlines 

established, and the state allowance budgets finalized. 

46 
7. "The AG suggested a shorter two year variance, and I was just wondering if 

Ameren would comment on the feasibility of the suggestion and the impact on air emissions?" 

(Board Member Zalewski, Tr. 203) 

Unfortunately, for planning purposes, a two-year variance simply does not create a 

sufficient period of economic certainty and AER would have little choice but to begin 

transitioning into mothballing of its uncontrolled units and/or plants. This is due to the 

regulatory structure of the MPS, the anticipated construction timeline required prior to the 

compliance date, and the high level of certainty that power markets will not sufficiently return 

over tbe next two years such tbat a capital funding option is available. Without the additional 

lead-time tbat AER has requested, the Company would be compelled to make the very difficult 

decision to continue to fund tbe Newton scrubber without comfort tbat an additional extension 

would ultimately be granted-in a time of extremely limited access to capital, the Company 

would likely decide tbat its capital would best be deployed in other, less risky projects. The 

rationale behind AER's request for a five year variance is based upon the regulatory structure of 

the MPS, tbe control strategy and construction timeline needed to comply witb those 

requirements, and tbe anemic economic outlook over the next several years. 

The Board may note that the structure of AER's requested relief is such tbat compliance 

with both tbe 0.25 and 0.23 lb/MMBtu S02 emission standards is separated by two only weeks 

(December 31, 2019 and January 15, 2020, respectively). That is because the control technology 

needed to achieve both of these rates, is the same - the completion of tbe Newton scrubber. In 

reality, achievement of one is the achievement of the other. A two-year variance as suggested by 

the Attorney General would move the 2015 compliance date to 2017 (and keep the 2017 

compliance date unchanged). In order to comply witb these rates, AER would need to reaccelerate the Newton scrubber starting in January 2015 so as to accommodate tbe estimated 24-

montb construction schedule. 

47 
As the Board is well aware, economic growth is virtually stagnant and AER does not 

expect power prices to recover (certainly not sufficiently) over the next twenty-eight months. 

Even the most optimistic economist would characterize this economy as faltering. Power prices 

have dropped steadily over the last four years and a return to more typical rates will likely be 

very gradual. As Mr. Gary Rygh testified, without a dramatic and sustained rebound in power 

prices, investors simply will not fund the $200 million to $250 million needed to complete that 

project and meet other financial obligations. The five-year term was selected with this bleak 

horizon in mind to allow a sufficient window for the economy (and power prices) to recover and 

to facilitate the two-year construction cycle. Investors need to see sustained growth before 

access to capital will be possible. Because of that reality, instead of investing in the Newton 

scrubber, AER will need to transition to a compliance strategy that encompasses shutdowns with 

all of its unfortunate and tragic consequences. Accordingly, a two-year variance is tantamount to 

a variance denial. While AER certainly appreciates the Attorney General's apparent belief that 

variance relief is appropriate, the suggested variance does not provide a sufficient relief period to 

alter the only other viable compliance option available to AER. AER carefully designed its 

request for relief to focus on what is needed based upon the current economic predicament and 

the need to synchronize both the construction and financing of the scrubber project. A two-year 

variance simply does not provide sufficient relief to AER. We believe we have presented a case 

that supports the variance terms AER requested along with the modifications suggested by IEP A 

and our other proposed conditions. 

8. "Several public comments referred to the benefits that Ameren realized by 

opting into the MPS. Could you please comment and quantifY the benefit that Ameren has 

realized in terms of controls for mercury, NOx and S02? I am particularly interested in the 

perceived benefit regarding mercury?" (Board Member Glosser, Tr. 204) 

48 
Pursuant to 35 Illinois Administrative Code Part 225, Subpart B, electric generating units 

("EGUs") are required to reduce mercury emissions by a specified removal rate (expressed as 

either percent reduction from input mercury content or an outlet based emission standard), 

beginning July 1, 2009. The regulations also contain alternative compliance mechanisms. 

Ameren selected the MPS compliance option and in so must, and has performed an~ IS 

performing, the following: 

• Installed an activated carbon injection (ACI) system on each unit less than 90 MW by 

July 2009, resulting in the installation of 12 systems; 

• Injects halogenated activated carbon into the ACI systems at a rate determined by the 

type of coal burned and in an "optimized manner" as defined by Section 225.233( c )(2); 

• In lieu of an ACI system, installed 3 FGD/SCR combined system in combination with the 

burning of bituminous coal. 

Also, by opting into the MPS, AER is required to achieve a specified removal efficiency 

or emission rate for mercury effective July I, 2015 and reduce S02 and NOx emissions across 

the System pursuant to progressively tightening emission rates. 

At the time of the original rulemaking, the company believed that three years was. 

insufficient time to install control technology and to test and perfect various sorbent injection 

methodologies across the fleet so as to achieve compliance with the mercury removal 

requirements. (As one AER employee from the E.D. Edwards plant noted, performance under 

laboratory conditions is very different than under field operating scenarios). Ameren believed 

that substantial field testing and refinement would be needed and therefore opted into the MPS. 

The benefit to the company was that the compliance date for one aspect of the regulation 

49 
(compliance with the removal efficiency) was deferred from July 2009 to January 2015. 

Notably, the obligation to install control technology and to inject activated carbon was not 

deferred. AER has continued to test various control methodologies and reagents. 12 At five of its 

active units, AER has recorded mercury emission levels between 0.00 l 8 and 0.0073 lb/GWh, 

well under the 0.008 lb/GWh standard that will go in effect in 2015. Mercury emissions at nine 

other units have been recorded at levels between 0.01 and 0.018 lb/GWh and AER has 

continuous experimentation and testing underway. AER also notes that with the exception of 

two units, overall mercury capture currently ranges from 80% to 95%. AER continues to 

evaluate and test mercury control technology to achieve more effective control and has been 

committed to reducing emissions as indicated by this data. The mercury reductions from AER's 

fleet are being achieved three years ahead of the compliance deadline set forth in the MPS. 

There is no question that the environment in Illinois is benefitting from these early reductions. 

Many public commenters have referred to the "benefits" AER has gained through the 

MPS. To really examine the benefits, one needs only to look back at the testimony Jared 

Policicchio of the Chicagoland area offered into the record at the August 1 hearing. Mr. 

Policicchio quoted the testimony of Michael Menne from the original mercury proceeding: "the 

proposal we put before you today sets out a regulatory scheme that addresses three pollutants, 

SOz, NOx and mercury, in a way that synchronizes and coordinates regulatory reduction 

mandates that are clearly on the way." (Tr. 140). Mr. Menne went on to say that the 

"amendment reflects our commitments to meet specific regulatory limits for mercury by 2010 

and 2015, representing 90% reduction on all but its smallest units, and substantial and real 

12 Exhibit 2 to the Petition details the numerous ACI permits obtained by AER and pilot tests 

performed as the Company seeks to refine the best technology appropriate for its units. 

50 
reductions in NOx and S02 which go beyond the CAIR requirements." (In the Matter of 

Proposed New 35 Ill. Adm. Code 225 Control of Emissions from Large Combustion Sources 

(Mercury), R06-25, Testimony of Michael Menne, pg. 8-9, filed Jul. 28, 2006). 

There is no question that the company's intended benefit was to align the MPS's NOx 

and S02 emissions requirements with what AER believed to be its control strategy for 

compliance with then pending CAIR regulations. Those regulations were deemed legally flawed 

and remanded back to USEPA. USEPA's CAIR replacement, CSAPR, has been stayed pending 

judicial review. The intended benefit to AER--coordinated implementation of state and federal 

regulatory requirements--has not occurred but substantial and real reductions of NOx and S02 

are still occurring. Much like the Attorney General, AER is also proud of the work it did to 

establish the MPS and agrees it put Illinois in a national leading role in terms of pollution control 

reduction. (Tr. 85). Unfortunately, the Attorney General did not develop the MPS nor can that 

Office talk to the purposes of its origination. AER can "look through the lens of the work that 

was done to achieve the MPS" as suggested by the Attorney General (Tr. 86) because AER has 

done and continues to do the work. The full benefit of the regulatory structure of the MPS has 

not been realized by AER, but the environment in Illinois is benefiting from its work and will 

continue to so benefit in the future. 

IV. CONCLUSION 

There are many people throughout this proceeding that talked about their participation in 

the creation of the MPS. Some claim it is their job to defend it, some claim that it was a "deal" 

they "agreed to" and yet others claim that without it, people will die. Yet, it was Ameren, who 

offered the very proposed language that was adopted ultimately as the MPS; and Ameren who 

worked with the Agency to negotiate, draft and advance the inclusion of the proposed 

51 
amendment within the underlying proposed regulation. (In the Matter of Proposed New 35 Ill. 

Adm. Code 225 Control of Emissions from Large Combustion Sources (Mercury), R06-25, · 

Ameren Joint Statement, filed Jul. 28, 2006). To be sure, at a later date, one other power 

generator presented its own approach to the MPS which also was ultimately adopted, and the 

Agency consulted with the environmental groups about the overall approach. Along the way, the 

Board took each position into consideration. The record shows, however, that no other 

stakeholder put more effort and heart into the MPS than Ameren. Those are just the bare facts. 

Just like Ameren put the time and effort, heart, and hard work into the MPS, so too do the 

men and women of AER put their hearts and and hard work into how they operate their power 

plants. At the August I, 2012 hearing, the Board heard time and time again what AER 

employees bring to their jobs and communities every day. It is worth repeating some of those. 

comments here because they are emblematic of the environmental stewardship of AER: 

Mr. Bogardus, E.D. Edwards Energy Center: "We go to work every day and manage 

our power plants with every one of you in mind. First part of every day is to look exactly at how 

we did in the environmental footprint the night before, and I do that every day, and my signature 

goes on every single piece of paper and the men and women who are going to stand up here 

spend more overtime on this system called ACI, mercury, trying to make sure we do absolutely 

everything we can to go above and beyond the minimum, above and beyond the minimum 

opacity, the late nights they're running. These people work hard for you. They understand. The 

men and women here with these vests on are working really hard, and we like you to consider 

that." (Tr. 136). 

Mr. Carter, Duck Creek and E.D. Edwards: "I just want to assure the Board that we are 

very dedicated to providing electricity in an environmentally responsible manner. I've been 

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there long hours, late nights, trying to make everything work like it should be. We're also very 

dedicated to our families and communities in which we live." (Tr. 165). 

Mr. Killebrew, E.D. Edwards: "What we are doing is spending a lot of time and effort 

trying to get up the pollution controls we do have. I work with a number of instrument techs. 

That's what I do there, and every day we work with ACI, the SCR, and we work very hard to try 

to make the emerging sciences that Faith talked about work properly." (Tr. 175). 

Mr. Pullen. Joppa: "Ameren and these employees you see out here, we are the people 

that make the decisions every day on how our plants are operated. We work hard. We do not 

gamble. We do not fool around. We operate our plants in a safe, environmentally responsible 

manner." (Tr. 198). 

Mr. Marsc/zewski, Newton: "I would comment on the fact that Ameren has done more 

than nothing. I live it every day. I've worked on the equipment that's been put in five years. 

I've been there for the activated carbon, calcium bromide, not to mention the precipitators that 

remove particles from our effluent. I'm constantly working on that and developing ways to 

make it better and keep it on line." (Tr. 238). 

Mr. Pierson, Joppa: "We're not like everyone has said, we're not here to deliberately do 

anything wrong. We do everything we can. Every morning of every day we meet and see what 

we can do, what we can be better. We meet the standards, and we continually strive to be even 

better than the standards. That's just the way we are." (Tr. 259). 

Obviously, this sample of comments is only a small representation of the men and 

women of AER who traveled long distances and waited a number of hours to express their own 

thoughts and opinions to this Board. They are invested in what they do every day and they care 

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about their future. These people of southern and central Illinois are also the "People" of the State 

of Illinois. 

Numerous elected officials, a number of them during an election year, took a day out of 

their schedule to explain to the Board exactly what is at stake. Senator Forby stated simply: 

"Everybody wants clean air. There's no doubt about that. ... If it keeps going like it's been 

going and we don't sit down and think what we're doing, we won't have a southern Illinois. It's 

going to be gone." (Tr. 58). 

The mayors of towns that would be directly impacted by the Board's decision in this 

proceeding recognized that this is not a choice between jobs and the environment, but rather one 

that can benefit both. The mayor of Newton Illinois, Mayor Bolander, stated "I'm asking the 

Illinois Pollution Control Board to grant the extension to ensure reduced emissions and higher 

environmental standards while protecting the economic livelihoods of Illinois families." (Tr. 

79). Julie Johnson, mayor of Joppa, Illinois added "We realize our environment is important but 

it's hard to put this aside when your families are without work, can't be provided for, your 

village is losing people out because they have to go elsewhere for jobs, your schools close down, 

and that pretty much devastates your community." (Tr. 103). In explaining how vital the Joppa 

Energy Center is to the area, the Mayor of the City of Metropolis, Billy McDaniel explained 

"You know, we do know that we have to have a quality of life as far as pollution and things of 

that nature, but we also still have to have a quality of life as far as economic situations." (Tr. 

105). 

AER knows what is at stake when faced with plant closures and the value of having the 

men and women of southern and central Illinois willing to travel to Springfield, Illinois, to put 

their own face to the other perspective. As Representative David Reis said so effectively to the 

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Board, "The people of Jasper County that I represent, you know, they don't have big 

organizations representing them, no lobbyists, no lawyers, no database of activists to send in 

comments, but for common sense folks, we have a deep sense for our community and our 

schools and our jobs, and I would be willing to bet in fact that not one person from Jasper 

County put their name on this denial request. I bet not one sent in a comment saying we reject 

it." (Tr. 66). To assume, as several of the commenter have, that AER has not considered all of 

its options before it presented its plant shut down case to this Board is absurd. The reality is that 

the decision the Board is now facing is as serious as the decision AER faced when it came to this 

Board on May 3, 2012. 

It is important to note that AER and the elected officials that appeared at hearing agree 

with Faith Bugel of ELPC that this is not a choice between jobs and the environment. AER 

made sure it would not put the Board in that position and did so by presenting a variance request 

that provides an overall net environmental benefit to the State of Illinois. AER presented its 

request to the Board in this way because it is not ready to give up on the completion of the 

Newton scrubber and it is certainly not prepared to give up on the plants. AER disagrees with 

both the Attorney General and ELPC when they suggest that the plants are "likely reaching the 

end of their viable life anyway and that with or without the variance, it is likely that these plants 

will shut down." (Tr. 117). Even in the face of adversity in the market, regulatory landscape and 

aggressive opposition from activists and the Attorney General, AER is before this Board asking 

it to allow the variance process to work. AER had demonstrated that it faces a hardship that 

cannot be fairly characterized as self-created or foreseen. It has provided the Board with a 

variance request and compliance plan that provides a net environmental benefit. AER' s 

framework, contrary to the Attorney General's assertions, does respect the very essence of the 

55 
MPS and in fact, enhances it. AER has met its burden. AER now respectfully asks the Board for 

time to comply with the 2015 and 2017 emission rates under the MPS. AER will allow Mr. 

Weaver's own words to explain, "Chairman, ladies and gentlemen of the Pollution Control 

Board, thank you for giving us this opportunity to present today. You know, coming up here 

today .. .first of all, my name is J. D. Weaver. I work at the A mer en facility in Duck Creek. Prior 

to that, I worked at the Dynegy plant in Havana, Illinois. In '94 I was laid off from there due to 

the economic conditions shutting units 1 through 5 down. Six years later, I was fortunate enough 

to be employed with Ameren and have worked there for 12 years. Coming up here today, I didn't 

really think --I'm not really a person to do public speaking but I thought I'd probably be remiss 

if I didn 't give my 5-year-old boy a chance to say I did everything I could to remain gainfUlly 

employed, and in doing that, I didn't really want to come up here with an "us versus them" 

mentality, but coming at the decision upon us from a team approach, at Ameren, we use the 

TEAM concept and use the acronym TEAM as "Together, everyone achieves more, " and in 

doing so, I wanted to try to put together maybe a common theme or some type of analogy that 

most people in this room can relate to or will relate to in their lives, and that is, all of us at some 

time will get a job or have a job and when they go out, they find their house of their dreams, 

whether it be in the city, a farm. They go to the bank. They borrow the money to help finance 

that dream, the American dream, and in doing so, they build, they upgrade, they fix up their 

house to make it the prettiest house on the block, the prettiest farm, the most productive farm, but 

sometimes there's circumstances that come about that are out of people's control. The person 

may be in an accident. That's not their fault. A person may get a debilitating illness and a 

person may lose their job because their company moves, all of which are circumstances that they 

could not foresee or was out of their control. If that happened to that person, they would do the 

56 
prudent thing. They would go to the bank, to the loan officer, and they would try to restructure 

that loan, that debt obligation that they agreed to in order not to affect their credit rating, to do 

what's right, to do what you would do with integrity. From a banker's standpoint, they would try 

to work with that person and try to maybe restructure the loan, try to work with him on his 

payments because they don't want that house in an economy which they wouldn't be able to sell. 

So in that case, working together was a win-win approach. This is really not about home 

ownership. I"s really about the situation we have at Ameren. At Ameren in our coal-fired 

facilities, we build our houses in Canton, Illinois, Duck Creek, Bartonville, E. D. Edwards, 

Newton, Coffeen and Joppa. We've upgraded those facilities. We've built that house. We've 

made it the best we can make it by spending over a billion dollars. In doing that, we're not 

trying to-we've done our part. We've tried to meet our obligations, and we 're not skirting the 

issues. We know our environmental obligation. We're trying to achieve it, and for the people of 

the board, we're just asking you to be the banker; just to give us time so the market can recover 

so the power prices that we're facing can get the cash flow to where we can afford to finish the 

scrubbers." (Tr. 246-249). 

In the spirit of its dedication to environmental stewardship, AER has considered every 

viable alternative to seeking this variance, but there is no other economically reasonable 

technology, operational measure, or pollution control equipment that would allow AER to meet 

the 2015 and 2017 S02 emission rates. Completing the Newton FDG system is the most 

effective and economically reasonable Bolution and through this variance AER seeks time to 

finish the work it has started towards that goal. AER cannot now secure the funding necessary 

to complete the scrubber and the outlook for the next several years is no better. AER has shown, 

and the Agency agrees, that the earlier and greater S02 emissions reductions AER will achieve 

57 
under its compliance plan will provide a net environmental benefit if the Board were to grant the 

requested relief. Accordingly, AER has met its burden to show it is facing an arbitrary and 

unreasonable hardship, and granting the requested variance is justified under these 

circumstances. 

WHEREFORE, petitioner Ameren Energy Resources respectfully requests the Pollution 

Control Board to grant its request for variance from the TI!inois Multi-Pollutant Standard 2015 

S02 emission rate through December 31,2019 and 2017 S02 emission rate through January 15, 

2020, as described more fully herein. 

Dated: August 15, 2012 

Renee Cipriano 

Gabriel Rodriguez 

Amy Antoniolli 

Schiff Hardin, LLC 

233 South Wacker Drive, Suite 6600 

Chicago, IL 60606 

Respectfully submitted, 

AMEREN ENERGY RESOURCES, Petitioner. 

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