MEMORANDUM

TO: Steam Electric Rulemaking Record

FROM: TJ Finseth and Danielle Lewis, ERG

DATE: January 29, 2013

SUBJECT: Flue Gas Desulfurization Future Profile Sensitivity Analysis

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) for the Steam Electric Power Generating Industry. As part of 

this technical support, EPA, with support from ERG, estimated compliance costs and baseline 

and post-compliance loadings for all plants identified as currently discharging FGD wastewater. 

The analyses and the conclusions that EPA presented in the proposed rule (e.g., compliance 

costs, pollutant loadings, economic achievability) reflect wastestreams generated by air pollution 

controls that will likely be in operation at plants at the time EPA takes final action on this 

rulemaking1. However, EPA recognizes that some recently promulgated Clean Air Act 

requirements may lead to additional air pollution controls (and resulting wastestreams) at 

existing plants beyond this date. In an effort to take these potential changes into account, EPA 

conducted a sensitivity analysis that forecasts future installations of air pollution controls through 

20202and estimated the associated costs of complying with the proposed regulatory

requirements for the wastewater that may result from the forecasted air pollution control 

installations. This memorandum discusses the sensitivity analysis EPA performed to assess how

the forecasted future installations of FGD systems may affect the estimated costs and pollutant 

removals for the proposed ELGs.

EPA has two primary data sources upon which to predict future air pollution control 

installations: 1) Integrated Planning Model projections for the final Mercury and Air Toxics 

Standards (MATS) rule3; and 2) responses to EPA’s Questionnaire for the Steam Electric Power 

Generating Effluent Guidelines (Steam Electric Survey). At the time EPA promulgated the 

MATS rule in 2011, it projected air pollution control retrofits using Integrated Planning Model 

(IPM) modeling (which also included projected retrofits associated with the Cross-State Air 

Pollution Rule (CSAPR) and other state and federal requirements). To support the ELG 

rulemaking, EPA’s Steam Electric Survey asked the industry to report plans for installing certain 

new air pollution controls at facilities through the year 2020. EPA has no reason to conclude that 

 

1 EPA expects to promulgate the final rule in calendar year 2014.

2 EPA considers that by forecasting future installations of controls out to the year 2020, the sensitivity analyses for 

this rulemaking reasonably reflect full implementation of air pollution controls to comply with existing federal and 

state requirements.

3 EPA IPM v.4.10 predictions for units based on compliance with CSAPR, MATS, state rules, and enforcement 

actions including consent decrees.
Memorandum

January 29, 2013

Page 2

either the IPM FGD projections or the survey responses are more accurate than the other. In fact, 

both of these sources may overstate actual installations. Prior to MATS becoming final, many 

plant owners and operators assumed that wet scrubbers would be the only technology available 

to meet emissions limits for acid gases. However, as EPA gathered and published additional data 

on facility emission rates (which informed how the Agency set the standards), and as 

stakeholders researched and published additional information on the performance of less capitalintensive control technologies such as dry sorbent injection, it has become clear that many 

facilities will find it more cost-effective to forgo wet scrubbers in favor of other emission 

reduction strategies. Furthermore, major economic variables such as electricity demand and 

natural gas prices have changed substantially since the market conditions prevalent when 

respondents were answering the survey in 2010. For example, it is possible that a facility 

originally indicating an expectation in the Steam Electric Survey to install a wet scrubber by 

2020 may now find itself no longer competitive in the updated marketplace with substantially

lower natural gas prices and lower electricity demand growth than previously expected. 

Consequently, the facility may elect to retire and thereby neutralize the previously reported intent 

to install a wet FGD system. Nevertheless, these two sources remain the best available 

information EPA has with which to estimate future predictions.

As a first step in conducting the sensitivity analysis, EPA compared the projections from the two 

sources. This comparison demonstrated that the IPM projections for the MATS Policy Case and 

the Steam Electric Survey responses are consistent at the aggregate level. Furthermore, in a very

large part, both the survey and IPM identify the same generating units as being wet-scrubbed, 

either currently or in the future (the two sources are in agreement for approximately 94 percent

of the wet scrubbed units). The two sources also predict similar wet-scrubbed generating 

capacities on an industry level. In the very few cases where there are differences between the two 

sources, the difference is primarily due to the expected variation at a unit-level (e.g., IPM model 

predicts wet FGD at unit A and dry FGD at unit B, but instead the survey responses report wet 

FGD at unit B and dry FGD at unit A). Another difference between the MATS IPM estimates 

and the industry survey estimates is that, in a very few cases, the IPM results predict that certain 

plants would retire (and therefore would not install wet scrubbers). In conducting the analyses 

for the ELGs, EPA made the conservative assumption (i.e., one that would tend to overestimate 

costs, if anything) that a plant would still be in operation in 2020 unless the plant has formally 

announced that it would close by then. The comparison of the IPM FGD projections and the 

Steam Electric Survey are included in document titled “Comparison of Current Industry Profile 

of IPM Projections” (DCN SE00818).

EPA developed a conservative upper-bound estimate of future FGD installations by combining 

the information from both sources to develop its “future steam profile.” By this, EPA means it 

combined any source that reported or projected a wet FGD into one “future steam profile.” 

Clearly, this “future steam profile” is conservative because it reflects more wet FGDs than are 

anticipated to actually be installed – by aggregating the IPM projections and the Steam Electric 

Survey responses it results in a total number of wet FGD systems and wet-scrubbed capacity that 

is greater than predicted by either of those individual sources. EPA identified twenty-one “future 

steam profile” plants based on only the IPM forecast estimates. Using both IPM projections and 

the Steam Electric Survey, EPA identified a complete “future steam profile” of twenty-nine 

plants that may install a wet FGD system after EPA promulgates the final ELGs.
Memorandum

January 29, 2013

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For each plant identified as having a future wet FGD system in the “future steam profile,” EPA 

estimated the costs for these plants to install the FGD treatment technology options considered 

for the proposed rule. To estimate the costs, EPA first determined the wastewater flow rate 

associated with the new wet FGD system. EPA determined the flow rate by either using

projected flow rates provided in the Steam Electric Survey, or by using the methodology EPA 

developed for planned FGD systems that did not report FGD wastewater flow rate, described in 

EPA’s Incremental Costs and Pollutant Removals for Proposed Effluent Limitations Guidelines 

and Standards for the Steam Electric Power Generating Point Source Category. EPA also 

evaluated the level of FGD wastewater treatment that would be installed at each plant in the 

“future steam profile.” The Steam Electric Survey requested each plant to describe the treatment 

technology that they planned to use to treat the wastewater from the planned FGD system. EPA 

categorized these proposed treatment systems as either a settling pond or chemical precipitation 

system based on the survey responses. For the planned FGD systems identified by only the IPM 

projection (i.e., no survey data available regarding the future installation), EPA categorized the 

system as a settling pond unless the plant already has a currently operating FGD system. For 

these IPM-identified plants that already operate at least one wet FGD system, EPA assumed that 

the new wastewater treatment system would be similar to the FGD treatment system already 

operating at the plant. EPA used the FGD wastewater flow and treatment-in-place data for each 

plant in the “future steam profile” to estimate the pre-tax engineering compliance cost for each 

technology option for the proposed rule. These costs are presented in Table 1.

EPA compared the compliance costs for the “future steam profile” to the costs for the current 

profile.4 EPA determined that even under this conservative analysis that would overestimate 

costs, incorporating the “future steam profile” into the ELG analyses would increase the costs of 

the proposed rule by no more than 10 to 15 percent. Table 2 presents the total annualized costs of 

compliance to society for Regulatory Options 3 and 4, for both the “current steam profile” and 

the “future steam profile.” Even assuming these higher costs, EPA finds that these additional 

costs are economically achievable.

EPA also estimated the pollutant loadings associated with the projected wastewater discharges 

from the “future steam profile” plants. EPA used the FGD wastewater flow and treatment-inplace data described above to evaluate baseline loadings and post-compliance loadings for each 

FGD treatment technology option. Table 3 presents the estimated baseline and post-compliance 

loadings for the “future steam profile.” Loadings from the “future steam profile” plants would 

increase the total industry baseline loadings by approximately seven percent.

EPA calculated the pollutant removals that would be realized by these “future steam profile”

plants complying with each of the FGD treatment technology options. Pollutant removals are 

presented in Table 4. Accounting for pollutant removals from the “future steam profile” plants 

would increase total industry pollutant removals by seven percent for the preferred regulatory

options. See DCN SE01756 for the complete plant-level loadings output, including baseline and 

post-compliance loadings.

Using the baseline loadings discussed above, EPA conducted an environmental assessment (EA) 

analysis to determine if the additional baseline loadings from “future steam profile” plants would 

 

4 The “current steam profile,” referred to as the current profile, includes all plants currently discharging FGD 

wastewater or planning to discharge FGD wastewater by January 1, 2014.
Memorandum

January 29, 2013

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result in additional water quality exceedances. The EA analysis showed that water quality

exceedances would increase for the evaluated criteria by between zero and ten percent. The 

freshwater national recommended water quality criteria are most affected by the increased 

pollutant loadings with exceedances increasing by ten percent. Other evaluated criteria for cancer 

risks, ecological health, and other national recommended water quality criteria would increase

zero to five percent. While the “future steam profile” increases the number of baseline 

exceedances (i.e., those exceedances prior to implementation of revised ELGs), EPA expects 

most of these additional exceedances would go away under the preferred options for the 

proposed rule, which would also result in increased benefits associated with the proposed rule.

EPA notes that subsequent to its analysis, the CSAPR was vacated by the D.C. Circuit Court of 

Appeals. EPA will continue to assess the potential impacts that changes to air pollution 

regulations may have on future installations of wet FGD systems. For the purpose of FGD 

wastewater analyses for this rulemaking, EPA has made a conservative assumption that all of the 

previously projected wet scrubber additions in the CSAPR-inclusive baseline (which also 

included MATS, state rules, consent decrees, etc.) would continue to be built, and that discharges 

from those additional wet scrubbers would therefore be subject to the proposed revisions to the 

ELGs.

Table 1. Estimated Compliance Cost for the “Current Steam Profile” and 

“Future Steam Profile”

Cost Element “Current Steam Profile”

“Future Steam Profile” –

Based on IPM Projection

“Future Steam Profile” –

Based on Combined IPM 

and Steam Electric 

Survey Projection

One-Stage Chemical Precipitation Costs

Total Capital Cost $1,450,000,000 $1,600,000,000 $1,650,000,000

Total O&M Cost $194,000,000 $215,000,000 $221,000,000

One-Stage Chemical Precipitation with Biological Treatment Costs

Total Capital Cost $2,500,000,000 $2,770,000,000 $2,850,000,000

Total O&M Cost $257,000,000 $285,000,000 $293,000,000

One-Stage Chemical Precipitation with Vapor-Compression Evaporation Costs

Total Capital Cost $6,240,000,000 $6,970,000,000 $7,160,000,000

Total O&M Cost $1,030,000,000 $1,120,000,000 $1,150,000,000

Note: Values rounded to three significant figures.

Note: Values presented in the “Future Steam Profile” columns represent the entire industry in the future, including 

the “current steam profile.” To obtain values associated with just the future profile generating units (i.e., excluding 

the currently operating units), subtract the “Current Steam Profile” from the “Future Steam Profile.”

Table 2. Total Annualized Social Costs for the “Current Steam Profile” and 

“Future Steam Profile” for Regulatory Options 3 and 4

Regulatory 

Option “Current Steam Profile”

“Future Steam Profile” –

Based on IPM Projection

“Future Steam Profile” – Based 

on Combined IPM and Steam 

Electric Survey Projection

3 $572,000,000 $613,000,000 $625,000,000

4 $1,380,000,000 $1,420,000,000 $1,430,000,000
Memorandum

January 29, 2013

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Note: Assumes a 3 percent discount rate.

Note: Values presented in the “Future Steam Profile” columns represent the entire industry in the future, including 

the “current steam profile.” To obtain values associated with just the future profile generating units (i.e., excluding 

the currently operating units), subtract the “Current Steam Profile” from the “Future Steam Profile.”

Table 3. Estimated Pollutant Loadings for the “Current Steam Profile” and

“Future Steam Profile”

Technology 

Option

“Current Steam Profile”

“Future Steam Profile” –

Based on IPM Projection

“Future Steam Profile” –

Based on Combined IPM 

and Steam Electric Survey 

Projection

Pounds/Year TWPE/Year Pounds/Year TWPE/Year Pounds/Year TWPE/Year

Baseline 3,240,000,000 3,030,000 3,420,000,000 3,200,000 3,470,000,000 3,260,000

Chemical 

Precipitation 

Option

3,650,000,000a1,490,000 3,890,000,000a1,590,000 3,960,000,000 1,620,000

Chemical 

Precipitation 

with Biological 

Treatment 

Option

2,080,000,000 411,000 2,220,000,000 438,000 2,250,000,000 444,000

Chemical 

Precipitation 

with VaporCompression 

Evaporation 

Option

13,500,000 36,400 14,200,000 38,600 14,400,000 39,100

Note: Values rounded to three significant figures.

Note: Values presented in the “Future Steam Profile” columns represent the entire industry in the future, including 

the “current steam profile.” To obtain values associated with just the future profile generating units (i.e., excluding 

the currently operating units), subtract the “Current Steam Profile” from the “Future Steam Profile.”

a – Characterization data used to estimate pollutant concentrations for baseline FGD surface impoundments does not 

include concentration data for ammonia, hexavalent chromium, and TKN. These pollutants are included in the postcompliance loadings and as a result appear to increase in concentration from baseline to technology option.

Table 4. Estimated Loadings Removals for the “Future Steam Profile”

Technology 

Option

“Current Steam Profile”

“Future Steam Profile” –

Based on IPM Projection

“Future Steam Profile” –

Based on Combined IPM 

and Steam Electric Survey 

Projection

Pounds/Year TWPE/Year Pounds/Year

TWPE/Yea

r Pounds/Year TWPE/Year

Reduction: 

Baseline -> 

Chemical 

Precipitation 

Option

-417,000,000a1,530,000 -472,000,000a1,610,000 -492,000,000 1,640,000

Reduction: 

Baseline -> 1,160,000,000 2,620,000 1,210,000,000 2,760,000 1,220,000,000 2,810,000
Memorandum

January 29, 2013

Page 6

Chemical 

Precipitation with 

Biological 

Treatment Option

Reduction: 

Baseline -> 

Chemical 

Precipitation with 

VaporCompression 

Evaporation 

Option

3,220,000,000 2,990,000 3,410,000,000 3,160,000 3,450,000,000 3,220,000

Note: Values rounded to three significant figures.

Note: Values presented in the “Future Steam Profile” columns represent the entire industry in the future, including 

the “current steam profile.” To obtain values associated with just the future profile generating units (i.e., excluding 

the currently operating units), subtract the “Current Steam Profile” from the “Future Steam Profile.”

a – Characterization data used to estimate pollutant concentrations for baseline FGD surface impoundments does not 

include concentration data for ammonia, hexavalent chromium, and TKN. These pollutants are included in the postcompliance loadings and as a result appear to increase in concentration from baseline to technology option.