January 7 , 2009

Reply to

Attn Of: OEA

- 095

MEMORANDUM

SUBJECT: Comments on the PGE Letter to ODEQ dated December 1 7, 2008

FROM: Paul Boys, P.E.

Environmental Engineer, E S U, O EA

TO: Keith Rose, Environmental Scientist

State and Tribal Air Prog rams Unit, OA WT

As you requested, I have reviewed the PGE letter to ODEQ dated December 17, 2008 regarding their preliminary comments on the proposed regional haze rules. You had asked for comments on the PGE letter by January 9, 2009. Since I’ll be out of the office most of the next two weeks I wanted to get you the comments I have on

the letter at this time so that you could consider them prior to communicating with ODEQ. My comments are listed below.

1. Page 3. In the last sentence of the second to last paragraph in section 1, PGE states that “These controls (SCR) were demonstrated not to constitute BART due to their extreme cost and their limited effectiveness in addressing visibility impacts.” This statement may represent the opinion of PGE, bu t not necessarily ODEQ or EPA. Even though ODEQ did not propose SCR as BART, they did propose SCR to ensure future reasonable progress. I think the ODEQ report demonstrated that SCR would result in significant visibility improvement.

2. Page 5. As an ar gument to support continued operation of the PGE Boardman power plant until the year 2020 without installing the SDFGD system determined to represent BART, PGE presents the cost effectiveness for this one option (a 2020 shutdown date) and concludes that th e $5200 per ton of SO 2 removed is high enough to justify not installing the SDFGD. Assuming it is proper to even consider operating the facility without BART controls after the date that ODEQ determined in the BART analysis, a more appropriate analysis wo uld be to present a series of cost effectiveness2

calculations for each year beyond 2014 so that the decision makers could see how the cost effectiveness values vary by the proposed shutdown date ( as reflected in the life of the control equipment in the cap ital recovery factor calculation). It is quite likely that the decision makers may find that some date other than 2020 would represent the point at which the cost effectiveness value becomes “too large” to justify the commitment of capital investment for

the SDFGD.

3. Page 7 and 13 . The attempt of justifying operation of the Boardman facility after 2014 without installation of controls representative of BART for SO 2 (SDFGD) by comparing the aggregate emissions under various facility life cycle times is s omewhat deceptive because the “benefits” of zero emissions after facility shutdown come in the distant years whereas no improvement s (emissions reduction and corresponding visibility improvement) are achieved until the shutdown date. The analysis also doe s not address the emissions from any electrical generation facility needed to replace the power from the shutdown Boardman facility. A similar comment applies to the table of aggregate emissions shown on page 13 based on a shutdown date of 2029.

4. Page 10 . In a statement similar to the one on page 3 (item 1 above), PGE states that “The technology is not cost

- effective, does not provide material benefits to visibility in the mandatory Class 1 areas and has material non

- air quality environmental impacts.” Again, this statement may represent the opinion of PGE, but not necessarily ODEQ or EPA. Even though ODEQ did not propose SCR as BART, they did propose SCR to ensure future reasonable progress. I think the ODEQ report demonstrated that SCR would

result i n significant visibility improvement.

5. Page 12. PGE states that “The cost

- effectiveness of the SCR based on a useful life of 12.5 years (i.e., the number of years after July 1, 2017 that the control would be operated if the plant had to close by the end of 2029) is over $7,300 per ton of NO

x removed.” This cost effectiveness value seemed high to me, so I obtained the Table 1 associated with the PGE December 17, 2008 letter from the ODEQ web site. The cost effectiveness value of $7,300 per

ton of NO

x re moved is actually the incremental cost effectiveness value of SCR compared not to the baseline but to the installation of low NO

x burners and overfire air ports (LNB/OFA). I checked the calculation s in Table 1 and found them to be accurate. However, the cost effectiveness of SCR alone compared to the baseline was not presented. Another important cost

effectiveness value for decision makers to consider is the cost effectiveness

of the total NO

x control package (LNB/OFA/SCR) using the shorter life (12.5

ye ars) in the capital recovery portion of the calculation for SCR and comparing that to the baseline case. I estimate the cost effectiveness of the LNB/OFA/SCR option compared to baseline to be about $3,709 per ton of

NO

x removed (based on a 12.5 year life for SCR, but using the ODEQ annual3

cost value for LNB/OFA of $3.718 million which is based on 20 year life). Since the SCR annual cost of $28.347 million is much larger than the annual cost of LNB/OFA, the error introduced by not recalculating the capital recovery cost of the LNB/OFA portion is small. In any case there is a significant difference between the total cost effectiveness value of about $3,709 and the incremental cost effectiveness value of $7,300.

6. Page 12. Similar to the comment in item 2 above, it would be informative for PGE to present a series of cost effectiveness calculations for each year beyond 2017 so that the decision makers could see how the cost effectiveness values vary by the proposed shutdown date (as reflected in the

life of the control equipment in the capital recovery factor calculation). It is quite likely that the decision makers may find that some date other than 2029 would represent the point at which the cost effectiveness value becomes “too large” to justify the commi tment of capital investment for the SCR.

If you have any questions about th ese comments , please call me at 3

- 1567.

cc. John Keenan , O CE Keven McDermott, OEA