p.1 

OAR Box 1778 

Prepped by Ollie Stewart 

Document Number: 

51) ll-B-26 

Docket Number: 

A-90-06 

Printed 10/28/2008 9:50:53 AM Sheet 51 of 276 
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• * » . 

II-B-26 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

REGION V 

DATE: MAR 2 5 1983 

SUBJECT: ps D Applicabilit y for a Power Plant 

Life Extension Project 

f rriTv. %J \f\ 

FROM: David Kee, Director 

Air and Radiation Division 

TO: 

Gerald A. Emison, Director 

Office of Air Quality Planning and Standards 

Wi> ^ ^ 

I am requesting quidance on a Prevention of Significant Deterioration (PSD) 

applicabilit y determination. Wisconsin Electric Power Company (WEPCO) intends 

to renovate it s Port Washington plant. The Wisconsin Department of Natural 

Resources (WDNR) has asked i f the United States Environmental Protection 

Agency (USEPA) considers these renovations subject to the requirements for 

a "major modification" in the Federal PSD regulations in 40 CFR 52.21. A 

physical change or change in the method of operation of a major stationary 

source is subject to PSD. However, an increase in the hours of operation or 

the production rate is not considered a physical change or change in the 

method of operation [see 40 CFR 52.21(b)(2)(iii)(f)] . WEPCO believes the 

renovation project is merely an increase in production which i s not subject 

to PSD regulations. 

WEPCO operates fiv e coal-fire d boilers at the Port Washington plant . One 

boiler has been shut down for 3 years due to a cracked steam drum. The 

others have not been able to operate at ful l capacity due to degradation. 

Some of the boilers have suffered more degradation than others as illustrate d 

below: 

Unit 1 

Unit 2 

Unit 3 

Unit 4 

Unit 5 

Generator Nameplate 

(megawatts) 

80 

80 

80 

80 

80 

1986 Summer Capabil 

(megawatts) 

49.0 

69.0 

78.0 

57.0 

75.0 

ity* -Year of Initial 

operation 

1935 

1943 

1948 

1949 

1950 

* From Inventory of Power Plants in the United States 1986. 

Administration 

Energy Information 

U ^ 

'.Qfti 

EPA FORM 1320-6 (REV 3-761 
P.3 

The renovations are intended to restore the boilers to their nameplate 

capacities and to allow them to operate unti l 2010. Plantwide capacity would 

increase about 40 percent above current levels to 400 megawatts. Net emission 

increases of sulfur dioxide, particulate matter, and possibly other pollutants 

would be "significant." Capital expenditures wil l be required to restore the 

los t capacity because major boile r components wil l be replaced. 

We are requesting concurrence with our determination that the WEPCO renovations are 

not exempt from PSD regulations under the provisions of 40 CFR 52.21(b)(2)(iii)(f) . 

We consider thi s exemption to be only for increases up to the production rate that 

the source can operate at without altering equipment. In other words, an 

increase in production rate i s exempt but a renovation that increases the 

production rate is not even though the renovation restores los t capacity. 

Although the Port Washington plant may have been able to operate at 400 megawatts 

in the past, degradation has caused operational limitation s that have restricted 

their potential to emit. Our understanding is that an increase in actual emissions 

up to the potential to emit would be exempt under 40 CFR 52.21(b)(2)(iii)(f) 

but an increase in the potential to emit would not. 

I have attached letter s from Mr. Dale Ziege of WDNR dated November 9, 1987, 

and February 5, 1988, and from Mr. Mark Steinberg of WEPCO dated March 17, 

1988. These letter s comprise the State and company's request for an applicabilit y 

determination. 

We request your consideration of thi s applicabilit y issue because boiler lif e 

extension projects appear to be on the increase nationwide and your determination 

here may impact numerous other projects . If you have any questions, please 

contact me or Bil l MacDowell of my staf f at FTS 886-6043. 

Attachments 
P.4 

State of Wisconsin \ DEPARTMENT OF NATURAL RESOURCES 

Carroll D. Besadny 

Secretary 

BOX 7921 

MADISON, WISCONSIN 53707 

November 9, 1987 IN REPLY REFER TO: 4530 

Mr. Steve Rothblatt, Chief 

Air and Radiation Branch " -' 7 ' > 

U.S. Environmental Protection Agency 

230 South Dearborn Street 

Chicago, IL 60604 '' "-••••.. #

 : 

Dear Mr. Rothblatt: 

On September 14, 1987, the Bureau of Air Management received a copy of the 

July 8, 1987 letter from Thomas J. Cassidy of Wisconsin Electric Power Company 

(WEPCO) to Jacqueline K. Reynolds of the Public Service Commission (PSC) of 

Wisconsin concerning the proposed renovation of Units 1 through 5 at WEPCO1s 

Port Washington power plant. This letter was forwarded to our agency from the 

PSC after some staff discussion. 

Perhaps you recall that Unit 5 at WEPCO - Port Washington has been out of 

service since January, 1985 due to ligament cracking in its rear steam drum. 

On September 16, 1985, the Wisconsin Department of Natural Resources received 

a PSD permit application from WEPCO to construct a pressurized, fluidized bed 

combustion (PFBC) boiler to repower the existing Unit 5 turbine. This 

application was deemed to be complete on March 28, 1986. The PSD permit was 

never issued because the applicant could not agree with the permitting 

authorities (DNR and EPA) on certain permit language and consequently 

requested that the permits remain unissued by the agencies. 

The Bureau of Air Management has recently verified that the facility in 

question (Unit 5 at WEPCO - Port Washington) has in fact been carried on the 

Wisconsin Air Emissions Inventory throughout its period of in^operation. As 

you know, s. 144.391(4)(b)2., Wis. Stats., provides that the resumption of 

operation of a source after a period of closure is an exempt modification 

1. if the existing equipment was continuously included in the source 

inventory as an existing source covered by the SIP, 

2. if the specified change does not cause or exacerbate the violation of an 

ambient air quality standard, and 

3. if the specified change does not cause or exacerbate the violation of an 

ambient air quality increment. 
P.5 

Mr. Steve Rothblatt - November 9, 1987 2. 

The Bureau has now also projected that the resumption of operation of (the 

repaired) Unit 5 at WEPCO - Port Washington will neither cause nor exacerbate 

the violation of an ambient air quality standard or increment. Therefore, the 

State of Wisconsin will not view the renovations at the Port Washington plant 

to actually modify any of the boilers. Furthermore, the capital expenditures 

for the repairs to Unit 5 amount to only 3X to 5% of the fixed capital cost of 

a comparable brand-new boiler system. 

It is our understanding that although the PFBC project was not actually 

permitted, the complete application as of March 28, 1986 set PSD baseline for 

Ozaukee County for TSP- We are unsure as to the status of the PSD baseline 

for SO?? for this county, however. WEPCO agreed to restrict the total plant 

S02 emissions via a permit so that they could take credit for the shutdown 

of the old No. 5 boiler (and its S02 emissions) and thus net out of PSD 

review for S02 for the proposed fluidized bed boiler. But these 

restrictions were never enforceable because the permit was never Issued. Does 

this mean that the PFBC project's complete, application filed with the DNR in 

fact set PSD baseline for both TSP and S02? 

Please advise us as to the applicability of the various PSD regulations to the 

WEPCO - Port Washington power plant as they carry out their renovations. 

Sincerely, 

^ _ 

Donald F. Theiler, Director 

Bureau of A1r Management 

DFT:dl/9362W 

Enclosure 

cc: Dale Ziege - AM/3 

Allen Hubbard - AM/3 

Ralph Patterson - AM/3 

Marcia Penner - LC/5 

Mark Steinberg - Wisconsin Electric Power Company 

Roger Dodds - Wisconsin Electric Power Company 
P.6 

r Wisconsin Electric POWER COMPANY 

231 W MICHIGAN, P.O. BOX 2046. MILWAUKEE, Wl 53201 

£ MASTER 

FILE COPY 

(414)277-2345 

July 8, 1987 

( 

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— 3 CO 

***** k " 

* % • •••; > 

u> 

•.<•-> 

: o 

Mrs. Jacqueline K. Reynolds 

Secretary to the Commission 

Public Service Commission of Wisconsin 

Post Office Box 7854 

Madison, Wisconsin 53707 

Dear Mrs. Reynolds: 

Pursuant to Section 196.49 of the Wis. Stats, and Section PSC 112.05(l)(b) of 

the Wis. Admin. Code, Wisconsin Electric Power Company (Applicant) makes application for authority to renovate units 1 through 5 and common plant facilities 

at its Port Washington Power Plant located in the city of Port Washington, 

Ozaukee County, Wisconsin. Renovation will involve replacements, modifications, 

and additions at the generating plant. 

I. Description of Project 

Applicant proposes to perform major renovation maintenance on Port Washington 

Power Plant units 1 through 5 and common plant facilities. This project is the 

result of evaluations performed by Applicant and its consultant, Bechtel Eastern 

Power Corporation (Bechtel). The assessment by Bechtel is included in the Plant 

Availability Study (PAS), a copy of which was previously submitted to the commission. 

This project has been established to manage implementation of selected PAS 

recommendations over a four-year period. 

The facilities that will undergo renovation include the turbine-generators, 

boilers, mechanical and electrical auxiliaries, and the common plant support 

facilities. Generally, the renovation work items included in this application 

are those that would normally occur only once or twice during a unit's expected 

life cycle. A listing of the work items for each unit and for the plant common 

facilities is attached as Exhibit A. The work items are intended to be completed 

during the period 1988 through 1991. 

Renovation is necessary to allow the Port Washington units to operate beyond 

their currently planned retirement dates of 1992 (units 1 and 2) and 1999 (units 

3, 4 and 5) as described in Advance Plan 4. 

PAS recommendations falling into the category of repetitive maintenance that are 

normally performed during scheduled equipment outages do not require specific 

commission approval and, accordingly, are not included in this application. 

Further, PAS recommendations for the upgrading of the WPDES waste water treatment system and installation of 22 kV bus fault protection equipment are already 

in progress due to need. 
P.7 

( 

( 

c 

Mrs. Jacqueline K. Reynolds 

July 8, 1987 

Page 2 

II. Project Cost and Financing 

Applicant estimates the total gross cost of the renovation maintenance work to 

be $83,843,000, detailed as follows: 

Item Amount 

Capital and Removal Costs 

Unit 1 $ 7,026,000 

Unit 2 8,432,000 

Unit 3 7,710,000 

Unit 4 6,718,000 

Unit 5 5,186,000 

Common Facilities 10,542,000 

Subtotal $45,614,000 

Associated Maintenance Costs 36,052,000 

AFUDC Charges 2,177,000 

Total Estimated Gross Project Cost $83,843,000 

The cost estimate is based on performing the work items over the four-year 

period, 1988 to 1991, utilizing successive nine-month outage periods for the 

five units. 

The cost of the project will be met from internal sources and/or from the 

issuance and sale of securities. 

III. Purpose and Necessity of Project 

The Port Washington Power Plant consists of five similar generating units with 

pulverized coal fired boilers providing steam to turbine-generators. The total 

designed nameplate capability of the plant is 400 MW. 

Since being placed in service during the period 1935 to 1950, the overall capability 

of the five units has decreased due to age-related deterioration of equipment. 

The current total plant net capability has declined by 40%. The single largest 

problem relates to unit 5 which has been out of service since January 1985 

pending resolution of a cracking problem in the boiler rear steam drum. 

In March 1983, Applicant initiated a Plant Availability Study to assess the 

physical condition of the pulverized coal fired generating units at the North 

Oak Creek, South Oak Creek, and Port Washington power plants. The study confirmed, 

with respect to Port Washington Power Plant, that extensive renovation of the 

five units and the plant common facilities is needed if operation of the plant 

is to be continued. 

The study indicated a need to perform certain major maintenance in the near 

future and concluded that the Port Washington Power Plant is capable of generating 

at its designed capability until year 2010 if renovation of the units is undertaken. Operation until year 2010 represents a life extension of the units from 
P.8 

( 

( 

c 

Mrs. Jacqueline K. Reynolds 

July 8, 1987 

Page 3 

their planned retirement dates. Renovation is also expected to improve plant 

availability, capability, and heat rate. 

Assessments resulting from the Plant Availability Study were used to determine 

the scope of renovation maintenance. In particular, the examinations of equipment in unit 3 were used as the basis for work scopes in the other four units. 

As the renovation outages dtxur, a detailed examination of equipment will also 

be performed in units 1, 2, 4 and 5. Should inspection reveal the need for 

unanticipated repair that would have a significant impact on the renovation 

project, the impact will be evaluated before proceeding with the repair. Applicant will advise the commission of any such unanticipated significant repairs. 

In addition to the renovation maintenance, regularly performed maintenance work 

is necessary to assure that the plant will continue to provide satisfactory service. 

IV. Effect of Project on Cost of Operation and Reliability of Service 

Applicant believes the proposed project is the proper alternative to discharge 

its obligation as a public utility. Renovation of the facilities will improve 

the efficiency and maintain the reliability of Applicant's service. It will not 

provide facilities in excess of present and probable future requirements. When 

placed in operation, the proposed project will not result in annual costs 

disproportionate to the service value of the work to be performed. 

V. Description and Cost of Property Being Retired 

A description of the property to be retired and its gross book cost will be 

submitted to the commission upon completion of the required engineering work. 

VI. Description of Alternatives 

Alternatives to the proposed project considered by Applicant are as follows: 

Alternative 1 - Retire all units at the plant during the 1988 to 1990 time 

period. 

Alternative 2 - Promptly renovate units 3, 4 and 5, resulting in their life 

extension to the year 2010, and retire units 1 and 2 immediately. 

Alternative 3 - Promptly renovate units 3, 4 and 5, resulting in their life extension 

to the year 2010, and delay renovation of units 1 and 2. 

The three alternatives were rejected because the life cycle accumulated discounted 

revenue requirements for each were greater than that for the proposed renovation 

project. 

Also considered as a technological demonstration project was replacement of the 

unit 5 boiler with a pressurized fluidized bed combustion (PFBC) boiler and 

renovation of the balance of the unit 5 equipment. An application for the unit 

5 project was filed with the commission on October 17, 1985. Renovation of the 

remaining four units and common plant facilities was planned to be carried out 
P.9 

Mrs. Jacqueline K. Reynolds 

( July 8, 1987 

^ Page 4 

as described herein. Carrying out of the PFBC project was contingent on obtaining 

funding commitments from sources external to Applicant, including Clean Coal 

Technology funds from the United States Department of Energy (DOE). 

Due to inability to obtain funds from DOE, Applicant canceled the PFBC project 

and on March 10, 1987 withdrew its application with the commission for authority 

to construct the demonstration project. It was then decided to include unit 5 

with the previously planned project for renovation of units 1 to 4. 

VII. Entities Affected by Proposed Project 

No other entity is affected by the proposed project. 

VIII. Environmental Screening Information 

Pursuant to Section PSC 2.90(3)(z) of the Wis. Admin. Code, an environmental 

impact statement is not required for this project. Therefore, screening information 

is not being submitted. 

IX. Flood Hazard Exposure/Impact 

( 

c 

Port Washington Power Plant is not in or near any designated floodplain or 

floodway area. 

Very truly yours, 

Thomas J. Cassidy ' 

Executive Vice President 

sip 

Attachments 

cc: Chairman Charles H. Thompson 

Commissioner Mary Lou Munts 

Commissioner George R. Edgar 

Ms. Cheryl Pofahl 
P.10 

Hr__i_ 

State of Wisconsin 

February 5, 1988 

\ 

DEPARTMENT OF NATURAL RESOURCES 

Carroll D. Besadny 

Secretary 

PFCEIVED IN 

BOX 7921 

MADISON, WISCONSIN 53707 

REPLY REFER TO: 4530 

CF9 0 9 1988 

Mr. Joseph Paisie, Chief 

Technical Analysis Section *v v 

Air and Radiation Branch (5AR26T 

U.S. Environmental Protection Agency 

230 South Dearborn Street 

Chicago, IL 60604 

'-•.•':3.'jr» Brancfl 

•TAft«# M V 

Dear Mr. Paisie: 

Pursuant to item 8 of the U.S. EPA - WDNR PSD delegation agreement of November 

13, 1987, our agency seeks concurrence on our interpretation of section 40 CFR 

52.21 as it relates to the proposed renovations at Wisconsin Electric Power 

Company (WEPCO) - Port Washington. The issue at hand is the applicability of 

PSD review to this utility boiler life extension project. 

Don Theiler's letter of November 9, 1987 to Steve Rothblatt presented our view 

of Wisconsin law governing major source modifications. The Wisconsin 

Department of Natural Resources has determined that neither the proposed 

renovations of the units at the Port Washington power plant nor the resumption 

of operation of Unit 5 are subject to new source review under the Wisconsin 

SIP. The November 9 letter also indicated that the repairs to Unit 5 will 

amount to only 3-5% of the fixed capital cost of a comparable (but brand-new) 

boiler system. Similarly, the proposed renovations for each of Units 1-4 will 

require an expenditure of far less than 50% of the replacement cost of a new 

boiler. Therefore, the renovations for each unit will not constitute 

"reconstruction", so that the provisions of New Source Performance Standards 

(NSPS) will not apply. 

Routine maintenance, repair and replacement do not constitute major 

modifications to a source (40 CFR 52.21(b)(2)(iii)(a)). The Department's 

investigation into the WEPCO-Port Washington situation has concentrated on the 

nature of the renovations proposed for the five units (boilers). Because of 

our limited expertise in utility boiler maintenance, we have consulted 

Wisconsin Public Service Commission (PSC) engineering staff for assistance in 

evaluating the planned maintenance activities. Allen Hubbard of our new 

source review staff has also discussed the life extension project at the 

Beckjord Power Station near Cincinnati with Tom Tucker of the Southwestern 

Ohio Air Pollution Control Agency (S0APCA). 

Utility boiler life extension projects, such as the WEPCO-Port Washington 

plant restoration, are of keen interest to PSC. A letter summarizing PSC's 

thoughts on the Port Washington project and how it fits in with Wisconsin's 

utility Advance Plans is in process. SOAPCA's Mr. Tucker indicated that the 
P.11 

Mr. Joe Paisie, Chief - February 4, 1988 t 

Beckjord renovations, which like those proposed for Port Washington simply 

restored boiler capacity which had been lost due to the normal aging of 

utility boilers, were determined to be exempt from PSD because they 

represented Increases in the production rates of sources which are limited in 

capacity by a SIP. Such increases are specifically exempted from PSD review 

by 40 CFR 52.21(b)(2)(iii)(f). 

It is the opinion of DNR that the renovations at WEPCO-Port Washington are 

similar to those at Beckjord and are indeed routine In nature for a utility. 

Therefore, like at Beckjord, a PSD permit is not required of WEPCO for 

undertaking the proposed plant life extension activities. 

What is your view of our interpretation of the applicability of the PSD 

regulations to the WEPCO-Port Washington renovations? We believe that you 

will agree that WEPCO may proceed with this life extension project without a 

PSD permit. (If EPA staff need further information to evaluate this 

situation, we would appreciate it if they would tell us what information is 

needed. Too often in the past people have just said "more information is 

needed" without specifying the exact nature of that missing information.) 

Sincerely, 

Dale Ziege, P.E. 

Source Review Unit 

Engineering & Surveillance Section 

Bureau of Air Management 

DZ:AH:jmc/2725E 

cc: Donald Theiler - AM/3 

Allen Hubbard - AM/3 

Dan Johnston - AM/3 

Tom Steidl - LC/5 

Marcia Penner - LC/5 

Wolf Klassen - SED 

Jeff Berger - SED 

Jim Leverance - Wisconsin Public Service Commission 

Steve Brick - Wisconsin Public Service Commission 

Dan Dasho - Wisconsin Public Service Commission 

Mark Steinberg - WEPCO 
P.12 

^ 

Wisconsin Electric POWER COMPANY 

231 W. MICHIGAN, P.O. BOX 2046, MILWAUKEE, Wl 53201 (414)221-2345 

March 17, 1988 

Mr. David Kee 

Director of Air and 

Radiation Division 

U.S. Environmental Protection Agency 

230 South Dearborn Street 

Chicago, IL 60604 

Dear Mr. Kee: 

PORT WASHINGTON RENOVATION PROJECT 

Wisconsin Electric und 

Headquarters staff is 

letter from the Wiscon 

determination that phy 

from our Port Washingt 

requirements under the 

ication." The two bas 

letter were the "routi 

exemption and the "pro 

exemption. 

erstands that EPA Region V and EPA 

currently reviewing the February 5, 1988 

sin DNR requesting concurrence on DNR's 

sical and operational changes resulting 

on renovation project will not trigger PSD 

State and Federal definition of "modifes for the exemption stated in the DNR 

ne maintenance, repair and replacement" 

duction rate/hours of operation increase" 

The issue presented in this instance is whether the changes 

contemplated by WEPCO will fall within one of these exemptions 

to the PSD "modification" definition. We understand that the 

review by Region V and Headquarters presently focuses on the 

"routine maintenance and repair" exemption. 

Since, as you are aware, time is of the essence in beginning the 

Port Washington project, we believe that EPA could act more 

quickly if the agency were to focus on the "production 

rate/hours of operation increase" exemption. That exemption 

provides that "a physical change or change in the method of 

operation" is not a "modification" if the changes bring about 

"an increase in the hours of operation or in the production 

rate" that is not prohibited by any "federally enforceable 

permit condition." See 40 C.F.R. Sec. 52.21(b)(2)(iii)(f). 

The Port Washington plant consists of five units designed with a 

maximum capacity of 80 MW each. All of these units had been 

operated in the past at their maximum design capacity. In the 

early 1980s, the units at the plant began to deteriorate to the 

point that the company concluded several units should not 

continue to be operated at maximum design capacity. The purpose 

IP 

MAR 21 1988 
P.13 

Page 2 

March 17, 1988 

of the planned renovation project is to allow all units to be 

reliably operated again up to, but not above, their design 

capacity of 80 MW each. At no time has a federally enforceable 

permit condition existed that limits the operation of any of the 

units to less than the design capacity of 80 MW or limits the 

hours of operation of the units. 

Under these circumstances, we believe that the planned renovation project falls directly under the production rate/hours of 

operation increase exemption of the "modification" definition. 

Accordingly, the Region can concur with DNR's determination 

without having to reach any issues of first impression 

potentially raised by the "routine maintenance" exemption. 

I look forward to talking to your staff (and to anyone in the 

OAQPS Staff involved in reviewing the DNR request). Of course, 

we will follow your lead as to the most efficient way of 

resolving this matter and will quickly respond to any requests 

ycu may have for additional information. 

Please have your staff call me at (414)221-2157 with any 

questions they may have. 

Thank you for your consideration of this matter. 

Sincerely, 

Mark P. Steinberg 

Superintendent 

Air Quality 

cjo 

cc: Mr. D. Dasho - PSCW 

Mr. D. Theiler - DNR