November 8, 2011

Mr. Gerardo Rios Chief, Permits Office USEPA Region IX

75 Hawthorne Street San Francisco, CA 94105

Subject: Pio Pico Energy Ce nter PSD Permit Application BACT for Cooling System

Dear Mr. Rios:

As requested by EPA in emails from Roger Kohn to Steve Hill dated October 12, 2011, and November 3, 2011, and a telephone conve rsation between R oger Kohn and Steve Hill on November 3, 2011, we are submitting clar ifying information on behalf of Pio Pico Energy Center, LLC.

October 12, 2011 Email

In the application, PPEC proposes the use of a high efficiency drift eliminator for particulate BACT for the cooling towers, and a drift rate of 0.001% or less (see pages 4.52 and App-1.94). Please note that the drift ra te in our proposed Palmdale permit is one half this rate. We need PPEC to evaluate this higher level of control for its project as part of the top down BACT analysis. Al so, in the top down analysis, PPEC should provide the equivalent hourly emission rate and concentration of me asured TDS, as these values are needed to propose enforce able particulate perm it conditions limiting emissions. Please submit a revised top dow n particulate BACT analysis for the cooling tower with this additional information.

Response:

The cooling tower at Palmdale is a large (130,000 gpm circulati on rate) evaporative

cooler. It is sized to condense the steam fr om the steam turbine in this combined cycle power plant.

The cooling system used by PPEC is not a c ooling tower, it is a partial dry cooling system comprised of two components: a dry cooling component that provides necessary cooling most of the time and has zero emi ssions; and a small (7,000 gpm circulation rate) wet cooling component that supplements the dry cooling component when ambient temperatures are too high for the dry coo ling system to function effectively. The PPEC cooling system is sized to provide intercooli ng for the simple-cycle turbines, and is much smaller than a system designed for condens ing steam from a co mbined cycle unit.

As demonstrated in the BACT analysis submitted with the reformatted PSD permit application, the PPEC cooling system is a di fferent basic technology with inherently 

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1801 J Street Sacramento, CA 95811 Tel: (916) 444-6666 Fax: (916) 444-8373

Ann Arbor, MI Tel: (734) 761-6666 Fax: (734) 761-6755Gerardo Rios -2- November 8, 2011

lower emissions than the cooling technology a pproved in the Palmdale permit. Because it is much smaller, and because it is not a recirculating water cool ing tower, the PPEC cooling system is a different class/category of source than the Palmda le cooling tower. The BACT analysis also documents that the drift rates achievable in large evaporative coolers have not been demonstrated in, and ar e not applicable to, much smaller units such as the PPEC system.

We have contacted the vendor to determ ine whether a guarantee of 0.0005% drift is available, and if so, at what price. Base d on information provided by the cooling system vendor, the estimated incrementa l cost of control would be:

Capital cost ($) $2.1 MM Annualized capital cost ($/yr, 0.11 recovery factor) $231,000 Operating cost ($/yr) -- Total incremental cost ($/yr) $231,000 Emission reductions (TPY PM/PM 10 /PM 2.5 ) = 1.4 TPY – 0.7 TPY = 0.7 TPY

Cost effectiveness = ($231,000/yr)/(0.7 TPY) = $330,000/ton

The TDS levels for the wet cooling component are provided in th e PSD application at page PSD-4.29. The hourly emission rate from the cooling tower is provided in the PSD application at page PSD –App-1.53.

October 12, 2011 Email

Can you tell me at what temperature the PPEC SC R units will start to be effective, and at what temperature the units wi ll be fully effective?

Response:

The SCR inlet flue gas temperature must be equal to or above the limit temperature of 570 degrees F before ammonia may be injected. This is also the temperature at which the SCR unit will be capable of achieving the emission limits. There will be a time delay of a few minutes while the SCR catalyst is satu rated with ammonia, but there no difference between the two temperatures. Maximum allowable gas temperature into the SCR catalyst is 870 degrees F.

The turbines will be in compliance with NOx limits for normal operations immediately after the end of the startup period (i.e., th e NOx concentration and mass emission rate for the first hourly average after the end of the startup period will meet the applicable limits).

October 12, 2011 telephone conversation

Please confirm that PPEC will use only PUC-quality natural gas in the turbines.

Response:

PPEC will use only PUC-quality natural gas in the turbines.Gerardo Rios -3- November 8, 2011

If you have any questions regarding this application, please cont act the applicant’s representative David Jenkins at (317) 431-1004 , or Gary Rubenstein or me at (916) 444-

6666.

Sincerely,

Steve Hill

cc: John McKinsey, Stoel Rives LLP David Jenkins, Apex Power Group Steve Moore, SDAPCD