TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION, INC. 

HEADQUARTERS: P.O . BOX 33695 DENVER, COLORADO 80233-0695 303-452-6111 

Janet McCabe 

Principal Deputy Assistant Administrator 

Office of Air and Radiation 

U.S. Environmental Protection Agency 

1200 Pennsylvania Avenue N.W. 

Washington, DC 20004 

February 13, 2013 

Subject: Treatment of "Transitional Sources" in New-Source NSPS for GHGs 

Dear Janet: 

Thanks again to you and your staff for taking the time to meet with Theresa Pugh and me 

last week. It was very nice to meet you, and I appreciated your willingness to talk about some of 

the challenges we face with OAR's rules for coal-fired power plants. I wanted to follow up on 

one of the issues we briefly discussed regarding the proposed NSPS for GHGs. In retrospect, 

I'm not sure that I did a very good job of explaining our concerns with the proposed definition of 

"transitional sources." 

As we discussed, Tri-State and another rural electric cooperative, Sunflower Electric 

Power Corporation, have been working together since 2007 to develop a new coal-fired power 

unit in Kansas known as Holcomb 2. Tri-State and Sunflower are not-for-profit cooperatives 

(generally referred to as "co-ops") that provide electricity to their members in rural parts of 

Colorado, Nebraska, New Mexico, Wyoming, and Kansas. 

As co-ops, we have a fiduciary obligation to provide our members with reliable 

electricity at the lowest possible cost, and we take this obligation very seriously. After 

considering our future resource needs and the various options for generating additional power, 

Tri-State determined several years ago that the Holcomb 2 was the best option for providing 

reliable, low-cost power for our members over the long term. We continue to follow the relative 

"as delivered" costs of coal and natural gas, but we still believe that a new coal-fired unit is 

probably the best option for our members. 

Tri-State alone has already invested more than $70 million in development costs for 

Holcomb 2, and the vast majority (all but about $10 million) is irrecoverable. We have provided 

detailed information about these sunk costs in our written comments on the proposed GHG 

NSPS. We believe that we have done enough to "commence construction" within the meaning 

of the Proposed Rule and thus qualify Holcomb 2 as a "transitional source," but we are 

concerned that there will almost certainly be litigation over this issue. As you know, the 

determination of whether construction has commenced on a particular unit is normally made on 

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A Touchstone Energy"Cooperative ~ 

- CRAIG STATION 

P.O. BOX 1307 

CRAIG, CO 81626-1307 

970-824-4411 

ESCALANTE STATION NUCLA STATION 

P.O. BOX 577 P.O. BOX 698 

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505-876-2271 970-864-7316 
case-by-case basis. Therefore, the proposed commence construction test creates uncertainty 

even for companies like Tri-State that have already invested years of effort and incurred 

substantial sunk cost in developing new units. 

We believe that the proposed "commence construction" deadline is unnecessary and 

should not be included in the final rule. We believe that the final rule should state, based on the 

information in the rulemaking docket about the sunk costs already incurred by Tri-State and 

Sunflower and the extensive planning steps that we have already taken, that Holcomb 2 is a 

transitional unit and will not be subject to the final GHG NSPS. Any other units that are 

similarly situated should also be identified as transitional units without regard to whether 

"construction has commenced" by a particular date, but it appears that there is a very limited 

number of such units. 

We believe that this approach is a logical outgrowth of the proposed rule and fully 

consistent with EPA's proposal for dealing with "transitional sources." The proposed rule 

recognizes that "transitional sources" are "a distinct set of sources with unique circumstances." 

77 Fed. Reg. at 22,421. EPA proposed to define the term "transitional source" to mean "a coalfired power plant that has received approval for its complete [prevention of significant 

deterioration ("PSD")] preconstruction permit by the date of this proposal ... and that 

commences construction within 12 months of the date ofthis proposal." 77 Fed. Reg. at 22,422. 

But the rationale for not applying the proposed GHG standard to these sources is that they have 

already incurred substantial sunk costs in developing plants that cannot meet those standards and 

that, therefore, the proposed standard cannot be considered the "best system of emission 

reduction adequately demonstrated" for them. 77 Fed. Reg. at 22,423. 

As EPA noted on page 22,424 of the proposed rule, "Transitional sources are a very 

small group of sources with a distinct profile of costs, preconstruction planning, overall business 

plans, technical and design concerns, and equitable concerns." These sources "have already 

incurred substantial costs in permitting" and have taken other preparatory steps to commence 

construction. " [B]ecause transitional sources have obtained a PSD permit and have developed 

their plans to the point where they are on the verge of construction," converting their plant 

designs from coal-fired power plants to natural gas combined cycle plants "would be 

significantly more disruptive to their plans than for proposed non-transitional sources." Such 

sources might need to "start over the process of developing the plant" if they were subject to the 

standards in the final GHG NSPS rule, which would "thereby render futile the planning and steps 

they have taken to date." " [A]t a minimum," these sources would face years of delays "and in 

fact [the need to redesign] may lead them to abandon the project." 

All these statements from the proposed rule are true regardless of whether a unit 

commences construction before or after April 2013. The commenced construction test is simply 

not an appropriate measure of the sunk costs and irretrievable commitments that transitional 

sources have already incurred. 

It should also be noted that the commenced construction deadline is not necessary to 

ensure that transitional sources will be constructed in a timely fashion and will be completed 

within a reasonable time. Holcomb 2 and all other potential transitional sources have already 

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A Touchstone Energy"Cooperative t-~ 

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obtained the necessary PSD permits, and any source that fails to begin a continuous program of 

construction by a specific date or fails to complete that construction within a reasonable time will 

lose the authority to construct. 

Again, we believe that EPA should eliminate the commenced construction deadline and 

simply identify specific units as transitional sources based on the information that they have 

already submitted regarding their sunk costs and the planning steps they have already taken. As 

noted above, this approach is a logical outgrowth of the proposed rule and fully consistent with 

EPA's proposal for dealing with "transitional sources." It will also provide greater certainty and 

avoid unnecessary litigation in the future 

Thank you for considering our proposal. Please feel free to contact me if you have any 

questions. 

Cc: Steve Page, OAQPS 

Kevin Culligan, OAQPS 

Bob Wayland, OAQPS 

Reid Harvey, CAMD 

Ellen Kerlansky, CAMD 

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-

Sincerely, 

Senior Vice President, Policy & Compliance 

Chief Compliance Officer 

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