Revised October 15, 2009



## Revised Nevada Division of Environmental Protection BART Determination Review of NV Energy’s Fort Churchill Genera ting Station Units 1 and 2

EXPLANATION: BOLD text below identifies the Guid elines for BART Determinatio ns under the Regional Haze Rule in Appendix Y of 40 CFR 51.

BACKGROUND

A BART analysis was completed by CH2M HILL at the request of NV Energy (NVE) for units 1 and 2 at the Fort Churchill Generating Stati on (Ft. Churchill) dated October 3, 2008. Fort Churchill consists of two BART-eligible units wi th a generating capacity of 113 megawatts each. The fuel currently used in units 1 and 2 is pipeli ne quality natural gas (PNG) or blended fuel oil (No. 6 residual oil and No. 2 distillate fuel oi l). In completing the BART analysis, technology alternatives were investigated and potential reductions in NO x , SO 2 and PM 10 emissions rates were identified by NVE. NVE’s BART analysis is summarized below, organized according to the five step analysis contai ned in Appendix Y of 40 CFR 51, followed by NDEP’s analysis and BART determination.

NV ENERGY ANALYSIS

STEP 1 – Identify all availabl e retrofit emissions control tech niques; alternatives can be categorized in three ways:

• Pollution prevention (used of inherentl y lower-emitting processes/practices);

• Use of (and where already in place, impr ovement in the perf ormance of) add-on controls; or

• Combination of pollution prevention and add-on controls.

NVE identified the following emission reduction scenarios: Potential NO x Control Options (Current controls consist of good combustion practices)

• Low NO x Burners (LNB)

• LNB with Flue Gas Recirculation (FGR)

• LNB with Selective Non-Catalytic Reduction (SNCR) System

• Rotating Opposed Fire Air (ROFA) with Rotamix

• LNB with Selective Catalytic Reduction (SCR) System Potential SO 2 Control Options (No SO 2 controls currently implemented)

• Use of low-sulfur No. 2 fuel oil

• Spray Dryer Absorber (SDA) Potential PM 10 Control Options (No PM 10 controls currently implemented)

• Use of low-sulfur No. 2 fuel oil and LNB

• Dry Electrostatic Precipitator (dry ESP)

• Wet Electrostatic Precipitator (wet ESP)

• Fabric Filter

STEP 2 – Eliminate technically infeasible options based on:

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• Availability (commercial availability); and

• Applicability (has it been used on the same or a similar source type).

NO x Technical feasibility for the proposed control options were based on physical constraints, boiler configuration and emissi on reduction potential. Howeve r, the installation of overfire air (OFA) was the only control option elim inated due to the potential cost of boiler water wall changes.

SO 2 Technical feasibility for the proposed control options were based on fuel storage delivery constraints, boiler configurati on and the emission reduction poten tial of No. 2 fuel oil. None of the control options were eliminated.

PM 10 Technical feasibility for the proposed control options was based on physical, chemical and emissions reduction potenti al. Dry ESP was eliminated due to the uncertainty in chemical and physical characteristics of the oi l-fired particulate and the increased loading from SDA. Likewise, wet ESP was eliminated due to the potential increased particulate loading from an SDA not allowing the wet ESP to meet the required control efficiency. Fabric filter is expected to function properly only with pr e-coating with the increased particulate loading from the SDA operation. NVE noted that the current baseline PM 10 emissions while burning PNG or No. 2 fuel oil already meet BACT emissions levels.

STEP 3 – Evaluate contro l effectiveness of rema ining control options:

• Make sure you express the degree of co ntrol using a metric that ensures an “apples to apples” comparison of emissions performance levels among options (e.g., lb SO 2 /MMBtu); and

• Give appropriate treatment and considera tion of control techniques that can operate over a wide range of emission performance levels (evaluate most stringent control level that the technol ogy is capable of achieving plus other scenarios).

NO x NVE estimates the following control efficienci es with each control option based on firing with No. 6 fuel oil: 1) LNB –45.4 to 49.5 percent with an emissions level of 0.26 lb/MMBtu (PNG) and 0.22 lb/MMBtu (low-sulfur No. 2 fuel oil). 2) LNB with FGR – 53.2 to 56.7 percent with an emissions level of 0.12 lb/MMBtu (PNG) and 0.14 lb/MMBtu (low-sulfur No. 2 fuel oil). 3) LNB with SNCR –59.1 to 62.1 percent with an emissions level of 0.20 lb/MMBtu (PNG) and 0.17 lb/MMBtu (low-sulfur No. 2 fuel oil). 4) ROFA with Rotamix –63.0 to 65.7 percent with an emissions level of 0.15 lb/MMBtu (PNG & low-sulfur No. 2 fuel oil). 5) LNB with SCR – 86.4 to 87.4 percent with an em issions level of 0.07 lb/MMBtu (PNG & low-sulfur No.2 fuel oil).

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SO 2 SDA is estimated to achieve 84.8 percent contro l efficiency and meet an emissions level of 0.10 lb/MMBtu. Conversion to low-sulfur No. 2 fuel oil is estimated to achieve 93 percent control efficiency and meet an emission level of 0.05 lb/MMBtu.

PM 10 Fabric filter is estimated to achieve 46 to 53 percent control effi ciency and meet an emissions level of 0.015 lb/MMBtu with inst allation of SDA. The conversion to lowsulfur No. 2 fuel oil with u tilization of LNB is estimated to meet an emission level of 0.03 lb/MMBtu.

STEP 4 – Impact analysis:

• Cost of compliance (identify emission units, design parameters, develop cost estimates);

o Baseline emissions rate should represent a realistic depiction of anticipated annual emissions for the source. In gen eral, for the existing sources subject to BART, the anticipated annual emissions will be estimated based upon actual emissions from a baseline period.

• Energy impacts;

o Direct energy consumption for the co ntrol device, not indirect energy impacts.

• Non-air quality environmental impacts;

o Solid or hazardous waste generation or discharges of polluted water from a control device.

• Remaining useful life;

o Can be included in the cost analysis.

Costs of Compliance Control options cost comparisons are presente d in Tables 3-3, 3-5 and 3- 7 of each NVE BART determination report. A complete economic analysis for NO x , SO 2 and PM 10 is presented in the appendix to each BART determination report.

Energy Impacts The installation of LNB is not expected to impact boiler effi ciency or forced draft fan power usage substantially. Installation of ROFA with Rotamix or SNCR will result in additional power requirements ranging from 116 to 313 kilowatts. SCR retrofit will increase pressure drop. No energy impact is associated with switchi ng to low-sulfur No. 2 fuel oil; however additional system pressure drop will result from installation of SDA. There is no additional energy impact from PM 10 reduction as a result of LNB or burning low-sulfur No. 2 fuel oil. Fabric filter and ductwork will add a pressure drop to the system. No energy impact costs are included for SO 2 and PM 10 control options in the economic analysis presented in the appendix to each NVE BART determination report.

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Environmental Impacts SNCR, Rotamix and SCR installation could potentially create a visible stack plume, which may impact visibility improvements. Transport of ammonia to the site may be an issue in the event of an accident al release. No environmenta l impact is associated with switching to low-sulfur No. 2 fuel oil or installation of an SDA. No negative environmental impacts are expected from th e utilization of new LNB, switching to low sulfur fuel, or utilizing a fabric filter.

Remaining Useful Life The remaining useful life is estimated to be 23 years from the installation of BART controls for units 1 and 2.

STEP 5 – Determine visibili ty impacts (improvements):

• Run the model at pre-control and post-control emission rates;

• Determine net visibility improvement;

• Compare 98 th percent days for pre- and post-control runs.

Modeling for pre-control and post-control emission rates demonstrates an improvement in visibility based on the BART conclusions presented by NVE for units 1 and 2 at Fort Churchill. The NO x emission rate (0.40 lb/MMBtu) modele d is in excess of the proposed NVE BART limit (0.28 lb/MMBtu - annual). Co nsequently, the modeling results show a lesser improvement in visibility than woul d be achieved with NVE’s proposed BART limit. Modeling results for other technically feasible control options were not presented.

NDEP ANALYSIS

Based on the information provided in NVE’s Oc tober 2008 BART determination reports, NDEP concurs with each BART determination for units 1 and 2 at Fort Churchill, with the exception of the installation of only LNB for control of NO x emissions and the associated NO x emission limits. For both units, BART for SO 2 is use of PNG and/or low-sulfur No. 2 fuel oil with an emission limit of 0.05 lb/MMBtu, 24-hr average. For PM 10 , BART is also PNG and/or lowsulfur No. 2 fuel oil but with an emi ssion limit of 0.03 lb/MMBtu, 3-hr average.

For NO x , NDEP established a baseline emissions scen ario using Acid Rain Data from calendar years 2002 through 2007. NDEP used the average of the two consecutive years of the highest annual NOx emissions to establish the NO x baseline emissions. NVE’s cost and control efficiencies presented for each control technology were taken at face-value and used in NDEP’s cost analysis and BART determination. The cont rol technologies were ordered from highest to lowest control efficiency. NDEP’s economic an alysis summary is presented in Table 1.

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TABLE 1



### NDEP ECONOMIC ANALYSIS SUMMARY

Ft. Churchill 1

Current Operation (Uncontrolled) LNB w/SCR ROFA w/Rotamix LNB w/SNCR LNB w/FGR LNB Capital Cost $ 0 $ 35,781,250 $ 5,250,940 $ 4,416,563 $ 1,610,000 $ 1,050,000 First Year O&M Cost $0 $705,037 $695,193 $424,800 $320,219 $45,200 First Year Debt Servic e $ 0 $ 3,794,816 $ 974,56 4 $ 468,403 $ 170,750 $ 111,359 Total Annual Cost $0 $4,499,853 $1,669,757 $893,203 $490,969 $156,559

Base Heat Input (MMBtu) 5,472,541 Total Heat Input allowed (MMBtu) 11,561,448 Base emissions (tons) 1209 NOx Removal Rate % 0.0% 87.4% 65.7% 62.1% 56.7% 49.5% NOx Removed (Tons) 0 1057 794 751 686 598 NOx Emission Rate (Tons ) 1209 152 415 458 524 611 NOx Emission Rate (lb/MMBtu) 0.056 0.152 0.167 0.191 0.223 First Year Cost ($/ton removed) $4,259 $2,102 $1,190 $716 $262 Incremental Cost ($/ton) $10,787 $17,842 $6,161 $3,842 $262 NOx Control

Ft. Churchill 2

Current Operation (Uncontrolled) LNB w/SCR ROFA w/Rotamix LNB w/SNCR LNB w/FGR LNB Capital Cost $ 0 $ 35,781,250 $ 9,189,14 5 $ 4,416,563 $ 1,610,000 $ 1,050,000 First Year O&M Cost $0 $685,698 $664,514 $393,739 $320,219 $45,200 First Year Debt Servic e $ 0 $ 3,794,816 $ 974,56 4 $ 468,403 $ 170,750 $ 111,359 Total Annual Cost $0 $4,480,514 $1,639,078 $862,142 $490,969 $156,559

Base Heat Input (MMBtu) 5,197,003 Total Heat Input allowed (MMBtu) 11,561,448 Base emissions (tons) 862 NOx Removal Rate % 0.0% 86.4% 63.0% 59.1% 53.2% 45.4% NOx Removed (Tons) 0 745 543 510 459 391 NOx Emission Rate (Tons ) 862 117 319 353 404 471 NOx Emission Rate (lb/MMBtu) 0.045 0.123 0.136 0.155 0.181 First Year Cost ($/ton removed) $6,014 $3,017 $1,692 $1,070 $400 Incremental Cost ($/ton) $14,082 $23,103 $7,296 $4,972 $400 NOx Control

NDEP specifically reviewed the cost per ton of NO x removed for each unit at Fort Churchill and determined that installation of LNB with FGR m eets the BART criteria, with associated first

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year costs of $716 and $1,070/ton of NO x removed for units 1 and 2, respectively. These values are considered cost effective. The cost data fr om the tables above are presented graphically in Figure 1. NDEP also considered the Clean Air Act factors of expected em ission rates, emissions performance levels, expected emissions re ductions, energy impacts, non-air quality environmental impacts and modeled visibility impacts in Nevada’s control technology determination. NDEP concluded based on a review of the economic analysis that the $/ton of NO x removed increased significantly for LNB w ith SNCR, ROFA and SCR technologies with only slight improvements in visibility.

FIGURE 1

LEAST COST ENVELOPE

Ft. Churchill Unit 1

ROFA w/Rotamix

LNB w/SNCR
LNB w/FGR LNB $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000

0 200 400 600 800 1000 1200

Tons of NOx RemovedAnnual Costs ($)

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ROFA w/Rotamix

LNB w/SNCR LNB w/FGR LNB $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000

0 100 200 300 400 500 600 700 800

Tons of NOx RemovedAnnual Costs ($)

Based on this review, NDEP concludes that for NO x the installation of LNB with FGR with an emission level at 0.20 lb/MMBtu for unit 1 and 0.16 lb/MMBtu for unit 2, on a 12-month rolling average, is BART.

NDEP anticipates greater visibility improvement upon implementation of BART than shown in NVE’s October 2008 BART report, which is based on a NO x emission rate of 0.40 lb/MMBtu. The annual NO x BART emissions are 38 to 51 percent of the rates modeled by NVE, while the total annual BART emissions are 53 percent of the modeled rate s, therefore the visibility improvement due to BART should improve significantly from that modeled.