CH2M HILL Engineers, Inc.

11301 Carmel Commons Blvd.

Suite 304

Charlotte

, NC 28226

Tel 704

. 544

. 4040

Fax 704

. 544

. 4041

www.ch2mhill.com

September 1 5 , 2011

Mr. Bill Simko

Director

- Generation Engineering NV Energy

6226 West Sahara Avenue Las Vegas, NV 89146

Subject: Update of BART A nalysis for Reid Gardner Units 1

- 3

Dear Bill:

As you requested, CH2M HILL has update d the NOx Control Costs in the BART Analysis that we conducted for NV Energy in 2008 for Reid Gardner Station Units 1

- 3. In October 2008 we submitted three reports entitled “BART Analysis for Reid Gardner S tation Unit 1 (2 and 3

, respectively)”

. Attached are the update d Table s 3

- 2, “NOx Control Cost Comparison” for each

unit. W e review ed the capital cost and O&M cost information developed in the original 2008

reports and update d it for 2011. It was noted in the original tables that the total installed cost for the option of ROFA with Rotamix only showed the cost of ROFA alone

. This error was

corrected. Th is letter report highlight s the methods used to determine these new tables.

The original 2008 report cost estimates were conceptual in nature and relied on budgetary equipment pricing and factors to arrive at a final cost estimates that w ere presented in 2007

dollars

. The original cost estimates were developed from the following information:

**•** Foster Wheeler provided budgetary cost information for the LNB/OFA options

**•** Mobotec provided budgetary cost information for the ROFA/Rotamix option

**•** Fuel Tech provided budgetary cost information for the SNCR option

**•** SCR budgetary costs were developed from CH2M Hill database information

No updated vendor information was considered in developing these revised estimates, therefore original budgetary pricing and NO

x removal efficiencies were maintained. While we understand that the target date for implementation of the selected technology is 2015, these updated tables are presented in 2011 dollars.

The attached tables were derived using accepted industry standard indices. For the capital cost escalation, we used the Bureau of Reclamation, Power Plants, Equipment 2011 index of 340. Comparing this to the 2007 index of 300 yields an escalation factor of 3.2% per year or 13.33% for 4 years compounded. This compounded interest factor was applied to the Total InstalledCH2M HILL Engineers, Inc.

11301 Carmel Commons Blvd.

Suite 304

Charlotte

, NC 28226

Tel 704

. 544

. 4040

Fax 704

. 544

. 4041

www.ch2mhill.com

Capital Cost line of Table 3

- 2 to estimate the 2011 c apital cost. For the O&M cost escalation, we used the Department of Labor, Bureau of Labor Statistics, 2011 Consumer Price Index of 225.9. When compared to the 2007 index of 208.29 we obtained an escalation factor of 2.1% per year or 8.45% for 4 years co mpounded. This labor compounded interest rate was applied to the Total

First Year Fixed and Variable O&M Costs line of Table 3

- 2 to estimate the 2011 O& M costs for each unit. These escalation factors reflect the CH2M HILL experience with capital power plant equipment cost and labor cost increases over the four year time period from 2007 to 2011.

Appendix A of the 2008 report was the Economic Analysis ta ble. This spreadsheet was updated

for the NOx Control section of each unit using the indices described above and these new spreadsheets are attached for each unit

.

Please contact me at 704

- 544

- 4057 should you have any questions or comments.

Sincerely,

Doug Vandergriff Project Manager

Attachments