I N R EPLY R EFER TO :

N3615 (2350)

July 24 , 2013

Ms. Rita Bates Planning Section Chief

, Air Quality Bureau New Mexico Environment Department 525 Camino de los Marquez, Suite 1
Santa Fe, NM 87505

Dear Rita:

Thank you for the opportunity to review and comment on the proposed State Alternative for Best Available Retrofit Technology for nitrogen oxide (NO

x ) emissions f rom San Juan Generating

Station (SJGS) . The State Alternative was developed through negotiati on between New Mexico Environment Departmen t (NMED)

, Public Service of New Mexico (PNM), and the Environmental Protection Agency ( EPA ) Region 6

, after EPA disapproved New Mexico’s

BART determination for SJ GS and proposed a Federal Implementation Plan (FIP) with more stringent controls

.

PNM did not demonstrate that the State Alternative (Selective Non

- Catalytic Reduction ( SNCR )

on two units and shut down of two units ) is b etter than EPA’s proposed BART determination (Selective Catalytic Reduction ( SCR ) on four units)

. PNM did not follow the BART guidelines

to model maximum 24

- hour emissions , so model results do not accurately estimate the visibility impacts . Actual 24

- hour maximum NO

x emissions sho uld have been used for the baseline, and

compa red to the percentage emissions reductions for each control technology (23% for SNCR and 83% for SCR).

The State Alternative needs to demonstrate greater visibility improvement than the EPA FIP proposal. We recommend that PNM and NMED evaluate the feasibility of further lowering the

emissions limits for NO

x and/or SO 2 to demonstrate that the State Alternative is b etter than the EPA FIP proposal

.

We also note that PNM overestimated the costs of SCR . We re calculated costs consistent with the BART guidelines and f ou nd that SCR c osts are in the same range as accepted by other states

as BART

. Our detailed comments are enclosed.



# United States Department of the Interior

NATIONAL PARK SERVICE

Air Resources Division

P.O. Box 25287 Denver, CO 80225

- 02871

National Park Service (NPS) Comments to New Mexico Environment Department (NMED)

Regarding Best Available Retrofit Technology (BART) for the

San Juan Generating Station (SJGS)

July 24 , 2013

SJGS Source Description:

SJGS is operated by the Public Service Company of New Mexico (PNM) and consists of four pulverized coal

- fired generating units located near Farmington, NM . Coal for the units is supplied by the adjacent San Juan Mine and is delivered to the facility by conveyor

. There are 16 Class I areas within 300 km of the SJGS facility, nine of which are administered by the NPS. At 40 km, Mesa Verde National Park is the closest Class I area. According to EPA’s Clean Air Markets (CAM) database, of 1,213 facilities in 2012, SJ GS ranked #176 for sulfur dioxide (SO 2 ) emissions (4,604 ton s ) and #9 for nitrogen oxides (NO X ) emissions (15,975 tons).

The SJGS Boiler Units 1 and 2 have a unit capacity of 350 and 360 MW, respectively. The units are equipped with Foster Wheeler subcrit ical, wall

- fired boilers that operate in a forced draft

mode. The SJGS Boiler Units 3 and 4 each have a unit capacity of 544 MW and are equipped with B&W subcritical, opposed wall

- fired boilers that operate in a forced draft mode. Because plant capacity ex ceeds 750 MW, presumptive BART applies to each unit (greater than 200 MW).

The table below shows how each unit’s 2012 CAM emissions ranked among the 3,495 Electric

G enerating U nits (EGUs) in the CAM database.

Unit

ID SO2 (tons) SO2

(tons)

Rank A vg. SO2

Rate (lb/MMBtu) Avg. NOx

Rate (lb/MMBtu) NOx

(tons) NOx

(tons)

Rank CO2 (tons)

1 952 626 0.081 0.278 3,352 133 2,473,030

2 864 653 0.078 0.290 3,302 136 2,319,354

3 1,137 579 0.074 0.271 4,278 91 3,227,133

4 1,652 475 0.089 0.267 5,042 58 3,886,720

Consent Decree and B est Available Retrofit Technology (B ART ) proposals : On March 5, 2005, PNM entered into a consent decree with the Grand Canyon Trust, the Sierra Club, and the New Mexico Environment Department (NMED) to settle alleged violations of the

C lean A ir A ct . The consent decree required PNM to meet a particulate aver age emission rate of

0.015 lb/ mm Btu, and a 0.30 lb/ mm Btu emission rate for NOx ( daily rolling, thirty

- day average ),

for each of Units 1, 2, 3, and 4. As a result, PNM installed Low

- NO X burners with overfire air ports and a neural network system to reduce NO X emissions, and pulse jet fabric filters to reduce

the particulate emissions. The c onsent decree also required that t he annual rolling average SO 2 percentage reduction for SJ GS Units 1, 2, 3, and 4 shall not be less than 90 percent for each unit.

The NM SIP dated July 5, 2011 determined BART for NO X for all four units as Selective Non

C atalytic Reduction ( SNCR )

. The EPA Federal Implementation Plan ( FIP ) dated August 22,

2011 determined BART for NOx for all four units is the more stringent technology, Selective2

Catalytic Reduction ( SCR ) . PNM, NM ED , and EPA negotiated the current proposed alternative

BART that would shut down units 2 and 3 and install SNCR on units 1 & 4

.

BART Analysis for Current Proposal

We agree with NM ED that SNCR and SCR are feasible technologies and that the other technologies do not need to be evaluated further for SJGS (Step s 1 & 2 )

.

Step 3: Evaluate Control Effectiveness of Remaining Control Tec hnologies

NMED assumed that SNCR could reduce emissions by 23% (to 0.23 lb/mmBtu) and SCR by 83% (to 0.05 lb/mmBtu). However, we found seven wall

- or tangentially

- fired EGUs in EPA’s 2012 CAM database operating at or below 0.04 lb/mmBtu (annual average )

. Three of these units (Morgantown #1 & #2, and W.A. Parish #7) were retrofit with SCR. (The other four units are new sources.) We believe that it is feasible for SJGS to achieve 0.04 lb/mmBtu on an annual average basis

. T his represents a n 8 5 %

- 86 % reduction in current NO X emissions , which is well within the capability of modern SCR

.

Step 4: Perform Impacts Analysis of Remaining Control Technologies

Black & Veatch ( B&V ) and Sargent & Lundy ( S&L ) prepared the design parameters and developed estimates of capital and annua l costs for applications of SCR and SNCR . PNM evaluated the energy impacts, non

- air quality environmental impacts, and remaining useful life of all additional technically feasible control options for NO X

. T he 2013 analysis for 4 SCR, 4

SNCR and 2 SNCR/2 Shutdown used a remaining useful life of 30 years. The table below is a slightly

- modified 1 version of NMED’s Table 10 that focuses on SNCR and SCR compared to the baseline set by the 2005 Consent Decree

.

Table 10: Impact Analysis and Cost Effectiveness of Additional NOx Control Technologies

Control Technology Emission

Performance Expected

Emission Rate (tpy) Expected

Emission

Reduction (tpy) Total

Capital

Investment (TCI) (1,000$) Total

Capital

Investment ($/kW) Total

Annualized

Cost Cost

Effectiveness ($/ton) Incremental

Cost

Effectiveness ($/ton) Level (lb/MMBtu) (TAC) (1,000$)

U nit 1 350 kW

Consent Decree 0.30 4,140

SNCR 0.23 3,174 966 17,392 50 5,400 5,590 $ 6,749

SCR + sorbent (FIP) 0.05 690 3,450 180,862 517 22,165 6,425

Unit 2 360 kW

Consent Decree 0.30 4,119

SNCR 0.23 3,158 961 17,392 48 5,400 5,618 $ 7,752

SCR + sorbent (FIP) 0.05 687 3,433 203,360 565 24,562 7,157

Unit 3 544 kW

1 Table 10 was modified to eliminate all control technologies except those under consideration in this proposal. Energy and non

- air impacts were also deleted. EGU rating s were added.3

Consent Decree 0.30 6,431

SNCR 0.23 4,931 1,501 17,163 32 8,224 5,480 $ 6,314

SCR + sorbent (FIP) 0.05 1,072 5,359 264,208 486 32,585 6,080

Unit 4 544 kW

Consent Decree 0.30 6,309

SNCR 0.23 4,837 1,472 17,163 32 8,224 5,587 $ 5,623

SCR + sorbent (FIP) 0.05 1,052 5,257 235,940 434 29,508 5,613

In previous comments by EPA 2 and NPS, it was noted that unit costs ( $434

- $565 /kW) for SCR presented by P NM were far greater than industry and vendor 3 data support

. In conducting our cost analysis for SCR , we used an approach similar to that reported by EPA R egion 8 in its analysis of costs for the Colstrip P ower P lant in MT:

We relied on a number of resources to assess the cost of compliance for the control technologies under

consideration. In accordance with the BART Guidelines (70 FR 39166), and in order to maintain and improve consistency, in all cases we sought to align our cost methodologies with the EPA CCM. 4

However, to ensure that our methods also reflect the most recent cost levels seen in the ma rketplace, we also relied on a set of cost calculations developed by Sargent & Lundy for the Integrated Planning Model (IPM) version 4.10. 5 These IPM cost calculations are based on databases of actual control project costs and account for project specific s such as coal type, boiler type, and reduction efficiency. The IPM cost calculations reflect the recent increase in costs in the five years preceding 2009 that is largely attributed to international competition. Finally, our costs were also informed by cost analyses submitted by the sources, including in some cases vendor data.

We used EPA’s IPM model to estimate Direct Capital Cost (DCC) and applied the Contro l Cost manual ( CCM ) factors (totaling 141%) for Indirect Capital Cost to estimate a Total Ca pital Investment (TCI). We then used the CCM to estimate (Direct and Indirect) Annual Costs. All

SCR costs are normalized to 2010

.

Unit Unit 1 Unit 2 Unit 3 Unit 4

SCR Control Efficiency 86% 86% 85% 86%
Controlled emissions (lb/mmBtu) 0.04 0.04 0.04 0.04
Controlled Emissions (tpy) 484 455 635 751
Emissions Reduction (tpy) 2,942 2,826 3,716 4,473
Capital Cost $ 83,713,596 $ 76,263,695 $ 105,336,653 $ 108,838,111 Capital Cost ($/kW) $ 239 $ 212 $ 194 $ 200

O&M Cost $ 2,526,966 $ 2,336,481 $ 3,219,734 $ 3,529,493

Annualized Cost $ 9,273,143 $ 8,482,298 $ 11,708,436 $ 12,300,365

Cost

- Effectiveness ($/ton) $ 3,152 $ 3,001 $ 3,151 $ 2,750

2 Five industry studies conducted between 2002 and 2007 have reported the installed unit capital cost of SCRs to be $79/kW to $316/kW, where the upper end of the range is for very complex retrofits that are severely site

constrained.

3 “The SC R System cost would range from $100/Kw to $200Kw. This was based on a unit size from 750 to 250MW.” Email dated 4/21/10 from Anthony C. Favale P.E., Director

- SCR Products, Hitachi Power Systems America, to Anita lee, EPA Region 9.

4 EPA Control Cost Manual Sixth Edition, January 2002, EPA 452/B

– 02

– 001

5 Documentation for EPA Base Case v.4.10 Using the Integrated Planning Model, August 2010, EPA #430R100104

Even with the increased catalyst volume necessary to meet the lower annual NO X emission rate

for SCR , our $194

- $239/kW estimates of TCI still fall within the range of industry norms . Our annual costs are less than estimated by PNM, resulting in $/ton estimates that are less than half

PNM estimates

.

Step 5: Visibility Impacts Analysis of Remaining Control Technologies On April 1, 2013, PNM submitted updated visibility modeling for SJGS with revised emission

estimates for SO 2 , sulfuric acid (H 2 SO 4 ), and total particulate matter (TPM). The modeling analysis compared available NO X control technologies including SCR and SNCR, as well as unit

retirements as an al ternative operating scenario that had not previously been analyzed. PNM’s updated BART modeling incorporated SJGS’s new SO 2 and TPM emission limits of 0.15 lb/mmBtu and 0.034 lb/mmBtu, respectively, including the EPA’s FIP scenario representing four
SCRs, and the NMED’s 2011 SIP scenario representing four SNCRs. PNM also modeled SO 2 at
0.10 lb/mmBtu. PNM utilized the EPA

- approved CALPUFF version 5.8, the CALMET data set originally created by EPA, and modeling input files as modifi ed by EPA to reflect the so urce

specific parameters for the specific modeling scenarios. The modeled CALPUFF domain, receptors, ozone data, and CALMET data came directly from EPA. Additionally, the surface, upper air, and precipitation stations used to make the CALMET files were als o directly delivered

from the EPA. In the 2013 analysis, the hourly ozone concentrations files that came directly from EPA were used and the ozone concentration of 80 ppb was used for the missing hours in the ozone data files. A constant ammonia background concentration of 1.0 ppb was used.

The NMED approved the use of all of the input parameters and data compiled by EPA for the updated modeling analysis. The condensable particulate matter (PM) emission rates used in the 2013 modeling were based on the facility’s total particulate matter emission limit as established in the NSR permit effective August 31, 2012. PNM utilized the default ammonia background concentration of 1 ppb and the revised IMPROVE equation (Method 8) to calculate the 98 th
percentile d elta deciview (dv) from modeled pollutant concentrations.

The meteorology used for the SJGS BART analysis followed EPA’s methodology described in the Technical Support Document and included with EPA’s proposed 2011 FIP. The modeling analysis was performe d on a year

- by

- year basis (2001

– 2003) for the facility

- wide impact for

the four scenarios (Baseline, EPA FIP, NMED SIP, State Alternative)

.

Ammonia slip was not considered in the modeling analysis. According to NMED,

“ [ C ] onsidering the 1 ppb ammonia ba ckground and the reductions in NOx, ammonia slip would have a negligible impact on visibility from any of the scenarios. EPA had determined in the FIP that ammonia slip would not significantly impact visibility improvement due to reductions in

NOx and SO 2 anticipated in the 4

- SCR scenario. ” This is misleading because the EPA statement 6
was in regard to SCR ammonia slip

— EPA never addressed ammonia slip from SNCR, which can be much higher than from SCR.

6 EPA TSD: “ We are proposing NOx reductions that would likely be met with the installation of SCR and would have associated ammonia slip (ammonia that is not fully reacted and is emitted to atmosphere). The ammonia slip limit may be higher than 1 ppb, but we don‘t think it would significantly impact visibility improvements due to the

reductions in NOx and SO2 at the SJGS units. ”5

CALPUFF Inputs

– Baseline and Control Options Source release parameters and emissions for baseline and control options for each unit are shown

in NMED’s Tables 16 through 19. The following notes apply to each of these tables: (1) Emissions levels (lb/ mm Btu) are shown on an annual average basis. (2) Emissions (lb/hr) calculations were based on the emissions level (lb/ mm Btu) and design heat

basis. (3) Emissions levels listed were based on performance guarantees provided by the equipment

vendor. (4) The 2013 analysis utilizes the Electric Power Resea rch Institute (EPRI) methodology to
estimate H 2 SO 4 emissions

.

The 2013 analysis used the revised IMPROVE equation (Method 8) and the Annual Average

Natural Conditions.

However, t he emissions modeled do not follow the BART Guidelines. Instead of modeling the

maximum 24

- hour emission rates as required by the BART Guidelines 7 , the 2013 analysis relies upon annual / 30 day rolling ? (please clarify) average emissions, which do not properly reflect the variability in 24

- hour emissions. To represent control techno logy, PNM should have used actual

maximum 24

- hr emissions modified by the percentage emissions reduction from Table 2, Appendix D (23% for SNCR and 83% for SCR). As would be expected, the baseline annual average SO 2 and NO X emissions modeled in the 2013 analysis are consistently lower than the corresponding 24

- hour maxima, as shown in the table below. ( The “ NMED ” values are the modeled emission rates, while the “CAMD” values are the 24

- hour maxima and the dates on

which t hey occurred.)

Baseline Unit 1 Date 2 Date 3 Date 4 Date

NMED SO2 (lb/hr) 556.1 553.2 863.7 847.4

CAMD SO2 (lb/hr) 598.3 4/17/2010 598.1 6/22/2012 988.0 12/22/2012 1,360.7 8/1/2012

NMED NOx (lb/hr) 1,112.1 1,106.4 1,727.4 1,694.7

CAMD NOx (lb/hr) 1,203.8 8/30/2012 1,105.2 7/25/2012 1,795.5 7/19/2012 1,893.1 6/3/2010

PNM also erred by assuming that future 24

- hour maximum emissions would be the same as the longer

- term emission limits

. Even though no additional SO 2 control measures are proposed,

PNM has assumed that SO 2 emissions will be reduced by one

- third from the “ba seline”

condition. PNM appears to be lowering allowable emissions limit closer to the demonstrated actual emissions without changing operational conditions. Thus the emissions reduction that SJGS is taking credit for is not actually a reduction. This sig nificant, but “ paper ” , reduction in

SO 2 emissions is likely to have played a major role in in NMED’ s conc lu s ion that the State Alternative is almost as good as BART. Without this paper SO 2 reduction, it is likely that

reductions from the State Alternative would be much less

. Instead of modeling this “paper ” SO 2

7 Scenarios would be run for the pre

- controlled and post

- controlled emission rates for each of the BART control options under review. The maximum 24

- hour emission rates would be modeled for a period of three or five years of

me teorological data.6

reduction, PNM should model future maximum 24

- hour emission based upon application of expected improved control efficiencies to the actual baseline emissions from CAM data.

Di scussions and Conclusions Because of the modeling errors discussed above, we cannot evaluate the State’s conclusion that:

T he State Alternative Plan (2 SNCR/2 Shutdown) and the EPA FIP (4 SCR) achieve greater visibility improvement than projected for the NMED SIP scenario of 4 SNCR. The State Alternative Plan provides for nearly the same visibility improvement as the EPA FIP i n improving visibility , with a difference of less than 0.5 dv at any one Class I area. The largest average differences in visibility improvement from the 4 SCR (FIP) and 2 SNCR/2 Shutdown (State Alternative) scenarios are 0.28 dv at Mesa Verde National Par k, and 0.16 dv at Canyonlands National Park.

Instead, NMED should address the modeling issues we have identified and present corrected results and conclusions. (It would also be helpful in NMED would present its results in tabular form, in addition to the chart format.)

2013 BART Determination

NMED states that it “ considered the terms of the non

- binding agreement between the EPA, NMED and PNM, signed February 15, 2013 (the “State Alternative”), and the resulting significant environmental improvements of this alternative and compared this scenario to the 4 SNCR and 4 SCR scenarios previously evaluated : ”

The retirement of Units 2 and 3 will reduce the facility annual NOx emissions by an additional 10,550 tons.

When added to the controlled emission rate of Units and 1 and 4, total annual NOx emission will be reduced by 12,989 tons.

We are not clear on the bases for the statement above

.

Under this BART alternative, PNM is to conduct performance testing to determine if the SNCRs

installed on Units 1 an d 4 can achieve significantly less than 0.23 lb/ mm Btu. Given that a similar optimization condition 8 is contained in the c onsent d ecree, please describe how that condition in

that c onsent d ecree has been implemented

.

NMED states that:

8 No later than sixty (60) days after the first twelve (12) months of operation of the new NO X combustion control technology installed at each unit, PNM shall submit a report to Plaintiffs and the Department (a) identifying the daily a verage NO X emission rate for each unit for every operating day in the period and the thirty (30) day rolling average emission rate for every calendar day of the period, (b) describing the performance of the NO X control technology at each unit, and (c) ev aluating the extent to which the 0.30 lb./mmBtu limit can be lowered at each unit based on the performance of each unit during the first twelve (12) months of operation of the new NO X combustion control technology. The report shall be reviewed pursuant to the procedure in Section IX (Approvals). Upon approval of Plaintiffs and the Department, the 0.30 lb./mmBtu limit shall be adjusted to a lower limit for the unit if the data gathered during the first twelve (12) months of operation indicate that a given u nit is capable of meeting a lower limit, provided, however, that any final NO X limit for a given unit shall add a ten (10) percent margin of safety to the most representative thirty (30) day average emission rate achieved during the first twelve (12) mont hs of operation.7 The visibility improvements from the State Alternative of SNCR on two units and two units shutdown compare very closely with the SCR installation sc enario as contained in the FIP... the degree of visibility improvement anticipated, the 2 SNCR/2 unit shutdown scenario is su perior to the 4 S N CR scenario, and substantially equivalent to the 4 SCR scenario.

Even if the visibility modeling results are accepted at face value, they do not demonstrate that the

2 SNCR/2 unit shutdown alternative is “better

- than

- BART.” And, both th e EPA FIP and the State Alternative continue to show more than a 2 dv impact at Mesa Verde NP, continue d visibility impairment at Canyonlands NP , and continued contributions to impairment at four

more Class I areas.

NMED concludes that:

The total capit al investment of the FIP 4 SCR scenario is estimated at nearly $861,871,000, as compared to $34,556,000 for the installation of SNCR at Units 1 and 4. This additional and significant capital expenditure that would be required to comply with the FIP 4 SCR s cenario is not justified given the slight

and undetectable im

provement in visibility of the FIP 4 SCR scenario over the State Alternative 2 SCR/2

Shutdown scenario.

We have shown that the total capital investment estimates cited by NMED for SCR are

overestimated ( our $194

- $239/kW estimates versus $434

- $565/kW by PNM ), and that the visibility modeling need s revision

.

Conclusions

 Cost estimates for SCR a re significantly overestimated.

 T he visibility modeling analysis was not done according to the BART Guidelines.

 The visibility modeling analysis does not demonstrate that the 2 SNCR/2 unit shutdown

alternative is “better

- than

- BART.”

 Without additional SO 2 or NO X reductions beyond those proposed in the State Alternative, the National Park Ser vice does not agree that the State Alternative is better

than the BART determination in EPA’s FIP.

Recommendations

While addressing the problems noted above, NMED should also evaluate the possibility of reducing actual SO 2 emissions and setting a limit on SO 2 lower than the proposed 0.10 lb/mmBtu (30

- day rolling average)

. For example, our review of CAM data shows that Unit #1 operated

with 30

- day rolling averages at or below 0.080 lb/mmBtu between 5/17/2010 and 3/26/2012. During 2010

– 2012, Unit #4 operated with 30

- day rolling averages below 0.080 lb/mmBtu 52% of the time, and below 0.09 lb/mmBtu 77% of the time. So, it appears that the scrubbers have the capability to operate with lower than 0.10 lb/mmBtu SO 2 emissions. It may be feasible to improve operation and maintenance of the scrubbers on units #1 & #4 such that they can consistently meet a lower SO 2 limit.