Revised October 22, 2009



## Revised Nevada Division of Environmental Protection BART Determination Review of NV Energy’s Reid Gardner Genera ting Station Units 1, 2 and 3

EXPLANATION: BOLD text below identifies the Guid elines for BART Determinatio ns under the Regional Haze Rule in Appendix Y of 40 CFR 51.

BACKGROUND

A BART analysis was completed by CH2M HILL at the reques t of NV Energy (NVE) for units 1, 2 and 3 at the Reid Gardner Generating Sta tion (Reid Gardner) dated October 3, 2008. Reid Gardner consists of three BART-eligible units with a nominal generating capacity of 110 megawatts (MW) each. A fourth unit (265 MW) is not BART-eligible. Th e units are wall-fired boilers, which burn primarily bituminous coal. NVE’s BART analysis is summarized below, organized according to the five step analysis contained in Appendix Y of 40 CFR 51, followed by NDEP’s analysis and BART determination.

NV ENERGY ANALYSIS

STEP 1 – Identify all availabl e retrofit emissions control tech niques; alternatives can be categorized in three ways:

• Pollution prevention (used of inherentl y lower-emitting processes/practices);

• Use of (and where already in place, impr ovement in the perf ormance of) add-on controls; or

• Combination of pollution prevention and add-on controls.

NVE identified the following emission reduction scenarios: Potential NO x Control Options – (Current controls consist of LNB and OFA)

• Low NO x Burners (LNB) with Over-Fire Air (OFA)

• LNB with Selective Non-Catalytic Reduction (SNCR) System

• Rotating Opposed Fire Air (ROFA) with Rotamix

• LNB with Selective Catalytic Reduction (SCR) System

• ROFA with SCR Potential SO 2 Control Options – (Current controls consist of soda ash scrubber for SO 2 )

• Dry Flue Gas Desulfurization (FGD) System

• Dry Sorbent Injection

• Furnace Sorbent Injection

• New Wet FGD System

• Improve or upgrade wet soda ash FGD system operation Cost-effective scrubber upgrades considered:

• Eliminate bypass reheat

• Install liquid distribution rings

• Install perforated trays

• Use organic acid additives

• Improve or upgrade scrubber auxiliary system equipment

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• Redesign spray header or nozzle configuration Potential PM 10 Control Options – (Current controls consist of a mechanical collector. As part of the planned environmental upgrad e pursuant to a 2007 consent decree, the mechanical collector is being re moved and new pulse jet fabric filter is being installed for units 1 through 3.)

• Upgrade the Existing Mechanical Collector

• Electrostatic Precipitator

• Fabric Filter (presently planned for installation by July 1, 2010)

STEP 2 – Eliminate technically infeasible options based on:

• Availability (commercial availability); and

• Applicability (has it been used on the same or a similar source type).

NO x Technical feasibility for the proposed contro l options was based on physical constraints, boiler configuration and emission reduction potential. Enhanc ing the existing or installing new LNBs and OFA is considered to be a capital cost, combustion technology retrofit that may require boiler water wall t ube replacement. Neural Net Boiler Controls should be considered as a supplementary or polishing technology, but not a stand-alone basis. Due to previous experience with RO FA, NVE does not consider ROFA as a standalone technology option. No control options were eliminated.

SO 2 With the fabric filter installation, the scr ubber venturi section will be opened further to reduce draft loss through the e quipment, and the scrubber oper ation will be improved to primarily remove SO 2 in the scrubber vessel. Only scrubber upgrades and new lime / limestone wet scrubber technology options can e qual or exceed the removal efficiency of the current wet soda ash scrubber. Ther efore, only these two alternatives were considered technically feasible. The ne w wet lime / limestone scrubber option is eliminated because little additional scrubbe r capital or operating cost is required by improving the current wet soda ash scrubber. No additional scrubber upgrades beyond those identified above were considered, as the upgrades accomplish many of the same purposes.

PM 10 Removal of the mechanical collector will eliminate the pressure drop and allow the full range of particulate sizing to the fabric filt er. Upgrade to the mechanical collector will not yield as great a leve l of emission reduction as fabric f ilter, and therefore, the option is not technically feasible. The new electrostatic precipitator is not technically feasible either because the potential level of emissions reduction is not as great as with the fabric filter installation already planned.

STEP 3 – Evaluate contro l effectiveness of rema ining control options:

• Make sure you express the degree of co ntrol using a metric that ensures an “apples to apples” comparison of emissions performance levels among options (e.g., lb SO 2 /MMBtu); and

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• Give appropriate treatment and considera tion of control techniques that can operate over a wide range of emission performance levels (evaluate most stringent control level that the technol ogy is capable of achieving plus other scenarios).

NO x NVE estimates the following control efficiencies with each control option: 1) LNB with OFA - unit 1 at 21.3 percent, unit 2 at 23.7 percent, and unit 3 at 6.5 percent and an emission level of 0.39 lb/MMBtu – annual average. 2) LNB with OFA and SNCR – unit 1 at 40.9 perc ent, unit 2 at 42.7 percent, and unit 3 at 29.9 percent and an emission level of 0.23 lb/MMBtu. 3) ROFA with Rotamix – unit 1 at 57.7 percent, unit 2 at 59.0 percent, and unit 3 at 38.3 percent and emission levels of 0.16 lb/MMB tu for units 1 and 2, and 0.20 lb/MMBtu for unit 3. 4) LNB with OFA and SCR – unit 1 at 81.6 per cent, unit 2 at 82.2 percent, unit 3 at 78.2 percent and an emission level of 0.07 lb/MMBtu. 5) ROFA with SCR – unit 1 at 81.6 percent, uni t 2 at 82.2 percent, unit 3 at 78.2 percent and an emission level of 0.07 lb/MMBtu.

SO 2 The projected emission rate for an upgraded wet soda ash FGD system is 95 percent SO 2 removal or less than 0.15 lb/MMBtu.

PM The guaranteed PM 10 control technology emission ra te is 0.015 lb/MMBtu with installation of fabric filter.

STEP 4 – Impact analysis

• Cost of compliance (identify emission units, design parameters, develop cost estimates);

o Baseline emissions rate should represent a realistic depiction of anticipated annual emissions for the source. In gen eral, for the existing sources subject to BART, you will estimate the anti cipated annual emissions based upon actual emissions from a baseline period.

• Energy impacts;

o Direct energy consumption for the co ntrol device, not indirect energy impacts.

• Non-air quality environmental impacts;

o Solid or hazardous waste generation or discharges of polluted water from a control device.

• Remaining useful life;

o Can be included in the cost analysis.

Costs of Compliance Control cost comparisons are presented for NO x and PM 10 in Tables 3-2 and 3-4, respectively of each NVE BART determina tion report for units 1 through 3 at Reid

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Gardner. An economic analysis for NO x is presented in the appendix to each BART determination report. There will be no economic impacts due to improving the current wet soda ash scrubber operation for SO 2 . A comparison of technologies on the basis of costs, design control efficiencies, and tons of PM 10 removed was not done because fabric filter is considered to be BART.

Energy Impacts The installation of LNB with OFA for NO x control is not expected to impact the boiler efficiency to a large degree or force draft fa n power usage. Instal lation of ROFA with Rotamix will result in additional power requirements ranging from 343 to 746 kilowatts. SCR retrofit will increase pressure drop. Upgrading the existing wet soda ash FGD system operation for SO 2 control will not require additi onal power. The energy impacts are included in the economic analysis pres ented in the appendix to each NVE BART determination report. Fabric filter installation for PM 10 control is expected to result in a net energy reduction due to removal of the mechanical collector.

Environmental Impacts CO emissions would be the same or lower th an prior levels with ROFA. SNCR and SCR installation could impact the salability and di sposal of fly ash due to ammonia levels and could potentially create a visi ble stack plume. Transport of ammonia to the site may be an issue in the event of an accidental releas e. No environmental impacts are anticipated in improving the wet soda ash scrubber operation or installation of fabric filter. The environmental impacts have not been quantifie d in the economic analysis presented in the appendix to each NVE BART determination report.

Remaining Useful Life The remaining useful life is estimated to be 20 years from the installation of BART controls for units 1, 2 and 3.

STEP 5 – Determine visibili ty impacts (improvements):

• Run the model at pre-control and post-control emission rates; and

• Determine net visibility improvement;

• Compare 98 th percent days for pre- and post-control runs.

Modeling for pre-control and post-control emission rates demonstrates an improvement in visibility based on the BART conclusions presented by NVE for units 1 through 3 at Reid Gardner. The NO x emission rate (0.46 lb/MMBtu) modeled is in excess of the proposed NVE BART limit (0.39 lb/MMBtu - annual). Conseque ntly, the modeling results show a lesser improvement in visibility than would be achieved with NVE’s proposed BART limit. Modeling results for other technically feas ible control options were not presented

NDEP ANALYSIS

NDEP’s review of NVE’s October 2008 BART dete rmination reports for Reid Gardner resulted in revisions to all of NVE’s BART determinatio ns except the control technologies proposed as

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BART for SO 2 and PM 10 . NDEP concurs that BART for SO 2 is the existing wet soda ash FGD and BART for PM 10 is a fabric filter, for the three BART units.

Nevada utilized NVE’s cost and control efficiencies, as presented for each control technology in NDEP’s NO x BART economic analysis and control technology determination. The control technologies were ordered in range of efficiency from highest to lowest control efficiency. NDEP’s economic analysis summary for NO x is presented in Table 1.

TABLE 1



### NDEP ECONOMIC ANALYSIS SUMMARY

Reid-Gardner Unit 1

Current Operation (Uncontrolled) ROFA w/SCR LNB w/OFA & SCR ROFA w/Rotamix LNB w/OFA & SNCR LNB w/OF A Capital Cost $ 0 $ 38,484,900 $ 35,048,000 $ 7,884,90 0 $ 6,945,500 $ 4,448,000 First Year O&M Cost $0 $1,313,191 $1,029,801 $613,952 $396,248 $80,000 First Year Debt Service $ 0 $ 4,081,555 $ 3,717,051 $ 836,241 $ 736,612 $ 471,737 Total Annual Cost $0 $5,394,746 $4,746,852 $1,450,193 $1,132,860 $551,737

Base Heat Input (MMBtu) 9,815,313 Total Heat Input allowed (MMBtu) 10,643,400 Base emissions (tons) 2,267 NOx Removal Rate % 0.0% 81.6% 81.6% 57.7% 40.9% 21.3% NOx Removed (Tons) 0 1850 1850 1308 927 483 NOx Emission Rate (Tons ) 2267 417 417 959 1340 1784

NOx Emission Rate (lb/MMBtu) 0.085 0.085 0.195 0.273 0.364 First Year Cost ($/ton removed) $2,916 $2,566 $1,109 $1,222 $1,143 Incremental Cost ($/ton) $7,2 0 $6,085 $833 $1,308 $1,143 NOx Control

8

Reid-Gardner Unit 2

Current Operation (Uncontrolled) ROFA w/SCR LNB w/OFA & SCR ROFA w/Rotamix LNB w/OFA & SNCR LNB w/OF A Capital Cost $ 0 $ 38,484,900 $ 35,048,000 $ 7,884,90 0 $ 6,945,500 $ 4,448,000 First Year O&M Cost $0 $1,388,071 $1,078,551 $661,760 $418,657 $80,000 First Year Debt Service $ 0 $ 4,081,555 $ 3,717,051 $ 836,241 $ 736,612 $ 471,737 Total Annual Cost $0 $5,469,626 $4,795,602 $1,498,001 $1,155,269 $551,737

Base Heat Input (MMBtu) 10,501,749 Total Heat Input allowed (MMBtu) 10,643,400 Base emissions (tons) 2,445 NOx Removal Rate % 0.0% 82.2% 82.2% 59.0% 42.7% 23.7% NOx Removed (Tons) 0 2010 2010 1443 1044 580 NOx Emission Rate (Tons ) 2445 435 435 1003 1401 1866

NOx Emission Rate (lb/MMBtu) 0.083 0.083 0.191 0.267 0.355 First Year Cost ($/ton removed) $2,721 $2,386 $1,038 $1,106 $952 Incremental Cost ($/ton) $7,0 $5,813 $860 $1,299 $952 NOx Control

01

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Reid-Gardner Unit 3

Current Operation (Uncontrolled) ROFA w/SCR LNB w/OFA & SCR ROFA w/Rotamix LNB w/OFA & SNCR LNB w/OF A Capital Cost $ 0 $ 38,484,900 $ 35,048,000 $ 7,884,90 0 $ 6,945,500 $ 4,448,000 First Year O&M Cost $0 $1,320,114 $1,000,893 $543,568 $345,970 $80,000 First Year Debt Service $ 0 $ 4,081,555 $ 3,717,051 $ 836,241 $ 736,612 $ 471,737 Total Annual Cost $0 $5,401,669 $4,717,944 $1,379,809 $1,082,582 $551,737

Base Heat Input (MMBtu) 10,063,851 Total Heat Input allowed (MMBtu) 10,836,120 Base emissions (tons) 2,268 NOx Removal Rate % 0.0% 78.2% 78.2% 38.3% 29.9% 6.5% NOx Removed (Tons) 0 1774 1774 869 678 147 NOx Emission Rate (Tons ) 2268 494 494 1400 1590 2121

NOx Emission Rate (lb/MMBtu) 0.098 0.098 0.278 0.316 0.421 First Year Cost ($/ton removed) $3,045 $2,660 $1,588 $1,596 $3,742 Incremental Cost ($/ton) $4,444 $3,688 $1,560 $1,000 $3,742 NOx Control

NDEP specifically reviewed the cost per ton of NO x removed for each unit at Reid Gardner and determined that installation of ROFA with Rotamix for units 1 through 3 is BART for NO x , with associated first year costs of $1,038 to $1,588/ton of NO x removed, depending on the unit evaluated. These values are consid ered cost effective. The cost data from the tables above are presented graphically in Figure 1. NDEP also cons idered the Clean Air Ac t factors of expected emission rates, emissions performance levels, ex pected emissions reductions, energy impacts, non-air quality environmental impacts and modele d visibility impacts in Nevada’s control technology determination. NDEP co ncluded, based on a review of the economic analysis, that the $/ton of NO x removed increased significantly for th e LNB with OFA and SNCR, and ROFA with SCR technologies without correspondingl y significant improvements in visibility.

In order to determine the BART emission limits for NO x and PM 10 , NDEP established baseline emissions scenarios for NO x using acid rain data and for PM 10 using annual emissions reported to NDEP, from calendar years 2001 through 2007. NDEP used the average of the two consecutive years of the highest annual emissions to establis h the baseline emissions for NO x and PM 10 in lb/MMBtu. The control efficiencies provided in NVE’s BART analyses were then applied to the baseline NO x emission rates to calculate the BART emission limits. The BART emission limits for PM 10 were also calculated using the cap acity factors presented in NVE’s BART analyses and the NDEP baseline data.

To determine the BART emission limits for SO 2 , NDEP initially (for the January 2009 FLM review draft) used acid rain data from 2001 through 2007 in establishing a baseline emissions scenario for SO 2. The SO 2 acid rain data for Reid Gardner c ontained periods of invalid data which NDEP omitted from the calculation of baseline SO 2 emissions. In light of the long operational history of the SO 2 controls, NDEP then used the 98 th percentile emissions values to establish SO 2 BART emission limits of 0.25 lb/MMBtu for Reid Gardner’s units. These BART emission limits allowed for future operation with in 98 percent of histor ical emissions (after discard of the invalid data) and provided some flexibility during transiti on to a different postBART operating scenario includi ng operation under a balanced draf t versus force draft scenario due to the installation of the fabric filt er and a potential change in coal type.

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FIGURE 1

LEAST COST ENVELOPE

Reid-Gardner Unit 1

ROFA w/Rotamix

LNB w/OFA LNB w/OFA & SCR

LNB w/OFA & SNCR $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000

0 200 400 600 800 1000 1200 1400 1600 1800 2000
Tons of NOx RemovedAnnual Costs ($)

Reid-Gardner Unit 2

ROFA w/Rotamix

LNB w/OFA LNB w/OFA & SCR

LNB w/OFA & SNCR $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000

0 500 1000 1500 2000 2500
Tons of NOx RemovedAnnual Costs ($)

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Page 8 of 8 Reid-Gardner Unit 3

ROFA w/Rotamix

LNB w/OFA LNB w/OFA & SCR

LNB w/OFA & SNCR $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000

0 200 400 600 800 1000 1200 1400 1600 1800 2000
Tons of NOx RemovedAnnual Costs ($)

However, based on USEPA, FLM and NGO comments on the public review draft regarding the BART SO 2 emission limits for Reid Gardner, NDEP re-evaluated NV Energy’s BART analyses for Reid Gardner and the use of acid rain data. In light of Nevada’s furthe r evaluation of the acid rain data, which is not a compliance dataset, Neva da decided to incorporate recent emissions data collected under the 40 CFR Part 60 requirements, which is a compliance dataset. The BART analyses submitted by NV Energy depended on emissi ons data representing the period prior to the installation of pulse jet fabric filter (a requi rement of the consent de cree described in section 6.5.2.2 of Nevada’s RH SIP).

Baghouses were installed at Reid Gardner in late 2008 and early 2009 upstream of the FGD system, so there is now a limited emission data set considering the performance of baghouses coupled with wet soda ash FGD a nd flue balancing. These data, particularly the Part 60 data, provided a higher level of confidence that th e facility can not only comply with the 0.25 lb/MMBtu limit, but also i ndicated that the BART limit can be lowered to 0.15 lb/MMBtu without jeopardizing complia nce with the limit.

NDEP concludes that for NO x the installation of ROFA with Ro tamix with an emission level at 0.20 lb/MMBtu for unit 1 and unit 2, and 0.28 lb/MMBtu for unit 3, on a 12-month rolling average, is BART. NDEP concludes that BART for SO 2 is the existing wet soda ash FGD with emission limits of 0.15 lb/MMBtu, 24-hour aver age, for all three un its and BART for PM 10 is fabric filter with emission limits of 0.015 lb/M MBtu, 3- hour average, for all three units.

NDEP anticipates greater visibility improvement upon implementation of BART than shown in NVE’s October 2008 BART report, which is based on a NO x emission rate of 0.46 lb/MMBtu, an SO 2 rate of 0.40 lb/MMBtu, and a PM 10 rate of 0.03 lb/MMBtu. The total annual BART emissions are 50 percent of the m odeled rates, therefore the visibi lity improvement due to BART should improve significantly from that modeled.