### 1

DATE: April 19 , 201 3

FROM: James Covington, OW

TO: Steam Electric ELG Record

SUBJ ECT : Calculation of Inferred Benefits for Options 3a, 3b, and 4a.



## 1.0 I NTRODUCTION



### As described in the BCA report, EPA analyzed the benefits of Options 1, 2, 3, 4, and 5 and used the information for these options to understand the potential magnitude of benefits under all proposed options , including Options 3a, 3b, and 4a ( for which EPA did not explicitly analyze benefits )

. The facilities affected by Option 3a are a subset of Option 3 facilities ; Option 3 benefit estimate s therefore provide an upper bound estimate of benefits anticipated under Options 3a and 3b

. In a similar

way , EPA expects Option 4 to provide an upper bound estimate of benefits anticipated under Option 4a

. A s an illustrative analysis, EPA inferred the potential benefits associated with Options 3a and 3b by subtracting the benefits for Option 2 (scaled up to inc lude a rough estimate of air emissions benefits) from the benefits for Option 3, because Option 3 includes a combination of the wastestreams and control technologies in Options 3a and 2. EPA inferred the potential benefits associated with Option 3b based o n the pollutant loading reductions (pounds) projected for Option 3b relative to pollutant loading reductions projected for Option 2 (plus the fly ash dry handling benefits of Option 3a) because Option 3b includes both fly ash requirements and the Option 2 FGD wastewater treatment requirements for a subset of

facilities

. This is equivalent to interpolating benefits linearly between Options 3a and 3 based on relative pollutant removals.



## 2.0 M ETHODOLOGY AND 

## E XAMPLE 

## C ALCULATIONS



### The following section describes the approach EPA used to infer benefits at a 3 percent discount rate and includes calculations for benefits estimated at a 3 percent discount rate, based on the values shown in

Table 1

.

Table 1: Summary of Estimated Benefits of Regulatory Options.

Option
i 3% Discount Rate 7% Discount Rate
Pollutant removals (million pounds/year)
L i Total benefits
without air

related benefits
B i ’ Total benefits

with air

- related
benefits
B i Total benefits

without air

related benefits
B i ’ Total benefits

with air

- related
benefits
B i 1 $82.0 NE $65.9 NE (417)
3a NE NE NE NE 471
2 $111.7 NE $90.7 NE 1,160
3b NE NE NE NE 916
3 $184.1 $311.7 $148.1 $230.4 1,630
4a NE NE NE NE 2,630 a

4 $435.0 $605.5 $350.2 $424.8 3,350
5 $434.1 NE $349.4 NE 5,400

NE = Not estimated. a. At the time this analysis was conducted, EPA inferred benefits for Option 4a based on pollutant removals for this option o f 2,630 million pounds per year. As presented in the TDD (DCN SE01964 ) , however, the pollutant removals for this option are 2,620 million pounds per year.

### 2

Step 1: Adjust total benefits for Option 2 to include air

- related benefits . EPA adjusted the benefits for Option 2 using the average ratio of benefits with and without air

- related benefits for Options 3 and 4.

[1.1] ( )



### [1 .2 ] ( )



### Step 2 : Estimate total benefits for Option 3a

. EPA inferred the benefits of Option 3a by subtracting Option 2 benefits from Option 3 benefits

[2.1]

[2 .2 ]

Step 3 : Estimate total benefits for Option 3b

. EPA inferred the benefits of Option 3b by adding to the benefits of Option 3a the difference in benefits for Options 3 and 3a, prorated by the difference in pollutant removals und er Options 3 a and 3b in relation to the difference in pollutant removals under Options 3 a and 3.

[3 .1 ] ( ) ( ) ( )



### [ 3 .2 ] ( ) ( ) ( )


### Step 4 : Estimate total benefits for Option 4a

. EPA inferred the benefits of Option 4a by adding to the benefits of Option 3 the difference in benefits for Options 3 and 4, prorated by the difference in pollutant removals under Options 3 and 4 a in relation to the difference in pollutant r emovals under Options 3 and 4

. For the 3 percent discount case, this is calculated as:

[4.1] ( ) ( ) ( )



### [ 4 .2 ] ( ) ( ) ( )


### EPA used the same approach (steps 1 through 4) to infer benefits using a 7 percent discount rate.

### 3



## 3.0 R ESULTS



### Table 2 provides the results for all options and for the two discount rates

. Values shown in bold were estimated, whereas values shown in italics w ere either adjusted to include air

- related benefits, or inferred from results for other options.

Table 2 : Summary of Estimated, Adjusted, and Inferred Benefits of Regulatory Options.

Option 3% Discount Rate 7% Discount Rate

Total benefits without
air

- related benefits Total benefits with air

related benefits Total benefits without
air

- related benefits Total benefits with air

related benefits
1 $82.0 $126.5 $65.9 $91.2

3a NE $139.4 NE $104.8

2 $111.7 $172.3 $90.7 $125.6

3b NE $205.6 NE $153.0

3 $184.1 $311.7 $148.1 $230.4

4a NE $482.5 a NE $343.4 a

4 $435.0 $605.5 $350.2 $424.8
5 $434.1 $669.6 $349.4 $483.7

NE = Not estimated. a. At the time this analysis was conducted, EPA inferred benefits for Option 4a based on pollutant removals for this option of 2,630 million pounds per year. As presented in the TDD (DCN SE01964 ) ,, however, the pollutant removals for this option are 2,620 million pounds per year, which would result in total annual benefits of $480.8 million (a t 3 percent discount and $342.3 million (at 7 percent discount)

.