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OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

70) ll-C-12 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:50:54 AM Sheet 70 of 276 
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l^SS ^ * UNITED STATES ENVIRONMENTAL PRO i cv_ i IUIN A-otNCY 

WASHINGTON D C 20450 

FEB I 5 1989 

Mr. John W. Boston 

Vice President 

Wisconsin Electric Power Company 

Post Offi.e Box 2046 

Milwaukee, Wisconsin 52301 

Dear Mr. Boston: 

This is a revised final determination, on reconsideration, 

regarding the applicability of the Clean Air Act's New Source 

Performance Standards (NSPS) and Prevention of Significant 

Deterioration (PSD) provisions to the proposed life extension 

project at the Port Washington steam electric generating station, 

which is owned and operated by Wisconsin Electric Power Company 

(WEPCO). This determination supplements the determination set 

forth in an October 14, 1988 letter to you from Lee M. Thomas, 

which in turn incorporated my September 9, 1988 memorandum. I 

find it necessary to reconsider EPA's original determination and 

issue this revised determination in part to address matters 

raised by, and new information submitted by, WEPCO 

representatives since the October 14 letter. WEPCO believes that 

these new aspects call into question the accuracy of EPA's prior 

determination. 

For the following reasons, EPA today reaffirms, with limited 

exceptions detailed below, its earlier findings regarding the 

Port Washington life extension project. I hereby incorporate by 

reference the October 14 letter and the September 9 memorandum, 

and reaffirm the findings and conclusions in those two documents 

except where they are specifically superseded below. 

This action constitutes final agency action for purposes of 

judicial review under section 307(b) of the Clean Air Act, 42 

U.S.C. § 7607(b). 

I. CAPITAL EXPENDITURE 

EPA explained in its earlier determination that under the 

General Provisions of the NSPS regulations, a physical or 

operational change which increases emissions at an affected 

facility is a modification subject to NSPS. See 40 CFR 60.14(a). 

However, 40 CFR 60.14(e) provides certain exceptions to that 

general rule. In particular, section 60.14(e)(2) provides that 

an increase in production rate at an affected facility would not, 

by itself, be considered a modification if that increase is 

accomplished without a capital expenditure. 

As has been discussed in recent meetings between WEPCO and 

EPA, the October 14, 1988 letter from Lee M. Thomas was based in 
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part on information supplied by WEPCO in a letter dated -October 

11, 1988 which indicated that the increase in production rate at 

each of the five units would be accomplished with a capital 

expenditure. On October 13, 1988, and November 22, 1988 WEPCO 

submitted revised capital expenditure calculations. EPA has 

carefully reconsidered its earlier determination based on those 

two additional submissions.1 However, as explained below, they 

provide no grounds on which to alter EPA's earlier finding on 

capital expenditure. 

I 

The modification provisions are designed in part to subject 

to NSPS those emissions increases caused by an increase in 

production rate that is in turn-attributable to a significant 

investment in improvements to the capital stock. Consistent with 

this intent, capital expenditure calculations employ the total, 

as opposed to annual, cost of a given project at each affected 

facility. 

Thus, the December 16, 197 5 preamble to the promulgated 

definition of capital expenditure states that "...the total cost 

of increasing the production or operating rate must be 

determined. All expenditures necessary to increasing the 

facility's operating rate must be included in this total" (40 FR 

58416) (emphasis added). The total cost of the planned work at 

each facility is then compared to the product of the existing 

facility's basis and the annual asset guideline repair allowance 

percentage used by the Internal Revenue Service for taxation 

purposes. If the total project cost for each facility exceeds 

:he product of the basis and repair percentage for each facility, 

there is a capital expenditure at that facility. See 40 CFR 

60.2. 

It is appropriate to accumulate, for capital expenditure 

purposes, the cost of the renovations necessary to increase the 

facility's production rate, because the overall work necessary to 

increase a facility's production rate pursuant to a particular 

renovation project is the same whether the work is performed in 

one calendar year or during two (or more) years. The use of 

annual costs could encourage sources to distort normal business 

planning. 1ST artificially stretching out costs over time as a 

means of evading a finding of capital expenditure and consequent 

NSPS coverage.* 

1 The October 13, 1988 submission was not received in 

time to be considered in issuing EPA's letter of October 14, 

1988. 

'Indeed, it appears that WEPCO may have extended the planned 

length of the Port Washington life extension project for 

precisely this purpose after being informed by EPA in the October 
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•Rather, the purpose of the exemption in 40 CFR 60.14(e)(2) 

is to .exclude from NSPS coverage increases in production rate 

that are accomplished without "an expenditure for long-term 

additions or improvements." See 39 FR 36948 (preamble to 

proposed NSPS regulations). Where the economic realities of the 

case are that increased production and, hence, emissions, are due 

to normal fluctuations in the business cycle rather than a 

considered decision to invest in substantial capital 

improvements, the NSPS do not apply. 

The letter submitted on October 13 from Neil Childress of 

your staff to Gary McCutchen of- EPA presented updated basis 

figures (determined by multiplying the original capital 

investment in the facility by a coefficient representing the 

inflation in construction costs between the year of the 

investment and the year in which the capital expenditure 

calculation is made) for each of the emissions units at Port 

Washington. These figures included costs of repair or 

replacement of equipment, such as steam turbines, that is not 

part of the existing affected facility for NSPS purposes. Since 

applicability determinations under the NSPS modification 

provisions are based on the existing affected facility, capital 

expenditure determinations likewise are limited to costs 

associated with the affected facility. For NSPS Subpart Da, the 

affected facility is the steam generating unit as defined at 40 

CFR 60.40a. Therefore, EPA staff requested WEPCO to limit the 

basis figures to the steam generating unit. 

The November 22, 1988 letter from Neil Childress to Walt 

Stevenson of EPA presented revised cost figures on the renovation 

work on steam generating units 1- 4 related to the capital 

expenditure calculations. These November 22 basis figures are 

understood to be limited to costs associated with the affected 

facility. The November 22 letter also presented a revised and 

extended schedule for the renovation work, under which the costs 

of repairs in any one year would not exceed the product of the 

annual asset guideline repair allowance percentage, which is 5% 

for electric utility steam generating units, and the basis of 

each unit. Mr Childress' letter concluded that since 5% of each 

14, 1988 letter that there would be a capital expenditure using 

the original schedule. The unit 1 renovations have been extended 

from four years to five; unit 2 has been extended from four years 

to six; unit 3 has been extended from three years to six; unit 4 

has been extended from two years to four. (Compare Telecopier 

Transmission, Neil Childress, WEPCO, to Gary McCutchen, EPA, 

October 11, 1988 (table attached to Response to Question No. 4) 

with Letter, Neil Childress, WEPCO, to Walt Stevenson, EPA, 

November 22, 1988, at page 2.) 
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unit's updated basis is not succeeded by the cost of renovation 

work in any one year, there would not be a capital expenditure at 

any of the units. The revised figures also show that the total 

costs for each unit over the entire renovation period would 

exceed the 5% basis figure by 50% to 325%. 

As explained above, it is the total cost,' not the annual 

cost of a renovation project that determines whether a capital 

expenditure has occurred. Accordingly, based on the calculations 

and total project costs in WEPCO's November 22, 1988 letter, the 

proposed project would result in a capital expenditure at each of 

the five Port Washington units, and those units would not qualify 

for the exemption in the NSPS modification provisions at 40 CFR 

60.14(e)(2).3 As to unit 5, WEPCO did not submit cost data 

limited to the affected facility. Thus, I have no reason to 

alter EPA's original determination that WEPCO has not 

demonstrated that the increase in production rate at unit 5 can 

be accomplished without a capital expenditure. 

In addition, I have determined that it is more appropriate 

to utilize the original basis of each affected facility (as 

adjusted to reflect past capital improvements), expressed in 

nominal dollars, rather than the updated basis, expressed in 

current dollars, in determining NSPS applicability. Thus, even 

if WEPCO were correct that annual renovation costs, rather than 

total costs, should be used in capital expenditure calculations, 

in this case a comparison of annual renovation costs and the 

3 WEPCO has argued that since the definition of capital 

expenditure at 40 CFR 60.2 refers to the IRS "annual asset 

guideline repair allowance percentage" (emphasis added), EPA is 

bound by the literal language of its own regulations, to use 

annual rather than total project costs in making capital 

expenditure calculations. However, the regulations do not 

dictate such a result. Instead, on their face they call for a 

comparison between total renovation costs and the annual asset 

guideline. Had EPA intended the result suggested by WEPCO, it 

would have explicitly called for comparison of annual costs of 

the change for projects exceeding one year with the annual asset 

guideline. This it did not do. In addition, as indicated above, 

the purpose of the capital expenditure provision would not be 

served by annualizing project costs for capital expenditure 

purposes. 
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(adjusted) original basis of each affected facility shows that a 

capital expenditure would still occur.'' 

In making a more detailed inquiry into the capital 

expenditure matter in response to WEPCO's request, I have found 

that neither the NSPS General Provisions nor the preamble thereto 

contain any discussion of the matter of original versus updated 

basis, and that EPA has rarely been called upon to address this 

issue. However, upon review of EPA's past practice in this area, 

I have found that in developing performance standards for 

particular industries, EPA has provided the regulated community 

a mechanism to calculate the original basis in making capital 

expenditure calculations. See, e.g., "Equipment Leaks of VOC in 

Petroleum Refining Industry — Background Information for 

Promulgated Standards," EPA-450/3-81-015b, December 7, 1983.3 

This suggests that EPA intended the original basis to be utilized 

to determine whether a capital expenditure is going to be made. 

Moreover, I believe that the use of original basis is 

consistent with the overall purpose of the NSPS modification 

regulations in general, and the capital expenditure provisions in 

particular. The effect of using original basis is that the 

greater the age of an affected facility, the more likely it is 

that a.given investment resulting in increased production will be 

deemed a capital expenditure and trigger NSPS. This is 

consistent with Congress' intent in adopting new source 

performance standards. Older facilities are more likely to use 

outdated equipment which does not reduce pollution to the extent 

more current technology does. Congress included modified sources 

within the new source performance standards of section 111 to 

ensure the use of new technology on such sources. See CAA 

§§ 111(a)(2), 111(a)(4); 

II. AIR HEATER RENOVATIONS AT UNIT 1 

In January 1989, WEPCO asked EPA to determine whether 

replacement of the heat transfer surface elements on the unit 1 

air heater would trigger PSD or NSPS applicability. However, in 

a letter dated February 3, 1989, WEPCO withdrew this request. 

4 It is worth noting in this regard that if EPA were to 

adhere to a literal reading of IRS guidelines as urged by WEPCO, 

it would have no choice but to use original basis as well as 

annualized costs in making capital expenditure calculations for 

Port Washington. Using this formula, WEPCO would exceed the 

repair allowance percentage at units 1- 5 for most years, and 

NSPS would still apply. 

9 This Background Information Document provides an 

alternative to the method prescribed in the General Provision 

when it is difficult to determine original costs. The formula 

uses replacement costs and an inflation index to "approximate the 

original cost basis of the affected facility." 
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asserting that it could not receive approval in the time 

necessary, while reserving the right to renew it at a later time 

as to unit 1 or any other unit at Port Washington. Because this 

issue may arise again, and because I believe it bears upon the 

project as a whole, I find it appropriate to address the matter 

of air heater element replacement. Based on the information 

submitted regarding this new plan, as well as the earlier 

information submitted regarding air heater replacement work, I 

conclude that if WEPCO were to proceed under its revised and now 

withdrawn plan, it would not alter EPA's earlier finding that PSD 

and NSPS would apply. In order to explain this finding, it is 

useful to first summarize the relevant facts. 

Originally, WEPCO advised EPA that it planned to replace the 

air heaters at units 1 - 4 in their entirety. As WEPCO 

explained: 

Air heaters are subject to the erosive and 

corrosive effects of the flue gas passing through them 

and require regular maintenance of the heat transfer 

surfaces. 

The plate-type air heaters on Units 1 - 4 do not 

lend themselves to replacement of the individual 

elements. Worn sections have been patched and blocked, 

where accessible, over the years. Now, however, 

overall corrosion and perforation h^s passed beyond the 

practical point of repair, and replacement of the air 

heaters is the economical way to maintain the air 

preheater system. 

The air heaters on Port Washington Unit 5 and the 

other units on the Wisconsin Electric system [other 

than Port Washington units 1-4 ] are of the Ljungstrom 

basket design, which allows the heat transfer surfaces 

(_ .ikets) to be replaced easily. *** 

See, e.g.. List of Port Washington Projects, p. 6 (Attachment to 

April 22, 1988 letter from John W. Boston, WEPCO, to Gary 

McCutchen, EPA). 

On January 11, 1989, WEPCO informed the State of Wisconsin 

that it was considering replacing all the plate elements at unit 

1. In a letter to the State of Wisconsin, WEPCO described this 

project as routine repair work, "necessary to halt the continuing 

decrease in the capability of Unit 1," and submitted a list of 40 

generating units where significant portions of the air heater 

have been replaced. See Letter, with attachment, from Mark P. 

Steinberg, WEPCO, to Dale Ziege, Wisconsin Department of Natural 

Resources, January 11, 1989. 
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In a telephone conversation with EPA staff the next day, 

WEPCO indicated that it desired to perform the unit 1 plate 

replacement work during a current unit outage; that it intended 

to replace only half, not all, of the elements, at a cost of 

approximately $500,000; that it intended to later scrap this work 

and replace the entire air heater as described in the original 

scope of work, at a cost of $2,600,000; and that it was 

considering performing the same work at unit 4 also. See Record 

of Telephone Conversation between David Schulz, EPA, and Mark 

Steinberg, Neil Childress, and Walter Woelfle, WEPCO, January 12, 

1989. 

In a meeting on January 17, 1989, WEPCO related that if it 

replaced half of the plate elements now, it probably would 

replace the remainder as part of the total renovation project at 

a later date and not replace the air heater in whole. WEPCO also 

related that complete replacement of the plate elements should 

increase unit l's capability to the original design capacity. 

Finally, WEPCO stated in response to questions from EPA staff 

that none of the air heaters or plate elements at units 1- 4 had 

ever been replaced in the past. See Memorandum, Meeting with 

WEPCO regarding the Port Washington Generating Station, from 

David Schulz, EPA, to Files, January 27, 1989. 

In addition to the above information, I note that WEPCO's 

list of 40 units at which air heater element replacements have 

occurred include no units containing plate elements such as those 

on units 1 - 4 at Port Washington. Instead, all of the examples 

submitted are of the Ljungstrom basket type or the tubular type. 

I conclude that those examples are too dissimilar to the platetype elements in use at units 1 - 4 to support WEPCO's contention 

that the work in question is routine.6 

Based on all of the foregoing, I find no reason to depart 

from EPA's earlier conclusion that PSD and NSPS would apply to 

the air heater work on unit 1. It appears that despite WEPCO's 

recent recharacterization of this work as a separate project, it 

is properly viewed as an integral part of the overall Port 

Washington, life extension project. WEPCO cannot evade PSD and 

NSPS applicability by carving out, and seeking separate treatment 

of, significant portions of an otherwise integrated renovation 

program. Such piecemeal actions, if allowed to go unchallenged, 

could readily eviscerate the clear intent of the Clean Air Act's 

'Further, even the list of air heater replacement work 

submitted by WEPCO did not establish this as routine repair work. 

Those 40 units comprise only a small fraction of total operating 

utility units, and even at the 40 units, air heater repair or 

replacement appears to have been a one-time occurrence, not 

routine repair. 
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new source provisions. Accordingly, if seen as part of WEPCO's 

previously proposed renovation project, the recent 

recharacterization of the unit 1 air heater work does nothing to 

alter the factors determinative of PSD and NSPS coverage. 

III. CAPACITY TESTING FOR UNITS 1- 4 

A. Impact of Test Results on NSPS Applicability. 

In Lee Thomas' October 14, 1988 letter, EPA stated that 

baseline emissions for NSPS purposes are determined by hourly 

maximum capacity just prior to the renovations. EPA relied on 

actual operating data to determine that current maximum capacity 

at units 1- 4 has significantly deteriorated, such that the 

restoration of original design capacity through the life 

extension project would result in corresponding emissions 

increases. As to unit 5, EPA stated that current capacity at 

unit 5 is zero because it is physically inoperable. EPA rejected 

WEPCO's unsupported assertions that all five units could be 

operated at high capacities, but held open the possibility of 

further discussions on that point. Subsequently, in November and 

December of 1988, following discussions with EPA, WEPCO conducted 

capacity tests to determine current actual capacity. 

Based on its review and analysis of the test data, EPA finds 

that the tests adequately demonstrate that units 2 and 3 can be 

operated at their original design capacity on a sustained basis. 

Accordingly, I hereby supersede EPA's earlier determination and 

find that NSPS would not apply to units 2 and 3 by virtue of the 

proposed renovations so long as the capacity of these units after 

completion of the work is no higher than demonstrated in the 

recent tests (694,000 and 690,000 pounds of steam per hour, 

respectively). As discussed in more detail below, this revised 

NSPS determination does not affect our determination that the PSD 

provisions would be applicable to the proposed work on these two 

units. 

During the tests on units 1 and 4, WEPCO was able to operate 

these units at 497,000 and 586,000 pounds of steam per hour, 

respectively, representing 72% and 89% of these units' respective 

original design capacities. These tests are adequate to confirm 

EPA's original determination that units 1 and 4 are not capable 

of operating at their original design capacities, and that 

restoration of the lost capacity through the life extension will 

trigger NSPS coverage. EPA today also determines that these 

tests are not adequate to show that current actual capacity for 

purposes of establishing the NSPS baseline is as high as the 

levels achieved during the recent tests. Rather, I reaffirm that 

baseline for those units is determined by the lower capacities 

reflected in recent actual operating data as set forth in Lee 

Thomas' October 14 letter. EPA must reject the tests for 
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purposes of establishing actual NSPS baselines because during the 

testing discussed above, there were significant, measured 

exceedances of the applicable particulate mass emission limit, 

and several measured exceedances of the applicable opacity limit 

contained in the Wisconsin State Implementation Plan. One of the 

purposes of these tests was to determine the maximum actual 

capacity of the Port Washington units that can be achieved in a 

lawful manner. As a consequence of the measured exceedances, 

WEPCO's tests cannot be relied on to demonstrate that the company 

could lawfully sustain the levels achieved during the testing. 

Regarding unit 5, I find that by declining to conduct or 

schedule capacity tests, WEPCO has effectively conceded that unit 

5 is at present inoperable. Therefore, I reaffirm that its 

baseline for NSPS purposes is zero. 

B. Impact of Test Results on PSD Applicability. 

In its February 3, 1989 letter, WEPCO asserted that EPA's 

October 14, 1988 determination assumed that the emission rate of 

each unit would increase following the renovations. Thus, WEPCO 

claims, EPA did not address the question whether units that are 

not increasing their emission rates following renovation can be 

deemed to trigger PSD. WEPCO is incorrect on both counts. 

EPA's prior determination explained that under the PSD 

program, unlike NSPS, baseline emissions are determined by 

representative actual emissions, prior to the physical or 

operational change. Accordingly, the results of testing 

conducted by WEPCO, intended to determine current maximum hourly 

capacity, have no impact on the existence of a significant net 

emissions increase for PSD purposes. Hence, those test results 

provide no reason to alter EPA's prior determination regarding 

PSD applicability. 

Actual emissions are the product of the emission rate 

(amount of pollution per unit of production or throughput, e.g., 

pounds of sulfur dioxide per ton of coal combusted), the 

production rate or capacity utilization (amount of production or 

throughput per hour, e.g., tons of coal combusted per hour), and 

the hour»-«f operation (e.g., hours per year). In its prior 

determination, BPA explained that an increase in any one of these 

three factors, if attributable to a physical or operational 

change, can trigger an emissions increase for PSD purposes, and 

rejected WEPCO's contention that only increases in the emission 

rate were determinative. In so doing, EPA explicitly assumed 

that emissions increases at Port Washington would come not from 

an increase in emission rate, but rather from increases in 

production rate or hours of operation. See Memorandum from Don 

R. Clay, September 9, 1988 at 8. 
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WEPCO further irr.piies ;:. its Jebruary 3, 1939 letter that 

the de.Tionstration that units 2 and 2 can operate now at -.aximudesign capacity means that there will be no increase in 

production rate for PSD purposes following the renovations. This 

is not the case because PSD baseline emissions are determined by 

rJP?^.e.ndative .attua 1 emission rate, production rate, and hours 

of operation prior to the physical change. Representative actual 

emissions are determined by examining the actual emissions 

during a representative two year period, (See 40 CFR 

52.21(b) (21) (ii)) which in this case the Administrator determined 

to be 1933 and 1984 (See Lee Thomas' Oct. 14 letter, at 5). The 

hourly capacity demonstration for NSPS purposes is not relevant 

to the PSD analysis. 

IV. NSPS OPERATIONAL LIMITATIONS 

In my September 9, 1988 memorandum, I pointed out that an 

affected facility cannot avoid NSPS applicability by offsetting, 

through the use of fuel with a lower sulfur content, an increase 

in the emission rate that would otherwise occur due to a physical 

or operational change. As I explained at that time, 40 CFR 

60.14(e) provides that use of an alternative fuel or raw material 

— such as higher-sulfur coal — which an existing facility was 

designed to accommodate before a physical or operational change 

does not constitute a modification for NSPS purposes. It follows 

that the facility cannot avoid NSPS by switching to lower-sulfur 

fuel to counteract a prospective increase in emission rate 

because, under the regulations, the facility would always have to 

option to switch back to a higher-sulfur fuel at a later date 

without triggering NSPS. 

Subsequent t'o the issuance of EPA's October 14, 1988 letter, 

WEPCO inquired whether it might be able to utilize lower-sulfur 

coal to avoid NSPS at Port Washington, notwithstanding the 

regulatory provision explained above, by agreeing to federally 

enforceable permit conditions that would bar the company from 

switching back to higher sulfur coal in the future. Restrictions 

of this nature are acceptable for netting transactions under the 

Act's PSO provisions. However, the statute reflects a basic 

political decision that fossil fuel-fired sources not rely only 

on natural occurring less-polluting fuels to comply with the 

NSPS. Instead, Congress declared that compliance must depend in 

part upon the application of flue gas treatment or other 

pollution control technologies. Thus, section 111(a)(1)(A)(ii) 

defines "standard of performance" for fossil fuel-fired sources 

as 

requiring the achievement of a percentage reduction in 

the emissions from such category of sources from the 

emissions which would have resulted from the use of 
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fuels which are not subject to treatment prior to 

combustion ... . 

Congress further clarified this point in a later paragraph of 

section 111(a) by adding: 

For the purpose of subparagraph (l)(A)(ii), any 

cleaning of the fuel or reduction in the pollution 

characteristics of the fuel after extraction and prior 

to combustion may be credited ... to a source which 

burns such fuel. 

This core policy judgment is reflected as well in the 

legislative history of the 1977 Clean Air Act amendments. For 

example, the Conference Report states: 

The Senate concurs in the House provision with 

minor amendments. The agreement requires (1) that the 

standards of performance for fossil fuel-fired boilers 

be substantially upgraded to require the use of the 

best technological system of continuous emission 

reduction and to preclude use of untreated low sulfur 

coal alone as a means of compliance; ... (3) that for 

fossil fuel-fired sources, the new source performance 

standards must be comprised of both a standard of 

performance for emissions and an enforceable 

requirement for a percentage reduction in pollution 

from untreated fuel. 

H.R. Rep. No. 95-564, 95th Cong., 1st Sess. 130. 

Because the will of Congress is so clear that lower-sulfur 

fuels alone will not suffice to comply with NSPS, it would be 

inconsistent with the legislative intent for EPA to allow sources 

to use lower-sulfur fuel to avoid coverage of NSPS in the first 

instance in the manner suggested by WEPCO. If EPA were to follow 

such a course, numerous modifications to existing facilities 

could escape coverage in a manner contrary to the statutory 

purpose. 

V. THE TIMING OF THE LIFE EXTENSION PROJECT 

In discussions with EPA, WEPCO has challenged, on grounds of 

timing, EPA's position on baseline emissions for NSPS purposes. 

In its prior determination, EPA explained that under the NSPS 

regulations, baseline emissions are determined by hourly maximum 

capacity just prior to the renovations. Thus, the baseline for 

unit 5 at Port Washington is zero because the unit has been shut 

down for several years due to safety concerns. In response. 
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WEPCO has presented the hypothetical question whether EPA would 

still have found a zero baseline if unit 5 had been shut down on 

a Friday due to some unexpected or catastrophic failure of a 

major component previously in good working order, and WEPCO had 

sought to replace that component on the following Monday. WEPCO 

asserts that in such circumstances, EPA should have established 

baseline emissions using the emissions rate just prior to the 

breakdown. 

I find it unnecessary to engage in speculation by addressing 

the hypothetical situation presented by WEPCO, because it is far 

removed from the true circumstances surrounding the proposed Port 

Washington life extension project. In fact, unit 5 has been shut 

down for over four years, not a -.eekend, and that is the 

foundation cf EPA's analysis and determination. 

In conclusion, with limited exceptions, EPA today reaffirms 

the decisions reached in the October 14 determination. In 

addition. EPA has concluded that the work on each unit 

constitutes a capital expenditure and that the proposed air 

heater plate replacement work on unit 1 would trigger PSD and 

NSPS. As a result of the capacity test demonstration, however, 

I find that units 2 and 3 at Port Washington can be operated at 

their design capacity on a sustained basis. Therefore EPA's 

earlier determination with respect to NSPS applicability is 

superseded and NSPS would not apply to units 2 and 3 by virtue of 

the proposed renovations so long as the capacity of these units 

after the completion of this work is no higher than demonstrated 

in the recent tests. This determination does not affect PSD 

applicability for these two units. If you should have any 

questions about the foregoing, please feel free to contact me. 

Thank you for your cooperation in this matter. 

Sincerely, 

Don R. Claj 

Acting Assistant Administrator 

for Air & Radiation