# APPENDIX C

EMISSION REDUCTION STUDY

VOLUME 1

ADDENDUM AUGUST 20, 2007

## WE ENERGIES

SOUTH OAK CREEK UNITS 5, 6, 7 AND 8

NO

x 

## AND SO 2 

## EMISSIONS REDUCTION STUDY



# VOLUME 1

TECHNICAL AND APPENDICES

ADDENDUM AUGUST 20, 2007

Washington Group International, Inc. 510 Carnegie Center Princeton, New Jersey 08540S OUTH O AK C REEK U NITS 5-8

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### REPORT REVISION PAGE

Project Name: South Oak Creek Units 5 – 8 Discipline: All

Client: We Energies

Latest Revision: 4

Status Rev.

No. Date Prepared By Pages Description of Changes

Draft 0 09/08/06 T. Tsui Draft Report for Client Review

Final 1 09/25/06 T. Tsui Final Report

Revision 2 10/12/06 T. Tsui Final Report

Revision 3 04/26/07 A. Crawford Final Report

Addendum 4 8/20/07 T. Tsui Addendum

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### ADDENDUM SUMMARY

Background

In March, 2007, Washington Group In ternational (WGI) was retained by We Energies to perform interim Engineering, Procurement, and Constructi on activities for the South Oak Creek Air Quality Control System Project. As part of that work, deta iled design basis engineering is being performed, in part to validate conceptual studies and estimates performed under the original Emission Reduction Study. That study concludes that the base case General Arrangement should be Wet Flue Gas Desulphurization (WFGD) followed by Selective Ca talytic Reduction (SCR) (tail end design), with Gas-Gas Heat Exchangers (GGH) across the SCR modules, as the lowest Total Evaluated Cost (TEC) solution. The Study also recommended that a more detailed evaluation of all possible FGDSCR arrangements be performed, since the relati ve difference in TEC was reasonably close.

Contracts for Engineering Servic es were also executed between We Energies and Riley Power Incorporated (RPI), the preferred SCR supplier, and Wheelabrator Air Pollution Control (WAPC), the preferred FGD supplier, to assist in the develo pment of the overall Projec t design. A priority for the engineering teams was identifying the im pacts of different operating conditions and arrangements on each of the suppliers’ performance, along with validating the initial assumptions of capital and operating costs th at were used in the Study.

Detailed design efforts started with the tail e nd design. The original a ssumption for the FGD GGH was a regenerative design. The leakage inherent in this design indicated ch allenges to WAPC in meeting SO2 removal requirements, so a zero l eakage design was evaluated. Both designs also required steam reheat to maintain the minimum in let temperature required by the absorber to
maintain the water balance in the absorber, as well as maintaining sufficient temperature

downstream of the FGD to minimize corrosion in th e ductwork and fans. The zero leakage design is also significantly more expensiv e than the base regenerative h eater design. Since there were now significant new costs identified, both in process capital for the different heater design, and in operating costs for the significantly higher steam consumption, an evaluation of SCR before the WFGD (cold side design) was started.

The study already recognized that the FGD GGH would not be requ ired, and that a larger SCR reactor would be required, so the capital cost ev aluation for this arrangement did not change significantly. A major catalyst manuf acturer (CERAM) was contacted to provide a detailed technical evaluation of catalyst issues with a cold side design, as well as tail e nd design. CERAM has world wide experience with both styles of SCR arrangem ent. The study originally assumed that cold side catalyst had a total life cycle cost similar to the standard hot side catalyst. The CERAM experience

indicated that the total lif e cycle catalyst cost was closer to a tail end design, especially when in

service on Powder River Basin fuel. Several other catalyst ma nufacturers were contacted, who confirmed the new relative life cycle cost assumption.

Results

Several significant cost differences were identified in the preliminary design basis engineering effort. The IECCOST estimating program was rer un with the new cost estimate information. The

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### appropriate tables from Sections 2,4,5 and 7 from the Study were updated with the new cost
information, and are attach ed with this Addendum.

The current evaluation shows that SCR followed by FGD (cold side design) has a significant Total Evaluated Cost advantage over the tail end design, pr imarily driven by the significant increase in steam consumption in the tail end design to maintain FGD water balance, as well as the significantly lower than originally assumed life cycle co st of catalyst in the cold side design.

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### Summary Evaluation

System

Cost $M SCR

Hot Side 7 & 8*

Cold Side 5 & 6 SCR

Cold Side (All Units) SCR

Tail End (All Units)

Capital Cost 193.4 190.5 178.6

Levelized O&M 13.8 12.8 14.3

Total Evaluated Cost 327.5 315.0 317.4

Evaluated Rank 19 22 20

*Including $18M power penalty.

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### Table 2-4. Economic Criteria

Variable Units Value

Economic Criteria Discount Rate (MAR) % 7.5

AFUDC Rate % 10.3

Construction Period Years 3 First Year Fixed Charge Rate % 19.2 Levelized Fixed Charge Rate (FCR) % 14.4 Levelized Fixed Charge Rate (FCR, constant $) % 10.5

Service Life For Units 5 & 6 Years 17

Service Life For Units 7 & 8 Years 17 Start-Up Date Year 2009

Inflation Rate % 3.0 Land Cost (@ Start-Up Date) $ 0 Power Outage Days (1) Days 0

Cost Basis Year 2006

Construction Labor Rate $/hr 50.00 Prime Contractor's Markup (% of equip. cost) % 10 Reagent Bulk Storage Days 30

Operating Cost Data FGD Operating Labor Rate $/hr 33.0

Power Cost Mills/kWh 40.0 Replacement Power Cost Mills/kWh 40.0 Steam Cost - high pressure $/1000 lbs 5.50

Methane Cost $/1000 scf 8.00

Activated Coke Cost $/ton 600 Sulfuric Acid Byproduct Price $/ton 30

Limestone Delivered Cost $/ton 15

Pebble Lime Delivered Cost $/ton 60 Ammonia Delivered Cost (as 29% aqueous solution) $/ton 180 Hydrogen Peroxide (as 50% aqueous solution) $/ton 318 ATS (as 60% aqueous solution) $/ton 180 Ammonia Sulfate By Product Credit $/ton 190 Gypsum Revenue $/ton 2 Waste Disposal (landfill) $/ton 35

Water Cost:

Fresh Water $/1000 gal 0.40

Blowdown Water $/1000 gal 0.00 Cooling Water $/1000 gal 0.16

(1) Power Outage Days – For this study it has been assumed that the tie-ins of wet or dry FGD equipment and

NO x equipment can be completed during a future scheduled 5 to 6 weeks outage period (no power generation lost during construction).

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### Table 4-2A. Technology Evalua tion of SCR for Units 5&6

Cold Side Tail End Ranking (0-5) Technology 4 3 Constructability 5 5 Operating and Maintenance 3 3

Commercial Risk 5 4 Performance Margin 5 5

Total 22 20

Other Factors Scaling Required No No

Can meet 0.07 lbs/MMBtu NO x Emission? Yes Yes

Unconditional Commercial Guarantees Yes Yes



### Table 4-2B. Technology Evalua tion of SCR For Units 7&8

Hot Side Cold Side Tail End

Ranking (0-5)

Technology 5 4 3
Constructability 1 5 5
Operating and Maintenance 2 3 3

Commercial Risk 3 5 4
Performance Margin 5 5 5

Total 16 22 20

Other Factors
Scaling Required No No No

Can meet 0.07 lbs/MMBtu NO x Emission? Yes Yes Yes

Unconditional Commercial Guarantees Yes Yes Yes

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Table 4.8A Cost Summary for Tail-End SCRs (Cost in Millions)

Unit 7 & 8 Unit 5 & 6

Incremental Total Capital ($2006) $95.6 $83.0 $178.6

First Year O&M Steam $2.8 $2.2

Other $3.1 $2.9

Total $5.9 $5.1 $11.0

Levelized O&M Steam $3.5 $2.9

Other $4.0 $3.9

Total $7.5 $6.8 $14.3

Capitalized O&M Steam $34.0 $28.3

Other $38.5 $37.9

Total $72.5 $66.2 $138.8

Total Evaluated Cost $168.1 $149.3 $317.4

Table 4.8B Cost Summary for Cold-Side SCRs (Cost in Millions)

Unit 7 & 8 Unit 5 & 6

Incremental Total Capital ($2006) $101.5 $89.0 $190.5

First Year O&M Steam $2.4 $1.8

Other $3.0 $2.8

Total $5.5 $4.6 $10.0

Levelized O&M Steam $3.0 $2.4

Other $3.8 $3.6

Total $6.8 $6.0 $12.8

Capitalized O&M Steam $29.4 $23.1

Other $37.0 $34.9

Total $66.5 $58.0 $124.5

Total Evaluated Cost $168.0 $147.0 $315.0

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Table 4.8C Cost Summary for Cold-Side SCRs (Units 5 & 6) and Hot Side SCRs (Units 7 & 8) (Cost in Millions)

Unit 7 & 8 Unit 5 & 6

Incremental Total Capital ($2006) $104.4 $89.0 $193.4

First Year O&M Steam $0.1 $1.9

Other $6.1 $2.9

Total $6.2 $4.8 $10.8

Levelized O&M Steam $0.2 $2.4

Other $7.7 $3.6

Total $7.9 $6.0 $13.8

Capitalized O&M Steam $1.7 $23.1

Other $74.4 $34.9

Total $76.1 $58.0 $134.1

Total Evaluated Cost * $180.5 $147.0 $327.5
Note (*) Including $18M power penalty

Table 4.8D Cost Summary for Tail-End SCRs (Units 5 & 6) and Hot Side SCRs (Units 7 & 8) (Cost in Millions)

Unit 7 & 8 Unit 5 & 6

Incremental Total Capital ($2006) $104.4 $83.1 $187.5

First Year O&M Steam $0.1 $2.2

Other $6.2 $3.2

Total $6.3 $5.4 $10.9

Levelized O&M Steam $0.2 $2.8

Other $7.7 $4.1

Total $7.8 $6.8 $14.6

Capitalized O&M Steam $1.7 $26.7

Other $74.4 $39.5

Total $76.1 $66.3 $142.4

Total Evaluated Cost (*) $180.5 $149.5 $330.0
Note (*) Including $18M power penalty

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### Table 5-2. Evaluation of LSFO Syst em Based on Cold-Side SCR Selection (Cost in Millions)

Units 7 & 8 Units 5 & 6

Incremental Total

Cost ($2006)

Capital Cost $148 $162.8 $310.8

First Year O&M $10.5 $8.1 $18.6

Levelized O&M $13.2 $13.8 $27.0

Capitalized O&M $128.2 $134.0 $262.2

Total Evaluated Cost $276.3 $296.7 $573.0

Ranking (0-5)

Technology 5 5 5
Constructability 5 5 5
Operating and Maintenance 3 3 3

Commercial Risk 5 5 5

Performance Margin 5 5 5

Total 23 23 23

Other Factors
Scaling Required No No

Unconditional Commercial Guarantees Yes Yes

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### Table 7-1 Evaluation results of Case 1 (Cost in Millions)

Total

Technology NO x SO 2 NO x + SO 2

Tail End SCR LSFO Tail End SCR +

LSFO

Cost ($2006)

Capital Cost $178.6 $360.8 $539.4

First Year O&M $10.9 $20.6 $31.5

Levelized O&M $14.3 $29.2 $43.5

Capitalized O&M $138.8 $283.6 $422.4

Total Evaluated Cost $317.4 $644.3 $961.7

Ranking (0-5)

Technology 3 5 8
Constructability 5 5 10
Operating and Maintenance 3 3 6

Commercial Risk 4 5 9
Performance Margin 5 5 10
Total (Note 1) 20 23 43

Other Factors
Scaling Required No No No

Can meet 0.07 lbs/MMBtu NO x Emission? Yes NA Yes

Unconditional Commercial Guarantees Yes Yes Yes

Chemical Used Ammonia Limestone

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### Table 7-2 Evaluation Results of Case 2 (Cost in Millions)

Total

NO x SO 2 NO x + SO 2 Technology Cold Side

SCR LSFO Cold Side SCR +

LSFO

Cost ($2006)

Capital Cost $190.5 $310.8 $501.3

First Year O&M $10.1 $18.6 $28.7

Levelized O&M $12.8 $27.0 $39.8

Capitalized O&M $124.5 $262.2 $386.7

Total Evaluated Cost $315.0 $573.0 $888.0

Ranking (0-5)

Technology 4 5 9
Constructability 5 5 10
Operating and Maintenance 3 3 6

Commercial Risk 5 5 10
Performance Margin 5 5 10

Total 22 23 45

Other Factors
Scaling Required No No No

Can meet 0.7 lbs/MMBtu NO x Emission? Yes NA Yes

Unconditional Commercial Guarantees Yes Yes Yes

Chemical Used Ammonia Limestone

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### Table 7-3 Evaluation Results of Case 3 (Cost in Millions)

Total

NO x SO 2 NO x + SO 2 Technology Hot Side &

Cold Side SCR LSFO SCR + LSFO

Cost ($2006)

Capital Cost $193.4 $313.3 $506.7

First Year O&M $10.8 $18.8 $29.6

Levelized O&M $13.8 $26.8 $40.6

Capitalized O&M $134.1 $260.3 $394.4

Total Evaluated Cost* $327.5 $573.5 $901.0

Ranking (0-5)

Technology 4.5 5 9.5
Constructability 3 5 8
Operating and Maintenance 2.5 3 5.5

Commercial Risk 4 5 9
Performance Margin 5 5 10

Total 19 23 42

Other Factors
Scaling Required No No No

Can meet 0.7 lbs/MMBtu NO x Emission? Yes NA Yes

Unconditional Commercial Guarantees Yes Yes Yes

Chemical Used Ammonia Limestone
*Including $18M power penalty.

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### 13 Table 7-4 Evaluation Results of Case 4 (Cost in Millions)

Total

NO x SO 2 NO x + SO 2 Technology Hot Side & Tail

End SCR LSFO SCR + LSFO

Cost ($2006)

Capital Cost $187.5 $338.1 $525.5

First Year O&M $10.9 $19.5 $29.9

Levelized O&M $14.8 $27.8 $42.6

Capitalized O&M $142.4 $270.7 $413.1

Total Evaluated Cost* $329.9 $608.8 $938.6

Ranking (0-5)

Technology 4 5 9
Constructability 3 5 8
Operating and Maintenance 2.5 3 5.5

Commercial Risk 3.5 5 8.5
Performance Margin 5 5 10

Total 18 23 41

Other Factors
Scaling Required No No No

Can meet 0.7 lbs/MMBtu NO x Emission? Yes NA Yes

Unconditional Commercial Guarantees Yes Yes Yes

Chemical Used Ammonia Limestone
*Including $18M power penalty.



### Table 7-5. Summary of Cases 1 to 4 (Cost in Millions)

Cases Unit # System Component Total

Process Capital Total

Evaluated

Cost Power Outage Penalty Total

Evaluated

Cost + Penalty Ranking

1 All Four LSFO +Tail End SCR $539 $962 $0 $962 43

2 All Four LSFO + Cold Side SCR $501 $888 $0 $888 45

3 Units 5 & 6

Units 7 & 8 LSFO +Cold Side SCR

LSFO + Hot Side SCR $507 $901 $18 $919 42

4 Units 5 & 6

Units 7 & 8 LSFO +Tail End SCR

LSFO + Hot Side SCR $526 $939 $18 $957 41