### MEMORANDUM

TO: Steam Electric Rulemaking Record

FROM: Elizabeth Gentile, ERG

DATE: September 30, 2015

SUBJECT: Bottom Ash Complete Recycle – Estimated Cost for Plants with Remote Mechanical Drag Systems to Implement Complete Recycle of Bottom Ash Transport Water

ERG is providing technical support to the U.S. Environmental Protection Agency’s Office of Water, Engineering and Analysis Division for deve lopment of effluent limitations guidelines and standards (ELGs) for the Steam Electric Power Generating Industry.

As described in EPA’s Incremental Costs and Pollutant Removals for the Final Effluent Limitations Guidelines and Standards for th e Steam Electric Power Generating Point Source Category Report (Cost and Loads Report, DC N SE05831/SE05832), EPA calculated plantspecific incremental compliance cost estimates a ssociated with zero discharge of bottom ash transport water. For those plants that announced plans to convert to dry handling bottom ash systems in the Questionnaire for the Steam Electric Power Generating Effluent Guidelines (“Steam Electric Survey;” DCN SE05903) or in separate company announcements 1 , EPA estimated that the plants would not incur cost s to comply with an ELG requirement for zero discharge of pollutants in bottom ash transpor t water. Although the a ssumption that plants announcing planned conversions of their bottom ash systems is reasonable, EPA nonetheless evaluated what additional costs may be incurred if the plants were to actually convert their bottom ash handling system to a remote mechanical drag system remote MD S that discharges to surface water, or similar system that results in a discharge to surface water. Thus, this memorandum presents information on the estimated cost to implement complete recycle of bottom ash transport water for plants that operate or plan to install remote MDS systems that are not known to already be closed-loop systems.

EPA identified plants that have announced plan s to convert their botto m ash handling systems, independent of any new ELG requirements, using two key sources of information.

1. EPA’s Steam Electric Survey performed a census of all coal-fired plants in the U.S. As part of the survey, EPA asked each plant the following question (Question C3-19): “If the current bottom ash handling operations for the steam electric generating unit are expected to significantly change by December 31, 2020, indicate how (i.e., convert to or add dry handling capability). [Ch eck all boxes that apply.]” For those plants responding that they intend to “End use of wet bottom ash handling system,” EPA estimated that the

1 See “Changes to Industry Profile for Steam Electric Gene rating Units for the Steam Electric Effluent Guidelines Final Rule” (“Industry Profile Changes memorandum;” DCN SE05069)Memorandum September 30, 2015 Page 2

affected generating units would not incur costs for the ELG. This is a reasonable approach because the response specifically stat es that the plant w ill end the use of the wet bottom ash handling system and, as a result, in the ab sence of a wet ash handling system the plant will not generate botto m ash transport water. These bottom ash

conversions identified in the Steam Elect ric Survey were incorporated into the compliance cost estimates published for proposal (78 FR 34432).

2. EPA also has information that identifies plants for which power companies have announced that they plan to convert the bot tom ash handling practices (see the Industry Profile Changes memorandum).EPA’s complia nce cost estimates for the ELGs assume that the plants will install an under-boiler MDS (or other under-boiler modification that eliminates generation of bottom ash transport water) or a remote MDS. Regardless of the specific bottom ash handling system modifi cation that would be employed at these plants, EPA estimated that the plants would not incur costs to meet the zero discharge requirement.

As noted above, EPA expects that the plants iden tified as bottom ash hand ling conversions in the Industry Profile Changes memorandum would incu r zero incremental compliance costs for the ELG bottom ash requirements. However, EPA does not have data on the sp ecific type of bottom ash handling conversion planned for the plant an d it is possible that some conversions may include a remote MDS that is designed to discharge to surface water, rather than completely recycle all bottom ash transport water in a closed -loop process. If configured to discharge, the remote MDS would likely include additional TSS removal capability to meet the current BPT limits for TSS, and may accomplish this TSS removal using a clarifier.

Because closed-loop remote MDSs have been installe d at plants in recent years, and some plants have replaced their wet handling system with MD S or completely dry under-boiler systems that do not generate transport water, EPA believes fe w plants with planned bottom ash conversions would actually incur costs for the ELG. EPA nonethe less evaluated what it would cost plants to install and operate equipment to ensure comple te recycle of the bottom ash transport water. Based on vendor discussions, EPA determined that for a converted system that is designed to discharge the transport water, su ch as a remote MDS and clarif ier configuration, the equipment needed to implement complete recycle would include a surge tank, return water pumps, and carbon steel piping. Consistent with EPA’s cost methodology, EPA also determined that the additional equipment may need to include a chem ical addition system, as described in Section 8.2.4.3 of the Costs and Loads Report. Therefor e, EPA estimated a potential incremental compliance cost associated with installing and op erating this additional e quipment. A description of EPA’s methodology and compliance cost estimates associated w ith these specific generating units is provided below.

1.0 P OPULATION OF P LANTS WITH A NNOUNCED B OTTOM A SH H ANDLING C ONVERSIONS

Based on the data in the Industry Profile Ch anges memorandum, EPA identified 39 generating units (corresponding to 10 plants) identified as bottom ash handling convers ions after taking into account the implementation of the Disposal of Co al Combustion Residuals from Electric Utilities (CCR) rule and removing generating units at or below the 50 MW threshold. Table 1 lists the steam electric power plants and the number of ge nerating units identified as bottom ash handling conversions in the Industry Profile Changes memorandum.Memorandum September 30, 2015 Page 3

Table 1. Steam Electric Power Plants with Announced Bottom Ash Handling

Conversions

Steam Electric Survey

Plant ID Plant Name Total Number of Converting Units

16 Paradise 1

265 Kingston 9 a

3597 Marshall Steam Station 4

5065 Allen Steam Plant 3

5570 Asheville Steam Electric Plant 2

6257 Widows Creek 1

6279 Gallatin 4

6329 Cumberland 2

6602 Shawnee 9 a

9391 Roxboro Steam Plant 4 a – EPA estimated compliance cost s, described in Section 2.0, associated with these plants based on the number of bottom ash transport water lines at the plant, not th e total number of generati ng units (DCN SE05969).

Of these 39 units, EPA identified 30 generating units (corresponding to eight plants) identified as bottom ash handling conversions after taking in to account the implementation of the CCR rule, the Clean Power Plan (CPP), and removing genera ting units at or below the 50 MW threshold. Table 2 lists the steam electric power plants a nd the number of generating units identified as bottom ash handling conversions in the Industr y Profile Changes memorandum, accounting for the implementation of the CPP.

Table 2. Steam Electric Power Plants with Announced Bottom Ash Handling Conversions, Accounting for CPP

Steam Electric Survey

Plant ID Plant Name Total Number of Converting Units

16 Paradise 1

265 Kingston 9 a

3597 Marshall Steam Station 3

5065 Allen Steam Plant 3

5570 Asheville Steam Electric Plant 2

6329 Cumberland 2

6602 Shawnee 9 a

9391 Roxboro Steam Plant 1
a – EPA estimated compliance cost s, described in Section 2.0, associated with these plants based on the number of bottom ash transport water lines at the plant, not th e total number of generati ng units (DCN SE05969).Memorandum September 30, 2015 Page 4

2.0 M ETHODOLOGY FOR E STIMATING C OSTS

EPA estimated the potential incremental complian ce costs associated with bottom ash handling generating units identified as conversions by estimating the capital and operation and maintenance (O&M) costs associated with additio nal surge tank capacity, water return pumps, and carbon steel piping. This equipmen t is required to ensure complete recycle at plants that may not have originally designed bottom ash remote MDS conversions for complete recycle, but rather discharge to surface water.

Based on vendor data, EPA determined that the nu mber of remote MDS installations at a plant depends on bottom ash transport water flow rate (i n gallons per minute) a nd the total number of bottom ash transport water lines at the plant. If the number of bottom ash transport water lines at the plant is not available, the total number of generating units can be used for the estimate (assuming there is one bottom ash transport wate r line per generating unit). Table 3 presents a crosswalk for a general rule of thumb for estimating the required number of remote mechanical drag systems at a plant (DCN SE05970).

Table 3. Estimated Number of Remote MDS Installations for Number of Generating Units

Number of Generating Units Estimated Number of Remote MDS

Installations

1 1-2

2 2

3 2

4 2-3

5 3-4

>5 Dependent on Quantity of Bottom Ash Transport Lines

For each set of two remote MDS installations, EPA estimates th at one surge tank, one set of water return pumps, and carbon steel piping to return water to the boiler are required to completely recycle bottom ash transport water. EPA estimates that the total capital cost associated with this equipment is $7.5 milli on and that the total O&M cost is between $50,000 and $100,000 (in 2015 dollars) (DCN SE05970). The capit al and O&M costs associated with the chemical addition system were estimated usi ng the same methodology described in Sections 8.2.4.3 and 8.2.5.2 of the Cost and Loads Report, respectively. To estimate the size of chemical feed systems and chemical addition required, EP A used the plant-level normalized bottom ash

sluice flow. EPA assumed one chemical addition system would be installed for each set of two remote MDS installations and that they would ope rate 365 days per year. EPA also estimated the total indirect capital costs associ ated with this additional equipmen t using the indirect cost factor

described in Section 8.2.4.6 of the Cost and Loads Report.

Therefore, for every set of two remote MDS inst allations identified for the plant, based on the number of generating units pres ented in Table 1 and Table 2, EPA applied the capital and O&M

costs stated above. As a conserva tive approach, EPA estimated the total costs at plants identifiedMemorandum September 30, 2015 Page 5

as requiring three remote MDS installations by assuming two sets of the additional equipment

would be installed.

3.0 R ESULTS

Based on the population of plants presented in Section 1.0 and the methodology described in Section 2.0, EPA estimated the potential incremental complian ce costs for generating units flagged as bottom ash handling conversions. The estimated compliance costs, compared to the industry-level bottom ash and Regulatory Option D compliance cost estimates, are presented below in Table 4. Table 5 adjusts the resu lts shown in Table 4, taking into account implementation of the CPP.

Table 4. Bottom Ash Handling Conversion Compliance Cost Estimates Compared to the Estimated Total Industry Compliance Costs

Compliance Cost Capital Cost (2010$) O&M Cost (2010$)

Bottom Ash Conversions 124,000,000 1,170,000

Industry-Level Bottom Ash 3,460,000,000 203,000,000
Industry-Level Regulatory Option D 5,430,000,000 326,000,000

Table 5. Bottom Ash Handling Conversion Compliance Cost Estimates Compared to the Estimated Total Industry Compliance Costs, Accounting for CPP

Compliance Cost Capital Cost (2010$) O&M Cost (2010$)

Bottom Ash Conversions 76,200,000 717,000

Industry-Level Bottom Ash 2,520,000,000 133,000,000

Industry-Level Regulatory Option D 4,160,000,000 235,000,000

As shown in Table 4, the estimated capital co sts associated with the bottom ash handling conversion generating units are less than four per cent of the bottom ash industry capital costs and less than three percent of the Regulatory Option D capital co sts. Table 5, accounting for CPP, shows that the estimated capital costs associ ated with the bottom ash handling conversion generating units are less than four percent of the bottom ash indus try capital costs and less than two percent of the Regulatory Op tion D capital costs. Further, O&M costs are less than one percent of both the bottom ash and Regulator y Option D O&M costs. EPA does not expect generating units identified as bottom ash handlin g conversions to incur incremental compliance costs; however, if they do it would be a small per centage of the total industry costs and therefore would not change EPA’s determination th at the ELGs are economically achievable. Additionally, EPA expects that these are the ma ximum costs incurred and may be reduced by the elimination of the clarifier, which is required fo r discharge but not require d for complete recycle. For the plant-level cost estimates, see the calculation file for estimating costs associated with implementing complete recycle at plants w ith remote MDS installations (DCN SE05969).