p. 1 

# OAR Box 

# 1828 Prepped byOllie Stewart



## Document

Number: 

# 130 ) ll-K-(B)-12 0 Docket Number: 

# A-83-2 7

Printed 11/12/200811:12:52 AM Sheet 130of 325P. 2



## ENERG YAN D ENVIRONMENTAL ANALYSIS , INC J 

## A'O O L I II-K-(B)-12 0
Jul y14 , 198 3

Mr . Rober t Shor t Economi c Analysi s Branc h U.S . Environmenta l Protectio nAgenc y Mai l Drop-1 2 Researc hTriangl e Park , N C 2771 1 Subject : EPAContrac t No . 68-02-3564 , Wor k Assignmen t # 8 Dea r Robert : EE Aprovide d initia l IFCA Mprojection s wit hth e ne wenergyscenari o o n Jul y8 , 1983 . Projecte d demand fo r ne wcoal-fire d industria l boiler s i s lowe r i nthes e ne wresult s tha ni npreviou s projections . Th e purpos e o f thi s lette r i s t o discus s th e potentia l impac t o f thes e ne wresult s o n th e upcomin g SO - NSP S regulatoryanalysis . Tabl e 1 compare s th e mos t recen t IFCA Mprojection s wit hth e previou s se t o f result s date d Ma y5 , 1983 . Althoug hth e tota l ne windustria l boile r fossi l fue l demand i s highe r i nth e Jul y8 projection s tha ni nth e Ma y5 projections , th e Jul y8 result s sho wsignificantl ylowe r coa l demand . I believ e tha t th e declin e i ncoa l demand i s du e primaril yt o lowe r projecte d natura l ga s prices . Tabl e 2 present s a compariso no f ol d and curren t natura l ga s pric e forecasts . Th e curren t natura l ga s pric e forecas t i s $0.5 0 - $1.40/MMBt u lowe r tha nth e ol d projection s fo r severa l regions . Thi s chang e i nnatura l ga s price s i s larg e enought o significantl yreduc e th e projecte d coa l penetratio nrat e i nne windus
tria l boilers . I expec t tha t th e projecte d leve l o f coa l demand i nne windustria l boiler s i nth e 199 0 SO - run s schedule d fo r th e en d o f thi s mont ht o dro p from17 2 trillio nBt u i n th e 198 8 PM/NO run s (se e Tabl e 1 ) t o abou t 10 0 trillio nBtu . Thi s declin e i s expecte d becaus e th e tota l projecte d fossi l fue l demand i nne windustria l boiler s wil l b e lowe r tha nth e Jul y 8 projection s (probabl yeve nlowe r tha nth e May5 results) . Th e tota l fue l demand i nne windustria l boiler s fo r th e 199 0 S0

_analysi s wil l declin e becaus e th e ne t increas e i ntota l projecte d industria l fossi l fue l demand betwee n198 5 and 199 0 i s estimate d b yEI At o b e 0. 8 quads . B ycomparison , th e EI Aestimat e o f th e ne t increas e betwee n198 3 and 198 8 (used fo r th e Jul y8 projections ) i s 1. 3 quads . A s a result , th e 199 0 S0

_run s wil l hav e fewe r ne wboiler s tha nth e 198 8 PM/NO run s and , therefore , fewe r ne wcoa l boiler s tha nth e Ma y5 o r th e Jul y8 projection s presente d i nTabl e 1 .

Economic s / Enqineerin qP. 3

Mr . Rober t Shor t Jul y14 , 198 3 Pag e 2
T o summarize , projecte d coa l demand i s lowi nth e ne w198 8 PM/NO run s becaus e o f th e ne wnatura l ga s pric e forecas t and i s expecte d t o b e eve n lowe r i n absolut e term s (annua l consumptio nan d numbe r o f boilers ) tha n th e futur e 199 0 S0

_runs . Th e significanc e o f thes e observation s i s tha t th e nationa l impact s o f alternativ e SO - NSP S regulation s ar e ex pecte d t o b e smal l becaus e th e numbe r o f ne wcoal-fire d industria l boiler s i s expecte d t o b e small . Alarg e numbe r o f IFCA Mrun s hav e bee nschedule d fo r th e S O NSP S regu latoryanalysi s (minimum : 10 ; maximum : 23 ; referenc e m ylette r t o yo u date d Jun e 23 , 1983) . I sugges t tha t w e revie wthi s schedule . Instea d o f producin g a larg e numbe r o f run s wit hsmal l nationa l impacts , i t ma y b e mor e appropriat e t o desig nand schedul e sensitivit yanalysi s o n natura l ga s pric e projections . I a mreviewin g th e availabl e DO E indus
tria l natura l ga s pric e projection s i norde r t o tryt o develo p recom mendation s o nalternativ e natura l ga s pric e projections . Sincerely ,
Ti mHoga n(J TH:m k Attachment s cc : A l Weh eP. 4

TABL E 1 . COMPARISONO F IFCA MPROJECTION S

May5 , 1983 a Jul y8 , 1983 b Fue l deman

d (IO 1 2 Btu) C

- coa l 254. 1 171. 8

- tota l coal , oi l an d ga s 573. 4 717. 7 Coa l deman

d a s a percen t o f tota l fue l deman

d 4 4 2 4 Numbe r o f coa l boilers c, d28 7 20 5
Bas e Cas e NSP S fo r S O . Propose d NSP S fo r P Man d N O . 199 0 run . N O emissio ncontrol s o nal l ne windustria l boilers . Optio nCas e 1 (Bas e Cas e NSP S fo r S O propose d NSP S fo r P Man d N O ) . 198 8 run . Include s ne windustria l boiler s large r tha n5 0 MMBtu/hr . B ycomparison , ABM

Aproject s 21 3 ne wcoal-fire d industria l boile r sale s large r than5 0 KPP H each .P. 5

TABL E 2 . COMPARISONOF INDUSTRIA L NATURAL GA S PRIC E PROJECTION S (198 2 $/MMBtu )
198 5 , 199 0 3 . n 3 . n Deman d regio nMay5 Jul y8 May5 Jul y8 3 . Middl e Atlanti c 5.1 1 4.2 9 5.9 4 4.5 9 5 . Midwes t 5.2 0 4.1 4 6.0 3 4.9 0 6 . Southwes t 4.8 2 4.2 7 5.9 4 4.6 3 7 . Centra l 5.1 3 3.7 7 5.9 6 4.5 5

a Use d i n May5 , 198 3 IFCA Mprojections . Use d i n Jul y8 , 198 3 IFCA Mprojections .