1

DATE: April 19, 2013

FROM: James Covington, OW

TO: Steam Electric ELG Record

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

1.0 INTRODUCTION

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 estimates 

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. 

As an illustrative analysis, EPA inferred the potential benefits associated with Options 3a and 3b by 

subtracting the benefits for Option 2 (scaled up to include 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 on 

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 METHODOLOGY AND EXAMPLE CALCULATIONS

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) 

Li

Total benefits 

without airrelated benefits

Bi’

Total benefits 

with air-related 

benefits

Bi

Total benefits 

without airrelated benefits

Bi’

Total benefits 

with air-related 

benefits

Bi

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 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.
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 under Options 3a and 3b in relation to the difference in pollutant removals under 

Options 3a 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 4a in relation to the difference in pollutant removals 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 RESULTS

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 were 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 airrelated benefitsTotal benefits without 

air-related benefits

Total benefits with airrelated 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 (at 3 percent discount and $342.3 million (at 7 percent discount).