SALT R IVER PROJECT
P

.O. B ox 52025 P hoenix

, AZ B 5072·2 0 25 (6 02) 236S 262 Fox ( 602) 2 36-6 690

K

effy. Ba rr@srpne t

. com

Jan uary 20 , 2 012

D r. D eborah J ord an



### u .s. En vironmental P rotectio n Age nc y Reg ion I X

75 H a wth orn e St r ee t
San Fr an c is co
, CA 94105

Re: U pdated Best Ava ilabl e Retrafit Techn ology Ana lysis Navaj o Generating Station

De ar D r. J ordan : KELLY J. BARR

, ESQ

. Se nio r D irec tor
En viron mental Ma nagement , P

olicy a nd C o mpliance

The Salt Ri ver Pro ject A gr ic ult ural Impr ov ement an d Powe r Distri ct ( SRP), th e op erator o f th e N avajo

Ge nerating S tation (NGS), s ubmitt ed a repo rt t o t he Unit ed S tates En vi r onm en tal Pr ote c ti o n Ag ency ( EP A) i n J anuary 2 009 co ntaining a B e st Av ailable R etr of it T echnology (BAR T ) a nalysis f or NG S

. S i nce th e

s ubmi tt al o f thi s r ep ort , S RP h as c onducted s everal studie s a nd a ddit ional a nalysis i n s upport of th e

p end in g B ART d et ermin ation. Acco rdingly, S RP is sub mi tt ing thi s r ep ort t o pro vide a co mpre hensive updat e t o it s BA RT a nalysis fo r N GS.

In this rep ort

, SRP co nducte d an a n alys is of each o f th e five BART s t at uto ry f actors in light o f t his

a dditi onal i n for matio n

. Based on th is a nalysis, SRP i s pr oposing that a n it rogen ox i de (N O ,) e mission

limit of 0

. 24 Ib /MMBtu

, a ch ie vab l e b y insta lling and operating Lo w-N O

, Burners a nd Separated O verfire

A ir ( LNB/SO FA) on a ll three uni t s, is BA RT fo r NG S.

W hile S RP's conc lu sio n h as n ot c hanged s ince th e 2009 re port, S RP h as ga thered s ignificant a dditional

inf orm at ion to s up port th at co nclusion, in cluding eco nomic s t udies, e mission co nt r ol cost eva luations,

a nd additi ona l v isibility mod elin g

.

SRP appr eciates E PA's co nsiderat ion of th i s a dditional in fo rmat ion . I f you h av e any ques t i ons re gard in g

t his r eport, pl ea se f ee l fr ee to ca ll m e a t 6 02-236-5262.

S

in ce r e l y,

# ~~ K

elly J. B arr

c c: J a net McCab e, D eput y A ss i s tant A dmi n ist ra tor, E PAO ffi ce of A ir a nd Rad iation

Ste phen Ets itty

, Exec utive Dir ector, Na v ajo N ation En v ir onmental P rotection A gency

E n clos u re

# Updated Best Available Retrofit Technology Analysis

Submitted for Consideration in Developing Best Available Retrofit
Technology Proposal for Navajo Generating Station

Submitted to:

United States Environmental Protection Agency, Region 9

75 Hawthorne Street

San Francisco, California 94105

Prepared by:

Salt River Project

P.O. Box 52025 PAB352
Phoenix, Arizona 85072

‐ 2025



### January 2012i 

### Executive Summary

The Navajo Generating Station (NGS ) is a unique generating asset that plays a critical role in the Southwest. In addition to providi ng electricity for millions of customers in the Southwest, it also provides 95% of the power used by the Central Ar izona Project (CAP) to pump water from the Colorado River to central Arizona. It provide s funds for the repayment of the cost of constructing the CAP, and for water rights settlements with multiple central Arizona Indian Tribes. It also provides signi ficant economic benefit to the Na vajo Nation and the Hopi Tribe through employment, scholarships, lease payments, and coal royalties.

There are several significant issues facing NGS that threaten its future viability. The plant site lease and other critical agreemen ts expire in 2019, and need to be extended. The coal supply contract with Peabody Energy is currently being renegotiated. Perhaps mo st significantly, the United States Environmental Protection Agency (EPA) is currently considering whether to require additional emission contro ls at NGS as part of its pe nding Best Available Retrofit Technology (BART) determination. If EPA require s costly additional controls as BART, the plant’s six owners would have to justify a sign ificant capital expense wit hout any certainty that the plant could continue to opera te beyond 2019. This could put the pl ant at a significant risk of closure, which could have deva stating economic consequences.

The Salt River Project Agricultural Improvement and Power District (SRP), the operator of NGS, submitted a report to EPA in January 2009 containing a BART analysis for NGS. Since the submittal of this report (hereafter referred to as the “2009 BART Report”), SRP has

conducted several studies and addi tional analysis in support of th e pending BART determination. Accordingly, SRP is submitting this report to provide a comprehensive update to its BART analysis for NGS.

SRP conducted an analysis of each of the five BART statutory factors in li ght of this additional information. Based on this analysis, SRP is proposing that a nitrogen oxide (NO
x ) emission limit of 0.24 lb/MMBtu, achievable by in stalling and operating Low-NO
x Burners and Separated Overfire Air (LNB/SOFA) on all three units, is BART for NGS. While SRP’s conclusion has not changed since the 2009 BART Report, SRP ha s gathered significant additional information to support this conclusion. In summary, SRP’s proposal is based on the following

considerations:

• LNB/SOFA achieves an emission rate that is well below the presumptive BART limit of 0.28 lb/MMBtu established by EPA fo r the type of boilers at NGS.

• LNB/SOFA achieves greater incremental visi bility improvement than post-combustion controls, at a fraction of the cost. The co st of Selective Cataly tic Reduction (SCR), the most expensive control option, exceeds that of LNB/SOFA by more than a factor of 10, and by more than a factor of 25 if baghouses are also required.ii • The NGS owners voluntarily installed LN B/SOFA on all three units between 2009 and 2011. By installing LNB/SOFA early, total NO
x reductions achieved in the first regional haze planning period will exceed the reductions that would be required by even the most stringent EPA BART determina tion, as shown in Figure ES-1.

Figure ES-1. Comparison of NO
x Reductions in the First Regi onal Haze Planning Period

0 20,000 40,000 60,000 80,000 100,000 120,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019NOxEmissionReductions(tons)

NOx Reductions from LNB/SOFA NOx Reductions if BART = SCR Cumulative NO

x Reductions from LNB/SOFA

Cumulative NO

x Reductions if EPA BART = SCR

LNB/SOFA

on Unit 3 LNB/SOFA

on Unit 2 LNB/SOFA

on Unit 1 SCR on
Unit 1

SCR on
Unit 2 SCRon
Unit 3

• The results obtained using the EPA’s CALP UFF model (Version 5.8) indicate that the incremental visibility improvement from inst alling SCR relative to LNB/SOFA is well below 1 deciview (dv) at all Class I areas. 1 dv is the level that EPA has indicated is a “small but noticeable change in haziness.”

• The results obtained using the latest versi on of CALPUFF (Version 6.4), which is based on the best available science, indicate that the incremental visibility improvement from installing SCR relative to LNB/SOFA is significantly less than the improvement predicted by CALPUFF v5.8. In certain Class I areas, visibili ty is predicted to degrade due to the increase in sulfates that are produced by SCR.

• Regardless of which version of the CALPUFF model is used, the re sults indicate that LNB/SOFA achieves greater incremental visi bility improvement than Selective NonCatalytic Reduction (SNCR) or SCR, and at a significantly lower capital cost. This conclusion is illustrated graphically in Figure ES-2 below.iii Figure ES-2. Cost vs. Visibility Benefit for BART Control Options

$45 Million $84 Million $589 Million ‐ $1.1 Billion

0.25 dv 0.17 dv

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

0 100 200 300 400 500 600 700

Low

‐ NOx Burners and Separated Overfire Air (LNB/SOFA) LNB/SOFA and Selective

Non

‐ Catalytic Reduction (SNCR) LNB/SOFA and Selective Catalytic Reduction (SCR)VisibilityImprovement(Deciviews[dv])*CapitalCost($million)

* Visibility improvement shown is the average over all Class I areas modeled, obtained using CALPUFF v5.8, assuming a NO

x emission rate of 0.15 lb/MMBtu for SNCR.

• If EPA requires SCR as BART, there is a significant risk that NGS could shutdown,

which would result in the lo ss of a vital resource to the economies of the Navajo and Hopi Tribes. NGS has over 500 employees, more than 80% of whom are Navajo. NGS and the Kayenta Mine, which supplies it with coal, employ a total of almost 1,000 people. The plant and the mine provide significant ec onomic benefit to the Navajo Nation and the Hopi Tribe through employment, scholarships, le ase payments, and coal royalties. All of

those benefits would be lost if NGS and the mine were to shutdown.

• The shutdown of NGS would also have deva stating economic consequences on the state of Arizona as a whole. In a recent study, Ar izona State University’s Seidman Institute

evaluated the economic contribution of NG S and the Kayenta Mine to the Arizona

economy. ASU estimates that NGS and the Kayenta Mine will account for over $20 billion in Gross State Product betw een 2011 and 2044, and contribute to over 3,000 jobs each year.

In light of the above considerations, SRP respectfully urges EPA to propose a NO
x BART

emission limit for NGS that is based on LNB/SOFA. The analysis presented in this report,

which is based on a review of the five BART stat utory factors, demonstrates that LNB/SOFA is the most cost-effective BART control option for NGS , and a BART proposal that is based on this technology would not introduce the risk of broader adverse economic consequences.

### Table of Contents

1 Background and Purpose of this Report .................................................................................. 1

2 Updated Emissions Data ........................................................................................................ . 2

3 Updated Visibility Modeling ................................................................................................... 5

4 Updated Costs of Compliance ............................................................................................... 10

5 Remaining Useful Life ......................................................................................................... . 16

6 Updated Five Factor Analys is and BART Proposal .............................................................. 17

Appendix A. Modeling Files1 

### 1 Background and Purpose of this Report

SRP submitted a BART analysis to EPA in January 2009. The analysis included a thorough review of each emission control opt ion in the context of the five BART statutory factors. Based on this analysis, SRP concluded that a NO
x emission limit of 0.24 lb/MMBtu, achievable by installing and operating LNB/SOFA on a ll three units, is BART for NGS.

Since the submittal of the 2009 BART Report, SR P has conducted several studies in support of the pending BART determination for NGS, and ha s submitted additional information to EPA:

• Additional Information Letter (May 2009)

• Comments on EPA’s Advanced Notice of Proposed Rulemaking (ANPR) (August 2009)

• Sargent and Lundy (S&L) Co st Study (August 2010)

• Ammonia Monitoring Report (September 2010)

• Additional Information Letter (October 2010)

• Modeling Update (February 2011)

SRP has also more recently in itiated several additional studie s in support of the pending BART determination for NGS that have not yet been submitted to EPA:

• ASU’s Seidman Institute conducted a study to quantify the value of NGS and the Kayenta Mine to the state of Arizona;

• Harvey Economics conducted a study to eval uate the broader economic impacts within

the state of Arizona associated with each of the BART control options, assuming that implementation of BART does not l ead to plant closure; and

• Fuel Tech, Incorporated (FTI), the larges t commercial supplier of SNCR, conducted infurnace temperature and gas measurements in order to more accurately define the potential NO
x emission rate achievable by installi ng and operating SNCR at NGS. The information from FTI suggests that SNCR can achieve greater NO
x reductions and visibility benefits than were esti mated in the 2009 BART Report.

SRP is submitting this report to EPA in order to provide a consolidated and comprehensive update to SRP’s BART analysis for NGS. This re port contains an updated analysis of the five statutory factors in light of all of the latest in formation available.

This report focuses on the NO
x BART determination for NGS. Sulfur dioxide (SO 2 ) emissions were addressed under the 1991 visibility Federal Implementation Plan (FIP). In the case of particulate matter (PM), NGS is currently s ubject to a limit of 0.06 lb/MMBtu. In the 2009 BART Report, SRP proposed a filterable PM limit of 0.05 lb/MMBtu, achievable using the existing electrostatic precipitators (ESPs) and wet scrubbers, as BART for NGS. SRP is not proposing any changes to its PM BART proposal in this report.2 

### 2 Updated Emissions Data

This section provides the latest information re garding the potential emission rates achievable by each of the BART control options.



### 2.1 LNB/SOFA

LNB/SOFA was voluntarily installed by the NGS owners on all three un its between 2009 and

2011. Actual NO
x emissions recorded from each unit at NGS since commencement of operation of LNB/SOFA have been below the proposed BART permit limit of 0.24 lb/MMBtu, and well below the presumptive BART limit of 0.28 lb/MMBtu established by EPA for the type of boilers

at NGS.



### 2.2 Combustion Diagnostic and Optimization Tools

Combustion diagnostic and optimi zation tools provide automatic feedback and control of parameters that directly affect NO
x emissions, such as excess oxyge n, temperature, and moisture. These tools have the potential to further reduce emissions by optimizing several parameters simultaneously, which may not be as easily or e ffectively accomplished by a human operator.

SRP has not conducted an evaluation of the potential NO
x reductions achievable using combustion diagnostic and optimization tools. Howe ver, the NGS owners ar e planning to install a combustion diagnostic and optimization softwa re package at NGS in calendar year 2012. Although some additional NO
x reduction may be achieved using these tools, SRP has not quantified the potential additional emission reducti ons that may be achievable at this time. Therefore, no credit is being taken for any potential additional NO
x reduction achievable using combustion diagnostic and optimization tools in th e BART analysis presen ted in this report. SRP will keep EPA informed as additional information becomes available on the performance of the diagnostic and optimizati on tools after installation.



### 2.3 SNCR

In the 2009 BART Report, SRP cons ervatively assumed that a NO
x emission rate of 0.20 lb/MMBtu was achievable by installing and operating SNCR. The visibility modeling, which was performed by AECOM on behalf of SRP, was conservatively based on stack ammonia emissions of 5 parts per m illion by volume (ppmv) at 15% oxygen (O 2 ). Although a sensitivity analysis was performed to explore th e effect of changing stack ammonia emissions, at EPA Region 9’s request, all of the sensitivity m odeling runs were based on a starting assumption of stack ammonia emissions of 5 ppmv.3 In the 2009 BART Report, SRP di d not propose SNCR as BART becau se the visibility benefits expected to be achievable usi ng SNCR were predicted to be mi nimal, and in certain Class I areas, SNCR was predicted to degrade visibility due to the adverse effect of ammonia slip under

certain scenarios.

Since the time of submittal of the 2009 BART Report, SRP has obtained information that suggests that SNCR can achieve greater NO
x reductions and visibil ity benefits than were estimated in the 2009 analysis. The update d information relates to the potential NO
x emission rate achievable using SNCR, and the ammoni a slip assumptions, as described below.

• NO
x Emission Rate. SRP recently retained Fuel Tech Incorporated (FTI), the largest commercial supplier of SNCR, to conduct in -furnace temperature and gas measurements in order to more accurately define the potential NO
x emission rate achievable by installing and operating SNCR at NGS. FTI is currently building a Computational Fluid Dynamics (CFD) model to develop a prelim inary design for an SNCR system for NGS

that would maximize NO
x removal. This work has not yet been completed, but based on the information that FTI has provided to date, SRP used two NO
x emission rates for the purpose of the cost effectiven ess calculations a nd modeling performed in this report: 1) 0.15 lb/MMBtu, and 2) 0.18 lb/MMBtu. SR P will keep EPA informed as additional

information becomes available on th e performance of SNCR at NGS.

• Ammonia Slip. In 2009, EPRI issued a report co ntaining recomme nded methodologies for quantifying ammonia emissions from power pl ants. In the report, EPRI indicated that wet scrubbers drastically reduce the amount of ammonia escaping the stack. EPRI expects that as a result of th e high solubility of ammonia in water, approximately 99% of the gaseous ammonia remaining in the flue ga s stream is assumed to be removed in wet

scrubbers. 1 In addition, 25% of the gaseous ammoni a is expected to be combined with sulfur trioxide (SO 3 ) in the air preheater, resulting in additional removal. Even if it is conservatively assumed that no gaseous ammonia is removed in the air preheater by combining with SO 3 , ammonia slip emissions would be ne gligible at the stack if the NGS
wet scrubbers achieve 99% control. If the ammonia concentration is 5 ppmv at 6% O 2 at the boiler exit, ammonia emissions would be 0.26 lb/hr if 99% contro l is achieved by the wet scrubber. In the modeling performe d in the 2009 BART Report, an ammonia

emission rate of 26 lb/hr was modele d in the worst-case scenario.

In the updated modeling presented in this re port, SRP assumed that the 5 ppm ammonia slip at the SNCR outlet is substantially reduced by contact with the air preheater and wet scrubbing. Although the 2009 EPRI report recommends a 99% control efficiency for wet scrubbers, the modeling presented in this re port is based on a more conservative control efficiency of 90%.

1 EPRI, Estimating Ammonia Emissions from Stationary Power Plants , Technical Update, Report #1017985, April 2009, Pg. A-14 and Table 4-6.4 

### 2.4 SCR

In previous submittals, including the 2009 BART Report and SRP’s comments on the August 2009 ANPR, SRP indicated that a NO
x emission rate of at least 0.08 lb/MMBtu is needed as a permit limit if the installation and opera tion of SCR was required as BART for NGS. Sufficient margin for compliance is necessary to ensure that a permit limit is achievable on a

continuous basis.

Since the visibility modeling performed by SRP in the BART analysis for the other control options was based on the permit limits that those controls could achieve, the cost effectiveness calculations and modeling presented in this report for the SCR scenarios are based on an

emission rate of 0.08 lb/MMBtu.5 

### 3 Updated Visibility Modeling

3.1 Modeling Approach

The visibility modeling pres ented in SRP’s 2009 BART Repo rt was based on a modeling protocol that EPA accepted in a letter dated July 1, 2008. The updated modeling presented in this report is also based on the approved protoc ol. The only differences are the refinements to

the NO
x and ammonia emissions from SNCR, and the use of the latest version of the CALPUFF model, as discussed below.

SRP retained AECOM to perform the updated mode ling presented in this report. The updated analysis is based on the following NO
x emission rates for SNCR: 1) 0.15 lb/MMBtu, and 2) 0.18 lb/MMBtu. In addition, SRP assumed that the 5 ppm ammonia slip is substantially reduced by contact with the air preheater and wet scrubbing. Although the 2009 EPRI report recommends a 99% control efficiency for wet scru bbers, the modeling presented in this report is based on a more conservative control efficiency of 90%. All of the other assumptions and inputs used in the modeling are the same as those that were used in the modeling presented in SRP’s comments on the August 2009 ANPR.

CALPUFF requires background ambient ammonia c oncentrations as input for visibility modeling, rather than stack ammonia emission ra tes. Therefore, for the SNCR scenarios, a separate analysis was conducted for each Class I area to determine the contribution of stack ammonia emissions to ambient background conditions. If this concentration exceeded 0.005 ppb at any Class I area, that value would be added to the ammonia b ackground value used as input to the visibility modeling analysis. If the maxi mum concentration was less than 0.005 ppb, there would be no effect expected from adding this small value to the background concentration.

To be consistent with previous modeling conducted for NGS, the updated modeling results presented in this report were obtained us ing two versions of the CALPUFF model:

1) CALPUFF v5.8, which is currently approved for regulatory use. The unadjusted background ammonia values used as input are the same as those used in the 2009 BART Report. These background ammonia values were adjusted for the SNCR scenarios based on the ammonia slip analysis described above.

2) CALPUFF v6.4, which incorporates updated nitrate chemistry. The unadjusted background ammonia values used as input were derived using the EPA’s Community Multi-Scale Air Quality (CMAQ) model, cons istent with SRP’s February 2010 submittal. These background ammonia values were adjust ed for the SNCR scenarios based on the ammonia slip analysis described above.6 

### 3.2 Results

The results obtained in the updated visibility an alysis are presented in Tables 1 and 2. The model input and output files genera ted in this analysis are incl uded on a Compact Disk (CD) in Appendix A of this report. Cons istent with the appr oved modeling protocol, the results shown in the tables represent the visibility improvement predicted by the CALPUFF model for each of the different emission control scenarios, in delt a dv. Consistent with the approved modeling protocol, the tabulated results represent the average of the 8 th highest (i.e., 98 th percentile) days of visibility impairment over the years 2001- 2003, relative to natura l background conditions.

In other state BART proceedings, certain commenters have noted that if visibility improvements are averaged over a number of Class I area s, the true potential for improvement is underestimated, since lower improvements at more distant parks could reduce the average. Those same commenters have suggested that in stead of looking at average improvement, the improvements over each Class I area should be summe d. As SRP has stated in previous reports, supported by opinions from experts in visibility science, the concept of adding improvements over multiple Class I areas has no connection to phys ical reality, and should not be used as a means of evaluating a BART control option. A more appropriate approach would be to consider the improvements that can be achieved on average, and then at the most impacted Class I area.

The tabulated values presented in this report include the improvements at the most impacted Class I area, as well as the average over all Clas s I areas. In Tables 1 and 2, the row labeled “Average” is the average improvements over a ll 11 Class I areas modeled. The row labeled “Maximum” is the largest improve ment over any of the 11 Class I areas modeled. In Tables 1 and 2, the ranges associated with the scenario s that involve SNCR reflect the two different emission rates that were modeled (0.15 lb/ MMBtu and 0.18 lb/MMBtu). For example, the average visibility improvement predicted by the model from installing SNCR compared to LNB/SOFA ranges from 0.15 dv to 0.25 dv. Th e 0.15 dv improvement is based on an SNCR

NO
x emission rate of 0.18 lb/MMBtu. The 0.25 dv improvement is based on an SNCR NO
x emission rate of 0.15 lb/MMBtu.

The visibility modeling results are displayed grap hically relative to the capital cost of each control option in Figures 1 and 2 below. Figure 1 shows the incremental visibility improvement from installing each BART control, relative to the capital cost of each control, which is discussed in greater detail in Section 4. The visibility improvements in Figure 1 are based on the average improvement over all Class I areas modeled us ing CALPUFF v5.8. Figure 2 displays the same information, but for the Class I area for which the model predicts the maximum visibility improvement (Canyonlands National Park).

Regardless of which model is used, the incremen tal visibility improveme nt associated with installing LNB/SOFA over the baseline conf iguration exceeds the incremental improvement from installing SNCR over LNB/ SOFA, or SCR over SNCR. Give n the significantly lower cost of LNB/SOFA, as discussed in the following secti on of this report, this analysis demonstrates

that LNB/SOFA is the most cost-effective tech nology for achieving visibility improvement in the first regional haze planning period.7 Table 1. CALPUFF v5.8 Modeling Results

Baseline to LNB/SOFA LNB/SOFA to SNCR SNCR to SCR

Arches 0.54 0.21 - 0.34 0.25 - 0.37

Bryce Canyon 0.42 0.18 - 0.28 0.19 - 0.29

Canyonlands 0.51 0.29 - 0.47 0.23 - 0.41

Capitol Reef 0.37 0.14 - 0.27 0.31 - 0.44

Grand Canyon 0.27 0.08 - 0.18 0.07 - 0.16

Mazatzal 0.25 0.06 - 0.09 0.03 - 0.07

Mesa Verde 0.38 0.20 - 0.30 0.21 - 0.31

Petrified Forest 0.38 0.15 - 0.24 0.18 - 0.27

Pine Mountain 0.19 0.07 - 0.10 0.06 - 0.09

Sycamore Canyon 0.39 0.11 - 0.17 0.15 - 0.21

Zion 0.37 0.16 - 0.26 0.20 - 0.31

Average 0.37 0.15 - 0.25 0.17 - 0.27

Maximum 0.54 0.29 - 0.47 0.31 - 0.44 Incremental Visib ility Benefits (delta dv)

Table 2. CALPUFF v6.4 Modeling Results

Baseline to LNB/SOFA LNB/SOFA to SNCR SNCR to SCR

Arches NP 0.51 0.14 - 0.18 0.04 to 0.09

Bryce Canyon NP 0.53 0.19 - 0.28 -0.12 - -0.03

Canyonlands NP 0.55 0.15 - 0.24 0.06 - 0.15

Capitol Reef NP 0.93 0.35 - 0.53 0.04 - 0.21

Grand Canyon NP 0.53 0.11 - 0.19 -0.19 - -0.10

Mazatzal W 0.09 0.00 - 0.00 -0.04 - -0.04

Mesa Verde NP 0.33 0.07 - 0.10 -0.02 - 0.01

Petrified Forest NP 0.42 0.08 - 0.10 -0.03 - -0.01

Pine Mountain W 0.02 0.00 - 0.00 -0.04 - -0.04

Sycamore Canyon W 0.18 0.03 - 0.03 0.01 - 0.01

Zion NP 0.44 0.05 - 0.07 -0.09 - -0.07

Average 0.41 0.11 - 0.16 -0.03 - 0.01

Maximum 0.93 0.35 - 0.53 0.06 - 0.21 Incremental Visib ility Benefits (delta dv)8Figure 1. Cost vs. Visibility Improvement for BART Control Options(Based on Average Visibility Improvement over all Class I Areas)$45Million$84Million$589Million‐$1.1Billion0.25dv0.17dv0.00.20.40.60.81.01.21.41.61.82.00100200300400500600700Low‐NOxBurnersandSeparatedOverfireAir(LNB/SOFA)LNB/SOFAandSelectiveNon‐CatalyticReduction(SNCR)LNB/SOFAandSelectiveCatalyticReduction(SCR) Visibility Improvement (Deciviews [dv]) *

Capital Cost ($million)* Visibility improvement shown is the average over all Class I areas modeled,obtained using CALPUFF v5.8, assuming a NOxemission rate of 0.15 lb/MMBtu for SNCR.9Figure 2. Cost vs. Visibility Improvement for BART Control Options(Canyonlands National Park)$45Million$84Million$589Million‐$1.1Billion0.47dv0.23dv0.00.20.40.60.81.01.21.41.61.82.00100200300400500600700Low‐NOxBurnersandSeparatedOverfireAir(LNB/SOFA)LNB/SOFAandSelectiveNon‐CatalyticReduction(SNCR)LNB/SOFAandSelectiveCatalyticReduction(SCR) Visibility Improvement (Deciviews [dv]) *

Capital Cost ($ million)* Visibility improvementsshown were obtained usingCALPUFF v5.8, assuming a NOxemission rate of 0.15 lb/MMBtu for SNCR.10 

### 4 Updated Costs of Compliance

NGS is a unique generating asset that plays a cr itical role in the delivery of reliable and affordable electricity and water to millions of customers in the Southwest. Depending on which

NO
x control option is selected for this power plant, the costs of compliance associated with more stringent BART control options will have substa ntial economic implications. Since the submittal of the 2009 BART Report, SRP has conducted a number of studies to refine the cost estimates for each of the BART control options under consid eration. This section contains the latest information regarding the cost of compliance associated with each BART control option.



### 4.1 Relationship of BART Controls to Water Cost and Supply

One of the unique attributes of NGS is its critical role in the delivery of reliable and affordable water to customers in central Arizona. Through an arrangement with the Un ited States Bureau of Reclamation (BOR) as part owner of the Plan t, NGS provides 95% of the power used by the

Central Arizona Water Conservation District (CAWCD) to pump water through the CAP, which

delivers water from the Colorado River to central Arizona.

The importance of NGS in the delivery of water through the CAP cannot be overstated. Providing power for CAWCD's delivery of water was one of the primary reasons for constructing the plant, and NGS was built as an a lternative to two hydroelectric dams that were proposed on both ends of the Grand Canyon. The CAP provides a renewable source of water to users in central Arizona, which reduc es their dependence on groundwater.

In 1980, Arizona passed the Groundwater Manage ment Act (GMA) to address declining groundwater tables in the state. The intent of the GMA, which imposes limits on the quantity of groundwater that can be pumped in central Arizona, is to reduce groundwater overdraft with the management goal of achieving safe-yield by 2025. Significant increases in the cost of CAP water, which could occur if EPA requires SCR or baghouses, could jeopardi ze the state’s ability to achieve the goals outlined in the GMA.

The BOR also uses proceeds from the sale of NGS power not needed for CAP pumping to fund Federal Indian water rights settlements. Thos e proceeds are currently di rected to a fund called the Lower Colorado River Basin Development Fund (LCRBDF). The LCRBDF is used to

subsidize water rates for Arizona Indian Tribes w ith CAP entitlements, as well as to fulfill other

commitments made to Arizona Indian Tribes as part of the Arizona Water Settlements Act of

2004. 2

Because of the unique connection between NGS, the delivery of affordable water and electricity to customers in the Southwest, and the role it play s in Indian water rights settlements, the cost of compliance associated with the more expensive BART control option will likely have significant adverse economic impacts to many different popul ation segments and groups that depend on the

2 Public Law 108-451.11 power produced at NGS. Furthermore, if the pl ant were to shutdown, which could occur if EPA imposes the most stringent control options as BART, the impacts to those same population segments and groups would be even more substa ntial. The shutdown of the plant would also adversely affect the Navajo Nation and Hopi Tr ibe, who receive significant economic benefit from the plant through employment, leas e fees, coal royalty payments.

The downstream implications associated with ad ditional control costs are critical and merit

further consideration in EPA’s BART determin ation for NGS. To provide EPA with specific information regarding the potential economic impacts of each contro l option, this section

contains information from several cost and economic studies recently performed for NGS.



### 4.2 Economic Studies

The economic impacts of additional controls were assessed in two studies that were recently performed for NGS:

1. An analysis of the broader economic impacts w ithin the state of Arizona associated with each of the BART control options, assuming th at implementation of BART does not lead to plant closure, conducted by Ha rvey Economics (“Harvey Study”)

2. An analysis of the value of NGS and the Ka yenta Mine to the stat e of Arizona, conducted by Arizona State University’s Seidman Institute (“ASU Study”)

The Harvey Study assesses the total economic impact of additional controls on different population segments and affected groups within the state of Arizona. For this updated BART report, the economic impacts are broken down as follows:

1. Impact on Arizona Indian Tribes with CAP Contract Entitlements. The tribes that receive water from the CAP could be impacted in two ways: 1) Tribes would be directly responsible for additional CAP energy costs a ssociated with the higher cost of producing power at NGS due to additional emission controls; and 2) Tribes could also be affected by reduced revenues to the L CRBDF, which funds Indian water rights settlements.

2. Impact on Arizona Economy. The recovery of costs associ ated with additional controls would fall on all users of CAP water, includ ing non-Indian agricultu ral users, industry, the non-Indian population residing in Central Ar izona, as well as the Indian tribes. Higher water costs could affect CAP water us ers by reducing their disposable income and potentially the amount of money that they sp end on sales of goods and services within their local economies. In addition, all custom ers of the electric ut ilities that are coowners of NGS would be impacted by higher electric power rates, which would reduce their disposable income and the amount of money they spend on sales of goods and

services within their local economies.

The ASU study evaluates the economic benefit of NG S, and the Kayenta mine that supplies coal to NGS, to the entire state of Arizona. This is particularly important beca use if costly additional controls are required, the NGS owners may not be able to justify the significant capital12 expenditure, which could force the closure of NGS. If NGS were to shutdown, the economic impacts would be much more significant. Th e shutdown of NGS would have a devastating economic impact on the Navajo Nation and the H opi Tribes, who receive significant economic benefit from the plant through employment, lease fees, and coal royalty payments.

Both the Harvey Study and ASU Study are still bei ng finalized. In the interest of submitting this updated BART report to EPA in a timely manner, preliminary results from those studies are presented in this section, since th ey are critical factors in asse ssing the cost of compliance. Although the results are not final, the conclusions are clear. The imposition of the most stringent control option as BART for NGS would have significant advers e economic consequences. SRP

will submit final versions of both studies to EPA under separate cover as soon as they are complete.



### 4.3 Updated Control Costs and Economic Impacts

4.3.1 LNB/SOFA

The NGS owners completed the installation of LNB/SOFA on all three units at NGS between 2009 and 2011. The actual capital cost of installi ng LNB/SOFA on all three units at NGS was approximately $45 million. Annual Operation and Maintenance (O&M) cost associated with LNB/SOFA are negligible. Ha rvey Economics estimates that the costs associated with

LNB/SOFA will translate to the following impacts:

• Impact on Arizona Indian Tribes with CAP Contract Entitlements. The five Arizona Indian Tribes that substantially depend on a ffordable CAP water could see increases in CAP energy charges and a reduction in funds av ailable to subsidize water rates in the LCRBDF. Between 2012 and 2044, this could tr anslate to a total reduction in Gross Product of $12 million, including personal income losses of $6 million.

• Impact on Arizona Economy. The higher costs of water and power, and the losses to the LCRBDF, could translate to a total reduc tion in Gross State Product of $73 million, including personal income losses of $27 million, between 2012 and 2044.

4.3.2 SNCR

SRP is currently working with FTI to develop mo re accurate estimates for the potential cost of installing and operating SNCR at NGS. Based on the most recent cost estimates provided by FTI, and estimates of additional costs developed by SRP, the capital cost of installing SNCR on all three units at NGS would be approximatel y $39 million. Annual O&M costs associated with SNCR would be approximately $19 million. Harv ey Economics estimates that the costs associated with SNCR will translate to the following impacts:

• Impact on Arizona Indian Tribes with CAP Contract Entitlements. The five Arizona Indian Tribes that depend on affordable CAP water could see increases in CAP energy13 charges and a reduction in funds available to subsidize water rates in the LCRBDF. Between 2012 and 2044, this could translate to a total reduction in Gross Product of $163 million, including personal income losses of $90 million.

• Impact on Arizona Economy. The higher costs of water and power, and the losses to the LCRBDF, could translate to a total reduc tion in Gross State Product of $820 million, including personal income losses of $310 million, between 2012 and 2044.

4.3.3 SCR

In 2010, SRP retained S&L to perform a thorough cost study for the purpose of more accurately quantifying the potential direct costs associated with installing and operating SCRs at NGS. The study was submitted to EPA in August 2010. The study was based on a site-specific assessment

that took into consideration factors such as th e logistics of bringing in the heavy machinery

needed to construct the SCRs. S&L also evaluate d the cost of an EPA requirement to install both SCRs and baghouses on each unit. S&L estimated that the capital cost of installing SCR on all units would be approximately $544 million. Annua l O&M costs associated with SCR would be approximately $12 million. Harvey Economics estimates that the costs associated with SCR will translate to the following impacts:

• Impact on Arizona Indian Tribes with CAP Contract Entitlements. The five Arizona Indian Tribes that substantially depend on a ffordable CAP water could see increases in CAP energy charges and a reduction in funds av ailable to subsidize water rates in the LCRBDF. Between 2012 and 2044, this could tr anslate to a total reduction in Gross Product of $264 million, including personal income losses of $145 million.

• Impact on Arizona Economy. The higher costs of water and power, and the losses to the LCRBDF, could translate to a total reduc tion in Gross State Product of $1.4 billion, including personal income losses of $536 million, between 2012 and 2044.

If baghouses were required in a ddition to SCR on all three units, S&L estimated that the total capital cost would be approximately $1.1 billi on. Annual O&M costs asso ciated with SCR and baghouses would be approximately $21 million. Harvey Economics estimates that the costs associated with SCR and baghouses will tr anslate to the following impacts:

• Impact on Arizona Indian Tribes with CAP Contract Entitlements. The five Arizona Indian Tribes that substantially depend on a ffordable CAP water could see increases in CAP energy charges and a reduction in funds av ailable to subsidize water rates in the LCRBDF. Between 2012 and 2044, this could translate to a total reduction Gross Product of $504 million, including personal income losses of $277 million.

• Impact on Arizona Economy. The higher costs of water and power, and the losses to the LCRBDF, could translate to a total reduc tion in Gross State Product of $2.8 billion, including personal income losses of $1.0 billion, between 2012 and 2044.14 If EPA requires SCR as BART, there is a signi ficant risk that NGS could shutdown, for the

reasons described in Section 5 of this report. If NGS were to shutdown, this would have a significant adverse impact on the Navajo and H opi Tribes. NGS has over 500 employees, more than 80% of whom are Navajo. NGS and the Ka yenta Mine, which supplies it with coal, employ a total of almost 1,000 people. The plant and th e mine provide significant economic benefit to the Navajo Nation and the Hopi Tribe through em ployment, scholarships, lease payments, and coal royalties.

ASU developed an estimate of the value of NGS a nd the Kayenta mine to the state of Arizona as

a whole. ASU estimates that NGS and the Kayenta mi ne will account for over $20 billion in Gross State Product between 2011 and 2044, and contribute to over 3,000 jobs each year. Clearly, the shutdown of NGS w ould have devastating economic consequences on the state of

Arizona as a whole.



### 4.4 Cost Comparison

Table 3 below contains a comparison of the dire ct costs of each control option. Table 4 shows the average and incremental cost per ton associ ated with each control option, as well as the estimates for the broader economic imp acts associated with each option.



### 4.5 Conclusions Regarding Costs of Compliance

It is clear from Tables 3 and 4 that LNB/SOFA is a far more co st effective control option for NGS than post-combustion controls. Even without considering the broader economic impacts, the cost of SCR exceeds that of LNB/SOFA by mo re than a factor of 10, and by more than a factor of 25 if baghouses were required.

The broader economic impacts asso ciated with the SCR control option are significantly higher

than those associated with LNB/SOFA or SNCR . Harvey Economics estimates that if the EPA were to require SCR as BART, the reduction in Arizona’s Gross State Product would be more than $1.4 billion, and more than $2.8 billion if both SCR and baghouses were required, between the years 2012 and 2044. If SCR were required as BART and NGS were to shutdown for the reasons described previously, th e broader economic impacts would be even more significant.

Even without considering the broa der economic impacts, a comparis on of costs in dollars-per-ton and dollars-per-deciview shows that LNB/SOFA is the most cost-effective option for improving visibility in the first regional haze planning pe riod. When the economic impacts are taken into consideration, the costs of compliance associated with SCR far exceed those of LNB/SOFA, and should compel EPA to propose a BART em ission limit that is based on LNB/SOFA.15Table 3. Cost of NOxControl OptionsBART Control OptionCapital CostAnnual O&MCostTotal AnnualCostLNB/SOFA $45,000,000 0 $5,214,000SNCR $39,200,000 $19,000,000 $23,542,000SCR $544,161,000 $11,946,000 $75,015,000SCR + Baghouses $1,130,972,000 $20,634,000 $151,714,000Table 4. Compliance Cost SummaryLNB/SOFASNCR(0.15 lb/MMBtu)SNCR(0.18 lb/MMBtu)SCR SCR + BaghousesCost MetricsAverage Cost ($/ton) $519 $1,251 $1,481 $2,926 $5,918Incremental Cost ($/ton)1$519 $2,090 $3,135 $5,282 / $7,546 $13,153 / $18,791Incremental Cost - CALPUFF v5.8 ($/dv)1$14,000,000 $73,000,000 $122,000,000 $191,000,000 / $303,000,000 $475,000,000 / $754,000,000Incremental Cost - CALPUFF v6.4 ($/dv)1$13,000,000 $115,000,000 $167,000,000 $5,147,000,000 / < $0 $12,817,000,000 / < $0Impact on Indian Tribes with CAP Water EntitlementsPeak Annual Job Losses Between 2012 and 2044 9 132 264Average Annual Job Losses, 2012-2044 4 83 159Total Personal Income Loss (2012-2044, 2011 dollars) $6,400,000 $145,100,000 $277,200,000Reduction in Gross Product (2012-2044, 2011 dollars) $11,700,000 $263,900,000 $504,200,000Impact on Arizona EconomyPeak Annual Job Losses Between 2012 and 2044 30 472 942Average Annual Job Losses, 2012-2044 16 316 620Total Personal Income Loss (2012-2044, 2011 dollars) $27,100,000 $535,600,000 $1,048,800,000Reduction in Gross State Product (2012-2044, 2011 dollars) $73,400,000 $1,425,900,000 $2,800,200,000$820,000,000$89,500,00058$162,900,000204$310,000,000511831.The incremental cost of the SNCRoptions are shown relative to the costs of LNB/SOFA. The incremental cost of the SCR option is shown relative tothe costs of both SNCR options (0.18 lb/MMBtu / 0.15 lb/MMBtu).2.“Impact on Arizona Economy” includes the effects on Indian tribes, non-Indian agriculture, industry and residents of cities orwater suppliers with CAPentitlements, as well as power customers in central Arizona.16 

### 5 Remaining Useful Life

Despite the economic importance of NGS, the plant faces a number of significant challenges that threaten its future viability. Those challenges include, but are not limited to, the following:

• The plant site lease and severa l other critical agreements that are required for NGS to continue to operate begin to expire in 2019. The extension of the plant site lease will trigger a review under the National Envir onmental Policy Act (NEPA), which could require the preparation of an Environmental Impact Statement (EIS). The development

of an EIS could take several years to complete, and the outcome of that assessment is

uncertain.

• NGS is co-owned by six participants: The United States Bureau of Reclamation (24.3%), Salt River Project (21.7%), Los Angeles De partment of Water and Power (21.2%), Arizona Public Service (14%), NV Energy ( 11.3%), and Tucson Electric Power (7.5%). As a result of the recent emphasis on reducing greenhouse gas emissions and increasing utility renewable portfolio sta ndards, several of th e participants are unc ertain about their continued ownership of coal-fired generati ng facilities. In th e case of LADWP, for example, there is a California law that could prohibit the company from making

investments that will extend the life of coal-fired facilities.

• Future ownership uncertainty creates a subs tantial challenge because any significant capital investment, such as the investment th at would be necessary if additional emission controls are required, must be unanimously appr oved by all six particip ants. If any of the

current owners decides not to continue to participate, another buyer would need to be found, or the remaining participants would need to absorb the additional costs, in order to keep the plant operating.

• The NGS participants are currently renegotiatin g the coal supply contract with Peabody Energy, and the terms of the plant site lease agreement with the Navajo Nation. Assuming that they can be successfully exte nded, the renegotiated agreements will result in higher future operating costs for the NGS participants, which could change the economics of NGS compared to other resource alternatives.

If the EPA requires costly additional emissi on controls such as SCR as BART, the NGS participants would be forced to decide whethe r to make large capital investments without any certainty that the plant could continue to operate beyond 2019, and without certainty regarding the future costs of operating NGS due to the poten tially higher lease and coal costs. This could put the plant at a significant risk of clos ure, which could have devastating economic consequences, as described in the pr evious section of this report.

The report provides the information above because the NGS participants are concerned that EPA may not be giving sufficient weight to the possibility of plant closure. If EPA proposes a BART emission limit for NGS that requires SCR, there is a significant risk that the plant

could shutdown.17 

### 6 Updated Five Factor Analysis and BART Proposal

6.1 Factor 1: Cost of Compliance

The information presented in this report clearly demonstrates that LNB/SOFA is the most costeffective BART control option. The cost of SCR exceeds that of LNB/SOFA by more than a factor of 10, and by more than a factor of 25 if baghouses are required. LNB/SOFA achieves the most incremental visibility improve ment of any of the control opti ons under consideration, at the

lowest cost.

This conclusion is further reinforced by the anal ysis of the broader economic impacts that could

occur if additional contro ls are required at NGS. Harvey Economics estimates that if the EPA were to require SCR as BART, the reduction in Arizona’s Gross State Product would be more than $1.4 billion, and more than $2.8 billion if both SCR and baghouses were required, between the years 2012 and 2044.

If EPA requires SCR as BART, there is a significant risk that NGS could be forced to close, for

the reasons discussed in Section 5 of this report. The broader economic impacts associated with the shutdown of NGS would be even more signifi cant. The closure of NGS would represent the

loss of a vital resource to the economies of the Navajo and Hopi Tribes. ASU estimated that NGS and the Kayenta mine will account for ove r $20 billion in Gross State Product between 2011 and 2044, and contribute to over 3,000 jobs each year.

An analysis of the costs of each control option, the potential visi bility benefits that can be achieved, and the broader economic implications, cl early points to LNB/SOFA as the most costeffective approach for improving visibility in the first regional haze planning period.



### 6.2 Factor 2: Energy and Non

­ Air Quality Impacts

LNB/SOFA and SNCR do not have any signifi cant adverse energy or non-air quality environmental consequences. SCR consumes si gnificantly more energy, and introduces several significant non-air qualit y environmental problems, including most notably: 1) an increase in cost of water to customers that rely on the CAP; 2) reduced revenue s to the LCRBDF, which funds Indian water rights settlements; 3) the loss of access to renewable surface water and increased dependence on groundwater; and, as id entified in the 2009 BART Report 4) the risk associated with the transporta tion and storage of anhydrous amm onia that would be needed by

SCR.18 

### 6.3 Factor 3: Existing Controls at the Facility

LNB/SOFA was installed on a ll three units at NGS between 2009 and 2011. By installing LNB/SOFA early, total NO
x reductions achieved in the first regional haze planning period will far exceed the reductions that would be requi red by even the most stringent EPA BART determination (SCR on all three units), as shown in Figure 3. In addition, LNB/SOFA would

achieve an emission rate that is well below the presumptive BART limit of 0.28 lb/MMBtu established by EPA for this source category.

Figure 3. Comparison of NO
x Reductions in the First Regional Haze Planning Period

0 20,000 40,000 60,000 80,000 100,000 120,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019NOxEmissionReductions(tons)

NOx Reductions from LNB/SOFA NOx Reductions if BART = SCR Cumulative NO

x Reductions from LNB/SOFA

Cumulative NO

x Reductions if EPA BART = SCR

LNB/SOFA

on Unit 3 LNB/SOFA

on Unit 2 LNB/SOFA

on Unit 1 SCR on
Unit 1

SCR on
Unit 2 SCRon
Unit 3



### 6.4 Factor 4: Remaining Useful Life of Facility

As discussed in Section 5 of th is report, the NGS participants are currently in the process of extending the plant site lease and ot her critical agreements that ar e necessary to ensure continued operation of NGS beyond 2019. The NGS participan ts are also working to extend the coal supply contract, which will result in higher fu ture operating costs. If the EPA imposes requirements to install costly additional emi ssion controls such as SCR as BART, the NGS participants would be forced to decide whethe r to make large capital investments without any certainty that the plant could continue to operate beyond 2019, and without certainty regarding the future costs of operating NGS due to the poten tially higher lease and coal costs. This could put the plant at a significant risk of clos ure, which could have devastating economic

consequences.19 LNB/SOFA achieves progress toward s national visibility goals in the first planning period, while allowing the NGS participants time to secure th e agreements necessary to ensure the continued operation of this valuab le generating asset.



### 6.5 Factor 5: Degree of Visibility Improvement

As discussed in detail in Section 3 of this re port, regardless of which version of the CALPUFF model is used, the incremental visibility impr ovement associated with installing LNB/SOFA over the baseline configuration exceeds the incremental improve ment from installing SNCR over LNB/SOFA, or SCR over SNCR. Given the si gnificantly lower cost of LNB/SOFA, this analysis demonstrates that LNB/SOFA is the most cost-effective BART control option for NGS.



### 6.6 Conclusion: BART Proposal

Based on an updated evaluation of the five statut ory factors considering the latest information presented in this report, SRP is proposing that a NO
x emission rate of 0.24 lb/MMBtu, achievable by installing and operating LNB/SOFA on all three units, is BART for NGS. While this conclusion has not changed since the 2009 BART report, SRP has gathered significant additional information to support that conclusion. In summary, SRP’s proposal is based on the following considerations:

• LNB/SOFA achieves an emission rate that is well below the presumptive BART limit of 0.28 lb/MMBtu established by EPA fo r the type of boilers at NGS.

• LNB/SOFA achieves greater incremental visi bility improvement than post-combustion controls, at a fraction of the cost. The co st of Selective Cataly tic Reduction (SCR), the most expensive control option, exceeds that of LNB/SOFA by more than a factor of 10, and by more than a factor of 25 if baghouses are also required.

• The NGS owners voluntarily installed LN B/SOFA on all three units between 2009 and 2011. By installing LNB/SOFA early, total NO
x reductions achieved in the first regional haze planning period will exceed the reductions that would be required by even the most stringent EPA BART determina tion, as shown in Figure 3.

• The results obtained using the EPA’s CALPUF F model (Version 5.8) indicate that the incremental visibility improvement from inst alling SCR relative to LNB/SOFA is well below 1 deciview (dv) at all Class I areas. 1 dv is the level that EPA has indicated is a “small but noticeable change in haziness.”

• The results obtained using the latest versi on of CALPUFF (Version 6.4), which is based on the best available science, indicate that the incremental visibility improvement from installing SCR relative to LNB/SOFA is significantly less than the improvement predicted by CALPUFF v5.8. In certain Class I areas, visibili ty is predicted to degrade due to the increase in sulfates that are produced by SCR.20 • Regardless of which version of the CALPUFF model is used, the re sults indicate that LNB/SOFA achieves greater incremental visi bility improvement than Selective NonCatalytic Reduction (SNCR) or SCR, and at a significantly lower capital cost. This conclusion is illustrated graphi cally in Figures 1 and 2.

• If EPA requires SCR as BART, there is a significant risk that NGS could shutdown,

which would result in the lo ss of a vital resource to the economies of the Navajo and Hopi Tribes. NGS has over 500 employees, more than 80% of whom are Navajo. NGS and the Kayenta Mine, which supplies it with coal, employ a total of almost 1,000 people. The plant and the mine provide significant ec onomic benefit to the Navajo Nation and the Hopi Tribe through employment, scholarships, le ase payments, and coal royalties. All of

those benefits would be lost if NGS and the mine were to shutdown.

• The shutdown of NGS would also have deva stating economic consequences on the state of Arizona as a whole. In a recent study, Ar izona State University’s Seidman Institute

evaluated the economic contribution of NG S and the Kayenta Mine to the Arizona

economy. ASU estimates that NGS and the Kayenta Mine will account for over $20 billion in Gross State Product betw een 2011 and 2044, and contribute to over 3,000 jobs each year.

In light of the above considerations, SRP respectfully urges EPA to propose a NO
x BART

emission limit for NGS that is based on LNB/SOFA. The analysis presented in this report,

which is based on a review of the five BART stat utory factors, demonstrates that LNB/SOFA is the most cost-effective BART control option for NGS , and a BART proposal that is based on this technology would not introduce the risk of broader adverse economic consequences.Attachment A. Modeling Files