D-1 

Appendix D 

EPA Extension of Cost Effectiveness Analysis 

I. Background 

As is noted in Appendix C to this TSD, OG&E costed a scrubber that was larger than 

necessary to control SO2 from the coal they currently burn. As it appears that was OG&E’s 

preferred option, perhaps for flexibility in future coal selection, it was carried forward for the 

bulk of the analysis as Option 1. Option 2, estimating cost effectiveness on the basis of a 

minimally sized scrubber to treat the coal currently burned, was also investigated. This was done 

by application of the "six-tenth rule,” to the annualized capital cost. 

Unlike Option 1, due to contracting limitations, Option 2 was not further adjusted within 

Appendix C to correct for cost estimating errors, such as (1) not following the Air Pollution 

Control Cost Manual, (2) adjusting costs that were outside of the range of the actual costs, (3) 

eliminating double counted costs, and (4) failing to evaluate the most cost effective options. 

However, even though it appeared that costing the larger scrubber was OG&E’s preferred option, 

we did not wish to propose our decision solely on that basis, as we wanted to investigate whether 

it was still cost effective to scrub the coal currently being burned. Therefore, we extended 

Option 2 to account for some of the issues that were rectified in Option 1. Also, as Option 2 was 

performed on the basis of a scrubber outlet of 0.10 lbs/MMBtu, and we determined that an 

emission rate of 0.06 lbs/MMBtu was appropriate, we also further adjusted Option 2 to account 

for a scrubber outlet of 0.06 lbs/MMBtu. This extension of the cost effectiveness of Option 2 is 

housed in a spreadsheet entitled, “EPA Modification of Appendix 1.xls,” which is present in our 

docket. A copy of that spreadsheet is attached to this Appendix (see primarily Columns F and I). 

II. Reapplication of the "Six-Tenth Rule." 

Please refer to Appendix C for a discussion of the "six-tenth rule." As discussed above, 

we reapplied the “six-tenth rule,” to adjust the assumed controlled emission rate of 0.10 

lbs/MMBtu were reduced to 0.06 lbs/MMBtu. This required recalculation of the size factor, 

Sb/Sa, that appears in the equation: 

Cb = Ca(Sb/Sa)

n

For the Sooner units, the scrubber inlet remains at 6,015 lb/hr. The scrubber outlet is 

calculated as: 

(5,611 MMBtu/hr)(0.055 lb/MMBtu) = 308.6 lb/hr 

In the above calculation, a controlled SO2 emission rate of 0.55 lb/MMBtu was used, in 

lieu of the design emission rate of 0.06 lbs/MMBtu, in order to build in a slight safety factor. For 

the low sulfur case of Option 2, the scrubber inlet SO2 remains at 2,605 lb/hr. Therefore, the SO2

removed is calculated as: 
D-2 

2,605 lb/hr - 309 lb/hr = 2,296 lb/hr 

The size factor is then calculated as: 

(2,296 lbs/hr/6,015 lbs/hr)0.69 = 0.5145 

Similarly, for the Muskogee units, the scrubber outlet is calculated as: 

(5,480 MMBtu/hr)(0.055 lbs/MMBtu) = 301.4 lb/hr 

For the low sulfur case of Option 2, the scrubber inlet SO2 remains at 2,778 lb/hr. 

Therefore, the SO2 removed is calculated as: 

2,778 lbs/hr – 301 lbs/hr = 2,477 lb/hr 

The size factor is then calculated as: 

(2,477 lbs/hr/6,442 lbs/hr)0.69 = 0.5171 

These size factors were then applied to the Option 1 Total Project Costs, in cells F44 and I44. 

III. Remaining Cost Adjustments 

The remaining cost adjustments were made to the lime, water, FGD waste disposal, property 

taxes, insurance, and SO2 emission reductions. These adjustments are explained as notes that 

follow the copy of the spreadsheet below. 
D-3 

1 EPA modification of Exhibit 1 

2 Revised Cost Effectiveness Analysis for Dry Flue Gas Desulfurization at 

3 Sooner Units 1 and 2 and Muskogee Units 4 and 5 

4 to Extend Fox Option 2 Case 

5 

6 

Sooner 1 

&2 

Sooner 

1&2 

Sooner 

1&2 

Muskog

ee 4&5 

Muskog

ee 4&5 

Muskog

ee 4&5 

Not

es 

7 S&L Fox EPA S&L Fox EPA 1 

8 

9 

1

0 Capacity (MW) 570 570 572 572 

1

1 Vendor Quote 

70,500,00

0

70,500,0

00

71,200,0

00

71,200,0

00 

1

2 Dry FGD System 

86,859,60

0

86,859,6

00 

86,741,2

00

86,741,2

00 

1

3 Fabric Filter 

46,335,00

0

46,335,0

00

45,872,9

00

45,872,9

00 

1

4 

Ash Recycling System - DFGD 

Contractor's Scope 

11,116,90

0

11,116,9

00

12,102,9

00

12,102,9

00 

1

5 

Waste Ash and Fly Ash 

Handling System 

14,265,60

0

14,265,6

00

14,311,5

00

14,311,5

00 

1

6 Ash Recycling - BOP Scope 955,600 955,600 

1

7 Flue Gas System 

42,463,00

0

42,463,0

00

52,238,2

00

52,238,2

00 

1

8 Mechanical - Balance of Plant 6,891,300

6,891,30

0

6,201,40

0

6,201,40

0 

1

9 

Electrical:Auxiliary Power and 

Balance of Plant Electrical 

Work 

41,935,10

0

41,935,1

00

37,923,6

00

37,923,6

00 

2

0 Controls & Instrumentation 5,088,500

5,088,50

0

5,088,50

0

5,088,50

0 

2

1 Civil Work 3,597,400

3,597,40

0

3,597,40

0

3,597,40

0 

2

2 

Removal & Relocation of 

Existing Equipment & 

Infrastructure 2,047,600

2,047,60

0

4,134,80

0

4,134,80

0 

2

3 Manhour Productivity Factor 

-

14,276,5

30 

-

14,918,1

00 

2

4 Vendor Discount Equipment 

-

3,525,00

0 

-

3,560,00

0 

2

5 

Optimizing Design Vendor 

Scope 

-

8,734,80

0 

-

9,073,56

0 

2

6 

Subtotal Equipment Material & 

Labor Costs 

261,555,6

00

235,019,

270

268,212,

400

240,660,

740 

2

7 Other Costs 

61,016,90

0

61,016,9

00

63,987,8

00

63,987,8

00 

2

8 Overtime Inefficiency 

-

9,518,00

0 

-

9,945,00

0 

2

9 

BOP Contractor's General & 

Admin 

-

7,408,60 

-

7,855,50 
D-4 

0 0 

3

0 

Spare Parts, Special Tools % 

Consumables 794,000 794,000 807,000 807,000 

3

1 Freight, Duties & Taxes 1,936,000

1,936,00

0

2,136,90

0

2,136,90

0 

3

2 

325,302,5

00

281,839,

570

335,144,

100

289,791,

940 

3

3 Total Indirect Costs 

48,090,10

0

48,090,1

00

49,601,9

00

49,601,9

00 

3

4 Engineering/Procurement 

-

12,205,3

38 

-

12,354,4

95 

3

5 Construction Management -869,259 -907,043 

3

6 

Startup & Commissioning Craft 

Support 

-

3,273,90

0 

-

3,417,60

0 

3

7 Operator Training & Manuals -900,300 -939,800 

3

8 Owner's Cost 

-

16,265,1

25 

-

16,757,2

05 

3

9 Revised Total Indirect Costs 

48,090,10

0

14,576,1

78

49,601,9

00

15,225,7

56 

4

0 Escalation 

46,602,90

0 0 

63,277,1

00 0 

4

1 Contingency 

58,673,40

0

2,115,00

0 

63,104,1

00

2,136,00

0 

4

2 Bond Cost 4,786,700 0 

5,111,30

0 0 

4

3 AFUDC 

101,133,8

00 0 

118,148,

300 0 

4

4 Total Project Cost 

584,589,4

00

298,530,

748

153,594,

070 

634,386,

800

307,153,

696 

158,829,

176 2 

4

5 CRF 0.1036 0.0806 0.1036 0.0806 

4

6 Annual Capital 

60,563,46

2

24,057,5

19

12,377,5

94 

65,722,4

72

24,752,4

12 

12,799,4

72 

4

7 Variable O&M 

19,899,40

0

19,899,4

00

19,899,4

00 

21,292,2

00

21,292,2

00 

21,292,2

00 

4

8 Fixed O&M 8,027,400

8,027,40

0

8,027,40

0 

8,439,20

0

8,439,20

0 

8,439,20

0 

4

9 Indirect O&M 5,174,200

5,174,20

0

5,174,20

0 

7,146,40

0

7,146,40

0 

7,146,40

0 

5

0 Total O&M 

33,101,00

0

33,101,0

00

33,101,0

00 

36,877,8

00

36,877,8

00 

36,877,8

00 

5

1 Lime 

4,682,11

0 0 

4,476,06

4 0 3 

5

2 Water -19,602 0 -180,730 0 4 

5

3 FGD Waste Disposal Cost 

4,738,72

1 0 

5,310,68

5 0 5 

5

4 Bag & Cage Replacement Cost -218,548 -218,548 -152,160 -152,160 6 

5

5 Auxiliary Power 

-

5,368,40

0

-

5,368,40

0 

-

5,886,80

0 

-

5,886,80

0 7 

5

6 Property Taxes 

-

4,862,99

7

-

7,326,92

1 

-

3,926,79

7 

-

5,706,69

1 8 

5

7 Insurance -60,072 -90,509 -68,719 -99,867 9 
D-5 

5

8 Revised O&M 

33,101,00

0

31,992,2

12

20,096,6

22 

36,877,8

00

36,449,3

43 

25,032,2

81 

5

9 Total Annual Cost ($) 

93,664,46

2

56,049,7

31

32,474,2

16 

102,600,

272

61,201,7

55 

37,831,7

54 

6

0 

SO2 Emission Reduction 

(ton/yr) 13,930 13,930 13,799 13,799 

6

1 

Revised Emission Reduction 

(ton/yr) 43,428 15,860 46,458 15,989 10 

6

2 S&L Cost Effectiveness ($/ton) 6,724 7,435 

6

3 

Revised Cost Effectiveness 

($/ton) 1,291 2,048 1,317 2,366 

6

4 

Revised (AFUDC, escalation, 

contingency) 1,670 1,738 

6

5 Cost ($/kw) 513 262 555 268 

6

6 Cost ($/kw) Utility Comparison 351 372 

1. This spreadsheet is a modification of "Exhibit 1," prepared by Phyllis Fox as part of her 

report "Revised BART Cost-Effectiveness Analysis for Flue Gas Desulfurization at Coal-Fired 

Electric Generating Units in Oklahoma: Sooner Units 1 & 2, Muskogee Units 4 & 5, 

Northeastern Units 3 & 4," October 2010, RTI Project Number 0209897.004.085. This 

spreadsheet is used to extend her cost analysis as part of EPA's proposed SO2 BART FIP 

for Units 4 and 5 of the OG&E Muskogee plant, Units 1 and 2 of the OG&E Sooner plant, and 

Units 3 and 4 of the AEP/PSO Northeastern plant. Any errors contained in this spreadsheet 

are solely the fault of EPA.

2. Modified total project cost by application of the "6/10" rule as per email from Phyllis Fox to 

Joe Kordzi on 9/30/10 2:15 PM.

3. Zeroed out Fox correction for lime, as the correction was needed to correct a S&L error for 

assuming lime use based on an inlet of 0.509 lbs/MMBtu SO2 at Sooner and 0.507 

lbs/MMBtu at Muskogee to an inlet of 1.176 lbs/MMBtu. Since this is an extension of the cost 

evalution for those lower inlet values, the correction doesn't apply.

4. Zeroed out Fox correction for water for the sake of expediency. This assumption biases 

the $/ton calculation upward.

5. Zeroed out Fox correction for FGD waste disposal, as the correction was needed to correct 

a S&L error for assuming FGD waste disposal based on an inlet of 0.509 lbs/MMBtu SO2 at 

Sooner and 0.507 lbs/MMBtu at Muskogee to an inlet of 1.176 lbs/MMBtu. Since this is an 

extension of the cost evalution for those lower inlet values, the correction doesn't apply.

6. Retained Fox bag and cage correction. This is slightly conservative towards OG&E 

because the correction in going to the 80% control case would actually be slightly larger due 

to the slight decrease in the flow rate through the baghouse OG&E uses in their design basis 

for the 80% control cases vs the 91% control cases on pdf 76 - 79 of their report. 

7. Retained Fox auxiliary power correction, as the correction as calculated is independent of 

the size of the scrubber.

8. Modified Fox property tax correction by using a recalculated total project cost, since S&L 

assumed ptoperty taxes were a percent of that figure. Project cost was recalculated using 

the "6/10" rule as per email from Phyllis Fox to Joe Kordzi on 9/30/10 2:15 PM 

9. Modified Fox insurance correction by recalculating the total project cost, since S&L 

assumed ptoperty taxes were a percent of that figure.
D-6 

10. The baseline emissions in line 61 are taken from the S&L report, Table 5. These 

baseline emissions correspond to uncontrolled emissions rates of 0.509 lbs/MMBtu for 

Sooner 1, 0.516 for Sooner 2, 0.507 for Muskogee 4, and 0.514 for Muskogee 5 (see Table 

9, S&L Report 12/28/09). EPA's reductions in line 61 are based on 0.06 lbs/MMBtu. The 

post control emissions are calculated by multiplying the baseline emissions by (0.06/0.509) 

for Sooner 1, (0.06/0.516) for Sooner 2, (0.06/0.507) for Muskogee 4, and (0.06/0.514) for 

Muskogee 5. The emissions reductions are then calculated by subtracting the post control 

emissions from the baseline emissions.