ALASKA POWER & TELEPHONE COMPANY

PO BOX 3222 – 193 OTTO STREET

PORT TOWNSEND, WA 98368 (360) 385-1733 – (800) 982-0136 FAX (360) 385-5177

April 1, 2011

Improving Regulations Docket Environmental Protection Agency

EPA Docket Center

Mail Code: 2822T 1200 Pennsylvania Avenue, NW Washington, DC 20460

VIA EMAIL: R10improvingregulations@epa.gov ImprovingRegulations.SuggestionBox@epa.gov Dunbar.bill@epa.gov

RE: Comments on EPA Docket for Impr oving Regulations and Regulatory Reform Docket No. EPA-HQ-OA-2011-0155 (Air)

Alaska Power & Telephone (AP&T) is submitting comments for EPA’s consideration in response to President Obama’s Executive Order No. 13563, “Improvi ng Regulations and Regulatory Review.” Specifica lly, our comments relate to the numerous regulations and concomitant control technology requirements fo r compression ignition reciprocating internal combustion engines (“CI RICE”).

AP&T delivers energy to over 12,000 customers in 36 communities across Alaska. We are recognized as one of the most progressive utilitie s in the State, operating in the very challenging Alaskan environment, and providing the lowest cost energy we can, primarily from renewable energy resources. Our employees own the compa ny, and they live and wo rk in the communities

where our facilities are located. We have a stro ng commitment to providing reliable and costeffective energy within the context of safety, security, health and environment.

AP&T operates more than 75 CI RICE rangi ng in size from 33 kW to 2,800 kW. Rules promulgated by EPA under NSPS Subpart IIII a nd NESHAP 40 CFR 63 Subpart ZZZZ present a complex regulatory maze that is very difficult to understand and operate w ithin. In particular, we have found NESHAP Subpart ZZZZ to be serious ly flawed as promulgated, and it will have significant, detrimental economic conseque nces for our stakeholders with no real health or

environmental benefit.

A brief analysis of Subpart ZZZZ and its flaws ar e provided in the attached documentation. We would request EPA to reconsider this rule a nd provide an exemption from Subpart ZZZZ forApril 1, 2011 Page 2 of 6

2 each CI RICE deployed as backup for hydropower and other renewable energy generation AND an exemption for each CI RICE which otherwis e operates for less than 500 hours per year as determined on a multi-year basis.

We appreciate the opportunity to provide our comments and suggestions for improving EPA’s regulatory programs. If there are any questi ons regarding our comment s, please contact Ms. Patsy Caldwell at 360.385.1733 (x135) or email at patsy.c@aptalaska.com

.

Robert S. Grimm, President

cc: Edward Settle, Tapis Energy Group, Inc.April 1, 2011 Page 3 of 6

3 National Emission Standards for Hazardous Air Pollutants for Compression Ignition Reciprocatin g Internal Combustion Engines 40 CFR 63, Subpart ZZZZ

National Emission Standards for Hazardous Air Pollutants (NESHAP) Subpart ZZZZ was published in the Federal Register on March 3, 2010 and became effective on May 3, 2010. New CI RICE are now subject to the rule requirement s, and existing CI RICE must meet the rule requirements by May 3, 2013. This document is focused primarily on existing CI RICE.

Subpart ZZZZ will require about the same capita l cost expenditure for a major source or a non-major source. A major source of hazardous air pollutant (HAP) emissions is generally a stationary source that emits or has the potential to emit any singl e HAP at a rate of 10 tons or more per year or any combination of HAP at a rate of 25 tons or more per year. An area source

of HAP emissions is a source that is not a major source, and there is no de minimis level of emissions for an area source. The capital cost for rule compliance is about the same for major source engines that run as base load and area source engines that rarely operate.

AP&T’s engines are not el igible for exemption from Subpart ZZZZ as written. Relevant to many of Alaska’s electric utilities, Sec tion 63.6590 of NESHAP Subpart ZZZZ identifies exemptions including emergency RICE, limited use RICE, and Alaska area sources not accessible by the Federal Aid Highway System (FAHS). First, the rule specifically states that RICE used for peak shaving are not considered to be emergency engines, and RICE used to supply power to an electric grid are not consid ered to be emergency engines. Second, limited use RICE are those engines which operate less than 100 hours per year. Third, area sources not accessible by the FAHS is an exemption for very remote area sources in Alaska. Many rural

Alaskan coastal communities like those served by AP&T are considered part of the FAHS because they are served by the Alaska Mari ne Highway with drive-on ferry service.

Subpart ZZZZ does not, in fact, expressly limit HAP emissions. The rule primarily limits emissions of carbon monoxide (CO) to 23 parts per million on a dry volume basis at 15 percent oxygen (ppmvd at 15% O2) or a reduction in CO emi ssions of 70 percent or more. The rule also sets forth requirements for ultra-lo w sulfur diesel fuel use, part iculate matter controls, operations and maintenance practices, ini tial and periodic sour ce testing, and various monitoring, reporting, and recordkeeping activities.

The final rule limited HAP emissions through sta ndards for carbon monoxide (CO) on the basis of a relationship between CO emissions reducti ons and formaldehyde emissions reductions from CI stationary engines. Additionally, PM emi ssions reductions by the use of after-treatment technologies were assumed to also reduce HAP emissions. Though EPA refers to previous studies to support a surrogate appr oach using CO, we could not find the conclusive detail to fully support the assertions that: (a) formaldehyde and CO emission ra tes are strongly related across all types and sizes of CI RICE, and (b) formaldehyde is the best indicator of all HAP, and (c)

controls for CO will result in the same reducti on in formaldehyde and all other HAP across all types and sizes of CI RICE.April 1, 2011 Page 4 of 6

4 Finally, EPA decided to use CO as a surrogate for formaldehyde emission control. However, EPA proceeded to focus on the benefit of the ru le as though the intent of the rule was the reduction of CO emissions. Given the large amount of CO emissions that can be controlled with the control technology required, this is a spurious approach as it leads a less-informed reader to

conclude that the overall regulatory impact of NESHAP ZZZZ is slight and the cost/benefit is very favorable. (Observe that CO and PM are criteria pollutants, not HAP, and the communities served by AP&T are small and designated attainment for all criteria pollutants).

The Regulatory Impact Analysis (RIA) fo r Subpart ZZZZ is substantially deficient. Table

4-8 of the RIA indicates that the rule would reduce emissions of HAP by 312 tons from major

sources and 703 tons from area sources for a total of 1,014 tons. The RIA further states (p. 7-11) that “Due to data, resource, a nd methodology limitations, we were una ble to estimate the benefits associated with the 1,014 tons of hazardous air pollutants that w ould be reduced as a result of

this final rule.” We submit that the estimated reduction for area sources is grossly overstated for purposes of Alaska’s contribution to both baseline and reduction, because the CI RICE supporting many Alaskan communities oper ate far less than 1000 hours per year.

HAP emissions data from one engine were used to represent large CI RICE for the rule.

The RIA references a Memorandum to Sims Roy, EPA OAQPS ES D Combustion Group: “Emissions Data for Reciprocating Internal Co mbustion Engines”, dated February 4, 2002. This memorandum acknowledges that HAP testing has been conducted only on a limited sample of engines. Acknowledging this limitation in th e current RIA, EPA attempted to incorporate

additional test data in the Res ponse to Comments on the rule. However, the additional testing did not appear to be for the suite of HAP constit uents which are targeted by the rule. Further, our experience and research suggest s that emissions from diesel engines may often be dependent on engine speed, cylinder geometry, peak pressures and temperatures, air-to-fu el ratio, and more.

EPA did not consider Alaska’s unique standby generating circumstances when setting forth Subpart ZZZZ. EPA has assumed that engines subj ect to the Subpart ZZZZ rule will operate at least 1,000 hours per year. However, for many Alaskan utilities such as AP&T, standby generation will be opera ted for only a few hours each month over many years and then dispatched for one or more months to provide energy during the infrequent interruption of renewable resources. AP&T believes that EPA’s definitions of emergency and limited use are inconsistent and far more string ent than past policy. If EPA were to exempt from Subpart ZZZZ each electric utility CI RICE that actually opera tes less than 500 hours per year (especially over a multi-year period), AP&T engines could be ex empt from NESHAP ZZ ZZ under such conditions.

EPA did not carefully consider the harsh testin g environment and limited use of Alaska’s CI RICE when establishing test requirements. Subpart ZZZZ requires an initial performance test of each CI RICE and a test every 8,760 hours of operation or 3 years, whichever comes first. EPA’s cost estimate for performance testing is based on $1,165 per day of testing for a portable analyzer. Three 1-hour runs, on two engines each day, is estimated to run $583 per engine.

Had EPA understood the unique circ umstances of AP&T’s operation, it would be clear that such requirement not only creates a significant ec onomic burden and operational inconvenience on AP&T, but this will also have an unnecessary eff ect on the environment. Testing an AP&T CIApril 1, 2011 Page 5 of 6

5 RICE every 8,760 hours of operation w ould likely result in more than a decade between testing events, whereas testing an EMD every 3 years will provide little benefit gi ven the low number of hours of actual operation and unexpected change in operational characteristics. Nevertheless, operation for the initial testing and periodic performance tests currently required by NESHAP

ZZZZ will cause fossil fuel to be consumed in significant amounts along with the unnecessary emissions of criteria pollu tants, HAP and carbon dioxide.

EPA’s logic was faulty when responding to comments on performance testing. On page 228 of the Response to Comments, APA requested testing using representative engines where multiple equivalent engines exist. EPA’s response was as follows:

“For existing engines, EPA disagrees with the commenter that the performance of a compliance test on a single engine can be us ed to show compliance for the equivalent engines located at the same facility. EPA cannot be certain that the engines have been operated identically, have had the same operational, deterioration, and malfunction experiences, and have undergone the same ma intenance, all of which could affect the emissions. Therefore, EPA does not believe that it is appropriate to allow the use of the test on a single existing engine to show compliance for othe r engines that are the same make and model. EPA has attempted to have as little testing as is necessary to ensure that engines are meeting the standard.”

We find the quoted statement from EPA in the para graph above to be rather ironic considering that apparently a single test of a large Caterpill ar engine has established the emissions basis and control requirements for all large CI RICE regardless of age, manufacturer, maintenance practices, engine speed, cy linder configuration, fuel injection timing, etc.

The Response to Comments includes the followi ng statement by EPA as well in response to a commenter who requested a 5- year window for testing:

“EPA believes that the requirements in §63.6612(b) of the rule are appropriate. Performance tests older than 2 years may not be representative of the current emissions from the engine. Maintenance of the engine re quires replacement of parts that may affect the combustion characteristics of the engine, wh ich in turn will affect the emissions of the engine. In addition, EPA believes that the 2-ye ar limit of performance test reports will also allow sufficient time for the sources to perf orm any applicable testing at their facility before the compliance deadline.”

Here again, we find irony in this statement consid ering the age of the test data from one single engine collected prior to 2000 which was used as the basis for the requirements that apply to large CI RICE at area sources.

The Add-on Control Technology required to comply with Subpart ZZZZ is unreasonably costly and does not provide a attendant benefit. For AP&T’s largest e ngine, the cost of addon control is estimated to be in the range of $75,000 to $100,000 as estimated using the control

cost data in the RIA. This does not consider the much more expensive construction costs in the small, isolated communities with challenging ambient conditions. But this cost is required to beApril 1, 2011 Page 6 of 6

6 spent for an engine that during a normal operating year will operat e very little while hydropower serves the community’s energy needs.

We evaluated the cost/benefit of the rule in a manner consistent with best available control technology (cost of technology divi ded by quantity of pollutant re duced). Looking at a typical scenario of the CI RICE operating for ex actly 50 hours during a year, we estimate HAP emissions at less than 0.01 tons per year (appr oximately 16 pounds). At an annualized cost of nearly $14,000, the rule suggests that a cost of $1.7 million per ton of HAP removed is a reasonable cost for a small community with clea n air in remote Alaska to bear. We would disagree, concluding that $1.7 million per ton of HAP is not a reasonable cost. We would further state that an emphasis on co-ben efits due to CO/PM reduction is spurious and not rational considering Alaska’s air quality.

The EPA has not conducted a representative analys is of urban air toxics concentrations in

the small communities of Alaska. We viewed the results of 1996 Modeled Ambient Concentrations for formaldehyde and acetalde hyde (provided on the Technology Transfer Network, National Air Toxics Assessment website ). Interestingly, much of the US has no exposure to formaldehyde or acetaldehyde. Perhaps of greater immediate interest is that the EPA did not conduct modeling analyses for Alaska, so no indication of concentra tions in Alaska have been provided. The same is true for the M odeled Human Exposure to estimate cancer and noncancer risks to the populations – exposure was assessed for the United States, except for Alaska and Hawaii. EPA’s rule might well serve the ci tizens of Los Angeles, Denver, Chicago, or New York City, but for Alaskan communities, it is a hi gh cost with little benefit resulting only in much higher electricity rates.

Based on our review of the basis for NESHAP Z ZZZ as found in the Urban Air Toxics Strategy Area Source Rule, we conclude that EPA ha s done a poor job of analyzing air quality concentrations and exposures in Alaska. Thus, it is by extension of results in the Lower 48 that Alaska has become subject to onerous rules which are very costly for Alaskans and do not result in a significant reduc tion in cancer and non-cance r risk to population.