, 4

215 South Cascade Street

POBox 496

Fergus Falls, Minnesota 56538-0496

218 739-8200

www.otpco.com (web site)

Match 14, 1997

Mr. Brian Gustafson

Power Company

Dear Mr. Gustafson:

SUBJECT: BIG STONE PLANT - NOx CONTROL PROJECT

On December 19, 1996, the Environmental Protection Agency (EPA) published a final rule on

the Acid Rain Program Nitrogen Oxides Emission Reduction Program. The rule was

published as an amendment to 40 CFR Part 76. The rule applies to Group 2 Phase II boilers

which includes the cyclone-fired boiler at Big Stone Plant.

Section 76.6(a)(2) ofthe rule requires that those cyclone-fired boilers, with a maximum

continuous steam flow ofgreater than 1,060,000 pounds per hour at 100% load, meet an

annual average NOx emission rate ofO.86Ib/mmBtu. The rule further specifies that

compliance must begin on January 1, 2000.

The 1996 annual average NOx emission rate at Big Stone Plant, as recorded by the

continuous emissions monitoring system, was 1.120 Ib/mmBtu. Obviously, the Big Stone

Plant NOx emissions rate must be reduced to meet the requirements ofthe December 19th rule.

The EPA used two control technologies, gas reburn and selective catalytic reduction, as the

basis for the emission limit ofO.86lb/mmBtu for cyclone-fired boilers (Section 76.6(a)(2).

Utilities are not required to use either ofthe control technologies specified in the rule.

However, an alternative emission limit under section 76.10 is only available if one ofthe

control technologies specified in section 76.6(a)(2) is installed. Unfortunately, natural gas of

the quantity needed for gas reburn would require construction ofa 55-mile pipeline at an

estimated cost of $1 million dollars per mile. EPA estimates that installation of a selective

catalytic reduction control systemto be in excess of $30 million dollars for a unit of

comparable size to Big Stone Plant. The co-owners ofBig Stone Plant owe it to our'

customers and to our shareholders to investigate other, more economical compliance

alternatives.

An Equal Opportunity Employer
.'

Brian Gustafson

March 14, 1997

Page 2

Several investigations ofboiler design changes and operational changes for purposes ofNOx

reduction have been studied by the Electric Power Research Institute as well as by other

independent utilities. Preliminary results are promising, but there are no guarantees of

success. Based on their preliminary work, plans are being made for installation of an over-fire

air system at the Big Stone Plant cyclone-fired boiler in early September, 1997. Although, if

the unit does incur an unexpected outage prior to the scheduled outage and we are physically

able to make a portion or all ofthe changes at that time, we plan to take the opportunity to do

so.

The purpose ofthe over-fire system is to allow for lower excess air in the cyclone, where most

ofthe combustion occurs in a cyclone-fired boiler. As a result, the combustion process would

be slowed and the combustion temperatures in the cyclones should be reduced with a

corresponding reduction in NOx formation. The combustion process would be completed

with the addition of combustion air via the over-fire air system.

The physical change to the boiler includes installation of over-fire air ports that will be tied to

the boiler windbox. The amount of over-fire air will be controlled with individual dampers at

each over-fire air port. If necessary, the dampers could be closed to simulate existing

operating conditions.

Based on the experience with a similar design at another utility, Otter Tail expects to be able

to reduce the NOx emissions at Big Stone Plant to an annual average ofO.86Ib.mmBtu or

less. There is a possibility that carbon monoxide emissions may increase slightly with the

change, but we would expect that its concentration in the flue gas to remain below 100 ppm

(O.Ollb/mmBtu based on 12% C02 wet basis in the flue gas).

It is Otter Tail's opinion that the proposed change is not a modification under either the

Prevention of Significant Deterioration (PSD) provisions of40 CFR Part 52 or the New

Source Review (NSR) provisions of40 CFR Part 60.

Section 52.21(b)(2)(iii)(h) and section 60. 14(e)(5) exclude pollution control projects from the

definition of physical change and facility modification, respectively. Consequently, the

proposed change is not regulated under 40 CFR Part 52 or 40 CFR Part 60 unless the

Administrator (DENR) determines that the addition renders the unit less environmentally

beneficial, or except:

(1) When the Administrator has reason to believe that the pollution control project

would result in a significant net increase in representative actual annual emissions of
Brian Gustafson

March 14, 1997

Page 3

any criteria pollutant over levels used for that source in the most recent air quality

impact analysis in the area conducted for the purpose oftitle I, if any, and

(2) The Administrator determines that the increase will cause or contribute to a

violation of any national ambient air quality standard or PSD increment, or visibility

limitation.

It is interesting to note that in section III.B.1 ofthe attachment to the July 1, 1994,

Memorandum "Pollution Control Projects and New Source Review Applicability," EPA

makes the presumption that those pollution control projects listed in section IlI.A.I. ofthe

attachment are, by their nature, more environmentally beneficial. Although over-fire air is not

specifically included in the list, comparable NOx reduction technologies are included. It must

be noted that the potential for an increase in carbon monoxide emissions is not unique to an

over-fire air installation. It is common to most combustion control changes whose purpose is

NOx reduction, including, but not limited to, low NOx burners for pulverized-fired units.

In summary, it is Otter Tail's position that, in absence ofthe Title IV provisions ofthe Clean

Air Act Amendments of 1990, Big Stone Plant would not be pursuing NOx emission

reduction technologies. Consequently, the proposed addition ofthe over-fire air system on

the Big Stone Plant unit 1 boiler is a pollution control project. It is not a modification for

NSR or PSD purposes, unless the Administrator (DENR) determines that the addition renders

the project less environmentally beneficial. It is our hope that the DENR will agree that the

potential for a significant decrease in NOx emissions is more environmentally beneficial than

the prospect of a slight increase in carbon monoxide emissions.

We look forward to your response to our proposal. Please contact me at 218-739-8407

should you have additional questions on our proposal or Otter Tail's understanding ofthe

regulatory requirements.

Sincerely,

~~/~Terry Graumann

Manager, Environmental Engineering

Enclosure