Revised October 15, 2009



## Revised Nevada Division of Environmental Protection BART Determination Review of NV Energy’s Tracy Generating Station Units 1, 2 and 3

EXPLANATION: BOLD text below identifies the Guid elines for BART Determinatio ns under the Regional Haze Rule in Appendix Y of 40 CFR 51.

BACKGROUND

A BART analysis was completed by CH2M HILL at the reques t of NV Energy (NVE) for units 1, 2 and 3 at the Tracy Generating Station (Tracy ) dated October 3, 2008. Tr acy consists of three BART eligible units with a generating capacity of 251 megawatts (MW), of which unit 1 is a 55 MW, unit 2 is 83 MW and unit 3 is 113 MW. The Title V permit allows burning pipeline quality natural gas (PNG) or blended residual (No. 2 and No. 6 and non-PCB mineral oil) fuel oil. In completing the BART analysis, technology alte rnatives were investigated and potential reductions in NO x , SO 2 and PM 10 emissions rates were identified by NVE. NVE’s BART analysis is summarized below, organized accord ing to the five step analysis contained in Appendix Y of 40 CFR 51 Appendix Y, followed by NDEP’s analysis and BART determination.

NV ENERGY ANALYSIS

STEP 1 – Identify all availabl e retrofit emissions control tech niques; alternatives can be categorized in three ways:

• Pollution prevention (used of inherentl y lower-emitting processes/practices);

• Use of (and where already in place, impr ovement in the perf ormance of) add-on controls; or

• Combination of pollution prevention and add-on controls.

NVE identified the following em ission reduction scenarios: Potential NO x Control Options (Current controls consist of good combustion practices)

• Low NO x Burners (LNB)

• LNB with Flue Gas Recirculation (FGR)

• LNB with Selective Non-Catalytic Reduction (SNCR) System

• Rotating Opposed Fire Air (ROFA) with Rotamix

• LNB with Selective Catalytic Reduction (SCR) System Potential SO 2 Control Options (No SO 2 controls currently implemented)

• Unit 1 – Use of low-sulfur No. 2 fuel oil

• Unit 2 – Use of low-sulfur No. 2 fuel oil or Spray Dryer Absorber (SDA)

• Unit 3 - Use of low-sulfur No. 2 fuel oil or Spray Dryer Absorber (SDA) Potential PM 10 Control Options (No PM 10 controls currently implemented)

• Unit 1 - No control proposed.

• Unit 2 – Use of low-sulfur No. 2 fuel oil and LNB, or dry Electrostatic Precipitator (dry ESP), or wet Electrosta tic Precipitator (wet ESP) or Fabric Filter

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• Unit 3 – Use of low-sulfur No. 2 fuel oil and LNB, or dry ESP, or wet ESP or Fabric Filter

STEP 2 – Eliminate technically infeasible options based on:

• Availability (commercial availability); and

• Applicability (has it been used on the same or a similar source type).

NO x Technical feasibility for the proposed control options were based on physical constraints, boiler configuration and emissi on reduction potential. Howeve r, the installation of overfire air (OFA) was the only control option elim inated due to the potential cost of boiler wall changes.

SO 2 Technical feasibility for the proposed contro l option was based on fuel storage delivery constraints, boiler configurati on, and on the ability of low-sulf ur No. 2 fuel oil to achieve SO 2 reduction.

PM 10 Unit 1 NVE indicated that Tracy unit 1 is considered to meet BART PM 10 emissions levels when burning either PNG or low-sulfur No. 2 fuel oil.

Units 2 and 3 Technical feasibility for the proposed control options was based on physical, chemical and emissions reduction potenti al. Dry ESP was eliminated due to the uncertainty in chemical and physical characteristics of the oi l-fired particulate and the increased loading from SDA. Likewise, wet ESP was eliminated due to the potential increased particulate loading from an SDA not allowing the wet E SP to meet the required control efficiency when used in conjunction with SDA. Fabric filter is expected to function properly only with pre-coating and the in creased particulate loading from the SDA operation.

STEP 3 – Evaluate contro l effectiveness of rema ining control options:

• Make sure you express the degree of co ntrol using a metric that ensures an “apples to apples” comparison of emissions performance levels among options (e.g., lb SO 2 /MMBtu); and

• Give appropriate treatment and considerati on of control techniques that can operate over a wide range of emission performance levels (evaluate most stringent control level that the technol ogy is capable of achieving plus other scenarios).

NO x NVE estimates the following control efficiencies with each control option: 1) LNB - unit 1 at 8.4 percent, unit 2 at 38.7 percent, and unit 3 at 16.4 percent. 2) LNB with FGR - unit 1 at 41.1 percent, unit 2 at 51.4 percent, and unit 3 at 28.8 percent.

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3) LNB with SNCR - unit 1 at 31.3 percent, unit 2 at 54 percent, and unit 3 at 37.3 percent. 4) ROFA with Rotamix - unit 1 at 49.1 percent, unit 2 at 52 percent, and unit 3 at 45.2 percent. 5) LNB with SCR - unit 1 at 74.5 percent, unit 2 at 85.2 percent, unit 3 at 78.3 percent.

SO 2 Unit 1 Control efficiency not estimated. NVE indicat ed that unit 1 is una ble to burn 100 percent No. 2 fuel oil because capital improvements would be required.

Units 2 and 3 Control efficiency for SDA estimated at 84.8 percent with an emissions level of 0.10 lb/MMBtu. NVE indicated that units 2 and 3 are unable to burn 100 percent No. 2 fuel oil because capital improvements would be required.

PM 1 0 Unit 1 Control efficiency not stated. Un it is considered to meet BART PM 10 emissions levels when burning either PNG or low-sulfur No. 2 fuel oil.

Units 2 and 3 Control efficiency for fabric fi lter is estimated at 76.9 percen t with an emissions level of 0.015 lb/MMBtu. Conversion to No. 2 fuel o il with LNB is estimated to meet an emissions level of 0.03 lb/MMBtu (3-hr average).

STEP 4 – Impact analysis

• Cost of compliance (identify emission units, design parameters, develop cost estimates);

o Baseline emissions rate should represent a realistic depiction of anticipated annual emissions for the source. In gen eral, for the existing sources subject to BART, the anticipated annual emissions will be estimated based upon actual emissions from a baseline period.

• Energy impacts;

o Direct energy consumption for the co ntrol device, not indirect energy impacts.

• Non-air quality environmental impacts;

o Solid or hazardous waste generation or discharges of polluted water from a control device.

• Remaining useful life;

o Can be included in the cost analysis.

Costs of Compliance Control options cost comparisons are presen ted in Tables 3-3, 3- 5 and 3-7 (except the unit 1 report, which does not include Tabl e 3-7) of each NVE BART determination

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report. An economic analysis of the control options is presented in the appendix to each BART determination report.

Energy Impacts The installation of LNB is not expected to impact boiler effi ciency or forced draft fan power usage substantially. Installation of ROFA with Rotamix or SNCR will result in additional power requirements ranging from 55 to 239 kilowatts. SCR retrofit will increase pressure drop. No energy impacts for SO 2 reduction are associated with switching to low-sulfur No. 2 fuel oil; how ever additional system pressure drop will result from installation of SDA. Ther e is no additional energy impact from PM 10 reduction as a result of LNB or burning low-sulfur No. 2 fuel oil. Fabric filter and ductwork will add a pressure dr op to the system. No energy impact costs for are included in the economic analysis presented in the appendix to each NVE BART determination report for SO 2 and PM 10 control options.

Environmental Impacts SNCR, Rotamix and SCR installation could potentially create a visible stack plume, which may impact visibility improvements. Transport of ammonia to the site may be an issue in the event of an accident al release. No environmenta l impact is associated with switching to low-sulfur No. 2 fuel o il or installation of an SDA for SO 2 emissions reduction. No negative environmental impacts are expected from the utilization of new LNB’s, switching to low-sulfur No. 2 fuel oil, or utilizing a fabric filter for PM 10 emissions reduction.

Remaining Useful Life The remaining useful life is estimated to be 23 years from the installation of BART controls for units 1, 2 and 3.

STEP 5 – Determine visibili ty impacts (improvements):

• Run the model at pre-control and post-control emission rates; and

• Determine net visibility improvement;

• Compare 98 th percent days for pre- and post-control runs.

Modeling for pre-control and post-control emission rates demonstrates an improvement in visibility based on the BART conclusions presented by NVE for units 1, 2 and 3 at Tracy. The NO x emission rate (0.40 lb/MMBtu) mode led by NVE is in excess of their proposed BART limit (0.25 lb/MMBtu for unit 1, 0.29 lb/MMBtu for unit 2 and 0.27 lb/MMBtu for unit 3 all on an annual basis). Consequently, the modeling results show less improvement in visibility than would be achieved with NVE’s proposed BART limit. Modeling results for other tec hnically feasible control op tions were not presented.

NDEP ANALYSIS

Based on the information provided in NVE’s Oc tober 2008 BART determination reports, NDEP concurs with each BART determination for units 1, 2 and 3 at Tracy, with the exception of the installation of only LN B for control of NO x emissions at units 2 and 3, and the proposed NO x

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emission limits at all three units. For all Tracy units, BART for SO 2 is use of PNG and/or lowsulfur No. 2 fuel oil with an emission lim it of 0.05 lb/MMBtu, base d on a 24-hr averaging period. For PM 10 , BART is also PNG and/or low-sulfur No. 2 fuel oil but with an emission limit of 0.03 lb/MMBtu, 3-hr average.

For NO x , NDEP established a baseline emissions scen ario using Acid Rain Data from calendar years 2002 through 2007. NDEP used the average of the two consecutive years of the highest annual NOx emissions to establish the NO x baseline emissions. NVE’s cost and control efficiencies presented for each control technology were taken at face-value and used in NDEP’s economic analysis and BART determination. The control technologies were ordered from highest to lowest contro l efficiency. NDEP’s economic analys is summary is presented in Table 1.

TABLE 1


### NDEP ECONOMIC ANALYSIS SUMMARY

Tracy Unit 1

Current Operation ( Uncontrolled ) LNB w/SCR ROFA w/Rotamix LNB w/FGR LNB w/SNCR LNB Capital Cost $ 0 $ 21,175,000 $ 7,389,835 $ 1,820,000 $ 4,431,875 $ 1,232,000 First Year O&M Cost $0 $194,090 $129,900 $83,589 $68,330 $22,000 First Year Debt Service $ 0 $ 2,245,736 $ 783,736 $ 193,022 $ 470,027 $ 130,661 Total Annual Cost $0 $2,439,826 $913,636 $276,611 $538,357 $152,661

Base Heat Input (MMBtu) 1,772,289 Total Heat Input allowed (MMBtu) 6,403,560 Base emissions (tons) 221 NOx Removal Rate % 0.0% 74.5% 49.1% 41.1% 31.3% 8.4% N O x R e m o v e d ( T o n s ) 0 1 6 4 1 0 8 9 1 6 9 1 NOx Emission Rate (Tons) 221 56 112 130 152 202

NOx Emission Rate (lb/MMBtu) 0.064 0.127 0.147 0.171 0.228 First Year Cost ($/ton removed) $14,840 $8,432 $3,050 $7,794 $8,235 Incremental Cost ($/ton) $27,2 7 $36,082 -$12,103 $7,632 $8,235 NOx Control

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2 Tracy Unit 2

Current Operation (Uncontrolled) LNB w/SCR LNB w/SNCR ROFA w/Rotamix LNB w/FGR LNB Capital Cost $ 0 $ 31,812,500 $ 4,624,375 $ 8,013,408 $ 2,156,000 $ 1,540,000 First Year O&M Cost $0 $400,266 $201,968 $317,342 $169,768 $33,200 First Year Debt Service $ 0 $ 3,373,907 $ 490,443 $ 849,870 $ 228,657 $ 163,326 Total Annual Cost $0 $3,774,173 $692,411 $1,167,212 $398,425 $196,526

Base Heat Input (MMBtu) 2,591,991 Total Heat Input allowed (MMBtu) 8,795,040 Base emissions (tons) 321 NOx Removal Rate % 0.0% 85.2% 54.0% 52.0% 51.4% 38.7% NOx Removed (Tons) 0 273 173 167 165 124 NOx Emission Rate (Tons) 321 47 148 154 156 197

NOx Emission Rate (lb/MMBtu) 0.037 0.114 0.119 0.120 0.152 First Year Cost ($/ton removed) $13,803 $3,995 $6,994 $2,415 $1,582 Incremental Cost ($/ton) $30,7 8 -$73,973 $399,253 $4,954 $1,582 NOx Control

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Tracy Unit 3

Current Operation (Uncontrolled) LNB w/SCR ROFA w/Rotamix LNB w/SNCR LNB w/FGR LNB Capital Cost $ 0 $ 35,862,500 $ 9,189,145 $ 4,431,875 $ 2,072,000 $ 1,232,000 First Year O&M Cost $0 $593,848 $548,326 $236,432 $354,865 $45,200 First Year Debt Service $ 0 $ 3,803,433 $ 974,564 $ 470,027 $ 219,748 $ 130,661 Total Annual Cost $0 $4,397,281 $1,522,890 $706,459 $574,613 $175,861

Base Heat Input (MMBtu) 5,485,741 Total Heat Input allowed (MMBtu) 10,074,000 Base emissions (tons) 795 NOx Removal Rate % 0.0% 78.3% 45.2% 37.3% 28.8% 16.4% NOx Removed (Tons) 0 622 359 296 229 130 NOx Emission Rate (Tons) 795 172 435 498 566 664

NOx Emission Rate (lb/MMBtu) 0.063 0.159 0.182 0.206 0.242 First Year Cost ($/ton removed) $7,067 $4,240 $2,383 $2,511 $1,349 Incremental Cost ($/ton) $10,928 $13,005 $1,952 $4,047 $1,349 NOx Control

NDEP specifically reviewed the cost per ton of NO x removed for each unit at Tracy and determined that installation of LNB with FGR for units 1 and 2, as well as LNB with SNCR for unit 3, meets the BART criteria. Associated fi rst year costs range from $2,383 to $3,050/ton of NO x removed. These values are considered cost eff ective. The cost data from the tables above are presented graphically for each unit in Figur e 1. NDEP also considered the Clean Air Act factors of expected emission rates, emissions pe rformance levels, expected emissions reductions, energy impacts, non-air quality environmental impacts and modeled visibility impacts in Nevada’s control technology determination. NDEP concluded based on a review of the economic analysis that the $/ton of NO x removed for units 1 and 2 increased significantly for LNB with SNCR, ROFA with Rotamix, and SCR w ith only slight improvements in visibility. Similarly, the $/ton of NO x removed for units 3 increased significantly for ROFA with Rotamix and SCR with only slight improvements in visibility.

NDEP concludes that for NO x the installation of LNB with FGR with an emission limit of 0.15 lb/MMBtu for unit 1 and 0.12 lb/MMBtu for unit 2, as well as LNB with SNCR with an emission limit of 0.19lb/MMBtu for unit 3, on a 12-month rolling average, is BART.

NDEP anticipates greater visibility improvement upon implementation of BART than shown in NVE’s October 2008 BART report, which is based on a NO x emission rate of 0.40 lb/MMBtu. The annual NO x BART emissions are 27 to 49 percent of the rates modeled by NVE, while the total annual BART emissions are 50 percent of the modeled rate s, therefore the visibility improvement due to BART should improve significantly from that modeled.

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FIGURE 1

LEAST COST ENVELOPE

Tracy Unit 1

ROFA w/Rotamix

LNB w/FGR LNB w/SNCR

LNB $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000

0 20 40 60 80 100 120 140 160 180

Tons of NOx RemovedAnnual Costs ($)

Tracy Unit 2

LNB w/SNCR ROFA w/Rotamix

LNB w/FGR LNB $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000

0 50 100 150 200 250 300

Tons of NOx RemovedAnnual Costs ($)

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Page 8 of 8 Tracy Unit 3

ROFA w/Rotamix

LNB w/SNCR LNB w/FGR
LNB $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000

0 100 200 300 400 500 600 700

Tons of NOx RemovedAnnual Costs ($)