B&V E-23 1 11/4/10 

### PNM Responses to Joe Kordzi ’s email of November 1, 2010

Question 1: The revised costs include a correction to the air heater modifications for Units 3 and 4, which were inadvertently double counted in prio r estimates. The record so far does not contain the vendor quote on which the air heater costs are based, or any other support. In response to our previous reque st, B&V responded that the information is not in the public record. As these costs are large, we n eed the supporting vendor proposal for the air heater modifications.

Response: Please refer to PNM response to EPA’ s other email from November 1, 2010.

Question 2: We cannot confirm B&V's costs for electrical equipment. The original cost estimate includes $484,000 per unit for an "electrical sy stem upgrade." We cannot confirm this cost, using the SJRPP proposals that were pr ovided or the cost excerpt in the OAQPS Commentary, Appx. B, Section 4.11: Electrical Upgrades. Please provide a calculation cited to specific pages/line items of the supplied quotes and identify each item that is included.

Response: The following items were taken from the SJ RPP quotation and include d in the San Juan estimate:

• 480 volt feeder breakers – budget price of $69,200 for 2 units

• Low voltage switchgear (for small electrical loads like the ammonia system) – budget price of $248,000 for 2 units

• 480 volt motor control centers (MCC’s) (f or small electric al loads like the ammonia system) – budget price of $500,000 for 2 units

• Secondary Unit Substation Transfor mer – budget price $180,000 for two units

The total budgetary cost fo r all of these items was $1,065,10 0 for two units ($532,550 per unit). These costs ar e shown in the budgetary estimate build up for SJRPP, previously supplied to the EPA. The actual costs were somewhat different, but in the same range. The actual quotations were provide d to the EPA last week.

This budgetary cost was then scal ed using the following equation:

000

, 484 $ cos 670 544 550

, 532 $ 03

. 1 3

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= ⎟ ⎠ ⎞ ⎜ ⎝ ⎛
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t PNM Unit t PNM MW SJRPP MW unit PNM t SJRPP rate escalation t PNMB&V E-23 2 11/4/10 The electrical modifications discussed above are independent of B& V’s updated auxiliary power assessment (submitted to the EPA on Oc tober 22, 2010) because these are the low voltage requirements and do not support the ad ditional power requirements for the draft fans. The auxiliary power assessment performed by B&V (and submitted to the EPA on October 22, 2010) was performed to assess the auxiliary power needs of the draft fans.

In addition to the costs above, which were al l used for supplying power to the small SCR loads (dilution air fans, NOx monitoring syst ems, elevator, seal air fans, etc.), a $1,000,000 allowance (per unit) was included in the original balance draft conversion estimate to cover modification associated with the new fans. This $1,000,000 was an allowance and was not based on any quotations or detailed estimating. It was simply an allowance.

When B&V performed a detailed assessment of the auxiliary power needs, the $1,000,000 allowance was removed from the bala nce draft conversion estimate to ensure that auxiliary power costs were not being doubl e counted. This is explained in Table 4 and Table 5 of PNM’s cost estimate update , submitted to the EPA on October 22, 2010.

Question 3: You have added a new cost item, entitled "auxiliary electric system requirements," amounting to $6,400,000 for each of Units 1 and 2 and $8,350,000 for each of Units 3 and 4. These additions are based on "min imum" load changes to talling 25,594 kw. An SCR typically uses about 0.3% of a plant's electric output. In the original B&V cost estimate, the annual auxiliar y and ID fan power was calculated assuming 4,881 kW, which is equal to about 0.3% of the plan t output. We do not understand the basis for ascribing 100% of the cost for upgrading auxiliary electrical equipment to support increases in load that are five times greater than the demand of the SCR alone. We feel that if any of these costs are warranted, th ey should be proportioned among the various Consent Decree modifications. To make this calculation, we will need a list of the Consent Decree modifications, the cost of each project, and the load change for each.

Response: Attachment 1 is being provided to give information on the late st fan sizing calculation. We continue to update and revise the fan si zing calculation and improve it as we gain more knowledge about the plant operation. B&V’s estimate assumes that the existing fans would be replaced with larger fans to handle the new system pressure requirements from SCR installation. This is especially required for Units 3 and 4 ID fans, which are already running at their maximu m capacity with no margin left for nominal ash fouling of convective heat transfer surfaces or leakage that is expect ed to increase between major unit maintenance outages. The new fans would be sized to operate normally at the full load conditions of the modified units, as we ll as 20 percent margin on pressure on the maximum continuous rating. Maximum Co ntinuous Rating (MCR) refers to the equipment design values. This is where B&V predicts the equipment will be operating at full load without margin. Test Block (TB) re fers to the maximum capability of the draft fan equipment and includes margin for nominal fouling and system leakage. The margin allows for some operating and maintenance flex ibility to allow the unit to continue toB&V E-23 3 11/4/10 meet full load if, for example, boiler c onvection pass surfaces are fouled with ashdeposits and the air heater has worn seals which results in additional leakage beyond asnew conditions. The electrical system has to be sized to allow starting of the new larger fan motors as well as continuously operate at the test block conditions, but this is not necessarily where the unit will be continuously operating.

For the sizing of ID fans for new genera ting units, the standa rd B&V fan sizing philosophy for developing test block (TB) conditions is recommended. This philosophy includes the application of the following it ems to the required MCR conditions for the new fans:

• 10 percent margin on flue gas exiting the boiler

• 50 percent margin on leakages throughout the draft system

• 50 percent margin on air heat er differential pressure

• 25°F temperature increase at the fan inlet

• Adjustments of draft system pressure dr ops to correspond with increased TB flow
rates

• 1.0 inch of water gauge (in w.g.) control allowance The application of these items typically results in flow margins in the range of 15 to 20 percent and pressure margins in the range of 35 to 45 percent. Compared to normal fan margins for new units, the fan margins for re trofit AQCS modifications are normally less, as is the case for the ID fan sizing used for the conceptual design for the SJGS.

This calculation shows that for Units 1 and 2, approxi mately 2,200 kW (3,000 hp) additional fan capacity is requi red per unit to add the SCR. For Units 3 and 4, 8,600 kW (11,600 hp) additional fan capacity is required.

For the consent decree, the following a uxiliary electric work was performed:

• New control system for the Unit 1 and 2 st artup transformer to prevent both units from starting up at the same time.

• New 480 v motor control centers for the fabric filter loads

No new transformers or switchge ar were added to the station for the new fan impacts that resulted from the recent consent decree work . Instead, the spare capacity of the plant auxiliary electric system was used towards supplying power to the fans. There is no spare capacity left at the plant for additiona l power consumption that would result with the addition of SCR. The additional electrical load requirements are based on the modifications needed to support the draft e quipment impacts of SCR operation and are not considered current constraints as the SJGS is operating as intended utilizing the air pollution control systems installed to comply with the consent decree.

When sizing the auxiliary electr ic system, it is recommended that the fans run off of a dedicated transformer. There ar e two options for providing this transformer. First, is to provide a new, dedicated transformer and asso ciated equipment to power the new fans. The other option would be to clear off an existing transfor mer and move smaller loads from an existing transformer to a new, smalle r transformer. In this second approach, the new fans could be run off of the old transformer (once it ha s been cleared off). ThisB&V E-23 4 11/4/10 option may sound less expensive because th e transformer being purchased would be smaller. However, the difference in cost is typically made up be the labor associated in re-routing all the smaller, non fa n loads to the new transformer. It increases the retrofit difficulty of the project and the uncertainty for additional costs resulting from complications in this option. Therefore, the first option was selected by B&V and was described in the updated cost estimate submitted to the EPA on October 22, 2010.B&V E-23 5 11/4/10 Attachment 1

Fan Sizing CalculationB&V E-23 6 11/4/10