December 2 0 , 2013

The Honorable Regina A. McCarthy

Administrator U.S. Environmental Protection Agency William Jefferson Clinton Federal Building 1200 Pennsylvania Ave., NW Washington, DC 20460

- 0001

Dear Administrator McCarthy:

On behalf of the Board of Directors and member companies of the Edison Electric Institute (EEI), as well as our partners at the Nuclear Energy Institute (NEI), Clean Energy Group ’s 316(b) Initiative (CEG), and Utility Water Act Group (UWAG), we want to extend our sincere thanks to Ken Kopocis and his team for meeting with our staff on December 18 , 2013 to discuss remaining electric power sector concerns with the Clean Water Act (CWA) § 316(b) cooling water intake structures rulemaking for existing facilities which is expected to be completed by January 14, 2014. Last week’s meeting was attended by Howard Shelanski , Dan Utech, and Gary Guzy a nd their respective teams, allowing for frank and open dialo gue on the remaining

issues.

Earlier in the year, you asked for feedback on certain issues of importance to the electric utility industry. Our September 17 th response (attached) outlined our concerns about the proposed

rule . Since that time

, we understa nd that language in the rule has continued to be refined and that several of the issues we raised at that time have been the subject of revision. It is our understanding that several of these issues remain to be resolved and a new issue regarding permit a pplication requirement s has arisen. We are writing to explain those concerns and offer

our recommendations on how best to resolve them in the final rule.

Endangered Species Act (ESA) Consultation and ESA

- Related Regulatory Requirements In a prior communi cation with you (see Utility Water Act Group letter dated October 25, 2013),

we have stated that the proposed § 3 1 6(b) rule will have only beneficial effects on listed species

and th e Services should conclude consultation with either a "not likely to adver sely affect" concurrence, or a biological opinion finding that no jeopardy or adverse modification will occur as a result of the rule. Nevertheless, it is our understanding that in response to the ESA consultation, the rule could require permittees to pro vide vastly expanded information to permitting authorities on the potential for direct and indirect impacts to threatened and endangered species. We have further concerns that any new ESA framework would raise considerable practical and legal problems and impose potential liabilities on the permittees. Trying to address species that may be in the area, but have no risk of being impinged or indirectly affected, and are potential prey of a listed species is much broader than the current ESA applications in t he NPDES permitting process. To address these concerns, we request that:

### The Honorable Regina A. McCarthy

December 20 , 2013 Page 2

 T he Services reach a “not likely to adversely affect” concurrence , and

 A ny focus in the rule, both in terms of monitoring and study requirements, must be on organisms inhabiting or likely to inhabit the zone of influence of the intake and thus likely to be directly affected by the intake.

ESA issues have long been evaluated and addressed at each our facilities as required by the Endangered Species Act. It is essential that EPA reconsider and not include this new scope of monitoring and study requirements in the final rule.

Definition of Closed

- Cycle Cooling and Waters of the United States (WOUS) We remain very concerned that EPA has not resolved this issue ac cording to established legal and regulatory precedent. Whether an existing facility is open

- cycle or closed

- cycle is a function of design choices made at the time of construction, not the jurisdictional classification assigned to any man

- made ponds o r impo undments included in its design. In addition to maintaining the current regulatory exemption for waste treatment systems, we recommend that EPA specify that cooling ponds or impoundments lawfully created principally to serve as part of a closed

- cycle cool ing system can continue to serve that purpose and will satisfy § 316(b) for both impingement and entrainment. To do otherwise would result in stranding these assets because these impoundments would no longer be usable for the purpose for which they were d esigned. Requiring that their status as a compliance technology hinge on their jurisdictional status as WOUS is wholly inconsistent with the statements EPA explicitly made in justifying its 1979 NPDES rule defining WOUS, which explicitly acknowledged that an impoundment could function as a compliance technology even if classified as a WOUS. 44 Fed. Reg. 32

, 585, col. 1.

Use of Cost

- Benefit Analysis and Willingness

- to

- Pay (WTP) Survey Issues EPA’s proposal appropriately requires permitting authorities to consider a variety of factors, including costs and benefits, when making a best technology available (BTA) determination. We understand that EPA’s most recent thinking restores costs and benefits in BTA determinations to the list of mandatory

actions to b e considered by the Director. This is a positive step. However, there remain certain concerns regarding the continued reference to and endorsement of the use of WTP surveys on an individual permit basis despite the significant, demonstrable problems with the use of such surveys.

To resolve these remaining concerns we ask that EPA take the following actions:

 Moderate the language which encourag es the quantification of non

- use benefits of reducing

entrainment. It must be clear that states are not required to conduct a WTP survey to consider a permit application. This can be accomplished by (1) adding language acknowledging that in many

cases, non

- use benefits may not occur, (2) acknowledging the substantial issu es involved in developing WTP surveys capable of producing reliable information, and thus the inherent uncertainty in monetizing non

- use benefits through the WTP methodology, and (3) in the discussion of social benefit evaluation, endorsing the use of qua litative descriptions and adding language similar to that included in the preamble to the Phase II rule, which specifically provided

that monetization of non

- use benefits was not warranted unless the entrainment characterization study indicated substantial harm to listed threatened and endangered species, to the sustainability of populations of important species of fish, shellfish, and wildlife, or to maintenance of community structure and function in a facility’s waterbody or watershed

. 69 Fed. Reg

. 41,648

, col. 1

,

### The Honorable Regina A. McCarthy

December 20 , 2013 Page 3

 Ensure that the preamble and the rule clearly state that all non

- water quality impacts are to be equally considered and weighed in determining whether further entrainment controls are justified

, and

 Modify the “backstop” provisions that req uire the Director to require closed

- cycle cooling if any portion of the permit application is viewed to be “inadequate.” Currently, th ese provisions could be interpreted as requiring closed

- cycle cooling if a facility does not conduct and submit a WTP

sur vey as part of a cost

- benefit study.

Definition of New and Existing Units at Existing Facilities As stated in our September 1 7 , 2013 letter, the electric power sector strongly believes that EPA should distinguish between “new” and “existing” units at exis ting facilities consistent with the 2011 proposed rule. We understand that the most recent iteration of the draft rule proposes to pinpoint the moment a modification renders an existing unit a new unit when three things occur: (1) the unit is repowered,

r eplaced or rebuilt; (2) both the turbine and condenser are replaced; and (3) the location of the cooling water intake structure or design intake flow is changed. When these conditions are met

, a mandatory

closed

- cycle cooling requirement would be establis hed. Closed

- cycle cooling is not BTA for modified

units for the same reasons

– land constraints, reliability impacts, non

- water quality environmental impacts,

etc.

— closed

- cycle cooling is not BTA for new units. Further, this process establishes a “New Sou rce Review” type program that will discourage future efficiency improvements such as nuclear uprates. T here

is no evidence that the modifications will result in adverse environmental impact . Of course, states have the opportunity upon every permit renewal to determine if additional protection is warranted as a result of a plant modification. In making this determination, states must consider the same factors that they apply

to site

- specific decisions for existing facilities. We recommend that t he provisi on be modified to mirror the language of the 2011 proposal which stated that new units at existing facilities should expressly exclude “repowered, rebuilt or replaced” units.

De Minimis Concerns We appreciate that the Agency has taken a number of positiv e steps to recognize the importance of including language exempting faci lities that have a de minimis environmental impact related to impingement. However, we understand that the language includes a broad, generalized application of the ESA in a fashion that would render the language meaningless for facilities because it prohibits the ability of facilities to qualify for the de minimis provision if a listed species may be present i n the area rather than if the facility is impinging or entraining listed species. As a result, the ESA provisions will tie the hands of permit writers and result in unjustifiable n ew costs to facilities while producing no environmental

benefits. The de mi nimis provision should remain focused on actual impingement , as opposed to indirect or potential impingement, while fully recognizing design and engineering protections. Accordingly, we ask that the de minimis provisions be modified to allow the Director to determine that no additional impingement controls may be required at facilities with a low documented rate of impingement provided the facility complies with applicable requirements of the Endangered Species Act.

Low Capacity Utilization Units

We unde rstand the revised rule allows permittees to request less stringent impingement requirements for

units with a low annual average capacity utilization rate. This is another positive development. But this provision must apply to entrainment as well as impi ngement. Units that have low capacity utilization rates are required for a variety of reasons , including but not limited to grid reliability, voltage

maintenance

, and load balancing. These facilities are infrequently called upon to produce power for the

### The Honorable Regina A. McCarthy

December 20 , 2013 Page 4

grid. For those reasons, additional operational costs (such as the installation of impingement and

entrainment reduction technologies) could make these units uneconomic and would force closure

, thus defeating the reliability purpose they serve. Entrainme nt control technologies are often the more expensive and capital intensive of CWIS technologies. We would request that t he provision be modified to allow permittees to request less stringent impingement and entrainment requirements for low capacity

utiliz ation units.

Permit Application Requirements and Deadlines Permit application deadlines need to be reasonable in length and should not require the selection and installation of impingement control technologies until entrainment requirements have been established.

This is a necessary feature of the final rule f or engineering and cost reasons . To conduct impingement

and entrainment assessments, the proper sequencing and adequate time are both needed. Based on our understanding of the current version of rule, neither is currently being provided

.

To ensure that the permit application process is logical and efficient, we recommend that EPA should modify the final rule language to:

 P rovide a minimum of five years for all facilities to complete the permit application requirements ;

 A dd a provision re quiring facilities to identify proposed impingement mortality control options compatible with entrainment control options for facilities that do not have in place the impingement control technology on which they plan to rely ;

 A uthorize permit writers to ap prove impingement controls based on a predictive demonstration of their performance, with any required two

- year optimization study occurring after the technology

has been installed ; and

 A uthorize permit writers to adjust permit application deadlines for ca use, regardless of the expiration date of the facility’s current NPDES permit.

We thank you for your continued focus on this important rule that will affect almost half of the existing U.S. generation capacity. As we reach the final stages of this process , we are committed to working with

the A gency to ensure an equitable and economical final rule that achieves important environmental

benefits and ecological benefits throughout the U.S

.

Sincerely,

Michael W. Yackira

President & CEO NV Energy

EEI Chair Ger ard M. Anderson Chairman, President & CEO DTE Energy Company EEI Policy Committee on Environment Co

- Chair

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December 20 , 2013 Page 5

Christopher M. Crane

President & CEO Exelon Corp.

EEI 316(b) Issue Leader Leo P. Denault

Chairman & CEO Entergy Corp.

Anthony F. Earley, Jr. Chairman, President & CEO PG&E Corp. Thomas F. Farrell Chairman, President & CEO

Dominion

Lynn J. Good Vice Chairman, President & CEO Duke Energy Ralph Izzo Chairman, President & CEO Public Service Enterprise Group, Inc. EEI Policy Committee on Environment Co

- Chair

James L. Robo Chairman, President & CEO NextEra Energy, Inc.

cc: The Hon. Robert Perciasepe, EP A The Hon. Howard A. Shelanski, OMB Gary Guzy, CEQ Ken Kopo cis, EPA Dan Utech, DPC