# memorandum

February 19, 2009 Thermal Discharge Constraints at 316(b) Facilities 1 

## Environment and Resources

55 Wheeler Street, Cambridge, MA  Tel: 617 492-7100  www.abtassociates.com

Date February 19, 2009

To Erik Helm and Josh Hall

From Dominick Tribone and Michael Fisher

Subject Key Concepts and Issues Surrounding an Anal ysis of Savings to 316(b) Facilities from Relaxation of Thermal Discharge Constraints

Steam power plants are often subject to thermal discharge limits as part of their overall NPDES limits. In some instances, particularly during periods of warm ambient water temperature, plants with once-through cooling water systems may need to curtail generation to remain within these limits. Such curtailments of output will lead to a loss of revenue and operating inco me. Installation of a cooling tower would generally eliminate the need to curtail generation to remain within thermal discharge limits. The avoidance of this output reduction would constitute a fina ncial benefit that would offset, potentially in a material way, the cost of cooling tower installation as a compliance r esponse to a 316(b) regulation. For facilities that curtail output because of a thermal discharge limit, fa ilure to account for this potential financial benefit will tend to overstate the cost and financial burden of cooling tower installation. Below, we review concepts for assessing the financial gain from rela xation of thermal discharge constraints due to installation of a cooling tower. We also provide a few examples of thermal discharge values relative to discharge limits for 316(b) facilities. These exampl es suggest that some facilities may be operating in such way that they would need to curtail out put to remain within their discharge limits.



### 1 Overview of Methodology and Issues to be Addressed

Our understanding of potential approach and issues in analyzing the financial benefits from relaxation of thermal discharge constraints is informed in part from our previous analyses to support development of a thermal discharge permit for the Brayton Point Genera ting Station in Massachusetts. In that effort, Abt Associates quantified increased opportunities for re venue generation (termed “avoided load loss”) anticipated at this power plant if it were to insta ll a recirculating system, as it was constrained in its generation during lucrative peak summer hours by thermal discharge limits in its NPDES permit. This calculation hinged on four pieces of information:

3⁄4 A schedule of periods during which the facility was limited in its generation due to thermal discharge limits

3⁄4 An estimate of the curtailment in generating output required to keep the facility below its thermal discharge limits

3⁄4 A schedule of wholesale electricity prices that would otherwise have been received by the company had the facility been able to ge nerate electricity at a higher capacity

3⁄4 A schedule of fuel costs for the generating units that curtailed output due to thermal discharge

limitations.

Abt Associates Inc.,

### 1.1 Determining the Extent to Whic h Generation is Constrained

For the Brayton Point analysis, the company provided detailed information of the number of hours per year that the facility restricted output due to its ther mal discharge limit; this is not likely to be feasible for the current facility set. In the case of the in-scope 316(b) facilities, we may be able to use permit compliance information from EPA’s PCS 1 and ICIS 2 -NPDES databases to identify time periods during which facilities are constrained by their thermal dischar ge limits. There are several questions related to

the use of this information:

3⁄4 What is the parameter used to limit thermal disch arges? Several are present, including (but not limited to): maximum temperature of discharged water, average temperature of discharged water, temperature difference from upstream/downstream monitoring sites, total BTUs discharged over a period of time, and combinations of two or more limits (in the case of Brayton Point, there were limits on both the temperature of the discharged wa ter at any given point and the total amount of thermal input over a given period).

3⁄4 When are facilities being constrained by thermal discharge limitations, and for how long? This question is related to the previous one, as the timing and duration of a generating constraint will depend on the stipulations of a specific facility’s permit, the characteristics of a plant’s normal operations, and the temperature of intake and receiving water.

3⁄4 How often is monitoring conducted? Initial searches for individual facilities returned monthly monitoring data, which does show some faciliti es hitting or slightly exceeding their thermal discharge limits in months where water temperat ure – and power demand – are usually high (July and August). It is unclear if this informat ion is detailed enough for a rigorous analysis. 3



### 1.2 Determining the Magnitude of a Generation Constraint

An estimate of the extent to which generation was cu rtailed to meet thermal discharge limitations was also provided by the company in the Brayton Point case. For 316(b) facilities, we would need insight from either the EPA regions and state permitting au thorities or from the 316(b) project engineers to determine an appropriate concept for approximati ng the potential “lost” production due to thermal discharge limits that could be “avoided” if a recirculating system is installed.



### 1.3 Valuing the Revenue Loss from a Generation Constraint

Both wholesale electricity prices and fuel costs are us ed in the IPM Market Model Analysis, and may be sufficient for valuing this “avoided load loss.” Combin ed with the timing and generation information, this would allow the calculation of a monetary benefit to facilities installing recirculating systems that also face thermal discharge constraints. However, mark et prices may be significantly higher during peak operating hours, which would increase the opportunity cost of curtailing operations due to thermal discharge constraints during these hours, and thus the benefit from avoiding such curtailments. If information on electricity prices by time period and by NERC region/Independent System Operator could be obtained, this would provide the most accurate est imate of the financial gain from avoided load loss.

1 Permit Compliance System

2 Integrated Compliance Information System

3 Another consideration is whether the thermal discharge lim it is actually a binding cons traint on the output for these facilities? Or are the penalties of non-compliance outweighed by revenue gained in such way th at the faciliti es would not gain from installation of cooling towers?

Thermal Discharge Constraints at 316(b) Facilities 2 Abt Associates Inc., February 19, 2009

### 1.4 Incorporation into 316(b) Economic Analysis

There are essentially two ways to in corporate the information regarding avoided load loss into the 316(b) Economic Analysis. If EPA judges that effect warrants a formal analysis and we can obtain the information detailed above, we can develop a framework to calculate this effect for each facility and incorporate the savings into the overall cost analysis . Alternatively, we could provide several case studies (including Brayton Point) that provide anecdotal ev idence of the financial benefits that facilities may experience from installing a recirculating cooling sy stem. As outlined above, either effort would entail working with EPA Region and state permitting authoriti es and/or the EPA project engineers to develop estimates of the generating loss resu lting from thermal discharge limits.

To help inform this decision, several examples of the information provided by PCS and ICIS are provided in following section.



### 2 Observed Thermal Discharge Tr ends at 316(b) Facilities

Using EPA’s Online Tracking Information System (O TIS), we examined thermal discharge effluent charts for a small sample of facilities (s ee figures below). In the following figures, horizontal lines represent limits set by the NPDES permits: solid lines indicate a limit on the maximum temperature and dashed lines indicate a limit on the average temperature; both may vary (as in Figure 3 and Figure 6 ). The symbols represent reported discharge values for the facilities: upward triangles are maximum reported values, diamonds are average reported values, and downward triangles are minimum reported values. Shading indicates a value reported over the permit limit.

A preliminary look at these charts shows that these facilities’ thermal di scharge limits are being reached and sometimes slightly exceeded during peak summe r months, suggesting that their generating output may be restricted by their permitted thermal dischar ges. Looking at a random sample of 20 facilities, 11 had both limits and monitoring data available for temp erature. Of these 11 facilities, 10 were operating at 90% or more of their limit during peak summer months. This leads us to believe that the limits may pose generation constraints during summer months for a su bstantial number of facilities. Below are sample charts of the effluent information available through OTIS.

Figure 1: Discharged Water Temperature at Danskammer Generating Station, Newburgh, NY – Outfall 2

Thermal Discharge Constraints at 316(b) Facilities 3 Abt Associates Inc., February 19, 2009Figure 2: Discharged Water Temperature at Danskammer Generating Station, Newburgh, NY – Outfall 4

Figure 3: Temperature Difference between Effluent and Upstream at Roseton Generating Station, Newburgh,
NY

Figure 4: Discharged Water Temperature at Roseton Generating Station, Newburgh, NY

Thermal Discharge Constraints at 316(b) Facilities 4 Abt Associates Inc., February 19, 2009Figure 5: Temperature Difference between Effluent and Upstream at Deepwater Generating Station Delaware River, Pennsville, NJ

Figure 6: Discharged Water Temperature at Laskin Power Plant, Aurora, MN

Figure 7: Discharged Water Temperature at Basin Electric Power L Olds, Stanton, ND

Abt Associates Inc., Thermal Discharge Constraints at 316(b) Facilities 5 February 19, 2009