Summary of Teleconference with EnerNOC Regarding the Stationary Existing RICE NESHAP March 30, 2010 Attendees Peter Tsirigotis, EPA Ken Schisler, EnerNOC Bob Wayland, EPA Rick Counihan, EnerNOC Melanie King, EPA Michael Horowitz, EPA Jenny Craig, EPA Don DiCristofaro, Blue Sky Environmental David Friedland, Beveridge & Diamond Summary of Meeting EnerNOC requested this teleconference with EPA to discuss the final NESHAP for existing stationary compression ignition engine s. A copy of a pres entation and supporting documentation proved by EnerNOC is included as Attachment 1. The focus of the teleconference was on engines used in demand response programs. EnerNOC provided information on the ISO/RTO tariff requirements for the hours of operation in emergency demand response and recommended that EPA allow up to 60 hours for demand response operation in order to allow engines to participate in the emergency demand response programs.Attachment 1

## NESHAPS Emergency Demand Response

Ken Schisler, Rick Counihan, Don DiCristofaro March 30, 2010

# Agenda

• EPA Appropriately Included Emergency Demand Response (DR) Programs in RICE NESHAPS, Subpart ZZZZ • Problem Statement: 15 Hour Limit Will Prevent Engines From Participating in Emergency DR • Minimum Required Availability by ISO Tariffs for Participation in Emergency DR Programs • Emergency DR Program Tariffs

– PJM

– ERCOT

– ISO New England • How Can EPA Be Assured of Limited Emergency DR Use? • EPA Justification for 15 Hour Limit • EPA Misinterpretation of DRSP Comments • Greenhouse Gases Regulations’ Definition of Emergency Generator • Our Recommendation Regarding an Hour per Year Limit for Emergency DR 2

# EPA Appropriately Included Emergency Demand Response (DR) Programs in RICE NESHAPS, Subpart ZZZZ We applaud the EPA for listening to EnerNOC’s concerns and including a definition of emergency demand response in the NESHAPS final regulation: “... owners and operators may operate the emergency engine for a maximum of 15 hours per year as part of a demand response program if the regional transmission organization or equivalent balancing authority and transmission operator has determine there are emergency conditions that could lead to a potential electrical blackout, such as unusually low frequency, equipment overload, capacity or energy deficiency, or unacceptable voltage level” 40 CFR 63.6640(f)(4)

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# Problem Statement: 15 Hour Limit Will Prevent 

# Engines From Participating in Emergency DR

• Emergency engines will be prevented from participating in emergency demand response programs since they will not be able to meet tariff requirements that specify minimum hours of availability to participate . • Engines then would have to be treated as non - emergency engines in the NESHAPS in order to meet the > 15 hour tariff requirements • Many sites will drop out of the program due to the non - emergency NESHAPS requirements rather than fund upgrades .

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# Required Availability By ISO Tariffs for Participation in Emergency DR Programs

• PJM: 60 hours per year • ERCOT: 24 hours per year • ISO - NE: No hour limit

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# Emergency DR Program Tariffs - Overview
• PJM Emergency Load Response Program (ELRP)

– Program timeframe: June 1 – September 30, non - holiday weekdays

– Program duration: Up to 6 hours per event, required to perform in first 10 events called by PJM (60 hours per year)

– Called just prior to brownout • Texas Emergency Interruptible Load Service (EILS)

– Program timeframe: January 1 – December 31, 24/7

– Program duration: Maximum 6 dispatches and 24 hours per year

– Called just prior to brownout, next action is forced load shedding • ISO New England Operating Procedure (OP) 4, Action 12

– Program timeframe: January 1 – December 31, business days (excluding national holidays) between 7 am and 7 pm

– Program duration: No hourly limits, no maximum hours per year

– Called coincident with initial brownout 6

# PJM Emergency DR

• Dispatched after Maximum Emergency Generation
• Maximum Emergency Generation is beyond the normal limits of operation for a power plant
• System is designed to avoid running at Maximum Emergency Generation because of serious risk of damage to power plants
• After Maximum Emergency Generation, there is literally nothing left to prevent brownouts/blackouts except Emergency Demand Response
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# PJM Emergency DR Tariff

• Emergency generators cannot make the required representation in the tariff if there is a 15 hour per year limit because pursuant to PJM Reliability Assurance Agreement (Rate Schedule FERC No. 44, Sheet 33 ):

- Performance is required for up to 10 dispatches.

- Up to 6 hours per event . Emergency generators can no longer meet the 60 hour limit under final rule. 8

# PJM Emergency DR Tariff (Continued)

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# ERCOT EILS Tariff 6.5.12 (15) An EILS Resource shall be subject to a maximum of two (2) Dispatch Instructions per EILS Contract Period. Additionally, an EILS Resource shall be subject to a maximum of eight (8) hours of Dispatch Instructions per EILS Contract Period, unless an EILS deployment is still in effect when the eighth hour lapses (in which case the EILS Resource must follow the Dispatch Instruction until ERCOT releases the EILS Resource).

Source: ERCOT Protocols Section 6: Ancillary Services Maximum 6 dispatches; 8 hours of dispatch; 3 contract periods per year; and 24 hours per year Emergency generators can no longer meet this requirement under final rule. 10

# ISO - NE Emergency DR

• Generators participating as Emergency DR are called coincident with 5% voltage reduction (brownout) – Action 12
• Emergency DR called only after all other available generation resources are exhausted – Actions 10 and 11
• After Action 12, the next steps are: Further voltage reduction (brownout) Request all non - contracted customer generation and curtailments Radio & TV Power Warning appeals to reduce load Alert Governors to reinforce Power Warning appeals to reduce load Involuntary load shedding (blackout) 11

# ISO New England Emergency Generation Tariff From ISO Operating Procedure 4: ACTION 12 ...Implement a voltage reduction of five percent (5%) of normal operating voltage requiring more than 10 minutes to implement. Interrupt Real -Time Demand Response – 30 Minutes or Less Notification (that requires a voltage reduction to be implemented). From ISO NEW ENGLAND INC. TRANSMISSION, MARKETS AND SERVICES TARIFF FERC ELECTRIC TARIFF NO. 3, effective Feb 1, 2005: Real - Time Emergency Generation Resource is Distributed Generation whose Federal, State and/or local air quality permits limit operation in response to requests from the ISO to the times when the ISO implements voltage reductions of five percent of normal operating voltage that require more than 10 minutes to implement. A Real - Time Emergency Generation Resource must be capable of: ( i ) curtailing its end - use electric consumption from the New England grid within 30 minutes of receiving a Dispatch Instruction; and (ii) continuing that curtailment until receiving a Dispatch Instruction to restore consumption Real - Time Emergency Generation Event Hours means those hours, or portions thereof, between 7 a.m. and 7 p.m. Monday through Friday, non - Demand Response Holidays in which the ISO dispatches Real - Time Emergency Generation Resources to curtail electric consumption.... Emergency generators can no longer meet this requirement under final rule. 12

# How Can EPA Be Assured of Limited Emergency DR Use?
• The main defense against unrestricted use of generators in emergency demand response programs is the strict NERC/ISO tariffs/rules that these programs can only be triggered in response to very serious emergency conditions. • As a result, historical data indicates these programs are rarely called upon. • But given the tariff requirements discussed earlier, we request that EPA change the 15 hour limit to 60 hours to maintain a bottom line backstop, while still affording system operators flexibility to respond to rare extended emergencies.

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# EPA Justification for 15 Hour Limit

“As discussed in the response to comment 6.1.1, EPA believes that it would be appropriate to allow engines to retain their status as emergency engines under subpart ZZZZ if they operate as part of demand response programs for 15 hours of operation per year or less in situations where grid failure and a blackout are imminent. The commenter’s information indicates that no engine has needed more than 15 hours of operation per year to meet their requirements under their demand response programs. This alleviates the concerns expressed by the commenter. ” [emphasis added] (Responses to Comments Section 13.5.2, at page 309) Nothing in Commenter 85 ’s letter (DRSP Coalition) supports the EPA justification. Commenter 85 ’s letter stated that emergency demand response was dispatched in New York between 0 and 40 hours per year over an 8 year history to address system emergencies, with an average of 16 hours/per year . 14

# EPA Misinterpretation of DRSP Comments

• EPA misinterpreted the comments in support of a 15 hour limit. • DRSP did not endorse a 15 hour limit. • The data presented by the DRSP Coalition shows that a 15 hour limit would have been exceeded by the number of hours the program was called in five of the eight years the program has been in existence. • CPower Inc. concurs that their comments were misinterpreted (see Binder, end of Tab 8): “While we are pleased that the EPA in its final rule has recognized the importance of allowing emergency engines to operate in demand response programs, we believe the EPA unfortunately has improperly interpreted our comments as described in Reference 2, and are using this interpretation as justification of the 15 - hour limit in the Final Rule.” “We submit that nothing in the Reference 1 DRSP Coalition comments supports the EPA justification for the 15 hour cap. DRSP did not, and does not now, endorse a 15 hour limit.”

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# Greenhouse Gases Regulations’ Definition of 

# Emergency Generator An emergency generator operates only during emergency situations, for training of personnel under simulated emergency conditions, as part of emergency demand response procedures, or for standard performance testing procedures as required by law or by the generator manufacturer. A generator that serves as a back - up power source under conditions of load shedding, peak shaving, power interruptions pursuant to an interruptible power service agreement, or scheduled facility maintenance shall not be considered an emergency generator. Source: 40 CFR 98.6

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# Our Recommendation Regarding an Hour Per 

# Year Limit for Emergency DR

• Maximum 60 hour limit for emergency demand response

• 60 hour limit will meet PJM and ERCOT tariff requirements on availability

• We believe 60 hour limit will allow us to maintain eligibility in ISO NE

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### Don DiCristofaro 101 Federal Street Suite 1100 

### Boston, MA 02110 Tel: 617.834.8408 Email: ddicristofaro@enernoc.com

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