Ill d 

Arizona's 

Co

G~T operatives T "'~,.,, ., f.n.·r~~' c ... , .. l,..,,,-, ~ 

EPA's Clean Power Plan and 

Arizona's G& T Cooperatives 

March 12, 2015 

Arizona's 

Introductions Coopemt

G~T lves r ............ t.-~.·, ... ,, ..... ,. .... ~ 

• Michelle Freeark, Director of Safety & Environmental 

• Eric Hiser, counsel for AEPCO 

- Jorden, Bischoff & Hiser, P.L.C. 

• Ralph Roberson, P.E., consultant to AEPCO 

- Principal, RMB Consulting & Research, Inc. 

T:\ADMIN ASSl\LtrhTemp\AZ G&T PPt Template.pptx August 8, 2012 
Arizona's 

Agenda G~T Coope ratives r ... h., . . ... l.h.,~.,·t.,'f'( ... , ..... ~ 

• Brief overview of AZ's G& T & Apache Station 

• Discussion about lack of flexibility in Arizona 

(based on ADEQ's analysis) 

• Discussion about compliance options analyzed by 

AZ's G&T 

• Overview of Subcategorization Solut ion 

• Overview of Arizona Solution 

• Impact on AZ's G& T if nothing changes 

• Conclusion 

Cooperative's Organization and 

Membership 

Arizona Electric Power Cooperative (AEPCO) 

is a generation cooperative, which owns 

and operates Apache Generating Station, in 

Cochise, AZ. 

• Southwest Transmission Cooperative 

(SWTC) owns and operates the transmission 

system to deliver AEPCO's power. 

• Together, 'the G& T' serves six rural electric 

distribution cooperatives over a large 

geographical area with numerous towns 

and small cities, serving about 150,000 

meters primarily for residential use. 

• The territory is rural, sparsely populated, 

and price-sensitive, with one third of 

customers living below the federal poverty 

line. 

T·\AOMIN ASSl\LtrhTcmp\AZ G&T PPt Tcmplatc.pptx 2 

Arizona's 

C

G~T ooperatives r .... 1.--.. ,...,,.._ t ..... , ............. -£!:. 

August 8, 20 12 
Apache Generating Station 

Unit Year Bulh Net capacky Fwl 

STI 1963 72MW , .. ST2 1978 17SMW coalfsu 

ST3 1979 175MW cool/s•• 

GTI 1964 IOMW , .. 

GT2 1972 20MW B"'/oll 

GT3 19H 6SMW , .. 

GT4 2002 38MW su/oll 

Total Net 555MW 

Capac• tv 

Transmission System 

... ...._ 

t-0... ..,... .... 

• « ........ ':."1~·.;-- -··· 

•!1J,-..:;::_ 

, ... _"" ~I•WoN ... -... -::·-· ... -:-l':. .. .:~--· 

~~-~7f£i:7 

rv --~ 

<"~ ~-=---, -·· 

\ ~--.r-

,., 

~··- .. __ .. ·l• 

•· ,..., ... _._ 

T:\ADMIN ASS1\LirhTcmp\AZ G&T PPt Templatc.pp1X 3 

Arizona's 

CooperatT ives r ... t-.... ,... .. <" t •• 'I"''' .... ~. ~ 

Arizona's 

Cooperatives T 

l.""t..._"" F.sv..-w'( .. ~1'"•n.r• ~ 

August 8, 20 12 
Ari zona's 

Cooperatives and Rural Arizona Cooperat

G~T ives 

Apache Station. 555 MW net 

generating capacity (two 175 MW Coal 

Units) located in Cochise County 

SWTC 620 miles of transmission lines 

and 24 substations in 7 counties 

G& T Cooperatives employ 245 union I 

nonunion people, more than 100 at 

Apache Station, most live in the 

surrounding area. 

Direct economic impact on rural cities, 

towns, and businesses 

Current Membership 

<1h\A 

\II R«'•l ulrrmrnl-. .\ lrmhr,.... 

lntn EC 

lluncm \';~lky LC 

CiiOlham Counl,_ rc 

~~(1m A 

l'utl.tl RhJYIH"IIlC'IIh f'll1bf't' 

\loloo• cloC 

Snl1•hur Sprinp l '.!llcy EC 

f""' EC 

lnh, n .\lru•lJn 

\ 'aU<V l:A 

)lu•bfr llradq1.1rtn ' 

Sin(C' 

19l9 :\111a. C'A 

1961 Dnnc:m,,\/ 

1961 Pima. ,\7 

197J UuiU1<od City •. I £ 

1961 \\'jlloo,, "' 

1961 ~lill1Ul. A/ 

~001 ll11hnuu, ;'\\' 

or 

·''"'' l..lar 

136 

-153 

1.217 

1.512 

0~9 

~ 

11 .573 

Tu.lw,•to. f~1or,~·l H.t'""l•l"'' ~ 

Arizona's 

G~T Cooperatives 

r ........ ..,.L ... "f\'t ... , ....... ."~ 

) lflff\ )ltOlbff' 

Srn t"d Prr Milt 

~.000 .' 

.IS,7 ~S 21 

~~.999 13 

.19~ 10 

10:,613 

I 

•1\11-requiremcnts members ("1\RMs") purchase all the requirements necessary 

for serving their distribution cooperative members from AEPCO 

•Partial-requirements members ("PRMs") purchase both from AEPCO and from 

other market sources 

•Class D Member Valley takes scheduling and trad ing services from AEPCO 

T:\ADMIN ASS'I\LuhTcmp\AZ G&T PPt Tcmplate.pptx 

4 

AugustS. 2012 
Arizona's 

AEPCO's Concerns G~T Cooperatives 

r .... ~.., • ...._l.r.,-n''.·"'r""' ,.'' ..... ,. 

• AEPCO previously met with EPA over regional 

haze. 

-Severely affected by $192 million proposal 

- Worked with EPA to develop alternative, $30 

million but 25% increase in fuel costs 

-Thought we had made AEPCO viable for medium 

term 

• Clean Power Proposal jeopardizes gains 

Arizona CPP Compliance 

1.800 

Curr ent (2012) [minion• ! PA Uke• lctlon 

1,4531b/MWh / on <Ute plan• 

t.600 / 

I PA Interim Goo! • 

(2020·2029 Avcrqe) 

7351b/MWh 

~ ~~~~~~~~~~~~~ 

Arizona's 

Coop 

G~T era ti ves f. ............ v f~·fY\ '•"f'"'I.CI•n ~ 

EPA 2030GC»I 

7021b/MWh 

10 11 / 014 70 16 /018 JOJO lOll lOll /Oib 1018 10~ 

T:\ADMIN ASSl\LtrhTemp\AZ G&T PPt Tcmplatc.pptx 5 

AugustS, 20 12 
ADEQ on CPP Goal Calculation 

• Formula: 

Arizona's 

Cooperatives T r ... tw.'fV r,...,-"'. c ~ .. ,...-...-~ ..... ~ 

(Coal Gen x Coal ER) + (OG Gen x OG ER) + (NGCC Gen x NGCC ER) +Other Emissions 

Coal Gen + OG Gen + NGCC Gen + Other Gen 

- "Gen" = Generation in MWh 

- "ER" = Emission rate in lbs C02/MWh 

- "OG" =Oil and Gas 

- "Other" generation consists of IGCC and high utilization (> 33% 

capacity factor (CF)) combustion turbines. Other generation is 

excluded from the redispatch calculations in Step 3. 

• Arizona: 

(24,335,930 X 2,268) + (1,033,871 X 1,563) + (26,782, 325 X 900) + 17,227,768 

24,335,930 + 1,033,871 + 26,782,325 + 19,361 

= 1,55llbs/MWh 

Arizona's 

ADEQ on CPP Goal Calculation Cooperatives 

G~T 

lui-· ... ~·, .. , .,..,.., .. ,._ ~ 

• Arizona in 2029: 

(0 X 2,132) + (0 X 1,563) + (52,152,126 X 900) + 17,227,768 

0 + 0 + 52,152,126 + 19,361 + 1,818,486 + 3,663,325 + 9,216,009 

= 702 lbs/MWh 

T:\ADMlN ASSl\LlrhTcmp\AZ G&T PPt Tcmplate.pptx 

6 

August 8, 2012 
Estimated Clean Arizona's Power Plan 

Impact on Arizona Cooperative

G~T s 

T··h"''" r, .. ,~"· ( '''f'J"A''" ~ 

Arizona was one of the states hit hardest by EPA's I I l(d) proposal. the result of 

which would be the shut down of all of the state's non-tribal coal generation by 2020 

stranding $3.8 billion in assets (Pace Global Study. 2020 dollars). 

The Arizona Department of Environmental Quality demonstrated in its lilcd comments that Arizona does not have the ncxibility necessary to comply with the rule's 

targets except via direct application of the Building Blocks 

as the EPA proposed. 

If the EPA's proposal is left unmodified, the following arc anticipated outcomes for the state's energy future. 

- Electnc rates will rise significantly as a result of the loss of the state's coal plants, a cheaper gencrotion source thnn natural gns.' 

- Arizona will go from a net ex{l_Oner of power to a net imponer withm the next decade, and w1ll be forced to rely upon its neighbors in order to serve its peak summer demand. 

- Electric reliability in the region w1ll sutTer unul remedies can be effected. 

- With a heavy dependency on natural gas, the state's electric customers would become captive consumers to natural gas proce Ouctuauon. 

Atl1on.1 l Oll [ltcttlc Genet.ltior'l MI ... 

(MWhl 

1 N,mual c;as riK'I COSt IS atlllU.ICd at 50· 

H..,e more ''peru•'~ th.ln eootl 0\ct the 

ht.\1 10 )C'an, but U hi&hl> \ 'OIIollk 

ADEQ: No Flexibility in CPP 

as Proposed for Arizona 

Arizona's 

G~T Cooperatives 

t u.fw:.,-.r-fJ>If'C''t .• , ........ f'O ~ 

St• p l • & )b (Rodispolch) Step 6&7 (Stol e Goo I Phose I & 

ll(lbs/MWh)) 

Scen• rlo Rl'diSJWtdwd Re:dbpii C.h RC'dllp.'ttched lnlttrhn Go•l Fln1l Go• I or 

Coal Gen. 0/G 1t11m NGCCGtn. or Rolo(2020 Rolo (2030 ond 

(MWh) Gen.(MWh) (MWh) ·2029 thereafter) 

o~v.r>ace) 

1 EPA G0o1l C.tlculalion 0 0 S2,t S2.t27 735 702 

2. IS" RE and 1.61% lncrtmt fl\41 6.)37,309 217,514 S.l-11 ,l(}! 77C 702 

EE S..Yings 

3 21 %RE3nd 1.61 %1ncrtmen:•l 9.70 7.76! J l2.<1S ~ 2,031.940 103 702 

rr S..Yings 

4, 33 " RE and 1.00 " ncrrmen ~l !7,269,395 73-'.St t 34.1 28.220 as a 702 

HS....;ng> 

S. l3% RE •rd 2 00 " l•cr<mtntal 9.06.915 <0 7.btl 47.Z77.601 HS 601 

£E S.Yinl' 

1-

T:\AOMIN ASS"I\LtrhTemp\AZ G&T PPt Tcmplate.pptx 

7 

August 8, 2012 
EPA's Building Blocks (BB) 

Implications on AEPCO 

881: Efficiency Improvements 

Arizona's 

Cooperatives 

G~T 

f •••W.•• &wrl\ I .• ...,..,..,,..... ~ 

• AEPCO has identified roughly 1 to 1.5% in available heat rate improvements with a reasonable 

payback schedule, assuming that coal units were preserved beyond 2020. This is well below the EPA's 

assumed level of 6%. Planned regional haze and MATS investments are imprudent with 2020 end. 

882: Re-d is patch to Natural Gas 

• Although AEPCO has natural gas resources, they are not designed to be operated as primary loadfollowing unit s, and the heat rates average from 11-14 MM8tu/MWh at best (compared to 10.6 

MM8tu/MWh), resulting in extremely costly energy. 

• Load following units are required at Apache Generating Station to provide the area's grid reliability. 

883: Use of low or Zero-Emitting Sources 

AEPCO has contracts for roughly 30MW of hydro resources. Hydroelectric generation, under the 

proposed lll(d) rule, will not help in blending down AEPCO's CPP emission rate. 

The active generation required to supplement and back-up intermittent solar or wind generation, and 

the small size of AEPCO's fleet, make acquisition of these resources unattractive. 

BB4: Energy Efficiency 

Due to the low population density and high transportation cost of resources, energy efficiency 

programs are extremely difficult to implement and highly uneconomical in rural communities. 

As a non-load serving entity, AEPCO has no opportunities for energy efficiency savings at the retail 

load level. 

Arizona's 

AEPCO Compliance Options Coope

G~T r a tl ves tuh..-...ll'Oo1"C\•t_.:. • ...,.~..,.~o 1-

• Improve the heat rate/carbon efficiency of "affected 

EGUs"· I 

• Reduce utilization of "affected EGUs"; 

• Purchase an existing "affected EGU11 

to reduce the 

overall C02/ MWh of AEPCO's fleet; 

• Build a new EGU not subject to the Clean Power Plan 

and shut down affected EGUs as appropriate; 

• Build/purchase renewable energy, such as solar 

photovoltaic, wind, or solar-thermal; 

• Purchase power on the market, if available; and 

• Any combination of the above. 

T:\ADMIN ASSl\LtrhTcmp\AZ G&T PPt Tc:mplate.pptx 8 

August 8, 2012 
Arizona's 

Options Studied G~T Cooperatives Jo-.l-fl(f.N!"0'\ l<'1"'"'"''• ~ 

• AEPCO evaluated three options: 

- Base Case: Convert ST2 and ST3 as required by RHR FIP/SIP in late 

2017 and operate through 2035 pursuant to existing contracts. 

- Compliance Option: Purchase MW of an existing affected NGCC 

unit in 2015; convert ST2 to natural gas in 2017; retire ST3 in 2017; 

purchase MW NSP5 compliant generation; and purchase solar PV 

and Wartsilas as needed to both achieve Interim and Final Goals and 

minimize additional costs. 

- Exit Option: Purchase MW of unaffected NGCC in 2015; convert 

ST2 to natural gas in 2017; retire ST3 in 2017; retire ST1 and ST2 in 

2019; purchase MW new, NSPS NGCC starting 2020; purchase 

solar PV and Wartsilas as needed to achieve Interim and Final Goals 

and minimize additional costs. 

Arizona's 

Case Study Results Coope

G~T ratives f.ut+ .. • 'lo f"'"T!''(~'(,.,.AIIoo ~ .. 

• Base Case: 

- $ million reduces CPP units to lb/ MWh 

(22.4%} and portfolio to lb/ MWh (16.7%} 

• Compliance Case: 

- $ million reduces CPP units to lb/ MWh 

(68.2 %) and portfolio to lb/ MWh (56.0%) 

• Exit Case: 

- $ mi llion eliminates CPP units (100%) and 

reduces portfolio to lb/ MWh (53.6%) 

., 

T:\ADMIN ASSl\LtrhTemp\AZ G&T PPt Tcmplatc.pptx 9 

August 8, 20 12 
Case Study Results 

C.teaorv 

Emllt\J fl>Rd Chirps 

$/KW-Me>nth 

Exlttlna OI.M 

Total ulstlna FOO!d ond O&M Charses. 

S/ICW·Month (C..podty Ch•~Jel 

Addition•! Fl•ed ChlfiH lor Option, 

$/ICW·Month 

Fl>ed OfoM CMU for OpUon Uppades 

$/l(W-Month 

Total ftxtd & O&M Costs for Option 

Uparwdcs, S/KW·Month 

GRAND TOTAL flii.ED Plus O&M, S/KW· 

Month 

R ""b 

69.8% "''""'Base 

AEPCO Out of Market 

Morl<et Prlu Farecast 

(ACES) 

HIJh Prlc•. $ MWh 

low~"""· $/MWh 

AEPCO/Pf~~.'AIIUil 

Fl~d 

m~

Cho'l@, 

~ 

$/KW· 

Month 

O&M Ch•'l•• S!KW· Month 

C.padty Cha~Je, $/KW· 

Month 

V.rlobl• oaM Ch•tJO. 

$/MWh 

Eneru Chlflt, S/MWh 

Toto! Cost, $/MWh 

T:\ADMIN ASS"IIl..trhTcmp\AZ G&T PPt Template.pptx 

---

PPA AEPCOExh 

l)ue 38.S% over Due 37 6% over Due 

10 

Arizona's 

G~T Coope ratives T.••IW•••II'IIt.rt."'f•l ·u f"'-t ... !•ro " 

62 l% '"'"' 8ue 

l'• 

Arizona's 

G~T Cooperatives T.ll.At•••vlrnn'C ... 'I"~•,••-.. ,. 

Comments 

Comtnents 

August 8. 2012 
Arizona's 

Impact on AEPCO G~T Cooperatives T-• ... h'll\•" ' (ll(n.,·c"f't'T .. ,.,. , 

• Unless changes, it appears that Interim Goal and 

Final goal will require shut down of Apache 

Station in 2020. 

• Even with changes in Interim Goal, AEPCO has no 

realistic way of reaching the Final Goal by 2030. 

• This jeopardizes 425 MW of 555 MW capacity. 

- Creates reliability issues on transmission system 

• Places significant strain on multicooperative 

cooperation 

Estimated Clean Power Plan 

Impact to AEPCO 

Arizona's 

Coope

G~T ratives r. ... t ..... . r.noro·c •• "~"'"' ... t 

Analysis was performed to project the costs which AEPCO would incur in order to comply with the 

proposed rule. Two primary options were considered: one in which AEPCO attempts to keep existing 

generating units, and another where the CPP-affected units are replaced. 

Shown below is the additional cost for these options (above AEPCO's current debt). as well as the 

resulting position of AEPCO relative to the electric pricing of the Arizona market. It is anticipated that 

AEPCO cannot survive if its pricing is higher than market. 

Scenario: AEPCO Compliance Option 

Attempt to Rtmoln In lll(d) pro&,.m 

by ,.tlrln& C..oland bltndln& down 

Natural Gas emluk)n rate on 

,.moinfn& uniU with Solor. 

SS30~1 (Jil% Drbtlnrrrast) 

33.3% ovtr Mork<t 

1 The Addotoonal Cost for these options is in addotlon to AEPCO's 

current debt o f $186M. 

T:\ADMIN 1\SSl\LirhTcmp\AZ G&T PPt Template.pptx II 

AEPCO Exit Option 

Rttl,. •ll offtcttd units In lll(d) 

Pro&,.m. Pun:host Ntw·Bulld 

osstts to ,.ploc. lost copocity. 

$-113M (225% Dtbtlnrrus<) 

37.6% ovtr Markrt 

AugustS. 20 12 
Proposed lll(d) Impact on 

AEPCO 

Arizona's 

G~T Cooperatives 

~ .... ,,..,..,,,..,.~'\·c ... 'f'"'~•·'<"• ~ .. 

If the aggressive IU targets of the 

proposed lll(d) rule were imposed 

on AEPCO, over 90% of AEPCO's most 

affordable capacity, which is 75% of 

AEPCO's total capacity, would become 

stranded. 

Replacing the stranded capacity is 

expected to at least triple AEPCO's 

existing debt, which AEPCO believes 

not to be sustainable. 

Both AEPCO and the State of Arizona 

require a rational and reasonable plan 

to achieve C02 reductions without 

compromising the afford ability and 

reliability of the Arizona electric 

system. 

Solutions 

AEPCO Gener<~tlng Capacoty Before/After 

CPP Proposed Rule 

p 

t 

0 ll.J .l.ff«· .. .; 11,,:~ ·o~~ .... ,..o~.~t (t<, .t.tt~:..J 

C.t~t .. 

Arizona's 

G~T Cooperatives 

T ...... t-... ttvtf\·~~•·•• "£!_ 

• EPA should subcategorize the affected EGU 

category to provide a pathway for small public 

and cooperative utilities to achieve substantial 

reductions, but over a longer time frame 

consistent with their financial abilities. 

• Who: 

- Public and cooperative utilities with base year sales of 

4 million megawatt hours or less 

- Disproportionately affected by proposed Clean Power 

Plan 

T:\ADMIN ASST\LtrhTcmp\AZ G&T PPt Templatc.pptx 

12 

August 8. 20 12 
Arizona's 

Who Qualifies G@T 

Cooperatives l• .. ~W..'l"W.fl'olo'\ l,e'I"T.,.,.•• I" 

• In order to qualify for relief, the small public or cooperative 

utility would need to demonstrate, applying EPA's building 

blocks only to its existing system resources, that: 

- One or more affected EGUs (a "non-achieving unit") cannot 

meet the relevant state Interim Goal or Final Goal; AND 

- Such non-achieving unit(s) make up 20% or more of the small 

public or cooperative utility's generating capacity; AND 

- Shutting down the unit in 2020 (or 2030) would occur prior to 

the end of the unit's remaining useful life; AND 

- The cost of building a replacement, NSPS-compliant unit 

together with the cost of paying down debt on the existing nonachieving units, would be excessive. 

Arizona's 

Alternative Guideline G~T Cooperatives 

t .... t-.. .,1,-.-rn·c..~~·"-'" ~ 

• Interim Goal Period: 

- Achieve all reasonably cost effective heat rate improvements on any 

non-achieving unit(s) (not just coal-fired ones); 

- Redispatch any NGCC units it owns and operates until 70% annual 

capacity is achieved (offer for dispatch any not operated); 

- Install renewable energy or obtain RECs equal to 10% of the nonachieving unit(s) capacity within 5 years or plan approval or 2025, 

whichever is earlier; 

- Meet one-half of the general state plan energy efficiency goal, if the 

small public or cooperative utility has local distribution; and 

- Achieve reductions equal to the lesser of the state Final Goal or 15% of 

total carbon emissions across the small public or cooperative utility's 

portfolio by 2030, with at least 33% of that reduction to occur by 2020 

or within three years of plan approval, whichever is earlier. 

T:\ADMfN ASST\LtrhTemp\AZ G&T PPt Tcmplate.pptx 

IJ 

AugustS, 2012 
Arizona's 

Alternative Guideline C

G~oope T ratives r .... h-.·- I ~~of,, c '"'~'T"'""" ~ 

• Final Goal Period: 

Shutdown the non-achieving unit(s) at the start of the final goal 

period; OR 

If any non-achieving unit{s) will rem ain in operation beyond 

2029, then 

• continue any measures imposed on the non-achieving unit(s) and the 

utility by the state plan effective in 2029; AND 

• install additional renewable energy or obtain renewable energy 

credits (in a state plan recognizing such credits) equal to at least 10% 

of the non-achieving unit(s)' capacity prior to the start of the final goal 

period and every five years thereafter if the unit(s) continue to run. 

• In addition, all units covered by alternative must shut down 

at the earlier of the end of t heir remaining useful life or 

December 31, 2039, as specified in state plan. 

Impact of Alternative 

Market Pll<e Foteust 

(ACES) 

HIJh Prlu, /MWit 

Low Prkt, S/MWh 

AEPCD/PPACmt 

Comparison 

O&M ~rp. S/KW-Monllt 

Capacity CNr£e, S/I(W· 

Month 

V•rlablt O&M Charat, 

$/MWh 

Enerav Olar&•. $/MWh 

Total C:0.. S/MWh 

T:\ADMIN ASST\LirhTemp\AZ G&T PPt Tcmplatc.pptx 

PPA 

Buc: 

AEPCO 

Compllonco 

38.5% r but 37."' over bue 

14 

Arizona's 

C

G~oope T ratives l .... t-.-..t, .. ,..,·c· ... 1' ..... ,. .... , 

Commrnts 

Smoll Coop Propo .. l 

3% ove ~u 

August 8, 2012 
Arizona's 

Impact of Alternative Cooperatives 

G~T 

r; .... ,;;c . ..-.:i;nct('l'{",,,.., ...... ., .. ~ 

• AEPCO has evaluated the potential impact of 

its proposed subcategory on EPA's Clean 

Power Plan proposa l. 

-EPA is guaranteed at least 15% reduction or State 

Goal achievement by all smal l public and 

cooperative utilities. 

-It will likely be more: In AEPCO's case, it results in 

a 21% overall portfolio decrease 

Arizona's 

Impact on C02 Reductions G~T Cooperatives 

T ..... tw • ..-u .. f"'"'·t .... " .. '.r••o ~ 

• AEPCO assessed the preliminary impact on 

carbon reductions. 

-Unclear if all small entities qualify 

- Maximum leakage is 9 million metric tons {1.2%) 

- Likely leakage is 6 million metric tons {0.8%) 

• However, alternative requires improvements 

on total portfolio, further reducing leakage 

from proposed Clean Power Plan. 

T:\ADMIN ASSnLtrhTcmp\AZ G&T PPt Tcmplatc.pptx 

15 

August 8, 20 12 
Arizona Utility Group (AUG) 

Solution 

Arizona's 

G@T 

Cooperatives 

T '" h..r· ~ Lr"tn • ( ,,,._.,,,hh • ~ .. 

EPA should account for "remaining useful life" of coal-fired power plants in 

establishing interim and final goals (similar to "book life" concept in Notice of Data 

Availability) and adjust Building Block lt2 re-dispatch schedule as follows: 

- Default re-dispatch date for all units is 40 years after startup date, or 2020, whichever is 

later 

- For EGUs that have installed a major pollution control retrofit (SCR, FGD, or baghouses)• 

prior to issuance of the finallll(d) rule, default re-dispatch date is 20 years after start 

of operation following addition of the major pollution control retrofit, or 2020, 

whichever is later 

- For EGUs that have been issued a permit incorporating a commitment to cease burning 

coal before the effective date of the final rule, re-dispatch date is the date of the 

commitment 

Allow states to set interim goals 

Apply appropriate natural gas emission rate (1000 lb/MWh) 

• fOf units owned bv •m•ll enUifes .u defined by FERC, • major poUutlon cootrol retrofit would lndude equipment such u ~C.R 1nd ESP 

and would have to be ln\t1lled prior to first ye~r of compfi.tnce period (i.e., 1010) 

Estimated Nationwide 

Impact 

Arizona's 

G@T 

Cooperatives 

90,000 T.uh""- wF~rn'(:.•'l•"""••.-• ~ 

60,000 

70,000 

c:~ 

.g ~ 60,000 

::::i: 

~ 'g 50,000 

~~ - ::::s 40,000 .., 0 

Os;. 

(.J::::. 30,000 

::::: ljljjj~ HJ jlll l. .. I.'··' .¢-~~~~~<....~~~r::.,~~~~"'o*"~~~~·~·<'·~~~~~tv~~~~~~b~"'Q~ 

• Coal after 1990; SCR, BH, or FGD after 2010 • Allowed Coal 

T:\ADMIN ASS'I\ LuhTcmp\AZ G&T PPt Templatc.pptx 

16 

August 8, 2012 
Arizona's 

AUG Solution Impacts Coope

G~T ratives T,.,j...,, e'lo INrn"Cu,'o"l'.otl•c-• ~ 

E>hlbit3: Surrm"')' of Costlmp<!cts of the Clean Power Pl1111 (2013$) 

.UGitdt p,., EPA Buiding Delio (EPA BB- Ptrum 

Scenario 8IO<k Setl\1no AZ Gil do Pllh) Chan;t 

.~ ,.:"J·X'!.')A~f'rd')'"' ~ M • ~-~· •.:tAb (s.ft1\.t'IV U"''.-'\(¥'.tl S':'-~ 1/1-,,V..., 11~·"·''N1 .. ,~ 

.. n J'f'~J· ... '<~ f V!'f • r1• ....-.!.,_ ($/UIIon} f.!-:' 9 J..o>- 4~ p- -B "• 

:'." ~!0 --e·,"' ,;•Jvty(t.t'"'i ii3~~M\"J tO rL:hh'V J.!Oet.Wt' 'J~ 

.!t."-;1)J.O<.x-ta' •.\•• lt'N'.-~tm'\"(t (f8Jitlorl) ~;:b k IB J "B :-11!-o 

~ ~ ... :ll';t,c;t n .. J~l'\»-ot f:At1.,Ct~ • ...... "' uc.:~ o·a ~·· (tlllll041} 

AUG Final Goal: 942 to 963 lb/MWh, a 34 to 35% reduction 

Arizona's 

Summary Cooperatives 

G~T 

t ..... t-. .. r#loft\·c:. .. 1"'~• ... ·~ 

• CPP as proposed imposes substantial burdens on 

AEPCO, likely resulting in shut down of Apache Station 

or excessive costs on relatively poor, few and rural rate 

payers of members 

• Subcategorization can significantly reduce the burden 

by allowing time to achieve EPA's goals at substantially 

less cost 

• AUG solution achieves similar reduction; two can work 

in tandem 

• Relief on timing and goals is needed to preserve rural 

electric service in AEPCO service area 

T:\AOMIN ASSl\LtrhTcmp\AZ G&T PPt Templatc.pptx 

17 

August 8, 2012