______

ManagerneiiSn

LEGAL NOTICE

The Department of Natural Resources and Environmental ‘—q

Control (DNREC), Air Quality Management section will

conduct

a public hearing on

a proposal to amend the

-

State of Delaware.Regulations Governing the Control of

Air Pollution

- Regulation No. 1146 “ELECTRIC GENERaT

1MG UNiT (EGIJ) MULTI-POLUJTANT REGULATION”

RegulatIon 1146 provldessulfur dioxide (S02), nitrogen

oxides (Nox), and mercury emissions iimitIons for Dela_.

ware’s coal-fired and residual fuel oil-fired EGUs with

nameplate capacity ratings greater than or equal to 25 (‘“\

,

megawatts (MW). Among the limitations established by. ç1

Regulation 1146 is an annual S02 mast emissions cap of a—.... CD

2427 tons per year for Cclnectlv Delmarva Generation’s ‘c- 5

‘

Edge Moor UnIt

5 The 502 mass cap isidentlfied in Ta- ‘c.z-’ ble 5-1 of Regulation 1146. Edge Moor Unit 51s aresiduV al fuel-oil fired EGU with a nameplate rating of 446 MW.

Regulation 1146 was promulgated In November 2006, and

on December 5, 2006 Conectiv appealed essentially all of c1

the Regulation 1146 provisIons that applied to the Edge

Moor facility. On December 17, 2008, Conectiv and.

DNREC signed an agreement that resolves the appeal.

The purpose of this proposed amendmeht

i to satisfy one

provision of that agreemenb modify the S02 mass emis

sions limit associated with Edge Moor Unit

5 (as constrained in 1146’s Table 5-1) from 2427 tons per year to

4600 tons per year, beginning in calendar year 2009. No

other changes tO 1146 are being proposed, Including no

change to the existing requirement for Unit

5 to bum only•

low sulfur oil.

-

The public hearing on this proposed amendment will be

held Tuesday, May 26, 2009; beginnlrig at 615 pm In the

Priscilla Building Conference Room, 156 South State

Street, Dover, DE.:

interested parties ‘may submit comments in writing on

this proposed amendment prior to the public hearing

and/or comments may be presented either orally or in

writing at the public hearing. If you are unable to attend

the public hearing or wish to submit your comments in

advance of the public hearIng, please address your com

ments to: Bob Clausen, 156 S. State St., Dover, DE

19901; by fax (302-739-3106); or by e-mail: robert.clau

sen@state.de.us. The public comment period will remain

open until at least May 30, 2009 for written comments.

For additional information please call Bob Clausen or Ron

Amirlkian, In Dover at (302) 739-9402. The proposed

regulation can be viewed on the Department’s website at

ttnI/www.awm.delaware.oov1Info/ReosIPagesIAQMNOTICE OF PUBLIC HEARING CD

CD

CD

CD

CDz

[

I

PlansRegs.aspx. V

Air Quality Management Section

Division of Air and Waste Management

156 S. State Street

Dover, DE 19901

318946 DSN 4/26/09

The News Journal

AFFIDAVIT OF PUBLICATION

STATE OF DELAWARE COUNTY OF NEW CASTLE

Personally appeared before me this 27th day of April, 2009:

I, Kristin Segner, ofthe NEWS JOURNAL COMPANY, a daily newspaper printed and

published in the County of New Castle County, State of Delaware, who, being duly sworn states

that the advertisement of S/D DNREC Air Ouality Management Section — Legal Notice-Notice

of Public Hearing

was published in THE NEWS JOURNAL on N/A

and/or THE SUNDAY NEWS JOURNAL on April 26, 2009

Legal Coordinator

Title

Sworn to before me this 27th day of April, 2009

Jacqueline Hawk

NOTARY PUBLtC

State of Delaware

Commission Expires 11/071201 C)

C

Public

equal to 25 megawatts MW). Among the limitations establIshed by Regulation 1146 Is an annual S02mass emissions cap of 2427 tons per year for Conec tiv Delmarva Generation’s Edge Moor Unit 5. The SO2 mass cap is identified In Table 5-1 of Regulation 1146. Edge Moor Unit is a residual fuel-oil fired EGU with a nameplate rating of 446 MW.

Regulation 1146 was promulgated In November 2006, and on December 5, 2006 Conectiv appealed essentially all of the Regulation 1146 provisions that applied to the Edge Moor facility. On December 17, 2008, Conecttv and DNREG signed an agreement that resolves the appeal. The purpose of this pro posed amendment is to satisfy one provision, of that agreement: modify the S02 mass emissions lImIt as sociated with Edge Moor UnIt 5 (as.Constralned In 1146’s Table. 5-1) from 2427 tons peryearto 46(10 tonsper.year,beglnnlng’to galendar,year 2009. No other changes to’ 1146 are being proposed, Including no change to the existIng requirement for Unit 5 to bum only low sulfur oil.

The publIc hearing on this proposed amendment will be held Tuesday, May 26, 2009, begInning at 6:15

pm in the Priscilla Building Conference Room, 156 South State Street, Dover, DE.Interested parties may submit comments in writing on this proposed amendment prior to the public hearing and/or comments may be presented either orally or in writing at the public hearing, If you are unable to at tend the public hearing or wish to submit your. com ments in advance of the public hearing, please ad dress your comments to: Bob Clausen, 156 S. State St., Dover, DE 19901; by fax (302-739-3106); or bye- mail: robert.clausen@state.de.us. The public com ment period will remain open until at least May 30, 2009 for written comments.

For additional Information please call Bob Clausen or Ron Amirikian, in Dover at (302) 739-9402. The pro posed regulation can be viewed on the Department’s website at http:Ilwww.awm.delaware.oov/InfolBoos, ‘ageslAQMPlansRecjs.aspx.

Air Quality Management Section Division of Air and Waste Management 156 S. State Street

Dover,DE 19901 4/26-NJ

Proposed Amendments to

7 Delaware Administrative)

Code, Regulation 1146

TRANSCRIPT OF PROCEEDINGS

DNREC

156 South State Street

Dover, Delaware

May 26, 2009

6:18 p.m.

HEARD BEFORE: ROBERT P. HAYNES, ESQ.

APPEARANCES:

ROBERT CLAUSEN - DNRECRON AMIRIKIAN - DNREC

WILCOX & FETZER

1330 King Street, Wilmington, Delaware 19801

(302) 655—0477

www.wilfet. corn

\%_______________ 

WILCOX & FETZER LTD.

Registered Professional Reporters 0R I G I 1\i i\I...
WILCOX

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& FETZER LTD.

Regisiered Professional Reporters
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6 MR. ZAK: I’d like that.

7 MR. HAYNES: Counsel for one of the

8 parties is here. Was that signed by the Court?

9 MR. WHETZEL: It was not signed by

10 the Court, but it is a final document between the

11 agency and Conectiv.

12 MR. ZAK: Should I just ask the

13 other questions?

14 MR. HAYNES: Go ahead.

15 MR. ZAK: How much output of S02 is

16 there at the entire facility annually?

17 MR. CLAUSEN: Let’s see if we’ve got

18 some numbers here for you.

19 MR. ZAK: If you don’t have it here,

20 you can just send it to me. I don’t need it this

21 second.

22 MR. CLAUSEN: Yeah. I may not have

23 it here, but I can get it to you. The S02

24 emissions have been dropping, just because of,

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6 because of times when that unit would have to

7 run. And the way Conectiv has explained to us is

8 they would run it when you have like a nuclear

9 outage or something like that, or when they would

10 have emergency type situations, which wouldn’t be

11 very frequent, but they could occur. And this

12 number now would restrain them.

13 MR. ZAK: So essentially it’s for

14 the purpose of reliability in extreme

15 circumstances that they want the limit raised?

16 That it could happen that breakdowns at other

17 production units would make it advisable for

18 them, in the service of electricity supply, to

19 really burn when necessary?

20 MR. AMIRIKIAN: That was my

21 understanding.

22 MR. ZAK: But otherwise it wouldn’t

23 be financially sensible for them to run?

24 MR. AMIRIKIAN: Right. Because of

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Registered Professional Reporters
6 MR. CLAUSEN: Yes. And if you look

7 at the cost that are in there, it’s pretty clear

8 there’s some huge penalties financially for them

9 to do so.

10 MR. ZAK: Yeah.

11 MR. AMIRIKIAN: And this is based on

12 1 percent oil, or —— 13 MR. CLAUSEN: Those were based on

14 average costs, and was comparing to 1 percent

15 fuel oil gas, and so, half a percent sulfur oil

16 will be even greater. But it’s hard to predict

17 what exactly that will be.

18 MR. ZAK: Okay. And the only other

19 question I have is, do you think you could get

20 that out to me tomorrow, the other information?

21 MR. CLAUSEN: Certainly. Yes, sir.

22 Not a problem.

23 MR. ZAK: Great. That’s all I have.

24 MR. CLAUSEN: As long as you have

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6 sort of a comparison from one year, for total

7 output at the facility.

8 MR. CLAUSEN: Okay.

9 MR. ZAK: Probably the latest one.

10 MR. CLAUSEN: Okay.

11 MR. HAYNES: Do representatives

12 of —— let me check your latest name. Conectiv

13 Delmarva Generation, Inc., have anything to say?

14 MR. WIDOM: I believe I do. I do

15 have a short statement to make. My name is

16 Stuart Widom, W-i-d—o—m. Is it okay to stay

17 right here or do I —-

18 MR. HAYNES: That would be great.19 MR. WIDOM: Thank you, Mr. Haynes.

20 Good evening, everybody. My name is Stu Widom,

21 W—i—d—o—m, and I’m a senior environmental

22 consultant representing Conectiv Delmarva

23 Generation. As you know, Conectiv is the owner

24 and operator of the Edgemoor power plant located

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6 regulation pending the outcome of its engineering

7 and technical analyses.

8 Following the completion of these

9 studies and promulgation of a final regulation by

10 DNREC, the company filed a compliance plan with

11 the Department in June, 2007, that shows some

12 innovative and advanced technologies in order to

13 meet the Department’s final emission limitations.

14 The company has elected to retrofit

15 advanced dry sorbent injection systems on the two

16 coal-fired units at Edgemoor, Edgemoor units 3

17 and 4, for sulfur dioxide control.

18 In addition, the company will be

19 reducing the sulfur in fuel content of the

20 residual oil it receives for use in unit number

21 5. Nox emissions from all three units will

22 further be controlled through advanced combustion

23 technologies and post—combustion control systems.

24 Each of the coal fired units will also be

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6 requests that the Department adopt the proposed

7 changes to regulation number 1146. Thank you

8 very much.

9 MR. HAYNES: Can I ask, I’ll ask the

10 Department, how was the 4600 number arrived at?

11 Was that a compromise number, or is there some —— 12 MR. CLAUSEN: It was a compromise

13 number, and basically it allowed the unit, as Stu

14 mentioned, with a .5 percent sulfur fuel, to come

15 up to what is basically an historic number of

16 capacity factor for the unit. That capacity

17 factor is somewhere on the order of 45 percent on

18 an annual basis, and I think the 4600 essentially

19 corresponds to that value.

20 MR. HAYNES: But based on your prior

21 comments into the record, you indicated that

22 based on the historic and economics, that you did

23 not —- the actual operating performance going

24 forward should not be changing that much?

WILCOX & FETZER LTD.

Registered Professional Reporters
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WILCOX & FETZER LTD.

Registered Professional Reporters
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inclusive, is a true and accurate transcript of

my stenographic notes taken on May 26, 2009, in

the above—captioned matter.

IN WITNESS WHEREOF, I have hereunto set my

hand and seal this 1st day of June 2009, at

Wilmington.

Julianne LaBadia, RDR, CRR

WILCOX & FETZER LTD.

Registered Professional Reporters

Hearing Examiner

Delaware Department of Natural Resources

& Environmental Control

89 Kings Highway

Dover, DE 19901

RE: DNREC Proposal to Amend Regulation No. 1146

Electric Generating Unit Multipollutant Regulation

Dear Mr. Haynes,

As a follow-up to the recent public hearing regarding the Delaware Department of

Natural Resources & Environmental Control’s (DNREC’s or the Department’s) proposal

to amend Regulation No. 1146 (Electric Utility Generating Unit Multipollutant

Regulation), Conectiv Delmarva Generation (Conectiv or the Company) would like to

submit some additional comments regarding erroneous and inaccurate information that is

contained in certain comments submitted by a member ofthe public.

In particular, the Company would like to respond to Mr. John Austin’s email to the

Department’s Mr. Robert Clausen, dated May 21, 2009 (entered into the May 26, 2009

hearing record as Exhibit Number 6). In his email correspondence, Mr. Austin states that

the DNREC proposal will allow the Company to run Unit 5 “at higher capacity utilization

and without a reduction of emissions until Jan 1, 2012 when the emission rate must be cut

from .37 lb/MMBTU to .26 lb/MMBTU by other provisions of Regulation 1146.”

Conectiv would like to take this opportunity to correct this statement. First, Unit 5 is an

electric generating facility that burns residual oil as its primary fuel. As such, the SO2

lb/MMBTU emission rates stated in Mr. Austin’s email are not applicable, as they pertain only to coal fired electric generating facilities. Regulation No. 1146, Section 5.5 requires that residual oil fired units (such as Edge Moor Unit 5) limit the sulfur content of the

residual fuel oil received to no more than 0.5% by weight, effective January 1, 2009.

Prior to the adoption ofRegulation No. 1146, Edge Moor Unit 5 was permitted to receive
As explained in the Company’s comments provided at the hearing, the Department’s

Proposal to amend the annual potential to emit SO2emissions from Edge Moor Unit 5from 2427 tpy to 4600 tpy would ensure that Conectiv’s multimillion dollar pollution

control investments on this Unit (including those for NOx control) could accommodate

operation of this Unit at historic annual capacity operating levels should circumstances or

needs dictate.

The Company would ask that this letter be entered into the hearing record.Thank you for giving Conectiv an opportunity to provide for this clarification. Should

you have any questions regarding this matter, please feel free to contact me at 451-5319.

Sincerely,

JttkL

Stuart Widom

Sr. Environmental Consultant

Conectiv Delmarva Generation

CC: Mr. Robert Clausen - DNREC, AQMS

Mr. Ron Amerikian -DNREC, AQMS
The regulatory change agreed to by DNREC allows Unit 5 to be run at higher capacity utilization and without a

reduction of emissions until Jan 1, 2012 when the emission rate must be cut from .37 lb/MMBTU to .26

lb/MMBTU by other provisions of Regulation 1146. Even with the cut in emission rate, Unit 5 can now be run

at such increased capacity utilization to potentially negate the benefits of any emission rate reduction.

Using the EPA’s regulatory impact analyses, reviewed by 0MB, cost benifits for health and environmental

benefits of $7300/ton S02 reduced, this backside from 2427 tons to 4600 tons S02 costs the people of

Delaware $15.86 Million per year in increased health costs associated with asthma, cardiovascular disease, and

lung disease.

(46002427)*$7300=$ 15.86 Million

The promulgated regulation should have been defended with all necessary resources, but was not. Once again,

DNREC has stepped back form defending a promulgated regulation, that improved human health and the

environment in favor of a settlement with significant adverse public costs.

The increased emissions will also result in the formation of additional fine particulate matter (PM2.5) making it

unlikely New Castle County will be in attainment of National Ambient Air Quality Standards.

When will DNREC’s mission stop being the furtherance of “corporate polluters”, but rather the protection

ofthe quality of our air and water and the health and safety of our families?

1

RE: PROPOSED REGULATION TO AMEND 7 DE ADMIN. CODE

1146 (ELECTRIC GENERATING UNIT (EGU) MULTIPOLLUTANT REGULATION)

DATE: August 25, 2009

I. PROCEDURAL HISTORY

On February 22, 2009, the Secretary ofthe Department of Natural Resources and

Environmental Control (Department), approved the Division of Air and Waste

Management’s Air Quality Management Section (AQMS) request for Start Action Notice

(SAN) No. 2009-04, which commenced the regulatory development process to amend

Regulation 1146 in the Department’s Regulations Governing the Control ofAir Pollution,

as codified at 7 DE Admin. Code §11O1 et seq. (Regulation). AQMS drafted the

proposed regulation to amend Table 5-1 in order to reflect a settlement that resolved

Conectiv Delmarva Generating, Inc’s appeal of Regulation 1146 (Conectiv)) The

Department agreed in the settlement to amend Regulation 1146’s Table 5-1 in order to

allow Conectiv’s Edge Moor Unit S’s (Facility) an annual sulfur dioxide (S02) limit

increase from 2,647 tons to 4,600 tons.

On May 1, 2009, the Department had published in the Delaware Register of

Regulations the proposed amendment to Regulation 1146, which if approved would

change Table 5-1, as referenced in Section 5.0. The Department also provided public

‘Conectiv filed an appeal with the Environmental Appeal Board at EAB Docket No. 2006-05, which was

removed by stipulation to be heard by New Castle County Superior Court in Docket No. 07C-0l-204FS.
Public comments were received in writing and orally at the public hearing.

AQMS’ experts who attended the hearing answered the questions. I requested AQMS to

prepare a post-hearing technical response memorandum, which I received and attach

hereto as Appendix A

11. SUMMARY OF THE RECOMMENDED RECORD

I determine that the record is complete to support a final decision on the proposed

amendment and recommend the following documents be included in the record: 1) a

twenty-one page verbatim transcript of the public hearing, 2) Department’s exhibits

admitted at the public hearing and described by Bob Clausen, the Department’s expert in

AQMS who drafted the proposed regulation; 3) the written public comments including

those received from John Austin (DNREC Ex 6) and from Conectiv (DNREC Ex 7, and

4) AQMS’s TRM.

The hearing transcript contains Bob Clausen’s explanation for the proposed

amendment as consistent with the Department’s December 2008 settlement with

Conectiv of an appeal it filed to challenge Regulation 1146. He explained that

Regulation 1146 established limits for nitrogen oxides (NOX), sulfur dioxide (S02) and

mercury from air emissions from large electrical generating units, which included the

Facility. He indicated that the. settlement’s increase in the Facility’s annual limit from

2
last few years because of the cost of fuel used to generate electricity. The operating

capacity factor for the Facility now is approximately 10%. The TRM explains the

assumptions and analysis the Department’s experts applied in determining that risk that

the Facility would emit S02 at the higher authorized levels was very low and that the

other reasons for the settlement supported the proposed amendment as a reasonable

compromise.

Bill Zak, a co-founder of the environmental group known as Citizens for Clean

Power asked several questions concerning the S02 emissions and the settlement. The

Department representatives from AQMS explained that the S02 limit increase was not

expected to result in any more S02 air emissions under normal operating conditions, but

would allow for increases ifthe Facility was needed to operate at a higher capacity factor

due to the need for the Facility’s electricity during unusual conditions, such as a

prolonged shutdown of a nuclear unit.

Stuart Widom, a senior environmental consultant representing Conectiv, spoke

and provided written comments for the record. His comments indicated that Conectiv

supported the proposed amendment based upon the settlement ofthe appeal ofRegulation

1146. He explained that the proposed amendment would provide Conectiv with the

ability to operate the Facility at its operating capacity historic levels when the pollution

3
ofthe residual oil from 1% to 0.5% and installing advanced burner technilogies and postcombustion control systems. The settlement also included Conectiv’s agreement to move

the Regulation 1146 date for lower mercury limits from 2013 to 2012. The basis for the

4,600 tons in the proposed amendment was the Facility operating at an annual capacity

factor of approximately 45%, but this was based on historic use before fuel cost increased

and using the less expensive 1% sulfur content fuel. Thus, Mr. Clausen concluded that

the proposed amendment allows a higher limit, but in reality the expected operating

factor should remain low based upon the estimated fuel cost and operating the Facility as

part of an economic dispatched system.

III. RECOMMENI)ED FINDINGS AND DISCUSSION

I find and recommend that the record is sufficiently complete to support a final

decision that the proposed regulation is reasonable and well-supported to approve the

proposed amendment as a final amendment to Regulation 1146. I find that the proposed

amendment would allow the Facility to operate and emit more S02 on an annual basis if

its current operating capacity increased from the current level of approximately 10% to

approximately 45%. I agree with the economic analysis and rely on the expert judgment

ofAQMS’ experts that it is unlikely that the Facility will operate at higher capacity factor

than it has in recent years. Nevertheless, it is prudent to increase the limit in order to

4
supported analys’is in Appendix A and that the benefits of a• settlement also should be

factored into the Department’s Regulation 1146. The settlement removed the risk of an

adverse result that could have overturned Regulation 1146 entirely, which is a result that

would not be good for the environment or public health. In addition, the settlement will

require Conectiv to meet mercury limits sooner than otherwise required by Regulation

1146. Thus, to the extent the proposed amendment allows on paper the Facility to emit

more S02 emissions, the reality in the Facility’s historic and expected future operations

and the cost ofgenerating electricity from low sulfur oil support the proposed amendment

as consistent with the settlement. I recommend the record be adopted based upon the

public hearing transcript, hearing exhibits, and AQMS’ memorandum, which explains in

/ details the reasoning and analysis for the proposed amendment.

I find that the record developed at the hearing, and AQMS’ detailed technical

response document, will provide documentary support for a final decision to adopt the

proposed amendment to Regulation 1146 as a final regulation, as set forth in Appendix B

hereto. I find that the purpose of the proposed regulation’s amendment to Regulation

1146 is consistent with the Department’s statutory purpose to protect the environment.

The amendment is based upon a compromise settlement and that should be factored in the

reasons for the amendment. The Department’s technical experts have concluded that the

5
In sum, I find that the Department provided ample, well-documented technical

support for proposed Regulation 1146 in the record, and that there is a sound and

reasonable basis for the exercise of the Department’s state authority to issue a fmal

regulation that will protect Delaware’s environment, public health and welfare.

IV. RECOMMENDED CONCLUSIONS

Based on the record developed, I find and conclude that the record supports

approval ofthe proposed regulation, as set forth in Appendix B hereto, as an amendment

to the Regulations. In conclusion, I recommend the Secretary adopt the following

findings and conclusions:

1.) The Department has jurisdiction under its statutory authority to make a

determination in this proceeding;

2.) The Department provided adequate public notice of the proceeding and

the public hearing in a maimer required by the law and regulations as discussed in this

report;

3.) The Department held a public hearing on the proposed regulation and plan

in a manner required by the law and regulations;

4.) The Department considered all timely and relevant public comments in

making its determination on the proposed regulation and plan;

6
to the Delaware Register ofRegulations for publication in its next available issue, and

such other notice as the law requires and the Department determines is appropriate.

S

Robert P. Haynes, Esqiyre

Senior Hearing Offic,(

7



DNREC Air Quality Management Section

Response to Public Comment

Revision to Regulation No. 1146

Electric Generating Unit (EGU) Multi-Pollutant Regulation

June 29, 2009
g 

Letter from Conectiv, signed by Stuart Widom and dated May 29, 2009 7
Regulation 1146’s Edge Moor Unit 5’s S02 mass emissions limit from 2427 tons/year to 4600 tons/year,

and states that the regulatory change will allow Edge Moor Unit 5 to run at a higher capacity utilization

until January 1, 2012 when the emission rate must be cut from 0.37 lb/MM BTU to 0.26 Ib/MMBTU by

other provisions of Regulation 1146. The email goes on to state that even with that rate cut, the

increased capacity utilization has the potential to negate the benefits of any S02 rate reduction.

Response: The email incorrectly states the 502 emission rate limitations of Regulation 1146 that are

applicable to Edge Moor Unit 5. The S02 rate limits of 0.37 Ib/MMBTU and 0.26 Ib/MMBTU from

Regulation 1146 are applicable to large coal-fired electric generating units. As Edge Moor Unit 5 is a

large residual oil-fired electric generating unit, 502 emission rate reductions are achieved by Regulation

1146’s requirements to switch from a residual fuel oil with a maximum sulfur content of 1.0% to a

residual fuel oil with a maximum sulfur content of 0.5%. The lower sulfur fuel oil limit of Regulation

1146 is unaffected by the proposed regulatory amendment of this proceeding. Regulation 1146

required affected units to begin receiving only the 0.5% maximum sulfur fuel oil effective January 1,

2009. Regulation 1146’s residual oil sulfur content maximum limit of 0.5% sulfur does not change over

time.

The requirement to convert to the 0.5% maximum sulfur fuel oil effectively reduced a residual fuel oilfired electric generating unit’s potential 502 emission rate by 50% (relative to the previously allowable

1.0% maximum sulfur fuel oil). Therefore, for any given hour of unit operation, the lower fuel oil sulfur

content requirements of Regulation 1146 will always result in lower 502 emissions than when Edge

Moor Unit 5 combusted the same amount of 1.0% sulfur residual fuel oil.

While the Department agrees that that the revised 502 cap has the potential to permit a higher capacity

utilization, it is the Department’s opinion that it is unlikely that Edge Moor Unit 5 will operate in the

future at capacity factors that would enable the unit to approach the 4600 ton/year 502 emission level.

Electric generating units such as Edge Moor Unit 5 tend to operate on an economic dispatch basis, being

predominately called upon to operate when it is economically advantageous to do so. For fossil fuel

fired units, where the cost of fuel is a significant contributor to the cost of electric generation, the unittypically operates less when the cost of fuel rises for that unit in relation to the other fossil fuel fired

units in the region. Residual fuel oil costs have risen significantly in recent years. Chart 1 illustrates the

relative average costs of natural gas, residual oil, and coal fuels in the mid-Atlantic region in recent

years.
It should be pointed out that the fuel prices noted in Chart 1 reflect average prices in the mid-Atlantic

region, and may not be accurate for any given facility such as Edge Moor. However, the price trends andrelationships between the fuels would be expected to be similar. From Chart 1 it can be seen that while

all three fuels have increased in price, the rate of increase in residual fuel oil price is greater than that of

the other fuels. This would tend to make a residual oil-fired electric generating unit less economically

attractive for operation and tend to reduce its annual operating capacity factor.

Chart 2 reflects the actual heat input capacity factor of Edge Moor Unit 5 and the average mid-Atlantic

residual fuel oil price for the past few years. Again, the residual fuel oil price may not be correct forEdge Moor, but it is expected that the price trends would be similar. From Chart 2 it can be seen that

Edge Moor Unit 5’s annual operating capacity factors have tended to drop off with significant increases

in residual fuel oil costs and have generally trended downward with the general trend upward of

residual fuel oil price.

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As a residual fuel oil-fired electric generating unit’s 502 emissions vary with its capacity factor, it would

be expected that reductions in capacity factor would result in a reduction in annual 502 emission. Chart

3 reflects Edge Moor Unit 5’s actual annual operating capacity factor and actual 502 emission over the

past several years. It can be seen in the chart that for Edge Moor Unit 5 the trends of S02 emissions

closely follow the trends of annual operating capacity factor.

As the above charts show, for Edge Moor Unit 5, a fossil-fuel fired electric generating units annualcapacity factor tends to follow trends in fuel costs, and the unit’s annual S02 emissions follows the

trends in capacity factor. It is generally believed that it is unlikely that residual fuel oil costs will againapproach those low costs seen in the late 1990’s.

Because of the trending of the relationship between fuel cost/unit capacity factor/unit 502 emission,

the Department believes that the trend in residual fuel-oil costs will tend to limit the annual operating

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Comment: The May 21, 2009 email from austin4102000@yahoo.com cites a EPA cost/benefit

methodology and utilizes that methodology to calculate the cost impact of an increase in S02 emissions

from 2424 tons/year to 4600 tons/year. The email states the increase in S02 emissions is calculated to

result in $15.86 million per year in increased health costs associated with asthma, cardiovascular

disease, and lung disease.Response: The Department does not dispute the calculation methodology identified in the May 21,

2009 email. However, as discussed above, the Department does not anticipate that there will be anincrease in Edge Moor Unit S’s annual capacity factor that will result in an increase in the actual annual

S02 mass emissions from the unit.

Comment: The May 21, 2009 email from austin4102000@yahoo.com states the increased S02

emissions resulting from this proposed revision will result in the formation of additional fine particulate

matter, making it unlikely New Castle County will be in attainment on National Air Quality Standards.

Response: The Department does not dispute that 502 can contribute to fine particulate emissions from

combustion sources. Regulation 1146 specifically addresses emissions of NOx, 502, and Hg from largecoal-fired and residual oil-fired electric generating units located in Delaware. During the initial

development of Regulation 1146, the Department received comments from the public suggesting that

the Department also address EGU emissions of fine particulate matter due to its impact on the public

health. At that time, the Department indicated that it would consider those comments and address

them separately from the Regulation 1146 development process. Subsequently a start action notice,

2008-27, has been approved to begin the development of a new regulation to address fine particulate

matter emissions from coal-fired and residual oil-fire electric generating units with a nameplate capacity

rating of 25MW or greater in New Castle County. Such a regulation will include addressing fineparticulate matter emissions from Edge Moor Unit 5 and address
proposed amendment to Regulation 1146. Conectiv’s background statements also provide discussion of

the use of “advanced and innovative” emission control technologies being installed Conectiv’s Edge

Moor units in response to the requirements of Regulation 1146.

Response: While the Department is appreciative that Conectiv supports this amendment to Regulation1146 that that is being proposed to resolve the pending litigation, the Department does not agree with

the characterization that the emission controls being installed at Edge Moor in response to Regulation

1146 represent “advanced and innovative” controls. While the Department is of the opinion that the

controls being installed at Edge Moor will attain the emission limits reflected in Regulation 1146, the

Department feels that such controls are all commercially available, well-proven emission controls

applicable to retrofit installation for units with a wide range in size and operating characteristics. It is

the Department’s opinion that more advanced controls are also commercially available and well-proven

in retrofit applications that would allow attaining the emission limits of Regulation 1146 with a large

comfort margin.

Comments from Conectiv

Letter dated May 29, 2009

Comment: In a letter dated May 29, 2009, Conectiv’s Stuart Widom submitted comments regarding theproposed amendment to Regulation 1146. While the May 29, 2009 Conectiv letter did not provide any

specific comment regarding the actual proposed amendment, it did provide comment regarding thecomments of the May 21, 2009 email from austin4102000@yahoo.com that was entered into the record

during the May 26, 2009 public hearing regarding the proposed amendment to Regulation 1146.

Specifically, the May 29, 2009 Conectiv letter pointed out the errors in the May 21, 2009 email fromaustin4102000@yahoo.com, stating that the email discussed Regulation 1146’s S02 emission limitations

applicable to coal-fired units which are not applicable to the Edge Moor Unit 5 residual oil-fired unit.

The Conectiv letter points out that a on 1146’s requirement for use of 0.5% sulfur fuel oil results

in up to a 50% reduction in short t rm., p rmitted 502 reductions from the unit.

Conectiv futher commented in the I er that the increase of Edge Moor Unit 5’s annual 502 mass

emission limit from 2427 ton/year to 4600 ton/year would accommodate operation of the unit at

historic annual capacity operating levels should circumstances or need dictate.



Control Period SO2

Mass Emissions Limit

Unit (tons)

EdgeMoor3 1391

Edge Moor 4 2410Edge Moor 5 4600Indian River 1 1082

Indian River 2 1130Indian River3 1759

Indian River 4 3657

McKee Run 3 439