August 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 1

Date August 8, 2012
To The Section 316(b) Existing Facilities Rule Record
From Erik Helm, U.S. Environmental Protection Agency Subject 316(b) Stated Preference (SP) Survey – Calculation of Age-one Equivalent (A1E)

Reductions and Percent of Fish Saved for the Pacific Survey Region

The primary purpose of this memorandum is to provide clarification of EPA’s calculation of the percent of fish saved under different regulatory options for the Pacific Stated Preference (SP) survey region. This memorandum expands upon preliminary data and analysis for the Pacific SP survey region presented in the, June 2012 EPA document entitled, “Survey Support Document, In Support of Section 316(b) Stated Preference Survey Notice of Data Availability” (DCN 11-4524) and the June 5, 2012 EPA memorandum to the 316(b) rulemaking record with the subject line, “316(b) Stated Preference (SP) Survey – Survey Methods and Model Results” (DCN 11-4525). On September 27, 2010, after the initial development of the SP survey questionnaires, the State of California announced a policy requiring impingement and entrainment (I&E) technology at coastal electric power plants. This policy announcement drew into question the baseline I&E losses values to be used in the Pacific region survey questionnaires. Arguments existed for both the inclusion and exclusion of the California coastal power plant losses in the baseline value to be presented to surveyed individuals. EPA made a decision to maintain the Pacific survey questionnaire as tested in focus groups and include the California coastal power plant losses in the baseline I&E mortality values. This decision has a direct impact on how the percent of fish saved is calculated for the assessment of benefits. The percent of fish saved, for potential regulatory options, is calculated by dividing the estimated reduction in A1E losses in the Pacific region by an estimate of baseline A1E losses in the Pacific region that includes California coastal power plants. Alternative calculations of percent of fish saved that do not include the A1Ebaseline losses at California coastal power plants would affectively inflate respondents’ willingness-topay (WTP) per fish and lead to overestimates of value for regulatory options analyzed in the Pacific region. This memorandum includes the following sections:
 Section 1 is a description of the Pacific SP survey benefits assessment region presented in NODA documents, which are different from the “California” benefits region used in the proposed rule supporting documents.
 Section 2 discusses the 316(b) SP survey development and the announcement of the California cooling water intake policy.
 Section 3 outlines the options for calculating baseline A1E reductions given the “California Policy.”
 Section 4 describes the calculation of the percent of fish saved for the Pacific SP survey region under the regulatory options presented in the proposed rule supporting documents.



### 1 The Pacific SP Survey RegionAugust 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 2

As noted in the supporting documents to the NODA, the SP survey regions differ from the seven benefits regions used in the Environmental and Economic Benefits Assessment (EEBA) proposed rule support document (USEPA 2011). 1 This redefinition of the benefits regions was precipitated by the survey sampling plan that uses state boundaries to stratify geographically U.S. households into four regions. The Pacific survey region, presented in the NODA documents, includes the states of California, Washington, Oregon, and Hawaii in their entirety. This Pacific survey region encompasses the coastal facilities that made up the “California” benefits region from the proposed rule analysis, which includes four facilities in Hawaii. Additionally, the Pacific survey region includes those non-coastal 316(b) facilities in California, Washington, and Oregon that would have previously been considered part of the Inland benefits region for the proposed rule analysis.



### 2 SP Survey Development and the Announcement of the California State Policy

EPA pre-tested the survey instrument extensively in six focus groups and a set of eight one-on-one cognitive interviews conducted from July 21, 2010 to September 23, 2010 (EPA ICR # 2090-0028). The current survey instrument pre-tested in the 2010 round of focus groups and cognitive interviews was built upon an earlier version initially developed as part of the 316(b) Phase III rulemaking. Twelve focus groups were conducted between 2004 and 2005 for the Phase III survey, the details of which are discussed in EPA ICR #2155.01. The Phase III survey was also peer reviewed in January 2006. EPA modified the survey several times based on the results of the pre-tests, to minimize potential biases, and to ensure shared and accurate interpretation of survey language among the respondents. The current survey incorporates both the results from all prior focus groups and cognitive interviews, and the recommendations received from the 2006 peer review panel. During the survey development process EPA estimated the baseline amount of impingement and entrainment (I&E) mortality for the Pacific region at approximately 384 million A1E. The California Office of Administrative Law approved the “Policy on the Use of Coastal and Estuarine Waters for Power Plant Cooling” on September 27, 2010 requiring that all coastal power plants reduce their intake flow to a level commensurate with closed-cycle cooling (other coastal manufacturing facilities in California are not included in the state policy). The California policy, being implemented before the final 316(b) rule, would affect the overall size of I&E reductions attributable to the national regulation. Because California is part of the Pacific SP survey region, this policy announcement raised the issue of what baseline I&E mortality A1E numbers should be presented to survey respondents in that region. Section three, below, outlines the two options for baseline A1E that could have been presented in the Pacific survey region questionnaires.



### 3 The Options for Calculating Baseline A1E in the Pacific SP Region

Given the announcement of the California coastal power plant policy, EPA was faced with a decision as to which of two baseline options should be presented in the Pacific regions survey questionnaire. Option

1 The seven benefits regions from the EEBA are California, Great Lakes, Inland, Mid-Atlantic, Gulf of Mexico, North Atlantic, and South Atlantic.August 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 3

1 was to leave the California coastal power plants in the baseline presented to potential respondents. Option 2 was to remove the California coastal power plants. Under Option 1, leaving the coastal plants in the baseline would minimize potential respondent confusion when presented with maps in the survey questionnaires that had no California coastal facilities. Maintaining the pre “California Policy” tested baseline would also mean that the Pacific region survey instrument would not have to be redesigned to give additional information about California versus Federal regulation of cooling water. This redesign work would have added additional cognitive complications to the Pacific survey and raised issues of valuing state versus federal regulation. Economic theory indicates that adding attributes to the choice questions to control for the state versus federal issue would not change the value of the other environmental attributes in the survey. However, EPA had found in early focus groups that people became confused when assessing programs that were implemented on both a regional and national scale in the same survey. The differing scope of state versus federal programs in a survey would likely produce the same cognitive problems in Pacific survey respondents. The larger baseline value that included the California coastal power plants would also mean that EPA’s WTP estimates for large reductions in A1E losses would be more robust. This would be most useful if EPA needed to develop benefits estimates for potential regulatory options that required stricter standards then the California policy. The advantages of Option 2 include more closely mirroring the potential reductions in I&E for regulatory options that are not as strict as the California policy on coastal power plants. Greater insight into the public’s value with regard to federal versus state regulation of cooling water intakes might have been obtained had the survey been redesigned. Given the advantages and disadvantages of the two options for presenting the baseline in the Pacific survey booklets, the Agency determined that the baseline should still include California coastal electric generating facilities. The primary factor driving this decision is the Agency’s concerns about the cognitive burden to respondents. Individuals taking the survey in the Pacific region were already faced with a lengthy survey booklet and complicated choices.



### 4 Calculation of Percent of Fish Saved in the Pacific SP Region

EPA’s decision to maintain the baseline that included the California coastal power plants has ramifications when determining how to calculate the percent fish saved in the Pacific region for potential regulatory options. EPA calculates percent fish saved by dividing the estimated reduction in A1E losses under a regulatory option by an estimate of baseline A1E losses. EPA has updated its estimate of the Pacific survey region’s total baseline A1E losses that now stands at 385.99 million. This total estimate of baseline loses for the Pacific region is made up of; 36.83 million A1E, representing losses at coastal Washington and Hawaii facilities as well as coastal manufacturing in California; 1.95 million A1E at inland California, Oregon, and Washington facilities: and 347.20 million A1E, representing coastal Californian electric power plants covered by the state policy. The 385.99 million A1E number is the correct value to use as the denominator in the calculation of the percent change in the fish saved attribute for the Pacific region because it includes the I&E at coastal California facilities and is consistent with how the baseline was presented in the survey questionnaires. For the stated preference survey NODA, reductions in the A1E losses under regulatory options in the Pacific survey region was based on only those facilities considered in scope for the proposed rule analysis. They exclude coastal generators in California that are subject to California’s policy, which EPA deemed to be at least as stringent as the options presented in the EEBA. EPA calculated the I&EAugust 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 4

reductions based on the proposed rule regulatory options analysis for the Pacific survey region that includes state wide values for California (excluding coastal power plants), Oregon, Washington, and Hawaii, and divided those values by the total baseline A1E losses for the Pacific region when calculating its preliminary estimates of percent fish saved.2 The resulting percent fish saved under this approach ranges from about 0.5% under Option 4 to 9.0% under Option 3 for the Pacific region. Refer to Exhibit II-11 of the Survey Support Document for the full results. These percent reduction figures are the correct values to be used for option assessment in the Pacific region. Survey respondents expressed their values for a reduction in both the percent of fish saved and the absolute number of fish saved, both numbers being presented as equivalent in the choice questions of the survey booklets. Excluding the California coastal power plants from the calculation of baseline losses the percent reductions for the Pacific region would range from 4.46 to 89.59 percent across the proposal options. If these higher percent reduction values were used in the calculation of benefits, this would be equivalent to inflating the per fish value expressed by respondents in the region. This inflation of per fish willingness to pay would result in an overestimate of the benefits of regulatory options in the Pacific SP region. Therefore, the appropriate percent reduction numbers are those including the California coastal plants in the calculation of baseline I&E for the region.



### 2 References

U.S. Environmental Protection Agency (USEPA). 2011. Environmental and Economic Benefits Analysis for the Proposed Section 316(b) Existing Facilities Rule. Office of Science and Technology, Engineering and Analysis Division. EPA 821-R-11-002. March 28. U.S. Environmental Protection Agency (USEPA). 2012. Survey Support Document, In Support of Section 316(b) Stated Preference Survey Notice of Data Availability. Office of Science and Technology, Engineering and Analysis Division. DCN 11-4524, June.

2 The total baseline losses of 385.99 million A1E for the Pacific region presented in Exhibit II-11 of the Survey Support Document includes all coastal and inland facilities in the states of California, Washington, and Oregon, as well as, facilities in Hawaii.