UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION
IX 75 Hawthorne Street San Francisco, CA 94105 t PRoc

June 18, 2014 David C. Bloomfield, Plant Manager Arizona Public Service Company Four Corners Electric Power Station P.O. Box 355 Fruitland, NM 87416-0355 Re: Receipt and Preliminary Review of PSD Permit Application
for the APS—Four Corners Electric Power Station Dear Mr. Bloomfield: The U.S. Environmental Protection Agency Region

9 (EPA Region
9) acknowledges receipt of your application on April 28, 2014, for a permit under the Prevention
of Significant Deterioration (PSD) program
in 40 CFR 52.21 for the installation
of selective catalytic (SCR) reductions systems onUnits

4 an5 atthe Four Corner Electric Power Plant (FCPP SCR Project). We also acknowledge yourwithdrawal
of your previously submitted permit application documents for this project. EPA Region

9 has begun ourreview of yournew application, including supporting documentation.

As of June 18, 2014, your application could notbe determined complete. We are requesting the following items, which areneeded
to determine that your application

is complete: PSD Applicability 1. Baseline Actual Emissions—Per 40 CFR 52.21 (b)(48)(i)(a),

in determining
the baseline actual emissions for Units

4 and 5, the averagerateshall include emissions associated with startups, shutdowns, and malfunctions. The application does not explicitly state that emissions associated with startup, shutdown, and/or malfunctions wereincluded
in youremissions analysis. Please confirm that the emissions analysis includes emissions associated with startups, shutdowns, and malfunctions, with any supporting information available. 2. Baseline Actual Emissions—Per 40 CFR 52.2 1(b)(48)(i)(b),

in determining
the baseline actual emission, the averagerate shall be adjusted downward

to exclude any non-compliant emissions that occurred while the sourcewas operating above anyemission limitation that was legally enforceable during the chosen 24-month period. Please confirm this is the casefor youremissions analysis by, for example, identifying anydeviations reported
as part of yourtitle V permit reporting requirements during the 24-month period. 3. Projected Actual Emissions—Per 40 CFR 52.2 1(b)(41)(i), project actual emissions meansthe maximum annual rate,in tons per year,atwhich an existing emissions unit is projected

toemit

a regulated NSR pollutant

in anyoneof the
5 years (12-month period)following

the date the unit resumes regular operation after the project,
orin anyoneof the 10 years following that date, if the project involves increasing the emissions unit’s design capacity
orits potential

toemit that regulated NSR pollutant and full utilization
of the unit would result in a significant emissions increase
ora significant net emissions increase
atthe major stationary source.The FCPP SCR Project

is expected

tobe operational

in mid-2018. This emissions analysis is subject
to the 10 year period and, as such, your application should include projected emissions based on years2018 through 2027. The application includes annual capacity factor information,

in Table A-8, information
for years2014 through 2024. Please provide projected operational information
for years2025 through 2027.4. Projected Actual Emissions— Your application excludes some emissions from the determination

of projected actual emissions based on the “demand growth exclusion”

in 40 CFR 52.21 (b)(4

1 )(ii)(c). 40 CFR 52.21 (b)(41 )(i) requires projected actual emissions

to consider all relevant information, including but not limited to, historical operational data, the company’s own representations,

the company’s expected business activity and the company’s highest projections
of business activity, and the company’s filings with the State or Federal regulatory authorities.

In determining projected actual emissions, your application identifies the expected annual capacity factor for Units

4 and

5 for years 2014 through 2024 in Table A-8 and then uses this information

to exclude certain increases

in emissions,

as allowed under the demand growth exclusion. However,

it is unclear how the information

in Table A-8 was obtained
or how it was generally determined. Please provide additional details on the basis for the annual capacity factor information provided

in the application,

so that it is clear you have considered
all relevant information

as required by 40 CFR 52.21(b)(41)(i). 5. Contemporaneous Emissions Increase— Your emissions analysis includes contemporaneous emission increases associated with the addition of the limited-use auxiliary boiler. Please confirm the construction and operation dates for this equipment,

so that it is clear this equipment was installed during the contemporaneous period. Best Available Control Technology Analysis 6. Air Preheater— The FCPP H 2 S0 4 source test provided

in your application indicates SO 3 emission reductions across the air preheater
of greater than 90%. However,

in your analysis of expected SO 3 reductions across the air preheater after installation
of SCR,

a 50% reduction across the air preheater was used. The application indicates that after SCR is installed partialloccasional bypassing
of the economizer will be required. This may cause the flue gas entering the air preheater

to be hotter than it has been historically and may alter the SO 3 reductions achieved across the air preheater

as the flue gas temperature may be above the dew point for H 2 S0 4 . Please provide (1) a basis for the 50% reduction assumed and (2) a temperature profile showing the expected changes
in temperature from the inlet and outlet of the air preheater, before and after the installation of SCR, and compare

it to the H 2 S0 4 dew point. 7. Control efficiency across the baghouse— Based on source test data, your application assumes SO 3 reductions of 57.39% across the baghouse and wet FGD. However, based on information available

in the literature, 90% reduction across the baghouse

is expected. Please provide

a discussion
on why the baghouse cannot achieve 90% reduction. In order to move forward with our review of your application

in a timely manner we respectively request

a response

to these items by July 2, 2014. Your review contact for this application

is Lisa Beckham with the EPA Region

9 Air Permits Office. She may be reached

at (415) 972-3811
or beckham.Iisa2epa.gov. Sinc 7 ,
/ Rios Chief, Permits Office cc: Mark Hajduk, APS (via email), Chas Spell, APS (via email), Raju Bisht, Navajo Nation EPA (via email)