, 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 PowerCompany

DearMr. Gustafson: SUBJECT: BIG STONE PLANT

- NOx CONTROL PROJECT OnDecember 19, 1996, the Environmental Protection Agency (EPA) published afinal rule on the Acid Rain ProgramNitrogen Oxides Emission Reduction Program. The rule was published as an amendment to 40 CFRPart 76. The rule applies to Group 2 Phase II boilers which includes the cyclone-fired boiler at Big StonePlant. Section 76.6(a)(2) ofthe rule requires that those cyclone-firedboilers, 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 rulefurther 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 19thrule. The EPAused 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 ifone 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 thatinstallation ofa selective catalytic reduction control systemto be in excess of$30 million dollars for a unit of comparable sizeto Big StonePlant. The co-owners ofBig StonePlant owe it to our' customers and to our shareholders to investigate other, more economical compliance alternatives.

AnEqual OpportunityEmployer

## .'

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. Preliminaryresults are promising, but there are no guarantees of success. Based on their preliminary work, plans are being made for installation ofan 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 aportion or all ofthe changes at that time, we planto take the opportunity to do so. The purpose ofthe over-fire system is to allow for lower excess airinthe cyclone, where most ofthe combustion occurs in a cyclone-fired boiler. As a result, the combustion process would be slowed and the combustiontemperatures in the cyclones should be reduced with a corresponding reduction inNOx formation. The combustion process would be completed with the addition ofcombustion air viathe over-fire air system. The physical change to the boiler includes installation ofover-fire air ports that will be tied to the boilerwindbox. The amount ofover-fire air will be controlled with individual dampers at each over-fire air port. Ifnecessary, the dampers could be closedto simulate existing operating conditions. Based on the experience with a similar design at another utility, OtterTail 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 expectthat its concentration inthe flue gas to remain below 100 ppm (O.Ollb/mmBtu based on 12% C02 wet basis inthe flue gas). It is OtterTail's opinion that the proposed change is not a modification under eitherthe Prevention ofSignificantDeterioration (PSD) provisions of40 CFRPart 52 orthe New SourceReview (NSR) provisions of40 CFRPart 60. Section 52.21(b)(2)(iii)(h) and section 60. 14(e)(5) exclude pollution control projects from the definition ofphysical change and facility modification, respectively. Consequently, the proposed change is not regulated under 40 CFRPart 52 or40 CFRPart 60 unless the Administrator (DENR) determines that the addition renders the unit less environmentally beneficial, or except: 

### (1) When the Administrator has reason to believethat the pollution control project would result in a significant net increase in representative actual annual emissions ofBrian 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, ifany, and (2) The Administrator determines that the increase will cause or contribute to a violation ofany national ambient air quality standard orPSD increment, orvisibility 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 presumptionthat those pollution control projects listed in section IlI.A.I. ofthe attachment are, by their nature, more environmentally beneficial. Although over-fire airis 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 airinstallation. It is common to most combustion control changes whose purpose is NOx reduction, including, but not limited to, lowNOx burners for pulverized-fired units. In summary, it is OtterTail'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 Plantunit 1 boiler is a pollution control project. It is not a modificationfor NSR orPSD purposes, unless the Administrator (DENR) determines that the addition renders the project less environmentallybeneficial. It is ourhope that the DENRwill agree that the potential for a significant decrease in NOx emissions is more environmentallybeneficial than the prospect ofa slight increase in carbon monoxide emissions. We lookforward to your response to ourproposal. 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