### MEMORANDUM

TO: Steam Electric Rulemaking Record

FROM: Danielle Lewis, ERG

DATE: September 30, 2015

SUBJECT: Plant-Specific Compliance Cost Esti mates for the Treatment of FGD Wastewater with Chemical Precipitation Followed by Evaporation

ERG is providing technical support to the U.S. Environmental Protection Agency’s Office of Water, Engineering and Analysis Division (EAD) for development of effluent limitations guidelines and standards (ELGs) fo r the Steam Electric Power Generating Industry. As part of the analyses for the ELGs, EPA, with support from ERG, estimated incremental compliance costs associated with installing and operating the various technologies and practices that make up the regulatory options cons idered by EPA. As described in the Technical Development Document for the Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category (DCN SE05904) and Incremental Costs and Pollutant Removals for the Final Effluent Lim itations Guidelines and Standards for the Steam Electric Power Generating Point Source Category (DCN SE05831) (Costs and Loads Report) EPA analyzed six regulatory options for the fina l rule. These six regulato ry options include new
or revised effluent limitations and standards on specific wastestreams generated by steam electric power plants. These wastestreams include flue gas desulfurization (FGD) wastewater, fly ash transport water, bottom ash transport water, combustion residual leachate, flue gas mercury control (FGMC) wastewater, and gasification wastewater. Tabl e 1 summarizes the technology basis for each wastestream under each regulatory opti on, Options A, B, C, D, E, and F. As one moves from Option A to Option F, there is a grea ter estimated reduction in pollutant discharges from steam electric power plants.

Table 1. Steam Electric Power Generating Point Source Category Regulatory Options

Wastestreams Technology Basis for Regulatory Options

A B C D E F

FGD

Wastewater Chemical Precipitation Chemical Precipitation + Biological

Treatment Chemical Precipitation + Biological

Treatment Chemical Precipitation + Biological

Treatment Chemical Precipitation + Biological

Treatment Evaporation

Fly Ash Transport
Water Dry Handling Dry Handling Dry handling Dry handling Dry handling Dry handling

Bottom Ash Transport
Water Impoundment (Equal to BPT) Impoundment (Equal to BPT) Dry handling/Closed loop (for units >400 MW); Impoundment Dry handling/ Closed loop Dry handling/ Closed loop Dry handling/ Closed loopMemorandum September 30, 2015 Page 2

Table 1. Steam Electric Power Generating Point Source Category Regulatory Options

Wastestreams Technology Basis for Regulatory Options

A B C D E F
(Equal to BPT)(for units

≤ 400 MW)

FGMC

Wastewater Dry handling Dry handling Dry handling Dry handling Dry handling Dry handling

Gasification

Wastewater Evaporation Evaporation Evaporation Evaporation Evaporation Evaporation

Combustion
Residual
Leachate Impoundment (Equal to BPT) Impoundment (Equal to BPT) Impoundment (Equal to BPT) Impoundment (Equal to BPT) Chemical Precipitation Chemical Precipitation

N onchemical
Metal Cleaning

Wastes [Reserved] [Reserved] [Reserved] [Reserved] [Reserved] [Reserved]

For each of the regulatory options, EPA estimat ed plant-specific compliance costs for the individual treatment technologi es using the methodologies desc ribed in the Costs and Loads Report. These plant-specific costs for individua l treatment technologies we re then combined to calculate total industry costs associ ated with each regulatory option.

Under Regulatory Option F, EPA would es tablish ELGs for FGD wastewater based on treatment using an evaporation system. EPA developed a methodology to estimate compliance costs for each plant discharging FGD wastewater to install or upgrade an existing FGD
wastewater treatment system to an evapor ation treatment system. EPA’s methodology for estimating compliance costs associated with ev aporation treatment of FGD wastewater is
described in Section 6.3 of th e Cost and Loads Report.

EPA revised the methodology for estimating ev aporation treatment system costs based on comments received on the proposed Steam Elect ric ELG. Revisions to the cost methodology include the following:

 Revised estimate of indirect capital costs – EPA estimated indirect capital costs (i.e., engineering and supervision, c onstruction expenses, contract or’s fees, and contingency fees) as a combined cost based on a pe rcentage of total equipment costs.

 Increased equipment costs to account for added redundancy – EPA added an escalation factor to the purchased equipment costs to account for the purchase of redundant equipment for the evaporation treatment system.

 Increased capital and operati ng and maintenance (O&M) costs to account for chemical treatment – EPA added capital costs associat ed with chemical addition systems to add polymer, sulfuric acid, sodium hydroxide (caust ic), anti-foam, and anti-scalant to the treatment system. EPA also included the O& M cost associated with purchasing these
chemicals.

 Revised operating labor costs – EPA increased the plant staff requirement to operate the evaporation system from one operator to three operators.Memorandum September 30, 2015 Page 3

 Revised maintenance labor and maintenance materials cost – EPA increased the costs
associated with maintenance labor and maintenance materials to account for more frequent maintenance activities to clean and replace parts within the evaporation system.

The Cost and Loads Report includes specific deta ils on the development of these revised cost
elements.

EPA determined there was no need to revise the electricity costs associated with the evaporation treatment system. The plant-spec ific costs for the elec tricity required by the evaporation treatment system remain unchanged fr om costs for electricity estimated at proposal. Due to changes in the equipment cost methodol ogy for evaporation and other plant-specific changes to the FGD wastewater treatment flow ra tes, EPA estimates that on an industry level these electricity costs will remain relatively unchanged. EPA determined there was no need to include additional electricity co sts for any of the new equipm ent added to the evaporation treatment system since proposal (i.e., new chemic al addition systems) because these systems use such a small amount of electricity, 9 kWh per da y per system, it is insignificant when compared to the energy consumption of the treatment sy stem. Additionally, EPA did not include additional electricity costs for redundant equipment because the purpose for the additional equipment is to add redundancy to the system and therefore the amount of equipment operating at any one time would be unchanged. For example, adding an additional pump for redundancy would not increase the electricity demand for the system because it would act as backup for an operating pump, and would only operate whenever the other pump is shutdown or otherwise out of service. EPA also determined that it was not necessary to revise electricity co sts because any changes
related to revisions to FGD wast ewater flow rates would not signi ficantly change the capital or O&M costs for the evaporation system. As descri bed in the Cost and Lo ads Report, electricity usage is directly related to the FGD wastewater flow rate; thus, any change to flow rate would result in a proportional change to electricity costs.

EPA estimated compliance costs several different ways to evaluate the effect of the final ELG on the steam electric industry. In these diffe rent cost approaches EPA considered other rulemakings affecting the steam electric industr y, to include the coal combustion residuals (CCR) rule and Clean Power Plan (CPP). In the cost estimates that account for CCR and CPP, EPA identified 3 plants with an increase in FGD wastewater flow from proposal and 13 plants
with a decrease in FGD wast ewater flow from proposal.

Attachment 1 includes plant-specific complian ce cost estimates for all plants discharging FGD wastewater for the cost approach accountin g for both the CCR rule and CPP, and for the cost approach accounting for only the CCR rule. Ta ble 2 summarizes the total industry capital and O&M costs estimate for each cost approach.

Table 2. Industry-Level Estimated Complia nce Cost for FGD Wastewater Treatment using Evaporation

Cost Approach Total Capital Cost Total O&M Cost With CCR and CPP $6,190,000,000 $661,000,000 With CCR $7,690,000,000 $821,000,000 Note: Compliance costs assume that oil-fired generating units and generating units with a capacity of 50 MW or less do not install the technology basis for FGD wastewater treatment. Note: Compliance costs rounded to three significant figures.