1 STATE OF NEW MEXICO
BEFORE THE ENVIRONMENTAL IMPROVEMENT BOARD

IN THE MATTER OF PROPOSED REVISIONS
TO THE STATE IMPLEMENTATION PLAN
FOR THE SAN JUAN GENERATING STATION
BEST AVAILABLE RETROFIT TECHNOLOGY
DETERMINATION
No. EIB 13

- 02 (R)

_____________________________________________________________________________

NMED EXHIBIT 14

– NMED RESPONSE S
TO COMMENTS OF THE
NATI ONAL PARK SERVICE

______________________________________________________________________________

This e xhibit presents the Department’s responses to comments received from the National Park Service (NPS), dated July 24, 2013, on the proposed Nitrogen Oxide (NOx) best available retrofit technology (BART) determination for the San Juan Generating Station (SJGS)

. (Document N3615 (2350)) (“ NPS comments”)

.

As a threshold matter, the Department notes that the NPS comments appear to be based on an
incorrect assumption that the Department is proposing a “better

- than

- BART” alternative, pursuant to 40 C.F.R. § 51.308(e)(2). The comments further assume that “BART” for the purpose of a “better

- than

- BART” determination is as defined by the U.S. EPA in the federal implementation plan (FIP) promulgated on August 22, 2011. ( See, e.g., comments at p. 1, “The State Alternative needs to demonstrate greater visibility impairment than the EPA FIP proposal.”) This is not the case.

The Department proposed SIP revision comprises a revised BART determination pursuant to 40 C.F.R § 51.308(e) (1), based on new information. Specifically, the revised determination
considers the voluntary shut

- down of two of the four units at San Juan, as envisioned in the
“State Alternative” negotiated between NMED, PNM, and EPA. Therefore, while the Department ’ s BART analysis of the “State Alternative” is informed by information contained in the FIP, as well as in NMED’s own prior NOx BART determination, the analysis does not purport to rel y on the option allowed in § 308(e)(2) of demonstrating “greater reasonable progress” than would the application of BART to all BART eligible sources. In other words, the State Alternative is not “better than BART,” it is BART.

Response to Comment Regard ing “ Step 3 : Evaluate Control Effectiveness of Remaining Control Technologies2 The NPS commented that it believes that it is feasible for the SJGS to achieve a NOx emission rate of 0.04 lb/MMBtu on an annual basis, citing the fact that three units with ret rofit SCRs

operate at or below 0.04 lb/MMBtu

, according to the 2012 CAM D database.

The NMED concurred with EPA’s determination that a NOx emission limit of 0.05 lb/MMbtu was an appropriate emission limit for SCR based on source specific factors and com monly accepted removal efficiencies of a retrofit SCR installation. In order for PNM to meet an

enforceable emission limit of 0.05 lb/MMbtu based on a 30

- day rolling average, the SCR system

w ould need to be designed to achieve greater removal efficiency f or most periods of operation

.

This enforceable emission limit also includes consideration of emissions during startup, shutdown, malfunction events that typically result in emissions in excess of those generated during normal operations. See 76 Fed. Reg. 52,388, 52

, 405 ( “ The CEMS data indicate that our proposed NOX BART limit can be achieved without separately limiting startups, shutdowns, and
malfunctions. ” ) Air permitting authorities typically take into consideration these types of
emissions i n addition to normal operating emissions to establish federally enforceable emission limits. This margin ensures that the emission limit is achievable and appropriate for all operating
situations.

The NPS comments do not specify what enforceable emissi on limit s apply to the three SCR

retrofit units that NPS cites as operating at or below 0.04 lbs NOx/MMBtu, or whether such
limits are greater than the actual emission rate s cited . As mentioned above, permitting
authorities do not establish enforceable e mission limits based on actual emission rates, but normally include emissions during startup, shutdown, and malfunction as a small safety factor
into the calculated emission limit. In any case, the mere existence of three units with lower
actual emission rates, out of hundreds of units employing SCR nationally , does not outweigh the
site

- specific determination by the EPA that 0.05 lbs/MMBtu is an appropriate SCR

- based limit
for the SJGS.

Response to Comment Regarding “Step 4: Perform Impacts Analysis of Remaining Control Technologies”

The NPS presented an estimate of SCR costs based on the EPA’s Control Cost Manual and partly based on the EPA’s Integrated Planning Model (IPM), concluding that th e dollar per ton
annual costs of SCR are less than half of what PNM estimated.

The cost estimates provided by the NPS were partly based on a methodology that is more appropriate for regulatory planning purposes and less effective at estimating costs for a source specific SCR installation. This economic model is the Integrated Planning Model (IPM) and is used by EPA to analyze projected impacts from proposed environmental regulations.3 Even if the NMED were to accept the NPS cost estimates for SCR instal lation, this information would not affect the Department’s final determination of BART at the SJGS. The NPS estimates indicate the total capital investment for SCR technology would be around $374,152,055 for a

four unit installation. In contrast the tota l capital investment estimated for the 2 SNCR/2 Unit Shutdown scenario is only $34,556,000, making this proposal the most cost effective proposal, especially considering the emissions reduction and visibility improvement that would be achieved by this prop osed alternative.

Use of a ctual maximum 24

- hour emission rate

The NPS asserts that PNM should have modeled 24

- hour maximum emission rates rather than

30

- day rolling average emission rates, because the latter are higher than the former , and should
have used actual 24

- hour emission rates modified by a percentage reduction to represent control technology

.

In fact, PNM did not model the 30 day rolling average, but rather added a 10% safety factor to
the 30

- day rolling emission limit of 0.30 lb/MMBtu, an d therefore assumed a NOx emission rate of 0.33 lb/MMbtu to establish the baseline visibility impact. PNM used this methodology i n the original 2007 BART analysis, and all subsequent updated visibility modeling submittals

. NMED accepted this methodology because it is actually more conservative (ie, a higher emission rate) than use of the 24 hour maximum emission rates. Specifically, as shown below, use of the 0.33 lb/MMBtu rate results in higher pound

- per

- hour NOx rates tha n use of 24

- hour maximum rates
for three of the four units. For the fourth unit, Unit 4, use of the 0.33 lb / MMBtu rate results in an emission rate that is 29 lb/hr less than the 24 hour maximum rate, an insignificant difference.

Modeled Emission Rates to Establish Baseline Visibility Impacts (lb/hr NOx)

Unit 1 Unit 2 Unit 3 Unit 4

CAMD 1203.8 1105.2 1795.5 1893.1

PNM Baseline 1223.3 1217.0 1900.1 1864.2

The Department notes that the use of the maximum 24

- hour actual emission rate inherently over

estimates the emission rate for this facility for all other 24

- hour periods of the review and does not represent a realistic depiction of actual emissions over th e review period. This emission rate represents the highest emission level and we appropriately note that the actual emissions are
below this level.

The Department also notes that in other BART evaluations, EPA has accepted the use of average use of eng ineering estimates of post

- control emission rates rather than percentage reductions from maximum 24 hour rates (as suggested by the NPS ) . Specifically, in its evaluation of
Nevada’s NOx BART determination for the Reid

- Gardner Generating Station, EPA explained:

“Regarding the use of control scenario emission rates based upon annual average emission factors (in lb/MMBtu) instead of 24

- hour average emission factors (lb/MMBtu), we disagree with the commenter that these emission rates do not provide accep table4 estimates of visibility benefits. The methodology for calculating control scenario model emission rates described by the commenter involves applying the estimated control efficiencies of particular technology to the baseline (pre

- control) model emis sion rate. While this methodology has been used by EPA, it does not preclude the use of other methodologies for calculating control scenario emissions. In the case of control technology performance, engineering estimates of a particular technology’s post

- c ontrol level of performance will often be expressed in terms of lb/MMBtu, either on a 30

- dayor annual average basis. To the extent that the engineering estimate represents more accurate depiction of future anticipated emissions at a particular facility, it may be appropriate to rely on the specified post

- control level of performance rather than on a control efficiency applied to a pre

- control emission rate. In fact, using model emission rates based on an annual average, instead of a 24

- hour average, results in more stringent emission rates. 77 Fed. Reg. 50,936, 50,944 (Aug. 23, 2012)

The Department’s approach is therefore similar to approaches previously approved by EPA.

The Department does not agree with the NPS assertion that the decrease in SO2 emissions is only a “paper” reduction in SO2 emissions. The shutdown of Units 2 and 3 results in a significant decrease in SO2 emissions from the facility and a real reduction in visibility impacts. In addition, a lower federally enforceable emission lim it for remaining Units 1 and 4 will reduce the variability in emissions from these units. The only legal mechanism to ensure that those reductions are realized at these units is by establishing a lower federally enforceable emission
limit of 0.10 lb/MMBtu . Without this emission limitation, the facility could have operated at the higher emission rate. Simply because the data reviewed by NPS indicated the facility’s actual SO2 emissions did not approach the upper limit of their SO2 emission limit does not preclude the facility from being able to do so.

Response to Comments Regarding “Step 5: Visibility Impacts Analysis of Remaining Control Technologies

The NPS commented that the Department’s reference to EPA’s conclusion that ammonia slip would not sig nificantly affect visibility was misleading, because EPA never addressed ammonia slip from SNCR, which can be much higher than from SCR.

The Department agrees that EPA’s reference to ammonia slip was with respect to SCR, not SNCR. Nonetheless, for severa l reasons the Department believes that ammonia slip from SNCR
need not be addressed in visibility modeling. There are a couple of reasons that the impact of ammonia slip from SNCR is expected to be negligible in visibility modeling. First, the constant
1

- ppb ammonia background concentration used in the PNM BART visibility modeling is representative of actual ammonia concentrations directly around the San Juan Generating Station (SJGS) emission sources, according to the EPA. See 76 Fed. Reg. 52,388, 52,43 4 (Aug. 22, 2011)

. Second, the ammonia removal efficiency from the wet scrubber for SNCR is 90% , the
same value that was used in EPA Region 9’s BART determination for Navajo Generating
Station

. See Docket Number: EPA

- R09

- OAR

- 2013

- 0009

– Technical Support Document for Proposed Rule , at p. 122

. EPA was also concerned with the impact of the remaining ammonia
after the 90% control for the Navajo project

, and performed modeling analysis to take into5 account the impact of the net ammonia slip. EPA determined that the net ammonia slip effect would be negligible. The PNM modeling used the same ammonia background value and the

same wet

- scrubber removal efficiency as the EPA modeling for the Navajo Generating Station. As with that analysis, the projec ted increase in ammonia concentrations due to ammonia slip is expected to be a small fraction of ammonia background levels. Therefore, the impact of the ammonia slip from SNCR should be negligible.

Response to Comments on “2013 BART Determination”

The NPS commented that it was not clear on the bases for this statement in the BART
determination:

“The retirement of Units 2 and 3 will reduce the facility annual NOx emissions by an additional 10,550 tons. When added to the controlled emission rate of Uni ts 1 and 4, total annual NOx emission will be reduced by 12,989 tons.”

The bases for this statement can be found in Table 10 on p. 18 of Appendix D. Current (i.e., “Consent Decree”) NOx emissions are 4119 tons per year (tpy) for Unit 2 and 6431 tpy for U nit 3. The sum of these is 10,550 tpy, which is therefore the reduction that would be achieved by shutting down these units.

The reductions from controlling Units 1 and 4 with SNCR are , respectively, 966 tpy (4,140 tpy under consent decree minus 3,174 tp y under SNCR) and 1,472 tpy (6,309 tpy under consent decree minus 4,837 tpy under SNCR).

Total annual NOx reductions are therefore 10,550 + 966 + 1,472 = 12,988 tons.

The NPS pointed to a condition requiring optimization of NOx reduction contained in a prior consent decree between the Department, PNM, and the Grand Canyon Trust, and requested that the Department describe how that condition has been implemented. See comments at p. 6, footnote 8 (setting forth language that is contained in Consent Decree CV 02

- 552 BB/ACT (ACE), Paragraph V.9 (b).

In 2009 and 2010, PNM submitted the required performance reports for each unit, covering the first 12 months of operation after installation of NOx controls at that unit. Based on the results
of the tests and the provision in the referenced paragraph calling for the addition of a 10% margin of safety, PNM recommended that the NOx emission limit remain at 0.30
lb/MMBtu. The Department, however, disapproved PNM’s test reports as containing
insufficient informat ion to allow the Department to determine whether an emission rate of less
than 0.30 lb/MMBtu was feasible. This disapproval triggered a dispute resolution procedure
under the consent decree. In May of 2011, the parties (including Grand Canyon Trust) agre ed to terminate the dispute resolution process if either the Environmental Improvement Board (EIB) or the EPA adopted a NOx limit for SJGS of 0.28 lb/MMBtu or lower, unless PNM challenged such
limits. In June 2011, the EIB adopted the Department’s propose d NOx BART limit of 0.23 lbs/MMBtu, based on installation of SNCR, and PNM did not challenge this standard. In6 accordance with the parties’ agreement, no further efforts were made to determine whether the

consent

- decree technology could achieve a NOx rate lower than 0.30 lbs/MMBtu.