# OAR Box 1132
Prepped by Candice Davis



# Document

Number: 

# 2 ) ll-A-1 9

Docket Number: 

# A-86-0 3

Printed 4/18/2008 2:24:46

PM Sheet 2 of 122 P. 1

## P. 2 

# /?-<3>cV-o 3

MEMORANDU M 

# E

TO : Wil l Smit h

FROM : Jef f Kolb/Stev e Sobotk a 

# - 9

SUBJECT : Evaluatio n o f the Cos t Saving s fro ma Banking andj Trfic^hg-! R Systemfo

r Diese l Fue l Sulfur 

# &gAJ R POCCET J

DATE : Augus t 1 , 198 8

Asyste mo f banking an

d tradin

g o f sulfur reductio n credit s potentiall y coul d b e use d t o supplemen t conventiona l regulation s tha t restric t the sulfur conten t o f on-highwa ydiese l fuel.-'

- Thi s memorandu mevaluates : (1 ) the cos t saving s t o the refining industr ytha t coul d resul t fro mbanking an

d trading ; and (2 ) whethe r banking an d tradin

g coul d facilitat e earlie r complianc e wit h restriction s o n the sulfur conten t o f diese l fuel

. Th e enforcemen t aspect s o f a bankin g an

d trading syste

mfo r diese l fue l sulfur wil l b e discusse d i n a subsequen t memorandum

.

OVERVIE W O F TH E ANALYSI S

W e evaluate d the potentia l cos t saving s t o the petroleu mrefining industr

y unde r a numbe r o f alternativ e banking an d tradin

g systems

. I n al l case s w e assume tha t the industr ywoul d hav e thre e year s t o compl yafte r the regulation s t o contro l the sulfur conten t o f on-highwa ydiese l fue l ar e promulgate d (e.g. , i f the regulation s ar e promulgate d i n lat e 1990 , the industr ywoul d b e require d t o compl ya s o f 1994 ) an d tha t ther e woul d b e n o restriction s o n the aromatic s conten t o f on-highwa ydiese l fuel

. W e evaluate d a numbe r o f alternativ e design s fo r banking an d tradin

g systems becaus e o f uncertaintie s abou t th e valu e o f sulfur reduction s wit hcurren t versu s futur e diese l engin e emissio n contro l system s an

d abou t the abilit yo f futur e engin e emissio n contro l systems t o operat e wit hdiese l fue l sulfur conten t level s i n exces s o f 0.0 5 percent

. If , i n fact , sulfu r reduction s during th e pre-regulatoryperio d (e.g. , 1991

- 1993 ) ar e wort hmuc hles s than i n the post-regulator yperiod , o r i f diese l engin e emissio n control s require d i n th e futur e ar e compatibl e onl ywit h sulfur

1 Banking an

d trading i s an innovative "non-regulatory " approac htha t potentiall yca n reduc e industry' s cost s (an d retai l prices ) o f complying wit h o r the tim

e neede d t o compl ywit henvironmenta l requirements

. Suc ha syste m allow s firms t o "bank " emissio n reductio n credit s tha t ar e generate d a t relativel ylowcost s b y"over-controlling " i n a n earlie r tim e perio d an

d t o us e the mlate r t o assis t i n complying wit hhighe r cos t regulator yrequirements

. Firm s tha t hav e relativel ylowe r cost s o f reducin g emission s ca n "trade " (sell ) emissio n reductio n credit s t o firms tha t hav e highe r contro l costs

. Banking an d trading provide s industr ywit hthe flexibilit yneede d t o mee t regulator y requirement s a t the lowes t cost

. EP Aha s use d banking an d trading i n the lead phas e dow

n program .

## P. 3



# conten t level s veryclos e t o 0.0 5 percent , banking an d trading system s designe d t o reduc e industry' s complianc e cost s woul d b e neithe r cost-effectiv e no r environmentall ysound

. Th e case s w e evaluat e ar e a s follows : (^\t l assume . 

# 0.0< f s+i

. i

n [Wl)

o Cas e 1 : Abankin g an d tradin

g syste mi n whic hcredit s coul d b e generate d i n 199 1 throug

h199 3 an

d use d t o compl ywit hregulatoryrequirement s i n 199 4 an d 1995

.

o Cas e 2 : Abanking an d tradin

g syste mwit hexchange s a t a 1: 1 rati o a s i n cas e 1 , bu t wit ha maximu mphysica l sulfur conten t limi t o f 0.1 0 percen t impose d o n on-highwa ydiese l fue l i n 199 4 an d 199 5 ( a physica l maximu m woul d b e appropriat e i f the emissio n contro l system s o n diese l engine s woul d b e compromise d a t highe r sulfur conten t levels)

.

o Cas e 3 : Asimila r system , bu t one i n whic hsulfur emissio n credit s coul d b e exchange d a t a 2: 1 rati o i n 199 4 an d 199 5 (sucha n exchang e rati o woul d b e appropriat e i f sulfur reduction s i n earlie r year s wer e no t a s environmentall ybeneficia l those'i n late r years)

.

o Cas e 4 : Acombinatio n o f Case s 2 an d 3

.
W e als o evaluate d the potentia l fo r a banking an d trading syste

m t o haste n industr ycomplianc e wit hthe 0.0 5 percen t sulfur conten t standard

. I n thi s analysi s w e assume d tha t the refinin g industr

ycoul d accumulat e credit s ove r a two yea r perio d and us e the mt o hel p compl ywit hregulatoryrequirement s impose d i n the third year . Thi s approac hi s simila r t o setting interi m standard s (sucha s i s bein g contemplate d fo r RV P i n gasoline) , i n the sens e tha t the reduction s i n the sulfur conten t o f diese l fue l woul d b e accelerated , bu t woul d allowthe industr ymuc hmor e flexibilit yi n making the reductions

.
W e use d the DO E refiner ymode l t o estimat e th e incrementa l cos t o f sulfur remova l i n eac hPA

D District

. Th e assumption s use d i n the mode l fo r produc t outputs , prices , an d productio n capacit yar e simila r t o thos e use d i n a previou s analysi s b ySC I o f the aggregat e cost s o f the sulfu r standards

. Th e informatio n develope d o n incrementa l contro l cost s i s use d t o determine : th e exten t t o whic hcredit s woul d b e generate d an d use d unde r the variou s configuration s o f a banking an d tradin

g system ; th

e contro l cost s tha t woul d b e incurre d b

yrefiners ; an

d th e directio n o f trades , o n net , betwee n PAD s (trade s among refinerie s withi n PAD s als o woul d occur bu t ar e no t estimate d b yth e

* I f sulfu r reduction s i n earlie r year s wer e a s environmentall ybeneficia l a s thos e i n late r years , designing a banking an d trading systemwit ha 2: 1 exchang e rati o woul d resul t i n bot himproved environmenta l benefit s (greate r sulfu r removal ) an

d reduce d complianc e costs

.

- ^ See , Cos t an

d Feasibilit yo f Lowerin g Diese l Fue l Sulfu r an d Aromati c Content , prepare d fo r EP Ab ySCI , Novembe r 2 , 1987

.

## P. 4



# model). ^ Amor e detaile d descriptio n o f th e analytica l approac hi s provide d i n the attache d Appendix

. RESULT S O F TH E ANALYSI S
Th e result s o f our analyse s unde r tw o alternativ e assumption s regarding the exten t t o whic hrefiner s an d the distributio n syste mar e abl e t o segregat e on-highwa

ydiese l fuel s fro

mothe r distillat e products , primaril yhome heating oil , ar e show

n i n the tabl e below

. Th e baselin e cost s o f the 0.0 5 percen t restrictio n o n sulfu r content , incurre d annually , ar e show n fo r comparison

. Th e cos t saving fro mbanking an

d trading i s the presen t valu e o f th e contro l cost s tha t woul d otherwis e b e incurre d i n 199 4 an d 199 5 (abou t $23 5 an d $70 0 millio n i n eac hyea r fo r the segregate d an d non-segregate d cases , respectively ) minu s the cost s incurre d unde r the banking an d trading systems

. Th e estimate s provid e a genera l indicatio n o f the siz e o f the potentia l saving s possibl e fro m banking an

d trading relative t o complianc e costs

.

Baselin e Industr

y Cost s an

dEstimate

dCos t Saving s fro

m Bankin g an dTradin

g Segregatio n o f Diese l Fue l Segregate d Unsegregate d

( $ million )
Baselin e Annua l Cost s $23 5 $69 9

Tota l Cos t Savings : Cas e 1 : Ful l banking & tradin g Cas e 2 : 0. 1 % sulfur limi t Cas e 3 : 2: 1 exchang e rati o Cas e 4 : combinatio n o f cas e 2 & 3

I n th e scenari o i n whic hdiese l fue l i s segregate d fro mothe r distillate , the analysi s indicate s tha t banking an d trading potentiall ycoul d resul t i n cos t saving s o f abou t $16 8 millio n i f credit s coul d b e trade d a t a 1: 1 rati o an d n o physica l limit s o n sulfur conten t wer e impose d i n 199 4 an d 1995

. Th e cos t saving s fro

mbanking an

d trading woul d decline , bu t stil l remai n significant , a s physica l limit s ar e impose d o n the sulfur conten t o f diese l fue l i n 199 4 an

d thereafte r an

d a s restriction s ar e impose d o n th e exchang e ratio

. Th e cos t saving s occur becaus e refiner s woul d b e abl e t o dela ythe capita l expenditure s require d t o physicall ymee t th e 0.0 5 percen t sulfur conten t standard

. $16 8 12 8 8 5 7 7 $58 0

43 4 32 1 30 6

Ou r analysi s focuse s o n difference s i n contro l cost s betwee n the baselin e 0.0 5 percen t standard an d an interi mbanking an d tradin

g system

. Thus , the fac t tha t the mode l "over-optimizes " productio n withi n PAD s i s no t o f grea t importanc e becaus e such "over-optimization " woul d b e reflecte d i n bot h cases . Th e result s o f the analyse s ar e no t highl ysensitive t o th e specifi c assumption s mad e regarding prices , output , an d capacit yfo r simila r reasons .

## P. 5



# I n the scenari o i n whic hdiese l fue l i s no t segregate d fro mothe r distillat e beyond curren t levels , the analysi s indicate s tha t banking an d tradin g potentiall ycoul d resul t i n cos t saving s o f abou t $58 0 millio n i f credit s coul d b e trade d a t a 1: 1 rati o and n o physica l limit s o n sulfu r conten t wer e impose d i n 199 4 an d 1995

. Th e cos t saving s fro mbanking an

d trading woul d b e larg e eve n i f physica l limit s ar e impose d o n the sulfur conten t o f diese l fue l i n 199 4 an

d thereafte r o r i f restriction s ar e impose d o n the exchang e ratio

. I n the unsegregate d case , muc ho f the benefi t fro mreducing the sulfur conten t o f distillat e woul d b e fro mothe r than the on-highwa ydiese l fue l portion

. Presumabl ysuc hsulfur reduction s i n bot hthe pre
- an d post

regulator

yperio d woul d generat e simila r benefits , regardles s o f the tradeoff s i n benefit s fo r the on-highwa yportion , an

d i t i s beneficia l t o attai n suc h benefit s earlier , rathe r than later

. Ou r analysi s als o indicate s tha t refiner s coul d mee t the 0.0 5 percen t standar d i n 199 3 using a banking an d tradin

g syste mi n whic hcredit s woul d b e generate d i n 199 1 an d 199 2 an

d use d fo r complianc e i n 1993

. Refiner s woul d incur cost s o f abou t $9 0 millio n (i n presen t valu e ove r the thre e yea r period ) i n the cas e wher e on-highwa ydiese l fue l coul d b e segregate d fro mal l othe r distillat e an

d abou t $22 0 millio n i n th e cas e wher e i t coul d no t b e segregate d beyond curren t levels

. Thi s i s abou t 4 0 percen t o f the cos t o f obtaining on e year' s wort ho f sulfu r reduction s unde r the 0.0 5 percen t standard fo r the segregate d cas e an

d abou t 3 0 percen t fo r the non-segregate d case .
W e understand tha t the refining industr ydoe s no t favo r bankin g an d trading

. I f futur e diese l engin e emissio n control s requir e a sulfu r conten t fo r diese l fue l veryclos e t o 0.0 5 percent , a banking an d trading system designe d t o hel p industr ymee t tha t targe t woul d no t b e cost-effective

. However , banking an d trading stil l coul d b e use d t o obtai n environmenta l benefit s b

yencouraging earlie r sulfur reduction s an d woul d effectivel y substitut e fo r interi mstandards

. Industr ywoul d incur additiona l costs , bu t the cos t pe r uni t o f sulfur reductio n woul d b e abou t 3 0 t o 4 0 percen t o f tha t o f the 0.0 5 standard and , thus , cost-effective. " I f banking an d trading i s full yo r partiall ycompatibl e wit hfutur e diese l engin e emissio n controls , our analysi s indicate s tha t i t coul d resul t i n significan t cos t saving s t o the refining industry

. Thes e cos t savin g woul d essentiall yal l b e passe d throug h t o consumer s i n the for mo f lowe r price s o f highwa ydiese l fue l i n the segregate d cas e and i n the for mo f lowe r diese l an d numbe r tw

o fue l oi l price s i n the non-segregate d case .

- > Becaus e essentiall yal l o f th e cos t saving s du e t o bankin g an d tradin

g woul d b e passe d throug ht o consumers , ther e i s n o reaso n fo r industr ya s a whol e t o favo r suc hsystems

. Banking an

d trading systems commonl yar e criticize d becaus e the yar e though t t o creat e enforcemen t problem s an d possibl yresul t i n emission s greate r than unde r a conventiona l regulator ystandard

. However , a bankin g an d tradin

g syste mdesigne d t o obtai n earlie r sulfur reduction s ca n onl ybenefi t the environment , eve n i f enforcemen t i s lax , a s th e sulfur conten t o f diese l fue l coul d onl yb e lowe r unde r suc ha syste mthan i t otherwis e woul d be

.

## P. 6



# APPENDI X

Banking an

d tradin

g allow s refiner s t o accumulat e credit s throug h "over

controlling " during a n earlie r tim e perio d an

d t o trad e (sell ) o r us e thos e "banked " credit s t o compl ywit henvironmenta l standard s i n late r periods

. Th e economi c theoryunderlying bankin g an d trading i s tha t petroleu mrefiner s wil l attemp t t o minimiz e thei r cost s o f complying wit henvironmenta l requirements

. Theyca n d o s o b

ygenerating credit s throug hreduction s i n sulfur conten t wher e the margina l cos t o f suc hreduction s i s relativel ylow

. Th e credit s generate d the n woul d b e use d t o hel p compl ywit henvironmenta l standard s an d t o dela

y making highmargina l cos t reduction s i n sulfur content

. Generally , the margina l cost s o f sulfur remova l increas e a s the percen t sulfur conten t o f diese l fue l declines , e.g. , the incrementa l cos t o f a 0.0 1 percen t poin t reductio n i n sulfu r conten t i s greate r whe n the percen t sulfu r conten t o f diese l fue l i s 0.0 5 than whe n i t i s 0.25

. Likewise , refiner s tha t hav e relativel ylowmargina l cost s o f sulfur reductio n ca n profi t b ygeneratin

g mor e credit s than the

yca n us e an

d selling suc hcredit s t o highmargina l cos t refiners

. Wit hbanking an d trading , the petroleu mrefining industr

ycoul d optimiz e sulfu r reduction s suc htha t the aggregat e cos t o f sulfur contro l woul d b e minimized

.
ANALYTICAL APPROAC H

T o estimat e the cos t saving s fro mbanking an

d trading w e simulate d the patter n o f sulfur reduction s an d the generatio n an d us e o f permit s tha t the petroleu

mrefining industr

yi s likel yt o make

. Our analysi s proceede d alon g the following lines :

o Shor t an

d lon g ru n incrementa l cos t curve s fo r sulfur remova l wer e develope d fo r eachPA D Distric t base d o n the DO E refiner ymodel

. ^ Th e shor t run cos t curve s ar e estimate d unde r the assumptio n tha t n o ne w refining capacit yi s constructed , wherea s the lon g ru n cos t curve s ar e estimate d unde r the assumptio n tha t refinerie s ad d refining capacit yi f tha t i s the leas t costl yapproach

. Thes e cos t curve s for mth e basi s fo r al l subsequen t analysis

.

o Th e time adjuste d incrementa l cost s o f sulfu r reduction s wer e calculate d fo r eac hyea r using a discoun t rat e o f 1 0 percen t (thi s account s fo r the cos t o f holding permits)

. Th e shor t ru n cos t curve i s use d fo r 199 1 an d 199 2 an d the lon

g ru n cos t curve i s use d fo r 199 3 throug h1995

.

I The assumption s regarding prices , output , an d curren t capacit ytha t serve a s input s t o the DO E refiner ymode l wer e simila r t o thos e use d fo r the 199 2 scenari o i n the earlie r SC I analysis

. However , the baselin e sulfur conten t level s i n distillat e an d diese l fue l wer e revise d base d o n th e calculation s show

n i n Tabl e 6

.

## P. 7



# Th e petroleu

mrefining industr

ywoul d minimiz e contro l cost s whe n the incrementa l cos t o f sulfur remova l i s the sam e acros s tim

e an d acros s PADs , subjec t t o the conditio n tha t the amoun t o f sulfur reductio n credit s generate d i s equa l t o the amoun t used

. W e selecte d alternativ e value s fo r the incrementa l cos t o f sulfur reductio n unti l the sulfur reductio n credit s tha t woul d b e generate d (b ycontrolling u

p t o the poin t tha t incrementa l contro l cost s equale d the selecte d value ) an d use d (again , b

y controlling u

p t o the poin t wher e incrementa l cost s equalle d the selecte d valu e during the post-regulatoryperiod ) wer e i n roug hbalanc e among al l PADs

. Thi s i s a n approximatio n o f the equilibriu mpoin t tha t a full y competitiv e industr ywit hful l informatio n woul d reac hthroug hbanking an

d trading

. Constraint s i n the for mo f limit s o n the percen t sulfur conten t o f highwa y diese l fue l an

d exchang e ratio s wer e adde d t o the model

. Limit s o n the sulfu r conten t o f highwaydiese l fue l i n the post-regulatoryperio d (1994

- 95 ) reduc e the exten t t o whic hsulfur credit s ca n b e use d t o mee t regulator

ystandards

. Exchang e ratio s greate r tha n 1: 1 rais e the cos t o f generating permit s a t an ycontro l leve l relativ e t o cost s incurre d i n the post-regulatoryperiod

. Th e presen t valu e o f the contro l cost s incurre d a t the "equilibriu m points " ar e the n calculate d an d subtracte d fro

mthe presen t valu e o f cost s tha t woul d b e incurre d unde r conventiona l regulation

. Thi s i s the "modelled " cos t saving

. T o estimat e th e tota l potentia l cos t saving s fro m banking an

d trading the valu e o f an yexces s permit s generate d a t the equilibriu

mpoin t selecte d using the mode l mus t b e adde d t o the modelle d cos t savings

. (Assumin g ful l information , th e industr

ywoul d no t generat e exces s permit s and , therefore , woul d no t incur contro l cost s t o generat e them. ) Th e valu e o f an yexces s permit s i s give n b ythe incrementa l contro l cos t time s the amoun t o f exces s permits , discounte d a t 1 0 percen t ove r tw o years .

DESCRIPTIO

NO F LOTU S MODE L
Table s I Athroug

hI E showthe lon

g ru n an d shor t run incrementa l cos t curve s ("inc

. cost

. sul

. red." ) estimate d fo r eac hPA D an d the amoun t o f sulfur credit s tha t woul d b e generate d o r use d a t eac hpercen t sulfu r conten t leve l (one credi t equal s a 0.0 1 percen t poin t reductio n i n sulfu r conten t pe r barrel)

. W e assume d tha t the percen t sulfur conten t leve l fro mwhic hcredit s coul d b e generate d ("credi t base" ) wa s the lowes t averag e percen t sulfur conten t fo r distillat e currentl yobserve d i n the PA D Districts , whic h w e

2 Thi s i s the basi c optimizatio n algorithm

. I f incrementa l cost s ar e no t unifor macros s tim

e an d PADs , cost s coul d alway s b e reduce d b yincreasin

g th e leve l o f contro l wher e incrementa l cost s ar e lo wan d reducing , correspondingly , the leve l o f contro l wher e incrementa l cost s ar e high

. Th e tota l amoun t o f sulfur reduction , however , mus t equa l regulator yrequirements

. An yles s sulfur reductio n an

d regulator

yrequirement s woul d b e violate d an d an ymor e reductio n woul d resul t i n exces s contro l costs

. i i

## P. 8



# estimat e t o b e abou t 0.2 3 percen t (a s show n i n Tabl e 6)

. Thus , i n som e PADs , suc ha s PA

D 4 , sulfur reduction s fro mthe curren t averag e t o the "credi t base " woul d no t coun t toward s generating credits

. Th e mode l account s fo r thi s b y allowing sulfur reduction s withi n eac hPA D onl yi f the pric e o f a credi t i s greate r tha n the averag e cos t o f generating credits

. Als o show n ar e the incrementa l cos t curve s adjuste d fo r the cos t o f holdin g permit s ("margina l cos t adj

. fo r disc

. rate")

. Table s 2 Athroug

h2 E showthe model' s solution s i n eac hcas e analyze d fo r bankin g an

d trading , assuming tha t on-highwa ydiese l fue l ca n b e segregate d fromothe r distillate

. Th e solution s ar e generate d a s follows :

o W e specif ya margina l cos t (price ) fo r generating (using ) a sulfur remova l credit

. Th e mode l examine s the tim e adjuste d incrementa l cos t curve s fo r eac hyea r an

d PA D an d identifie s the amoun t o f sulfu r reductio n tha t woul d b e mad e consisten t wit hthi s margina l cos t (price)

. Fo r example , i n Cas e 1 , wit ha margina l cos t o f $0,02 2 sulfu r reduction s woul d no t b e mad e i n yea r 1 , bu t woul d b e abou t 0.1 1 i n yea r 2 (corresponding t o a sulfur conten t leve l o f 0.1 2 percent)

.

o Th e amoun t o f credit s tha t woul d b e generate d an d use d b

yeac hPA

D an d the su mo f the PAD s i s the n estimated

.

o Iteration s wer e mad e wit hvariou s value s fo r the margina l cos t (price ) o f a sulfur remova l credi t unti l an "equilibriu mpoint " wa s reached

. Thi s i s the poin t wher e the ne t generatio n o r us e o f permit s i s closes t t o zero .

o Base d o n the model' s equilibriu mpoint , th e contro l cost s ar e estimate d i n eac h yea r fo r eac hPA D an d th e ne t cos t saving s o f banking an d tradin

g ar e estimated

. Table s 3 Athroug

h3 E an d Table s 4 Athrough4 E provid e corresponding informatio n fo r the cas e wher e diese l fue l canno t b e segregate d fro mdistillat e beyond curren t levels

. Tabl e 5 summarize s the tota l cos t saving s fro mbanking and trading base d o n the assumptio n tha t an yexces s (shortfall ) i n credit s woul d no t (would ) b e generate d a t the margina l cos t specifie d i n th e model

.

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### SPREADSHEE T FO RDIESE L FUE L SULFU RANALYSI S 

## TABL E I B P.1 0

CASE : CAPITAL :

PAD : CASE : CAPITAL :

MARGINAL ADJ . FO R SEGREGATE D

UNCONSTRAINE D

BAS E CREDI T BAS E



## *

PAD 2 SEGREGATE D CONSTRAINE D

BAS E CREDI T BAS E

COS T DISC . RAT E

BAS E CREDI T BAS E 29 5

SULFU R CONTEN T

0.2 5 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

29 5

SULFU R CONTEN T

0.2 5 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 .0.0 8 0.0 6 0.0 5

SULFU R CONTEN T

0.2 5 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 SUL . FO R

SU L FO R

SU L FO R RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 107.67 5

MARGI N

9,195.3 5
9,187.5 6 9,183.1 8 9,178.2 0 9,173.1 0 9,163.7 5 9,150.7 9 9,136.6 6 9,120.3 1 9,108.4 8

107.67 5

MARGI N

9,195.3 5
9,187.5 6 9,183.0 3 9,177.2 2 9,170.8 0 9,158.8 6 9,000.0 0

YEAR1

0.00 0 0.03 5 0.03 1 0.04 0 0.04 4 0.08 1 1.08 0 0.00 0 0.00 0 0.00 0 MMB Y

TOTA L COS T

7.7 9 12.1 7 17.1 5 22.2 5 31.6 0 44.5 6 58.6 9 75.0 4 86.8 7

MMB Y

TOTA L COS T

7.7 9 12.3 2 . 18.1 3 24.5 5 36.4 9 195.3 5

YEAR2

0.00 0 0.03 2 0.02 8 0.03 6 0.04 0 0.07 4 0.98 2 0.00 0 0.00 0 0.00 0 CHANG E I N

MARGI N

4.3 8 4.9 8 5.1 0 9.3 5 12.9 6 14.1 3 16.3 5 11.8 3

CHANG E I N MARGI N

4.5 3 5.8 1 6.4 2 11.9 4 158.8 6

YEAR3

0.00 0 0.02 8 0.02 5 0.02 8 0.02 9 0.05 3 0.07 3 0.07 9 0.09 2 0.13 3 INC . COS T SUL . REDUCT . 

## S

0.00 0 0.02 3 0.02 0 0.02 3 0.02 4 0.04 3 0.06 0 0.06 6 0.07 6 0.11 0

INC . COS T SUL . REDUCT . 

## $

0.00 0 0.02 4 0.02 1 0.02 7 0.03 0 0.05 5 0.73 8

YEAR4

0.00 0 0.02 5 0.02 2 0.02 5 0.02 6 0.04 8 0.06 6 0.07 2 0.08 4 0.12 1 AVG . COS T

CREDI T 

## $

0.02 4 0.02 3 0.02 3 0.02 3 0.02 7 0.03 2 0.03 6 0.04 1 0.04 5

AVG . COS T CREDI T 

## S

0.02 4 0.02 3 0.02 4 0.02 5 0.03 1 0.14 0

YEA R5

0.00 0 0.02 3 0.02 0 0.02 3 0.02 4 0.04 3 0.06 0 0.06 6 0.07 6 0.11 0 CREDIT S GENERATE D •ail .

323.0 3 538.3 8 753.7 3 969.0 8 1,184.4 3 1,399.7 8 1,615.1 3 1,830.4 8 1,938.1 5

CREDIT S GENERATE D mil .

323.0 3 538.3 8 753.7 3 969.0 8 1,184.4 3 1,399.7 8 1,615.1 3 1,830.4 8 1,938.1 5

SUL . RED . FO RCRED .

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 CREDIT S

NEEDE D mi l

(1,938.15 ) (1,615.13 ) (1,399.78 ) (1,184.43 ) (969.08 ) (753.73 ) (538.38 ) (323.03 ) (107.67 ) 0.0 0

CREDIT S NEEDE D rail

(1,938.15 ) (1,615.13 ) (1,399.78 ) (1,184.43 ) (969.08 ) (753.73 ) (538.38 ) (323.03 ) (107.67 ) 0.0 0

### SPREADSHEE T FO RDIESE L FUE L SULFURANALYSI S 

## TABL E IC p.1 1

CASE : CAPITAL :

PAD : CASE : CAPITAL :

MARGINA L ADJ . FO R SEGREGATE D

UNCONSTRAINE D

BAS E CREDI T BAS E

1r

PAD 3 SEGREGATE D CONSTRAINE D

BAS E CREDI T BAS E

COS T DISC . RAT E

BAS E CREDI T BAS E 

### 48 8

SULFU R CONTEN T

0.2 4 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5



### 48 8

SULFU R CONTEN T

0.2 4 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

SULFU R CONTEN T

0.2 4 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 

### SU L FO R

SU L FO R

SU L FO R RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 178.1 2

MARGI N

17,983.4 3
17,974.3 7 17,969.2 3 17,964.4 6 17,959.7 6 17,954.8 6 17,939.5 5 17,918.0 9 17,893.7 7 17,879.8 5

178.1 2

MARGI N

17,983.4 3
17,974.3 7 17,969.2 3 17,964.4 6 17,959.7 6 17,954.8 6 17,939.5 5 17,000.0 0

YEAR1

0.00 0 0.02 2 0.02 1 0.02 0 0.01 9 0.02 0 0.06 3 3.86 1 0.00 0 0.00 0 MMB Y

TOTA L COS T

9.0 6 14.2 0 18.9 7 23.6 7 28.5 7 43.8 8 65.3 4 89.6 6 103.5 8

MMB Y

TOTA L COS T

9.0 6 14.2 0 18.9 7 23.6 7 28.5 7 43.8 8 983.4 3

YEAR2

0.00 0 0.02 0 0.01 9 0.01 8 0.01 8 0.01 8 0.05 7 3.51 0 0.00 0 0.00 0 CHANG E I N

MARGI N

5.1 4 4.7 7 4.7 0 4.9 0 15.3 1 21.4 6 24.3 2 13.9 2

CHANG E I N MARGI N

5.1 4 4.7 7 4.7 0 4.9 0 15.3 1 939.5 5

YEAR3

0.00 0 0.01 8 0.01 7 0.01 6 0.01 6 0.01 7 0.05 2 0.07 3 0.08 3 0.09 5 INC . COS T SUL . REDUCT . 

## $

0.00 0 0.01 5 0.01 4 0.01 3 0.01 3 0.01 4 0.04 3 0.06 0 0.06 8 0.07 8

INC . COS T SUL . REDUCT . 

## S

0.00 0 0.01 5 0.01 4 0.01 3 0.01 3 0.01 4 0.04 3 2.63 7

YEAR4

0.00 0 0.01 7 0.01 6 0.01 5 0.01 5 0.01 5 0.04 7 0.06 6 0.07 5 0.08 6 AVG . COS T

CREDI T 

## $

0.01 7 0.01 6 0.01 5 0.01 5 0.01 5 .0.01 9 0.02 4 0.03 0 0.03 2

AVG . COS T CREDI T 

## $

0.01 7 0.01 6 0.01 5 0.01 5 0.01 5 0.01 9 0.36 8

YEAR5

0.00 0 0.01 5 0.01 4 0.01 3 0.01 3 0.01 4 0.04 3 0.06 0 0.06 8 0.07 8 CREDIT S

GENERATE D mil .

534.3 6 890.6 0 1,246.8 4 1,603.0 8 1,959.3 2 2,315.5 6 2,671.8 0 3,028.0 4 3,206.1 6

CREDIT S GENERATE D mil .

534.3 6 890.6 0 1,246.8 4 1,603.0 8 1,959.3 2 2,315.5 6 2,671.8 0 3,028.0 4 3,206.1 6

SUL . RED . FO RCRED .

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 CREDIT S

NEEDE D mi l

(3,206.16 ) (2,671.80 ) (2,315.56 ) (1,959.32 ) (1,603.08 ) (1,246.84 ) (890.60 ) (534.36 ) (178.12 ) 0.0 0

CREDIT S NEEDE D mi l

(3,206.16 ) (2,671.80 ) (2,315.56 ) (1,959.32 ) (1,603.08 ) (1,246.84 ) (890.60 ) (534.36 ) (178.12 ) 0.0 0

### P.1 2



## TABL E I D

SPREADSHEE T FO RDIESE L FUE L SULFURANALYSI S

PAD : CASE : CAPITAL :

PAD : CASE : CAPITAL :

MARGINA L ADJ . FO R PAD 4

SEGREGATE D UNCONSTRAINE D

BAS E CREDI T BAS E



## *

PAD 4 SEGREGATE D CONSTRAINE D

BAS E CREDI T BAS E

COS T DISC . RAT E

BAS E CREDI T BAS E 4 2

SULFU R CONTEN T

0.3 2 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

4 2

SULFU R CONTEN T

0.3 2 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

SULFU R CONTEN T

0.3 2 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 SUL . FO R

SUL . FO R

SU L FO R RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 15.3 3

MARGI N

1,376.9 8
1,375.9 6 1,375.7 9 1,375.6 2 1,375.4 5 1,374.7 9 1,373.8 6 1,372.9 3 1,371.9 8 1,371.4 2

15.3 3

MARGI N

1,376.5 3
1,375.2 6 1,375.0 5 1,374.8 4 1,374.6 3 1,373.9 2 1,372.9 9 1,372.0 6 1,371.1 2 1,300.0 0

YEAR1

0.00 0 0.02 0 0.01 0 0.01 0 0.01 0 0.03 4 0.04 4 0.04 4 0.04 5 6.79 2 MMB Y

TOTA L COS T

1.0 2 1.1 9 1.3 6 1.5 3 2.1 9 3.1 2 4.0 5 5.0 0 5.5 6

MMB Y

TOTA L COS T

1.2 7 1.4 8 1.6 9 1.9 0 2.6 1 3.5 4 4.4 7 5.4 1 76.5 3

YEAR2

0.00 0 0.01 9 0.00 9 0.00 9 0.00 9 0.03 1 0.04 0 0.04 0 0.04 1 6.17 5 CHANG E I N

MARGI N

0.1 7 0.1 7 0.1 7 0.6 6 0.9 3 0.9 3 0.9 5 0.5 6

CHANC E I N MARGI N

0.2 1 0.2 1 0.2 1 0.7 1 0.9 3 0.9 3 0.9 4 71.1 2

YEAR3

0.00 0 0.01 3 0.00 7 0.00 7 0.00 7 0.02 6 0.03 7 0.03 7 0.03 7 0.04 4 INC SUL .

INC SUL . . COS T REDUCT . 

## $

0.00 0 0.01 1 0.00 6 0.00 6 0.00 6 0.02 2 0.03 0 0.03 0 0.03 1 0.03 7

. COS T REDUCT . 

## S

0.00 0 0.01 4 0.00 7 0.00 7 0.00 7 0.02 3 0.03 0 0.03 0 0.03 1 4.63 9

YEAR4

0.00 0 0.01 2 0.00 6 0.00 6 0.00 6 0.02 4 0.03 3 0.03 3 0.03 4 0.04 0 AVG . COS T

CREDI T 

## S

0.02 2 0.01 6 0.01 3 0.01 1 0.01 3 0.01 6 0.01 8 0.01 9 0.02 0

AVG . COS T CREDI T 

## $

0.02 8 0.01 9 0.01 6 0.01 4 0.01 5 0.01 8 0.01 9 0.02 1 0.27 7

YEA R5

0.00 0 0.01 1 0.00 6 0.00 6 0.00 6 0.02 2 0.03 0 0.03 0 0.03 1 0.03 7 CREDIT S

GENERATE D mil .

45.9 9 76.6 5 107.3 1 137.9 7 168.6 3 199.2 9 229.9 5 260.6 1 275.9 4

CREDIT S GENERATE D mil .

45.9 9 76.6 5 107.3 1 137.9 7 168.6 3 199.2 9 229.9 5 260.6 1 275.9 4

SUL . RED . FO RCRED .

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 CREDIT S

NEEDE D mi l

(275.94 ) (229.95 ) (199.29 ) (168.63 ) (137.97 ) (107.31 ) (76.65) (45.99 ) (15.33 ) 0.0 0

CREDIT S NEEDE D mi l

(275.94 ) (229.95 ) (199.29 ) (168.63 ) (137.97 ) (107.31 ) (76.65 ) (45.99 ) (15.33 ) 0.0 0

### SPREADSHEE T FO RDIESE L FUE L SULFURANALYSI S •i " CI


## TABL E I E

CASE : CAPITAL :

PAD : CASE : CAPITAL :

MARGINAL ADJ . FO R SEGREGATE D

UNCONSTRAINE D

BAS E CREDI T BAS E



## *

PAD 5 SEGREGATE D CONSTRAINE D

BAS E CREDI T BAS E

COS T DISC . RAT E

BAS E CREDI T BAS E 15 4

SULFU R CONTEN T

0.2 3 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

15 4

SULFU R CONTEN T

0.2 3 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

SULFU R CONTEN T

0.2 3 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 SUL . FO R

SU L FO R

SU L FO R RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 56.2 1

MARGI N

5,088.9 0 5,088.9 0 5,086.6 5 5,085.1 6 5,083.6 6 5,081.4 7 5,078.4 3 5,075.3 8 5,071.6 7 5,067.3 6 5,064.3 6

56.2 1

MARGI N

5,088.9 0 5,088.9 0 5,086.6 5 5,085.1 6 5,083.6 6 5,081.4 7 5,078.3 7 5,075.3 0 5,071.3 3 5,065.6 8 5,000.0 0

YEAR1

0.00 0 0.02 0 0.01 9 0.02 0 0.02 9 0.04 0 0.04 0 0.05 2 0.07 4 1.71 1 MMB Y

TOTA L COS T

0.0 0 2.2 5 3.7 4 5.2 4 7.4 3 10.4 7 13.5 2 17.2 3 21.5 4 24.5 4

MMB Y

TOTA L COS T

0.0 0 2.2 5 3.7 4 5.2 4 7.4 3 10.5 3 13.6 0 17.5 7 23.2 2 88.9 0

YEAR2

0.00 0 0.01 8 0.01 8 0.01 8 0.02 6 0.03 7 0.03 6 0.04 7 0.06 7 1.55 5 CHANG E I N

MARGI N

2.2 5 1.4 9 1.5 0 2.1 9 3.0 4 3.0 5 3.7 1 4.3 1 3.0 0

CHANG E I N MARGI N

0.0 0 2.2 5 1.4 9 1.5 0 2.1 9 3.1 0 3.0 7 3.9 7 5.6 5 65.6 8

YEAR3

0.00 0 0.01 6 0.01 6 0.01 6 0.02 4 0.03 3 0.03 3 0.04 0 0.04 6 0.06 5 INC . COS T SUL . REDUCT . 

## S

0.00 0 0.01 3 0.01 3 0.01 3 0.01 9 0.02 7 0.02 7 0.03 3 0.03 8 0.05 3

INC . COS T SUL . REDUCT . 

## S

0.00 0 0.01 3 0.01 3 0.01 3 0.01 9 0.02 8 0.02 7 0.03 5 0.05 0 1.16 8

YEAR4

0.00 0 0.01 5 0.01 5 0.01 5 0.02 1 0.03 0 0.03 0 0.03 6 0.04 2 0.05 9 AVG . COS T

CREDI T 

## S

0.01 3 0.01 3 0.01 3 0.01 5 0.01 7 0.01 9 0.02 0 0.02 3 0.02 4

AVG . COS T CREDI T 

## S

0.01 3 0.01 3 0.01 3 0.01 5 0.01 7 0.01 9 0.02 1 0.02 4 0.08 8

YEAR5

0.00 0 0.01 3 0.01 3 0.01 3 0.01 9 0.02 7 0.02 7 0.03 3 0.03 8 0.05 3 CREDIT S

GENERATE D mil .

168.6 3 281.0 5 393.4 7 505.8 9 618.3 1 730.7 3 843.1 5 955.5 7 1,011.7 8

CREDIT S GENERATE D oil .

168.6 3 281.0 5 393.4 7 505.8 9 618.3 1 730.7 3 843.1 5 955.5 7 1,011.7 8

SUL . RED . FO RCRED .

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 CREDIT S

NEEDE D mi l

(1,011.78 ) (843.15 ) (730.73 ) (618.31 ) (505.89 ) (393.47 ) (281.05 ) (168.63 ) (56.21 ) 0.0 0

CREDIT S NEEDE D mi l

(1,011.78 ) (843.15 ) (730.73 ) (618.31 ) (505.89 ) (393.47 ) (281.05 ) (168.63 ) (56.21 ) 0.0 0

# TABL E 2A P.1 4

CAS E 1 : FUL L BANKINGANDTRADING

DIESE L FUE L SEGREGATE D

SULFU RREDUCTIO N

MAR GCOST : 0.02 2

GENERATIO N

AND US E O F CREDIT S YEAR1 YEAR2 YEA R3 YEAR4 YEAR5

ANNUA L COST S I N

S MILLION/YEAR PAD 1 PAD 2 PAD 3 PAD 4 PAD 5

PAD 1 PAD 2 PAD 3 PAD 4 PAD 5

PAD 1 PAD 2 PAD 3 PAD 4 PAD S 0.0 0 0.0 0 0.1 1 0.0 9 0.0 7 0.1 1

0.0 0 0.1 1 0.0 9 0.0 7 0.1 1

0.0 0 0.1 1 0.0 9 0.0 7 0.1 1

0.0 0 0.1 1 0.0 9 0.0 9 0.1 1

0.0 0 0.1 1 0.1 1 0.0 9

YEAR1 YEAR2 YEA R3 YEAR4 YEAR5 

### SU M

0.0 0 0.0 0 1,959.3 2 137.9 7 393.4 7

YEAR1

SO . 0 0 SO . 0 0 $28.5 7 S1.9 0 $5.2 4 369.3 8

0.0 0 1,959.3 2 137.9 7 393.4 7

YEAR2

S5.8 5 $0.0 0 . $28.5 7 $1.9 0 $5.2 4 369.3 8

0.0 0 1,959.3 2 137.9 7 393.4 7

YEAR3
$5.8 5 $0.0 0 $28.5 7 $1.5 3 $5.2 4 (235.06 )

(1.938.15 ) (1,246.84 ) (137.97 ) (505.89 )

GRAND TOTAL :

YEAR4
$5.8 5 $0.0 0 $28.5 7 $1.5 3 $7.4 3 (235.06 )

(1,938.15 ) (1,246.84 ) (107.31 ) (505.89 )

YEAR5
$5.8 5 $0.0 0 $28.5 7 $2.1 9 $7.4 3 268.6 4

(3,876.30 ) 3 , 384.2 8 168.6 3 168.6 3

113.8 8

DISC SU

M $18.5 4 $0.0 0 $119.1 3 $7.5 4 $24.9 9
$35.7 1 $41.5 6 $41.1 9 $43.3 8 $44.0 4 $170.2 1

COS T SAVING S — $ MILLIO N $166.4 1

COS T SAVINGADJUSTE D FO REXCES S CREDIT S $168.1 3

# TABL E 2 B

CAS E 2 : MAXIMUM SULFU RCONTEN T O F 0.1 0 PERCEN T I N 1994-9 5 DIESE L FUE L SEGREGATE D

SULFURREDUCTIO N

MARGCOST : 0.019 5

GENERATIO N

AND US E O F CREDIT S

ANNUA L COST S I N

$ MILLION/YEA R PAD 1 PAD 2 PAD 3 PAD 4 PAD 5

PAD 1 PAD 2 PAD 3 PAD 4 PAD S

PAD 1 PAD 2 PAD 3 PAD 4 PAD 5 

### 1

0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 YEAR2

0.0 0 0.0 0 0.0 0 0.0 9 0.0 7 YEAR3

0.0 9 0.0 0 0.1 1 0.0 9 0.0 7 YEAR4

0.1 3 0.1 3 0.1 3 0.1 3 0.1 3 YEAR5

0.1 3 0.1 3 0.1 3 0.1 3 0.1 3

YEAR1

YEAR1 YEAR2 YEAR3 YEA R4 YEAR5 

### SU M

0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0

0.0 0 0.0 0 137.9 7 393.4 7 302.2 2

0.0 0 1,959.3 2 137.9 7 393.4 7 (167.90 )

(538.38 ) (890.60 ) (76.65 ) (281.05 ) (167.90 )

(538.38 ) (890.60 ) (76.65 ) (281.05 ) (33.58 )

(1,076.75 ) 178.1 2 122.6 4 224.8 4

YEAR2 GRAND TOTAL : (584.73 )

YEAR3 YEA R4 YEA R5 DIS C SU M
$0.0 0 $0.0 0 $0.0 0 $0.0 0 $0.0 0
$0.0 0 $0.0 0

$0.0 0 $0.0 0 $1.9 0 $5.2 4
$7.1 4 $4.7 4

$0.0 0 $28.5 7 $1.5 3 $5.2 4
$40.0 8 $7.5 7

$44.5 6 $43.8 8 $3.1 2 $13.5 2
$112.6 5 $7.5 7

$44.5 6 $43.8 8 $3.1 2 $13.5 2
$112.6 5 $14.7 8

$63.9 1 $86.5 5 $7.4 7 $28.4 9
$201.1 9

COS T SAVINGS — $ MILLIO N $135.4 3

COS T SAVINGS ADJUSTE D FO REXCES S CREDIT S $127.6 4

# TABL E 2 C

CAS E 3 : EXCHANGE S I N 1994-9 5 A T A

RATI O O F 2: 1 DIESE L FUE L SEGREGATE D

SULFU RREDUCTIO N 1994-9 5 MAR GCOST : 0.04 5

1991-9 3 MAR GCOST : 0.022 5

GENERATIO N

AN D US E O F CREDIT S

ANNUA L COST S I N

$ MILLION/YEA R 

## /

PAD 1 PAD 2 PAD 3 PAD 4 PAD S

PAD 1 PAD 2 PAD 3 PAD 4 PAD S YEA R1

0.0 0 0.0 0 0.1 1 0.0 9 0.0 7

YEA R1

0.0 0 0.0 0 979.6 6 68.9 9 196.7 4 YEAR2

0.1 1 0.0 0 0.1 1 0.0 9 0.0 7

YEAR2

184.6 9 0.0 0 979.6 6 68.9 9 196.7 4 YEAR3

0.1 1 0.0 0 0.1 1 0.0 9 0.0 7

YEAR3

184.6 9 0.0 0 979.6 6 68.9 9 196.7 4 YEA R4

0.1 5 0.0 9 0.1 1 0.1 8 0.1 7

YEA R4
(100.74 ) (969.08 ) (1,246.84 ) 0.0 0 (56.21 ) YEAR5

0.1 7 0.1 1 0.1 3 0.1 8 0.1 7

YEAR5
(33.58) (753.73 ) (890.60 ) 0.0 0 (56.21 ) 

### SU

M
23 5 (1,72 2 

### 80 1 20 6 47 7 0 6 80 ) 5 4 9 6 7 9

PAD 1 PAD 2 PAD 3 PAD 4 PAD S YEAR1 GRAN D TOTAL : (1.46 )

YEAR2 YEAR3 YEA R4 YEAR5 DIS C SUM
$0.0 0 $0.0 0 $28.5 7 $1.9 0 $5.2 4
$35.7 1 $5.8 5

$0.0 0 $28.5 7 $1.9 0 $5.2 4
$41.5 6

COS T SAVING S $5.8 5 $0.0 0 $28.5 7 $1.5 3 $5.2 4
$41.1 9

COS T

ADJUSTE D FO R $9.7 7 $22.2 5 $28.5 7 $5.5 6 $21.5 4
$87.6 9

SAVING S $12.5 9

$31.6 0 $43.8 8 $5.5 6 $21.5 4
$115.1 7

— $ MILLIO N

EXCES S CREDIT S $26.0 9 $38.3 0 $129.5 9 $12.8 7 $45.2 3
$252.0 8
$84.5 4
$84.5 0

# TABL E 2 D P.1 7

CAS E 4 : EXCHANGE S A T A RATI O O F 2: 1 AN D MAXIMU M SULFURCONTEN T O F 0.1 0 PERCEN T I N 1994-9 5 DIESE L FUE L SEGREGATE D

SULFU RREDUCTIO N 1994-9 5 MAR GCOST : 0.04 3 YEAR1

1991-9 3 MAR C COST : 0.021 5

GENERATIO N

AND US E O F CREDIT S

ANNUAL COST S I N

$ MILLION/YEA R PAD 1 PAD 2 PAD 3 PAO 4 PAD 5

PAD 1 PAD 2 PAD 3 PAD 4 PAD S

PAD 1 PAD 2 PAD 3 PAD 4 PAD S 0.0 0 0.0 0 0.0 0 0.0 9 0.0 7

YEAR1

YEA R1 2

0.0 9 0.0 0 0.1 1 0.0 9 0.0 7 YEAR3

0.1 1 0.0 0 0.1 1 0.0 9 0.0 7 YEA R4 YEAR5

YEAR2 YEAR3 0.1 5 0.1 3 0.1 3 0.1 8 0.1 7

YEA R4 0.1 7

0.1 3 0 . 0 . 0 ,

YEAR5 1 3 1 8 1 7



### SU

M

0.0 0 0.0 0 0.0 0 68.9 9 196.7 4 151.1 1

0.0 0 979.6 6 68.9 9 196.7 4 184.6 9

0.0 0 979.6 6 68.9 9 196.7 4 (100.74 )

(538.38 ) (890.60 ) 0.0 0 (56.21 ) (33.58)

(538.38 ) (890.60 ) 0.0 0 (56.21 ) 201.4 8

(1,076.75 ) 178.1 2 206.9 6 477.7 9

GRAND TOTAL : (12.41)

YEAR2 YEAR3 YEAR4 YEAR5 DIS C SU M
$0.0 0 $0.0 0 $0.0 0 $1.9 0 $5.2 4 $4.7 4

$0.0 0 $28.5 7 $1.9 0 $5.2 4 $5.8 5

$0.0 0 $28.5 7 $1.5 3 $5.2 4 $9.7 7

$44.5 6 $43.8 8 $5.5 6 $21.5 4 $12.5 9

$44.5 6 $43.8 8 $5.5 6 $21.5 4 $25.0 8

$63.9 1 $112.5 2 $12.8 7 $45.2 3
$7.1 4 $40.4 5 $41.1 9 $125.3 1 $128.1 3 $259.6 2

COS T SAVING S — $ MILLIO N $77.0 0

COS T SAVINGS ADJUSTE DFO REXCES S CREDIT S $76.6 4CAS E 5 : BANKIN GAN DTRADIN GOVE RTHRE E YEAR S DIESE L FUE L SEGREGATE D

SULFURREDUCTIO N

MAR GCOST : 0.018 5

ADJ . MARGCOS T 0.02238 5

GENERATIO N

AN D US E O F CREDIT S YEA R1 YEAR2 YEAR3

ANNUA L COST S I N

$ MILLION/YEA R 0.0 0 0.0 0 0.1 1 0.0 9 0.0 7 0.1 1

0.0 0 0.1 1 0.0 9 0.0 7 0.1 1

0.0 0 0.1 1 0.0 9 0.0 7

YEAR1 YEAR2 YEAR3 PAD 1 PAD 2 PAD 3 PAD 4 PAD S

PAD 1 FAD 2 PAD 3 PAD 4 PAD 5

PAD 1 PAD 2 PAD 3 PAD 4 PAD S

TOTA L COS T $35.7 1 $41.5 6 $41.1 9

COS T ADJUSTE D FO REXCES S CREDIT S 

### SU M

0.0 0 0.0 0 1,959.3 2 137.9 7 393.4 7

YEAR1
$0.0 0 $0.0 0 $28.5 7 $1.9 0 $5.2 4 369.3 8

0.0 0 1,959.3 2 137.9 7 393.4 7

GRAND TOTAL :

YEAR2
$5.8 5 $0.0 0 $28.5 7 $1.9 0 $5.2 4 (235.06 )

(1,938.15 ) (1,246.84 ) (137.97 ) (618.31 )

YEA R3
$5.8 5 $0.0 0 $28.5 7 $1.5 3 $5.2 4 134.3 2

(1,938.15 ) 2,671.8 0 137.9 7 168.6 3

1174.5 7

DIS C SU

M $10.1 5 $0.0 0 $78.1 5 $4.8 9 $14.3 3
$107.5 3
$89.5 7 P.1 8



# TABL E 2 E0 3 

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tf l a M O W ^|Od*.<**J00Ot O OtOM^JOCI^JO O O^lr'UIO«*00O^J0 D or.*-a>r.*-*jo*-o o oaioaotoc-ovoooo o a P I r - tf l I - o C O

T J

COSPREADSHEE T FO RDIESE L FUE L SULFU RANALYSI S 

## TABL E 3 B

PAD : PAD 2 CASE : UNSEGREGATE D CAPITAL : UNCONSTRAINE D 

### 48 9 178.48 5 MMB Y

SULFU R CONTEN T SUL . RED .

FO RCRED . MARGI N

BAS E CREDI T BAS E 0.2 S 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 0.0 0

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 9,195.3 5

9,179.9 7 9,171.7 2 9,163.4 1 9,149.2 9 9,129.3 1 9,104.5 3 9,062.2 0 9,007.7 0 8,974.1 4 TOTAL CHANG E I N INC . COS T AVG . COS T COS T MARGI N SUL . REDUCT . CRE 1 

## $ $

15.3 8 23.6 3 31.9 4 46.0 6 66.0 4 90.8 2 133.1 5 187.6 5 221.2 1 8.2 5

8.3 1 14.1 2 19.9 8 24.7 8 42.3 3 54.5 0 33.5 6 0.00 0

0.02 6 0.02 3 0.02 3 0.04 0 0.05 6 0.06 9 0.11 9 0.15 3 ' 0.18 8 OS

D ]

0 0 0 0 0 0 0 0 0 > T

. T

02 9 02 6 02 6 02 9 03 4 03 9 OS O 06 2 06 9 CREDIT S GENERATE D 

### mil

.

535.4 6 892.4 3 1,249.4 0 1,606.3 7 1,963.3 4 2,320.3 1 2,677.2 8 3,034.2 5 3,212.7 3 CREDIT S

NEEDE D mi l

(3,212.73 ) (2,677.28 ) (2,320.31 ) (1,963.34 ) (1,606.37 ) (1,249.40 ) (892.43 ) (535.46 ) (178.48 ) 0.0 0

PAD : CASE : CAPITAL : PAD 2

UNSEGREGATE D CONSTRAINE D 

### 48 9 178.48 5 MMB Y

SULFU R CONTEN T SUL . RED .

FO RCRED .

BAS E CREDI T BAS E

MARGINAL COS T ADJ . FO RDISC . RAT E 0.2 5 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

SULFU R CONTEN T 0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

SUL . RED . FO RCRED . MARGI N

9,195.3 5
9,000.0 0 TOTAL CHANG E I N INC . COS T AVG . COS T COS T MARGI N SUL . REDUCT . CREDI T 

## $ $

195.3 5 0.00 0 0.36 5 0.36 5

YEAR1 YEA

R2 YEAR3 YEAR4 YEA R5 CREDIT S GENERATE D mil .

535.4 6 892.4 3 1.249.4 0 1,606.3 7 1,963.3 4 2,320.3 1 2,677.2 8 3,034.2 5 3,212.7 3

SUL . RED . FO RCRED . CREDIT S

NEEDE D mi l

(3,212.73 ) (2,677.28 ) (2,320.31 ) (1,963.34 ) (1,606.37 ) (1,249.40 ) (892.43 ) (535.46 ) (178.48 ) 0.0 0

BAS E CREDI T BAS E 0.2 5 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 0.0 0

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 0.00 0

0.53 4 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0

0.48 6 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0

0.03 1 0.02 8 0.02 8 0.04 8 0.06 8 0.08 4 0.14 3 0.18 5 0.22 8 0.00 0

0.02 9 0.02 5 0.02 6 0.04 4 0.06 2 0.07 6 0.13 0 0.16 8 0.20 7 0.00 0

0.02 6 0.02 3 0.02 3 0.04 0 05 6 06 9 11 9 15 3 18 8 0.0 3

0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.17 . 0.1 8

### SPREADSHEE T FO RDIESE L FUE L SULFURANALYSI S 

## TABL E 3 C P.2 1

CASE : CAPITAL :

PAD : CASE : CAPITAL :

MARGINA L ADJ . FO R UNSEGREGATE D

UNCONSTRAINE D

BAS E CREDI T BAS E



## *

PAD 3 UNSEGREGATE D CONSTRAINE D

BAS E CREDI T BAS E

COS T DISC . RAT E

BAS E CREDI T BAS E 132 7

SULFU R CONTEN T

0.2 4 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

132 7

SULFU R CONTEN T

0.2 4 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

SULFU R CONTEN T

0.2 4 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 SUL . FO R

SU L FO R

SU L FO R RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 484.35 5

MARGI N

17,983.4 3

17,957.6 2 17,944.6 0 17,930.1 4 17,911.6 6 17,869.6 0 17,811.6 6 17,747.4 2 17,673.3 8 17,606.2 1

484.35 5

MARGI N

17,983.4 3
17,957.6 2 17,944.6 0 17,930.1 4 17,000.0 0

YEAR1

0.00 0 0.02 3 0.02 0 0.02 2 1.40 6 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 MMB Y

TOTA L COS T

25.8 1 38.8 3 53.2 9 71.7 7 113.8 3 171.7 7 236.0 1 310.0 5 377.2 2

MMB Y

TOTA L COS T

25.8 1 38.8 3 53.2 9 983.4 3

YEA R2

0.00 0 0.02 1 0.01 8 0.02 0 1.27 8 0.00 0 0.00 0 0.00 0 0.00 0 0.00 0 CHANG E I N

MARGI N

13.0 2 14.4 6 18.4 8 42.0 6 57.9 4 64.2 4 74.0 4 67.1 7

CHANG E I N MARGI N

13.0 2 14.4 6 930.1 4

YEAR3

0.00 0 0.01 9 0.01 6 0.01 8 0.02 3 0.05 3 0.07 2 0.08 0 0.09 2 0.16 8 INC . COS T SUL . REDUCT . 

## $

0.00 0 0.01 6 0.01 3 0.01 5 0.O1 9 0.04 3 0.06 0 0.06 6 0.07 6 0.13 9

INC . COS T SUL . REDUCT . 

## $

0.00 0 0.01 6 0.01 3 0.01 5 0.96 0

YEAR4

0.00 0 0.01 8 0.01 5 0.01 6 0.02 1 0.04 8 0.06 6 0.07 3 0.08 4 0.15 3 AVG . COS T

CREDI T 

## $

0.01 8 0.01 6 0.01 6 0.01 6 0.02 1 O.02 7 0.03 2 0.03 8 0.04 3

AVG . COS T CREDI T 

## $

0.01 8 0.01 6 0.01 6 0.22 6

YEA R5

0.00 0 0.01 6 0.01 3 0.01 5 0.01 9 0.04 3 0.06 0 0.06 6 0.07 6 0.13 9 CREDIT S

GENERATE D mil .

1,453.0 7 2,421.7 8 3,390.4 9 4,359.2 0 5,327.9 1 6,296.6 2 7,265.3 3 8,234.0 4 8,718.3 9

CREDIT S GENERATE D mil .

1,453.0 7 2,421.7 8 3,390.4 9 4,359.2 0 5,327.9 1 6,296.6 2 7,265.3 3 8,234.0 4 8,718.3 9

SUL . RED . FO RCRED .

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 CREDIT S

NEEDE D mi l

(8,718.39 ) (7,265.33 ) (6,296.62 ) (5,327.91 ) (4,359.20 ) (3,390.49 ) (2,421.78 ) (1,453.07 ) (484.35 ) 0.0 0

CREDIT S NEEDE D mi l

(8,718.39 ) (7,265.33 ) (6,296.62 ) (5,327.91 ) (4,359.20 ) (3,390.49 ) (2,421.78 ) (1,453.07 ) (484.35 ) 0.0 0SPREADSHEE T FO RDIESE L FUE L SULFU RANALYSI S 

## TABL E 3 D

PAD : PAD 4 CASE : UNSEGREGATE D CAPITAL : UNCONSTRAINE D 

### 8 4 30.6 6 MMB Y

SULFU R CONTEN T SUL . RED .

FO RCRED .

BAS E CREDI T BAS E 0.3 2 0.2 3 0.2 0 0.1 8 0.1 6 1 4 1 2 1 0 0 8 0.0 6 0.0 5 MARGI N

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 1,376.9 8

1,374.7 5 1,374.2 2 1,373.7 0 1,372.9 5 1,371.4 0 1,368.7 4 1,365.7 4 1,361.9 0 1,358.6 2 TOTAL CHANG E I N INC . COS T AVG . COS T COS T MARGI N SUL . REDUCT . CRE1 

## $ $

2.2 3 2.7 6 3.2 8 4.0 3 5.5 8 8.2 4 11.2 4 15.0 8 

### 18.3 6 0.5 3

0.5 2 0.7 5 1.5 5 2.6 6 3.0 0 3.8 4 3.2 8 0.00 0

0.01 5 0.00 9 0.00 8 0.01 2 0.02 5 0.04 3 0.04 9 0.06 3 0.10 7 OS T

DI T

0.02 4 0.01 8 0.01 5 0.01 5 0.01 7 0.02 1 0.02 4 0.02 9 0.03 3 CREDIT S

GENERATE D mil .

91.9 8 153.3 0 214.6 2 275.9 4 337.2 6 398.5 8 459.9 0 521.2 2 551.8 8 CREDIT S

NEEDE D mi l

(551.88 ) (459.90 ) (398.58 ) (337.26 ) (275.94 ) (214.62 ) (153.30 ) (91.98 ) (30.66 ) 0.0 0

PAD : CASE : CAPITAL : PA

D 4 UNSEGRECATE D CONSTRAINE D 

### 8 4 30.6 6 MMB Y

SULFU R CONTEN T SUL . RED .

FO RCRED . MARGI N

BAS E CREDI T BAS E

MARGINAL COS T ADJ . FO RDISC . RAT E

BAS E CREDI T BAS E 0.3 2 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

SULFU RSUL CONTEN T FO R

0.3 2 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 0.0 0

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 1,376.9 8

1,374.7 5 1,374.2 2 1,373.7 0 1,372.9 5 1,371.4 0 1,300.0 0

YEAR1

0.00 0 0.02 2 0.01 3 0.01 2 0.01 8 0.03 7 1.70 5 0.00 0 0.00 0 0.00 0 TOTAL CHANG E I N INC . COS T AVG . COS T COS T MARGI N SUL . REDUCT . CREDI T 

## $ $

2.2 3 2.7 6 3.2 8 4.0 3 5.5 8 76.9 8

YEAR2

0.00 0 0.02 0 0.01 2 0.01 1 0.01 6 0.03 4 1.55 0 0.00 0 0.00 0 0.00 0 0.5 3

0.5 2 0.7 5 1.5 5 71.4 0

YEAR3

0.00 0 0.01 8 0.01 0 0.01 0 0.01 5 0.03 1 0.05 2 0.05 9 0.07 6 0.12 9 0.00 0

0.01 5 0.00 9 0.00 8 0.01 2 0.02 5 1.16 4

YEAR4

00 0 01 7 01 0 00 9 01 3 02 8 04 8 05 4 06 9 0.02 4

0.01 8 0.01 5 0.01 5 0.01 7 0.19 3

0.11 8 YEA R5

0.00 0 0.01 5 0.00 9 0.00 8 0.01 2 0.02 5 0.04 3 0.04 9 0.06 3 0.10 7 CREDIT S

GENERATE D mil .

91.9 8 153.3 0 214.6 2 275.9 4 337.2 6 398.5 8 459.9 0 521.2 2 551.8 8

SUL . RED . FO RCRED . CREDIT S

NEEDE D mi l

(551.88 ) (459.90 ) (398.58 ) (337.26 ) (275.94 ) (214.62 ) (153.30 ) (91.98 ) (30.66 ) 0.0 0

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

### SPREADSHEE T FORDIESE L FUE L SULFURANALYSI S 

## TABL E 3 E

CASE : CAPITAL :

PAD : CASE : CAPITAL :

MARGINAL ADJ . FO R UNSEGREGATE D

UNCONSTRAINE D

BAS E CREDI T BAS E



## *

PAD 5 UNSEGREGATE D CONSTRAINE D

BAS E CREDI T BAS E

COS T DISC . RAT E

BAS E CREDI T BAS E 26 7

SULFU R CONTEN T

0.2 3 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

26 7

SULFU R CONTEN T

0.2 3 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5

SULFU R CONTEN T

0.2 3 0.2 3 0.2 0 0.1 8 0.1 6 0.1 4 0.1 2 0.1 0 0.0 8 0.0 6 0.0 5 SUL . FO R

SUL . FO R

SU L FO R RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8

RED . CRED .

0.0 0 0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 97.45 5

MARGI N

5,088.9 0 5,088.9 0 5,085.0 1 5,082.4 2 5,079.1 4 5.073.6 9 5,066.3 1 5,058.8 7 5,051.4 3 5,042.9 2 5,036.4 6

97.45 5

MARGI N

5,088.9 0 5,088.9 0 5,085.0 1 5,082.4 2 5,079.1 4 5,073.6 7 5,000.0 0

YEA R1

0.00 0 0.01 9 0.01 9 0.02 5 0.04 1 0.55 3 0.00 0 0.00 0 0.00 0 0.00 0 MMB Y

TOTA L COS T

0.0 0 3.8 9 6.4 8 9.7 6 15.2 1 22.5 9 30.0 3 37.4 7 45.9 8 52.4 4

MMB Y

TOTA L COS T

0.0 0 3.8 9 6.4 8 9.7 6 15.2 3 88.9 0

YEAR2

0.00 0 0.01 8 0.01 8 0.02 2 0.03 7 0.50 3 0.00 0 0.00 0 0.00 0 0.00 0 CHANG E I N

MARGI N

3.8 9 2.5 9 3.2 8 5.4 5 7.3 8 7.4 4 7.4 4 8.5 1 6.4 6

CHANG E I N MARGI N

0.0 0 3.8 9 2.5 9 3.2 8 5.4 7 73.6 7

YEAR3

0.00 0 0.01 6 0.01 6 0.02 0 0.03 4 0.04 6 0.04 6 0.04 6 0.05 3 0.08 0 INC SUL .

INC SUL . COS T REDUCT . 

## $

0.00 0 0.01 3 0.01 3 0.01 7 0.02 8 0.03 8 0.03 8 0.03 8 0.04 4 0.06 6

. COS T REDUCT . 

## $

0.00 0 0.01 3 0.01 3 0.01 7 0.02 8 0.37 8

YEAR4

0.00 0 0.01 5 0.01 5 0.01 9 0.03 1 0.04 2 0;04 2 0.04 2 0.04 8 0.07 3 AVG . COS T

CREDI T 

## $

0.01 3 0.01 3 0.01 4 0.01 7 0.02 1 0.02 4 0.02 6 0.02 8 0.03 0

AVG . COS T CREDI T 

## $

0.01 3 0.01 3 0.01 4 0.01 7 0.08 3

YEA R5

0.00 0 0.01 3 0.01 3 0.01 7 0.02 8 0.03 8 0.03 8 0.03 8 0.04 4 0.06 6 CREDIT S

GENERATE D mil .

292.3 7 487.2 8 682.1 9 877.1 0 1,072.0 1 1,266.9 2 1,461.8 3 1,656.7 4 1,754.1 9

CREDIT S GENERATE D mil .

292.3 7 487.2 8 682.1 9 877.1 0 1,072.0 1 1,266.9 2 1,461.8 3 1,656.7 4 1,754.1 9

SUL . RED . FO RCRED .

0.0 3 0.0 5 0.0 7 0.0 9 0.1 1 0.1 3 0.1 5 0.1 7 0.1 8 CREDIT S

NEEDE D 

### mil .

(1,754.19 ) (1,461.83 ) (1,266.92 ) (1,072.01 ) (877.10 ) (682.19 ) (487.28 ) (292.37 ) (97.45 ) 0.0 0

CREDIT S NEEDE D mil .

(1,754.19 ) (1,461.83 ) (1,266.92 ) (1,072.01 ) (877.10 ) (682.19 ) (487.28 ) (292.37 ) (97.45 ) 0.0 0

### " ' 7 

### ' 

# TABL E 4 A

CAS E 1 : FUL L BANKINGANDTRADING

DIESE L FUE L UNSEGREGATE D

SULFU RREDUCTIO N

MAR GCOST : 0.0 3

GENERATIO N

AN D US E O F CREDIT S

ANNUAL COST S I N

$ MILLION/YEA R PAD 1 PAD 2 PAD 3 PAD 4 PAD 5

PAD 1 PAD 2 PAD 3 PAD 4 PAD S

PAD 1 PAD 2 PAD 3 PAD 4 PAD 5 YEAR1

0.0 9 0.0 0 0.0 7 0.0 9 0.0 7

YEA R1

604.4 4 0.0 0 3,390.4 9 275.9 4 682.1 9

YEAR1
$10.1 5 $0.0 0 $53.2 9 $4.0 3 $9.7 6
$77.2 3 YEAR2

0.0 9 0.0 0 0.0 7 0.0 9 0.0 7

YEA R2

604.4 4 0.0 0 3,390.4 9 275.9 4 682.1 9

YEAR2
$10.1 5 $0.0 0 $53.2 9 $4.0 3 $9.7 6
$77.2 3 3

0.0 9 0.0 0 0.0 9 0.0 9 0.0 7

3 YEA

R4

0.1 1 0.0 7 0.0 9 0.1 1 0.0 7

YEA R4 YEA

R5

0.1 3 0.0 7 0.0 9 0.1 1 0.0 9
YEA R5

604.4 4 (470.12 ) 0.0 0 (1,963.34 ) 4,359.2 0 (4,359.20 ) 275.9 4 (214.62 ) 682.1 9 (1,072.01 )

YEAR3
$10.1 5 $0.0 0 $71.7 7 $4.0 3 $9.7 6 GRAND TOTAL :

YEAR4
$13.6 9 $31.9 4 $71.7 7 $5.5 8 $9.7 6 SU M
(335.80 ) 1,007.4 0 (1,963.34 ) (3,926.67 ) (4,359.20 ) 2,421.7 7 (214.62 ) 398.5 8 (877.10 ) 97.4 6

(1.46 )

YEAR5
$17.4 8 $31.9 4 $71.7 7 $5.5 8 $15.2 1 DIS C SU

M
$49.9 9 $45.8 1 $263.9 9 $19.0 3 $44.4 2
$95.7 1 $132.7 4 $141.9 8 $423.2 4

COS T SAVINGS — $ MILLIO N $579.9 9

COS T SAVING S ADJUSTE DFO REXCES S CREDIT S $579.9 6CAS E 2 : MAXIMUM SULFU RCONTEN T O F 0.1 0 PERCEN T I N 1994-9 5 DIESE L FUE L UNSEGREGATE D 

# TABL E 4 B

SULFU RREDUCTIO N

MAR C COST : 0.021 5

GENERATIO N

AN D US E O F CREDIT S

ANNUA L COST S I N

$ MILLION/YEA R PAD 1 PAD 2 PAD 3 PAD 4 PAD 5 YEAR1 YEAR2

YEAR1 YEAR3 YEAR4 YEAR5

0.0 0 0.0 0 0.0 0 0.0 0 0.0 5 0.0 3

0.0 0 0.0 7 0.0 9 0.0 5 0.0 7

0.0 0 0.0 7 0.0 9 0.0 7 0.1 3

0.1 3 0.1 3 0.1 3 0.1 3 0.1 3

0.1 3 0.1 3 0.1 3 0.1 3

YEAR2 YEAR3 YEA R4 YEA R5 

### SU M

PAD 1 PAD 2 PAD 3 PAD 4 PAD S

PAD 1 PAD 2 PAD 3 PAD 4 PAD 5 0.0 0 0.0 0 0.0 0 0.0 0 487.2 8

YEAR1
$0.0 0 $0.0 0 $0.0 0 $0.0 0 $6.4 8 201.4 8

0.0 0 3,390.4 9 275.9 4 487.2 8

YEAR2
$3.1 3 $0.0 0 $53.2 9 $4.0 3 $6.4 8 470.1 2

0.0 0 3,390.4 9 275.9 4 682.1 9

YEAR3
$7.5 3 $0.0 0 $53.2 9 $4.0 3 $9.7 6 (335.80 )

(892.43 ) (2,421.78 ) (153.30 ) (487.28 )

GRAN D TOTAL :

YEAR4
$17.4 8 $90.8 2 $171.7 7 $8.2 4 $30.0 3 (335.80 )

(892.43 ) (2,421.78 ) (153.30 ) (487.28 )

YEAR5
$17.4 8 $90.8 2 $171.7 7 $8.2 4 $30.0 3 (0.00 )

(1,784.85 ) 1,937.4 2 245.2 8 682.1 9
1,080.0 4

DIS C SU

M
$34^1 4 $130.2 7 $338.8 6 $18.8 1 $63.5 1
$6.4 8 $66.9 3 $74.6 1 $318.3 4 $318.3 4 $585.5 9

COS T SAVINGS — $ MILLIO N $417.6 4

COS T SAVING S ADJUSTE D FO REXCES S CREDIT S $433.5 0

# TABL E 4 C

CAS E 3 : EXCHANGE S I N 1994-9 5 A T A

RATI O O F 2: 1 DIESE L FUE L UNSEGREGATE D

SULFU RREDUCTIO N 1994-9 5 MAR GCOST : 0.06 4

1991-9 3 MAR GCOST : 0.03 2

GENERATIO N

AN D US E O F CREDIT S PAD 1 PAD 2 PAD 3 PAD 4 PAD S YEAR1

YEAR1 YEAR2 YEA R3 YEAR4

YEAR2 YEAR3 YEA R4 YEAR5

0.0 9 0.0 0 0.0 7 0.0 9 0.0 7 0.0 9

0.0 0 0.0 7 0.0 9 0.0 7 0.1 1

0.0 7 0.0 9 0.1 1 0.0 7 0.1 8

0.1 1 0.1 1 0.1 5 0.1 7 0.1 8

0.1 1 0.1 3 0.1 7 0.1 7

YEAR5 

### SU

M

ANNUA L COST S I N

$ MILLION/YEA R PAD 1 PAD 2 PAD 3 PAD 4 PAD S 302.2 2 0.0 0 1,695.2 4 137.9 7 341.0 9 302.2 2

0.0 0 1,695.2 4 137.9 7 341.0 9 369.3 8

624.7 0 2,179.6 0 168.6 3 341.0 9 0.0 0

(1,249.40 ) (3-.390.49 ) (91.98 ) (97.45)

GRAN D TOTAL : ( 1

( 2 0.0 0 249.40 ) 421.78 ) (30.66) (97.45) ( 1 973.8 2

,874.09 ) (242.18 ) 321.9 3 828.3 7

7.8 5

PAD 1 PAD 2 PAD 3 PAD 4 PAD S YEAR1
$10.1 5 $0.0 0 $53.2 9 $4.0 3 $9.7 6 YEAR2

$10.1 5 $0.0 0 $53.2 9 $4.0 3 $9.7 6 YEAR3

$13.6 9 $31.9 4 $71.7 7 $5.5 8 $9.7 6 YEA R4

$30.2 1 $66.0 4 $113.8 3 $11.2 4 $45.9 8 YEAR5

$30.2 1 $66.0 4 $171.7 7 $15.0 8 $45.9 8 DIS C SU

M
$74.0 2 $121.1 2 $363.8 9 $31.0 5 $92.6 5
$77.2 3 $77.2 3 $132.7 4 $267.3 0 $329.0 8 $682.7 3

COS T SAVING S — $ MILLIO N $320.5 0

COS T SAVING S ADJUSTE D FO REXCES S CREDIT S $320.8 4

# ''"" M 

# TABL E 4 D P.2 7

CAS E 4 : EXCHANGE S A T A RATI O O F 2 DIESE L FUE L UNSEGREGATE D 1 ANDMAXIMU M SULFU RCONTEN T O F 0.1 0 PERCEN T I N 1994-9 5

SULFURREDUCTIO N 1994-9 5 MAR GCOST : 0.04 7 YEAR1

1991-9 3 MARGCOST : 0.023 5 PAD 1 PAD 2 PAD 3 PAD 4 PAD S 0.0 3 0.0 0 0.0 7 0.0 9 0.0 5 

### 2

0.0 7 0.0 0 0.0 7 0.0 9 0.0 7 YEA R3

0.0 7 0.0 0 0.0 9 0.0 9 0.0 7 YEA R4 YEAR5

0.1 7 0.1 3 0.1 3 0.1 3 0.1 5 0.1 7

0.1 3 0.1 3 0.1 3 0.1 7

GENERATIO N

AND US E O F CREDIT S YEAR1 YEAR2 YEAR3 YEAR4 YEAR5 

### SU M

PAD 1 PAD 2 PAD 3 PAD 4 PAD 5 100.7 4 0.0 0 1,695.2 4 137.9 7 243.6 4 235.0 6

0.0 0 1,695.2 4 137.9 7 341.0 9 235.0 6

0.0 0 2,179.6 0 137.9 7 341.0 9 (67.16 )

(892.43 ) (2;421.78 ) (153.30 ) (292.37 )

GRAN D TOTAL : (67.16 ) (892.43 ) (2,421.78 ) (153.30 ) (97.45) 

### ( 1 436.5 4

,784.85 ) 726.5 3 107.3 1 536.0 0

21.5 4

ANNUA L COST S I N

$ MILLION/YEA R

PAD 1 PAD 2 PAD 3 PAD 4 PAD S AR1



### $ 3 $ 0 $5 3 $ 4 $ 6 $6 6 1 3 0 0 2 9 0 3 4 8
9 3 YEAR2

COS T 

### $ 7 $ 0 $5 3 $ 4 $ 9 $7 4 5 3 0 0 2 9 0 3 7 6
6 1

SAVING S YEAR:



### $ 7 $ 0 $7 1 $ 4 $ 9 $9 3 5 3 0 0 7 7 0 3 7 6
0 9 YEAR4



### $2 6 $9 0 $17 1 

### $ 8 $3 7
$33 4 

### 6 8 8 2 7 7 2 4 4 7
9 8

COS T SAVING S

ADJUSTE D FO R EXCES S YEAR5 

### $2 6 $9 0 $17 1 

### $ 8 $4 5
$34 3 

### 6 8 8 2 7 7 2 4 9 8

4 9

-- $ MILLIO N

CREDIT S DIS C SU M 

### $5 4 $13 0 $40 7 

### $2 2 $8 2
$69 7
$30 5
$30 5 

### 4 7 2 7 4 2 8 4 9 8
9 7

2 6
9 5P.2 8


## TABL E 4 E

CAS E 5 : BANKIN C AN DTRADIN GOVE RTHRE E YEAR S

DIESE L FUE L UNSEGREGATE D

SULFU RREDUC 1

MAR GCOST :

ADJ . MAR GCOS T "IO

N

0.02 1

0.02541 PAD l PAD 2 PAD 3 PAD 4 PAD 5 YEAR1 YEAR2 YEAR3

0.0 7 0.0 0 0.0 7 0.0 9 0.0 7 0.0 7

0.0 0 0.0 7 0.0 9 0.0 7 0.0 9

0.0 0 0.0 9 0.0 9 0.0 7

GENERATIO N

AN D US E O F CREDIT S YEAR1 YEAR2 YEAR3 

### SU M

PAD l PAD 2 PAD 3 PAD 4 PAD 5 470.1 2 0.0 0 3,390.4 9 275.9 4 682.1 9 470.1 2

0.0 0 3,390,4 9 275.9 4 682.1 9

GRAND TOTAL : (604.44 )

(3,212.73 ) (4,359.20 ) (275.94 ) (1,072.01 ) 335.8 0

(3,212.73 ) 2,421.7 8 275.9 4 292.3 7

113.1 5

ANNUA L COST S I N

$ MILLION/YEA R

FAD 1 PAD 2 PAD 3 PAD 4 PAD 5

TOTA L COS T YEAR1
$7.5 3 $0.0 0 $53.2 9 $4.0 3 $9.7 6
$74.6 1 YEAR2

$7.5 3 $0.0 0 $53.2 9 $4.0 3 $9.7 6
$74.6 1 YEA R3

$10.1 5 $0.0 0 $71.7 7 $4.0 3 $9.7 6
$95.7 1 DIS C SU

M
$22.7 6 $0.0 0 $161.0 5 $11.0 2 $26.7 0
$221.5 4

COS T ADJUSTE D FO REXCES S CREDIT S $219.5 7

# TABLE 5

Estimate

dCos t Savin

g fro m Banking an

dTradin

g

Scenario/Cas e Cos t o f Exces s Cos t Saving s Credit s Credit s Modelle d Adjusted 5 

# --($)-

- -(mil ) ( $ million)--

- Segregated :
Cas e 1 : Ful l b & t Cas e 2 : 0. 1 % Cas e 3 : 2: 1 Cas e 4 : 0. 1 % 2: 1

Cas e 5 : Earl ycompl

. 0.02 2 0.019 5 0.04 5 0.04 3 11 4

(585 ) 

# ( D (12 ) $ 16 6

13 5 8 5 7 7 $ 16 8

12 8 8 5 7 7
0.018 5 1,17 5 10 8 9 0

Unsegregated :
Cas e 1 : Ful l b & t Cas e 2 Cas e 3 Cas e 4 0. 1 %

2: 1 0. 1 % 2: 1 0.03 0

0.021 5 0.06 4 0.04 7 (2 )

1,08 0 8 2 2 $ 58 0 41 8 32 0 30 5 $ 58 0

43 4 32 1 30 6
Cas e 5 : Earl ycompl

. 0.02 1 11 3 22 2 22 0

Source : Table s 2 Athroug h2 E an d Table s 4 Athrough4E

.

a 

# Calculate d a s the su mof : (1 ) th

e modelle d cos t savings ; an d (2 ) the equilibriu

mpermi t pric e time s th e exces s numbe r o f credit s discounte d a t 10 % fo r four years . Fo r Cas e 5 , earl ycompliance , th e latte r amoun t i s discounte d fo r tw o year s an

d i s subtracte d fro mestimate d contro l costs

.

# TABLE 6

Estimatio

no f Average Sulfu

r Content inDistillate , b y PA D Distric t

Numbe r 1 Fue l Corresponding PA D Regio n

1 2 3 4 5 Easter n Centra l Souther n Rock yMountai n Wester n Diese l Fue l

198 5 198 6

0.10 8 0.07 2 0.11 4 0.09 7 0.05 0 0.08 2 0.10 2 0.08 4 0.07 7 0.03 2 Home Heating Oi l

198 5 198 6

- -(percent )
0.08 2 0.12 3 0.04 2 0.11 2 0.04 6 0.08 7

0.12 9 0.07 0 0.08 6 0.02 7 Averag e

0.09 0 0.10 6 0.07 8 0.09 3 0.03 9
Numbe r 2 Fue l Corresponding PA D Regio n

1 2 3 4 5 Easter n Centra l Southern Rock yMountai n Wester n Diese l Fue l

198 5 198 6

0.23 7 0.26 4 0.22 5 0.31 6 0.25 9 0.23 7 0.26 2 0.25 8 0.34 6 0.23 1 Home Heating Oi l

198 5 198 6 Averag e (percent )
0.25 0 0.26 7 0.25 5 0.32 9 0.22 6 0.22 1

0.26 0 0.23 4 0.34 3 0.25 2 0.23 6

0.26 3 0.24 3 0.33 4 0.23 4

Corresponding PA D Regio n

1 2 3 4 5 Easter n Centra l Souther n Rock yMountai n Wester n Averag e Percen t

Sulfur Conten t # 1 Fue l # 2 Fue l (percent )
0.09 0 0.10 6 0.07 8 0.09 3 0.03 9 0.23 6

0.26 3 0.24 3 0.33 4 0.23 4 Weighte d

Volume o f Sale s Avg

. Sulfur # 1 Fue l # 2 Fue l Conten t (bil

. gal.)-

- -(percent)

- 0.18 4 0.74 6 0.03 0 0.09 5 0.10 3 16.30 6

12.52 7 10.00 4 1.43 6 6.14 1 0.23 4

0.25 4 0.24 3 0.31 9 0.23 1

Sources : Sulfur Content :

Table s 1 an

d 2 , Diese l Fue l Oils

. 1986

. prepare d b yNationa l Institut e fo r Petroleu

man d Energ yResearc hfo r AP I an d U.S

. DOE , Oct

. 1986 ; an d
Table s 1 an

d 2 , Heating Oils

. 198 6 Augus t 1986

. Volume o f Sales :
Table s 4 7 an

d 43 , Petroleu

mMarketing Annual

. 1986

. Energ y Informatio n Administration

.