Summary of Meeting with EnerNOC 

Regarding the Existing Stationary RICE NESHAP 

August 25, 2010 

Attendees 

Penny Lassiter, EPA Mark Foreman, EnerNOC (by phone) 

Bob Wayland, EPA (by phone) David Friedland, Beveridge & Diamond (by phone) 

Melanie King, EPA Bruce Campbell, EnergyConnect (by phone) 

Michael Horowitz, EPA (by phone) 

Don DiCristofaro, Blue Sky Environmental 

Rick Counihan, EnerNOC 

Tom Rutigliano, CPower (by phone) 

Howard Feibus, Innoventive Power (by phone) 

Herb Healy, EnerNOC (by phone) 

 

Summary of Meeting

EnerNOC requested this meeting with EPA to discuss their petition for reconsideration of 

the final national emission standards for hazardous air pollutants (NESHAP) for stationary 

compression ignition reciprocating internal combustion engines. 75 FR 9648 (March 3, 2010). 

Rick Counihan and Don DiCristofaro gave a presentation to EPA regarding the operation of 

emergency engines in demand response programs and the reasons why they believe the 

allowance for emergency demand response operation in the NESHAP should be increased to 60 

hours or the minimum hours required by the Independent System Operator tariff. A copy of the 

presentation given by EnerNOC is provided as Attachment 1. EPA indicated that the next step is 

to publish a Federal Register notice indicating that EPA has granted reconsideration on the issue 

of emergency demand response and requesting public comment on the issue. 
Emergency Demand Response callout discus

Rick Counihan, Don DiCristofaro representing the co-petition

August 25, 2010

Confidential Settlement Communication
Agenda

• Problem statement• Our recommended solution Our recommended solution• Timeline for this proceeding• Overview of arguments for increasing the 15 hour limitation• R t dt ecent updates

– Comments regarding Delaware’s position– Emergency Demand Response events in 2010– O i f J l 7 2010 t PJM t Overview of July 7, 2010 eastern PJM event– Emergency emissions due to July PJM event

• Review of our recommended solution and next steps• Q ti /Di i Questions/Discussion

Confidential Settlement Communication 
Problem statement

The 15 hour limit mayp g y g g y p 

preclude emergency engines from emergency demand resp

• The NESHAPS as written mayp g y g prevent emergency engines fr

participating in emergency Demand Response (DR) programthese engines will not be able to meet tariff requirements that speminimum hours of availability for participation

• Engines then would have to be treated as non-emergency engine

NESHAPS in order to meet tariff requirements

• Sites committed to last-resort emergency operation will drop out 

program if th i d t f d d d it t t t

if they are required to fund upgrades and commit to test

Emergency DR should not be confused with other forms of o

distributed generation including economic DR, peak shavingforms of non-emergency operation

Confidential Settlement Communication 
Our recommended solution

The callout works if it The callout works if it s’ adjusted to address program requirements adjusted to address program requirements

• Maintain the existing callout for emergency DR

• Set the hours limitation as the lesser of:

– M i f 60 h Maximum o

f 60

hours per year 

– Minimum hours required by Independent System Operator 

Confidential Settlement Communication 
Timeline for this proceeding

We’re continuing to work towards a resolution

• Last met with EPA March 30, 2010; discussed in detail NERC Sta

ISO Tariffs

• Subsequent phone call, EPA made clear Agency would not make 

May 3, therefore a lawsuit had to be filed

• CPower, Inc., EnergyConnect, Inc., EnerNOC, Inc., and Innovent

LLC (Companies) filed Petition for Review on May 3 to preserve 

• Companies filed Petition for Reconsideration on May 27• Court ordered abeyance of Petition for Review on June 4; require

status reports

• EPA approved reconsideration on August 2

The Companies are looking to arrive at a mutually acceptabl

Confidential Settlement Communication 
Arguments for increasing the 15 hour lim

Reconsideration of callout terms is 

justified and reasonable

• E DR b fit th i t Emergency DR

benefits the environmen

t

• ISOs must follow North American Electric Reliability Counci

when dispatching DR for Capacity and Energy Emergencies

• Emergency DR Programs are rarely dispatched, therefore the 

they will be dispatched to their maximum hours is minimal, but thmeet tariff requirements that specify minimum hours of availab

participation

• EPA’s justification for the 15 hour limit reflects a misinterpretatio

comments supporting DR

• Numerous states allow emergency engines to participate Numerous states allow emergency engines to participate in 

in 

DR; no state limits participation to 15 hours

• EPA set a precedent for the use of emergency engines in emer

programs in the Mandatory Greenhouse Gas Reporting Final 

in the Mandatory Greenhouse Gas Reporting Final 

Confidential Settlement Communication 
Emergency DR benefits the environment

Infrequent emergency DR dispatches prevent larger environmental issues• Record peak demand does not always result in an emergency 

response event response event; grid abnormalities tend to drive event dispatches ; grid abnormalities tend to drive event dispatches

• If the grid fails, every emergency generator in the area will ope

extended period of time

– The existing emergency generator fleet includes many poorly mainta

The existing emergency generator fleet includes many poorly maintapermitted generators

– Demand Response programs only utilize curtailment or properly perm

generation

• After a grid failure it can take days to restore conditions to no

operating levels, affecting public health and safety 

– During the August 2003 eastern blackout many millions of gallons of 

sewage from NYC was dumped into rivers due to power failure

• Study prepared for EPA1 shows that DR programs in New Eng

benefit air quality1 Study by Synapse Energy Economics included as Attachment 1 of our Petition for Reconsiderat

Confidential Settlement Communication
Grid operators must follow NERC standards

Emergency DR dispatches are governed by rigorous procedures and reportin

• North American Electric Reliability Council (NERC) require

plans for Capacity and Energy Emergencies plans for Capacity and Energy Emergencies to be executed 

to be executed 

dispatching Emergency DR

• When facing an energy shortfall a grid operator must declare 

Energy g y Emer

genc

y Alert Level 2 ( ); 

EEA Alert 2); measures at 

can include:

– Public appeals– Voltage reduction– Interruption of non-firm load– Demand response– Utility-side load conservation

• Following an EEA Alert 2 declaration, the grid operator must 

back to the NERC on causes, measures taken to address the and post-event mitigation

Confidential Settlement Communication 
Emergency DR Programs Are Rarely Dispa

The risk of dispatch to maximum hours is low

Location Total events 

called, 2003-

Cumulative 

event 

Notes

2009 duration 

(hours)

ERCOT 0 NoneISO-NE 3 26 • Southwest Connecticut only dispatche

hours) following 2003 blackout

• Connecticut only dispatched in 2005 (• All of New England dispatched in 2006 

NYISO 10 80 • No events called in 2004, , 2008 or 200

• 2 events (total 22 hours) of events dis

immediately following 2003 blackout

• 5 events (total 35 hours) in 2006; majo

responded to distribution system failur

PJM 5 20 • All events called in eastern PJM zone

zone have not been called

Confidential Settlement Communication 
EPA’s justification for 15 hour limit

The EPA’s limit rationale is not supported by the record• The Demand Response Service Providers (DRSP) Coalition pro

comments on the initial 

p g, g y roceeding, includin

g a histor

y of NYISO 

response dispatches

• EPA’s response to DRSP’s comment letter and hour limit justific

noted that:“As discussed in the response to comment 6.1.1, EPA believes that it would be apallow engines to retain their status as emergency engines under subpart ZZZZ if thpart of demand response programs for 15 hours of operation per year or less in sigrid failure and a blackout are imminent. The commenter’s information indicateengine has needed more than 15 hours of operation per year to meet their reunder their demand response programs. This alleviates the concerns exprecommenter.” [emphasis added] (Responses to Comments Section 13.5.2, at pag

Nothing in the DRSP’s letter supports the EPA’s justification

Confidential Settlement Communication 
EPA misinterpreted DRSP’s comments

The 15 hour limit is based on an avera

g , pp e not a reasonable upper limit

• The DRSP did not endorse a 15 hour limit The DRSP did not endorse

a 15 hour limit; the letter stated tha

; the letter stated tha

emergency demand response was dispatched in New York betw40 hours per year over an 8 year history to address system emewith an average of 16 hours/per year

• Data presented by the DRSP Coalition shows that a 15 hour lim

have been exceeded in three of the past seven years

• The DRSP Coalition concurs that their comments were misin

(see Attachment 17 in Petition to EPA)

Confidential Settlement Communication 
Regulators recognize the value of DR

Most permitting agencies allow the operation of emergency engines for emer

Regions that currently support emergency DR in air regul

• Connecticut*• Massachusetts*• Vermont*• Rhode Island

*

• Maryland*• Virginia*• West Virginia

• Rhode Island

• Illinois

• Maine• New York• Pennsylvania (all but Philadelphia County)• Ohio

*

• Illinois• Indiana• Michigan• Texas

• Ohio

Regions that do not currently support emergency DR in air re

D l Phil d l hi C t PA

St t t d ith * i d l t h t f ilit t DR

•

D

elaware

• New Jersey

• Phil

a

d

elphia 

County, PA

• Washington, DC

St

ates note

d with * require

d regulatory c

hange to facilit

ate emergency DR

participation by emergency engines

Confidential Settlement Communication 
EPA set a precedent in GHG reporting regu

The EPA included emergency DR in the emergency generator definition in thGreenhouse Gas reporting standards 

The EPA carved out emergency DR, without an hours limitatioemergency generator definition in Final Rule of the GHG reportinregulation:

An emergency generator operates only during emergency situations for traininAn emergency generator operates only during emergency situations, for trainin

personnel under simulated emergency conditions, as part of emergency demanresponse procedures, or for standard performance testing procedures as requirlaw or by the generator manufacturer. A generator that serves as a back-up posource under conditions of load shedding, peak shaving, power interruptions pu

to an interruptible power service agreement, or scheduled facility maintenance be considered an emergency generator.

Source: 40 C

• Emergency engines participating in emergency DR are emergency gene

thus exempt from the GHG reporting regulation

• En

gines 

partici

patin

g in non-emer

genc

y DR are not considered emer

g

Confidential Settlement Communication 

g p pg g y g 

generators and are not exempt from the GHG reporting regulation
Recent updates on engines in emergency 

Correspondence and actual event dispatc Correspondence and actual event dispatches have brought clarity to this issu

have brought clarity to this issu

• Filings by Delaware Filings by Delaware on the NESHAPS on the NESHAPS have clarified their pos

have clarified their pos

will continue to advocate our position on the merits of emergency emergency DR programs

• Several emer

g y pg enc

y DR 

pro

grams have been called this sum

successful outcomes

• Eastern PJM was called on July 7, 2010 to mitigate a significa

issue on the I-95 corridor

• Estimates of emissions during the July 7, 2010 eastern PJM ev

being miscalculated

Confidential Settlement Communication 
Comments regarding Delaware’s position

We app y reciate Delaware’s concerns but believe they are unfounded• Met in May with OTC Chair and Ali Mirzakhalili (DNREC Division of Air Qu

Director) to discuss and understand Delaware’s concerns

• DNREC confuses peak shaving with emergency DR; in their August 5, 20

comment letter to EPA, DNREC refers to engines at poultry farms being u

“to achieve lower electric rates in exchange for operating the emergency generators as peak demand scenarios Delaware believes that the change in the definition of emerpeak demand scenarios....Delaware believes that the change in the definition of emer

ICE explicitly provides for this type use”

• DNREC’s comment letter further noted that their current air regulations pre

engines from participating in emergency DR unless engines meet strict emDNREC’s overarching concern that emergency DR will be used on woquality days is unfounded based on actual program use data

Year # ozone exceedence days # ELRP events

2008 14 02009 3 0

2010 4 1 (eastern PJM only)

Confidential Settlement Communication 
Emergency DR events with generation in 

Events disp yg y atched this summer were driven by localized 

grid instability

Grid Operator Event 

D

EventZ

Duration (hrs) Notes

ate one

ERCOT None • Record peak dema

this summer, yet no dispatched

ISO NE

N Si ifi t ti 

- one • Significant generati

June 24 with curtailemergency DR disphours

• Highest summer de

highest all time) occhighest all time) occ

NYISO June 28

July 6July 7

SubzonesNYCNYC

766

• Localized grid insta

peak load

• Supply constraints

PJM May 26

June 11July 7Aug 12 

PepcoPepcoMid AtlanticPepco

444 – 5 (varied by zone)

6

• Unplanned transmis• Generation outages• Consecutive days w

Confidential Settlement Communication 
July 7, 2010 eastern PJM DR event - ove

Only part of PJM was dispatched to address grid issues in that specific area

Confidential Settlement Communication 

Other PJM zones not called for this emergency DR event
Emergency engine emissions due to July PJ

Delaware’s comment letter grossly overestimates emissions

• Emergency DR dispatched for 5.3 hours in Dominion and 3.9 

Mid Atl ti Mid Atlantic zones

• PJM estimates 12,500 MWh of demand response realized in th

• Only about 46 tons NOx was emitted by diesel generators

• This value is contrary to the estimate presented in Delaware’s 

letter:

 If one erroneously assumes all of this came from emergency engines (N

assumption) and uses AP assumption) and uses AP-42 for emissions 42 for emissions, NOx = 217 tons = 217 tons

 HOWEVER, only about 25% of emergency DR came from backup ge

came from curtailment (e.g., turning down lights, air conditioning, manufaprocesses, etc.)

 Assuming 65% non tier rated 25% tier 1 rated and 10% tier 2 rated Assuming 65% non tier rated, 25% tier 1 rated, and 10% tier

2 rated, NO

be 46 tons

 25% engine assumption is probably too high since emergency engine us

in DC, Philadelphia County, NJ, and Delaware (some coops exempt)

 The 46 ton estimate does NOT net out emissions from other generation 

The 46 ton estimate does NOT net out emissions from other generation 

due to total emergency DR of 12,500 MWh

Confidential Settlement Communication 
Review of our recommendation and next st

How do we move forward from here

?

Our recommendation:• Maintain the existin

g callout for emer

g y enc

y DR

• Set the hours limitation as the lesser of:

– Maximum of 60 hours per year – Minimum hours re

quired 

b

yp y p Inde

pendent S

ystem O

perator tariff

• This change will meet PJM (60 hours) and ERCOT (24 hours) tarif• This change should allow emergency engines to maintain eligibility 

and NYISO

Questions:• How else can we help you with this issue? How else can we help you with this issue?• Can we provide additional information?• What are your next steps?• The hours limit is turning up in other regulations and thus timely re

warranted; what is your timeline?

Confidential Settlement Communication 
Contact Information

Rick Counihan – Vice President Regulatory AffairsEnerNOC, Inc. | 400 8th St., NW, Suite 804 | Washington, DC 20004415.517.1861rcounihan@enernoc.comDon DiCristofaro – Air Quality Meteorologist Consultant to EnerNOC, Inc. | 101 Federal Street, Suite 1100 | Boston, 617 834 8408 617.834.8408ddicristofaro@enernoc.comDavid Friedland – Attorney Beveridge & Diamond, PC | 1300 I Street, NW, Suite 700 | Washington202.789.6190dfriedland@bdlaw.com

Confidential Settlement Communication