# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 1 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# APPENDIX C

Cost Effectiveness Analysis For Revised Proposed Amendments to Rule 4702

August 18, 2011

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 2 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# This page intentionally blank.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 3 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# COST EFFECTIVENESS ANALYSIS

FOR REVISED PROPOSED RULE 4702

I. SUMMARY

The California Health and Safety Code (CH&SC) Section 40920.6( a) requires the

District to conduct both an absolute cost effe ctiveness analysis and an incremental cost effectiveness analysis of available emission control options before adopting each Best Available Retrofit Control Technology (BAR CT) rule. The purpose of conducting a cost effectiveness analysis is to evaluate the economic reasonableness of the pollution control measure or rule. The analysis also serves as a guideline in developing the control requirements of a rule.

Absolute cost effectiveness of a control option is the added annual compliance cost to meet the proposed rule’s require ments, in dollars per year , divided by the emission

reduction achieved in tons of pollutant reduced per year.

Table 1 shows the costs and the results of the cost effectiveness analysis for engines greater than 50 brake horsepower (bhp). Dis trict staff estimates that operators will need to retrofit a total of 222 engines at an annual cost between $12. 3 million and $27.1 million. For rich-burn engines, the estimat ed cost effectiveness is $29,600 per ton NOx removed. For lean-burn engines, the absolute co st effectiveness for th is rule project is between $28,200 and $59,300. Taking the rule amendment s as a whole, the cost effectiveness is between $23,600 and $51,800 per ton NOx removed. If all operators choose the fee payment option, cost effe ctiveness for all engines is $17,500 per ton

NOx removed.

Table 1 – Summary of Compliance Costs and Cost Effectiveness All Operators Retrof it Their Engines

Rich-Burn Lean-Burn Overall Number Affected Engines 160 62 222 Total Cost ($/yr) a 

# lower cost higher cost --- $3,900,000 $8,400,000 - $23,200,000 $12,300,000 - $27,100,000

Cost Effectiveness b 

# ($/ton NOx) --- $29,600 $28,200 - $59,300 $23,600 - $51,800 All Operators Elect Alte rnative Compliance Fee

Rich-Burn Lean-Burn Overall

Number Affected Engines 160 62 222

Total Cost ($/yr) a 

# $1,700,000 $7,500,000 $9,100,000

Cost Effectiveness b 

# ($/ton NOx) $12,600 $19,100 $17,500

a 

## Rounded to nearest $100,000; Total may be off due to rounding

b 

## Rounded to nearest $100

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 4 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# The incremental cost effectiveness is the di fference in cost between successively more effective controls divided by the additional emission reductions achieved. For engines operating at least 6,750 hours annually, the NOx emission concentra tion limits are the most stringent available. For this reason, no incremental cost effectiveness analysis

can be done because there is no more stri ngent option available for these engines.

Proposed rule language would not lower emi ssion limits for waste-gas fueled and cyclicloaded field gas-fueled engines. As ex plained in Appendi x B, there are no technologically feasible controls t hat can be added which would produce a lower

emission level for these cat egories of engines. Because t here are no feasible control options, it is not possible to conduct a cost effectiveness analysis for these engine
types.

The proposed rule would create a category called limited-use engines. These engines are operated less than 4,000 hours annual ly. District staff has identified 11 engines that

could meet this condition. Since the NOx em ission control system wo uld be identical to systems used on full-time engines, the cost per engine would be the same, but the

emission reductions derived from the limited-use engines would be less than for a fulltime engine. The incremental cost effectiveness would be about $184,000 per

additional ton of NOx removed. Details of this analysis are outlined in Section IV.B.

II. BACKGROUND

Amendments to Rule 4702 would include requirements for non-AO engines rated between 25 bhp and 50 bhp; however, these requi rements are a “point of sale” basis

therefore no costs are associ ated with the newly-added group.

Revised Proposed Rule 4702 would implement more stringent NOx limits for non-AO spark-ignited engines greater than 50 bhp. The majority of these engines are operated on natural gas. It is the District’s experi ence that, when an emission limit is reduced, a small percentage of operators will choose to r eplace their IC engines with electric

motors rather than retrofit with an emissi on control system. Based on past experience with engine rule amendments, it is expected that two or three of the 222 affected engines would be replaced by electric motors. It would be speculative, at best, to determine which engines would become electr ified; therefore the following compliance costs and cost effectiveness analysis do not include any cost-of-electrification

scenarios.

For rich-burn engines, non-selective catalytic r eduction (NSCR) is the most likely retrofit control technology. Most rich-burn engines already have NSCR and the majority of those can already achieve the proposed NOx limit. The engines that currently do not meet the proposed NOx limit would have to in stall a new NSCR system or both upgrade their existing NSCR system s and add more catalyst.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 5 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# For lean-burn engines that would be required to limit their emissions to 11 ppmvd, the most likely control technology is selective catalytic reduction (SCR). Existing engines

with SCR controls are either meeting the proposed 11 ppmv limit or should be able to do so with minor adjustments. The costs used for this analysis assume that the operator currently has no SCR system, and the operator will in stall new one in order to meet the proposed NOx limit. For lean-burn engines that are used in gas compression, the operator would incur costs associated with upgrading the air-fuel controller, ignition system and engine timing in order to r educe engine emissions by 93%.

III. ESTIMATED COMPLIANCE COSTS

A. Non-AO Engines Between 25 bhp and 50 bhp

Revised Proposed Rule 4702 includes requi rements for engines between 25 bhp and 50 bhp for the first time. There are federal requirements in 40 CFR 63 Subpart IIII and 40 CFR 63 Subpart JJJJ which place certain requirements on engines manufactured or rebuilt after a certain date. These requi rements can be as simple as a specific frequency of oil change or can be specific em ission limits. As proposed, Rule 4702 would not alter what is already in place fo r new/rebuilt engines subj ect to these federal regulations. Rather, the rule would require that, at the point of sale, the federal requirements for the cleanest engines be ap plied to the engine when the new owner places the engine into service. Only at the point of sale does the rule require that the replacement engine meet limits which are already required by federal regulation. Any change in emission limits or maintenance fr equency is imposed by the federal rule and are not attributed to changes in Rule 4702; t herefore, there is no cost associated with adding engines between 25 bhp and 50 bhp.

B. Retrofit of Non-AO Spark-I gnited Engines Greater than 50 bhp

For engines greater than 50 bhp, District staff queried the Permit Services Permits Database for non-AO spark-ignited engines. The returned records were then manually sorted into one of three groups: emer gency standby/dormant engines; rich-burn engines; and lean-burn engines. The em ergency standby engines and dormant engines were removed from the analysis. The information about the remaining engines’ facility and the permit information were scrutin ized to estimate which engines would fit the waste-gas fueled definitio n and the cyclic-loaded field gas fueled definition. These engines were removed from the cost calculati ons because the NOx emission limits were not changed. Limited-use engines were identi fied for the incremental cost effectiveness

calculations that would use the costs derived from this se ction of the appendix.

Compliance costs include both one-time costs and on-going annual costs. Examples of one-time costs are the purchase of equipment and installation cost s. On-going costs are items like maintenance costs, reagent purchases, and the additional fuel burned because of the control technology (fuel penalty). In order to dete rmine a single figure

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 6 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# for costs, District staff use a capital recovery factor to allocate the one-time costs over the life of the equipment. For all cost analyse s in this report, District staff used a 10 percent rate of return and a 10-year equipm ent life to covert the capital costs to equivalent annual cost.

1. Rich-Burn Engines

An operator shared costs with the District th at included the costs to install new NSCR units and to modify a NSCR syst em to hold more catalyst. An engine distributor also

submitted costs to the Distric t. The dealer and operator cost s received were relatively close, so District staff averaged the three co sts sources for the co st categories. The averaged costs represent a mixe d situation where some fa cilities are already using NSCR systems to control emissions and will need to upgrade to meet the draft emission limit as well as some operators installin g new NSCR systems. Table 2 outlines the basis for estimating compliance costs.

Table 2 – Compliance Cost Basis for Rich-Burn Engines

Engine Size (bhp) 800 Total Direct Capital Cost ($) $57,747
Total Indirect Capital Costs ($) $0 Project Contingency ($) $2,962
Total Capital Cost ($) $59,721
Annualized Capital Cost ($/yr) $9,717
Total Annual O&M costs ($/yr) $25,276
TOTAL ANNUALIZED COST ($/yr) $34,993

Costs were submitted to the District for a cert ain size of engine. In order to determine costs for engines with output different than t he submitted costs, Di strict staff used the following equation:

Cost engine2 

# = 

#  

basis

basis engine 

# Cost horsepower horsepower

       6

. 0

2



# Where

Cost engine2 

# = cost of the desired engine (unknown)

Cost basis 

# = cost of the engine used as t he basis of the calculation (known) horsepower engine2 

# = the rated output of the desired engine (known) horsepower basis 

# = the rated output of the engine used as the basis of the calculation (known)

Using the costs submitted by stakeholders and using the above equation to adjust for different sized engines, the total annual cost to retrofit all 160 rich-burn engines to meet

the draft rule’s emission limits is about $3.9 million annually. Costs for individual engines are shown in Table 5 near the end of this appendix.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 7 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# 2. Lean-Burn Engines

The compliance costs for lean-burn engines we re based on two different scenarios.

District staff assumed that t he engines that are subject to the 11 ppmv NOx limit would currently have no SCR to control NOx emissi ons and that the operator would incur costs

for the installation of a SCR emission cont rol system to meet t he proposed NOx limit. Engines that would be subject to the l ean-burn engines used in gas compression with the percent-reduction limit woul d be modified to meet the proposed NOx limit through engine upgrades only. Since the gas comp ression engines do not maintain a steady state during operations, ut ilizing an add-on control technology is problematic.

a) Lean-Burn Engines Subject to Proposed 11 ppmvd NOx Limit Each facility is unique and has its own challenges in adding new equipment. With this
in mind, District staff review ed several sources of cost data. The cost data are outlined

in Table 6 near the end of this appendix. From this information, District staff has chosen

cost data from Western States Petroleum Association, (WSPA) as well as from the control technology vendor EF&EE to represent the range of costs t hat an operator might reasonably be expected to incur. The lower cost may be more likely for smaller engines that need relatively simple modifications and the higher cost may reflect larger engines involving more extensive modifications.

The control technology vendor’s capital cost s are based on a linear equation relating the installed cost to the engines size. District staff then used standard rati os to fill in other portions of a capital equipment project. The ratios were taken from the EPA’s Alternative Control Techniques (ACT) for In ternal Combustion Engines. Once the total capital cost was evaluated, a capital reco very factor was applied to convert this onetime expense into the equiva lent annual costs. Annual operating costs were given by the vendor. The annualized capital cost and the annual operating costs were then added together for the tota l annual compliance cost.

WSPA used EPA’s ACT document to estimate the equipment costs as well as the annual costs. Additionally, WSPA’s members stated that an existi ng engine would also need some upgrades to the air/fuel contro ller, the ignition syst em, and for larger engines, a turbocharger or supercharger. Di strict staff used costs for engine upgrades (without the turbo/superchar ger upgrade) for engines less than 2,000 bhp. For engines 2,000 hp and larger, the costs included the turbo/supercharger upgrade.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 8 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# Table 3 outlines the cost multipliers used to calculate the total annual cost for each engine.

Table 3 – Cost Multipliers Used for Compliance Cost Evaluation

Engine Size (bhp)

Direct Capital Cost ($)

A. SCR cost -
B. engine upgrade -
C. Aux equip -

D. Total Purchased Equip Cost (PEC) A+B+C

E. Freight 5% PEC

F. Sales tax 8.25% PEC

G. Direct installation Cost 25% PEC

H. Total Direct Capital Cost D+E+F+G

Indirect Capital Cost ($)

I. Facilities 5% PEC

J. Engineering 10% PEC

K. Miscellaneous Costs (System start-up/calibration, piping, stack modifications) -

L. Process Contingency 5% PEC

M. Total Indirect Capital Costs I+J+K+L

N. Project Contingency 20% PEC

O. Total Capital Costs (TCC) ($) H+M+N

P. Annualized Capital Cost ($/yr) (10 years @ 10%) 0.1627* TCC

Annual O&M Costs ($/yr)

Q. Annual maintenance labor 16% PEC

R. Annual reagent cost $1.50/gal

8.5 gal/bhp

S. Annual electricity cost -

T. Fuel penalty (0.5% increase) * assume $7.19/Mcf fuel & 30.28 Mcf fuel/hp (back calculated from WSPA #'s) 0.5%

30.28

$7.19

U. Power Loss (2% engine hp) * assumptions same as fuel penalty calcs 2%

V. Catalyst cleaning/replacement ($3.83/bhp *1.8)

W. Total Annual O&M costs ($/yr) Q+R+S+T+U+V

TOTAL ANNUALIZED COST ($/yr) P+W



# b) Lean-Burn Engines Used fo r Natural Gas Compression WSPA’s engine upgrade costs were used as the compliance costs for lean-burn engines used for natural gas compression. It is expected that engine upgrades alone will suffice for these particular engines to meet the proposed 93% percent reduction. District staff used the engine upgrade costs as the purchased equipment costs (PEC) for these engines.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 9 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# c) Cost Scaling to Engine Size

Costs were submitted to the District for a cert ain size of engine. In order to determine costs for engines with output different than t he submitted costs, Di strict staff used the following equation:

Cost engine2 

# = 

#  

basis

basis engine 

# Cost horsepower horsepower

       6

. 0

2



# Where

Cost engine2 

# = cost of the desired engine (unknown)

Cost basis 

# = cost of the engine used as t he basis of the calculation (known) horsepower engine2 

# = the rated output of the desired engine (known) horsepower basis 

# = the rated output of the engine used as the basis of the calculation (known)

d) Overall Lean Burn Engine Re trofit Compliance Costs

District staff estimates that a total of 62 lean-burn engines would be affected by the proposed rule amendments. Us ing the cost-scaling formula to adjust compliance costs to engine size, the compliance cost for the draft rule changes would range between $7.6 million and $37.6 million annually, depending on the amount of work needed to modify the specific engine control system or facility modifications needed for the new SCR system. Costs used for individual engines are shown as part of Table 7 near the end of this appendix.

C. Fee Payment in Lieu of Retrofit Calculations

Operators also have the option to pay a fee in lieu of complying with the proposed NOx

emission limits. District sta ff used the emission limits on each affected engines PermitTo-Operate to estimate each engines total annual emissions. The emissions assumptions were the same as used in t he Appendix B calculations, namely, engines that operate 6,570 hours per year, engines are 30% efficient at converting fuel to power, and engines generally operat e at 65 percent of its maxi mum output. The total annual emissions for each engine was then multiplied by $9,350 per ton pollutant, the current District Rule 9510 (Indirect Source Review) cost to yield the estimated annual fee for each engine. The relevant information about this calculation is in Table 8 near the end of this appendix.

IV. ABSOLUTE AND INCREMENTAL COST EFFECTIVENESS ANALYSIS

Absolute cost effectiveness of a control opt ion is the added annual cost, in dollars per year, of a control technology or technique divided by the emission reductions achieved, in tons reduced per year. The costs c an include, but are not limited to, capital equipment costs, engineering desi gn costs, and additional labo r or fuel costs. The costs also can include any monetary savings realized by implementation of the pollution

controls.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 10 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# Incremental cost effectiveness is intended to measure the change in costs and the potential additional emission reductions betw een to progressively more effective control options or technologies. Incremental cost effectiveness does not reveal the emission reduction potential of the control options, but merely indicates the additional cost of adding the next most effective control to a given control measure. Although absolute

cost effectiveness and incremental cost effect iveness are in the same units, the relative values produced in the incremental cost effectiveness analysis and the absolute cost effectiveness values are not comparable and cannot be evaluated using similar

standards.

A. Absolute Cost Effectiveness Analysis

The absolute cost effectiveness is the cost in dollars per year of the expected control technology divided by the es timated annual emission reductions achieved in tons of pollutant reduced per year. Details of the expected emission reductions are in Appendix B of this staff report.

1. Rich-Burn Engines

Using the costs calculated above and the esti mated emission reductions from Appendix
B, the cost effectiveness for rich-burn engines due to the change in NOx limit is $29,600 per ton NOx removed. The cost effectiveness is shown in Table 5 near the end of this appendix.

2. Lean Burn Engines

Using the costs calculated as described in the previous section and the estimated emission reductions from Appendix B, the co st effectiveness for lean-burn engines due to the change in proposed NOx limits is between $21,600 and $59,300 per ton NOx removed. The wide range in cost effect iveness can be directly attributed to the difference in the costs submitted by stakehol ders during the rule development process. Table 7 shows the cost effectiveness on an engine-by-engine basis for lean-burn engines.

3. Fee Payment Option

The estimated fee for each engine was determi ned in Section III.C. District staff then

used the estimated emission reductions from Appendix B to estimate the cost effectiveness of the fee payment option. In a sense, the cost effectiveness calculated this way overstates the dollar per ton basis si nce the fee is applied to the totality of NOx emissions but the cost effectiveness only lo oks at the difference in emissions between

the current emission limit and the proposed emission limit. Even with the smaller number in the denominator, the cost effect iveness for the fee payment option is less than $20,000 per ton NOx removed. Table 8 at the end of this appendix outlines the fee calculations and the cost effectiveness for this option.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 11 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# B. Incremental Cost Effectiveness Analysis

1. High Use Engines (Engines Operat ing at Least 6,570 Hours Annually)

The incremental cost effectiveness is the di fference in cost between successively more effective controls. For engines operati ng at least 6,750 hours annually, the NOx

emission limits are the most st ringent available. For this reason, no incremental cost effectiveness analysis can be done because there is no more stringent option available for these engines.

2. Limited-Use Engines (Engines Operating Less than 4,000 Hours Annually)

Limited-use engines would incur the same costs to retrofit as full-ti me engines, yet the

emission reductions would be less since the limited-use engines oper ate for fewer hours than full time engines. Leaving the engines at the current level, operators would incur no cost because the engines already comply with the current rule’s em ission limits. The

difference between the installed cost of an add-on emission control system and the cost of leaving things as they are is the in cremental cost for t he limited-use engines.

District staff calculated the additional emissi on reductions associated with including the limited-use engines in the 11 ppmvd NOx emission limit by assuming that the limiteduse engines operate, on average , 3,500 hours each year. Distr ict staff has identified 10 rich-burn engines and no lean-burn engines that would meet the limited -use definition. Using the costs developed in Section III.B.1 fo r rich-burn engines, it is estimated that

the incremental cost effectiveness for all limited use rich-burn engines is about $184,000 per ton of additional NOx removed. Because no lean-burn engines are limited use engines, the incremental cost effectiv eness was not evaluated for limited use leanburn engines. The results of t he analysis are in Table 4.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 12 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 Table 4 – Incremental Cost Effectiveness A nalysis for Limited Use Rich-Burn Engines

Bhp Total Annual Cost ($/yr) Estimated NOx Reductions (tpy) Cost Effectiveness ($/ton)

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

100 $10,049 0.05 $191,946

197 $15,094 0.10 $146,350

TOTALS $105,536 0.574 $183,758



# 3. Lean-Burn Engines Used for Gas Compression

Incremental cost effectiveness was not ev aluated for lean-burn engines used for gas compression. Stakeholders have stated that add-on controls, which would be considered more stringent than engine upgrades alone, are difficult to utilize for these engines. District staff believes that SCR is not a viable retrofit control technology and

that there is no other retrofit control for these engines. For this reason, the proposed 93 percent reduction is the most stringent limit for these engines and no incremental cost effectiveness analysis was performed.

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 13 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

# ATTACHMENT A – DETAIL TABLES

Table 5 – Compliance Costs and Cost Effectiveness Analysis for Retrofit of Rich-Burn Engines

Power Rating (bhp) SIC Total Annual Cost ($/yr) Estimated ER (tpy) Cost Effectiveness ($/ton)

80 1311 $8,790 0.08 $111,801

95 1311 $9,745 0.09 $104,374

95 1311 $9,745 0.26 $37,468

104 1311 $10,288 0.10 $100,663

115 1311 $10,928 0.07 $150,414

120 2911 $11,211 0.12 $95,062

120 2911 $11,211 0.12 $95,062

150 2911 $12,817 0.15 $86,945

151 1311 $12,868 0.15 $86,714

157 1311 $13,172 0.15 $85,373

157 1311 $13,172 0.15 $85,373

157 1311 $13,172 0.15 $85,373

157 1311 $13,172 0.15 $85,373

162 1311 $13,423 0.44 $30,265

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

Continues on next page

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 14 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 Table 5 – Compliance Costs and Cost Effectiveness Analysis for Retrofit of Rich-Burn Engines (continued)
Power Rating (bhp) SIC Total Annual Cost ($/yr) Estimated ER (tpy) Cost Effectiveness ($/ton)

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

162 1311 $13,423 0.16 $84,309

163 1311 $13,472 0.09 $147,178

165 2911 $13,571 0.16 $83,693

165 2911 $13,571 0.16 $83,693

165 2911 $13,571 0.16 $83,693

180 2911 $14,299 0.18 $80,830

180 2911 $14,299 0.18 $80,830

180 2911 $14,299 0.18 $80,830

180 1311 $14,299 0.18 $80,830

193 1389 $14,909 1.40 $10,684

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.53 $28,102

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.19 $78,283

195 1311 $15,002 0.03 $547,981

195 1311 $15,002 0.19 $78,283

197 2099 $15,094 0.19 $77,964

199 1311 $15,186 0.20 $77,650

200 1311 $15,232 0.20 $77,494

208 1311 $15,594 0.57 $27,385

208 1311 $15,594 0.20 $76,288

208 1311 $15,594 0.20 $76,288

208 1311 $15,594 1.15 $13,519

208 1311 $15,594 0.20 $76,288

208 1311 $15,594 0.20 $76,288

Continues on next page

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 15 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 Table 5 – Compliance Costs and Cost Effectiveness Analysis for Retrofit of Rich-Burn Engines (continued)
Power Rating (bhp) SIC Total Annual Cost ($/yr) Estimated ER (tpy) Cost Effectiveness ($/ton)

220 1311 $16,128 0.60 $26,778

316 1311 $20,042 0.31 $64,537

316 1311 $20,042 0.31 $64,537

316 1311 $20,042 0.31 $64,537

316 1311 $20,042 0.31 $64,537

316 1311 $20,042 0.31 $64,537

325 1311 $20,382 0.32 $63,816

330 1311 $20,570 0.32 $63,427

365 1311 $21,853 0.36 $60,921

370 1311 $22,032 0.36 $60,590

370 1311 $22,032 0.36 $60,590

400 1311 $23,087 0.39 $58,730

400 1311 $23,087 0.39 $58,730

490 1311 $26,076 1.65 $15,794

490 1311 $26,076 1.65 $15,794

490 1311 $26,076 1.65 $15,794

490 1311 $26,076 1.65 $15,794

498 1311 $26,331 0.49 $53,801

498 1311 $26,331 0.49 $53,801

500 1311 $26,394 0.49 $53,715

500 1311 $26,394 0.49 $53,715

525 1311 $27,178 0.52 $52,677

525 1311 $27,178 0.52 $52,677

525 1311 $27,178 0.52 $52,677

525 1311 $27,178 0.52 $52,677

525 1311 $27,178 0.52 $52,677

525 1311 $27,178 0.52 $52,677

600 1311 $29,445 0.59 $49,937

615 1311 $29,885 0.60 $49,446

625 1311 $30,176 0.61 $49,128

640 1311 $30,608 0.63 $48,664

650 1311 $30,894 2.19 $14,106

650 1311 $30,894 2.19 $14,106

650 1311 $30,894 2.19 $14,106

650 1311 $30,894 2.19 $14,106

660 1311 $31,178 2.22 $14,020

765 1311 $34,066 0.75 $45,312

765 1311 $34,066 0.75 $45,312

765 1311 $34,066 0.75 $45,312

767 1311 $34,120 0.75 $45,265

767 1311 $34,120 0.75 $45,265

Continues on next page

# SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 16 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 Table 5 – Compliance Costs and Cost Effectiveness Analysis for Retrofit of Rich-Burn Engines (continued)
Power Rating (bhp) SIC Total Annual Cost ($/yr) Estimated ER (tpy) Cost Effectiveness ($/ton)

767 1311 $34,120 0.75 $45,265

800 1311 $34,993 0.79 $44,509

800 1311 $34,993 0.79 $44,509

880 1311 $37,052 0.86 $42,844

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1000 1311 $40,006 3.37 $11,873

1024 1311 $40,580 1.01 $40,324

1024 1311 $40,580 1.01 $40,324

1215 1311 $44,965 1.19 $37,657

1478 1311 $50,575 1.45 $34,819

1478 1311 $50,575 1.45 $34,819

1478 1311 $50,575 1.45 $34,819

1478 1311 $50,575 1.45 $34,819

1478 1311 $50,575 1.45 $34,819

1493 2037 $50,882 1.47 $34,678

1585 4931 $52,741 0.45 $118,505

1585 4931 $52,741 0.45 $118,505

1585 4931 $52,741 0.45 $118,505

1585 4931 $52,741 0.45 $118,505

1585 4931 $52,741 0.45 $118,505

1585 4931 $52,741 0.45 $118,505

1680 1311 $54,615 1.65 $33,079

1680 1311 $54,615 1.65 $33,079

TOTALS 

## $3,898,230 131.5 

## $29,641SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICTAppendix C: Cost EffectivenessAnalysis August 18, 2011C - 17Final Staff Report with AppendicesFor Revised Proposed Amendments to Rule 4702Table 6 – Cost Comparisons for Lean Burn EnginesCost CategoryWestKern WDWSPAValleyPowerSCAQMD 2008RuleFiscaliniDairyCARBRACTBARCTFoothillLandfillJohnsonMatheySCAQMD2010StudyAverageEngine Size (bhp)615 2,000 1,000 2,000 1,075 1,500 3,012 2,105 3,471 1,869Direct Capital Cost ($)A.SCR cost-$325,000 $473,040 $172,040 $176,000 $52,154 $185,000 $222,648 $87,000 $336,687 $211,223B.engine upgrade-$0 $935,000 $0 $0 $0 $0 $0 $0 $0 $103,889C.Aux equip-$0 $0 $0 $41,076 $0 $0 $0 $0 $5,135D.Total Purchased Equip Cost(PEC)A+B+C$325,000 $1,408,040 $172,040 $176,000 $93,230 $185,000 $222,648 $87,000 $336,687 $319,676E.Freight5% PEC$16,250 $70,402 $8,602 $8,800 $4,662 $9,250 $11,132 $4,350 $16,834 $15,984F.Sales tax8.25% PEC$26,813 $116,163 $14,193 $14,520 $7,691 $15,263 $18,368 $7,178 $27,777 $26,373G.Direct installation Cost25% PEC$215,380 $352,010 $43,010 $44,000 $23,308 $46,250 $55,662 $21,750 $84,172 $98,393H.Total Direct Capital CostD+E+F+G$583,443 $1,946,615 $237,845 $243,320 $128,890 $255,763 $307,811 $120,278 $465,470 $460,426Indirect Capital Cost ($)I.Facilities5% PEC$16,250 $70,402 $8,602 $8,800 $4,662 $9,250 $11,132 $4,350 $16,834 $15,984J.Engineering10% PEC$32,500 $140,804 $17,204 $17,600 $9,323 $18,500 $22,265 $8,700 $33,669 $31,968K.Miscellaneous Costs(System start-up/calibration, piping,stack modifications)- $14,325 $0 $0 $10,549 $105,800 $0 $50,000 $0 $0 $20,075L.Process Contingency5% PEC$16,250 $70,402 $8,602 $8,800 $4,662 $9,250 $11,132 $4,350 $16,834 $15,984M.Total Indirect Capital CostsI+J+K+L$79,325 $281,608 $34,408 $45,749 $124,446 $37,000 $94,530 $17,400 $67,337 $84,010N.Project Contingency (20% PEC)20% PEC$65,000 $281,608 $34,408 $35,200 $18,646 $37,000 $44,530 $17,400 $67,337 $63,935O.Total Capital Costs ($)H+M+N$727,768 $2,509,831 $306,661 $324,269 $271,982 $329,763 $446,870 $155,078 $600,145 $608,372P.Annualized Capital Cost ($/yr)(10 years @ 10%)0.1627* TCC$118,408 $408,350 $49,894 $52,759 $44,252 $53,652 $72,706 $25,231 $97,644 $98,982Continues on next pageSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICTAppendix C: Cost EffectivenessAnalysis August 18, 2011C - 18Final Staff Report with AppendicesFor Revised Proposed Amendments to Rule 4702Table 6 – Cost Comparisons for Lean Burn Engines (continued)Annual O&M Costs ($/yr)Q. Annual maintenance labor16% PEC$52,000 $225,286 $27,526 $28,160 $14,917 $29,600 $35,624 $13,920 $53,870 $51,283R. Annual reagent cost$1.50/gal$23,360 $25,500 $12,750 $25,500 $13,706 $19,125 $38,403 $27,425 $44,255 $23,8348.5 gal/bhpS. Annual electricity cost-$427 $0 $0 $0 $0 $50,000 $46,000 $17,500 $0 $12,659T.Fuel penalty (0.5% increase)*assume $7.19/Mcf fuel & 30.28Mcf fuel/hp0.5%$669 $2,177 $1,089 $2,177 $1,170 $1,633 $3,279 $2,342 $3,778 $2,03530.28$7.19U.Power Loss (2% engine hp)*assumptions same as fuel penaltycalcs2% $2,678 $8,709 $4,354 $8,709 $4,681 $6,531 $13,115 $9,366 $15,114 $8,140V.Catalyst cleaning/replacement$3.83/bhp *1.8 $4,240 $13,788 $6,894 $13,788 $7,411 $10,341 $20,765 $14,829 $23,929 $12,887W.Total Annual O&M costs ($/yr)Q+R+S+T+U+V$83,374 $275,460 $52,613 $78,334 $41,885 $117,230 $157,185 $85,382 $140,946 $110,837TOTAL ANNUALIZED COST ($/yr)P+W$201,782 $201,782 $102,507 $131,092 $86,137 $170,883 $229,891 $110,613 $238,590 $206,798SAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICTAppendix C: Cost EffectivenessAnalysis August 18, 2011C - 19Final Staff Report with AppendicesFor Revised Proposed Amendments to Rule 4702Table 7 – Compliance Costs and Cost EffectivenessAnalysis for Retrofit of Lean-Burn EnginesPower Output(bhp)SICLow InstallEngineUpgradesInstall SCR +upgrades(low)Total AnnualCost low($/yr)High InstallEngineUpgradesonly ($/yr)High InstallSCR +upgrades($/yr)Total AnnualCost high($/yr)EstimatedER (ton/yr)Low Perengine CostEffectiveness($/ton)High Perengine CostEffectiveness($/ton)2204952$0$32,098$32,098$0$124,849$124,8490.91$35,384$137,6302204952$0$32,098$32,098$0$124,849$124,8490.91$35,384$137,6302204952$0$32,098$32,098$0$124,849$124,8490.91$35,384$137,6303302911$0$37,055$37,055$0$159,235$159,2351.36$27,232$117,0243302911$0$37,055$37,055$0$159,235$159,2351.36$27,232$117,0244501311$0$42,461$42,461$0$191,804$191,8041.57$27,122$122,5134501311$0$42,461$42,461$0$191,804$191,8041.57$27,122$122,5134551311$0$42,687$42,687$0$193,080$193,0801.58$26,966$121,9735774952$0$48,184$48,184$0$222,657$222,6571.97$24,456$113,0106154941$0$49,896$49,896$0$231,343$231,3432.14$23,320$108,1236154941$0$49,896$49,896$0$231,343$231,3432.14$23,320$108,1236204952$0$50,121$50,121$0$232,470$232,4701.56$32,173$149,2246204952$0$50,121$50,121$0$232,470$232,4702.16$23,236$107,7736704952$0$52,374$52,374$0$243,543$243,5432.33$22,469$104,4818924952$0$62,376$62,376$0$289,168$289,1682.24$27,831$129,0189304953$0$64,089$64,089$0$296,497$296,4973.24$19,808$91,6381,0001311$105,753$0$52,876$105,753$0$105,7532.85$18,547$37,0941,0001311$105,753$0$52,876$105,753$0$105,7532.85$18,547$37,0941,0001311$105,753$0$52,876$105,753$0$105,7532.85$18,547$37,0941,0001311$105,753$0$52,876$105,753$0$105,7534.46$11,851$23,7031,0001311$105,753$0$52,876$105,753$0$105,7534.46$11,851$23,7031,0704941$0$70,397$70,397$0$322,524$322,5243.72$18,911$86,6391,0704941$0$70,397$70,397$0$322,524$322,5243.72$18,911$86,6391,0704941$0$70,397$70,397$0$322,524$322,5243.72$18,911$86,6391,1504922$0$74,001$74,001$0$336,783$336,7834.00$18,496$84,1761,1504911$0$74,001$74,001$0$336,783$336,7834.00$18,496$84,176Continues on next pageSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICTAppendix C: Cost EffectivenessAnalysis August 18, 2011C - 20Final Staff Report with AppendicesFor Revised Proposed Amendments to Rule 4702Table 7 – Compliance Costs and Cost Effectiveness Analysis for Retrofit of Lean-Burn Engines (continued)Power Output(bhp)SICLow InstallEngineUpgradesInstall SCR +upgrades(low)Total AnnualCost low($/yr)High InstallEngineUpgradesonly ($/yr)High InstallSCR +upgrades($/yr)Total AnnualCost high($/yr)EstimatedER (ton/yr)Low Perengine CostEffectiveness($/ton)High Perengine CostEffectiveness($/ton)1,1504911$0$74,001$74,001$0$336,783$336,7834.00$18,496$84,1761,2001311$0$76,254$76,254$0$345,494$345,4944.17$18,265$82,7551,2001311$0$76,254$76,254$0$345,494$345,4944.17$18,265$82,7551,2004941$0$76,254$76,254$0$345,494$345,4944.17$18,265$82,7551,4084922$0$85,626$85,626$0$380,271$380,2714.90$17,480$77,6291,4084952$0$85,626$85,626$0$380,271$380,2713.88$22,069$98,0121,4084952$0$85,626$85,626$0$380,271$380,2714.66$18,364$81,5561,4084952$0$85,626$85,626$0$380,271$380,2714.66$18,364$81,5561,5004922$0$112,298$112,298$0$394,990$394,9905.22$21,519$75,6891,5004922$0$112,298$112,298$0$394,990$394,9905.22$21,519$75,6891,5001311$134,880$0$67,440$134,880$0$134,8806.69$10,077$20,1541,5001311$134,880$0$67,440$134,880$0$134,8806.69$10,077$20,1542,0001311$0$70,397$70,397$0$683,810$683,8106.96$10,117$98,2752,0001311$0$70,397$70,397$0$683,810$683,8106.96$10,117$98,2752,0001311$0$70,397$70,397$0$683,810$683,8106.96$10,117$98,2752,0001311$420,762$0$210,381$420,762$0$420,7628.41$25,022$50,0442,0001311$420,762$0$210,381$420,762$0$420,7628.41$25,022$50,0442,0001311$420,762$0$210,381$420,762$0$420,7628.41$25,022$50,0442,0001311$420,762$0$210,381$420,762$0$420,7628.41$25,022$50,0442,0001311$420,762$0$210,381$420,762$0$420,7628.41$25,022$50,0442,0001311$420,762$0$210,381$420,762$0$420,7628.41$25,022$50,0444,0001311$420,762$0$210,381$420,762$0$420,76214.75$14,259$28,5194,0001311$420,762$0$210,381$420,762$0$420,76214.75$14,259$28,5194,0001311$420,762$0$210,381$420,762$0$420,76214.75$14,259$28,5194,0001311$420,762$0$210,381$420,762$0$420,76214.75$14,259$28,5194,0001311$420,762$0$210,381$420,762$0$420,76214.75$14,259$28,519Continues on next pageSAN JOAQUIN VALLEY AIR POLLUTION CONTROL DISTRICTAppendix C: Cost EffectivenessAnalysis August 18, 2011C - 21Final Staff Report with AppendicesFor Revised Proposed Amendments to Rule 4702Table 7 – Compliance Costs and Cost Effectiveness Analysis for Retrofit of Lean-Burn Engines (continued)Power Output(bhp)SICLow InstallEngineUpgradesInstall SCR +upgrades(low)Total AnnualCost low($/yr)High InstallEngineUpgradesonly ($/yr)High InstallSCR +upgrades($/yr)Total AnnualCost high($/yr)EstimatedER (ton/yr)Low Perengine CostEffectiveness($/ton)High Perengine CostEffectiveness($/ton)4,4454922$0$222,457$222,457$0$1,104,181$1,104,1810.26$863,102$4,284,0644,4454922$0$222,457$222,457$0$1,104,181$1,104,1810.26$863,102$4,284,0644,4454922$0$222,457$222,457$0$1,104,181$1,104,1810.26$863,102$4,284,0644,4454922$0$222,457$222,457$0$1,104,181$1,104,1810.26$863,102$4,284,0645,5001311$420,762$0$420,762$420,762$0$420,76220.29$20,741$20,7415,5001311$420,762$0$420,762$420,762$0$420,76220.29$20,741$20,7415,5001311$420,762$0$420,762$420,762$0$420,76220.29$20,741$20,7415,5001311$420,762$0$420,762$420,762$0$420,76220.29$20,741$20,7415,5001311$420,762$0$420,762$420,762$0$420,76220.29$20,741$20,7415,5001311$420,762$0$420,762$420,762$0$420,76220.29$20,741$20,741TOTALS$7,951,478$3,055,145$11,006,622$7,951,478$15,042,813$22,994,291390.9$28,160$58,829Table 8 – Compliance Cost and Cost Effectiveness Analysis for Fee Payment Option (Rich-Burn and Lean-Burn)Total 1311;1389 2037;2099 2911 4911 4922 4931 4941 4952 4953Rich-BurnNumber Affected Engines 160 143 2 9 0 0 6 0 0 0Alt Compliance Fee $1,663,596 $1,530,752 $25,451 $21,460 $0 $0 $85,932 $0 $0 $0Cost Effectiveness ($/ton)$12,649 $12,170 $15,324 $15,324 none none $32,181 none none noneLean-BurnNumber Affected Engines 62 32 0 2 2 8 0 6 11 1Alt Compliance Fee $7,454,812 $6,491,759 $0 $29,819 $90,058 $345,083 $0 $220,838 $299,574 $36,415Cost Effectiveness ($/ton)$19,073 $20,892 none $10,957 $11,255$16,943 none $11,255 $11,441 $11,255TotalNumber Affected Engines 160 143 2 9 0 0 6 0 0 0Alt Compliance Fee $9,118,408 $8,022,511 $25,451 $51,279 $90,058 $345,083 $85,932 $220,838 $299,574 $36,415Cost Effectiveness ($/ton) $17,455 $18,378 $15,324 $12,441 $11,255 $16,943 $32,181 $11,255 $11,441 $11,255

# SAN JOAQUIN VALLEY AIR POLLU TION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis August 18, 2011

C - 22 Final Staff Report with Appendices For Revised Proposed Amendments to Rule 4702 

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