UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION III 1650 Arch Street Philadelphia, Pennsylvania 19103
DATE: December 1, 2009 SUBJECT: T echnical Support Document for Delaware’s Amendment to Regulation No. 11 46

– Electric Generating Unit Multi

- Pol lutant Regulation FROM: Irene Shandruk , Environmental Scientist

Office of Air Program Planning TO: File /s/ THRU: Cristina Fernandez , Associate Office Director

Office of Air Program Planning
A. BACKGROUND: On November 16, 2006, the Delaware D epartment of Natural Resources and Environmental Control (DNREC) submitted a revision to the Delaware State Implementation Plan (SI P). This SI P revision pertain ed to a new regulation, Regulation No. 1146

– Electric Generating Unit (EGU) Multi

- Pollutant Re gulation. The regulation was adopted in order to impose lower emissions limits of nitrogen oxides (NOx), sulfur dioxide (SO 2 ) and mercury in order to help Delaware attain and maintain the national ambient air quality standards (NAAQS) for ozone and fine p articulate matter (PM 2.5 ), a s well as to assist Delaware in achieving the emissions re ductions needed to support the S tate’s 8

- hour ozone reasonable further progress plan (RFP) for NOx. EPA approved the SI P revision on August 28, 2008 (73 FR 50723). On O ctober 7, 2009, EPA received a SI P revision for this rule, dated September 24, 2009. The revision is an amendment to Regulation No. 1146 of Delaware ’s Administrative Code , and it modifies the SO 2 mass emissions limit associated with Conectiv Edge Moor Uni t 5 (as constrained in Regulation 1146’s Table 5

- 1) from 2,427 tons per year to 4,600 tons per year, beginning in calendar year 2009. No other changes were made to Regulation 1146. The effective date of the state level revision was October 10, 2009.
B. EPA REQUIREMENTS : In1998, the Environmental Protection Agency (EPA) issued the NOx SI P Call to reduce air emissions of NOx, which is a precursor to ozone that is subject to the NAAQS . Th e NOx SI P Call allowed NOx emissions trading , which allowed sourc es of NOx emissions an alternative to2

investing in pollution control equipment. Instead of investing in pollution control equipment, the sources could purchase emission allowances. In2005, EPA issued the Clean Air Interstate Rule (CAI R) to further regul ate NOx and SO 2 emissions. CAI R also allowed emissions trading as an alternative to actual emission reductions from a source. EPA believed that the state caps set in CAI R represent ed the appropriate amount of cost

- effective emissions reductions required to prevent significant contribution to nonattainment through transport of emissions to downwind ozone and PM 2.5 nonattainment areas. However, States ha d flexibility in the design of NOx allocation schemes. Delaware believed that tighter caps on these sources were a necessary component of its plan for attainment of the NAAQS. R egulation 1146 supplement ed the CAI R program by setting “ hard ” NOx and SO 2 emissions caps that could not be exceeded for affected facilities. These units, however, were still subje ct to all of the EPA’s CAI R requirements, including its allowance allocation and cap

- and

trade provisions, independent of this regulation. Thus, the units subject to R egulation 1146 were required to meet the cap set by this regulation independent of any c ompliance provisions of the CAI R program
. C. STATE SUBMITTAL: Originally

submitted to the EPA on November 16, 2006, Regulation No. 1146 establishe d NOx and SO 2 emission limits to achieve reductions from Delaware’s large EGU s. This multi

- pollutant re gulation impact s any owner or operator of a coal or residual oil fired power plant 25 megawatts (MW) and greater in size, specifically the Conective Delmarva Generating, Inc.’s Edge Moor Generating Station Units 3, 4 and 5; City of Dover’s McKee Run Generating Station Unit 3; and NRG Energy , Inc.’s Indian River Generatin g Station Units 1, 2, 3 and 4. The following table identifies the units affected by this regulation and the annual SO 2 mass emissions limits for each : Facility Unit County Primary Fuel Annual SO 2 Mass Emissions Limits (tons) Edge Moor 3 New Castle Coal 1391 Edge Moor 4 New Castle Coal 2410 Edge Moor 5 New Castle Residual Oil 2427 In dian River 1 Sussex Coal 1082 In dian River 2 Sussex Coal 1130 In dian River 3 Sussex Coal 1759 In dian River 4 Sussex Coal 3657 McKee Run 3 Kent Residual Oil 4393

On October 7, 2009, EPA received an amendment to this regulation modifying the SO 2 mass emissions limit associated with Conectiv Edge Moor Unit 5, located in New Castle County , Delaware , from 2 ,427 to 4,600 tons per year. Since this revision is only associated with the SO 2 emissions limit, NOx will not be discussed here. This SI P revision was the result of a litigation settlement agreement between Conectiv Delmarva Generating, Inc. and the D epartment of Natural Resources and Environmental Control in December 2008. Conectiv had filed an appeal challenging the regulation for their Edge Moor 5 facility

. The argument was that the emissions limit of 2,427 tons per year limited the facility from operating in extreme circumstances when failure at other production units would require them to exceed that limit in order to supply the needed electricity

. The limit of 4,600 tons per ye ar was determined to be an adequate limit after an analy sis of the f acility ’s history

of operation and the estimate of future operations using the low sulfur (0.5%) residual fuel to generate electricity at the 446 megawatt oil

- fired steam generating unit. Currently , the facility operates at a 10% capacity

factor. I f so r equired, the new emissions limit would allow the facility to operate at a 45% capacity

factor. This higher operational capacity factor, however, was determined to not be economically favorable for the facility

to operate at such a level continuously

. Analy s i s show ed that because residual fuel oil prices change with the cost of oil, the unit’s capacity factor over the last several ye ars has been dropping because of the cost of fuel. Over the last decade, there has been a fairly steady increase in residu al fuel oil costs. This has reflected on the facility ’s operating capacity , decreasing over the course of a single year. As the unit operates at a very low capacity

factor on an annual basis, the SO 2 emissions from that unit will be relatively low form a mass emissions perspective on an annual basis. Additionally , R egulation 1146 has required the facility to reduce their use of a maximum 1 percent sulfur fuel oil to a maximum half a percent sulfur fuel oil, reducing the emissions of the unit by roughly 5 0 percent. Given both of these factors, DNREC believes that both the fuel oil sulfur requirement and the economics residual fuel cost will generally keep the unit to operating at a low capacity factor. Therefore, D NREC believes that the actual SO 2 emissi ons from this unit will not change significantly from the original emission limit in the regulation, nor will there be any significant impact on the air quality that would affect the public. This SI P revision changes Regulation 1146’s Table 5

- 1 to read as follows : Unit Annual SO 2

Mass Emissions Limits (tons) Edge Moor 3 1391 Edge Moor 4 2410 Edge Moor 5 4600 In dian River 1 1082 In dian River 2 11304

In dian River 3 1759 In dian River 4 3657 McKee Run 3 439 Furthermore, no other aspects of the origin al regulation pertaining to SO 2 will change with this SI P revision. The Edge Moor 5 facility will still be subject to the following: Coal fired unit shall not exceed a SO 2 emission rate of 0.37 lb/MMBTU heat input from May 1, 2009 through December 31, 20 11. Compliance with this requirement shall be demonstrated on a rolling 24

- hour average basis. Compliance can also be demonstrated with SO 2 emissions from multiple units at a common facility be averaged on a heat input basis. No coal

- fired unit subject to this regulation shall emit SO 2 at a rate exceeding 0.26 lb/MMBTU heat input , demonstrated on a rolling 24

- hour average basis , on and after January 2012. A coal

- fired unit subject to this regulation shall not emit annual SO 2 mass emissions that exceed the values shown in on or after January 1, 2009. Compliance with these requirements from January 1, 2009 through December 31, 2011, may be achieved by

demonstrating that the total number of tons of SO 2 emitted from a common facility does not exceed the sum of the tonnage limitations for all of the units subject to this regulation at that facility . Compliance shall also be achieved by using, tende ring, or otherwise acquiring SO 2 allowances under any

State or Federal emission trading program. For the purpo se of determining compliance with these requir e ments , the total tons for a specified period shall be calculated as the sum of all recorded hourly emissions, with any

remaining fraction of a ton equal to or greater than 0.50 ton deemed to equal one ton and any remaining fraction of a ton less than 0.50 ton deemed to zero tons. Overall, compliance with the requirements of this regulation shall be demonstrated with a continuous emissions monitoring sy stem that is installed, calibrated, operated, and certified in accordance with 40 CFR Part 75 or other method approved by DNREC and EPA, and meeting the monitoring and reporting requirement s of 40 CFR Part 96, subpart HHH

. No residual oil with a sulfur content in excess of 0.5 percent by weight, shall be received for any residual oil

- fired unit subject to this regulation, on and after January 1, 2009. Compliance with these requirements shall be demonstrated by fuel oil sampling and analy s is. Samples shall be collected: (1) from the transport vessel for each ship ment of residual fuel oil received at the facility for combustion in the subject residual oil

- fired unit; or (2) from the supply pipeline each day residual oil is delivered to the facility via pipeline for combustion in a residual oil

- fired unit subject to this regulation, after sufficient fuel oil has been drained from the sampling line to remove any

fuel oil that may

have been standing in the sampling line; or (3) from the supply pipeline at the inlet to the residual oil

- fired unit subject to this regulat ion each day the unit fires any quantity of oil fuel, after sufficient fuel oil has been drained from the sampling line to5

remove any

fuel that may

have been standing in the sampling line.
D. EPA EVALUATION: This amendment to Regulation No. 1146 is a r easonable compromise between Conectiv and DNREC, which prevented a potential overturning of the regulation. Analy sis supports that the increase in the SO 2 emissions limit for the Edge Moor 5 facility will generally

not lead to increased SO 2 emissions on an annual basis but will enable the facility to operate at a higher capacity if in the unusual circumstance it should be needed. Given that an increase in SO 2 emissions is not expected from what they currently are at the facility , this revision will continue to help Delaware attain and maintain NAAQS for ozone and PM 2.5 . E. CONCLUSIONS AND RECOMMENDED AGENCY ACTION: The amendment to the EGU multi

- pollutant regulation on NOx and SO 2 emission limitations adopted by

Delaware w ill result in the reduction o f NOx and SO 2 emissions from the affected sources. The settlement between Conectiv and DNREC removed the risk of an adverse result that could have overturned this regulation entirely , a result that would not have been good for the environment or public he alth. Therefore, EPA approval of the SI P revision is recommended.