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### Hausman, John R.

From: McDowell, Andrew S. Sent: Friday, June 04, 2010 11:01 AM To: Gischia, Scott; Hausman, John R. Cc: Kroll, Hannah L.; Klejeski, Julie; Beaty, Aisha D. Subject: PEMS Discussion Summary

Scott / John,

In preparation for our call Monday with MPCA, I wan ted to summarize the current situation with PEMS at HTC, as well as provide possible discussion points for the call.

Current State

1. Based on RVI values > 0.2, HTC submitted PEMS propo sals to MPCA to predict NOX concentrations. Predic ted

concentrations were then converted to mass emission rates using installed stack gas flow monitors (“tw o-step approach”).

2. Following premature failure of installed stack gas flow monitors, HTC worked with su pplier to test new probes of alternative designs. Test results indicated that e xcessive wear of new probes is likely, and supplier refuses to provide a warranty on any new probes. Use of new p robes would require constant maintenance as well as replacement of worn parts, resulting in additional downtime of the PEMS.

3. As a result, HTC developed a new PEMS model to dire ctly calculate NOx mass emission rates (“one-step approach”). Negotiations with MPCA are ongoing to obtain approval of the PEMS one-step approach, with MPCA currently suggesting a “hybrid approach”.

4. HTC recently completed PEMS certification stack tes ts on Furnace Lines 1 and 2. Preliminary stack tes t results indicate that the one-step PEMS will not meet the 9 0% relative accuracy requirement contained in feder al performance specification 16 (PS-16).

Possible Discussion Points for Call

1. Communicate to MPCA that the 7-day NOx stack tests used to develop the initial one-step and two-step P EMS proposals intentionally introduced variability into the pellet indurating process, resulting in elevat ed RVI calculations. In addition, the vast majority of th e operating conditions subject to stack testing wer e not conditions that HTC will operate under. In some ca ses we were also unable to maintain our fired pelle t quality specifications, and this information was communicat ed to MPCA in writing with each of the original PEM S proposals.

2. HTC has historically operated in two distinct produ ction modes to produce standard and high compressio n pellets. NOx emission rates are significantly high er when producing high compression pellets (heat in put increases per ton of pellets and firing zone temper atures are increased by ~100 degrees F.

3. Because of the two separate production modes, HTC p roposes to follow current Administrative Order procedures to conduct a new 7-day NOx test for eac h furnace line. The 7-day test will be split into two operating conditions to represent standard and high compression pellet production. RVIs will be calcu lated to determine whether alternative monitoring methods ar e necessary. If RVIs are greater than 0.2, then se parate PEMS would be developed for standard and high compr ession pellet production modes.2

Section 8.5 of PS-16 also says that if operational changes occur at a facili ty that may cause a significant change in emission rate, the PEMS must be recertified. I wou ld argue that the change to and from standard and h igh compression pellet production does result in a sign ificant change in NOx emission rates, which support s our desire to conduct new extended NOx stack tests.

Sorry this was a little long-winded, but I wanted t o capture some of our initial thoughts before I hea d out for the day. If we want to connect prior to the 10:00am call on Mon day to discuss, I have availability most of the mor ning. Thanks.

-Andy