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OAR Box 1828 

Prepped by Ollie Stewart 

Document Number: 

303) IV-B-7 

Docket Number: 

A-83-27 

Printed 11/12/200811:12:59 AM Sheet 303 of 325 
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tf*" A-83-27 

IC 

IV-B-7 

r INCORPORATED International Square.

 1.850 K Street, Northwest. Washington, DC. 20006 (202) 862-1100 

January 19, 1987 

MEMORANDUM 

TO: 

FROM: 

SUBJECT: 

Fred Porter, EPA 

Walt Stevenson 

Craig D. Ebert, ICF, 

Incremental Costs to Supply Very Low Sulfur Coals 

Attached in Table 1 are the incremental costs to supply very low sulfur 

coals into each of the ten Federal regions. Ve have provided these cost 

estimates for three levels -- 0.7, O.S, and 0.9 pounds sulfur dioxide per 

million Btu for bituminous and subbituminous coals. 

These cost estimates are our assessment of the additional costs that will 

be incurred to supply very low sulfur coals to industrial consumers compared 

to 1.2 pound coals. As we discussed, these estimates refer only to the cost 

to supply these coals, not the market price that may be charged by producers 

for very low sulfur coal. At a minimum, the price of very low suifur coal 

will be the market price for low sulfur (1.2 pound) coal plus these 

incremental costs. To represent this potential level, the cost increment in 

Table 1 could be added to the low sulfur prices ICF has already provided to 

EPA. 

Table 2 provides the adjustment factors to convert the industrial prices 

EPA has already received to utility prices. Please use these factors with 

caution. They are approximate adjustments only to indicate the basic 

differential between industrial and utility prices into Illinois and Colorado, 

but should be sufficient for your purposes at this time. 

Please feel free to call me at (202) 862-1100 if you have any questions. 

cc: Michael Shelby, EPA 

David White, Radian 

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TABLE 1 

INCREMENTAL COSTS TO SUPPLY VERY LOW SULFUR COALS a/ 

" (January 1986 dollars per MMBtu) 

EPA 

Region 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

0.9 Pounds 

Bituminous 

0.16 

0.18 

0.18 

0.27 

0.19 

0.15 

0.01 

0.00 

0.00 

0.00 

S02/MMBtu 

Subbituminous 

N.A. 

N.A. 

N.A. 

N.A. 

0.00 

0.00 

0.00 

0.00 

0.34 

0.00 

0.8 Pounds 

Bituminous S 

0.16/0.54 b/ 

0.18/0.80 b/ 

0.18/0.79 b/ 

0.27/0.49 b/ 

0.19 

0.15 

0.01 

0.00 

'0.00 

0.00 

S02/MMBtu 

ubbituminous 

N.A. 

N.A. 

N.A. 

N.A. 

0.00 

0.00 

0.00 

0.00 

0.34 

0.00 

0.7 Pounds 

Bituminous 

0.75 

1.01 

1.00 

0.97 

0.40 

0.2S 

0.22 

0.13 

0.21 

0.21 

S02/MMBtu 

Subbituminous 

N.A. 

N.A. 

N.A. 

N.A. 

0. 14 

0.14 

0.14 

0.14 

0.48 

0.14. 

a/ These incremental costs apply only to coals supplied by U.S. producers in the 

lower 48 states. The potential competitiveness of imported coals has not been included 

in these cost estimates. 

b/ Two cost estimates are provided. The lower cost estimate refers to Central 

Appalachian coals; the higher cost estimates refer to Western coals in Regions 1-3 and 

Alabama coal in Region 4. Both estimates are provided because the ability of Central 

Appalachian producers to supply 0.8 pound coals is very limited. 

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TABLE 2 

ADJUSTMENTS TO INDUSTRIAL PRICES 

TO ESTIMATE ELECTRIC UTILITY PRICES 

Region Coal Type Adjustment Factor 

5 Bituminous Low Sulfur 0.72 

Bituminous Low-Medium Sulfur 0.77 

Bituminous Medium Sulfur 0.78 

Bituminous High-Medium Sulfur 0.79 

Bituminous High Sulfur 0.77 

H Bituminous Very High Sulfur 0.76 

Subbituminous Low Sulfur 0.60 

Subbituminous Low-Medium Sulfur 0.60 

Subbituminous Medium Sulfur 0.60 

Bituminous Low Sulfur 0.71 

Bituminous Low-Medium Sulfur 0.71 

Bituminous Medium Sulfur 0.74 

Bituminous High-Medium Sulfur 0.73 

Bituminous High Sulfur 0.72 

H Bituminous Very High Sulfur 0.72 

V Subbituminous Low Sulfur 0.65' 

^ Subbituminous Low-Medium Sulfur 0.64 

t- Subbituminous Medium Sulfur 0.66' 

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