2

case of Healy, this cost is significant, adding alm ost $2 million to the SCR project capital costs. In general, cost estimates prepared to dete rmine the cost-effectiveness of an air pollution control project assume that the project w ill be well planned and occur during a regularly scheduled plant shutdown.

“Lost opportunity” costs such as the cost to replac e lost electricity production due to the shutdown can be significant and can introduce an ar tificial high bias to the cost of the air pollution control project. In rare cases, it m ay be argued that the air pollution control project requires an extension to a regularl y scheduled plant shutdown because the air pollution control equipment cannot be tied into the existing plant exhaust ducting in the time allowed. This argument require s highly specific information establishing that the extension to the shutdown is unavoidable and is due solely to the air pollution control project. The Alaska BART ana lysis includes no such information or detailed argument. I therefore consider these to b e inappropriate costs not attributable to the SCR project. Other than this cost, my revie w did not identify any additional costs which should be eliminated as inappropriate.

Removing the lost production cost improves the cost effectiveness for the SCR project to the values detailed below, but these costs are s till well above the range considered

cost effective under BART.

Facility Remaining Useful Life (years) SCR Cost ($ per ton NO X removed) 8 $13,624 10 $12,122 15 $10,170 20 $9,248

Auxiliary Boiler #1 The Enviroplan BART document proposes that BART for particulate matter (PM), sulfur dioxide (SO 2 ), and nitrogen oxides (NO X ) emissions from the Auxiliary Boiler #1 consist of the existing emission limits, which reflect no a dditional controls. However, except for noting that the visibility impairment attributable to this boiler is less than 0.5 deciview, the Enviroplan BART analysis did not include techni cal or cost analysis supporting this

BART determination.

According to the facility Title V Air Operating Per mit for the Healy Power Plant (ADEC, 2003), annual emissions from this boiler are limite d to 2 tons per year (tpy) NO X , 1 tpy PM, and 4 tpy SO 2 . At these emission levels, cost effective control s to reduce NO X and PM emissions are clearly not available since techno logies to reduce emissions of these pollutants involve add-on pollution control equipme nt whose costs would not be justified to reduce these already low emission leve ls.3

For SO 2 , the most cost-effective method to reduce emission s from the boiler would be to

burn lower sulfur diesel fuel in the boiler. Accor ding to the Title V permit, the boiler is currently allowed to burn diesel fuel with sulfur c ontent up to either 3,000 or 5,000 parts per million (ppm), depending on the averaging time. Since ultra-low sulfur diesel (ULSD) with sulfur content of 15 ppm is widely avai lable, I conducted limited research into the local (Healy, AK) market to understand the cost differential between these two

distillate fuels.

On February 6, 2012, I contacted Nenana Heating Ser vice in Nenana, AK and obtained prices for ULSD and high sulfur heating oil, which typically has sulfur content above 3,000 ppm. After calling several companies, Nenana was the only one I found that delivered to Healy. The price differential between "keep full" prices for the two fuels was 55.5 cents per gallon.

As noted above, Auxiliary Boiler #1 is limited to 2 tons/year NO X emissions. Using the AP-42 emission factor 20 pounds of NO X per 1000 gallons of diesel 1 , the boiler would be allowed to burn approximately 200,000 gallons of di esel per year 2

.

At 55.5 cents/gallon, it would cost GVEA approximat ely an additional $111,000 per year to purchase ULSD. For SO 2 , this translates to almost $28,000/ton 3 of SO 2 removed. This is clearly not cost effective.

If you have any questions about these comments, ple ase call me at 3-1217.

C: Mark Filippini, Unit Manager, ESU, OEA Debra Suzuki, Unit Manager, STAPU, OAWT Juliane Matthews, ORC

1 Table 1.3-1 Distillate oil fired boilers less than 100 MMBtu/hr heat input. Auxiliary Boiler #1 is r ated at 10.4

MMBtu/hr. http://www.epa.gov/ttn/chief/ap42/ch01/final/c01s03 .pdf

2 		 x ,		

	 x ,		

		 = 200,000 	

3 $.

	 x ,		 x 		= $27,750	per	ton	SO24

References

ADEC, 2003. Title V Air Operating Permit No. 173TVP01 – Healy P ower Plant. Alaska Department of Environmental Conservation. Issued N ovember 14, 2003.

EPA, 2002. EPA Air Pollution Control Cost Manual, Sixth Editio n. US Environmental Protection Agency, Office of Air Quality Planning a nd Standards. EPA/452/B-02-001. http://www.epa.gov/ttn/catc/dir1/c_allchs.pdf

Fuel Tech, 2009. Golden Valley Electric Association, Healy Station U nit 1, Conceptual Application of Selective Catalytic Reduction (SCR) Technology. Fuel Tech, Inc. Warrenville, Illinois. June, 2009.