**A TTACHMENT 1**  **To NPS/FWS Comments -**  **Maine Draft Regional Haze SIP NPS Comments Regarding Verso Androscoggin Paper Mill BART Evaluation**  **July 23 , 2010**  Power Boilers #1 & #2: NO x The following statement by Verso is misleading: The Androscoggin Mill followed the guidance and procedures outlined in 40 CFR Part 51, Appendix Y and the OAQPS Air Pollution Cost Control Manual. Supporting cost evaluation spreadsheets are provided in Attachment C, Table Nos. C
- 1, C
-2, C
- 3, and C
- 4. While we applaud Verso’s intent to use the Cost Manual, the actual Verso approach appears to have borrowed the Cost Manual method for evaluating wet scrubbers and applied it to SCR and SNCR, which we believe is inappropriate. In actuality, there is no OAQPS Air Pollution Cost Control Man ual (Cost Manual) procedure for evaluating costs for SCR or SNCR for **oil -** **fired** EGUs. The procedures described by the Cost Manual are intended for use with **coal -** **fired** boilers > 250 mmBtu/hr. So we adapted them to oil
fired boilers , but the cost algorithms f or the Direct Capital Costs are from the Cost Manual coal
boiler method and therefore questionable. Even if we accept the Verso approach as a default, it still contains some highly questionable estimates for SCR, and Verso clearly did not follow the Cost Manual :  If we assume that Power Boilers #1 & #2 are capable of producing about 68 MW each, then the Total Capital Investment (TCI) per kW is about $115 for SCR, which is in the middle of the $ 50 - $260/kW range for coal
- fired EGUs. The attached Excel workbook estimates a slightly higher TCI by applying our adapted Cost Manual approach
.  Verso has estimated an annual reagent cost of $414,000/boiler. This exceeds the $54,000 annual reagent cost that the Cost Manual procedure estimates. Verso must justify this estimate.  Verso has estimated an annual catalyst replacement cost of $155,000/boiler. Since this exceeds the $92,000 annual catalyst replacement cost that the Cost Manual procedure estimates for the 330 MW Naughton Unit #3 (that Wyoming is requiring to install SCR as BART), the Verso estimate appears to be very high. Our adapted Cost Manual method estimates catalyst volume at 88 m3, a 24,000 hour catalyst life, and an annual Catalyst Replacement Cost = $ 41 ,000/boiler
. Furthermore, because most catalyst vendors do not charge for recovery

o f the spent catalyst, that $30,000 annual cost also appears unfounded
.  Verso's Capital Recovery Factor (12.4% interest over a 10
- ye ar SCR life) is inflated. The Cost Manual recommends 7% interest over a 20
- year SCR life.  Verso estimates an annual cost of $5.1 million to control both boilers 1 versus our estimate of $1.1 million for each boiler, and Verso estimates $7,361/ton versus our $3, 070/ton.

1 Verso assumed a $0.08/kWh cost for electricity.According to Maine Department of Environmental Protection (MEDEP ) :

The cost effectiveness numbers in the table above are based on controlling NO x emissions from Power Boilers #1 and #2 at the control effectiveness rates indicated in the table from the highest estimated two year average annual emissions between 2002 and 2008. In recent years (2008 and 2009) these boilers have been operating close to only 20% of the time, which for example, would result in an actual cost effectiveness of $16,313 per ton of NO

x removed with the installation of SCR. MEDEP estimates cost- effectiveness at $5,271/ton versus the $7,361/ton estimated by Verso; we request an explanation for this difference. Furthermore, if MEDEP intends to consider the reduced operation of these boilers in the economic analysis, those reduced operational parameters should b e made federally enforceable if they affect the outcome of the analys is. Because BART is a visibility improvement program, we believe that cost/deciview ($/dv) is a very important parameter. In this case, for the four Class I areas evaluated by Verso, SCR would improve visibility

b y a total of 4.6 dv. (We would also like to see the visibility improvements that would occur in the other two Class I areas.) This results in a cost- effectiveness value of less than 0.5 million/dv, which is quite reasonable compared to the average $1 3 - $20 million/dv that we are seeing accepted by states and sources that are proposing reductions under BART. Even if one considers only the visibility improvement at Acadia National Park, the addition of SCR results in a cost- effectiveness value of $1.3 million/dv. This leads to the conclusion that SCR is BART for the Androscoggin power boilers. The same situation applies to SNCR. The actual Verso approach appears to have borrowed the Cost Manual method for evaluating wet scrubbers and applied it to SNCR, which we believe is inappropriate. Even if we accept the Verso approach as a default, it still contains some highly questionable estimates for SNCR:  If we assume that Power Boilers #1 & #2 are capable of producing about 68 MW each, then the Total Capital Investment (TCI) per kW is about $47 for SNCR, which is on the high end of the $29
- $45/kW range we are seeing in proposals to install SNCR on coal
fired EGUs ( See http://www.wrapair.org/forums/ssjf/bart.html). The attached Excel workbook estimates $26/kW. Verso should provide vendor quotes to support its higher
than expected estimates.  Verso has estimated a Direct Annual Cost (DAC) of $0.55 million/boiler. Since this exceeds the $0.1 2 million DAC that the Cost Manual procedure estimates, the Verso estimate appears to be very high. The biggest difference is in Verso's estimate of almost $0.5 million/year/boiler for reagent versus the Cost Manual estimate of $0.06 million/y r.  Verso's Capital Recovery Factor (12.4% interest over a 10 -ye ar SNCR life) is inflated. The Cost Manual recommends 7% interest over a 20
-ye ar SCR life.  Verso estimates an annual cost of $2.6 million to control both boilers 2 versus our estimate of $0. 29 million for each boiler, or Verso's $9,758/ton versus our $ 2,128 /ton. MEDEP estimates cost- effectiveness at $5,973/ton versus the $9,758/ton estimated by Verso; we request an explanation for this difference.

2 Verso assumed a $0.08/kWh cost for electricity.In this case, for the four Class I areas evaluated by Verso, SNCR would improve visibility b y a total of 4.3 dv. (We would also like to see the visibility improvements that would occur in the other two Class I areas.) This results in a cost- effectiveness value of less than 0. 13 million/dv, which is quite reasonable compared to the average $1 3 - $20 million/dv that we are seeing accepted by

states and sources that are proposing reductions under BART. Even if one considers only the visibility

improvement at Acadia National Park, the addition of SCR results in a costeffectiveness value of $0.41 million/dv. This leads to the conclusion that SNCR could also be a candidate for BART for the Androscoggin power boilers if SCR is rejected
. Power Boilers #1 & #2: SO 2 Some comments on Verso's BART analysis for SO 2 from the Androscoggin mill Power Boilers #1 & #2. Power Boilers #1 & #2 wet scrubber cost analys is  Verso's Purchased Equipment Costs are not supported or justified.  Is there a state sales tax exemption for pollution control equipment?  Verso's Maintenance costs are not supported or justified.  Verso's Utilities costs are not supported or justified.  Can Verso use waste caustic from the mill to augment caustic purchases? (We are seeing this at other mills.)  Verso's annualized costs do not make sense
--the numbers do not work out as presented. 3  Verso overestimated the interest rate and underestimated equipment life. According to the OAQPS Control Cost Manual, the correct interest rate is 7% and the correct equipment life is 15 years. Verso's Power Boilers #1 & #2 lower sulfur fuels analysis is incomplete. For example, 4 FPL evaluated 1%S residual, 0.5% S residual and 0.3% S residual fuel oils for its Wy man facility, Verso should at least evaluate the lower sulfur residual oils. Waste Fuel Incinerator (WFI): NO x We adapted the OAQPS Air Pollution Cost Control Manual (Cost Manual) procedure for evaluating costs for SCR or SNCR for oil
- fired EGUs to oil
- fired EGUs (see electronic attachment), but the cost algorithms for the Direct Capital Costs are from the Cost Manual coal
boiler method and therefore questionable. So, even if we accept the Verso approach as a default, it still contains some highly questionable estimates for SCR:  If we assume that the WFIi s capable of producing about 48 MW, then the Total Capital Investment (TCI) per kW is about $165 for SCR, which is in the middle of the $ 50 - $260/kW range for coal
- fired EGUs. The attached Excel workbook estimates a slightly lower TCI.

3 Verso assumed a $0.08/kWh cost for electricity. 4 In Massachusetts, sources evaluated 1%S residual, 0.5% S residual, 0.3% S residual, 0.3% S distillate, 0.05% S distillate, and 0.0015% S distillate. Verso has estimated an annual reagent cost of $286,000. This exceeds the $72,0 00 annual

reagent cost that the Cost Manual procedure estimates.  Verso's Capital Recovery Factor (12.4% interest over a 10
- ye ar SCR life) is inflated. The Cost Manual recommends 7% interest over a 20
- year SCR life.  Verso estimates an annual cost of $2.4 million to control the WFI 5 versus our estimate of $0.9 million, or Verso's $5,092/ton versus our $ 1,986/ton. MEDEP estimates cost- effectiveness at $4,676/ton versus the $5,092/ton estimated by Verso; we request an explanation for this difference. Becaus e BART is a visibility improvement program, we believe that cost/deciview ($/dv) is a very important parameter. In this case, for the four Class I areas evaluated by Verso, SCR would improve visibility

b y a total of 1.0 dv. (We would also like to see the visibility improvements that would occur in the other two Class I areas.) This results in a cost- effectiveness value of less than $1 million/dv, which is quite reasonable compared to the average $1 3 - $20 million/dv that we are seeing accepted by states and sources that are proposing reductions under BART. Even if one considers only the visibility improvement at Acadia National Park, the addition of SCR results in a cost- effectiveness value of $2.3 million/dv. This leads to the conclusion that SCR is BART for the Androscoggin WFI. The same situation applies to SNCR. So, even if we accept the Verso approach as a default, it still contains some highly questionable estimates for SNCR:  Although Verso stated that SNCR could achieve 35% control, its cost analysis is based upon 30% control.  If we assume that the WFIi s capable of producing about 48 MW, then the Total Capital Investment (TCI) per kW is about $65 for SNCR, which is above the high end of the $29
- $45/kW range we are seeing in proposals to install SNCR on coal
- fired EGUs. The attached Excel workbook estimates $31/kW. Verso should provide vendor quotes to support its higher
-than expected estimates.  Verso has estimated a Direct Annual Cost (DAC) of $0.41 million. Since this exceeds the $0.1 3 million DAC that the Cost Manual procedure estimates, the Verso estimate appears to be high. The biggest difference is in Verso's estimate of almost $0.34 million/ye ar per boiler for reagent versus the Cost Manual estimate of $0.07 million/y r.  Verso's Capital Recovery Factor (12.4% interest over a 10 -ye ar SNCR life) is inflated. The Cost Manual recommends 7% interest over a 20
-ye ar SNCR life.  Verso estimates an annual cost of $1.1 million to control the WFI 6 versus our estimate of $0. 27 million, or Verso's $7,009/ton versus our $1, 757/ton. MEDEP estimates cost- effectiveness at $5,944/ton versus the $7,009/ton estimated by Verso; we request an explanation for this difference. In this case, for the four Class I areas evaluated by Verso, SNCR would improve visibility b y a total of 0.2 dv. (We would also like to see the visibility improvements that would occur in the

5 Verso assumed a $0.07/kWh cost for electricity. 6 Vers o assumed a $0.07/kWh cost for electricity.other two Class I areas.) This results in a cost- effectiveness value of less than 1. 4 million/dv,

which is quite a bargain compared to the average $10
- $20 million/dv that we are seeing accepted by

states and sources that are proposing reductions under BART. Even if one considers only the visibility

improvement at Acadia National Park, the addition of SCR results in a costeffectiveness value of $2.7 million/dv. This leads to the conclusion that SNCR could also be a candidate for BART for the Androscoggin power boilers if SCR is ruled out. Waste Fuel Incinerator (WFI) : SO 2 This is what Verso says about SO 2 BART for the Androscoggin Waste Fuel Incinerator: Wh en No. 6 fuel oil is fired at significant levels, **the Mill**  **adds caustic**  **to the**  **wet scrubber**  to meet the SO2 emission limit for the W FI. **SO2 BART ANALYSIS Identify BART**  The WF I has very low SO2 emissions due to the inherent alkalinity (i.e., SO2 control ) of the primary fuel and the small amount of fuel oil used in the WF

I. In addition during the limited amount of time that No. 6 fuel oil is used to provide a significant amount of the heat for the WF I, **caustic is**  **added to**  **the wet**  **scrubber**
. Since there are only 50 tons of SO2 to control annually, the addition of caustic to the wet scrubber would end up controlling a very small amount of emissions on an annual basis. Considering visibility, the low, pre
-control visibility impacts from the W

FI mean that any visibility reductions associated with post
-control of SO2 emissions would be **imperceptible**
. Based on the information developed in the Impacts Analysis, the Androscoggin Mill believes that **there is**  **no SO2**  **BART** determination for SO2 from the WFI. IsVerso saying that it does not want its current procedure of adding caustic to the wet scrubber when burning fuel oil to be considered BART, but will keep doing it any way? If so, that is clearly wrong because BART would include this practice as a technically
- and economicallyfeasible option, as proven by Verso. Finally, a control option does not have to produce a perceptible improvement to be viable.**ATTACHMENT 2 To NPS/FWS Comments**  **- Maine Draft Regional Haze SIP**  **NPS Comments Regarding FPL Energy Wyman Stati on BART Evaluation**  **July 20, 2010** Beginning in 2006, capacity utilization of, and emissions from Units #3 & #4 dropped so much that, assuming that trend continues, it would likely b e cost-prohibitive to make any substantial capital expenditures to reduce emissions. Furthermore, as noted by Maine Department of Environmental Protection (MEDEP ) , NO X emissions are already so low as to make any significant additional expenses economically infeasible. So, we shall focus our comments on reducing SO 2 emissions by switching to lower sulfur fuels. SO 2 This appears to be the only B ART analys is conducted by MEDEP in which cost- effectiveness was not evaluated in terms of annual cost/ton of pollutant removed. Instead, MEDEP appears to have relied solely upon annual cost/deciviews (dv) of visibility improvement. While we encourage the use of the $/dv metric, it was not properly calculated nor applied in this case. MEDEP also evaluated the BART strategies on the basis of incremental cost/dv
. While that is certainly a vali d and useful parameter, it must be used with caution and its results placed into the proper perspective. The basic premise underlying the incremental cost analysis is to identify those strategies that contribute relatively little environmental benefit in proportion to their cost. Because, in most cases, the cost of pollution control rises exponentially with control efficiency, the slope of the cost curve will also increase. For this reason, rigid use of incremental cost effectiveness will always result in the choice of the cheapest option if carried to its ultimate extent. (For example, if this approach were used to evaluate PM controls, it is likely that all controls more expensive than a multiple cyclone would be rejected.) According to the NSR Workshop manual, “As a precaution, the difference in incremental costs among dominant alternatives cannot be used by itself to argue one dominant alternative is preferred to another.” Instead, it should be used to compare closely performing options. 7 However, FPL di d evaluate the costs and benefits of several SO 2 reduction options, including the use of lower sulfur fuels. In doing so, FPL included estimates of the annual costs and emission reductions for each option, as well as the cost/ton for each of those options; those results are contained in Tables 5 - 3 thru 5 - 5 of the FPLB ART analysis. We used the data from FPL’s Table 5 - 3 to generate the cost-benefit data contained in the electronic attachment, and our results are summarized below.

7BART Guideline s : “You should consider the incremental cost effectiveness in com bination with the average cost effectiveness when considering whether to eliminate a control option” and “You should exercise caution not to misuse these [average and incremental cost effectiveness] techniques...[but consider them in situations where an option shows]...slightly greater emission reductions...”Wyman #3 (2007
- 2008)

Fuel Sulfur (%) 1 0.7 0.5 0.3 Increased Annual Fuel Cost $ 175,306 $ 206,243 $ 835,283 $ 1,722,127 SO2 Emission Reductions (tpy) 270 351 405 459 SO2 Reductions Cost
-Effectiveness ($/ton) $ 650 $ 588 $ 2,064 $ 3,755 Greatest Visibility Improvement (dv) 0.99 1.43 1.78 2.15 Cost-Effectiveness ($/dv) $ 177,077 $ 144,226 $ 469,260 $ 800,989 Cumulative Visibility Improvement (dv) 2.61 4.26 5.26 6.28 Cumulative Cost-Effectiveness ($/dv) $ 67,167 $ 48,414 $ 158,799 $ 274,224 Wyman #4 (2007
- 2008) Fuel Sulfur (%) 0.5 0.3 Increased Annual Fuel Cost $ 2,910,880 $ 7,014,743 SO2 Emission Reductions (tpy) 250 499 SO2 Reductions Cost
-Effectiveness ($/ton) $ 11,656 $ 14,045 Greatest Visibility Improvement (dv) 0.41 0.84 Cost-Effectiveness ($/dv) $ 7,099,707 $ 8,350,885 Cumulative Visibility Improvement (dv) 1.60 3.38 Cumulative Cost
-Effectiveness ($/dv) $ 1,819,300 $ 2,075,368 Our results differ from those presented by MEDEP because we used the most-recent (2007

– 2008) average fuel use data provided by FPLinstead of the maximum two -ye ar average. We did this because the most-recent two ye ars are much more representative of anticipated reduced operation of these units. While use of the reduced
- capacity operation data did not affect the $/ton estimate (which MEDEP did not include), it has a great effect on the $/dv estimate because of the reduced annual costs. Our results indicate that, on a $/ton basis, use of 0.7% sulfur oil is the most cost- effective. However, BART is not necessarily the most cost- effective solution. Instead, the $2,000/ton cost of switching Unit #3 to 0.5 % sulfur oil would be considered reasonable by most states. As noted above, MEDEP appears to have relied solely u pon $/dv of visibility

improvement. However, the baseline for estimating the increased costs of lower sulf ur fuels (2% sulfur) is different from the baseline for existing visibility impacts (1.6% S). Therefore, the visibility benefits are underestimated because the baseline impacts are underestimated. MEDEP has also presented 98 th percentile visibility values despite using only one year of meteorological data

— that is misleading because, when only one ye ar is modeled, only the maximum values are to be used. Because BART is a visibility improvement program, we believe that cost/deciview ($/dv) is a very important parameter. In this case, for the six Class I areas evaluated by FPL , lower
- sulfur (0.5%
- 0.3% S) fuels would improve visibility by a total of 6.9

– 9.7 dv. This results in a costeffectiveness value of $0.2

– 2.1 million/dv, which is relatively inexpens ive compared to the average $1 3 - $20 million/dv that we are seeing accepted by states and sources that are proposing reductions under BART. Even if one considers only the visibility

improvement at AcadiaNational Park, the lower
- sulfur fuels result in cost- effectiveness values of $0.5

– 8.4 million/dv.

This leads to the conclusion that 0.5% - 0.3% sulfur fuels are BART for the FPL boilers.**ATTACHMENT 3 To NPS/FWS Comments**  **- Maine Draft Regional Haze SIP**  **NPS Comments Regarding SAPPI SD Warren Paper**  **Mill BART Evaluation**  **July 20, 2010** Page 63 of the 2/06/09 draft of Maine Department of Environmental Protection (MEDEP) RH SIP contains Table 8 -2 titled "Modeled Impacts...of Maine BART -Eligible Sources..." That table shows a 0.75 dv impact at Acadia and 0.7 8 dv at Moosehorn from Power Boiler #1 at the SAPPI SD Warren Paper mill. The September 2009 company BART report did not evaluate Power Boiler #1. The MEDEP BART analysis (1/21/10) listed Power Boiler #1 as a BART source and included a BART determination for it. The MEDEP BART analysis (posted 6/29/10) did not mention Power Boiler #1. Why was Power Boiler #1 omitted from the BART determination?