August 30, 2006
Glenn Shankle Executive Director TCEQ MC 109 12100 Park 35 Circle Austin, TX 78753

Re: Response to SOAH Proposal ForDecision

DearMr. Shankle,
BabcockPower 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 informationprovidedbelow. Giventhe 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 requiredto comfortablymeettheproposed OakGrove airpermit.
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 ofthe 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 inEurope exceedingthe removal rates required for OakGrove.
The major areas ofconcernwiththe application ofSCRto lignite are: CatalystDeactivation: Catalyst deactivation measured for Gulf Coast lignite in the Electric Power Research Institute (EPR!) Martin Lake report shows acceptable results based on 8000 hours oftesting. This, combined with full-scale commercial operation on three units inEurope 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 OakGrove provides an extra spare layer ofcatalystcapacity should deactivationrates be greaterthanpredicted. CatalystPluggage: 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 inthe original design and are currently orwill beretrofittedwith steam sootblowers. The University ofNorthDakota (UND) reportreferenced inthe PPD studiedNorth Dakotalignite coal utilizing a slipstreamreactorwith acompressed 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 suchissues with slipstreamreactors onPRB 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 ofmixers nearthe inlet ofthe SCRreactorto ensure uniform ash distribution atthe catalyst face. This complete system has been proven with 100% PRB firing for over 16,000 hours without resulting NOx removal degradation due to catalystor systemashpluggage. Large Particle Ash (LPA):
LPA is aconcernfor all SCRinstallations regardless ofcoal 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 OakGroveproject.
Based on our review ofthe PFD, the major areas ofconcern with sorbent injection for control ofmercury emissions appear to be based on the limited number ofcommercialscale or pilot scale installations with lignite achieving the required removal rates. The major area ofconcern 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 lowerthan the Oak Grove design. Further, commercial installations in Europe with over six years continuous operation ofsorbent injection 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 ofcarbon 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 marginto meetthe removal efficiencies.
The above technical discussions provide abasis for BPIto extend, with sufficientmargin, acommercial guarantee onthe mercury emissionrate forthe OakGroveproject.
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 ofsuccesses coupled with our knowledge and experience as one ofthe world's largest AQCS suppliers results in BPI's ability to technically and financially backthe Oak Groveproject.

Verytruly yours,

DrEricN. Balles SeniorVicePresident
BabcockPower Inc.