### Cost - Effectiveness Metrics

BART is not necessarily

the most cost - effective solution. Instead, it represents a broad consideration of technical, economic, energy , and environmental (including visibility improvement) factors. For example, Oregon DEQ established a cost/ton threshold of $7,300 based upon the premise that improving visibility in multiple Class Iareas warrants a higher cost/ton than where onl y one Class Iarea is affected. In their BART proposal for the San Juan Generating Station, New Mexico used a range from $5,946/ton to $7,398/ton, and Wisconsin is using $7,000
- $10,000/ton as its BART threshold. 1 

### Inits proposal to disapprove part of the North Dakota plan, EPA R8 stated: In our BART analysis for NOx at Milton R. Young Station 1, wec onsidered SNCR + ASOFA and SCR + A SOFA...We have concluded that SNCR + ASOFA and SCR + ASOFA are both cost effective control technologies and that both wo uld provide substantial visibility benefits. SNCR + ASOFA has a cost effectiveness value of

$687 per ton. While SCR + ASOFA is mo re expens ive than SNCR + ASOFA, it has a cost effectiveness value of $2,569 per ton of NOx emissions reduced. This is well within the range of values we have considered reasonable for BART and that states other than North Dakota have considered reasonable for BART. Even with mo re frequent catalyst replacement, SCR wo uld still be cost effective even at the high end of the range ($2,783 per ton) allowing for the mo st frequent catalyst replacement of one layer per year and allowing for the questionable costs of lost po wer generation revenue in TESCR Scenario 4. We also analyzed the SCR costs assuming the same baseline emissions of 9,032 tons per year used by N orth Dakota and determined that the high - end cost effectiveness value, assuming the most frequent catalyst repla cement frequency, would be about $3,115 per ton of NOx reduced. All of these cost effectiveness values are well within the range of v alues that North Dakota considered reasonable in several of its NOx BART determinations, where predicted visibility improve me nt was considerably lower. We have weighed costs against the anticipated visibility impacts at Milton R. Young Station 1, as mo deled by Minnkota and the State. Both sets of controls would have a positive impact on visibility. As compared to SNCR + ASOFA, SCR + ASOFA would provide an additional visibility benefit 0.553 deciviews and 18 fewer days above 0.5 deciviews at Theodore Roosevelt. We consider these im pacts to be substantial, especially in light of the fact that neither of these Class I areas is pro jected to meet the uniform rate of progress. We also note that the 0.553 deciview im provement at Theodore Roosevelt is greater than the im provement in visibility that North Dakota fo und reasonable to support other NOx BART determinations in the SIP despite higher cost effectiveness values for the sources involved in these other BART determinations. Given the incremental visibility improvement associated with SCR + ASOFA, the relatively low

i ncremental cost effectiveness between the two control options ($4,8 55 per ton), and the reasonable average cost effectiveness values for SCR + ASOFA, wepropose that the NOx BART emission limit for Milton R. Young Station 1 should be based on SCR + ASOFA. 2 

### Although EPA R8 subsequently decided not to disapprove the ND pl an, its reason for changing its proposal for NO X 

### controls was due to issues of technical feasibility and EPA R8 did not change its determination that the costs cited above are “reasonable.” Also, in its proposed

1 “T he Department used cost -per - ton reduced as the primary metric for determining the BART level of control. The upper limit for this metric was $7,000 to $10,000 per ton, which reflects historical low - end costs for controls required under BA CT.” BEST AVAI LABLE RETROFIT TECHNOLOGY AT N ON - EGU FACILITIES April 19, 2010, WISCONSIN DEPARTMENT OF NATURAL RESOURCES 2 ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA

–R08

–OAR

–2010

–0406; FRL

– 9461

– 7] Approval and Promulgation of Implementation Plans; North Dakota; Regional Haze State Implementation Plan; Federal Implementation Plan for Interstate Transport of Pollution Affecting Visibility and Regional Haze AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. Federal Register / Vol. 76, No. 183 / We dnesday, September 21, 2011

### Federal Implementation Plan for Montana, R8 determined that it was cost - effective to spend

$4,659/ton to control SO 2 

### and $4,415/ton for NO X 

### at the J.E. Corette power plant. 3 

### In evaluating addition of SCR at the Four Corners Power Plant, EPA R9 stated: EPA considers its revised cost - effectiveness estimates of $2,515
- $3,163/ton of NOx removed to be more accurate and representative of the actual cost of compliance. However, even if EPA had decided to accept APS’s worst - case cost estimates of $4,887

– $6,170/ton of NOx removed, EPA considers that estim ate to be cost effective for the purpose of proposing an 80% reduction in NOx, achievable by installing and operating SCR as BART at FCPP. 4 

### EPA R6 agreed with our conclusion that $2,600/ton was a reasonable cost for adding SCR at SJGS: We agree with the general contention that many individual cost items for the installation of SCR on the units of the SJGS were overestimated by PNM...We note that the NPS estimate of an average cost of $2,600/ton for the four units of the SJGS closely agrees with our ow n revi sed estimate. 5 

### EPA has determined that costs as high as $6,170/ton are reasonable, while some states use even higher thresholds. In effect, EPA R8 is basing its Colstrip NO X 

### BART decision solely upon actions taken by

PPL subsequent to the baseline perio d. While it is informative to consider how much additional visibility improvement would result from additional emissions controls (e.g., SCR), EPA should not allow BART sources to circumvent the BART process by claiming credit for interim emission reductio n measures which bias the BART process against addition of more stringent controls later. If EPA R8 continues to rel y upon such an incremental analysis, it must re - consider the decision criteria it uses to evaluate those incremental changes. EPA R8 has pl aced undue weight on incremental costs, which it estimated at $5,770/ton for SOFA + SCR on Colstrip 1 and $5,877 on Colstrip 2. In discussing average and incremental costs, EPA BART Guidelines explain: The average cost (total annual cost/total annual emiss ion reductions) for each may be deemed to be reasonable. However, the incremental cost of the additional emission reductions to be achieved may be very great. In such an instance, it may be inappropriate to choose control B, based on its high incremental c osts, even though its average cost may be considered reasonable. 

### Although EPA does not explain in its BART Guidelines what it considers “very great” and “high” incremental costs, it goes on to provide an example of how incremental cost is calculated, and explains: The incremental cost of Option 1, then, is $20,000 per ton, 11 times the average cost of $1,900 per ton.

3 EPA R8 determined that the visibility benefits of those controls were not sufficient. 4 ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 49 [EPA

–R09

–OAR

–2010

–0683; FRL

– 9213

– 7] Source Specific Federal Implementation Plan for Imple menting Best Available Retrofit Technology for Four Corners Power Plant: Navajo Nation AGENCY : Environmental Protection Agency (EPA). ACTION: Proposed rule. Federal Register / Vol. 75, No. 201 / Tuesday, October 19, 2010 5 ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 EPA

–R06

–OAR

–2010

–0846; FRL

– 9451

– 1 Approval and Promulgation of Implementation Plans; New Mexico; Federal Implementation Plan for Interstate Transport of Pollution Affecting Visibility and Best Available Retro fit Technology Determination AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011

### The clear implication of EPA’s advice in the BART Guidelines is that incremental costs become

a deciding factor onl y if they greatl y exceed average costs. For Colstrip Units 1 & 2, the NPS estimates of $5,054/ton incremental costs of SCR are onl y slightl y greater than SCR’s $4,760/ton average cost (which EPA agrees is cost - effective ). Although EPA R8 provides no insight in its Federal Register notice as to what criteria it used to determine BART, it is our understanding that EPA R8 requires any control option with an incremental cost that exceeds $5,000/ton to also achieve at least 0.5 dv incremental visibility improvement. Not only

is such an approach contrary to the BART Guidelines which explicitly state that it is not necessary for a BART option to achieve 0.5 dv improvement, it exempts any emission unit at a BART source with less than a 0.5 dv impact from BART.