### DEPARTMENT OF ENV IR ONMENTAL CONSERVATION

AIR QUALITY OPERATING PERMIT

RESPONSE TO COMMENTS

Operator Name: Golden Valley Electri c Association Permit No. AQ0173TVP02 Owner Name: Alaska Industrial Development and Export Authority Public Comment Closing Date: August 29, 2011 Stationary Source Name: Healy Power Plant

The public comment period for the Golden Valley Electric Association, and Alaska Industrial Development and Export Authority

, Healy Power Plant operating permit closed on August 29, 2011

.

GVEA applied for the permit renewal on June 16, 2008, with amendments and additional information received by the Department prio r to the comment period through August 25, 2009. A previous comment period was held in the Fall of 2009. Further information was received from GVEA February 14, 2011 and July 19, 2011.

The Department revised the draft permit before the second comment period, based on review of the application, comments and testimony received during the 2009 public comment period, and subsequent changes in currently applicable Clean Air Act requirements. In response to additional issues raised through the first public comment process, the Department supplemented the PSD applicability review by a) enhancing its basis for co ncluding that the project is not a modification; b) examining the commercial start-up project affiliated physical changes in their totality; and c) evaluating net emissions increase of the project to conclude that PSD does not apply. See Statement of Basis Appendix C.

This document evaluates the comments received during the second comment period that ended August 29, 2011

.

Some comments appear he re exactly as written. Comments are paraphrased where numerous commentators repeated the same comment, not always in the same words. This paper provides ADEC’s responses to the comments

.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

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## Table of Contents

1. GENERAL COMMENTS IN SUPPORT OF ISSUING THE RENEWAL PERMIT ...............4

Cost of Power, Security, Effect on the Economy, and Jobs ...........................................7

Power Cost ..................................................................................................................7 Role of HCCP in Reducing Costs, Creating Jobs, and Providing Security .................9

Investments Made in HCCP ......................................................................................10
Other Power Options ......................................................................................................10

Coal Resources

............................................................................................................................. ........ 12 Comments Suggesting Reasons fo r Delay in HCCP Startup

............................................. 12

2. GENERAL COMMENTS IN SUPPORT - ENVIRONMENTAL AN D REGULATORY

ISSUES ....................................................................................................................... ..................13

Plant Emissions and Area-wide Air Quality .............................................................13

Ash

............................................................................................................................. 14

Greenhouse Gas Emissions .......................................................................................14

3. COMMENTS IN SUPPORT - PERM ITTING AND EMISSIONS .........................................15

Environmental Performance Standards .....................................................................15 Additional Regulatory Review ..................................................................................15 To Strike Down the Project Wrong ...........................................................................16 Mercury .....................................................................................................................16

Lower Emissions .......................................................................................................16

4. TECHNICAL COMMENTS FROM GVEA ........................................................................17

5. GENERAL COMMENTS IN OPPOSITION TO PROPOSED PERMIT ........................18

6. LOCAL AIR QUALITY AND REGIONAL HAZE ............................................................19

7. PSD APPLICABILITY ..........................................................................................................20

PSD Comments from Denali Citizens Council .............................................................20

PSD Comments from National Park Service ................................................................21

PSD Comments from Trustees for Alaska ....................................................................23 Reactivation Policy ....................................................................................................23 Major Modification - Routine Maintenance ..............................................................25 Major Modification - Emissions Increase .................................................................41

8. COMMITMENTS IN THE 1993 MEMORANDUM OF AGREEMENT .......................43

9. COMMENTS RECOMMENDING CO 2 , MERCURY, AND COAL ASH EMISSION LIMITS, AND MONITORING ..................................................................................................43 BACT and Monitoring ...................................................................................................44

Health Standards ............................................................................................................45 Mercury Control Provisions ..........................................................................................46Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

3 Abbreviations and Acronyms

ADEC....................... Alaska Department of Environmental Conservation AQRV ....................... Air Qualit y Related Value

BACT ...................... Best Availa ble Control Technology

Btu ........................... British thermal unit

CAA ........................ Clean Air Act CFR. ........................ Code of Federal Regulations

CO ........................... Carbon Monoxide

CO2 ......................... Carbon Dioxide

CO2e ....................... Carbon Dioxi de Equivalent

DNPP ....................... Denali National Park and Preserve EPA.......................... United States Environmental Protection Agency Fed. Reg. ................. Federal Register

GHG or GHGs......... Greenhouse Gas or Greenhouse Gases

km............................ Kilometers

kW-h ...................... KiloWatt Hours lb/MMBtu ................ pound per million Btu MOA ....................... memorandum of agreement

μ g/m3....................... Microgram per Cubic Meter NAAQS .................... National Ambient Air Quality Standards NEPA........................ National Environmental Policy Act NO2 .......................... Nitrogen Dioxide NOX.......................... Oxides of Nitrogen

NPS ....................... National Park Service OxyCat...................... Oxidation Catalyst

PM ........................... Particulate Matter PM2.5 ....................... PM with an Aerodynamic Di ameter less than 2.5 Microns PM10......................... PM with an Aerodynamic Di ameter less than 10 Microns ppm........................... Parts Per Million

PTE............................ Potential to Emit

PSD .......................... Prevention of Si gnificant Deterioration

SCR .......................... Selective Ca talytic Reduction SIL ........................... Significant Impact Level

SO2 ........................... Sulfur Dioxide tpy............................. Tons per Year VOC.......................... Volatile Organic CompoundGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

4 1. GENERAL COMMENTS IN SUPPORT OF ISSUING THE RENEWAL PERMIT

A large number of commentators submitted written comments requesting the Department to issue the renewal permit without addressing specific permit conditions or regulatory authority for making a decision. Most of the following commen tators included one or more comments also made by others. Many of the comments containe d a statement agreeing with the Department's decision to issue the permit without additiona l regulatory review and urging EPA to honor delegation of authority by accepting the permit.

These comments are paraphrased and grouped to gether, sometimes in the same paragraph, because many commentators made the same point, sometimes using differing language, sometimes sending the same letter.

From:

Julie Abegg Frank Abegg Mark Anderson, Construction Operation s Manager, CCI Automated Technologies Anna C. Atchison, Board Member, G reater Fairbanks Chamber of Commerce Gregory A. Beischer, President & CEO, Millrock Resources Inc.

Robert Bell Steve Borrell, Executive Director, Alaska Miners Association, Inc. Deryl A. Box Randy Brand Bill Brophy Jerry Cleworth, Mayor, City of Fairbanks Steve & Carol Connelly John Coghill, Senator, Senate District F Dayn Cooper, President, Comp lete Service Company, Inc. Bryan Davis, Director of Business Develo pment, North Star Equipment Services

Steve Denton

Mike Desmond Alan Dick, Representati ve, House District 6 Linda Dingbaum Jim Dodson, President & CEO, Fairbank s Economic Development Corporation Sandi Doyle, Administrator, Caring Bridges ALH Inc. James P. Duffield,II, CPA, Resource A ccountant, NANA Development Corporation

Bruce Dunkle Dr. David Eichler, dentist Eric Feige, Representative, House Di strict 12, Co-Chair, House Resources

Committee Siegfried FinkGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

5 Will Finley

Thomas Fisher

Rebecca Galasso Rajive Ganguli Becky Gay

Rich Giessel Cathy Giessel, Senator, Senate District P Stephanie Gohlke

Karl. I Gohlke

Claudio Gomes and Theresa Gomes Daniel Graham, PE, President, Alaska Coal Association Randy S. Griffin

Ken Hall

Laren Haskin William T. Hawley Richard Heieren Board of Directors, Ch air; Lisa Herbert, Executive Director,

Greater Fairbanks Chamber of Commerce Luke Hopkins, Mayor, Fairbanks Northstar Borough Rich & Virginia Hughes

Todd Hume Garry Hutchison Douglas W. Isaacson, Mayor, City of North Pole Carole Jaffa, President, Jaffa Construction Inc. (comments received late but duplicated by others) Guy Jeske, VP – US Operations, Coeur d’Alene Mines Corp.

Anton K. Johansen

Colin C. Keith

Samantha Kirstein

Jo A. Kuchle Mark S. Kulstad (comments receive d late but duplicated by others)

Ken D. Lambertsen

Bart LeBon Steven R. Lundgren Peter Lundquist Denise Lundquist Jim L. Lynch

Ladd McBride

Glenn M. Prax

Michael D. Miller Audrey Murphy Bob Musgrove Jerry Mustard

Kurt W. Newman Buzz Otis, Executive Director, North Pole Economic Development Corporation Mike Powers, CEO, Fairbanks Memorial Hospital / Denali CenterGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

6 Dan Rees, District Treasurer, Fairbank s Soil and Water Conservation District Board of Supervisors

Alan Renshaw Brent Richey

Ann Roberts

Lance Roberts

Glenn Ross Mark Schimscheimer, P.E., HCCP Pr oject Manager, Alaska Industrial Development and Export Authority Lorna Shaw, Community & Government Relations Manager, Fairbanks Gold Mining, Inc.

Diane Shoemaker

Teri Simmons Karm Singh Dan Snodgress, Vice President and General Manager, Kinross Fort Knox Mine Jeanine St. John, Vice President, Lynden Incorporated Renee Staley

Nannette Stone

Suzanne Summerville Gary Swoffer, President, Denali Industrial Supply, Inc. David Szumigala David M. Talerico, Mayor, Denali Borough Patricia F. Thayer

Donna Therriault Coleen Thompson

Jack Van Alstine P.E. Joseph E. Usibelli, Jr., President , Usibelli Coal Mine, Inc. Marilyn Usibelli Timothy S, Venechuk

Bill Vivlamore

Glen Weaver

Jason Wells Charles Wiegers Jack B. Wilbur, Jr.

David L. Williams Tammie Wilson, Representative, House District 11 One additional commentator whose signature was not completely legible.

75 public comment cards supporting issuance of the permit were received from Local 375

in Fairbanks. Comments on each card are id entical, and are included in the comments below. Signers were:

David Hughes Kirk Culver Tyra Gelinas Jerry C. Freel Linda Buechler Brett G. Smith Rick Kimberlin Dennis Dooley Rick Lord Ihor Bashchuk Jeremy Holan Joseph HoegerlGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

7 Michelle Morgan Kim Bran denburg Michael R. Sexton Kei M. Church John Ferree Steve Harvey

Daniel D. Davis Daniel Huerd Tim Olsen Dean Bean Jacob Wright, Sr. Maril Garner Rose Todd Cindy L. Gray Jeff Mabin

Jason Stewart Christine Rae Litsch Michael Arron Adams

David S Dever Paul Johnson Michael Downs

John Guichici Bret Helms Michael Beans Jake Furtak Max Sprott Luke Pearson L. Wayne Roberts Jeramie Ubben Brandon Burnett Josh McKay Chad Gudschinsky John T. Wing Robert Knight Samuel Dordile Kirk Jackson John Plutt Karm Singh Rodney Brown Jenn Dayan Doug Tansy Eileen Laiti Jay Quakenbush Kim Brown Mary Springer Dale Springer Mike Laiti John Baker

Jim Laiti Janet Baker James McMilon Dale L. Welty Charles W. Young Laird Grantham Josef Schruf, Jr. Kevili M. Ginley Alex Innes Jonna Weed Maryann Keane Ed Flanagan Carol L. Heiter Scott C. Eickholt Kevin Pomeroy

Note: The Department apologizes for a ny misspellings where signatures were not completely legible.

Cost of Power, Security, Effect on the Economy, and Jobs There were many commentators who stated that HCCP is needed b ecause it will ease the high price of energy in the In terior. Many identified themselves as GVEA members, lifelong or long-term Alaskans, homeowners, or businessmen and women. Comments on cost, security, the economy, and jobs are the following.

Power Cost

Interior residents are bracing for anot her season of crushing energy costs. Limited access to natural gas results in reliance on diesel fuel for heat and electricity. There are seven or eight months w ith limited daylight. Temperatures often dip to minus 20° to 50° Fahrenheit a nd can remain there for weeks. Nearly 50% percent of our electric needs are curre ntly met by oil-fired generation. Our economy is being choked out by energy prices too high to attract growth or even sustain a reasonable standard of living. T housands of homeowners in the interior pay more than $1,000 (ONE THOUSAND DOLLARS MONTHLY) to electric and heat bills combined per month in the winter.

It is not fair to suffer in the winter because GVEA can't get the permit.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

8 Depending on the price of oil, upwards of $600 Million dollars are drained from our Community’s economy yearly and residents who might normally spend

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‐ 15% of their income on energy, spend upwards of 25

‐ 30% or more.

The [City of North Pole] Council has passed resolutions to help improve the energy efficiency of the City, to exchange out the sodium street lights for LEDs, make improvements in the Utilities wh ich have greatly reduced electrical consumption, and other actions, yet have watched with growing concern as the City's energy costs have doubled since 2008.

As the single largest ratepayer at GVEA, and a consistent consumer of 32 megawatts of power, [Kinross Fort Know Mi ne has] a keen interest in both the source and the cost of power for GVEA.

Because of high energy costs, profit marg in continues to get pressed lower and lower, which results in inability to expand, hire and grow businesses.

One small business owner reported paying, as of August, over $19,000 for heat, electricity, and water/sewer, including over $11,000 to GVEA.

As retired folks, we find that living in Alaska is becoming an intolerably costly

situation.

Too often, residents are delaying or fo rgoing the kind of i nvestments they'd normally make towards their mid- to long- term prosperity for fear the "last" dollar, might be the only thing which allows them to hold onto the little they have.

GVEA’s turn off notice’s are at a summer time high never before seen in summer

months.

Heavily reliant on oil for all three of our major energy requirements – transportation, space

‐ heating and electrificati on – we have watched as

ever

‐ increasing petroleum costs have erode d the underpinnings of our economy.

I believe that the cost of energy has a massive trickle-down effect, and could be considered an important part of mone y-multiplying behavior within our local economy. I also perceive a trade-off betw een quality of life (especially for the poor) and the price of energy. When local energy costs decrease, production costs will decrease for everyone relying on the grid. One way or another, these savings are likely to be passed on in "quality-of-life" purchases , regardless of whether the purchases are for luxuries or essentials. The more times money changes hands, the more jobs tend to be involved. In any case, you can bet the folks on the thinner parts of this money-multiplyi ng tree need the tric kle-down benefits of lower energy prices more than others.

The need for relief is urgent.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

9 Role of HCCP in Reducing Costs, Creating Jobs, and Providing Security

Taking current oil prices into consider ation, HCCP has the ability to reduce GVEA members’ electricity bills by 20%. It is estimated that GVEA members are purchasing power at three times the cost of the national average.

Rate payers will save $24 million per year.

We desperately need the HCCP to re sume full power production. HCCP would produce power at a much lower cost than oil-fired generation and would eliminate a great deal of the uncertain ty in cost of electricity caused by extreme fluctuations in price of oil.

Disagrees with assertions that imply the HCCP is an outdated coal plant or that

investments in other availabl e alternatives would be be tter for GVEA members.

HCCP won't solve our energy crisis but is part of a larger energy plan.

To stand in the way of reasonable effo rts to alleviate this burden would be

criminal.

It is a travesty that it is not already op erating in these days of extremely high oil and natural gas prices.

Allowing the plant to resume operations w ill help to stabilize and lower the cost of electricity, create a number of new, good

‐ paying jobs, demonstrate technologies which may be replicable across Alaska and the nation, and help Interior Alaska build expertise which ma y be likewise marketable across the state

and nation.

Starting HCCP up (clean coal) is good for Alaska, the country and potentially the

world.

Alaska must maintain and further devel op a diverse energy base to ensure cost stability and energy security. Electrical power, however generated, will be crucial for the future development of Alaska. Accessibility to power makes other mining

ventures and other businesses possible. This will become increasingly important as Alaska’s petroleum industry declines. Local coal is a more secure fuel source that something that has to be transported longer distances.

If we are to prosper, we need to pursue all feasible avenues to obtain inexpensive energy. The HCCP is a facility that can he lp provide some of that capacity while at the same time reducing the overa ll pollution generated by GVEA through reducing demand on other facilities that are less environmentally friendly.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

10 HCCP will provide added security for the power requirements of Interior Alaska during the winter when failures of some segment of the power generation system or the electrical grid can leave fam ilies and businesses in grave danger.

Investments Made in HCCP

HCCP was constructed using hundreds of m illions of dollars of federal and state money; however to date, Interior Alaska has not received the benefit from this public spending.

To withhold the permit renewal will cau se harm to the State and waste the money already invested in this plant.

Residents were promised this additiona l energy. GVEA's members and the other government entities, who have all invest ed hundreds of millions of dollars to build HCCP, need to see a tangi ble return on their investment.

The power plant, environmental controls , nearby fuel supply, and operator are all ready. Legal challenges since th e 1990's have been resolved.

Response from ADEC:

Power Cost The Department fully appreciates the importance of stable lower cost power to Alaskans living and working in the Interior. The Department must use specific criteria for permitting which comply with state and federal air pollution laws.

Role of HCCP in Reducing Costs, Creating Jobs, and Providing Security

Since these issues are not with in the scope of operating permit review criteria, the Department has not verified any of the projec tions regarding the effect of HCCP on utility rates. Therefore, in issuing this permit, the Department is also not making any finding on the effect that operation of HCCP will have on jobs or energy security.

Investments Made in HCCP The Department can consider the investments made in HCCP to decide on issuing this permit only to the extent that they re late to PSD permitting criteri a, as discussed under Comment 7.

Other Power Options

Hydro-electric energy is years away.

Natural gas [for the City of North Pole] is still an unknown number of years away.

I represent Rural Interior Villages - places wh ere the cost of energy far exceeds what the bureaucrats in Washington, DC can even imag ine. Alaska must be able to use ourGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

11 resources for the good of our citizens. We have oil, coal, natural gas, hydro power and in some places, even solar power. We don't have it all in every region. Where we have an abundance of water, we use it to offset the high cost of diesel fu el, as in Southeast

Alaska. Where we have an abundance of coal, it should be used similarly.

I attended a presentation through UAF as part of an energy alternativ es symposium a year or so ago. A graph was pres ented addressing various energy options. Working hard to incorporate "social costs" they managed to make "greener" options ie: wind, solar, hydro, almost as cost effective as the Healy Clean Co al plant. The major difference was that the benefits for coal were shown in 2 colors, representing infrastructu re and employment. Their more socially acceptable alternatives traded Alaskan jobs for a third color representing societal benefits. As the gr oup leader was assuming th e listeners agreed on their pet "green" a lternative I spoke out in favor of th e coal plant option. I continue to

feel it is our best option for Alaskans.

We're using up our precious gas reserves when we should be using plentiful coal. Our energy needs have to be met in divers ified ways. Gas, oil, wind, geothermal, biomass, and coal.

After reviewing the proposals for altern ate energy sources including the Susitna hydroelectric project, and ga s pipeline, and liquid natural gas, and wind power and geothermal power, and tidal energy, and solar pa nels, nuclear power, et . al.; the studies I have reviewed still have an energy shortfall that is only practicably filled with coal

energy.

I disagree with assertions that investments in other available altern atives would cause less aggregate environmental impact in light of the fact that the HCCP is already in existence and has been operated according to the conditions of the permit.

I support reasonable energy conser vation efforts as an alternative to increasing electricity generating capacity, but the practical steps th at can be taken to reduce electrical power consumption will be insufficient to avoid th e need for the electricity that will be generated by this facility. We should not view bringing the HCCP back on line and energy conservation as mutually exclusive strategies. We should pursue them both.

GVEA could cut back on the burning of expe nsive fuel oil to the tune of 25 million gallons per year according to an ar ticle on the GVEA website by Brian Newton.

Coal-fired electricity seems less risky than nuclear power.

I continue to be impressed by GVEA's steps to try to reduce our electric rates while taking steps to safeguard our environment. Eva Creek Wind is a major positive step in this direction. Anything we can do to reduce our reliance on ..oil.., to generate electricity is a good thing.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

12 Response from ADEC:

Each energy alternative has both direct and indirect costs and be nefits associated with it. However, the Department's review authority doe s not extend to choosi ng between one project and another - for example, evaluating the relative benefits of a pl ant in one location using local coal, to an oil fired plant in another, to wind tu rbines in another loca tion where wind resources

are available.

Coal Resources

HCCP was designed to burn low- grade coal that is currentl y being removed at the area mine to access higher-grade coal required by other coal consumers in Alaska. Having

HCCP sit dormant is a waste of these coal resources.

Significant infrastructure, including a coal mine in the proximit y, the existing power plant, and distribution lines is already in place. This proj ect is ready to move forward

with no additional envi ronmental impact.

Response from ADEC:

The Department's air permitting authority does not extend to favoring a particular project because coal resources are locally available.

Comments Suggesting Reasons fo r Delay in HCCP Startup

What is disconcerting is that those with an extreme anti-coal agenda can hold our communities hostage, while not providing any significant relief to us from their organizations. The environmental communit y, through Trustees for Alaska, agreed, in writing, at the issuance of the original permit not to launch further challenges to operation of the plant under the terms of that perm it; those promises should be honored.

There are some within the environmental community who ju st don't want to see the plant in operation. We are being put in a terribl e circumstance in the Fairbanks/North Pole area with costs rising and EP A requirements clamping down.

I ... have grave concerns about high offici als in the EPA and our President who have embraced very questionable conclusions about Carbon Dioxide from Coal-fired power plants and stated that all su ch plants should be shut down. The current administration seems bent on regulating capital ism into extinction. I urge you to resist this federal pressure and stand up for our 10th Amendment State rights to regul ate our own business.

There have been numerous studies regarding the plant and there is nothing other than

emotion over the use of coal as a fuel that has caused the delay in the plant's startup.

It was internal legal challenges that he ld up the project - not its viability.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

13 We must work together and show the count ry that government is flexible and not wasteful if this plant is not started it’s a nother black eye for government that swing’s in the wind of what political party that is in ch arge and not what makes sense for the people it serves. Please issue this permit for th e 100,000+ people and businesses that are being hung out their due to bad decisi ons of past CEO’s of GVEA.

I'm surprised that a coal plant, with a n earby Alaska-sourced fuel source isn't getting used, especially with cons ideration of the following:

 The fallout from the CRU scandal.

 The rate at which other countries (China in particular) are presently expanding their coal-fired generation.

 The lull in the economy.

Response from ADEC:

The above comments do not relate to the ability of the Department to issue or deny this permit.

The Department is not a party to statements made by third parties. There have been ongoing negotiations between some members of the environmental community and GVEA. The Department is not a party in those negotiations. The Department is proposing this permit rather t han continuing to await agreement between those parties.

The Department is unaware of any action or inte nt by the federal government to the effect that all coal fired power pl ants should be shut down.

The delay in permitting operating HCCP since 1999 has numerous causes. The Department finds it inappropriate to apporti on blame or responsibility, but is taking reasonable steps to permit it's operation.

2. GENERAL COMMENTS IN SUPPORT - ENVIRONMENTAL AND REGULATORY

ISSUES

Statements by many of the commentators lis ted under Comment 1 included the following

comments which do deal with environmental an d regulatory issues, buy do not address permit conditions or the authority the De partment must use in issuing or denying the air quality permit.

Plant Emissions and Area-wide Air Quality

We have access to the newest technologies to make this operation environmentally sound and a boon to the economic wellbeing of our community.

HCCP has the ability to be one of the cleanest burning power plants in the State, and one of the cleanest coal fired power plants of its si ze in the country. It will likely be subjectGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

14 to even further emission requirements, given the regulatory requirements being developed by EPA.

The plant is designed to burn th e fuel close at hand cleanly.

The HCCP is a total coal combustion system that addresses all objections to coal combustion except carbon emissions and the stat e of the science is th at carbon is unlikely a significant climate driver anyway. The HCCP should be operated to complete the demonstration of a truly integrated a pproach to clean coal power generation.

Fairbanks North Star Borough is facing issu es with the non-attainment for PM-2.5, and the expectation of even a higher standard next year. Reducing the need to run generators within the borough will improve our air quality and help us attain the PM 2.5 pollution standards. If HCCP is even partially su ccessful, immediate effects would not only be

economic but would contribute to the health of all the residents of the Interior.

In desperation, many have turned to wood burning: an act which might be environmentally laudable but, as seen in its negative impacts to the Community’s PM2.5 compliance and, frankly, neighbor relations, can also be problematic. In a real sense, the

rise in both the cost of oil and oil price volatility are forc ing many of our residents – too many – to choose between financial survival and their healthful well

‐ being.

For minimal impact on the environment, distri bution of power via an electrical grid that

serves the state over its vast geographical expanse seems the mo st reasonable plan. In that context, the Healy Clean Coal Power Plant is a viable source of pow er that overall will reduce pollutants from carbon sources and redu ce energy costs. Using the cleanest coal from Usibelli Mine, I believe, will produce cl eaner air with fewer contaminants than most existing coal plants in the States.

With a reduction of costs, I’m sure people in the Fairbanks and North Pole areas will reduce the amount of wood they burn to heat their homes. This pollution truly is the worst I’ve seen in all of my 55 year s plus as an Alaskan residence.

Ash HCCP produces a glass like ash product whic h effectively encapsula tes the trace metals in the ash. The ash is totally benign, addr essing objections to disposal of conventional coal ash products, and can be us ed in many beneficial ways.

Greenhouse Gas Emissions I recognize that the startup of HCCP will increase the CO 2 entering the atmosphere; however, any potential detriment resulting from the miniscule increase in the atmosphere's CO 2 levels stemming from HCCP will be more than offset by the economic

benefits afforded Interior Alaskans.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

15 One commentator quoted President Obama: "Rapid commercial development and deployment of clean coal t echnologies, particularly carbon capture and storage, will help position the United States as a leader in the global clean energy race."

Response from ADEC:

Plant Emissions and Area-wide Air Quality To operate cleanly, HCCP will be required to meet the standards incorporated in the Title V permit.

The Department recognizes that there are pot ential air quality benefit s to the Fairbanks and North Pole areas from generating power farthe r from the population centers. The Department does not have information on how many people in Fairbanks have the ability to heat with electricity, or would choose to if HCCP is built. So the Department cannot project whether operating HCCP would significantly reduce wo od smoke impacts during the winter months. Moreover, this permit is not linked to any regional air quality plan in a way that could affect the Department's decision on this permit.

Ash The Air Permits Program has not analyzed the properties of HCCP fly or bottom ash. The Department's solid waste program does have th e responsibility for safe ash disposal.

Greenhouse Gas Emissions In issuing this permit the Department will not eva luate the relative value of tradeoffs between greenhouse gas emissions and economic benefits because the maximum emission increase in greenhouse gas emissions do not exceed the thres hold which would make them subject to PSD permitting.

HCCP does incorporate clean coal technology, bu t it does not incorporate carbon capture or

storage.

3. COMMENTS IN SUPPORT - PERMITTING AND EMISSIONS

Many of the above commentators also made comme nts which were directed to the Department's regulatory authority. These co mments included the following:

Environmental Performance Standards The plant met or exceeded all environmental performance standards during start up operations in 1998.

Additional Regulatory Review HCCP has already undergone an extensive regu latory and environmental review process, including an EIS that was conducted under NEPA. DEC has determined that no additional regulatory review is necessary prior to the HCCP restart. All criteria pollutants are controlled by the HCCP.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

16 This permit renewal addresses only issues relevant to changes in DEC’s air regulatory program since the original permit was issued.

This is a viable plant and should be grandfathered under older permits.

To Strike Down the Project Wrong To strike down this project based on arbitrary, political rule-changing (i.e. the permitting process) is simply wrong.

Mercury This second ADEC permitting action continues to require all current emission levels, plus the newer mercury levels.

Lower Emissions The HCCP has the technology to burn coal and make low cost electricity with emissions that reduce air quality impacts to a negligib le level. Any claim to needing lower emissions is totally unreasonable.

Response from ADEC:

Environmental Performance Standards During the demonstration phase, HCCP did meet emission standards most, but not 100% of the time. Violations occurred during shutdown and during change out of spray dryer absorber

atomizers.

The Department does not find that the periods where the SO 2 emission limit was not met provides a basis to deny the permit.more discussion

Additional Regulatory Review For discussion of additional regulatory review , please see Comment 7 on PSD applicability. The question of PSD applicability does not arise only from changes to the Department's regulatory program since the original permit was issued. It arises from whether HCCP needs such a permit under EPA PSD regulation and guidan ce. Much of the regulation and guidance is long standing.

To Strike Down the Project Wrong If the Department had found that additional PSD permitting was necessary, it would not have struck down the project. It would, however, ha ve required additional permitting work based on established rules that would have delayed th e project, and may or may not have found that additional emission control was necessary.

Mercury The applicable requirements included in the pro posed permit do not incl ude emission limitations for greenhouse gasses or mercury.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

17 Lower Emissions

HCCP needs to maintain consistent compliance with emission standards.

If PSD were required, GVEA would need to show whether additional control were technically and economically feasible. The economic feasib ility analysis could in clude the effect on

ratepayers.

The Memorandum of Agreement (MOA) between GVEA and the National Park Service, which formed part of the original basis for preconstruction permit ting, deals in part with GVEA's

commitment to decrease emission limits bas ed on emission levels achieved during the demonstration phase. Please see Comme nt 8 for the discussion of the MOA.

4. TECHNICAL COMMENTS FROM GVEA

From: Kristen DuBois, Environmental Officer

Golden Valley Electric Association Inc. (GVEA) would like to take th is opportunity to submit brief comments to the Alaska Department of En vironmental Conservation (ADEC) on the draft revised renewal permit for the Healy Power Pl ant Title V Air Quality Operating Permit No. AQ0173TVP02).

1. Condition 15.1.d -The EU identifie r is missing from the modified condition. Please correct to state: Use AP-42 emission factors, along with the hours of operation and/or amount of fuel

used to calculate the emissions of CO for EU 10 4, and continuous emission monitor to

determine emissions from EU ID 2.

2. Statement of Basis, Page 5, Greenhouse Gas Prevention of Significan t Deterioration (GHG PSD) applicability discussion: We believe methane should be included in ADEC's PSD applicability determination calculation. Both AP-42 and th e GHG Reporting Rule (40 CFR 98 Subpart C Table C-2) provi de emission factors for C02, methane and nitrous oxide.

Attached are two sets of calcu lations for ADEC to consider. Th e first calculation uses AP-42 factors, the second uses 40 CFR 98 emission f actors. Regardless of method, the increase in C02e emissions from an annual coal consumpti on change of 34,465 tons/yr still results in an emission increase well below the sign ificance threshold of 75,000 tons/yr.

3. Statement of Basis, Appendix C, page 26, item 7 -Greenhouse Gases, second paragraph: please correct HCCP BAE at 41.1 t ons per day to tons per hour.

[The comments included an attachment showi ng equipment ratings, emission factors, and the results of their greenhou se gas calculations.]

Response from ADEC:

1. The Department made the approp riate correction to Condition 15.1d.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

18 2. The Department agrees with the comment and has verified the calculation method for the greenhouse gas increase which the commentator provided, including CO 2 , methane, and N 2 O for a total of 53,474 tons per year CO 2 e.

3. The Department has made the minor correction to Appendix C, and has also clarified that all three greenhouse gasse s are in included.

5. GENERAL COMMENTS IN OPPOSITI ON TO PROPOSED PERMIT. The following comments oppose the renewal pe rmit without addressing specific permit conditions or regulatory aut hority for making a decision.

From: Carter Crawford I agree we must reduce our carbon print and seek alternative energies to both improve air quality and reduce energy costs.

We can do that and rely on diesel and oil only.

But I find the state in a difficult position. It wants to sell HCCP but your Department is no doubt receiving pressure from the administ ration while charged with being absolutely objective about environmental conservation.

HCCP did not prove to be the solution a pproximately 15 years ago and we have no evidence this aged plant can today. Multiple efforts by the state proved unsuccessful and nothing has changed. Coal by its very nature is not clean. It is an improvement over diesel and oil, but it cannot begin to compare to solar a nd wind. And this plant by no means provided consistent energy either.

GVEA has just committed almost,and probably actually $100 Million to build the Eva Creek Wind Farm for the Interior. If they need to produce more clean energy before Eva is ready, they can buy wind power from the Delta Wind Farm, guaranteed clean, operating turbines today in several communities, and a guaranteed reduction in diesel and oil. And GVEA can give the Interior electricity without multimillion investments since Delta is privately funded.

I do not like the risks and potential additional costs than HCCP will surely have.

Response from ADEC:

None of the comments directly relate to the criteria the Department must use to make this decision. The Department's operating permit aut hority does not extend to choosing between one project and another - for example, ev aluating the relative benefits of a coal plant in one location to an oil fired plant in another to wind turb ines in another location where wind resources are

available.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

19 6. LOCAL AIR QUALITY AN D REGIONAL HAZE

From: Nancy Bale, Director, Denali Citizens Council

Local air quality should be a consideration in this permit Because the Denali Borough has no role in regul ating local air quality, there is no legal framework, at present, for monitoring particul ate matter and other pollu tants in the air around Healy. The community deserves a commitment by the state and the developer to improving its near-ground air quality. This could be done, as an amendment to this permit, in two ways:

1. ADEC, for its part, should commit to ongoing monitoring for particulates and key coal-based pollutants not only at the plant but in the local community, and should take a more proactive role in protecting the overall air quality in an area, wh ere cheap coal contribute s to its unregulated use in home heaters. Currently, the availability of inexpensive coal leads to periods of extremely poor air quality in Healy during winter.

2. GVEA, partnering with Usibelli Coal Mine, Inc., should conduct public education projects and installation incentive programs to assist locals in the cl eanup of local air by burning it more efficiently in better heaters.

The regional haze state implementation plan (SIP ) provides important confirmation that starting Healy 2, after all these years of shut-down, will create a point source of significantly increased pollution in Alaska’s Interior

 "These forecasts do not account for the emissi ons from the HCCP at the GVEA facility in Healy (i.e., unit # 2). That facil ity did not operate in 2002 and is not currently operating, but is permitted to operate. If brought on line, the point source NO X emitted within the Denali Borough would increase by a factor of 4.0 and the SO x would increase by a factor of 2.8 (based on permitted not actual emissions). This increase wo uld make the Denali Borough the largest source of anthropogenic emissions and the second larges t source of all emissions impacting Denali monitors." (III.K.7-16, III.K.9-35, III.K.9-40, weighted emission potential-WEP-by borough)

While reasonable people may disagree regardi ng the air quality impacts from re-opening Healy 2, it is certain that impacts will occur, and the st ate of Alaska would do well to ensure that they are minimal. The companies that most benefit fr om the issuance of this permit should recognize their financial and ethical obligation to the lo cal community in reducing the impacts of coal burning, and improving the quality of local air and regional air. Pleas e take seriously the suggestions above.

Response from ADEC:

The Department does not have a regulatory basis to require the community improvement projects the commentator requests as part of an operating permit.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

20 The operating permit does include all applicable re quirements from the original PSD permit. Ambient analysis for that permit were sufficient for the De partment to find that ambient air

standards and increments and air quality related values woul d be protected from plant

emissions.

Further, as part of the effort to get HCCP permitted, GVEA agr eed to reduce emissions from Unit 1 so that emissions from both units combin ed would be less than th e original emissions from Unit 1 alone.

The Department is not able to establish ambi ent monitoring requirements through a Title V operating permit. Ambient monitoring was require d by the Title I permit for HCCP. Monitoring was conducted for several years, including during the 90 day test, and has been completed as required

7. PSD APPLICABILITY

From: Nancy Bale, Director, Denali Citizens Council

PSD Comments from Denali Citizens Council The Denali Citizens Council, a local non-profit educati on and community advocacy organization, has been involved in the decision process around this plant since the early 1990s. We are not in complete opposition to the Healy 2 coal-fired power plant, despite its obvious negative contributions to air quality and carbon pollution world- wide. Instead, we support the most up-to-date and inclusive permitting, taking into account more modern notions of what constitutes pollution, including more newly reco gnized pollutants such as carbon and mercury. The PSD process would have been ideal for reviewing the technology and determining its efficacy in addressing current standards. We are disappointed that a complete review under PSD

has not been conducted.

There are retrofit technology options now available to GVEA that surpass designs used in the original clean coal plant. GVEA sh ould be required to consider a nd install such options in order to satisfy Clean Air Act mandates for new plants . I can tell you unequivocally that GVEA closed Healy 2 and it has been closed for 11 years. GVEA indicated that they had no intention of running this plant and described it as unworkable. Such closure is, to our way of thinking, an automatic PSD trigger. We have signed on to mo re detailed comments on this issue elsewhere, and we intend to maintain our place at the tabl e as a local organization concerned with the air quality in Healy and in the wider region, which includes the Class 1 Airshed of Denali National

Park.

It is patently clear to us that putting Healy 2 into operation will cause an increase in total emissions for the area around Healy. As such, GVEA takes on the responsibility of legally and appropriately reducing those emissions w ith the most up-to-date equipment.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

21 Response from ADEC:

Please see the response to the Comment s from Trustees for Alaska, below.

From: John Bunyak, Chief, Policy, Planning and Permit Review Branch, National Park

Service

PSD Comments from National Park Service The NPS has been involved in subsequent di scussions between GVEA, the Sierra Club, the Trustees for Alaska, the Envir onmental Protection Agency (Reg ion 10) and ADEC regarding the

HCCP restart. These discussions were initiated due primarily to concerns raised by the involved parties during the 2009 public comment period fo r the draft Title V permit. Notably, ADEC concluded that PSD does not appl y to the restart of the HCCP. Given disagreements over this issue, parties began an "outcomes" driven nego tiation that focused on environmental protection measures GVEA could implement that would satisf y stakeholder concerns in the absence of an agreement on whether the PSD process would achiev e those same outcomes. We are aware that GVEA has provided a settlement proposal to th e Sierra Club and the Trustees for Alaska regarding the HCCP restart. In this July 8, 2011, proposal, which was submitted to the NPS via email by Kate Lamal, vice president of GV EA, the electric association offers to:

1. Install a selective catalyst reduction (S CR) technology system to control emissions of nitrogen oxides (NO X ) from HCCP prior to start up. 2. Install mercury emission contro ls on HCCP prior to start up. 3. Reduce its reliance on coal and oil-fired systems and replace them with renewable energy sources. Specifically, GVEA would commit to construction the 25 MW Eva Creek wind farm by December 31, 2014; a shutdown of Unit 1 no later than December 31, 2024, and a conditional shutdown of HCCP 30 years after its startup.

While the NPS is not a current party to this proposal, we have been involved in various discussions, because it relates sp ecifically to many NPS concer ns over reactivation of HCCP. The specific details of any agreement would need to be identified prior to final NPS evaluation,

but we believe that the inst allation of SCR post-combustion controls (with a corresponding emission limit) and installation of mercury emi ssion controls at HCCP would address many of our previous concerns. SCR represents top-of-the-line NO X controls that would need to be addressed in a top-down Best Av ailable Control Technol ogy (BACT) analysis if the source were required to obtain a PSD permit prior to restart. Additionally, it is anticipated that the NO X reductions achieved under the installation of SCR would exceed the permitted NO X emission limit reductions achieved under implementation of permit condition 25. Ther efore, we commend the proposal to install SCR on HCCP (with a "B ACT-like" enforceable emission limit) prior to startup, and encourage GVEA to c ontinue pursuing this option. However, to fully satisfy NPS concerns, any final agreement between parties woul d need to be reflected in the permit and the permitted emission limitations, as was specified in our 1993 MOA.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

22 Installing mercury controls prior to federal requirements imposed under the proposed Toxics Rule and the associated Utility Maximum Achi evable Control Technology (MACT) standards for mercury may also address NPS concerns related to mercury. Again, we commend the proposal and encourage GVEA to co ntinue pursuing this option. However, to fully address the concern, we believe the agreement should specify the type of control t echnology to be installed, anticipated control efficiencies and a commitme nt to continuously ope rate the technology and monitor effluent mercury emissions. Again, spec ific information identified in the agreement

should be reflected in the associated permits.

The proposal also identifies a shutdown date for Healy Unit 1. The date referenced in the settlement proposal, December 31, 2024, reflects th e date identified in the BART proposal for Unit 1 and referenced in Alaska's Regional Haze State Implementation Plan (RH SIP). This time period was used when considering the remaining useful life of the facility in assessing the cost of various BART control options. The NPS remains convinced that the final BART determination

for Unit 1 must include an enforceable shutdown da te in the Alaska RH SI P. This commitment should be made regardless of any agreement reached through the current negotiations, as it pertains to the BART requirements for this sour ce. Additionally, ADEC concluded in its RH SIP that in light of the remaining useful life of the facility, Selective Non-Catalytic Reduction (SNCR) technology represents BART for Unit 1; however, the settlement proposal is silent regarding this requirement. It is assumed th at GVEA will comply with ADEC's BART decision

to install SNCR on Unit 1.

In all, the NPS would be pleased to see several of these options pursued, as it will alleviate many

of our concerns with the reactiv ation of HCCP. However, the Title V permit has been revised and re-issued for public comment prior to the pa rties reaching a negotiated agreement. In the absence of such an agreement, the NPS is commenting on the draft permit as written. Accordingly, most of our previous co ncerns have been reiterated below.

The restart of HCCP is complex in terms of de termining PSD applicability requirements. In Appendix C to its Statement of Basis, ADE C provided a revised PSD Applicability determination for the restart of HCCP. The Ap ril 26, 2011, re-evaluation re lies on an alternative analysis approach and provides additional suppor ting documentation, but ultimately arrives at the same conclusion as the October 12, 2009, analysis; i.e., PSD does not apply to the HCCP restart. In the new analysis, ADEC highlights the unique f actors that differentiate the Healy restart from other similar cases; however, it appears the analys is continues to depart from long-standing EPA reactivation policy in several areas.

We recognize that there are circumstances unique to the restart of the HCCP facility. However, there are also a significant number of similaritie s between the HCCP case and other reactivation policy determinations. These nuanced and extenua ting details highlight the necessity for EPA to traditionally make these determinations on a case-by-case basis. EPA expressed concerns regarding ADEC's 2009 analysis. We have not seen EPA's response to this most recent analysis; however, we understand that the issue has not been fully reso lved. As expressed in our December 4, 2009, comments, we believe this issue warrants additional discussion, and ultimately, resolution between ADEC, EPA and potenti ally GVEA. We again stress this in light of NPS's "affirmative responsibil ity" to protect Air Quality Rela ted Values (AQRVs) in DNPP.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

23 PSD is one process that allows the NPS to meet our responsibility to protect AQRVs, as it may result in more stringent emission controls or other mitigation to protect AQRVs in DNPP. However, as expressed previously, we believ e a negotiated agreement to install additional controls at HCCP outside of the PSD process may achieve a similar outcome. Considering the high public and tourism value of Alaska's only Class I national park, we strongly urge ADEC and EPA to err on the side of protecti ng AQRVs when resolving this issue.

Response from ADEC:

Because the Department has an approved program, it is the Department's responsibility to make

the determination. We understand that EPA has th e ability to reverse the Department's decision. The Department has met with EPA to attempt to reach resolution. However, given that EPA has not conveyed a finding to the Department, th e Department is sending the proposed permit to EPA for their review in the interest of keeping the process moving.

The Department is also not currently a party to the third party negotiations referred to in the comment. The Department has gone ahead with the new comment period because the parties involved have not reached agreement.

From: Brian Litmans, Staff Attorney, Trus tees for Alaska; Sanjay Narayan, Sierra Club Environmental Law Program

PSD Comments from Trustees for Alaska Comments submitted by Trustees for Alaska on be half of the Northern Alaska Environmental Center, Denali Citizens Council, National Parks Conservation Association, Alaska Community

Action on Toxics and the Sierra Club

We previously corresponded with ADEC regarding this proposed renewal (in a letter to Debra Dalcher dated December 9, 2009) . That letter referred to an earlier letter to Brian Newton, Chief Executive Officer, Golden Valley Electric Assoc., Inc. (April 29, 2009). Those two letters, which focused, in part, on whether the restart of Healy Po wer Plant Unit 2 (hereinafter Unit 2) will trigger Prevention of Significant Deterioration (“PSD”) applicability, are incorporated by reference.

We have now carefully studied ADEC’s revised pr eliminary decision to issue the permit, including the Statement of Basis dated July 26, 2011, and in particular, Appendix C to that Statement of Basis. As discussed below, our review shows that ADEC has made some clearly erroneous factual findings and a number of errors of law in order to conclude that the restart of Unit 2 does not require a PSD permit. When these errors are corrected, the inevitable conclusion is that Unit 2 cannot be restarted without obtaining a PSD permit.

Reactivation Policy

Unit 2 Must Be Considered a New Sou rce Under EPA’s Reactivation Policy. In Appendix C, ADEC correctly notes that: “react ivation of a major stationary source that has been permanently shut down, will be treat ed as construction of a new stationary

source for PSD review.” ADEC then walks thro ugh some of the factors used by EPA in its Reactivation Policy as part of its analysis. Appendix C, however, does not discuss aGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

24 critical aspect of the Reactivation Policy, which is discussed in the Monroe Electric

Order. 1 In that Order, EPA notes the following:

EPA believes owners and operators of shutdown facilities must continuously demonstrate concrete plans to restart the facility sometime in the reasonably foreseeable future . If they cannot make such a de monstration, it suggests that for at least some period of the shutdown, the shutdown was intended to be permanent. Once it is found that an owner or operator ha s no real plan to restart a particular facility, such owner or operator cannot overcome this suggestion that the shutdown was intended to be permanent by later pointing to the most recent efforts to reopen the facility. . . . This approach for assessing the intent of the owner or operator is consis tent with the general noti on that a company cannot sit indefinitely on a governmental permissi on to emit air pollutio n without showing

some definite intention to use it.

Id . at pp. 9-10 & n. 11 (emphasis added).

Review of the record in this matter une quivocally shows that at times since 1999, the owners and operators of Unit 2 intended to s hut down the facility pe rmanently. First, an independent audit of the 90-day test conduc ted in 1998 and 1999 concluded that if Unit 2 were operated on design coal, “in its present configuration [it] will not perform acceptably for 30 years, even if operated and maintained in accordance with standard utility practices.” 2 By the end of 1999, AIDEA had spent all of the project funds (including the retrofit budget), ye t Unit 2 still required millions of dollars worth of work. 3

In one document, GVEA describe d the facility as “shuttered,” id. , and in 2003, GVEA referred to the facility as “mothballed.” 4

In 2006, AIDEA retained Shaw, Stone & Webste r to evaluate what it would take to restart the facility. Shaw pe rsonnel started visiting the site that year. An April 16, 2008 trip report filed by Gene Scott of Shaw observed that the areas inside of the facility: “are cluttered with materials, spar e parts, tools, equipment work tables, debris, empty pallets; etc, and the ash loading facili ty and intake structure are be ing used for storage of heavy equipment and emergency vehicles. It will ta ke considerable time and effort to sort through all the materials and determine ow nership and proper storage of anything salvageable.” References to “salva g[ing]” parts fails to meet the Monroe requirement of

“ continuously demonstrate[ing] concrete plans to restart th e facility sometime in the

1 Order Responding to Petitioner’s Request... Carol Browner, EPA Administrator. In the Matter of Monroe Electric Generating Plant Entergy Louisiana, Inc. Proposed Operating Permit. Petition No. 6-99-

2

. 2 1299 Harris Group Inc., Independent Engineer’s Review of HCCP 90 Day Test and Determination of Sustained Operations , December 1999 (“12/99 Harris Group”), available at: http://www.netl.doe.gov/technologies/c oalpower/cctc/cctdp/bibliography/demonstration/pdfs/healy/90544R 10.pdf (Attachment 1).

3 GVEA, Narrative Statement of Facts , available at http://www.gvea. com/about/hccp/HCCP_S tatement_Facts.pdf , at ¶ 31 (Attachment 2).

4 GVEA, Improving on a Classic, 2003 Annual Report

, http://www.gvea. com/about/annualreport/2003annrep.php (Attachment 3).Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

25 reasonably foreseeable future .” 5 Accompanying photographs further demonstrate that the facility was not in “hot standby” in 2006. 6

Given these observations and the facts poi nted out in our Ap ril 29, 2009 letter to Brian Newton, one can only conclude that duri ng the last decade, there were certainly periods when no real plan existed to restart Unit 2. Consequently, re start of the facility

now must be considered the construc tion of a new source for PSD purposes.

Response from ADEC:

Reactivation Policy.

While it is true that AIDEA's plan to get H CCP running changed as circumstances changed, the Department believes that it is beyond question that AIDEA never stopped trying to get that result at the earliest possible date. AIDEA used c ooperative agreements with GVEA, lawsuit, and the attempt to bring in another operator -- essentiall y, whatever it takes to get it going. Please see the chronology of events in the St atement of Basis, Appendix B.

For a period of time, it was prudent for AIDEA to stop providing more money for the project while they attempted to reso lve their dispute with GVEA.

This is a very different circum stance from a plant that has oper ated for years, recovered its

initial investment and has become obsolete or has worn out, and the owner needs to decide whether to rejuvenate it. The suggestion that AIDEA ever intended to simply walk away from their very substantial investment without seeing benefits from it, especially considering their persistent efforts to see it operate, is not credible.

Major Modification - Routine Maintenance

Unit 2’s Restart Would Be a Major Modification

. A. The Physical and Operational Changes N ecessary to Make Unit 2 Operational Again

Would Not Be Routine Maintenance.

ADEC’s finding that the physical and opera tional changes necessary to make Unit 2 capable of long-term operation is incorrect. Part of the problem is that although ADEC properly recites the five WEPCO factors cited by EPA in making case-by-case routine maintenance evaluations, ADEC fails to focus on a fundamental aspect relating to such evaluations, and that is that only de minimis activity can qualify for the exemption. As EPA recently put it in respondi ng to a Title V petition:

Importantly, in undertaking the RMRR [“routine maintenance, repair, and replacement”] analysis, it is critical not to focus inappropriately on any one factor

5 See infra Footnote 1 at pp. 9-10 & n. 11 (emphasis added).

6 Trip Report filed by Gene Scott, Shaw Power Group, April 16, 2008, Re: HCCP Construction Site Visit Report (Attachment 4).Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

26 such that the fundamental purpose of the narrow exclusion is forgotten. In New

York II . 443 F.3d at 883-84, the D.C. Circuit Court underscored that, “EPA has for over two decades defined the [routine maintenance] exclusion as limited to ‘de

minimis circumstances.’”

In the Matter of Tennessee Va lley Authority, Paradise Fo ssil Fuel Plant Drakesboro, Kentucky Title V Air Quality Permit # V-07-018 RI

, Petition No. IV-2010-1 (U.S. E.P.A. May 2, 2011) (Attachment 8).

A thorough examination of the facts here shows that all of the activity to bring Unit 2 back to life after a decade of inactivity can neither be considered de minimis nor routine.

First, ADEC should take a hard look at GVEA’s cost assertions, over which there are serious questions. In June 2008, AIDEA’s startup engineers estimated it would take 19 months to startup HCCP at a cost of $62 million, 7 or about a quarter of the or iginal cost of the plant. The GVEA assumed ownership of the shutte red HCCP in January 2009 and is proposing to start up the facility. In February 2009, GVEA advised its members that startup would

take 18 to 24 months and that AIDEA w ould loan GVEA up to $45 million “to fix known deficiencies, to star tup up the plant...” 8 In contrast, in May 2009, when GVEA petitioned

the ADEC to determine that it did not have to go through PSD review again, 9 GVEA’s petition and revisions thereto id entified 105 separate activities that had to be completed to startup Unit 2, costing a total of $16.2 million (“Project List). 10 This Project List excludes many of the activities that AIDEA’s startup engineers concluded were required to startup and successfully operate Unit 2 in June 2008. Costs for many individual activities reported to ADEC are substantially lowe r than the costs estimated by AIDEA’s engineers. Indeed, the total cost to star tup Unit 2 reported to ADEC, $16.2 million, is nearly four times lower than that estimated by AIDEA’s startup engineers. 11

Furthermore, a close examination of the Project List shows that much of the activity here is not maintenance at all. In the 90’s, this plant was brought to th e point where it could produce power, but it was never put into a state where it could do so on a continuing, long-term basis. Many of the physical alterati ons now proposed are essential to complete

construction.

It must be remembered that in the late 90’s, the project ran out of money. As a consequence, the facility, as it was tested in 1998 and 1999, was considered to be unsafe

7 Shaw, Stone & Webster, HCCP Condition and Restart Study, HCCP/Unit 1 Independent Operations, Volume 1 of 2, March 28, 2006 (“3/28/06 Shaw Report”), Sec. 7.0 (Attachment 5); 10/14/08 Shaw Closeout Report, Section 10.0 Project Cost Estimate, Section 10.1 Capital Cost Estimate, Cost Estimate Summary, June 2008.

8 Letter from Bill Nordmark GVEA Board Chairm an and Brian Newton, GVEA President & CEO, to GVEA Members, February 12, 2009.

9 Letter from Kristen DuBois, GVEA, to Alice Edwards and John Kuterback, ADEC, May 26, 2009, Re: Request for Confirmation of PSD No n-Applicability (“5/26/09 DuBois Letter”).

10 Letter from Kristen DuBois, GVEA, to Sally Ryan, ADEC, August 17, 2009, Re: Response to ADEC Request for Further Analysis, August 17, 2009.

11 12/18/08 Shaw Closeout Report, Section 10.0 Project Cost Estimate, Section 10.1 Capital Cost Estimate, Cost Estimate Summary, June 2008.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

27 and uneconomical to operate. Things were patc hed together using rive ted steel plates and

unusual interventions that coul d not be sustained in the l ong run. During the 90-day test period, for example, rapid deterioration of equipment forced workers to weld and reinforce equipment while it was running. 12 At other times, coal silos to the coal feeder plugged and “maintenance workers used sle dge hammers throughout the night in an effort to keep the coal flowing.” 13 Common operating practices during the 90-day test included patching leaking equipment with bolted steel plates, manual cl earing of slag that appeared in places it was not supposed to be , manually cleaning screens that should not plug, and banging on hoppers and chutes to maintain coal flow. 14 Further, during the first year of operation, Unit 2 tripped offline 78 times, unacceptable for a commercial facility. 15 The results of the 90-day test were inconc lusive as the test was performed with coal having a heating value slightly above th e design specification, resulting in 23% less ash than design. Further, excess staffing was on site during the test to make real time repairs while the facility was operating. Th e excess staffing, equivalent to 15 full time maintenance people on a 40-hour week basis, di d emergency work to the keep the facility running, tasks that would not be required in a commercial facility. These tasks included clinker breaking, atomizer replacement, pyrites hopper cleaning, re pairing the head pulley on the ash bucket conveyor and silo di scharge chute battering to clear plugging, and repairing the mill and surrounding equipment. 16

An engineering assessment of the 90-day te st run and plant equipment in December 1999 prepared for GVEA concluded: “Overall, DE&S [Duke Engineering & Services] found during the 90-Day Test, the subsequent equipm ent inspections, the performance tests, and the turbine test, that [Unit 2] has several seri ous deficiencies. These deficiencies need to be resolved before [Unit 2] can operate re liably as a cost competitive power plant for extended periods of time.” 17 Duke opined:

[C]ertain systems and equipment failed to meet an acceptable level of reliability. The coal feed system has both reliabil ity and safety concerns. The pulverizer explosion is an obvious example that addi tional instrumentation and/or controls

work needs to be done to assure that a similar incident does not happen again. The reliability and safety of the existing pulv erizer exhauster fans and the variable coal splitter is unsatisfactor y. The 90-Day Test proved th at these components will require frequent repair to stop pulverized coal leakag e and are not capable of sustained operation in their current state.” 18

Construction work to complete Unit 2 was discontinued at the end of 1999 after the initial 90-day test (8 /17/99 – 11/15/99) and has not yet resumed, over a decade

12 Narrative Statement of Fact s, p. 13 (Attachment 2).

13 Duke Engineering & Services, 90-Day Test Run Systems Evaluation & Plant Assessment, Prepared for GVEA, December 1999 (“12/99 Duke Report”), p. 6-12 (Attachment 6).

14 12/99 Duke Report, pp. 6-24 to 6-24 (Attachment 6).

15 Narrative Statement of Facts, pp. 5, 14. (Attachment 2).

16 AIDEA, Healy Clean Coal Proj ect Performance and Economics Report, Final Report: Volume 2 (April 2001, pp. 1-4 (hereinafter AIDEA 4/01) (Attachment 7); Harris Group 12/99, pdf 89-90 (excess staffing) (Attachment 1).

17 12/99 Duke Report, p. 1-3 (Attachment 6).

18 Id , p. 6-27.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

28 later. In fact, the Long-Term Commerc ial Operation Demonstration beyond the initial 90-day, required by the DOE contract, was never performed. 19 The patches made to get through the test phase were never made permanent.

GVEA chronicles the history of this facility in its annual reports, posted on its website. In 1998, the first year of attemp ted operation, GVEA wrote:

Though HCCP generated power during 1998, the 54-megawatt plant was not commercially reliable or dispatchable and it is still not ready to provide competitively-priced electric power. GVEA has a number of significant unresolved issues relating to design, ope rating efficiency and safety with the owners of the project, Alaska Indus trial Development and Export Authority (AIDEA). 20

In its 1999 annual report, during e xperimental testing, GVEA wrote:

HCCP began burning coal in 1998 and ge nerated power inte rmittently through 1999, but the nominal 50-megawatt plant wa s not commercially reliable and it produced very expensive power. Late in 1999, the plant failed to pass a 90-day operating test designed to test reliability and economics resulting in the automatic

termination of the contract between AIDEA and GVEA. The plant was shut down on December 31, 1999 until new agreements can be made for the operation of the plant and for power sales. 21

Many of the projects now proposed for restart thus involve either completing construction activity that was abandoned 22 when the owners ran out of money or fixing major problems to allow the Unit to operate. Furtherm ore, the original facility was designed to test an experimental combustor, the TRW slagging bed combustor, and a new SO 2 control technology, the Joy/Niro spray dr ier absorber. The focus of the work was to scale up a pilot version of the combustor, which necessa rily involves a lot of trial and error. The numerous design errors and scaleup probl ems are catalogued in engineering studies. 23 The startup Project List includ es many modifications to co rrect design errors, reduce maintenance costs, and improve safety so that HCPP can operate commercially.

19 AIDEA 4/01, p. 4-3 (Attachment 7).

20 GVEA 1998 Annual Report at http://www.gvea.com/about/a nnualreport/1998annrep.php

. 21 GVEA 1999 Annual Report at 1, http://www.gvea.com/about/annualreport/1999annrep.php

. 22 “As-built” drawings of the entir e plant have never been found. Closeout Report , Section 3.1, Bid Package (Disc 1), Volume 2 – Tech Spec, Attachment A: Technical Specification for Design, Supply Installation and Startup of Indoor Systems for Healy Clean Coal Restart Project , October 23, 2008, p. 3 of 364 (“Complete and accurate “As-Built” drawings of th e entire plant are not available, therefore it is the Contractor’s responsibility to verify the accuracy of the existing plant drawings and documents including all Owner and Contractor supplied new designs prior to st art of construction for all items of work related to the Contractor’s scope.”). “As-built” drawings are submitted by a co ntractor upon completion of a project. They reflect all changes made in the specifications and working drawings during the construction process and reflect actual existing condition as opposed to designs or proposed changes. They show the exact dimensions, geometry, and location of all elements of the work completed under the contract. The absence of a complete set of these drawings for HCCP is st rong evidence that construction was never completed properly.

23 See, e.g ., 2/99 Duke Report; 12/99 Harris Report.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

29 Addressing these “modifications” through “redes ign” indicates that the type of work necessary to get the Unit up and running is not routine. Some of these are discussed

below to illustrate the fact that what is now contemplated at the site cannot be considered

routine maintenance.

1. Access Platforms

The facility tested in 1998-1999 was not desi gned for commercial operation because it excluded many features that would be require d for safe routine ope ration, such as access platforms, walkways, heat tracing of piping a nd valves (critical given the local weather), and adequate ventilation. Similarly, piping blocked access required for routine maintenance. The access modifications include adding the following:

 Task F.4.e: Precombustor access platform stairs, south end

 Task F.6: Mill tensioners access platforms

 Task F.7: Walkway from floor 3 to top of mills

 Task F.8: Relocate air piping to resolve interferences around mills

 Task G.4: Stairway to access boiler manway

 Task Q.4: SDA access platform

 Task Q.6: Walkway from upper DA platform to 6 th floor

 Task R.2: Heat trace ash piping and valves

 Task AC.1: Battery room ventilation improvements

 Task AD.1: Install CO 2 monitor in Unit 2 relay room per regulations

 Task AH.1 Reroute seal air piping that blocks pulverizer maintenance door

 Task AL.1: Reroute deaerator overf low piping to improve efficiency

 Task AP.1: Reroute sample lines to eliminate blocking ventilation hood door

2. Tagging and Labeling During initial construction and startup, all eq uipment, piping systems, and valves are commonly labeled to facilitate operator trai ning and safety. Tagging and labeling was not completed at Unit 2. Task AV.1 finishes this job for $80,000. 24

3. Electrical Breakers Several plant electrical breaker s may have been designed and/ or installed with the wrong

cable size. Task K.2 would confirm that su itable service is installed and replace as

necessary. 25

4. HCP Dry Ash Transfer System This system transfers dry ash between Unit 1 and Unit 2. “This system is part of the original design, but was never fully commissioned in 1998 and 1999.” 26 Task V.1 would commission this system, evaluate its operabi lity, and make repairs as necessary for $32,500. 27 It is not clear whether repairs are included in the task cost.

24 Project List, p. 11, Task AV.1.

25 Project List, p. 5, Task K.2.

26 Project List, p. 21, Task V.1 (emphasis added).

27 Id.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

30 5. Unit #1 Wet Ash Transfer System This system transfers wet ash between Units 1 and 2. “This system is part of the original design, but was never fully commissioned in 1998 and 1999.” 28 Task W.1 would evaluate the performance of this system a nd make repairs as necessary for $8,000. 29 It is not clear whether repairs are included in the task cost.

6. Second Coal Bucket Elevator The original HCCP design made provisions for the addition of a second coal bucket elevator. However, this system was not in stalled. A second coal bucket elevator will provide a redundant system, allowing coal load ing to the silos when the primary bucket elevator is down for repairs. Task AG.2 eval uates the cost and benefits of this second elevator for $678,000. It is unclear whether this cost includes the second elevator or just the study.

7. September 1999 Explosion A large explosion occurred on September 6, 1999, on the 20 th day of the 90-day test during plant shutdown, originati ng in Pulverizer B. Consider able damage was done to the area around the pulverizer. 30 The explosion was caused by faulty equipment and extended operation at low load. 31 This explosion damaged a section of the primary air duct to the B Pulverizer. The damage from this explosion was never repaired. The Project List includes modifications to repair this damage. Thes e repairs include insp ecting and repairing damaged parts including the pulverizer primary air ducts and transport tubes and the coal feeder system both upstream and downstr eam from where the explosion occurred.

Such explosions are not routin e and are attributed to the ex perimental nature of the Unit 2. These are more properly considered developm ent costs because this is first generation technology. The costs should have been incu rred during the demonstration period to facilitate commercial operation. They are just one of many indicati ons that the Unit 2 cannot be operated in its current state and never could have been commercially operated

at the time it was shutdown. Fu rther, the fact that the Unit was never repaired after the explosion indicates that there was no intention of re-starting the facility at some later

time. Some of the modifications to re pair the damage are discussed below.

(a) Coal Silos

The fires that occurred in coal silo B in September 1999 damaged several coal silo

liners. 32 This damage was never repaired. Task M.1 would repair the damage to the silo and install new liners for $300,000.

(b) Coal Feeder System

28 Project List, p. 21, Task W.1 (emphasis added).

29 Id.

30 12/99 Duke Report, pp. 1-2., 6-11 (Attachment 6).

31 3/28/06 Shaw Report, p. 21. (Attachment 5).

32 3/28/06 Shaw Report, pp. 19-20.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

31 The TRW coal feed system is a new pro cess. Two pulverizer explosions occurred that may result in premature failure and safety issues. 33 The explosion damaged a section of the primary air duct to the B Pulverizer. The modifications include Task F.1.b, which will evaluate the ductwork and if necessary, replace it, for $310,000. 34

(c) Transport Tubes The explosion may have damaged some of the ceramic tiles lining the coal transport tubes. The modifications incl ude Task F.1.c, which will inspect these tubes and replace any tiles, as necessary, at a cost of $24,000. 35 It is unclear

whether this cost includes re placing the tubes, or just the study to inspect them.

8. November 1999 Explosion A duct explosion occurred in November 1999 during the shutdown of the coal feed system, while the unit was decreasing load. In the lead-up to this explosion, coal being

fed from the coal silo to the coal f eeders plugged in the downspouts. Maintenance workers used sledge hammers throughout the night in an effort to keep the coal flowing. In spite of these efforts, a duct explosi on occurred, causing Pulverizer A to trip. 36

This explosion was attributed to the elevated temperatures of the air exitin g the pulverizer

and reduction in air flow th rough the pulverizer and exha ust fan. Shaw recommended a number of measures to preven t the recurrence of these cond itions, including replacing the mill exhaust fans with new smaller fans, revising the operation of the capacity dampers, modifying the control logic, and repairing or replacing the leaking automatic valves. 37
The Project List only identifies one of th ese recommendations, new mill exhaust fans.

(a) Mill Exhaust Fans The mill exhaust fans pull hot air and pulverized coal out of the pulverizers and transport it to the pre-combustor and sla gging combustor via a sp litter system with cyclones. Task F.2.a will re place the exhauster fans in the coal feed system for $2,000,000. This change is required to correct an original design error discovered during the 90-day trial period. The mill e xhauster fan blades and scrolls eroded faster than expected due to the high as h content and abrasive properties of the Usibelli coal, requiring an unacceptable amount of repair. 38 Numerous unsuccessful attempts were made during plant operation to correct this problem. 39
The problem was not corrected.

As explained by Shaw: “There is gene ral agreement between the information sources and SSW [Shaw, Stone & Webster] that the dem onstrated service life of

33 12/99 Duke Report, p. 8-4.

34 Project List, p. 12, Task F.1.b.

35 Project List, p. 12, Task F.1.c

36 12/99 Duke Report, p. 6-12

37 12/18/08 Shaw Closeout Report, Section 9.0 Studies & Reports, Coal Feed and Mill Exhaust Fan Analysis, October 16, 2008.

38 12/99 Duke Report”, p. 1-2.

39 3/28/06 Shaw Report, p. 2.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

32 90 days resulting from operation of this equipment under the conditions of the demonstration test was unusually low and not acceptable for a typical power plant application.” 40 Thus, these fans are not capable of commercial operation. This task

will evaluate installation of new mill exhauster fans lined with a more erosion resistant material and possi bly include variable frequency drives to control fan speed. 41

The Shaw Closeout Report indicates that the new mill exhaust fans, equipped with smaller diameter rotors, would in crease pulverizer inlet coal flow from 44,827 lb/hr in August 1999 to a design level of 48,842 lb/hr. 42 This increase in

coal flow rate could lead to an increase in emissions.

9. Redesign Swirl Dampers The demonstration showed that it may be benefi cial to use a fixed cr oss sectional area in the swirl dampers, rather than an adjustable cross sectional area, as in the original design. Task F.4.g will evaluate the cost and feasib ility of changing the design of the swirl dampers from adjustable to fixed for $99,000. It is unclear whether th is cost includes the cost to make the design change, but desi gn changes cannot be considered routine

maintenance.

10. Slag Ash Clinker Grinder During operation of Unit 2, staff reported numerous occurrences of large pieces of slag ash accumulating on the oversize grate upstream of the slag ash bucket elevator that loads

ash into trucks. This material had to be ma nually removed from the grates and reduced in size using rods, water spray, a nd air-powered tools, a situ ation that would never be

tolerated in a commercial f acility due to labor costs. 43 Task H.1 is a study to evaluate the need for a slag ash clinker grinder at a co st of $205,000 to automate this process. The Shaw Closeout Report estimated the co st of the new grinder at about $303,000. 44

The Project List claims that clinker grindi ng would not increase emissions because the clinker would be wet when they enter the grinder and would thus produce no dust. 45
However, grinding produces some dust, rega rdless of the moisture content. A related study, in Task AM.1, would consider an altern ate design to bypass the bucket elevator when it is out of service. The clinker gri nder would alleviate the need for this bypass
system. 46

11. Bottom Ash Bucket Elevator Conveyor Bypass During 1998 – 1999 testing, slag ash could not be handled by the ash loadout bucket elevator feeding material to the bottom ash s ilo (while burning a coal with less ash than

40 3/28/06 Shaw Report, p. 44.

41 Project List, p. 18, Task F.2.a.

42 12/18/08 Shaw Closeout Report, Section 9.0 Studies & Reports, Coal Feed and Mill Exhaust Analysis, October 16, 2008.

43 3/28/06 Shaw Report, pp. 3, 27; 12/99 Duke Report, p. 6-12.

44 12/18/08 Shaw Closeout Report, Section 10.0 Project Cost Estimate, Section 10.1 Capital Cost Estimate, Estimate Download, June 9, 2008

45 Project List, p. 20, Task H.1.

46 Project List, p. 23, Task AM.1.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

33 design basis). A temporary conve yor was installed to bypass th e bucket elevator and load ash directly into trucks. 47 Task M.1 installs a dedicated slag ash bypass for $90,000. The Shaw Closeout Report estimates the cost for this bypass as $281,770. 48

12. Combustor Flame Scanners The original purge air flame scanners have inadequate purge air flow. Task F.4.b will modify them to increase air pressu re and air flow to the scanners. 49

13. Coal Bucket Elevator Chute Task E.2 will add vibrators and modify th e coal bucket elevator inlet chute for $282,000. These changes are required because the 90-day trial showed plugging problems existed at

the coal bucket elevator inlet chute. This task redesigns the inlet chute and adds vibrators to prevent plugging the bucket elevator with coal. 50 Unit 2 will not be able to operate commercially without this modification.

14. Bottom Ash Conveyor Operating reports indicated the bottom ash bucket elevator periodically plugged. Task R.1 will inspect and review this elevator and modify as appropriate. The stated cost of $4,000 is not adequate to cover any modifications.

15. Coal Handling System The automated coal blending system never worked properly and did not meet project design requirements. 51 Rather, the run-of-mine coal and waste coal were blended in the yard by operators using wheeled loaders. This is a very inaccurate method to maintain a uniform coal supply, which is required for commercial operation. The 12/99 Harris Report recommended an automated coal ble nding system to address this situation. Similarly, the 3/28/06 Shaw Report opined: “Numerous operating problems encountered during initial plant startup and subsequent operation demonstrat es that the combined coal handling system as currently configured, is lim ited in its ability to ensure reliable delivery of coal to both plants.” 52

The modifications include Task AG.3, whic h would study coal pile management for $400,000. The 12/18/08 Shaw Closeout Report c ontemplates far more than a study, specifying design for a new coal handling system. 53 A new coal handling system was estimated to cost about $16 million in the Closeout Report. 54

47 3/28/06 Shaw Report, p. 27.

48 48 12/18/08 Shaw Closeout Report, Section 10.0 Project Cost Estimate, Section 10.1 Capital Cost Estimate, Estimate Download, June 9, 2008.

49 Project List, pp. 2-3, Task F.4.b.

50 Project List, p. 17, Task E.2.

51 12/99 Duke Report, p. 1-2 (“The coal blending system does not operate as designed. The coal feed system exhibits high rates of wear of various components, in particular the exhauster fans and cyclones. The existing exhauster fans are unsuitabl e for long term operation due to the unacceptable amount of repairs required.”) and 8-4 (“The automated HCCP coal blending system is not working properly and does not meet project design requirements.”).

52 3/28/06 Shaw Report, p. 61.

53 12/18/08 Shaw Closeout Report, Section 4.0 Coal Handling, Section 4.1 Bid Package, Engineering, Design and Supply of Coal Handling System, October 14, 2008, Document No. 128569-S-M-Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

34 16. Replace Worn Air Nozzles Air is injected into the precombustor. Du ring testing, the Precombustor B staged air annulus was completely blocked by slag and the majority of the radial startup air nozzles was covered with slag. As this precombus tor was designed to be non-slagging, this precombustor did not operate per design. 55 Task F.4.a would replace several air nozzles for $100,000. The Project List fails to mention slagging or include a ny design changes to mitigate it.

17. Limestone Feeder/Control During the test period, the response time between changes in limestone feed rate to the furnace and resulting changes in SO 2 at the inlet to the scrubb er were much longer than required to adequately control SO 2 emissions. 56 The test data indicate a five-day lag

between the addition of limestone to the furn ace and the time it significantly changes the composition of the slurry fed to the SDA. 57 This is too long to effectively control SO 2 emissions. Thirty-five hours of SO 2 violations were recorded during the 90-day test. 58
The startup modifications include Task U.1, a $53,000 study to re solve this issue. 59

The only other modifications to the SDA identif ied in the Project List are Task Q.4, SDA access platforms ($37,000), and Task Q.5, replace SO 2 process monitors and probe at SDA inlet ($20,000). The Closeout Report co st estimate includes: “SDA & Flue Gas System Inspection & Refurb” for $463,261. 60

18. Turbine Efficiency At the conclusion of the test period, the steam turbine was reported to have a 2% loss in efficiency compared to the original guar antee. The restart pr ojects include $600,000 to disassemble the turbine to investigate the cause of this loss and to perform minor turbine refurbishment to mitigate the loss. 61 The Shaw Closeout Report estimated the cost at $690,734. 62 The Project List, however, fails to disclo se this intent, inst ead containing only generic Task J.1, to inspect the steam tu rbine and generator, claiming it as RMRR, 63
when, in fact, its purpose is to correct design error(s).

19. Waste Water Treatment System

00002-0.

54 12/18/08 Shaw Closeout Report, Section 10.0 Project Cost Estimate, Section 10.1 Capital Cost Estimate, Estimate Download, June 9, 2008.

55 12/99 Duke Report, pp. 7-2 to 7-3.

56 3/28/06 Shaw Report, p. 12; Project Performance and Economics Report, Volume 2, April 2001, pp. D-6 to D-7.

57 12/99 Duke Report, p. 6-28.

58 12/99 Duke Report, p. 6-23.

59 Project List, p. 20, Task U.1

60 10/14/08 Shaw Closeout Report, Section 10.0 Project Cost Estimate, Section 10.1 Capital Cost Estimate, Estimate Download, June 9, 2008.

61 3/26/06 Shaw Report, p. 3.

62 12/18/08 Shaw Closeout Report, Section 10.0 Project Cost Estimate, Section 10.1 Capital Cost Estimate, Estimate Download, June 9, 2008.

63 Project List, p. 4, Task J.1.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

35 The original installation injected acid and cau stic into the top of the neutralization tank. The 90-day test demonstrated this design resu lted in substandard mixing of chemical and

thus slow neutralization of tank contents. Ta sk Z.2 will move the injection points to the

suction line of the neutraliz ation pumps to improve mixing of acids and caustic for $37,000. 64

Routine Maintenance Summary It is important in analyzing the “routine” main tenance issue in this matter not to lose sight of the numerous design changes being made to facility. Design changes do not qualify as

routine maintenance. See Detroit Edison Applicability Determination, Attachment 9.

Furthermore, the changes discussed above are not “ regular, customary, or standard undertaking for the purpose of maintaining the plant in its present condition.” TVA Order

, Attachment 8, at p. 10. The “present condition” of the plant is not operable on a long-term

basis. Thus routine maintenance would consist of doing whatever is necessary to keep the plant in its non-operational mode. In contrast, the purpose of the proposed changes is to take a plant which is incapable of long-term commercial operation and make it viable; in other words, the changes are designed to improve the plant – not keep it in its current condition. Therefore, the “purpose” factor weighs strongly in favor of a finding that the proposed changes are not routine.

As for the “nature” and “extent” factors, as catalogued above, the changes being made at the plant comprehensive, and many of them cannot be made while the plant is in operation. Thus, these factors also indicate that the proposed changes are not “routine.” As for the “frequency” factor, as mentioned above, many of the changes being made at this facility are the result of a situation where the facility started up in test phase and operated even though construction was never fully completed. Thus, many of these changes are not those that would be either regular or customary, but rather are actions more properly associated with initial construction. Consequently, analysis of the “frequency” factor also leads one to conclude that the type of maintenance activities taking place to “re-start” the facility are not routine.

Finally, as mentioned above, serious questions need to be asked about the cost figure being used in the current analysis, but even with th e conservative cost estimate used by ADEC, the cost of the changes approaches the unit’s annual maintenance budget. Therefore, the physical changes simply cannot be considered de minimis

.

For all these reasons, a finding that the planned changes here constitute routine maintenance is simply not credible.

Response from ADEC:

Major Modification - Routine Maintenance

First, a response related to the various costs mentioned in the comment. These costs do not relate directly to each other in the way that would be assume d without further evaluation. The

64 Project List, p. 7, Task Z.2.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

36 $62 million from The Shaw Group was prepared for AIDEA under the assumption at the time that HCCP would be operated for AIDEA by Homer Electric. That would have required complete separation between HCCP and Unit 1. GVEA reports that there are 97 points of connection between the plant that w ould have to be severed and replaced. 65 Separation would require major new investments including a coal handling system and new fuel storage tanks. Thus, The Shaw Group's cost estimate is of necess ity far higher than that prepared by GVEA for their operation of HCCP.

The $45 million is a revolving l oan fund offered to GVEA by AID EA. It is the Department's understanding that much of the $45 million was not intended for physical changes. Of those physical changes that were contemplated, many are not to air pollutant emitting activities at Unit 2. Some of the funds, while rela ted to HCCP may be for activities at other locations, such as spinning reserves as backup to HCCP. The De partment does not have ava ilable information to do a detailed comparison between GVEA's cu rrent task list and ac tivities originally contemplated for funding under th is loan. The Department is in stead relying on GVEA's current certified list of planned tasks

$16.2 million was derived by a GVEA consultant as a collection of possible tasks from all reports from engineering firms that have studie d HCCP. It intentionally included all aspects including those not related to ai r pollutant emitting ac tivities such as wate r treatment, lighting, signage, HVAC air balance, and bathroom fans. This possible task list was reviewed by GVEA for decisions on which tasks would be done befo re commercial startup. The current estimated cost is $11 million. This is less than the es timated annual O & M budget, but would come from the revolving loan fund because, until HCCP ope rates there is no O&M budget. The $11 million

includes numerous tasks that are not c hanges to pollutant emitting activities.

After construction is complete, every new large industr ial facility will go through a shakedown period to make sure it is in proper working orde r, and to change things that are not working properly. When the facility is made up of off the shelf components, standard in how they are configured, this is a much simpler process, the manufacturer having made changes to equipment and recommended procedures based on previous experience. HCCP is one of a kind. Shakedown after construction has turned out to be much more difficult than could have been envisioned. But the changes GVEA plans are in their nature post construction changes based on difficulties encountered during shakedown.

The Commentator states, " The results of the 90-day test were inconclusive as the test was performed with coal having a he ating value slightly above the design specification, resulting in 23% less ash than design." GVEA has informed the Department 66 that based on the experience during testing, they plan during norma l operation to use a blend of coal and waste coal with a minimum heat content of 7,200 Btu/l b. This differs from that or iginally planned, being higher in Btu and lower in ash in order to better manage the abrasive quality of the coal and avoid a high level of abrasion damage. This is not a modification because the equipment was always more

65 Ex Parte teleconference between GVEA and the Department, 10/27/11. Kris DuBois, GVEA; Flint Goodrich, consultant for GVEA; Jim Baumgartner, ADEC; Jim Plosay , ADEC, Bill Walker, Blue Creek Consulting, consultant for the Department. Teleconference was requested by Department to obtain information related to comments.

66 Ex Parte teleconference between GVEA and the Department, 10/27/11.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

37 able to use such a blend, and did so during the 90 day test phase. The original Department of Energy intent to use a large percen tage of waste coal has been abandoned.

Clarifications are in order regardi ng task by task evaluations.

For some of the tasks listed by the comment ator above, the Department relied primarily on factors other than routine maintenan ce in the task by task evalua tion to determine that they are not modifications with resp ect to the PSD thresholds.

While the Department did list a ccess improvements and tagging and labeling also as routine maintenance, the Department prim arily categorized them as no t being modifications because they are not physical changes to pollutant emitting activities.

The Department categorized the dry ash and we t ash transfer systems, and relocation of injection points for the waste water treatment sy stem as not being mod ifications because they do not increase emissions, and are not necessary for commercial startup. The dry ash and wet ash

conveyor systems are not for HCCP at all. The system s move Unit 1 ash to Unit 2 to avoid running redundant systems and because HCCP ash handling is better environmentally than the Unit 1 ash pond. The change to the waste water tr eatment system is not essential because the change is not necessary to meet water quality standards.

The coal pile management task is a study, not a modification. GVEA reports that their method of using wheeled equipment to blend coal is work able, and is currently be ing used for Unit 1.

Three of the tasks listed are no longer on the list GVEA intends to perform before startup: AG.2, the second coal bucket elevator; F.4.g, redesign of swirl dampers; and AM.1., bottom ash bucket elevator conveyor bypass.

Those remaining tasks from th e commentator's list are:

3 Electrical Breakers

7a Coal Silos 7b Coal Feeder System 7c Transport Tubes

8a Mill Exhaust Fans 10 Slag Ash Clinker Grinder

12 Combustion Flame Scanners

13 Coal Bucket Elevator Chute

14 Bottom Ash Elevator
16 Worn Air Nozzles

17 Limestone Feeder 18 Steam Turbine Inspection and Repair

Remaining planned tasksGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

38 Electrical Breakers. It is uncertain from the Duke Energy assessment whether or what cables may have been the wrong size, so it is uncertain whether any replacements are necessary. If cables need replacing, it is unclear whether any changes would be to pollutant emitting activities or equipment. The Department considers complying with

electrical codes to be routine for such a stationary source.

Coal Silos, Coal Feeder System, and Transport Tubes The Department believes that repair of any ac cidental damage at a stationary source is routine industry practice. The Department does not believe that plant accidents requiring repair before continued operation are of them selves PSD triggering events. The tasks are to inspect and, if needed, repair the coal feeder system and transport tubes, and to repair the coal silos. Repai rs would not involve redesign of the damaged equipment.

Mill exhaust fans

The comment states " The Shaw Closeout Report indicates that the new mill exhaust fans, equipped with smaller diameter rotors, would increase pulverizer inlet coal flow from 44,827 lb/hr in August 1999 to a design level of 48,842 lb/hr. 67 This increase in coal flow

rate could lead to an increase in emissions."

The fan replacement task described by GVEA only includes replacement with fans that have a more abrasion resistant coating, not c hanging the size of the fan blades. As mentioned above, the Shaw Closeout Report was not prepared for GVEA. GVEA reports that to date they have not considered changing fan size. Smaller di ameter blades may not be able to reach the design pressure. The exi sting fans are capable of supplying coal at least up to the heat input and steam output capacities of the bo iler using 7,200 Btu/lb

coal. 68

In the task list GVEA states "Fans are typica lly replaced while the plant is running or during normal scheduled outages. Length of outages will not change whether using the chromium carbide liner or tungsten-carbide liner fans." So the task would not change anticipated down time. In any event, any increa se in utilization that may result from this or other tasks is accounted for by the use of a 95% utilization factor in the calculation of projected actual emissions. (See Major Modification - Emission Increase below).

GVEA indicates that the existing fan can be operated without replacement. However, it makes sense to change it out now so that it can be operated for an estimated two years before being replaced again.

Slag Ash Clinker Grinder Because the EPA emission factor is a non-detect, any emission in crease from this task is not quantifiable, and could not cause an in crease to exceed the PSD modification threshold for PM-10.

67 12/18/08 Shaw Closeout Report, Section 9.0 Studies & Reports, Coal Feed and Mill Exhaust Analysis, October 16, 2008.

68 68 Ex Parte teleconference between GV EA and the Department, 10/27/11.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

39 The Department concurs that manual removal of clinkers is labor intensive. The task

would reduce labor costs.

Combustor Flame Scanners GVEA reports that flame scanners are replaced at about six year intervals. They also report that purge air is adjusted at the same time after the scanner is replaced. Incorrect adjustment could lead to either less efficient combustion fr om introduction of more purge air than necessary, or more frequent replacemen t of the scanner. Bec ause this adjustment must occur at predictable intervals, the De partment considers it ro utine. Rather than being a physical change to the emissions unit, it is an adjustment within its existing capabilities.

Coal Bucket Elevator Chute

The task would decrease down time and redu ce labor costs. The Department does not find that Trustees has supporte d the statement that Unit 2 will not be able to operate commercially with the change.

Bottom Ash Elevator The comment does not provide new information which would lead the Department to revise its evaluation of this task.

Worn Air Nozzles Regardless of whether a better design would decrease the wear, simply replacing worn parts is clearly a r outine maintenance item.

Limestone Feeder/Control

The comment does not address the actual intent of the task. The co mment deals with the very long time lag between addition of limes tone and changes in the slurry composition fed to the SDA, concluding that the lag is too long to effectively control SO 2 emissions. The comment then points out that there were thirty five hours of SO 2 violations during the 90 day test, implying that they may ha ve been caused by the time lag.

However, the Duke Report indicates that the re sult of the time lag is that automatic limestone feed control is not fe asible and that limestone feed rate must be set manually at a rate that is high enough to insure compliance. 69

The report also describes a second reason fo r higher than design limes tone feed rates-- that the feeder motor is oversized and does not perform well at sma ll percentages of its full flow design. 70 Task U.1 is related to this se cond concern - physica l difficulties in using lower limestone rates. GVEA states that the reason for th e task is that the operating range of the existing sy stem is too broad, making it di fficult to control the feed

at lower rates.

69 12/99 Duke Report, p. 5-31.

70 12/99 Duke Report, p. 5-6.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

40 In any event, the result of not doing the task is using more limestone than otherwise would be necessary to assure compliance with SO 2 emission limits.

The thirty-five hours of SO 2 violations during the 90 day te st did not result from the time lag mentioned above or from control difficul ties at lower limestone feed rates - and therefore do not relate to th is task. The Duke Report identifies each occurrence as being cause by either startup, shutdown, or operation while changing out Spray Dryer Absorber (SDA) atomizers. It is the natur e of the atomizers to plug and need to be swapped out routinely or after the fact, every m onth or two, taking the SDA off line. This

causes elevated SO 2 emissions during change out. Du ring startup and shutdown, there are periods when furnace temperatures are t oo cool for the SDA to function. Emission standards still apply during these periods. Am ong the ways to manage these situations are reducing the time the SDA is off line, and sw itching to very low sulfu r fuel oil at times when the SDA is off line.

The permit does not contain a compliance pl an because HCCP was in compliance when it discontinued operation.

Steam Turbine Inspection and Repair The Shaw Report 71 cited by the commentator describe s the task as: "to disassemble the turbine to investigate the cause of th is loss in efficiency and to perform minor turbine refurbishment to mitigate this apparent loss." (em phasis added) It further reports, "Turbo-Dyne Electric...found the genera tor capable of immediate start-up." 72 The report does not mention design flaws. This task is apparently similar to maintenance which

EPA in Detroit Edison describes as routine. 73

With the possible exception of the electrical breake rs (for which it is uncertain whether any work is needed) and the repair of accidental damage, wh ich the Department finds to be routine in any event, HCCP is capable of operating without thes e changes. While the rated capacity of HCCP will not be increased, operation will make far mo re efficient use of manpower if the changes are made. For each task it is not the Department 's responsibility to de termine how the change affects the profits or consumer power costs fr om the operation in orde r to issue the permit.

The commentator goes to considerable length to argue that GVEA's proposed physical changes are not routine and would therefore trigger PSD r eview. As the Department stated in 3bii. of Appendix to the Statement of Basis, even if none of the proposed physical changes were considered routine, those changes taken as a whole would not cause emission increases that would exceed the PSD significance threshold, an d would therefore not trigger PSD review.

In Detroit Edison

, 74 EPA states, "nonroutine changes of any type, purpose, or magnitude at an electric utility steam generati ng unit --ranging from proj ects to increase production efficiency to

71 3/26/06 Shaw Report, p. 3.

72 3/26/06 Shaw Report, pp. 26, 50.

73 Letter from Francis Lyons, EPA Regional Administrator, to Henry Nickel, Counsel for Detroit Edison Company, Unton & Williams, May 23, 2000. The letter and attachment contain the Detroit Edison Dense Pack applicability

determination.

74Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

41 even the complete replacement of entire major components -- are excluded from PSD coverage as long as they do not significantly in crease emissions from the source."

Major Modification - Emissions Increase B. The Physical and Operational Changes N ecessary to Make Unit 2 Operational Again

Would Cause an Emissions Increase.

ADEC’s emissions increase analysis is lega lly erroneous. In its analysis, ADEC first

concedes that Unit 2 is not a “new emissi ons unit.” Appendix C, at 20-21. ADEC then

examines the definition of “baseline actua l emissions,” 40 C.F.R. 52.21 (b)(48)(i), and concludes that the first two y ears of operation, rather than an y time within the past five years , is representative of normal operati on. ADEC then takes two approaches to the

emissions increase issue.

In the first approach, ADEC concludes that dur ing that initial two-ye ar period, Unit 2 was “new,” and therefore, under 40 C.F.R. 52.21 (b )(48)(iii), baseline actual emissions equals the unit’s potential to emit. In the second approach, ADEC derives a value for baseline actual emission based on the 90 days of operation that occurred during the first two years. Both of these approaches are legally flawed.

The first approach is flawed for the follo wing reason. ADEC concedes that Unit 2 cannot

be treated as a “new emissions unit” as defi ned in 40 C.F.R. 52.21(b)(7). Nevertheless,

ADEC awards Unit 2 the baseline of a new em issions unit by arguing that the unit should

be awarded the baseline set aside for new units that have commenced operation. Thus, ADEC is simultaneously treating Unit 2 as new and existing at the same time. The facility is either new or it is not. Legall y, it cannot be both. Since ADEC concedes that Unit 2 is existing, ADEC must rely on the regu lations that apply to existing emissions units. Under those regulations, “bas eline actual emissions” equals:

the average rate, in tons per year, at which the unit actually emitted the pollutant during any consecutive 24-month period sel ected by the owner or operator within the 5- year period.

40 C.F.R. 52.21(b)(48)(i) (emphasis added). Accordingly, baseline emissions must be based on what the unit actually emitted, regard less of the 24-month period selected. Thus

if the state selects the first 24-months as th e representative period, th en it must use values for what was actually emitted during that period.

Section 52.21(b)(48)(i) also dooms ADEC’s second approach, where ADEC calculates emission factors based on the ninety-day test , and then extrapolates to determine what emissions would have been during the first 24-months of operation had Unit 2 run at a 95% capacity factor. This approach is le gally barred because as mentioned above, subparagraph 52.21(b)(48)(i) requ ires that the baseline must be based on what a unit “actually emitted” over a 24-month period. The regulations do not authorize baseline actual emissions to be based on extrapolations.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

42 Fundamentally, over the life of th is plant, the facility’s most “representative” mode is when it is not operating. Not surprisingly the n, the most appropriate baseline for this facility is one based on no emissions at al l. Legally, ADEC must use zero for baseline actual emissions from this facility. When the proper baseline is used, ADEC must conclude that a significant emi ssions increase will occur here.

Response from ADEC:

Major Modification - Emissions Increase

The Department can choose of a time period not within the preceding five years. 40 C.F.R. 52.21(b)(48)(i) says

"The Administrator shall allow the use of a different time period upon a determination that it is more representa tive of normal source operation."

Under 18 AAC 50.306(b)(1)(A) and 18 AAC 50.990(28), for the purposes of 40 C.F.R. 52.21(b)(48)(i), “administrator” means the Alaska Department of Environmental Conservation. Because EPA has approved the state PSD program this is also true under federal law.

Since the first two years of opera tion were the only years in wh ich HCCP Unit 2 operated, they are more representative of normal operation – that was and still is intended but has still has not been achieved – than no operation at all. C hoosing the earlier period is supported by HCCP Unit 2 circumstances – the delays to enter comme rcial operations due to the difficulty of the negotiations between the owner and intended ope rator. These circumstances are unique, and are not comparable to any other case for which EPA has formulated guidance on choosing an alternative baseline period. Th is interpretation is especial ly appropriate for HCCP Unit 2 because the PSD rules for baselin e actual emissions and projected actual emissions simply do not address the case where an existing emissions unit went through PSD, but has yet to achieve any period representing normal operation.

The Department's first interpretation of how to calculate the resulting baseline actual emissions is further reasonable because HCCP did not oper ate during any two year period during which it was an existing unit.

Under the commentator's interpretation, if a permitting agency were to receive an application during the first two years of a new unit's opera tion, it could force the applicant to change its

baseline actual emissions calcula tion from potential to emit to the more restrictive calculation in 40 C.F.R. 52.21(b)(48)(ii) simply by waiting to act on the application until the emissions unit had existed for more than two years after initial operation.

The Department stands with its analysis in St atement of Basis Appendix C, 5c as adequate.

Regarding baseline actual emissions calculated from the 90 day demonstration phase, the Department does not concur with the comment. Th e commentator is ignores a relevant clause inGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

43 the Baseline Actual Emissions definition. The statement above in 40 C.F.R. 52.21(b)(48)(i) about the Administrator allowing the use of a different time period does not restrict that different time period to a two year period.

The calculation of baseline act ual emissions did not use a 95% capacity factor. It used the actual emission rate for the 90 day test. The 95% capacity factor was used for calculating projected actual emissions . The Department finds that factor acceptable. Very few coal fired power plants have capacity factors higher than 95%. 75 Considering the past operational problems at HCCP, the Department finds it highly likely that 95% is sufficient.

8. COMMITMENTS IN THE 1993 ME MORANDUM OF AGREEMENT

From: John Bunyak, Chief, Policy, Planning and Permit Review Branch, National Park

Service

The requirement outlined in the 1993 MOA were negotiated based on significant concerns the NPS raised during, and after, the HCCP PSD pe rmitting process over anticip ated adverse effects to AQRVs in DNPP. As required by the 1993 M OA, ADEC has continued to include specific language from the MOA provisions in the permit conditions. In our December 4, 2009, comments, we stated that GVEA has not yet fulfilled its commitment to implement MOA provision III.A.4 (permit condi tion 25) by requesting lower SO 2 and NO X limits. In response to NPS comments, GVEA submitted an owner-requested short-term NO X emission limit reduction from 0.350 lb/MMBtu to 0.325 lb/MMBtu (based on a 30-day rolling average). This ownerrequested reduction is reflected in the July 26, 2011, draft perm it. We recognize, and commend GVEA's efforts to demonstrate their commitment toward fulfilling this provision. However, this revised rate is significantly hi gher than the rates achieved du ring the demonstration period to which the provision is initially tied. The demonstration phase was completed over ten years ago, and a Department of Energy assessment of the pr oject concluded that HCCP was able to achieve

a NO X rate of 0.275 lb/MMBtu; again, this is much lower than the 0.325 lb/MMBtu rate that GVEA recently requested. Therefore, we woul d like to reinstate our previous comments regarding this matter for the record (please reference our December 4, 2009, comment letter).

In the response to comments document, ADEC poin ts out that they are not a party to the 1993 MOA, and that affected parties may seek relief or settlement under the terms of the MOA if they believe a breach in the agreement has occurred. We concur that this is one avenue for the NPS to seek implementation of provision III.A.4, but the provision is tied to seeking emission reductions through the Title V permit renewal process. Acco rdingly, we believe that the Title V renewal process is the appropriate first step in seeking fulfillment of this provision. While ADEC is not a party to this agreement, they are inherently i nvolved in the process thr ough which the agreement is fulfilled. We request that ADEC reconsider its conclusion and work with the NPS and GVEA

to resolve this issue.

75 . Summary from DOE data prepared by Energy Venture Analysis and provided by GVEA shows only three of the top 20 CFB plants above 95% in 2009.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

44 Finally, we believe this issue is more pertinen t in light of ADEC's revised PSD applicability analysis, which utilized emissions data from the 1999 test period to conclude PSD does not apply. GVEA has long disputed th e commercial viability of the test phase, and does not feel it reflected normal source operations or emission limits the facility would be able to achieve longterm. However, we continue to question why em issions information from this time period are not deemed adequate for fulfilling the MOA provisions, particularly when the agreement GVEA

made with NPS was tied to the demonstrati on phase. Additionally, we now question why emissions information from the demonstration ph ase is considered adequate for calculating "baseline emissions" used in ADEC's PSD netting analysis. The netting analysis was not the only analysis ADEC relied on to determine that PSD does not apply to the restart. However, it was included as one analysis in what can be desc ribed as ADEC's "weight of evidence" approach to support their conclusion. As such, there appe ars to be a discrepancy in determining the validity of the 1999 emissions data: it is deem ed adequate for accepting a permitted emission limitation required under the MOA and under associated provisions in the current Title V permit. We request that ADEC resolve this issue with GVEA and the NPS.

Response from ADEC:

The Department does not believe that GVEA's owner requested limit of 0.325 lb/MMBtu fulfilled the provisions of Condition 25 (or therefore th e MOA) because more time is needed, and at normal operating conditions to determine if th e unit can achieve a rate of 0.275 lb/MMBtu. Further, GVEA did not represent the owner re quested limit as fulfilling that condition. Therefore, the Department has left that condition unchanged from its original form in a Title I permit.

In its netting analysis, the Department recognized that emissions from the demonstration phase were not completely representative of normal operation. But they are the closest to being representative of any to date.

The Department cannot establish new emissi on limits through Title V permitting, unless requested by the applicant. The Title V permit can only include applicable requirements that are otherwise established through law, regulation or Title I permit.

9. COMMENTS RECOMMENDING CO 2 , MERCURY, AND COAL ASH EMISSION

LIMITS AND MONITORING

From: Gary Newman

BACT and Monitoring As one who has been involved in this project since 1990 and a party to the settlement in 1994 to allow the experimental project to move forward, there were a lot of unknowns then that, due to the failure of the plant to operate, were neve r answered. Required monitoring adjacent to the

Class 1 air shed of Denali National Park was an important factor in that settlement.

Nearly 2 decades later, the propos al to retrofit this plant with conventional technology I findGolden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

45 unsatisfactory. Improved technology as well as awar eness of additional pollutants such as coal ash, mercury, and CO2 must require more attenti on to this permit vs. what was approved in 1994. While such pollutants aren’t currently being regulated, the U.S. Supreme Court has mandated that CO2 be regulated. Mercury and coal ash are also on the table with the EPA. Since this plant is anticipated to be at least a 20 year investment by GVEA, one would think it be a wise move to consider methodologies to both monitor and mitigate.

It would be my recommendation regarding any issuance of a new permit that the above items be

included as well as the Best Av ailable Control Technol ogy (BACT) that was not available when the air quality permit was granted for the expe rimental coal plant in 1994. If these are not required with this permit, the permit should be denied.

Response from ADEC:

The proposal by GVEA to change to emission limits based on switching to conventional technology was denied by th e Department on April 11, 2002. GVEA subsequently abandoned plans to retrofit with conventional technology. Th e emission limits in the permit presume use of the original technology. A phy sical change to a conventional pl ant would need a construction permit under PSD.

While there is increase d awareness of additional pollutants including CO 2 , mercury, and coal ash, if the PSD process were repeated today, th e Department would stil l not have a regulatory basis for BACT analysis or monito ring to include mercury or CO 2 (the increase in greenhouse gas emissions is not a major modification.) Ambient analysis was done for PM-10, which included combustion emissions. EPA is considering coal ash in regard to proper disposal rather than air emissions. If handled wet during dis posal, coal ash should not result air emissions.

From: Tom Paragi

Health Standards The Healy Clean Coal Plant (HCCP) should meet the current Title V Air Permit requirements.

I am a GVEA member who thinks factors other than simply cost of produced power are important for our future. We can continue to ope rate the existing permitted coal fired plants until natural gas or various renewable sources (i ncluding hydro) come online for electricity production. Regarding HCCP, we should strive to bring any ne w coal plant emissions into compliance for health standards regarding partic ulate size, mercury, sulf ur dioxide, and various nitrogen oxides.

Response from ADEC:

HCCP will only be permitted to operate in compliance with ambient air quality standards, and maximum allowable increases, as well as emission standards. Ambient impacts were demonstrated to be in compliance with standards in 1994, and again during post construction monitoring during the test phase.Golden Valley Electric Association Response to Comments AQ0173TVP02 Healy Power Plant February 3, 2012

46 However, there has been no preconstruction revi ew and ambient analysis for the new PM-2.5 or

1-hour SO 2 standards.

Please see also the responses to Comment 1. and to Comment 9. BACT and Monitoring.

From: John Bunyak, Chief, Policy, Planning and Permit Review Branch, National Park

Service

Mercury Control Provisions The draft permit does not include mercury control provisions, or mercury monitoring requirements. GVEA has proposed in their Ju ly 8, 2011, letter to install mercury control equipment earlier than may be required by federa l regulations at the facility. As expressed previously, we support this propos al, with the caveats discussed a bove. However, in the absence of this agreement, at a minimum, we believe the draft permit should in clude mercury monitoring provision for the Healy plant. Potential mercur y monitoring was verbally discussed between the NPS and GVEA during a January 28, 2010, meeting. This will assist in establishing baseline mercury emissions prior to fede ral regulations taking effect.

Response from ADEC:

In the absence of an owner request from the appl icant to the Department to add such monitoring conditions, the Department does not have a regulator y basis to add such requirements. The CAA and regulations under the CAA, and similarly, Al aska statutes and regulations do not require mercury monitoring.