August 24, 2011 

MEMORANDUM 

From: William H. Maxwell 

EPA/SPPD/ESG (D243-01) 

To: Docket Number EPA-HQ-OAR-2009-0234 

Subject: Meeting with PJM 

Attendees: 

Sam Napolitano, EPA/OAR/OAP/CAMD 

Jeb Stenhouse, EPA/OAR/OAP/CAMD 

Misha Adamantiades, EPA/OAR/OAP/CAMD 

Robert J. Wayland, EPA/OAR/OAQPS/SPPD 

Bill Maxwell, EPA/OAR/OAQPS/SPPD 

Craig Glazera, PJM 

Gary helm PJM 

Paul Setkiewicz, PJM 

Jennifer Tribulski, PJM 

Discussion: 

A general discussion of the comments submitted by PJM on the proposed Mercury and Air 

Toxics Standards was held along with the attached. 
,Ð

EPA's

Briefing to EPA Staff:

PJM Comments

0n

Hazardous Ai r Pollutants

(NESHAP)

Rule

August 24,2011

PJN4(ì20i 1
Overview of Comments

o PJM's Comments:

Explain PJM's reliability role and provide overview of

reliability concepts

Focus on Proposed Rule's findings relating to impact

on reliability

Propose a "safety valve" for compliance timeframe

o Two-year notification to allow time for analysis
Planning for Reliability of System

o PJM responsible for reliability of the

transmission grid serving 13 states and the

District of Columbia.

Transmission planning is key to ensuring shortand long-term reliability of transmission system

in response to generation retirements.

o PJM stakeholders reviewing changes to

planning process.

One key driver is "al risk" generation
PJM Proposal Overview

EPA Proposed Rule:

Comply in 3 years; possible 1 year extension

PJM proposed extension of compliance

timeframe where:

Advance notice of retirement

Unit is a "Reliability Critical Unit"

Lead time needed for reinforcements

o Broad support among affected RTOs

PJM(Ò2011
PJM Proposal: Advance Notice

Key to getting extension is advance notice of

retirement

2 years prior to compliance deadline

Reliability analysis to determine need for

reinforcements

Ensures generators do not take advantage of

extension at the last minute
PJM Proposal: Reliability Critical Unit

"Reliab¡lity Critical Units" are those generating

units whose retirement/deactivation would result

in violations of applicable reliability criteria

unless appropr¡ate transmission or resource

reinforcements are forthcoming.

o Unit-specific determination

o Analysis conducted upon unit

retirement

providing notice of
PJM Proposal: Reinforcements

Necessary transmission reinforcements an dlor

replacement resources could to take more than

3 years to be in service

Benning & Buzzard (-5 yrs)

Eddystone & Cromby (- 3 yrs)

TrAIL Line (- 5 yrs)

Susquehanna-Roseland (-G yrs)

www.plm com PJMO201 1
PJM Proposal Targeted

o Extension only on case-by-case basis

o Safe harbor - extensions beyond 1 year

established under pro forma Consent Decree
Observations About F¡ndings in the Proposed Rule

EPA's findings in its Notice of Proposed

Rulemaking:

focus on resource adequacy

acknowledged no analysis of local reliability impacts

understate the level of expected generation

retirements (just over 1,000 MW in PJM)

PJMO201 1
Empirical Evidence: What is Happening?

o Public announcements 7,000 MW

o 201 411 5 capacity (RPM) auction results

approximately 7,000 MW less capacity than prior

year

www,plm com
Coal-Fired Generation: Smaller, Older Units Challenged

Over 40 Years Old, Under 400 MW Capacity

Total

No SO, Control

No Baghouse

No SO, Control & No Baghouse

No SCR

No SO, Control & No SCR

22,907

17,397

20,104

16,775

18,762

14,541
,Ð Coal-Fired Generation At Risk

MW of lnstalled Capacity with Revenue Requirements vs. Net CONE in

PJM with a 20 Year Recovery of Retrofit Costs

€

õ(J

(u

=€

=0

E

60,000.00

40,oo0.o0

30.000.00

RTO LDA Ner CONE lrC,Spt = s¡ZO.A+/N'tW-day

MAAC frrer COhrE (rcAp) = 5226.?9iuW-day

10,oo0.00

10,000.00

NF O 5-1 ll Nêì ':ô\F rì- 1 q Nnt al-f Ntr > 1-5 N¿.Ì CONF

r 20 Yr Hich Gas 59,28C'.10 2,817.10 809_00 É45.û0

ss 2O Yr All G¡s Oi-1O 51,260.1 0 7,952,0O 3,442.04 897.10

x 20 Yr Loln¡ G.r ¡8.6¿5 _10 13,855.O0 6,3DD.OO 4,75r.L3

PJlv1o201 1
Observations

o Resource adequacy not a near-term concern.

o System security - especially local reliability -

more likely to be impacted.

PJMO201 1
Key Takeaways

ln face of this uncertainty, need narrowly tailored

flexibility to allow more time to comply when

needed.

o PJM's proposal does just that:

Advance notice

Reliability Critical Unit

Reinforcements

PJMO201 1