August 30, 2006

Glenn Shankle

Executive Director

TCEQ

MC 109

12100 Park 35 Circle

Austin, TX 78753

Re: Response to SOAH Proposal For Decision

Dear Mr. Shankle,

Babcock Power Inc (BPI), the Air Quality Control System (AQCS) supplier for the TXU

Oak Grove Project, is completely confident of the application of Selective Catalytic

Reduction (SCR) for NOx control and sorbent injection for mercury control to lignite

fired units based on information provided below. Given the supporting technical data and

BPI's ties to the largest AQCS worldwide experience base, the BPI corporation has

committed to, guaranteed and financially backed the NOx and mercury removal

guarantees required to comfortably meet the proposed Oak Grove air permit.

The SOAH Proposal For Decision (TCEQ Docket No. 2006-0195-AIR; SOAH Docket

No. 582-06-1502) (PFD) gave several reasons why SCR and sorbent injection on lignite

firing may not be technically feasible. BPI respectfully completely disagrees with this

assessment. BPI has been involved in the development and early installation of the first

Powder River Basin (PRB) fired SCR installation where many of the same concerns

existed for the SCR. The patented BPI Delta Wing® SCR system was installed and its

operation has consistently met or exceeded the NOx reduction guarantee. BPI has

operational experience with sorbent injection on lignite and lignite blended applications

in Europe exceeding the removal rates required for Oak Grove.

The major areas of concern with the application of SCR to lignite are:

Catalyst Deactivation:

Catalyst deactivation measured for Gulf Coast lignite in the Electric Power

Research Institute (EPR!) Martin Lake report shows acceptable results based on 8000

hours of testing. This, combined with full-scale commercial operation on three units in
Europe with over five year of operation, provides technical evidence that catalyst

deactivation does not prevent the application of SCR on lignite units. The BPI Delta

Wing® SCR System design we are supplying for Oak Grove provides an extra spare layer

of catalyst capacity should deactivation rates be greater than predicted.

Catalyst Pluggage:

Catalyst pluggage has been successfully controlled by using BPI's Delta Wing®

SCR System that have been installed on units for a wide range of fuels and for Oak

Grove both steam soot blowers and sonic horns cleaning devices have been provided.

This catalyst cleaning arrangement has been proven successful with PRB coal at plants

with over 16,000 hours of operation. The W.A. Parish units referenced in the PPD

utilized only sonic horns in the original design and are currently or will be retrofitted with

steam soot blowers. The University ofNorth Dakota (UND) report referenced in the PPD

studied North Dakota lignite coal utilizing a slipstream reactor with a compressed air soot

blower; this test reactor arrangement can introduce significant moisture via the air soot

blowing media resulting in ash deposition causing catalyst pluggage. BPI has

documented such issues with slipstream reactors on PRB and PRB blends.

Ash Deposition:

Ash deposition and accumulation in ductwork has been addressed and controlled by

BPI on over 34,000 MW of US SCR installations and 65,000 MW worldwide, BPI

technology utilizes advanced fluid mechanics modeling and static mixer design to mix

flue gas chemistry and ash. In specific, BPI installs a series of mixers near the inlet ofthe

SCR reactor to ensure uniform ash distribution at the catalyst face. This complete system

has been proven with 100% PRB firing for over 16,000 hours without resulting NOx

removal degradation due to catalyst or system ash pluggage.

Large Particle Ash (LPA):

LPA is a concern for all SCR installations regardless of coal type. LPA has resulted in

operational issues on bituminous, PRB and fuels blends alike on all furnace and firing

system configurations. The current 100,000 MW US SCR operating fleet has been

successful in implementing methods and techniques to control, mitigate and prevent

LPA.

The above technical discussions provide a basis for BPI to meet the requirements for

commercial guarantees that will meet the TCEQ NOx emission air permit rates for the

Oak Grove project.

Based on our review of the PFD, the major areas of concern with sorbent injection for

control of mercury emissions appear to be based on the limited number of commercial
scale or pilot scale installations with lignite achieving the required removal rates. The

major area of concern with lignite coal compared to bituminous coal is the low chloride

content in the coal; this is a similar concern with PRB coal as well. Several field tests

have been completed on sorbent injection and treated sorbent injection with lignite firing

with and without fabric filters achieving 70 to 95% removal with injection rates over 3

times lower than the Oak Grove design. Further, commercial installations in Europe with

over six years continuous operation of sorbent inj ection on low chloride fuels (sewage

sludge) blended with lignite achieving greater than 80% removal exist. As mentioned in

the docket the Oak Grove AQCS system has inherit conservatism, the SCR system will

increase mercury oxidation resulting in greater capture with sorbent injection, this

beneficial feature is not available in either lignite pilot or full-scale installation

referenced. The sorbent injection method is being designed for Oak Grove using BPI

exclusive mixing technology to ensure maximum distribution of carbon in the flue gas.

As mentioned above, the sorbent injection system is being sized and built for sorbent

injection rates over three times greater than that expected, thus providing additional

operational margin to meet the removal efficiencies.

The above technical discussions provide a basis for BPI to extend, with sufficient margin,

a commercial guarantee on the mercury emission rate for the Oak Grove project.

In summary, BPI's confidence in achieving the Oak Grove emission rates for NOx and

mercury is based on our proven experience and knowledge in the AQCS field. This

experience includes decades of static mixer development resulting in the current

proprietary Delta Wing® SCR mixing system, using the BPI SCR system our customers

have obtained the lowest outlet long term NOx emissions worldwide for the 2005 Ozone

season. Our operational European experience combined with an active US mercury

control program provides a solid basis for the guaranteed removal rates and equipment

design ranges. These types of successes coupled with our knowledge and experience as

one of the world's largest AQCS suppliers results in BPI's ability to technically and

financially back the Oak Grove project.

Very truly yours,

Dr Eric N. Balles

Senior Vice President

Babcock Power Inc.