AECOM (805)388

- 3775 tel

1220 Avenida Acaso (805)388

- 3577 fax
Camarillo, CA 93012

May 9 , 201 1

Mr. Gerardo Rios Chief, Permits Office (AIR 3) U.S. Environmental Protection Agency , Region IX
75 Hawthorne Street San Francisco, CA 94105

RE: Palmdale Hybrid Power Project (PHPP)

– Greenhouse Gas BACT Analysis and Request For Draft PSD Perm it

Dear Mr. Rios:

AECOM Environment, on behalf of the City of Palmdale and Inland Energy, Inc., is submitting the
enclosed Greenhouse Gas Best Available Control Technology ( BACT) Analysis as a supplement to
the Prevention of Significant Deterioration (P SD) permit application for the Palmdale Hybrid Power Project (PHPP).

The PHPP is a 570 MW state

- of

- the art, “hybrid” natural gas

- fired combined

- cycle power plant integrated with 50 MW of solar thermal generati on . The combined

- cycle equipment utilizes two

state

- of

- the

- art natural gas

- fired combustion turbine generators, two heat recovery steam generators, and one steam turbine generator. The solar thermal component of the PHPP has the potential to produce up to almost 10 percent of facility total gene ration. PHPP will also employ General Electric Power Systems (GE) Rapid Start Process (RSP) to minimize emissions during startup and increase the efficiency of the power plant.

As we demonstrate in the enclosed document

, the advanced thermal efficiency achieved by the PHPP constitutes BACT for greenhouse gases. Our analysis was prepared in accordance with the

EPA ’s PSD And Title V Permitting Guidance For Greenhouse Gases , issued March 11, 2011. With this submittal, the PHPP application for a P SD permit is fully complete. Accordingly, we respectfully request issuance of the draft PSD permit as soon as possible, and

, for the reasons described below, no later than June 20, 2011.

T he City of Palmdale submitted a PSD permit application to EPA Region 9 for the PHPP o n April 1, 2009, more than two years ago . Based on verbal and email communications with the EPA and to address new standards, we responded to a number of informal EPA data requests and provided a substantial application supplement on July 21, 20 10 in response to a conference call on March 14,

2010 . Subsequent to that submittal, we have submitted several additional modeling supplements to

address the 1

- hour NO 2 ambient air quality standard, including memorandums on October 7 , 2010,

December 14 , 2 010 and March 30, 2011 1

1 Note, some of the an alyses requ ested by EPA were subsequently de termined not to be needed under the guidance on the new 1

- hour NO 2 NAAQS that was issued on March 1, 2011. . The March 30 supplement resolved all outstanding issues identified by the EPA except for the greenhouse gas BACT analysis, which we are providing today.AECOM 2

The City of Palmdale requests that the EPA issue a draft PSD permit as soo n as possible. The City has expended significant time and tax

- payer expenses during the PHPP’s permitting process. The City has cooperatively responded to each of EPA’s requests to date. The length of time in the permitting process, in particular the ent ire year between submittal of the PSD application on April 1,

2009 and the conference call with EPA on March 14, 2010 when completeness items were relayed, has lead to the need for additional analyses which have been burdensome to the City. This delay

has led to the need to address new requirements related to PM2.5 analyses, new national ambient air quality standards, and now GHG requirements

– none of which would have been required if the PSD permit were issued within the EPA target one year PSD processin g timeframe. We now have another date approaching

-- the effective date of the new PM2.5 increment on October 20, 2011 2

T he City requests that the EPA issue the draft PSD permit no later than June 20, 2011. This date will provide adequate time for public review, responses, and permit issuance before October 20,

2011. We believe this is a reasonable schedule because the EPA has had a substantial period of

time to review the PHPP’s PSD application and supplements. The GHG BACT analysis submitted today should not cause further substantial delay. Given the importance of this matter to the City, we will contact your office to set up an in

- person meeting to address a ny remaining questions . We look forward to working with the EPA to finalize this PSD permit. . Addressing this requirement would involve potentially expensive and time

- consuming additional analysis. The continued need to addres s one new requirement after the other will threaten the feasibility of the project. The final approvals of the PHPP are expected to be issued by the California Energy Commission in the next couple of months , and further delay of the PSD permit will severe ly hamper the ability of the project to obtain financing and move forward

. PHPP is the type of power generation project that EPA should be encouraging, due to its high efficiency and lack of significant impacts.

If you have any questions about this letter , please do not hesitate to contact me.

Sincerely

Sara J. Head, QEP Vice President, AECOM Environment
Sara. H ead@aec om.com

Attachment: P almdale Hybrid Power Plant Greenhouse Gas BACT Analysis

cc: Ms. Shirley Rivera, EPA Ms. Laurie Lile, Assistant City Manager, Palmdale Mr. Tom Barnett, Inland Energy, Inc. Mr. Mike Carroll, Latham & Watkins

2 See Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (P M2.5)

— Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC), 75 Fed. Reg. 64,864, 64,887 (Oct. 20, 2010).