EPA developed the Regional Haze Program inresponse to a requirement fromCongress to restore visibility at National Parks and Wilderness Areas (Class Iareas) to natural visibility conditionsThe Best Available Retrofit Technology (BART) provision of the Regional HazeProgram requires large old sources of air pollution that affect visibility atClass I areas to be evaluated against five factors to determine if new airpollution controls should be requiredNGS is subject to BART because it is alarge, old source of air pollution thataffects visibility at 11 Class I areas, including Grand Canyon and CanyonlandsN ti l P kNational ParksAill t t(i l diti l dF t 1C t f C lirpollutants(including,particlesand gaseslike NOxthat form particles) cause hazeReducing emissions of pollutants that causehaze should reduce visibility impairmentFactor1–Costof ComplianceFactor 2 – Energy and Non-Air QualityImpacts of ComplianceFactor 3 – Existing Controls at the SourceThe same pollutants that impair visibility area concern for human healthNOxis reduced using combustion controls(low NOxburners - LNB) or post-combustiont l ( l tit l tid tiFactor 4 – Remaining Useful Life of theSourceFactor 5 –Degree of Anticipated VisibilityImprovementcontrols(selectivenoncatalytic reduction-SNCR or selective catalytic reduction - SCR)p1LNB/SOFA SNCR+LNB/SOFA SCR+LNB/SOFAEmissionLimit(poundspermillionBritishThermalUnitsorlb/MMBtu)0.24 0.18 0.055



# Fact oTotalCapitalCost $45million– alreadyspent $84million $541millionAnnualizedCapitalCost $5.2million $29million $64millionAnnualOperation&MaintenanceCost $0 $19million $11.9millionTotalAnnualCost($/year) $5.2million $23.5million $58.8million



# o r 1EmissionsReductions(tonsperyear) 10,865 16,608 28,573AverageCostEffectiveness$486/ton $1,745/ton $2,240/tonIncrementalCostEffectiveness($/ton) n/a $4,110/ton(vs.LNB)$3,315/ton(vs.LNB)$2,933(vs.SNCR)WillSCRforceNGStoclose?No:IncreaseinNetPresentValuefromSCR=$648millionvsNPVfromLow



# Factor 2*WillSCRforceNGStoclose?(complianceby2018)No:IncreaseinNetPresentValuefromSCR$648millionvs.NPVfromLowMarketCase=$673millionElectricityRatein2018forSRPCustomers(complianceby2018)9.26¢/kWh(Baseline)9.28¢/kWh(0.2%)9.32¢/kWh(0.6%)CAPWaterRates(Energyonly)in2018(complianceby2018)$58peracrefoot(AF)(Baseline)$61/AF(5%increasetoTribes)$66/AF(14%increasetoTribes)(complianceby2018)(Baseline)(5%increasetoTribes)increase



# 3ExistingControlsatNGSLNB/SOFAwasinstalledonall3unitsatNGSover2009– 2011;Hot‐sideESPsforPMandWetFGDforSO2



# 4RemainingUsefulLifeofNGSEPAusedadefaultamortizationperiodof20years.ExtendedNGSleasewithNavajoNationgoesto2044(over30years).2 1dv3 1dv5 4dv



# 5LargestSingleClassIAreaVisibilityImprovement2.1dv(35%changeindv)3.1dv(40%changeindv)5.4dv(71%changeindv)CumulativeVisibilityImprovement(11ClassIareas)16dv(33%changeindv)22dv(45%changeindv)35dv(73%changeindv)*EPA’sProposedBARTdetermination(February5,2013)includesadditionalanalysisanddiscussionofpotentialimpactstoTribeslocatedinArizonaandotherCAPwaterusers2Based on our five-factor analysis, EPA proposeda BART emission limit of 0.055 lb/MMBtu (on arolling average of 30 boiler operatingdays), achievable with the installation of SCR, in addition tothe existing LNB/SOFA at NGS, with a compliance date 5 years following the final rule (e.g., 2018)Circumstances related toNGS create unusual andi ifi t h ll f 5liThe Regional Haze Rule requires BARToranAlt ti t BART th t hi tsignificantchallengesfora5-yearcompliancescheduleContinued operation of NGS and Kayenta Mine isimportant to Navajo Nation and Hopi TribeNGS powers pumps that supply water to much ofAlternativetoBART thatachievesgreaterreasonable progress than BARTIn addition, because NGSis located on TribalLand, EPA is also using our authority anddiscretion to propose an extended timeframeNGS powers pumps that supply water to much ofArizona, including many Tribes (Congressionallyapproved water settlement agreements)for an Alternative to BARTProposed to credit NGS with the early and voluntary installation of LNB/SOFA on one unit peryear in 2009-2011 (LNB Credit)‒Early installation of LNB/SOFAresulted in more emission reductions over 2009-2018 than wouldhave been achieved if LNB/SOFA and SCRwere installed concurrently for BARTEPA proposed to require NGS to comply with theBART emission limit of 0.055 lb/MMBtu on oneunit per year in 2021, 2022, and 2023 (Alternative 1)With LNB Credit, total NOxemissions from 2009-2044 under Alternative 1 are less than totalemissions under BART therefore Alternative 1achieves greater reasonable progress than BARTemissions under BART,therefore Alternative 1 achieves greater reasonable progress than BARTEPA invited interested stakeholders to submitother Alternatives that meet our framework3NGS is owned by six entities:‒US Bureau of Reclamation (24.3%)‒Salt River Project (SRP) (21.7%)A group of seven stakeholders* formed aTechnical Work Group (TWG) to discuss additionalAlternatives to BART‒Los Angeles Department of Water & Power (21.2%)‒Arizona Public Service (14%)‒NV Energy (11.3%)‒Tucson Electric Power (7.5%)The State of Nevada passed a law in mid-2013that prohibits NV Energy’s continued ownership inNGS beyond 2019Therefore, two entities that own 32.5% of NGSintend to divest from NGS by 2019State Law in California prohibits LADWP’scontinued ownership in NGS beyond 2019* SRP, US Department of the Interior,Navajo Nation, Gila River IndianCommunity, Environmental Defense Fund, Central Arizona WaterConservation District, and Western Resource AdvocatesOn July 26, 2013, TWG submittedto EPA an Agreement that includes, among other things, itsrecommended Alternative to BART (TWG Alternative)The TWG Alternative:Establishes a lifetime cap in NOxEmissions over 2009-2044 based on EPA’s proposed BARTdetermination for NGS (2009-2044 NOxCap)Due to on-going lease and ownership uncertainties, includes several alternative operating scenarios(TWG Alternatives A and B) for meeting the 2009-2044 NOxCapTWG Alternative A‒Requires significant emission reductions by December 31, 2019 through closure of one unit or curtailmentof electricity generation, and‒Requires significant emission reductions by December 31, 2030 though installation of SCR on two unitswith a limit of 0.07 lb/MMBtuTWG Alternative B‒Establishes a second cap in NOxEmissions over 2009-2029 (2009-2029 NOxCap) equivalent to closure ofone unit at NGS, in addition to the 2009-2044 NOxCap4TWGAlternative:MaintainEmissionsbelow2009‐2044NOxCapusingoneofthefollowingoperatingscenarios:A1 A2 A3 BOwnershipPossibilitiesIf:LADWPandNVEnergyexitwithoutsellingownershipinterestorbysellingtoanexistingNGSParticipant.LADWPorNVEnergyexitsbysellingtoa3rdparty,orLADWPorNVEnergydonotexitNGS.And:NavajoNationdoesnotpurchaseownershipinterest.NavajoNationpurchasesinterest(upto170MW).NavajoNationpurchasesinterest(upto170MW).And:Ownersincreasecapacity(doesnottriggerpermit).Ownersdonotincreasecapacity(triggerspermit).SummaryofCaporOperating2009‐2044NOXCap=494,899tons:By12/31/2019,closeoneunit.By12/31/2019,closeoneunit.Threeunitscouldremainopen.MaintaintotalNOxemissionsbelowaorOperatingScenarios,By7/1/2019,meetlimitof0.055lb/MMBtuthroughinstallationofLNB/SOFAconcurrentlyithSCR(BARTBy12/31/2030,meetNOxlimitof0.07lb/MMBtuontwounits.By12/31/2019,increasenetcapacitybynomorethan189MW.By12/31/2030,meetNOxlimitof0.07lb/MMBttpBy12/31/2019,curtailgenerationbyatleast561MW.By12/31/2030,meetNOxlimitof0.07lb/MMBtt2009‐2029NOxCap(416,865tons).Capisequivalenttoclosureofoneunitby12/31/2019.withSCR(BARTdetermination).lb/MMBtuontwounits.lb/MMBtuontwounits.EPA’sEstimateofTotalNOxEmissionsover2009‐2044435,819tons 461,816tons NGSmustensuretotalemissionsremainbelowbothNOCapsx.Public Comment Periodcloses on January 6, 2014EPA will work expeditiously to review all comments and respond to all substantive comments inwriting in our final rulemaking for NGS5