PREVENTION

OF SIGNIFICANT DETERIORATION PERMIT ISSUED PURSUANT TO THE REQUIREMENTS

AT 40 CFR

§ 52.21 U.S. ENVIRONMENTAL PROTECTION AGENCY, REGION IX PSD PERMIT NUMBER:
SE 09-01 PERMITTEE:

City of Palmdale 38300 Sierra Highway, Suite A Palmdale, CA 93550 FACILITY NAME: Palmdale Hybrid Power Project FACILITY LOCATION:
950 East Avenue M Palmdale, CA Pursuant

tothe provisions
of the Clean Air Act (CAA), Subchapter

I, Part C (42 U.S.C. Section 7470, et. seq.), and the Code of Federal Regulations (CFR) Title 40, Section 52.21, the United States Environmental Protection Agency Region

9 (EPA)
is issuing

a Prevention
of Sign ficanz’ Deterioration (PSD) permit tothe City of Palmdale. The Permit applies
tothe construction and operation
of anew570 megawatt (MW, nominal) natural gas-fired combined-cycle power plant, with an integrated
50 MW solar-thermal plant, known
asthe Palmdale Hybrid Power Project (PHPP)
in Palmdale, California. The City of Palmdale

is authorized

toconstruct and operate the PHPP power plant as described herein, in accordance with the permit application (and plans submitted with the permit application),
the federal PSD regulations

at40 CFR

§ 52.21, and other terms and conditions
setforth in this PSD Permit. Failure
to comply with anycondition
ortermset forth in this PSD Permit mayresult in enforcement action pursuant
toSection 113 of the Clean Air Act. This PSD Permit does not relieve the City of Palmdale from the responsibility

to comply with anyother applicable provisions
of the Clean Air Act (including applicable implementing regulations

in 40 CFR Parts 51, 52, 60, 61, 63, and 72 through 75), orother federal, state, and Antelope Valley Air Quality Management District requirements. Per 40 CFR

§ 124.15(b), this PSD Permit becomes effective
30 days after the service of notice of this final permit decision unless review
is requested
onthe permit pursuant
to 40 CFR

§ 124.19. /,?

1•________________

/

( --cfDeborah Jordaj

DATE Director, Air iivisionPALMDALE HYBRID POWER PROJECT (SE 09-01) PREVENTION
OF SIGNIFICANT DETERIORATION PERMIT PERMIT CONDITIONS PROJECT DESCRIPTION The Palmdale Hybrid Power Project (Project) consists of two General Electric (GE) Frame 7FA natural gas-fired combustion turbine-generators (CTGs) rated at154 megawatt (MW, gross) each, twoheat recoverysteam generators (HRSGs), onesteam turbine generator (STG) rated at 267 MW,and 251 acresof parabolic solar-thermal collectors with associated heat-transfer equipment. The Project will have anelectrical output of 570 MW (nominal)
or563 MW (net). The Project will be located ona parcel of land owned by the city of Palmdale, currently zoned for industrial use,in Los Angeles County. The approximately 333-acre parcel
is westof the northwest cornerof Air Force Plant 42, and eastof the intersection

of Sierra Highway and East Avenue M. The City of Palmdale

is located within the Antelope Valley Air Quality Management District (District). This Prevention
of Significant Deterioration (PSD) permit for the Project requires the useof Best Available Control Technology (BACT)
tolimit emissions
of nitrogen oxides (NO), carbon monoxide (CO), total particulate matter (PM), particulate matter under 10 micrometers (jim) in diameter (PM 10 ), particulate matter under 2.5 (jim) in diameter (PM 25 ), and greenhouse gases (GHG),
tothe greatest extent feasible. Air pollution emissions from the Project would notcause orcontribute

to violations
of anyNational Ambient Air Quality Standards (NAAQS)

or any applicable PSD increments for the pollutants regulated under the PSD permit. Additional equipment includes auxiliary equipment including

anatural gasheater and boiler,

a diesel-fired emergency generator and emergencyfirewater pump engine, cooler towers, and circuit breakers. EQUiPMENT LIST The following devices and activities are subject
tothis PSD permit: Palindale Hybrid Power Project (SE 09-0 1) PSDPermit October 2011Unit ID Description GEN

I

• 154 MW (gross) combustion turbine generator (CTG), with

a maximum heat input rate of 1,736 MMBtu/hr (H1-IV) • Natural gas-fired GE Model Frame 7FA Rapid Start Process CTG • Vented
to a dedicated 1-teat Recovery Steam Generator (HRSG) and
a 267 MW Steam Turbine Generator (STG) shared with GEN2 • Integrated (through the HRSG and STG) with

a 251 -acre solar-thermal plant (STP) consisting
of parabolic solar-thermal collectors and associatedheattransfer equipment designed

to contribute
up to 50 MW of generation from the STG • Emissions
of NO and CO controlled
by Dry Low-NOx (DLN) Combustors, Selective Catalytic Reduction (SCR), and an Oxidation Catalyst (Ox-Cat) GEN2

• 154 MW (gross) combustion turbine generator (CTG), with

a maximum heat input rate of 1,736 MMBtulhr (HHV) • Natural gas-tired GE Model Frame 7FA Rapid Start Process CTG • Vented
to a dedicated Heat Recovery Steam Generator (HRSG) and
a 267 MW Steam Turbine Generator (STG) shared with GEN2 • Integrated (through the HRSG and STG) with

a 251-acre solar-thermal plant (STP) consisting
of parabolic solar-thermal collectors and associatedheattransfer equipment designed

to contribute
up to 50 MW of generation from the STG • Emissions
of NO and CO controlled
by Dry Low-NOx (DLN) Combustors, Selective Catalytic Reduction (SCR), and an Oxidation Catalyst (Ox-Cat) DBI

• 500 MMBtuJhr (HHV) Duct Burner for GENI, fired on natural gas DB2

• 500 MMBtu/hr (FIHV) Duct Burner for GEN2, fired on natural gas Dl

•

110 MMBtu/hr (HHV) Auxiliary Boiler with ultra low-NOx burner, fired on natural gas • 2,000 kW (2,683 hp) Emergency Internal Combustion (IC) Engine, fired on D2

Diesel fuel • 40 CFR Part 60, Subpart 1111 emission standards • California Air Resources Board Tier
2 emission standards • 182 hp (135 kW) Emergency Diesel-fired

IC Engine Firewater Pump Engine D3

• 40 CFR Part 60, Subpart 1111 emission standards • California Air Resources Board Tier

3 emission standards 2 Palindaic’ Hybrid Power Project (SE 09-0 1) PSD Permit October2011Unit ID Description D4

•40 MMbtulhr (HHV) Auciliary Heater with ultra low-NOx burner, fired on natural gas D5

• Cooling tower with 130,000 gallons perminute maximum circulation rate •Total dissolved solids (TDS) concentration

in makeup waterof 5,000 ppm (531 mg/L) •Drift eliminator with drift losses less than or equal to0.0005 percent based on circulation rate CB

• Enclosed-pressure

SF 6 Circuit Breakers •0.5% (by weight) annual leakage rate •10% (by weight) leak deWction system MV

•Maintenance vehicles generating fugitive road dust when traveling
on paved and unpaved roadways

in the solar field for the Project • Project Fugitive Dust Control Plan PERMIT CONDITIONS I. PERMIT EXPIRATION As provided

in 40 CFR

§ 52.21(r), this PSD Permit shall become invalid if construction: A. is not commenced
(as defined
in 40 CFR

§ 52.2 1(b)(9)) within 18 months after the approval takes effect; or B. is discontinued
for a period of 18 months
or more;or C. is not completed within

areasonable time. II. PERMIT NOTIFICATION REQUIREMENTS Permittee shall notify EPA Region IX by letter or by electronic mail of the: A. date construction

is commenced, postmarked within 30 days of such date; B. actual date of initial startup,
asdefined
in 40 CFR

§ 60.2, postmarked within
15 days of such date; C. date uponwhich initial performance testswill commence,

in accordance with the provisions
of Condition X.G, postmarked notless than 30 days prior tosuch date. Notification maybe provided with the submittal
of the performance test protocol required pursuant
to Condition X.G; and 3 Pabndale Hybrid Power Project (SE09-0 1) PSDPermit October2011D. date upon which initial performance evaluation
of the continuous emissions monitoring system (CEMS) will commence

in accordance with 40 CFR

§ 60.13(c), postmarked not less than 30 days prior to such date. Notification may be provided with the submittal
of the CEMS performance test protocol required pursuant

to Condition X.F. IlL FACILITY OPERATION A. At all times, including periods of startup, shutdown, shakedown, and malfunction, Permittee shall, to the extent practicable, maintain and operate the Facility, including associated
air pollution control equipment,

in a manner consistent with good air pollution control practice for minimizing emissions. Determination

of whether acceptable operating and maintenance procedures
are being used will be based on information available

to EPA, which may include, but is not limited to, monitoring results, opacity observations, review of operating maintenance procedures and inspection
of the Facility. B. The Permittee shall operate and maintain the STP in a manner consistent with good engineering practices for its full utilization. C. As soon as practicable following initial startup of the power plant (as defined
in 40 CFR

§ 60.2) but prior to commencement

of commercial operation (as defined
in 40 CFR

§ 72.2), and thereafter, the Permittee shall develop and implement

an operation and maintenance plan for the STP, consistent with Condition III.B above. At a minimum, the plan shall identify measures for assessing the performance

of the STP, the acceptable range of the plant performaice measures for achieving the design electrical output, the methods for monitoring the plant performance measures, and the routine procedures for maintaining
the STP in good operating condition. IV. MALFUNCTION REPORTING A. Permittee shall notify EPA at R9.AEOepa.gov within two (2) working days following the discovery
of any failure of air pollution control equipment

or process equipment,

or failure of a process
to operate
in a normal manner, which results
in an increase
in emissions above the allowable emission limits stated in Section
X of this permit. B. In addition, Permittee shall provide an additional notification

to EPA in writing or electronic mail within fifteen (15) days of any such failure described under Condition IV.A. This notification shall include

a description
of the malfunctioning equipment or abnormal operation, the date of the initial malfunction,
the period of time over which emissions were increased due to the failure, the cause of the failure, the 4 Palmdale Hhrid Power Project (SE 09-0 1) PSD Permit October 2011estimated resultant emissions

in excessof those allowed
in Section X, and the methods utilized
to mitigate emissions and restore normal operations. C. Compliance with this malfunction notification provision shall notexcuseorotherwise constitute

adefense
to anyviolation of this permit or anylaw or regulation such malfunction maycause. V. RIGHT OF ENTRY The EPA Regional Administrator, andlor anauthorized representative, uponthe presentation

of credentials, shall be permitted: A. to enterthe premises where the Facility

is located orwhere anyrecords are required tobe kept under the terms and conditions
of this PSD Permit; B. during normal business hours, tohave accesstoand to copy anyrecords required
to be kept under the terms and conditions
of this PSD Permit; C. to inspect any equipment, operation,

ormethod subject to requirements

in this PSD Permit; and D. to sample materials and emissions from the source(s). VI. TRANSFER
OF OWNERSHIP In the event of any changes
in control or ownership
of the Facility, this PSD Permit shall be binding onall subsequent ownersand operators. Within
14 days of anysuch change in control or ownership, Permittee shall notify the succeeding ownerand operator of the existence
of this PSD Permit and its conditions
by letter. Permittee shall send

a copyof this letter toEPA Region IX within thirty (30) days of its issuance. VI!. SEVERABILITY The provisions
of this PSD Permit are severable, and, if any provision
of the PSD Permit is held invalid, the remainder
of this PSD Permit shall notbe affected. VIII. ADHERENCE
TO APPLICATION AND COMPLIANCE WITH OTHER ENVIRONMENTAL LAWS Permittee shall construct the Project
in compliance with this PSD permit, the application 5 Palmdale [-lybrid Power Project (SE 09-01) PSDPermit October 2011on which this permit
is based, and all other apilicab1e federal, state, and local air quality regulations. This PSD permit does not release the Permittee from any liability for compliance with other applicable federal, state and local environmental laws and regulations, including the Clean Air Act. IX. RESERVED

6 Palrndale Hybrid Power Project (SE 09-01) PSD Permit October 2011X. SPECIAL CONDITIONS A. Annual Facility Emission Limits 1. Annual emissions,

in tons per year (tpy) ona12-month rolling average basis, shall not exceed the following: NO
CO
PM PM 10 PM 2 . Facility114.9 ipy 244.1 tpy 111.Itpy 94.5tpy 88.0 CO 2 e Total Facility 1,913,000 tpy 2. Only Public Utilities Commission (PUC)-quality pipeline natural gasshall be fired atthis Facility. PUC-quality pipeline natural gasshall not exceed

asulfur contentof 0.20 grains per100 dry standard cubic feet ona12-month rolling averagebasis and shall not exceed asulfur content of 1.0 grains per100 dry standard cubic feet, at anytime. B. Air Pollution Control Equipment and Operation As soonas practicable following initial startupof the power plant (startup
asdefined
in 40 CFR

§ 60.2) but prior to commencement

of commercial operation (as defined
in 40 CFR

§ 72.2), and thereafter, except asnoted below in Condition X.D, Permittee shall install, continuously operate,and maintain the SCR systems for control of NOx and the Ox-Cat systemsfor control of CO for Units GEN1 and GEN2. Permittee shall also perform any necessary operations

tominimize emissions

sothat emissions areatorbelow the emission limits specified
in this permit. C. Combustion Turbine Generator (CTG) Emission Limits 1. Except
asnoted below under Condition X.D, onand after the date of initial startup, Permittee shall not discharge
orcausethe discharge
of emissions from each CTG Unit (of GEN1 and GEN2) into the atmosphere

in excessof the following: 7 Palmdale HybridPower Project (SE 09-01) PSD Permit October2011Emission Limit (per CTG) (no duct burning) • 13.47 lb/hr • 1-hr average • 2.Oppmvd@15%0 2 3-Year Demonstration Period • 8.20 lb/hr • 1-hr average • 2.Oppmvd@15%0 2 Post-Demonstration Period • 6.15 lb/hr • 1-hr average • 1.5ppmvd@15%0 2 Emission Limit (per CTG) (with duct burning) • 16.60 lb/hr • 1-hr average • 2.Oppmvd@15%02 • 10.10 lb/hr •

1 -hr average • 2.Oppmvd@15%0 2 PM, PM 10 PM 2 . 5 Conditions

in X.C.3 may affect the timing and applicability

of post-demonstration period emission limits. • 0.0048 lb/MMBtu • 8.46 lb/hr • 9-hr average • PUC-quality natural gas (Sulfur content of no greater than 0.20 grains per 100 dscf on a 12-month average and not greater than 1.0 gr/dscf
at any time)

• 0.0049 lb/MMBtu • 11.31b/hr • 9-hr average • PUC-quality natural gas (Sulfur content of no greater than 0.20 grains per 100 dscf on a 12-month average and not greater than 1.0 gr/dscf
at any time) • 774 lb C0 2 /MWh source-wide
net output • 7,319 Btu/kWh source-wide
net heat rate • 365-day rolling average NO, Co GHG 2. The hours of operation for each duct burner (DBI and DB2) shall not exceed 2,000 hours per 12-month rolling average. Permittee shall ensure that the duct burners are not operated unless the associated turbine units are in operation. 8 Palrndale Hybrid Power Pro/ect (SE 09-01) PSD Permit October 20113. CO Emissions Limit Demonstration Period—The Demonstration Period
is defined
asthe first

3 years immediately following the commencement

of commercial operations
(as defined
in 40 CFR

§ 72.2). a.Permittee shall design the gasturbines
to achieve

aCO emission rate of 1.5 ppmvd
@ 15% 02 and 6.15 lb/hr over
a

1:hour period without duct firing. Prior to construction, Permittee shall submit design specifications

toEPA as proof that the gasturbines were designed
toachieve such
arate,and
a plan that setsforth the measuresthat will be taken to maintain the system and optimize
its performance. b. During the Demonstration Period, Permittee shall operate the gasturbines according tothe design specifications, within the design parameters, and consistent with the maintenance and performance optimization plan described above in Condition X.C.3.a. During the Demonstration Period, Permittee shall not discharge
orcausethe discharge
of CO emissions from each CTG Unit (GEN1 and GEN2) into the atmosphere

in excessof the following amounts over

a1-hour averaging period: 2.0 ppmvd CO@ 15% 02 and (1) 10.10 lb/hr with duct firing or (2) 8.20 lb/hr without duct firing. c. Following the Demonstration Period, Permittee shall not discharge
orcausethe discharge
of CO emissions from each CTG Unit (GEN

1 and GEN2) into the atmosphere

in excessof the following amounts over
a1-hour averaging period except as specified
in Condition X.C.3.d: i. 1.5 ppmvd
@ 15% 02 without duct firing; ii. 2.0 ppmvd
@ 15% 02 with duct firing; iii. 6.15 lb/hr without duct firing; and iv. 10.10 lb/hr with duct firing. d. If, during the Demonstration Period, Permittee determines that the CO limits in Conditions X.C.3.i orX.C.3.iii arenot feasible, Permittee shall submit an application toEPA prior tothe end of the Demonstration Period requesting

arevision of those limits. Such an application mustcontain data and information that demonstrates that the Facility was operated according

tothe design specifications and parameters, and the maintenance and performance optimization plan, identified above in Condition X.C.3.a,
aswell asatechnical justification explaining why the lower limits arenot feasible.
If, after the applicable review process following such

asubmission (which will include an opportunity
for public review and comment),

it is determined through data and information gathered during the Demonstration Period that different CO limits are necessary,the limits in Condition X.C.3.i and X.C.3.iii will be revised accordingly. Provided that the application specified
in this condition

is postmarked prior tothe end of the Demonstration Period, the emission limits in Condition X.C.3.b 9 Palmdale HybridPower Project (SE 09-01) PSD Permit October 201]shall remain in effect until EPA evaluates the application and makes

a final decision regarding the revision of the limits in Conditions X.C.3.i or X.C.3.iii. D. Requirements during Gas Turbine (GEN1 and GEN2) Startup and Shutdown 1. Startup
is defined
as the period beginning with ignition and lasting until either the equipment complies with all operating permit limits for two consecutive 15-minute averaging periods Or the maximum time allowed for the event after ignition, whichever occurs first; and the period of time during whih

a unit is brought from

a shutdown status to its operating temperature and pressure, including the time required by the unit’s emission control system to reach full operations and demonstrate compliance with Condition X.C. a. A cold startup means

a startup when the CTG has not been in operation during the preceding
48 hours. b. Warm and hot start-ups include all startups that are not a cold startup. 2. Shutdown

is defined
as the period beginning with the lowering of equipment from normal operating load and lasting until fuel flow is completely off and combustion has ceased. 3. The duration of startup and shutdown periods and emissions
of NO and CO shall not exceed the following, for each CTG (GEN1 and GEN2) and associated HRSG unit, as verified by the CEMS: NO. CO Duration Cold Startup

96 lb/event
410 lb/event
110 minutes Warm and Hot 40 lb/event
329 lb/event

80 minutes Startup Shutdown

57 lb/event
337 lb/event

30 minutes 4. Permittee must operate the CEMS during startup and shutdown periods. 5. Permittee must record the time, date, and duration of each startup and shutdown event. The records must include calculations

of NOx and CO emissions during each event based on the CEMS data. These records must be kept for five years following the date of such event. 6. During startup, the SCR system, including ammonia injection, shall be operated
as soon as the SCR reaches an operating temperature

of 550 degrees Fahrenheit. 10 Palmda/e Hybrid Power Project (‘SE 09-01) PSD Permit October 20117. During startupor shutdown, emissions
of NO from both CTGs (GEN1 and GEN2) combined shall notexceed 130 lb/br, asverified by the CEMS. 8. During startup or shutdown, emissions
of CO from both CTGs (GEN1 and GEN2) combined shall notexceed 790 lb/hr, asverified by the CEMS. E. Auxiliary Combustion Equipment Emission Limits and Work Practices 1. At all times, including equipment startup and shutdown, Permittee shall not discharge
or causethe discharge
of emissions from each unit into the atmosphere

in excessof the following, and shall otherwise comply with the following specifications: UnitiD
NO

CO PM/PM 10 PM 2 .5
GHG Unit Dl

•9 ppmvd
@

•50 ppmvd

•0.8 lb/hr Annual boiler 110 MMBtu!hr

3% 02

3% 02

• PUC-quality tUfle-UpS (l-IHV) Boiler

•3-hr average

•3-hr average pipeline natural gas •6.4 g/kW-hr,

•0.20 g/kW-hr,
Not applicable Unit D2

(4.8 g/hp-hr),

(0.15 g/hp-hr

) 000 kWincludes

•3.5 g/KW-hr,

•Use of ultra-low (2,683 hp) engineNMHC.(2.6 g/hp-hr) sulfur fuel, notto •3-hr average
exceed
15 ppm fuel sulfur Unit D3

•4.0 g/KW-hr,

•Fuel supplier Not applicable 182 hp firewater
(3.0 g/hp-hr), certification pump includes NMHC •3-hr average Unit D4

•9 ppmvd
@

•50 pprnvd
@

•0.3 lb/hr Annual boiler 40 MMBtu/hr

3% 02

3% 02

• PUC-quality tune-ups (HHV) Heater

•3-hr average

•3-hr average pipeline natural gas Unit D5

•1.6 lb/hr (as total 130,000 gpmNot applicable Not applicable
PM)

Not applicable Cooling Tower

•<0.0005% drift • <5,000 ppmtotal dissolved solids 11 Palmdale HybridPower Project (SE 09-01) PSD Permit October2011Unit ID NO

CO PM

/ PM 0 PM 2 . 5 GHG CB

• 9.56 tpy C0 2 e SF Circuit
Not applicable Not applicable Not applicable

• 12-month Breakers

rolling total MV

Conditions

in X.E.9 Maintenance

Not applicable Not applicable including

a Fugitive Not applicable Vehicles

Dust Control Plan 2. Unit Dl shall not operate during normal operations
of GEN1 or GEN2, except during periods of, or immediately following, startup. Unit Dl shall be shut down as soon as practicable after the completion
of any startup process
as defined
in Condition X.D.
1. Annual hours of operation for Unit Dl shall not exceed 500 hours per 12-month rolling average. 3. Except during an emergency, Unit D2 shall be limited
to operation
of the engine for maintenance and testing purposes. Annual hours of operation for Unit D2, for maintenance and testing, shall not exceed 50 hours per 12-month rolling average. 4. Except during an emergency, Unit D3 shall be limited
to operation
of the engine for maintenance and testing purposes, including

as required for fire safety testing. Annual hours of operation for Unit D3, for maintenance and testing, shall not exceed 50 hours per 12-month rolling average. 5. Units D2 and D3 shall not operate during startup of GEN1 or GEN2, except when Units D2 or D3 are required for emergency operations. 6. Unit D4 restrictions
on usage shall be limited
to annual hours of operation
of not to exceed 1,000 hours per 12-month rolling average. 7. Unit D5 cooling tower emission limits shall not exceed the following: a. Drift rate shall not exceed 0.0005% with amaximum circulation rate of 130,000 gallons per minute (gpm). The maximum total dissolved solids (TDS) shall not exceed 5,000 ppm. b. The maximum hourly total PM emission rate from the cooling tower and the evaporative condenser combined shall not exceed 1.6 lb/hr. 8. Unit CB enclosed-pressure

SF 6 circuit breakers: 12 Palmdale Hybrid Power Project (SE 09-01) PSI) Permit October 2011a.Emissions shall not exceed anannual leakage rateof 0.5% by weight; and b. Shall be equipped with
a10% by weight leak detection system. 9. For Unit MV, maintenance vehicles that travel on paved and unpaved roadways

in the solar field associated with the Project, Permittee shall complete the following prior tothe commencement

of commercial operation (as defined
in 40 CFR

§ 72.2): a.Pave the main accessroad into the plant site; b. Submit

a Project Fugitive Dust Control Plan toEPA that includes fugitive road dust control measuresfor unpaved and paved roads, including, but not limited to: i. useof adurable non-toxic soil stabilizer applied throughout the solar field for dust control; ii. useof adurable non-toxic soil stabilizer

totreat unpaved roads within the solar field used by wash trucks that sprayand clean the mirrors; iii. inspection and maintenance procedures

toensurethat the unpaved roads remain stabilized; iv. useof water trucks applying water ondisturbed areaswhere soil stabilizers arenot as effective; v.useof water nthe mirror washing for incidental dust control; and vi. limiting vehicle speeds tonomorethan 10 miles perhour on unpaved roadways, with the exception that vehi1es maytravel upto25 miles perhour onstabilized unpaved roads as long assuch speeds do notcreate visible dust emissions. 10. Units Dl and D4 shall undergo annual tune-ups and meetthe associated requirements

of Condition X.I.9 asfollows (if the unit is not operating
onthe required date for a tune-up, the tune-up mustbe conducted within oneweek of startup): a. Inspect the burner, and clean or replace any components

of the burner as necessary (you may delay the burner inspection until the next scheduled unit shutdown, but you must inspect each burner
at least once every18 months). b, Inspect the flame pattern, and adjust the burner as necessary

to optimize the flame pattern. The adjustment should be consistent with the manufacturer’s specifications. c. Inspect the system controlling the air-to-fuel ratio, and ensurethat it is correctly calibrated and functioning properly. d. Optimize total emissions
of carbon monoxide. This optimization should be consistent with the manufacturer’s specifications.

13 Palmdale HybridPowerProJect (SE 09-01) PSDPermit October201!e. Measure the concentrations

in the effluent stream of carbon monoxide

in parts per million, by volume, and oxygen
in volume percent, before and after the adjustments are made (measurements may be either on a dry or wet basis, as long as it is the same basis before and after the adjustments
are made). F. Continuous Emissions Monitoring System (CEMS) for GEN1 and GEN2 1. At the earliest feasible opportunity after first fire of GEN

I and GEN2 and before GEN

1 and GEN2 commence commercial operation (as defined
in 40 CFR

§ 72.2), in accordance with the recommendations

of the equipment manufacturer and the construction contractor: a. Permittee shall install, calibrate, and operate

a CEMS each for GEN1 and GEN2 that measures stack gas N0, CO, and CO 2 concentrations

in ppmv. The concentrations shall be corrected

to 15% 02 on a dry basis. No later than the end of the shakedown period as defined
in Condition X.J. or upon commencing commercial operations, whichever comes first, Permittee shall also maintain, certify, and quality-assure

a CEMS for each CTG that measures stack gas NOx, CO, and CO 2 concentrations

in ppmv, and shall conduct initial certification

of the CEMS in accordance with Condition X.F.6. The concentrations shall be corrected

to 15% 02 on a dry basis. b. If Permittee chooses
to install an 02 CEMS,

it shall be installed, calibrated and operated
to measure 02 concentrations

in ppmv. No later than the end of the shakedown period as defined
in Condition X.J. or upon commencing commercial operations, whichever comes first, Permittëe shall also maintain, certify, andqualityassure the CEMS for each CTG that measures 02 concentrations

in ppmv, and shall conduct initial certification

of the CEMS in accordance with Condition X.F.6. Permittee may not install an 02 CEMS in lieu of the CO 2 çEMS in Condition X.F.

I .a. 2. The NON, CU 2 , and 02 CEMS shall meet the applicable requirements

of 40 CFR Part 75. 3. The CO CEMS shall meet the applicable requirements

of 40 CFR Part 60 Appendix

B, Performance Specification

4, and 40 CFR Part 60 Appendix

F, Procedure

1, except the relative accuracy specified

in section 13.2 of 40 CFR Part 60 Appendix
B, Performance Specification

4 shall not exceed 20 percent. 4. Each CEMS shall complete

a minimum
of one cycle of operation (sampling, analyzing, and data recording) for each successive 15-minute clock-hour period. 5. The CEMS shall be tested in accordance with Conditions X.F.2 and X.F.3. 14 Palmdale Hybrid Power Project (SE 09-01) PSD Permit October 20116. The initial certification

of the CEMS mayeither be conducted separately,

as specified

in 40 CFR

§ 60.334(b)(1),

oras partof the initial performance test of each emission unit. The CEMS must undergo and passinitial performance specification testing onorbefore the date of the initial performance test. 7. The CEMS shall meetthe requirements

of 40 CFR

§ 60.13. Data sampling, analyzing, and recording shall also be adequate
todemonstrate compliance with emission limits during startup and shutdown. 8. Not less than 90 days prior tothe date of initial startupof the Facility, the Permittee shall submit tothe EPA

a quality assurance project plan for the certification and operation
of the CEMS. Such

a plan shall conform
toEPA requirements contained

in 40 CFR Part 60 Appendix

F for CO, 40 CFR Part 75 for NOx and 02orC0 2 ,and 40 CFR Part 75 Appendix

B for stack flow. The plan shall be updated and resubmitted upon request by EPA. The protocol shall specify how emissions during startups and shutdowns will be determined and calculated, including quantifying flow accurately

if calculations
areused. 9. The gasturbine CEMS shall be audited quarterly and tested annually
in accordance with 40 CFR Part 60 Appendix

F, Procedure

1. Permittee shall perform

afull stack traverse during initial runof annual RATA testing of the CEMS, with testing points selected according

to40 CFR Part 60 Appendix
A, Method

1. 10. Permittee shall submit

aCEMS performance test protocol
tothe EPA nolater than 30 days prior tothe testdate toallow r.eview of the test plan and to arrangefor anobserver
to be present
atthe test.The performance testshall be conducted

in accordance with the submitted protocol and any changes required by EPA. 11. Permittee shall furnish the EPA

awritten reportof the results of performance tests within 60 days of completion. 12. The stack gasvolumetric flow ratesshall be calculated

in accordance with the fuel flowmeter requirements

of 40 CFR Part 75 Appendix

D in combination with the appropriate partsof EPA Method 19. 13. Prior to the date of initial startupof GEN1 and GEN2, Permittee shall install, and thereafter maintain and operate, continuous monitoring and recording systems
tomeasure and record the following operational parameters: a.The ammonia injection rate of the ammonia injection systemof the SCR system. b. Exhaust gas temperature

atthe inlet tothe SCR reactor. 15 Palmdale HybridPower Project (SE 09-01) PSDPermit October 201114. Permittee shall measure and record, for each Unit GEN 1/DB

1 and Unit GEN2/DB2,
the actual heat input (Btu) on an hourly basis. 15. Permittee shall measure and record, for the entire facility, the following: a. Net energy output (MWhnet afld kWhnet) on an hourly basis; b. Pounds of CO 2 per net energy output (lb C0 2 /MWhnet)

on an hourly basis; c. Net heat rate (BtulkWhnet)

on an hourly basis, based on total heat input for the facility; d. The 365-day rolling average emission rate of lb C0 2 /MWhnet and BtUlkWhnet. The 365-day rolling average shall be based on the average hourly recordings. G. Performance Tests 1. Stack Tests a. Within 60 days after achieving normal operation, but not later than 180 days after the initial startup of equipment, and, unless otherwise specified, annually thereafter (within 30 days of the initial performance test anniversary), Permittee shall conduct performance tests (as described

in 40 CFR

§ 60.8) as follows: i. NOx, CO, C0 2 , PM, PM 10 and PM 25 emissions from each gas turbine (Units GEN1/DB1 and GEN2/DB2); ii. NOx and CO emissions from the 110 MMBtu/hr boiler (Dl) and the 40 MMBtuJhr heater (D4); PM, PM 10 and PM 25 emissions from the 110 MMBtuJhr boiler (Dl) and the 40 .MMBtuJhr heater (D4) shall be tested initially and at least every five years (within 30 days of the initial performance test anniversary); iii. NOx, CO. PM, PM 10 and PM 25 emissions from the 2,000 kW (2,683 hp) internal combustion engine (D2), initial performance test and at least every five years beginning ten years after the initial performance test (within 30 days of the initial performance test anniversary); iv. NOx, CO. PM, PM 10 and PM 25 emissions from the 182 hp firewater pump (D3), initial performance test and at least every five years beginning ten years after the initial performance test (within 30 days of the initial performance test anniversary); and v. PM, PM 10 and PM 25 emissions from the cooling tower (D5). b. Permittee shall submit

a performance test protocol
to EPA no later than 30 days prior to the test to allow review of the test plan and to arrange for an observer
to be present 16 Palmdale Hybrid Power Project (‘SE 09-01) PSD Permit October 2011atthe test. The performance testshall be conducted

in accordance with the submitted protocol, and any changes required by EPA. c.Performance testsshall be conducted

in accordance with the test methods setforth in 40 CFR

§ 60.8 and 40 CFR Part 60 Appendix
A, asmodified below. In lieu of the specified test methods, equivalent methods maybe used with prior written approval from EPA: i. EPA Methods 1-4 and 7E for NOx emissions measured

in ppmvd ii. EPA Methods 1-4, 7E, and 19 for NOx emissions measured
onaheat input basis iii. EPA Methods 1-4 and 10 for CO emissions iv. EPA Methods 1-4 and 3B for CO 2 emissions v.EPA Methods

5 and 202, orMethods 201A and 202, for PM, PM 10 and PM 25 ,in accordance with the test methods setforth in 40 CFR

§ 60.8, 40 CFR Part 60 Appendix
A, and 40 CFR Part 51 Appendix M; in lieu of Method 202, Permittee mayuseEPA Conditional Test Methods for particulate matter CTM-039 vi. Modified Method 306 orthe Cooling Tower Institute’s heated bead test method for PM emissions from the cooling tower, and vii. the provisions
of 40 CFR

§ 60.8(f). d. The initial performance test conducted after initial startup shall usethe test procedures for a “high NO 2 emission site,” as specified
in San Diego Test Method 100, tomeasureNOx emissions. The sourceshall be classified

aseither

a“low” or “high” NO 2 emission site based onthese test results.
If the emission source
is classified

asa: i. “high NO 2 emission site,” then each subsequent performance testshall usethe test procedures for a “high NO 2 emission site,” as specified
in San Diego Test Method 100. ii. “low NO 2 emission site,” then the test procedures for a “high NO 2 emission site,” as specified
in San Diego Test Method 100, shall be performed once everyfive yearsto verify the source’s classification

asa“low NO 2 emission site.” e.The performance test methods for NO emissions specified

in Condition X.G.

1 .c.i and ii., maybe modified

asfollows: i. Perform

aminimum
of 9 reference method runs,with
aminimum time perrunof 21 minutes,

ata single load level, between 90 and 100 percent of peak (or the highest physically achievable) load, and ii. Use the test data both to demonstrate compliance with the applicable NOx emission limit and to provide the required reference method data for the RATA of the CEMS.

17 Pabndale HybridPower Project (SE 09-01) PSDPermit October 2011f. Upon written request and adequate justification from the Permittee, EPA may waive

a specific annual test andlor allow for testing to be done at less than maximum operating capacity. g. For performance test purposes, sampling ports, platforms, and access shall be provided
on the emission unit exhaust system
in accordance with the requirements

of 40 CFR

§ 60.8(e). h. Permittee shall furnish the EPA

a written report of the results of performance tests within 60 days of completion. 2. Cooling Tower Total Dissolved Solids Testing a. Permittee shall perform weekly tests of the blow-down water quality using anEPAapproved method. The operator. shall maintain

a log that contains the date and result of each blow-down water quality test, the water circulation rate at the time of the test, and the resulting mass emission rate. This log shall be maintained onsite for a minimum
of five years and shall be provided
to EPA and District personnel upon request. b. Permittee shall calculate PM, PM 10 and PM 2 . 5 emission rate using an EPA-approved calculation based on the TDS and water circulation rate. c. The operator shall conduct all required cooling tower water quality tests in accordance with an EPA-approved
test and emissions calculation protocol. Thirty (30) days prior to the first such test, the operator shall provide

a written test and emissions calculation protocol for EPA review and approval, with

a copy to the District
as specified
in Condition XII below. d. A maintenance procedure shall be established that states how often and what procedures will be used to ensure the integrity of the drift eliminators,

to ensure that the TDS limits are not exceeded, and to ensure compliance with recirculation rates. This procedure

is to be kept onsite and made available

to EPA and District personnel upon request. Permittee shall promptly report any deviations from this procedure. 3. Fuel Testing a. Permittee shall take monthly samples of the natural gas combusted. The samples shall be analyzed for sulfur content using an ASTM method. The sulfur content test results shall be retained onsite and taken to ensure compliance with Special Conditions X.C and X.E fbr Units GEN1/DBI, GEN2/DB2, Dl, and D4. As an 18 Palmdale Hybrid Power Project (‘SE 09-0 1) PSD Permit October 2011alternative, Permittee mayobtain laboratory analysis of sulfur content from the fuel supplier ona monthly basis, if Permittee candemonstrate that the fuel tested
is representative

of fuel delivered/to
the facility. H. Monitoring for Auxiliary Equipment 1. Permittee shall install and maintain
an operational non-resettable totalizing massor volumetric flow meter in each fuel line for the 110 MMBtuJhr boiler (Unit Dl) and the 40 MMBtuJhr heater (Unit D4). 2. Permittee shall install and maintain
an operational non-resettable elapsed time meterfor the 110 MMBtu /hr boiler (Unit D t), 2,000 kW emergencyuse engine (Unit D2), the 182 hp emergency-usefirewater pump (Unit D3), and the 40 MMBtuJhr heater (Unit D4). 3. Permittee shall install and maintain

aleak detection systemonthe circuit breakers that signals analarm in the facility’s control roomin the event that anycircuit breaker loses morethan 10% of its dielectric fluid. The owner/operator shall promptly respond
to any alarm, investigate the circuit breaker involved, and fix any leak-tightness problems that caused the alarm. I. Recordkeeping
and Reporting 1. Permittee shall maintain

afile of all records, data, measurements, reports, and documents related tothe operation of the Facility, including, but not limited to, the following:
all records or reports pertaining

to adjustments and/or maintenance performed
on any system ordevice
at the Facility; all records relating
to performance testsand monitoring
of auxiliary combustion equipment; for each diesel fuel oil delivery, documents from the fuel supplier certifying compliance with the fuel sulfur content limit of Condition X.E; and all other information required by this permit recorded

in a permanent form suitable for inspection. 2. Permittee shall maintain CEMS records that include the following: the occurrenceand duration of any startup, shutdown, shakedown,

or malfunction, performance testing, evaluations, calibrations, checks, adjustments, maintenance, duration of any periods during which

acontinuous monitoring systemor monitoring device
is inoperative, and corresponding emission measurements. 3. Permittee shall maintain records of all sourcetests and monitoring and compliance information required by this permit. 4. Permittee shall maintain records and submit

awritten reportof all excessemissions

to EPA semi-annually, exceptwhen: more frequent reporting

is specifically required by an 19 Palmdale ifybrid Power Project (SE 09-01) PSDPermit October2011applicable subpart;
or the Administrator,

on a case-by-case basis, determines that more frequent reporting

is necessary

to accurately assess the compliance status of the source. The report
is due on the

30 th day following the end of each semi-annual period and shall include the following: a. Time intervals, data and magnitude
of the excess emissions, the nature and cause (if known), corrective actions taken and preventive measures adopted; b. Applicable time and date of each period during which the CEMS was inoperative (monitor down-time), except for zero and span checks, and the nature of CEMS repairs or adjustments; c. A statement

in the report of a negative declaration; that is, a statement when no excess emissions occurred
or when the CEMS has not been inoperative, repaired,
or adjusted; d. Any failure to conduct any required source testing, monitoring,

or other compliance activities; and e. Any violation of limitations
on operation, including but not limited
to restrictions on hours of operation. 5. Excess emissions shall be defined
as any period in which the Facility emissions exceed the maximum emission limits set forth in this permit. 6. A period of monitor down-time shall be any unit operating clock hour in which sufficient data are not obtained by the CEMS to validate the hour for NOx, CO, C0 2 , or 02, while the CEMS
is also meeting the requirements of-Condition X.F.7. 7. Excess emissions indicated by the CEM system, source testing, or compliance monitoring shall be considered violations
of the applicable emission limit for the purpose of this permit. 8. Permittee shall maintain the Fugitive Dust Control Plan on-site, which shall include all documentation related
to demonstrating compliance with Condition X.E.9 for Unit MV, in a permanent form suitable for inspection. 9. Permittee shall conduct annual tune-ups
as required by Condition X.E. 10 for Units Dl and D4 and maintain onsite, and submit if requested
by the Administrator,

a biennial report containing the information

in paragraphs
(a) through (c) below: a. The concentrations

of CO in the effluent stream in parts per million, by volume, and 20 Palmdale Hybrid Power Project (SE 09-01) PSD Permit October 2011oxygen
in volume percent, measured before and after the tune-up of the boiler. b. A description
of anycorrective actions taken asa partof the tune-up of the boiler. c.The type and amount of fuel used overthe 12 months prior tothe biennial tune-up of the boiler. 10. Permittee shall record the pounds of dielectric fluid added tothe circuit breakers each month. 11. The Permittee shall maintain

a cop5r of the current operation and maintenance plan for the STP, and shall keep

a copyof all prior versions of the plan for aminimum
of five years. The Permittee shall also keep records of the monitoring data for each of the plant performance measuresand all maintenance activities; the Permittee shall maintain such records for aminimum
of five years following the date they arecreated 12. Unless otherwise specified herein, all records required by this PSD Permit shall be retained for not less than five years following the date of such measurements, maintenance, reports, andJor records. J. Shakedown Periods The combustion turbine emission limits and requirements

in Conditions X.C, X.D, and X.E shall not apply during combustion shakedown periods. Shakedown

is defined
asthe period beginning with initial startup and ending nolater than initial performance testing, during which the Permittee conducts operational and contractual testing and tuning to ensurethe safe, efficient and reliable operation
of the plant. The shakedown period shall not exceed 90 days. The requirements

of Section III of this permit shall apply atall times. 21 Palmdale Hybrid Power Project (SE 09-0!) PSDPermit October2011Xl. ACROYNMS AND ABBREVIATIONS AQMD
Air Quality Management District ASTM American Society for Testing and Materials BACT Best Available Control Technology BTU British Thermal Unit CAA Clean Air Act CEMS Continuous Emissions Monitoring System CFR Code of Federal Regulations CO Carbon Monoxide C0 2 e Carbon Dioxide Equivalent CTG Combustion Turbine Generator CTM Conditional Test Method District Antelope Valley Air Quality Management District DLN
Dry LowNOx (d)scf (dry) Standard Cubic Feet EPA Environmental Protection Agency FDOC Final Determination

of Compliance g grams GE General Electric GHG Greenhouse Gas gpm Gallons Per Minute gr grains HHV Higher Heating Value l-IRSG Heat Recovery Steam Generator hp Horsepower hr Hour IC Internal Combustion kPa kilopascals kW Kilowatt lb Pounds lbs Pounds MMBtu Million British Thermal Units MW Megawatt NAAQS National Ambient Air Quality Standards NNSR Nonattainment New Source Review NO 2 Nitrogen Dioxide NO Oxides of Nitrogen NSPS New Source Performance Standards 02 Oxygen Ox-Cat Oxidation Catalyst PHPI Palmdale Hybrid Power Project 22 Palmdale Hybrid Power Project (SE 09-0 1) PSD Permit October 2011PM Total Particulate Matter PM 25 Particulate Matter with aerodynamic diameter less than 2.5 micrometers PM 10 Particulate Matter with aerodynamic diameter less than 10 micrometers ppmParts Per Million ppmvd Parts Per Million by Volume, Dry basis ppmvParts Per Million by Volume PSD Prevention
of Significant Deterioration PUC Public Utilities Commission RATA Relative Accuracy Test Audit SCR Selective Catalytic Reduction SF 6 Sulfur Hexafluoride SO 2 Sulfur Dioxide 5 Ox Oxides of Sulfur STG Steam Turbine Generator STP Solar-thermal Plant TDS Total Dissolved Solids tpy Tons Per Year yrYear XII. AGENCY NOTIFICATIONS All correspondence

as required by this Approval

to Construct mustbe sentto: A. Director, Air Division (Attn: AIR-5) EPA Region IX 75 Hawthorne Street San Francisco, CA 94105-3901 Email: R9.AEOepa.gov Fax: (415) 947-3579 With

a copyto: B. Air Pollution Control Officer Antelope Valley Air Quality Management District 43301 Division Street, Suite 206 Lancaster, CA 93535 Fax: (661)723-3450

23 Palmdale HybridPower Project (SE 09-0]) PSDPermit October2011