Electronic Filing- Received, Clerk's Office, 8/10/2012 

*****PC# 2410 * * * * * 

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD 

AMEREN ENERGY RESOURCES 

Petitioner, 

v. 

ILLINOIS ENVIRONMENTAL 

PROTECTION AGENCY, 

Respondent. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

PCB 12-126 

(Variance- Air) 

NOTICE OF FILING 

TO: SEE ATTACHED SERVICE LIST 

PLEASE TAKE NOTICE that I have electronically filed today with the Dlinois Pollution 

Control Board the Post-Hearing Comments of the illinois Attorney General's Office, a copy of 

which is hereby served upon you. 

Dated: August 10, 2012 

BY: 

Respectfully submitted, 

PEOPLE OF THE STATE OF ILLINOIS 

by LISA MADIGAN, Attorney 

General of the State of illinois 

JAMES P. GIGNAC 

Environmental and Energy Counsel 

Illinois Attorney General's Office 

69 W. Washington St., 18th Floor 

Chicago, Illinois 60602 

(312) 814-0660 

jgignac@atg.state.il.us 

31 ATTACHMENT ___ _ 
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Carol Webb 

Hearing Officer 

Illinois Pollution Control Board 

I 02 I North Grand Avenue East 

P.O. Box 19274 

Springfield, IL 62794-9274 

Gina Roccaforte 

SERVICE LIST 

Illinois Environmental Protection Agency 

I 02 I North Grand Avenue East 

P.O. Box 19276 

Springfield, IL 62794-9276 

Amy Antoniolli 

Renee Cipriano 

SchiffHardin, LLP 

6600 Willis Tower 

233 S. Wacker Drive 

Chicago,IL 60606-6473 

·~ I ·~ 
., -"-. 

Electronic Filing- Received, Clerk's Office, 8/10/2012 

*****PC# 2410 * * * * * 

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD 

AMEREN ENERGY RESOURCES 

Petitioner, 

v. 

ILLINOIS ENVIRONMENTAL 

PROTECTION AGENCY, 

Respondent. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

PCB 12-126 

(Variance - Air) 

POST-HEARING COMMENTS OF THE 

ILLINOIS ATTORNEY GENERAL'S OFFICE 

The illinois Attorney General's Office, on behalf of the People of the State of illinois (the 

"People"), hereby submits its post-hearing comments in this matter, pursuant to 415 ILCS 5/32, 

35 lll. Adm. Code§ l04.224(d), and the comment deadline set forth in the Hearing Report dated 

August 2, 2012. These comments supplement the People's initial comments dated July 23, 2012 

(PC #249) and the oral statements offered at the August 1, 2012 public hearing. 

For the reasons set forth below, the People continue to believe that the Board should 

require Ameren to submit a comprehensive analysis of the various compliance alternatives and to 

deny the petition if Ameren is unable or unwilling to do so. Detailed information on options to 

reduce sulfur dioxide ("S02') pollution is needed to assist the Board in evaluating conditions that 

could or should be attached to the variance that will help minimize deviations from the MultiPollutant Standard ("MPS"). The People urge the Board to give careful consideration to these 

potential conditions and, to the extent the Board determines that a variance is warranted, consider 

limiting the term to two years to allow for reassessment of the rapidly changing energy landscape 

we confront today. 

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I. Ameren Must Submit More Information on Alternative Compliance Strategies. 

The People asserted in its initial comments that Ameren's petition had failed to properly 

articulate and document the alleged hardship that it would face if required to comply with the 

MPS. PC #249 at 6-7. Ameren has since provided additional information in response to written 

questions from the Board (see AER' s Responses to the illinois Pollution Control Board 

Technical Unit's Questions (July 30, 2012) and AER's Responses to the illinois Pollution 

Control Board Technical Unit's Second Set of Questions (July 30, 2012)) and in verbal 

testimony provided at the August I, 2012 public hearing (Tr. 12-56). The additional 

information, however, is still not sufficient to determine whether various pollution control 

strategies, either alone or in combination with one another, are available to reach compliance or 

to minimize the gap of non-compliance. 

Indeed, Ameren is still not quite clear on what exactly it would have to do if the variance 

request is unsuccessful. As pointed out in the People's initial comments, the affidavits submitted 

to verify the claims in the petition do not match Ameren's assertion that it would have to close 

two entire plants if it is unable to receive a variance. See PC #249 at 6. At the public hearing, 

Ameren witness Michael Menne testified only that "probably" anywhere from one to three plants 

could "very likely" need to shut down, Hearing Tr. 21:9-15, and went on to mention other 

pollution reduction strategies contemplated by the company to meet pending federal mandates 

that it has apparently chosen not to offer here to help reduce the departure from the MPS. 1 In 

order to get to the bottom of this, the Board should require that Ameren provide a comprehensive 

When asked by Member Zalewski about the company's compliance plan for the CrossState Air Pollution Rule ("CSAPR") that is currently stayed on appeal, Ameren witness Michael 

Menne stated that operating at the proposed variance level of .3 5 lb/mmbtu would place the 

company "well on [its] way" to meeting CSAPR limits but that "we are anticipating that we are 

going to have to take some additional measures" including buying lower sulfur coal, using 

sorbent injection, and buying allowances to the extent available. Hearing Tr. 41-43. 

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analysis on its alternative compliance options-including those discussed below- before 

granting any variance to the company. If Ameren cannot or will not provide the analysis, then 

the petition should be denied. 

A. Use of Dry Scrubbing Systems 

Pollution control of S02 emissions through flue gas desulfurization (FGD) can be 

accomplished through either wet or dry scrubber systems. Ameren is planning a wet FGD 

system at Newton. It had previously planned to utilize a dry scrubbing application-Dry Sorbent 

Injection or DSI-at both its Joppa and Edwards facilities 2 Other types of dry scrubbing 

applications include Furnace Sorbent Injection (FSI), Spray Dry Absorption (SDA), Flash Dry 

Absorption (FDA), and Circulating Dry Scrubbers (CDS). 3 Dynegy has recently installed or is in 

the processes of installing dry FGD systems at four units located at its Baldwin and Havanna 

facilities.' 

A joint USEPA-CICA5 fact sheet offers the following succinct description of dry 

scrubbing applications: "Dry scrubbers have significantly lower capital and annual costs than wet 

systems because they are simpler, demand less water and waste disposal is less complex. Dry 

2 "We are now planning to use dry sorbent injection at Joppa .... " Ameren Corporation 

Q12010 Earnings Call Transcript (May 5, 2010), available athttp://bit.ly/0LMip6. "[W]e will 

use DSI at our Edwards energy center." Ameren Corporation Q2 2011 Earnings Call Transcript 

(Aug. 4, 2011), available athttp://bit.lv/NduGIX. 

3 Dry Scrubber Fundamentals, WPCA/Duke Seminar (Sept. 3, 2008), available at 

http://bit.lv/RA03hw. 

4 Dynegy, Inc., Form 10-K for fiscal year ended December 31, 2011, available at 

http:/ /1.usa.gov/0Masnf. 

5 CICA is sponsored by USEP A's Clean Air Technology Center (CATC) and provides a 

variety of technical assistance on air pollutants and control strategies, emissions inventories and 

emissions factors, dispersion modeling, ambient monitoring, emission measurements, and risk 

analysis. http:/ /www.epa. gov/ttncatc 1/cica/about e.htrnl. 

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injection systems install easily and use less space[;] therefore, they are good candidates [for] 

retrofit applications. "

6 While aclmowledging that dry scrubbing applications typically have 

lower removal efficiencies than wet scrubbers, USEPA and CICA point out that "[n]ewer dry 

scrubber designs are capable of higher control efficiencies, on the order of90%."7 Indeed, the 

U.S. Energy Information Administration states that dry sorbent injection may serve as a key 

pollution control technology at power plants and that "DSI systems can [] significantly reduce 

sulfur dioxide (S02) emissions. " 8 USEP A predicts that in coming years, 56 GW of coal-fired 

capacity will install DSI9 

Despite having announced previous plans to use DSI at the Edwards and Joppa plants to 

comply with the MPS, Ameren is now saying that it believes the use of sorbent has too much 

variability in the removal efficiency (supposedly anywhere from 10 to 90 percent) and would put 

too much strain on other equipment such as electrostatic precipitators. Response to Second Set 

of Questions, at 2; Hearing Tr. 23:3-24:12. Yet, at the same time, Ameren is also apparently 

contemplating the future use of DSI anyway, either if it does not get the variance levels it wants 

or if it needs to achieve additional reductions to comply with the Cross-State Air Pollution Rule 

("CSAPR"). See Hearing Tr. 42:10-13 ("If we have to do some sort of additional sorbent 

injection [to comply with CSAPR], it wouldn't be enough to get us to these MPS rates but we 

might have to enhance it some."). This raises the obvious question as to why Ameren has not 

6 See EPA-CICA, Air Pollution Control Technology Fact Sheet: Flue Gas Desulfurization, 

EPA-452/F-03-034 (2003), available at http://www.epa.gov/ttncatcl/dirllffdg.pdf. 

7 !d. 

8 U.S. Energy Information Administration, Today in Energy (March 16, 2012), available at 

http://www.eia.gov/todayinenergv/detail.cfm?id=5430. 

9 Regulatory Impact Analysis of the Proposed Toxics Rule: Final Report (March 2011), at 

8-13, available at http://www.epa. gov/ttnecas 1/regdata/RIAs/ToxicsRuleRlA.pdf. 

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considered or proposed some kind of partial use of sorbent application to reduce the size of MPS 

deviation now when it is already considering using the technology to meet pending federal 

standards. 

Ameren should be required to submit the details of its evaluation of DSI (including 

partial applications rather than what it would need to install for full MPS compliance) and any 

other dry scrubbing technologies for the Board's review. The emergence ofDSI and other dry 

scrubbing applications as cheaper, faster ways to reduce S02 emissions means that Ameren must 

demonstrate that it has thoroughly analyzed the viability of using these approaches to comply 

with the MPS or to minimize deviation from it. 

B. Generation Management 

Ameren states that it investigated curtailment of plant operations as a compliance 

alternative and that the evaluation revealed the following: "[I]n order to comply with the 

proposed MSP S02 emission rates, AER would need to lower capacity factors on such units 

[Edwards, Joppa, Newton] to between 22% and 38%." Response to Questions, at 2. Ameren 

witness Michael Menne also addressed this topic at the public hearing, stating that the 

curtailment of plants to comply with the MPS would exacerbate the company's financial 

problems as it would mean less revenue from those plants without a concomitant reduction in the 

fixed costs that are necessary to operate a plant at any level of output. Hearing Tr. at 22:9-20. 

Ameren should provide its evaluation and analysis on unit curtailments or deratings to the 

Board. While it may indeed prove too much of a financial hardship to require Ameren to rely on 

curtailment as a single compliance strategy, there could be cost effective pollution reductions 

through partial curtaihnent that, when combined with other compliance strategies, would bring 

the company closer to complying with the MPS and should therefore be considered as potential 

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conditions to a variance. Indeed, Ameren is already planning to use "generation utilization" to 

comply witli its proposed emission rate. Response to Second Set of Questions, at 2; Hearing Tr. 

26:1-5. The company should be required to submit tlie information necessary for tlie Board to 

discern whether additional generation utilization should in fact be included as a condition to help 

minimize departure from tlie MPS. 

C. Maximization of Existing Pollution Control Equipment 

It appears tliat Ameren is committing to run the Duck Creek and Coffeen scrubbers at a 

98-99 percent S02 removal rate. See Response 2 at 2 (stating that "tlie operation ofFGD 

systems at tlie Duck Creek and Coffeen Energy Centers will be fully maximized . . . The 

removal efficiencies for the FGD systems will range between 98-99%"); Hearing Tr. 25:15-17 

("The removal efficiencies for tlie scrubber system will range between 98 and 99 percent."). 

This commitment should be incorporated as a condition to any variance tliat may be granted. 

D. Procurement of Low-Sulfur Coal 

Ameren has stated its intent to procure low -sulfur coal as an operational step to meet its 

proposed emission rate under tlie variance. Response to Second Set of Questions, at 2. In fact, 

99 percent of Ameren's coal supply for its lllinois plants already comes-from the western lowsulfur coal region called the Powder River Basin (PRB). 10 But the sulfur content in coal from the 

PRB can vary from mine to mine witli the lowest content sometimes being referred to as "ultra 

low-sulfur" or "super-compliant" coal. 11 Indeed, Ameren's counterpart subsidiary in Missouri, 

10 Ameren Corporation, Form 10-K for fiscal year ending Dec. 31,2011, at 12, available at 

http:/ /www.sec.gov/ Archives/edgar/data/18654/000 119312512085489/d260990dl Ok.htm. 

Unfortunately, even during its highest revenue years, Ameren has never taken steps to equip all 

its Illinois plants to use Illinois coal and continue to meet emission standards. 

II See, e.g., PRB Coal Makes tlie Grade, Platts Power (Oct. 2003), at 31, available at 

http://www.prbcoals.com/pdf/PRBCoallnformation/Power-Oct03-PRBCoal.pdf 

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the regulated utility Ameren Missouri, has recently entered in to a five-year contract for ultra 

low-sulfur coal as its strategy to achieve compliance with the pending Cross-State Air Pollution 

Given Ameren's intent to rely on procuring low-sulfur coal to meet its proposed emission 

rate, the Board should ensure that Ameren maximizes this operational step to reduce emissions 

as much as possible. To do this, the Board should require Ameren to certify on an ongoing basis 

that it has procured the lowest sulfur coal to the greatest extent possible and that it has fully 

exhausted this strategy to reduce emissions. Indeed, it appears there may be additional room to 

leverage fuel procurement, as Ameren is already contemplating further improvements it could 

make on the fuel side to comply with potential federal regulations that are apparently not part of 

its current variance request. See Hearing Tr. 43:3-5 ("On the S02 side, we will still have to be 

able to take some additional measures [to comply with CSAPR], and we're looking at 

possibly ... bringing in more low sulfur coal or lower sulfur coal."). This action would be 

consistent with what the Ameren Missouri subsidiary has already done and should be considered 

here to assist with the MPS. 

II. Ameren's Proposed Conditions are Inadequate. 

In evaluating whether Ameren has satisfied its burden of showing that its hardship 

outweighs harm to public health and the enviromnent, the Board should consider conditions that 

would attach to a variance if the Board decides to grant one. Some of which have already been 

mentioned above, these should or could include: 

12 "In July 2011, Ameren Missouri entered into a coal contract for the purchase of 

approximately 90 million tons ofu1tra low-sulfur coal to be delivered between 2012 and 2017'' 

Ameren Corporation, Form 10-Q Quarterly Report (Aug. 9, 2011), available at 

http://biz. vahoo.corn/e/11 0809/aee 1 0-g .htrnl. 

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• Setting of a revised S02 emission rate based on additional measures Ameren might take 

to limit excess pollution; 

• The Hutsonville and Meredosia stations remain non-operational; 13 

• Require the use of dry sorbent injection or other dry scrubbing applications as a partial if 

not full compliance measure; 

• Require the partial curtailment or derating of certain units to assist with compliance; 

• Require Ameren to operate the Duck Creek and Coffeen scrubbers at 98-99% S02 

removal efficiencies; 

• If Ameren continues to procure low-sulfur coal as an operational step to meet emission 

rates, require Ameren to procure the lowest sulfur coal available and to submit regular 

verified certifications; and 

• Any other conditions as determined by the Board that would minimize deviation from the 

MPS and provide a more proper balance between the hardship to Ameren and the harm to 

public health and the environment that the variance would allow. 

III. If Granted, the Variance Should be Limited to Two Years with the Ability of 

Ameren to Petition for Extension. 

As stated in the petition, the reason Ameren is seeking relief now (in 2012) from 2015 

and 2017 standards is that it would have to resume normal construction of the Newton scrubbers 

in early 2013 (which Ameren says it cannot due to lack of financing) or begin the process of 

mothballing units around the same time (which it does not want to do) in order to be ready for 

the 2015 standard14 The People respectfully suggest that a two-year variance 15 would provide 

the company with the relief it needs now but provide the added benefit of allowing the Board and 

13 Ameren asks that the proposed FutureGen project at its Meredosia facility be exempt 

from this restriction. Response to Questions at 11. The People have no objection to that request. 

14 "One of the main drivers for AER's petition for relief now is that if mothballing of 

facilities must occur, AER must have the necessary time to make and effectuate these critical 

decisions in the best possible way'' Petition at 23. 

15 In keeping with the proposals that Ameren has made, the Board could grant a variance of 

the 2015 standard to 2017 and the 2017 standard to 2018. 

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the illinois Environmental Protection Agency an opportunity for reassessment if, two years from 

now, Ameren still believes it needs more time under a variance. 

There are many factors currently at play in the power sector, factors that are discussed 

throughout Ameren's petition. A two year variance-with a strict emissions limit and set of 

conditions such as those discussed above-would allow Ameren to maintain the decelerated 

status of the Newton scrubber project and to hold off on making any decisions about placing 

plants in cold standby. But it would also preserve the chance for the Board to keep the MPS on 

track to the fullest extent possible and to keep excess pollution to a minimum. 

There are a number of factors that could lead to an increase in power prices and an 

improvement in Ameren' s financial position and therefore its compliance strategy: 

16 

• Rise in natural gas prices. There is currently a glut of natural gas because of overproduction and the very warm 2011-2012 winter that resulted in lesser amounts of gas 

being used for heating. This has led to extremely low prices for gas in 2012. However, 

many analysts expect prices to rise once the gas market has a chance to rebalance 

(although gas prices could dip even lower if storage capacity maxes out this summer and 

early fall). Demand is continuing to go up as utilities switch from coal to gas, and 

producers have started to scale back supply. 16 Once the balance between supply and 

demand shift, it is possible that gas will price out between $4/mmBtu and $6/mmBtu or 

perhaps even higher in the next couple of years. 17 This would ease the downward 

pressure that cheap gas is currently exerting on power prices. 

• Compliance with CSAPR and MATS. As noted by Ameren witnesses at the public 

hearing, the Cross-State Air Pollution Rule ("CSAPR") or some version of it is likely to 

be in place and require compliance from coal-fired power plants, perhaps in 2014. In 

addition, the federal Mercury and Air Toxics Standard ("MATS"), assuming it survives 

pending legal challenges, has compliance dates beginning in 2015. The effective dates of 

these rules may mean that coal plant owners will choose to retire additional older, 

smaller, inefficient coal plants to avoid the cost of making investments in them. This will 

"Natural gas prices surge 70%," CNN Money (July 25, 2012), available at 

http:/ /monev. cnn. corn/20 12/07/24/investing/natural-gas-pt~ces/index.htm; "Chesapeake to 

throttle back on gas, bank on oil," Platts (Aug. 7, 2012), available at 

http://www.platts.com/RSSF eedDetailedN ews/RSSFeed/N aturalGas/6534891. 

17 See here for a discussion of some of the trends and dynamics affecting the price of gas: 

http://www.cleveland.com/business/index.ss£'2012/07/natural gas pnces for winter.html. 

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remove some of the cheapest units from the generation stack and reduce the current 

oversupply of generation capacity, two factors that will likely contribute to an uptick in 

power pnces. 

• Economic improvement. Of course, no one knows for sure what our economy will look 

like in two years. If industrial, manufacturing, and other types of activity pick up, 

demand for electricity will pick up and power prices will rise along with it. 

• Weather patterns, price of coal, renewable energy policy. Various other factors can 

also influence energy prices, such as whether we experience particularly warm summers 

or cold summers or v,:hether the seasons are milder and require less load for air 

conditioning and heating. Just like the price of natural gas, the price of coal can vary 

depending on demand both domestically and overseas and the contracts that utilities are 

able to negotiate with railroads and coal suppliers. In terms of renewable energy policy, 

decisions that are made about things such as the Production Tax Credit (PTC) can 

influence how quickly renewable energy like wind is entering the market and exerting 

pressure on incumbent generators and power prices. 

Depending on how all of these factors trend and interact with each other-for good or for 

worse in terms of power prices-Ameren' s fmancial position could improve and re-acceleration 

of the Newton scrubber project could become feasible in the company's eyes or perhaps justify 

the investment in additional controls at Edwards or Joppa. On the other hand, Ameren's position 

could erode further and it could be forced to mothball additional units with our without a 

variance from the MPS. The point is that no one can know for sure how all of these dynamics 

will play out. A two-year variance would provide Ameren with the relief it needs now (i.e., a 

delay from having to make a compliance route decision in 2013). It would simultaneously 

preserve the opportunity for the Board to reevaluate the situation assuming more clarity emerges 

on the price of gas, the status of the federal rules, etc., while also allowing for Ameren to make 

its case for an extension of the variance if it feels it is necessary when the time comes. 

In conclusion, a two-year variance would be a more narrowly tailored approach for the 

Board to take and would keep the option open for maintaining the MPS as close as possible to 

the original framework. This, coupled with a strict emission limit and set of conditions required 

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during the two-year variance term, will help to minimize the amount of excess pollution 

permitted by a variance. 

Dated: August 10, 2012 

MATTHEW J. DUNN, Chief 

Environmental Enforcement/ 

Asbestos Litigation Division 

BY: 

Respectfully submitted, 

PEOPLE OF THE STATE OF ILLINOIS 

by LISA MADIGAN, Attorney 

General of the State of Illinois 

,. a ··4';:·- ~ c: 

JAMES P. GIGNAC 

Environmental and Energy Counsel 

illinois Attorney General's Office 

69 W. Washington St., 18th Floor 

Chicago, illinois 60602 

(312) 814-0660 

j gignac@atg. state.il. us 

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* * * * *PC# 2410 * * * * * 

CERTIFICATE OF SERVICE 

I, James P. Gignac, an Assistant Attorney General in this case, do certify that I caused to 

be served this lOth day of August, 2012, the foregoing Post-Hearing Comments of the Illinois 

Attorney General's Office upon the persons listed on the Service List by depositing same in an 

envelope, first class postage prepaid, with the United States Postal Service at 69 W. Washington 

St., Chicago, Illinois, at or before the hour of 5:00 p.m. 

JAMES P. GIGNAC