November 2,2010

Exhibit A

PacifiCorp's Emissions Reductions Plan

In connection with its Best Available Retrofit Technology ("BART") determinations and its

other regional haze planning activities, the Wyoming Department of Environmental Quality, Air

Quality Division ("AQD") asked PacifiCorp to provide additional information about its overall

emission reduction plans through 2023. The purpose is to more fully address the costs of

compliance on both a unit and system-wide basis. PacifiCorp is committed to reduce emissions

in a reasonable, systematic, economically sustainable and environmentally sound manner while

meeting applicable legal requirements. These legal requirements include complying with the

regional haze rules which encompass a national goal to achieve natural visibility conditions in

Class I areas by 2064

Summary

PacifiCorp owns and operates 19 coal-fueled generating units in Utah and Wyoming, and owns

100% of Cholla Unit 4, which is a coal-fueled generating unit located in Arizona. PacifiCorp is

in the process of implementing an emission reduction program that has reduced, and will

continue to significantly reduce emissions at its existing coal-fueled generation units over the

next several years. From 2005 through 2010 PacifiCorp has spent more than $1.2 billion in

capital dollars. It is anticipated that the total costs for all projects that have been committed to

will exceed $2.7 billion by the end of 2022. The total costs (which include capital, O&M and

other costs) that will have been incurred by customers to pay for these pollution control projects

during the period 2005 through 2023, are expected to exceed $4.2 billion, and by 2023 the

annual costs to customers for these projects will have reached $360 million per year.

Envirorunental benefits, including visibility improvements will flow from these planned

emission reductions. PacifiCorp believes that the emission reduction projects and their timing

appropriately balance the need for emission reductions over time with the cost and other

concems of our customers, our state utility regulatory commissions, and other stakeholders.

PacifiCorp believes this plan is complementary to and consistent with the state's BART and

regional haze planning requirements, and that it is a reasonable approach to achieving emission

reductions in Wyoming and other states.

PacifiCorp's Long-Term Emission Reduction Commitment

Table I below identifies the emission reduction projects and related construction schedules as

currently included in PacifiCorp's reduction plan.
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2, 20 10

Page 2 of 10

Table I: Long-Tel111 Reduction Plan

Status of S02

S02 Scrubbers Low NOx /L B/ Selective

Installation - I Burner Baghouse Baghouse Catalytic

Plant Name Upgrades - U Installations lnstallations Pennitting Reduction

Hunter I 2014 - U 2014 2014 Pennitted

Hunter 2 201 I - U 2011 201 I Under

Construction

Hunter 3 Existing 2008 Existing Completed

Huntington I 2010 - U 2010 2010 Under

Construction

Huntington 2 2007 - I 2007 2007 Completed

Dave Jolmston 3 2010 - I 2010 2010 Completed

Dave Jolmston 4 2012 - I 2009 2012 Under

Construction

Jim Bridger I 2010 - U 2010 Completed 2022

Jim Bridger 2 2009 - U 2005 Completed 2021

Jim Bridger 3 2011 - U 2007 Permitted 2015

Jim Bridger 4 2008 - U 2008 Completed 2016

Naughton 1 2012 - 1 2012 Under

Construction

Naughton 2 2011 - I 2011 Under

Construction

Naughton 3 2014 - U 2014 2014 Baghouse 2014 Pennitted

Wyodak 2011 - U 2011 2011 Under

Construction

Cholla 4 2008 - U 2008 2008 Completed

The following charts represent the reductions in emissions that will occur at units owned by

PacifiCorp in Utah, Wyoming and Arizona'. It is significant to note that pennitting has been

completed for all but the SCR projects; pennitting for the SCR projects will be completed as

needed in advance of project construction. The emission estimates shown in these charts have

been calculated using projected unit generation and heat rate data in conjunction with each unit's

pennitted emission rate. In those cases were the units do not have emissions controls the

estimates have been based on projections ofthe future coal quality. All projections used are from

PacifiCorp's ten-year business plan. Actual future emissions will be less than those estimated in

these charts since the units will operate below their pel111itted rates.

1 PaciriCorp is also a joint owner of coal·fucled facilities 111 Colorado and Montana that are subject 10 regional haze

planning requirements and for which PacifiC0'1) will incur associated costs of emissions controls.
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2, 20 I0

Page 3 of 10

2005 - 2009 Actual and 2010- 2023 Projected 802 Emissions

PacifiCorp's Arizona, Utab & Wyoming Coal-Fired Units

120,000

112,500

105,000

97,500

90,000

82,500

75,000

'" 67,500

60,000

iii 52,500

45,000

37,500

30,000

22,500

15,000

7,500

o

" I 1

'-I

I .......

....... 1

- I

"-

"

I

A ual ro'e ed

Emis ions missi< ns

I

(20 Oemis ions h vebe nesti ated QY ratio gyea -to-da eemi sionst rough

1 1ll!2 o to r presertaful yearo emiss cns)

0- 0 N M 0- 0 N M

8 8 8 8 8 <3 <3 <3 <3 N N N N 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N N

Year

-TonsofS02 Emitted

2004- 2009 Actual and 2010 - 2023 Projected NOx Emissions

PacifiCorp's Arizona, Utah & Wyoming Coal-Fired Units

110,000

100,000

90,000

80,000

70,000

.. 60,000 c

.. 50,000 =c

c 40,000 <

30,000

20,000

10,000

0

-'.......... I I I I -

" I

I ....... , I

I .......-l ... ...... "'- dual

E isSioj I

I I I Pm eetedlEmisSI~ns I I

I ~lOe ssion ha....e een lculat d usi ,ct, I year to-da eern' ionr es)

I

8 8 0 N M 0- 0 N M

" 0 0

" <3 <3 0 <3 <3 N 0' N N 0 0 0 0 0 0 0 0 0 0 0 N 0' 0' N N N 0' N 0' N N N 0' 0' N N N N N N

Year

-TOllsofNOx Emitted
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2, 2010

Page 4 of 10

Project Installation Schedule

Emission reduction projects ofthe number and size described above take many years to engineer,

plan and build. When considering a fleet the size of PacifiCorp's, there is a practical limitation

on available construction resources and labor. There is also a limit on the number of units that

may be taken out of service at any given time as well as the level of construction activities that

can be supported by the local infrastructures at and around these facilities. Such limitations

directly impact both the overall timing ofthese projects as well as their timing in relation to each

other. Additional cost and construction timing limitations include the loss of large generating

resources during some parts of construction and the associated impact on the reliability of

PacifiCorp's electrical system during these extended outages. In other words, it is not practical,

and it is unduly expensive, to expect to build these emission reduction projects all at once or

even in a compressed time period. The pressure on emission reduction equipment and skilled

labor is likely to be exacerbated by the significant emission reduction requirements necessitated

by the Environmental Protection Agency's Clean Air Transport Rule which requires emission

reductions in 31 Eastern states and the District of Columbia beginning in 2012 and 2014. The

Envirorunental Protection Agency has indicated that a second Transport Rule is likely to be

issued in 2011, requiring additional reductions in the Eastern U.S. beyond those effective in

2014. The balancing of these concerns is reflected in the timing of PacifiCorp's emission

reduction commitments.

Priority of Emission Reductions

PacifiCorp's initial focus has been on installing controls to reduce S02 emissions which are the

most significant contributors to regional haze in the western US. In addition, PacifiCorp

continues to rely on the rapid installation of low NO, burners to significantly reduce NOx

emissions. Also, the installation of five SCRs (or similar NOx-reducing technologies) will be

completed by 2023 and reduce NOx emissions even further. PacifiCorp's commitment also

includes the installation of several baghouses to control particulate matter emissions. For those

units which utilize dry scrubbers, baghouses have the added benefit of improving S02 removal.

Baghouses also significantly reduce mercury emissions.

In addition to reducing emissions at existing facilities, PacifiCorp has avoided increasing

emissions by adding more than 1,400 megawatts of renewable generation between 2006 and

2010. In order to meet growing demand for electricity, PacifiCorp added non-emitting wind

generation to its portfolio at a cost of over $2 billion and has dismissed further consideration of a

new coal-fueled unit.

Emission Reductions and BART Deadlines

As depicted in the table and charts above, PacifiCorp began implementing its emission reduction

commitments in 2005. This was well ahead of the emission reduction timelines under the

regional haze rules which require BART to be installed no later than five years following

approval of the applicable Regional Haze SIP. This also provides a graphic demonstration of the

construction schedule and other limitations described above, as PacifiCorp was required to begin

installing emission control projects at some units earlier in order to complete projects at other
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2, 2010

Page 5 of 10

units within the five years after SIP approval. The table above demonstrates that most of the

projects to be built between 2010 and 2014, likewise, will be installed in advance ofthe required

completion date under BART requirements.

Customer Impacts

The following charts identify the timing and magnitude of the capital and O&M expenses that

will be incurred due to the projects identified in Table I. The charts identify:

1. The timing and magnitude ofthe capital costs.

2. The O&M expenses that will be incurred due to these projects.

3. The expected arumal costs2 through 2023 that customers will be incur as a result ofthese

specific pollution control projects.

Capital Expenditures to Add Pollution Control Equipment onPacifiCorp's

Arizona, Utah & Wyoming Coal-Fired Units

$600,000

$500,000

8

= $400,000 =.

.s

"0 $300,000 Q

$200,000

$\00,000

$0

-

- -

• II - '" " 00

'" 0 - N M

'" '" " 00 '" 0 ;:; N M 0 0 0 0 ;; ;; ;; N N N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N

Year

.Capilal Expenditw·es

2 PacifiCorp has made every attempt to provide an accurate estimate of the anticipated increase in annual revenue

requirements that will ultimately be translated to increases in customers' electricity rates. However, there are several

variables such as interest rates, inflation rates, discount rates, depreciation lives, and final construction costs and

operating and maintenance expenses that will be considered at the time these projects actually go into rate base and

will influence the actual revenue requirements associated with these capital projects.
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2,2010

Page 6 of 10

Increases In 0&1\1 Expenses Due to Additional Pollution Control Equipment

on Arizona, Utah & Wyoming Coal-Fired Units

560,000

550,000

Q

0 540,000 o.

..

"0 530,000 Q

..,

c

c

<: 520,000

510,000

50

5400,000

5350,000

5300,000

Q

0

q 5250,000

..

"0 5200,000 Q

..,

c 5150,000 c

<:

5100,000

550,000

50

/

....... 1 I

/1

I

V

....

J

rT

V I

l.---' ....... 1/

'<> 0 N .., !:: 0 N

8 0 0 8 <5 <5 N N N N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N

Year

-Annual O&M Expenses

Annuallncrease to Customers Due to Additional Pollution Control

Equipment on Arizona, Utah & Wyoming Coal-Fired Units

..,

I I l--V

- /

I L-VI

I J I I

I

'/

J

1/ I

[71

l/P I '<> 0 N .., '<> !:: 0 N

8 0 0 8 <5 <5 <5 N N N N 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N N N N N

Year

1 -Annual Revenue Requirement I
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2,2010

Page 7 of 10

As can be seen fi'om the previous charts, the rate increases for PacifiCorp customers associated

with PacifiCorp's emission reduction strategy alone will be significant. In the event that

PacifiCorp is required to accelerate or add to the planned emission reduction projects, the cost

impacts to our customers can be expected to increase incrementally, paliicularly as plant outage

schedules are extended and the need for skilled labor and material increases in the near term.

Ofpmiicular note, the projected costs reflect only the installation ofthe noted emission reduction

equipment. These cost increases do not include other costs expected to be incurred in the future

to meet fUliher emission reduction measures or address other environmental initiatives, including

but not limited to (see Attachment 1):

I. Implementation of Utah's Long Tem1 Strategy for meeting regional haze requirements

during the 2018-2023 time period.

2. The addition of mercury control equipment under the requirements of the upcoming

mercury MACT provisions. PacifiCorp estimates that $68 million in capital will be

incurred by 2015 and annual operating expenses will increase by $21million per year to

comply with mercury reduction requirements. In addition, anticipated regulation to

address non-mercury hazardous air pollutant (HAPs) emissions may require significant

additional reductions of SOz, as a precursor to sulfuric acid mist, from non-BART units

that clllTently do not have specific controls to reduce S02 emissions.

3. Mitigating and controlling COz emissions. While Congress has not yet passed

comprehensive climate change legislation, in December 2009, the Administrator of the

Environmental Protection Agency made a finding that greenhouse gases in the

atmosphere threaten the public health and welfare of cunent and future generations.

Having made the so-called "endangenl1ent finding," EPA issued the final greenhouse gas

tailoring rule, effective January 2, 2011, which will require greenhouse gas emissions to

be addressed under PSD and Title V permits3 Likewise, mandatory reporting of

greenhouse gas emissions to the Enviroru11ental Protection Agency commenced

beginning in January 20 10.

4. 1n addition, there are a number of regional regulatory initiatives, including the Westem

Climate Initiative that may ultimately impact PacifiCorp's coal-fueled facilities.

PacifiCorp's generating units are utilized to serve customers in six states - Wyoming,

ldaho, Utah, Washington, Oregon and Califomia. California, Washington and Oregon are

participants in the Western Climate Initiative, a comprehensive regional effOli to reduce

greenhouse gas emissions by 15% below 2005 levels by 2020 through a cap-and-trade

program that includes the electricity sector; each state has implemented state-level

emissions reduction goals. California, Washington and Oregon have also adopted

greenhouse gas emissions performance standards for base load electrical generating

resources under which emissions must not exceed 1,100 pounds of CO2 per megawatt

J The EnvironmeI1lal Protection Agency has not yet published its proposed guidance on what constitutes Best

Available Control Technology for greenhouses gases.
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2, 2010

Page 8 of 10

hour. The emissions perfonnance standards generally prohibit electric utilities from

entering into long-tenn financial commitments (e.g., new ownership investments,

upgrades, or new or renewed contracts with a tenn of 5 or more years) unless the base

load generation supplied under long-tenn financial commitments comply with the

greenhouse gas emissions perfonnance standards. While these requirements have not

been implemented in Wyoming, due to the treatment of PacifiCorp's generation on a

system-wide basis (i.e., electricity generated in Wyoming may be deemed to be

consumed in California based on a multi-state protocol), PacifiCorp's facilities may be

subject to out-of-state requirements.

5. Regulations associated with coal combustion byproducts. In June 2010, the

Environmental Protection Agency published a proposal to regulate the disposal of coal

combustion byproducts under the Resource Conservation and Recovery Act's Subtitle C

or D. Under either regulatory scenario, regulated entities, including PacifiCorp, would be

required, at a minimum; to retrofit/upgrade or discontinue utilization of existing surface

impoundments within five years after the Environmental Protection Agency issues a final

rule and state adoption of the appropriate controlling regulations. It is anticipated that the

requirements under the final rule will impose significant costs on PacifiCorp's coalfueled facilities within the next eight to ten years.

6. The installation of significant amounts of new generation, including gas-fueled

generation and renewable resources.

7. The addition of major transmission lines to support the renewable resources and other

added generation.

8. Increasing escalation rates on fuel costs and other commodities

BART and Regional Haze Compliance

PacifiCorp finnly believes that the commitments described above meet the letter and intent ofthe

regional haze rules, including the guidance provided by the EPA known as "Appendix Y." The

regional haze program is a long-tenn effort with long-tenn goals ending in 2064. It must be

approached from that perspective. It was never intended to require SCR on BART-eligible units

within the first five years of the program. Rather, it calls for a transition to lower emissions

exactly as PacifiCorp has implemented to date and as it has proposed going forward through

2023.

In its evaluation of emission reductions for regional haze purposes, the state should also consider

several other variables which will significantly affect emissions and costs over the next ten years.

These include such things as the development of new emission control technology, anticipated

new emission reduction legislation and rules, the new ozone standard, the one hour S02 and N02

standards, the PM2.5 standard, potential CO2 regulation and costs, an aging fleet, and changing

economic conditions. All ofthese variables matter and will affect the long-tenn viability of each

PacifiCorp coal unit and will contribute to the reduction of regional haze in the course of the
Exhibit A - PacifiCorp's Emissions Reduction Plan

November 2, 2010

Page 9 of I0

implementation of these programs. This, in tum, will affect the controls, costs and future

operational expectations associated with these generating resources.

Conclusion

PacifiCorp has made a significant, long-term conunitment to reducing emissions from its coalfueled facilities and requests that the AQD consider this commitment as a reasonable approach to

achieving emission reductions in Wyoming.
November 2,2010

Attachment 1 Possible Timeline for Environmental Regulatory

Requirements for the Utility Industry

I Ozone (03) I ISOx/NOx I ICAIRlTransport I IWater I

liBr~':'s:'~~ECTJ PMIPM2.5 I

EffluentGuidelines

Compliance 3·5 yrs

after final ru Ie

IC02 I

-Adapted from Wegman (EPA 2003) Upd<ied 7.28.10

316(b) Compliance

3·4 yrs afterfinal rule

,-------_1_ --r- ., 1 , , ,

IHg/HAPS I

t--------------J-------------l----------------r--------------_:

TransportRule HAPS MACT Begin Compliance

Phase II Compliance 3yrs Requirements

Reductions afterfinal rule under FinalCCB

Rule(ground

water monitoring,

double mon~ors,

closure,dryash

conversion)

EffluentGuidelines

Final rule expected

Transport I PM

Rule II (NOx) Transport

proposal Rule

316(b)final

rule

expected

Transport Rule

Phase I

Reductions

Ozone

Transport

Rule

Effluent

Guidelines

proposed

rule

expected

HAPSMACT

final rule

expected

FinalTransport SOxIN02x

RuleExpected Secondary

(CAIR Replacement) NAAQS

OZOne

NAAQS

Revision

C02

Regulation

(PSDIBACT)

N02

Primary

NAAQS

TransportRule

proposal issued

(CAIR Replacement)

S02Primary

NAAQS

Final j NextPM·

Rulefor 2.5

CCBs NAAQS

Mgmt Revision

Proposed LHAPS MACT

Rule for proposed

CCBs rule

Management 316(b)proposed

rule expected IAsh I

BeginCAIR

Phase IAnnual

S02Cap

BeginCAIR

Phase I

AnnualNOx

Cap

CAIR

Remanded

BeginCAIR

Revised Phase I

Ozone Seasonal

NAAQS NOx.Cap

CAIR

Vacated

CAMR&

Delisting

Rule

vacated