Ms. Lanelle Bembenek Wiggins

RFA/SBREFA Team Leader

U.S. Environmental Protection Agency

Office of Policy

1200 Pennsylvania Avenue, NW (1806A)

Washington, DC 20460

wiggins.lanelle@epa.gov

Re: Small Business Review Panel for the EPA rulemaking “Greenhouse Gas (GHG)

New Source Performance Standards (NSPS) for Electric Utility Steam Generating Units

(EGU)”

Members of the Small Business Advocacy Review Panel:

San Miguel Electric Cooperative, Inc. (San Miguel) thanks the Small Business Advocacy 

Review Panel (Panel) for selecting San Miguel to participate as a Small Entity 

Representative in this process. San Miguel submits the following comments to the Panel 

on the EPA rulemaking for the Utility GHG NSPS. San Miguel’s comments will be 

covered under the following general headings:

Concerns on the Small Business Advocacy Review for this particular rule

General Comments on Utility GHG NSPS rulemaking 

Input on Questions from the Presentation Packet 

Introduction

The principal business of San Miguel is the production of electric energy in South Central 

Texas. San Miguel’s electric production comes solely from one mine mouth coal-fired 

power plant in South Central Texas. This one coal-fired unit comprises 100% of San 

Miguel’s generating capacity; average yearly output is 2.9 million megawatt hours. The 

coal-mine, which is located adjacent to the generating facility, extracts a Yegua, LowerJackson lignite (a Group B Lignite). The lignite mine supplies fuel only for the San 

Miguel Generating Station, with a yearly production of approximately 3.3 million tons of 

lignite. The generating unit fires only lignite provided by this mine. The San Miguel 

electric generating station was designed and built specifically for this locally available 

lignite fuel. This unit has been reliably providing power to its customers since 1982 with 

a yearly availability factor averaging approximately 84%. 

San Miguel is a Generation and Transmission Cooperative (G&T) and power generated 

from the plant is sold to two other G&T Cooperatives who ultimately distribute the power 

to 26 member cooperatives that serve approximately 570,000 end-user member-owners in 
114 Texas counties. As a not-for-profit cooperative, San Miguel does not have 

shareholders and these member-owners bear all of the costs of owning and operating the 

San Miguel facilities – including the costs associated with regulations such as the Utility 

GHG NSPS rulemaking. 

San Miguel is a member of the National Rural Electric Cooperative Association 

(NRECA) and supports their comments to the Panel on the Utility GHG NSPS 

rulemaking.

Concerns on the Small Business Advocacy Review

San Miguel is very concerned with this review process for the following reasons: 

1) The EPA did not provide usable information or data in a sufficient form that 

would assist the SERs in assessing the potential impact of this rulemaking. The 

SERs were not provided enough information on how EPA will structure this 

regulation or establish the relevant standards. Without the necessary information or 

options I do not believe the SERs can identify reasonable regulatory alternatives.

2) Developing NSPS for GHGs involves complexities heretofore not encountered in 

the NSPS context, because unlike other emissions regulated under the CAA, there 

are no viable emissions control technologies applicable to reducing CO2, the main 

GHG component in EGU emissions. In particular carbon capture and storage 

(CCS) is not developed technology as our comments below address in detail. 

Therefore, we expect EPA will have to rely on energy efficiency and possibly 

work practice standards as a means of Section 111 regulation. Unfortunately, the 

SERs have yet to see a single proposal by EPA on options it may be considering. 

This is very troubling, and contrary to the requirement that EPA present 

regulatory options for review by the panel.

General Comments on the Utility GHG NSPS Rulemaking

1) Promulgating an NSPS based on an output standard would be difficult if not 

impossible to implement.

Consistent with presentations made to the panel on July 13th, an output derived 

standard such as a CO2/Mwh metric cannot realistically be applied to EGUs 

without accounting for significant and unavoidable variabilities. This is the case 

because an EGU heat rate and thus the CO2/Mwh rate varies significantly over 

the EGU operating range and the duty-cycle to which the unit is committed. The 

following graph shows how CO2/mmBtu and CO2/Mwh varies with load at the 

San Miguel generating unit.
 Graph based on turbine design heat rate and design boiler efficiency

Moreover, an EGU heat rate characteristic and thus the corresponding CO2/Mwh 

rates are largely unit specific, and they can be severely impacted by equipment 

conditions which cannot be quickly or easily remedied. The graph below shows 

how increased heat rate in 2008, due to a turbine problem, caused higher 

CO2/Mwh at the San Miguel unit. 
So even if such individual unit variability could be accounted for in an output 

standard, such a standard would be source specific. 

 

2) NSPS must represent “best demonstrated technology” (BDT) at the source 

and require nothing more. The intent of Section 111 is to disseminate BDT 

throughout the source category. NSPS provisions cannot be utilized in a top 

down methodology where BDT requirements are based on or follow an overall 

source category reduction goal, national GHG emissions reduction goal, or GHG 

intensity averaged over multiple sources. Stated differently, NSPS must represent 

BDT for any single source including costs of achieving the standard. For new or 

modified EGUs, BDT should not effectively dictate any particular fuel use such 

as natural gas over coal or one type of coal over another. In other words BDT 

must be fuel dependent.

San Miguel opposes the justification of an NSPS subcategory or the like, as was 

stated in our response at the second panel meeting, which is based upon the 

presumption that offsets, mitigation, or off-source activities must be presumed in 

establishing the standard. Any standard or subcategory must be established on the 

basis of the emission source.
Once the standards are established however, it seems reasonable that some 

sources could benefit from these strategies, and so sources should have the option 

to meet source NSPS requirements that might be satisfied by undertaking other 

actions apart from those at the source (emissions unit). Some of these 

considerations were discussed in the second SER panel meeting, and these are not 

generally objectionable so long as the BDT for those sources not willing or able to 

participate in “off source” actions are not affected 

San Miguel wants to make clear that while some utilities, small and large, may 

benefit from an off-source mitigation or offset, many small entities lack economic 

opportunities based upon geographic or location factors to addresses GHGs by 

incorporating off-site actions. For those unwilling or unable to undertake offsource actions, factoring those options into a source BDT would heavily prejudice 

those small business entities not utilizing off source options, thus hurting small 

business entities and not helping them

3) NSPS provisions and guidelines to states should be technology-based and 

should not establish national or EGU source category wide GHG mitigation 

requirements, reduction goals, or caps. 

Section 111 standards and requirements are meant to be technology-based and not 

driven by an overall emissions reduction or mitigation goal. NSPS by statutory 

definition is technology that first and foremost has been “adequately 

demonstrated,” typically referred to as “best demonstrated technology” (BDT). In 

this context, EPA has no broad mandate or even discretionary authority under 

Section 111 to expand its discretion to promulgate provisions incorporating 

national or source category GHG reduction or mitigation goals.

Further, EPA cannot require any new or modified source to install and operate 

any particular technological system of continuous reduction to comply with any 

new source standard of performance. Since such emission reduction technology 

does not exist commercially, it follows that EPA cannot simply impose a fuel 

choice that has the same effect as the mandate of a particular control technology. 

San Miguel would also point out that the U.S. Congress explicitly considered a 

cap-and- trade regime last year to address climate concerns and rejected such an 

approach. We believe it ill-advised for EPA to propose an NSPS regulatory 

program that would have the effect of imposing an outcome already rejected by 

Congress. EPA’s strategy to utilize the NSPS program is a never-attempted effort 

to shoe-horn an emission reduction or mitigation policy onto sources under an 

existing program never intended to address an emission reduction policy. 

4) Section 111 requires that EPA undertake an “endangerment finding” 

directed at whether EGU greenhouse gas emissions endanger public health 

or welfare. Section 111(b)(1)(A) clearly requires that EPA issue a proposed 
regulation addressing the endangerment question as a requisite to actually 

regulating EGU GHG emissions. EPA has yet to do so.

5) EPA must reconcile the proposed NSPS including any standards or 

guidelines with its interpretation of New Source Review (NSR) major 

modification potential violations. 

As previously mentioned, carbon dioxide is the primary GHG associated with 

EGUs and yet there is no available technology to directly reduce carbon dioxide 

emissions from these facilities. While EPA did not expressly say so, presumably 

they will be looking at energy efficiency and work practice standards as no other 

demonstrated technologies exist. Many of the current EPA regulatory initiatives 

are counter-productive to improved efficiency as is referenced below; real

efficiency improvements such as turbine upgrades are the sort of changes that 

EPA has considered to be NSR major modifications and Clean Air Act violations.

To state the obvious, it would be poor policy for EPA to require EGUs to 

undertake activities to comply with NSPS where such activities trigger NSR 

violations under EPA current policies. EPA must reconcile this conundrum if it 

requires efficiency improvements as part of its NSPS proposal.

6) NSPS should not function to economically prejudice smaller systems or 

systems utilizing higher carbon content fuels, and must account for the 

installation of additional pollution control devices.

a) NSPS must recognize fuel diversity and be cognizant of the fact that different 

fuels utilized by EGUs have different carbon contents, and with current 

demonstrated technologies, utilization of different fuels will yield different 

GHG emissions. NSPS must not effectively dictate fuel switching. 

b) Unit size, design, and use will dictate unit efficiency. For example, fossil fuel 

units that cycle or follow baseload or renewable generation cannot achieve the 

same overall efficiency as other similarly designed units that do not cycle in 

this manner. As identified at the second panel meeting, the efficiency of 

existing facilities were long-ago determined and the tools available to improve 

efficiency are limited by the design operating temperatures and pressures 

which cannot be altered short of reconstruction. In many cases the design is 

limited by the size of the unit and the capital then available for the project. 

Also, the economics associated with installing efficiency improvements on 

smaller units will be quite different when compared to installing similar 

technologies on larger ones. The statutory definition of NSPS requires that the 

standards must account for technology costs, thus NSPS requirements for 

smaller units may be different than for larger ones.

c) As EPA is well aware, new regulations finalized or likely to be finalized over 

the next several years include the Cross State Air Pollution Rule, the Electric 

Utility Hazardous Air Pollutants Rule, and the Clean Water Act 316(b) 

cooling water intake structure rule. All these regulation will require massive 

new installations of add-on controls such as flue gas desulfurization units 
(FGDs), selective catalytic reduction units (SCRs), baghouses, wet electrostatic participators (ESPs), dry sorbent injection and cooling towers. All these 

devices require significant amounts of energy, and by definition, these EGUs 

will become less energy efficient. It is quite plausible many EGUs will 

become notably less energy efficient over the next several years than they are 

now. NSPS requirements must take the continuing addition of these types of 

controls causing EGU energy inefficiencies into account in this rulemaking 

process. 

d) Lastly, the statute requires EPA issue guidance to the states for developing 

NSPS for existing units following a State Implementation Plan (SIP) like 

process. To carry out this mandate, EPA must consider, in addition to the 

factors listed above, the remaining useful life of an EGU and other factors that 

would affect existing NSPS determinations that are identified during this 

rulemaking process.

Questions for SERs

Since time ran out during the Panel meeting on July 13, 2011 San Miguel will attempt to 

provide input on selected questions contained in June presentation. 

Applicability

Should applicability include stationary combustion turbines (combined cycle and 

simple cycle)? I would say yes. Combustion turbines have similar problems to 

steam units in that as load decreases CO2/ Mwh increases and CO2/ mmBtu 

remains constant across the load range.

Current Practices

Do you employ measures to ensure that your EGU operates in an energy efficient 

manner? Yes. I believe most power plants are run reasonably energy efficient. 

But one impediment for improving efficiency has been the NSR rules, which have 

prevented making major changes to improve efficiency.

What are the energy efficient measures you employ? Yearly planned outage to 

work on equipment that has deteriorated over time, an example is work performed 

on air heaters to reduce leakage due to routine wear. This restores the heat rate 

that was lost over the year. 

Are these measures a result of regulatory requirements, initiated voluntarily, or 

employed for other reasons? Voluntary – reducing heat rate will reduce fuel and 

help keep customer costs at a minimum.
What are the estimated emissions reductions associated with the energy efficient 

measures? Energy efficiency will improve the heat rate, which will reduce the 

fuel used thus reducing emissions. Energy efficient measure would need to be 

calculated based on the heat rate improvement. Whereas emission reductions 

efforts at power plants usually cause units to be less energy efficient, thus in 

actuality increases emissions on a pound/Mwh basis.

Appropriate Control Levels for New Sources 

Should new source standards be based on fuel and technology specific efficiency 

standards based on the best performing coal units being permitted/ built (e.g., 

IGCC and/or ultra-supercritical coal)? NSPS requirements must be based on 

BDT at the time the unit is designed. 

Alternatively, should tighter standards that require new coal units to go beyond 

technologies such as IGCC and ultra-supercritical coal and be designed/built to 

perform at lower CO2/MWh levels be considered? No, NSPS requirements must 

be based on BDT at time of design/build. 

Should the new source standards be fuel neutral (i.e., standards would not be fuel 

or technology specific but instead would be based on use of lower GHG fuels such 

as natural gas)? No, BDT must be fuel dependent.

Should EPA consider a phased approach where a fuel and technology specific 

standard based on existing technologies would apply initially and, after several 

years, a tighter standard would apply? No. The efficiency of existing facilities 

were long-ago determined and the tools available to improve efficiency are 

limited by the design operating temperatures and pressures which cannot be 

altered short of reconstruction.

Appropriate Control Levels for Modified Sources

Will compliance with other regulations impacting the power sector cause EGUs 

to become modified sources subject to the GHG standards? It would be poor 

policy for EPA to require EGUs to undertake activities to comply with NSPS 

where such activities trigger NSR violations under EPA current policies.

Appropriate Control Levels for Existing Sources 

Should existing source guidelines be based on efficiency improvements? No. 

NSPS requirements must be based on BDT at the time the unit was designed. 

What is an appropriate heat rate reduction to require for existing EGUs? The 

efficiency of existing facilities was long-ago determined and the tools available to 

improve efficiency are limited by the design operating temperatures and pressures 
which cannot be altered short of reconstruction. EPA has no broad mandate or 

even discretionary authority under Section 111 to expand its discretion to 

promulgate provisions incorporating national or source category GHG reduction 

or mitigation goals.

Should replacement of older generation be part of the guidelines? No, this is 

beyond the scope of NSPS

Should there be a linkage between remaining useful life and tightened standards? 

No, this is beyond the scope of NSPS. EPA has no broad mandate or even 

discretionary authority under Section 111 to expand its discretion to promulgate 

provisions incorporating national or source category GHG reduction or mitigation 

goals.

Should EPA consider a phased approach where a fuel and technology specific 

efficiency standard based on existing technologies would apply initially and, after 

several years, a tighter standard would apply? No. NSPS requirements must be 

based on BDT at the time the unit was designed. 

Should other options such as fuel switching or co-firing with lower carbon fuels 

be considered? NSPS must recognize fuel diversity and be cognizant of the fact 

that different fuels utilized by EGUs have different carbon contents, and with 

current demonstrated technologies, utilization of different fuels will yield 

different GHG emissions. NSPS must not effectively dictate fuel switching. 

San Miguel would like to once again thank the Panel for selecting us as a Small Entity 

representative on this very important industry regulation. We encourage the Panel to give 

further consideration in scheduling an additional Panel meeting once the EPA has 

progressed in its rulemaking preparation.

If you have any questions concerning these comments please contact me.

Sincerely,

Joseph G. Eutizi

Engineering Manager

San Miguel Electric Cooperative, Inc.

830-784-3411 ext. 226

jeutizi@smeci.net