p. 1 

# OAR Box 1865 Prepped byCharmelle Mathews



## Document

Number: 

# 113)lV-K-(B)- 8 Docket Number: 

# A-83-2 7

Printed 12/3/20083:22:17

PM Sheet 113 of 198P. 2


## ENERG Y AN D ENVTOONMENTA L ANALYSIS , INC . 165 5 NORT HFOR T MYE RDRIV E ARLINGTON

, VIRGINI A 2220 9 703/528-190 0 IV^K-(B)-8r .

Octobe r 27 , 198 6

Mr . Rober t Pahel-Shor t Economi c Analysi s Branc h(MD-12 ) U.S . Environmenta l Protectio n Agenc y Researc hTriangl e Park , N.C . 2771 1 Subject : EPAContrac t No . 68-02-4202 , Wor k Assignmen t No . 1 8

Summaryo f Recen t IFCA MRun s Dea r Robert : I n September , EEAra n IFCA Mwit hfour regulatoryscenario s an d tw o ne wset s o f industria l fue l pric e forecasts :

• the ne w198 6 EE Ahighoi l prices , non-carriag e marke t natura l ga s price s

• the ne w198 6 EEAlowoi l prices , non-carriag e rigi d marke t natura l ga s prices . Referenc e m

ylette r t o yo u date d Septembe r 30 , 1986 . I n October , EEAra n IFCA Mwit hthre e regulatoryscenario s an d thre e ne wset s o f industria l fue l pric e forecasts :

• the ne w198 6 EEAhighoi l prices , carriag e marke t natura l ga s price s

• the ne w198 6 EEAlowoi l prices , rigi d carriag e marke t natura l ga s price s

• the ne w198 6 EEAlowoi l prices , flexibl e carriag e marke t natura l ga s prices . Recal l tha t befor e an yo f thes e run s wer e executed , ther e wer e severa l change s i n assumption s (referenc e m ylette r t o yo u date d Septembe r 11 , 1986) . Al l o f thes e ne wIFCA Mrun s use d the revise d 198 6 IC F industria l coa l pric e projections . Th e enclose d tabl e present s a compariso n o f IFCA Mresult s fo r thes e five ne wfue l pric e forecast s plu s a se t o f IFCA Mrun s whic hwer e performe d i n 1984 . Th e result s fo r the non-carriag e marke t natura l ga s price s ar e discusse d i n m ylette r t o yo u date d Septembe r 30 , 1986 .

MANAGEMEN T / ECONOMIC S / ENGINEERIN GMr . Pahel-Shor t

Octobe r 27 , 198 6 Pag e Two

Th e carriag e marke t natura l ga s price s result s hav e relativel y smalle r cost-effectivenes s ratio s becaus e o f a large r leve l o f fue l switching fro

mresidua l fue l oi l t o natura l gas . Th e SO 2 emissio n reduction , 0. 8 v . 0.3 , fo r the carriag e marke t natura l ga s prices/198 6 highoi l an

d 198 6 lowoi l (flexibl e market ) i s relativel ysmall , onl y 3-4,00 0 shor t tons . Thi s i s smal l becaus e 9 8 percen t o f the fue l us e i s natura l ga s fo r the 0. 8 lb . S02/MMBt u residua l fue l oi l standard . Onl y tw o percen t o f the fue l us e i s residua l fue l oi l fo r the 0. 8 lb . S02/MMBt u standar d and , a s a result , the incrementa l SO 2 emissio n reductio n i s verysmal l fo r a standard whic hi s tighte r than 0. 8 lb . S0 2 /MMBtu . Fo r the carriag e marke t natura l ga s pric e runs , IFCA Mproject s deman d onl yfo r natura l ga s whe n the residua l fue l oi l regulatio n i s 0. 3 lb . S02/MMBtu . Therefore , ther e ar e n o incrementa l difference s betwee n a mandatoryscrubbing standard an d 0. 3 emissio n regulation . Cal l m e i f yo u hav e an yquestions .

Ti mHoga n TH:lm h enclosur e cc : Dr . A . Weh eCOMPARISONO FIFCA M PROJECTIONS 3

1 Baselin e v . 0. 8 SO 2 emissio n red . (10 ^ shor t tons ) Tot . ann . cos t increas e ($198 5 10 6 ) Incrementa l C- E (198 5 $/shor t ton ) 0. 8 v . 0. 3 SO 2 emissio n red . (10- 5 shor t tons ) Tot . ann . cos t increas e ($198 5 10 6 ) Incrementa l C- E (198 5 $/shor t ton ) 0. 3 v . al l scrub SO 2 emissio n red . (10- 5 shor t tons ) Tot . ann . cos t increas e ($198 5 10 6 ) Incrementa l C- E (198 5 $/shor t ton ) Baselin e v . al l scrub SO 2 emissio n red . (10- 5 shor t tons ) Tot . ann . cos t increas e ($198 5 IO 6 ) Averag e C- E (198 5 $/shor t ton ) 198 4 Ref. b 17 3 6 3 36 4 6 7 7 8 1,16 4 2 2 6 27 3 26 3 14 8 56 3 Non-Carriag e Marke t Natura l Ga s Price s 198 6 Hig hOi l 12 0 5 5 45 6 5 0 3 5 70 2 6 1 9 3,22 0 17 6 10 9 61 8 198 6 Lo wOil c 28 2 6 0 21 2 6 0 3 7 61 2 1 3 7 6 5,95 3 35 5 17 2 48 5 Carriag e Marke t

Natura l Ga s P r 198 6 Hig hOi l 12 6 5 4 3 4

- 1

- 0 0

- 130 e 4 e 33 e 198 6 Lo wOil c 31 3 4 7 15 0 4 4

- 2

- 0 0

- 357 e 44 e 125 e ice s

198 6 Lo wOil d 32 4 2 9 9 1 3 0 0 0 0

- 327 e 2 9 e 89 e

c d e Ne windustria l fossi l fuel-fire d boiler s large r than 10 0 MMBtu/h r and installe d betwee n 198 5 and 1990 . "Hig hOi l Demand " scenario . Projecte d Impact s o f Alternativ e Sulfu r Dioxid e Ne wSourc e Performanc e Standard s fo r Industria l Fossi l Fuel-Fire d Boilers . EEA . Marc h1985 . Baselin e and alternativ e contro l level s II , I V and VI . Rigi d marke t natura l ga s prices . Flexibl e marke t natura l ga s prices . Als o applicabl e t o Baselin e v . 0.3 .