INTERNAL DRAFT DELIBERATIVE: DO NOT CITE, QUOTE, or DISTRIBUTE 

### MEMORANDUM

TO: Steam Electric Rulemaking Record

FROM: Danielle Lewis, ERG

DATE: September 30, 2015

SUBJECT: Transportation and Disposal Costs for Plants Operating Storage Impoundments for the Treatment of Fly Ash and Bottom Ash Transport

Water

ERG is providing technical support to the U.S. Environmental Protection Agency’s Office of Water, Engineering and Analysis Division (EAD) for development of effluent limitations guidelines and standards (ELGs) fo r the Steam Electric Power Generating Industry. As part of this tec hnical support, EPA, with support from ERG, estimated plant-specific compliance costs associated with installing and operating the various technologies and practices that make up the regulatory options consider ed by EPA to revise the existing ELGs. EPA estimated compliance costs several different ways to evaluate the effect of the final ELGs on the steam electric industry. EPA considered other rulemakings affecting the steam electric industry in its analysis. The three different costing ap proaches used to estimate compliance costs are

listed below:

 Approach 1 - EPA evaluated compliance cost s taking into account changes that plants may make to implement the coal combustion residuals (CCR) rule (but not the Clean Power Plan (CPP)).

 Approach 2 - EPA evaluated compliance costs taking into account changes that plants may make to implement both the CCR rule and the CPP. 1

 Approach 3 - EPA evaluated compliance costs taking into account no changes from either the CCR rule or CPP. This approach represen ts what the ELG costs would be if there were no changes to plant operations due to the CCR rule or CPP (in other words, what the ELG compliance costs would be if the CCR rule and CPP had not been promulgated).

The methodologies used to estimate costs for each of the three approaches are discussed in the Incremental Costs and Pollutant Removals for the Final Effluent Limitations Guidelines and Standards for the Steam Electric Powe r Generating Point Source Category (DCN SE05831 and SE05832). The report also includes detailed plant- level compliance cost es timates for the three different approaches in the appendices of the report (DCN SE05831.A1 and SE05831.A2).

1 At the time it conducted th ese analyses, the CPP had not yet been fina lized, and thus EPA used the proposed CPP for its analyses.Memorandum September 30, 2015 Page 2

As part of the compliance cost estimat es, EPA calculates costs associated with transporting and disposing of any additional combustion residuals (i.e., fly ash, bottom ash, and FGD wastewater treatment solids) resu lting from compliance with the ELGs. 2 EPA’s methodology includes costs for each plant to tr ansport and dispose of these additional

combustion residuals in either an on-site or o ff-site landfill based on wh ether or not the plant currently operates a landfill containing combustion residuals. 3 Under EPA’s Approach 3 for estimating compliance costs (i.e., costs not acco unting for the CCR rule and CPP), transportation and disposal costs were include d for all plants based on the to tal amount of incremental waste (e.g., treatment solids, ash converted from wet to dry handling) generated at each plant. 4 Upon reviewing comments on the proposed rule re garding EPA’s cost methodology for compliance with a zero discharge requirement for ash transport water, EPA determined that it is not necessary (nor appropriate ) to include transportation and dispos al costs for those plants that send fly ash or bottom ash to a storage impoundment 5 , and that do not report disposing of fly ash or bottom ash in an impoundment. Because these pl ants use their impoundments only for temporary storage of the ash, and thus are already regularly dredging and ha uling the solids to other final disposal (e.g., a landfill, beneficial use), there should be no tran sport or disposal cost attributed to the ELG even if the ELG requirements lead the plant to convert to a dry ash system. Nevertheless, these transport and di sposal costs were retained in the cost estimates for Approach 3 as an upper bound of the potential co st to comply w ith the ELGs.

EPA’s methodology for estimating transportatio n and disposal costs for Approach 1 and Approach 2 take into account that plants usi ng storage impoundments are already periodically hauling the solids to a landfill (or beneficial use) . For these approaches, EPA reviewed the U.S. Energy Information Administration (EIA) data th at EPA used for the CCR rule to identify the plants operating only storage impoundments under the CCR rule. For these plants, EPA evaluated whether fly ash and/or bottom ash were reported as “disposed” in the EIA data. Where plants reported to EIA that they are disposing of those CCR mate rials in places other than the impoundments (e.g., landfill, beneficial reuse) , EPA determined that there would be no incremental change to the transportation and disp osal costs for these plants after conversion to dry handling operations. For example, if a plant’ s current operation consists of wet sluicing fly ash to an impoundment, dredging the solids on an a nnual basis, and disposing of the solids in an off-site landfill, EPA assumed that there would be no increase in the costs for that

2 Although compliance with the ELGs may result in generati ng solids associated with the wastewater treatment processes, such as from the chemical precipitation stag e of the FGD wastewater treatment system, the ELGs would not result in generating additional fly ash or bottom ash so lids. Compliance with the ELGs, however, could result in plants disposing of fly ash or bottom in a landfill instead of an impoundment (e.g., due to wet-to-dry conversion of the ash handling system), and EPA’s ELG analyses included costs for such transport and landfill disposal, where appropriate.

3 As described in the Incremental Costs and Pollutant Removals for the Final Effluent Limitations Guidelines and Standards for the Steam Electric Powe r Generating Point Source Category (DCN SE05904), plants with existing on-site landfills already containing combustion residuals we re costed to transport and dispose of additional solids in an on-site landfill while all other plants were costed to transport and dispose of add itional solids in an off-site

landfill.

4 EPA determined that some plants incurring fly ash compliance costs did not have any incremental fly ash generated at the plant as a result of the ELG. These plants incurred capital costs associated with backup or redundant equipment only or only incurred comp liance costs associated with expandin g the capacity of specific system elements (e.g., conveyance, silo) based on in formation provided in the Steam Electric Survey.

5 A storage impoundment is generally defined as an impoundment that is periodically dredged and has its CCR disposed elsewhere such that it can continue operating indefinitely.Memorandum September 30, 2015 Page 3

transportation/disposal compared to trucking the dry fly ash to the same off-site landfill after the plant converts to a dry fly ash handling system to comply with the final ELG. 6 As such, EPA included no incremental costs for transportation or disposal attributable to the ELG for these plants.

As noted above, by unnecessarily including transportation/dispos al costs for plants that do not dispose of ash in an impoundment, A pproach 3 provides an upper bound estimate of potential costs for the ELG, especially because this approach does not take into account the effects of implementing the CCR rule and CPP. EP A also evaluated how the total industry costs under Approach 3 would be affect ed if the transporta tion and disposal costs for those plants operating only storage impoundments were removed (zeroed out). Based on a review of the EIA data, EPA identified 10 plants operating fly as h storage impoundments and 72 plants operating bottom ash storage impoundments affected by th is methodology change. Table 1 summarizes the changes to total industry fly as h conversion costs and bottom ash conversion costs by removing all transportation and disposal costs for these plants.

Table 1. Approximate Change in Compliance Cost Estimates Under Approach 3 for Fly Ash Transport Water and Bottom Ash Transport Water Without CCR and CPP Adjusting for Transport and Disposal Costs

Wastestream Number of

Plants Affected Approximate Change in Cost (Estimated Reduction in Costs) Capital Costs O&M Costs Fly Ash Transport Water 10 4.60% 22.7% Bottom Ash Transport Water 72 1.88% 26.3%

TOTAL 74 a 2.13% 25.5%
Note: Percent change shown represents how costs estimated using Approach 3 (i.e., not taking into account the CCR rule or CPP) without transportation and disposal costs for storage impoundm ents compare to the costs estimated using Approach 3 with transportation and disposal costs for storage impoundments. a – The number of plants is not add itive as one plant may operate both a fly ash storage impoundment and a bottom ash storage impoundment.

6 In fact, these plants would be more likely to realize a cost savings since th ey would no longer have to dredge the ash from surface impoundments.