UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 2 290 Broadway New York, NY 10007-1866

August 10, 2004 Certified Mail - Return Receipt Requested Mr. Carlos Reyes, Vice President AES Puerto Rico, L.P. Carr. #3 Km 142.0, Barrio Jobos P. O. Box 1890 Guayama, Puerto Rico 00785 Re: – Second Revision to the Final Prevention of Sig nificant Deterioration of Air Quality (PSD) Permit for the AES Puerto Rico Cogeneration P lant (AES-PRCP) – Administrative Permit Modification Dear Mr. Reyes: On October 29, 2001, the Region 2 Office of the U.S . Environmental Protection Agency (EPA) issued a revised final PSD permit to the AES Puerto Rico, L.P. company for the construction and operation of a 454 megawatt (net) coal-fired steam electric cogeneration facility known as the AES Puerto Rico Cogeneration Plant (AE S-PRCP) in Guayama, Puerto Rico. On August 12, 2003, AES-PRCP requested EPA to make additional changes in AESPRCP’s PSD permit. Subsequently, AES-PRCP supersed ed the August 12, 2003 letter with the April 19, 2004 submittal. AES-PRCP’s proposed chan ges are not expected to result in emission increases over those allowed in the PSD permit exce pt for a trivial amount of 0.0210 ton/year (42 lb/year) of PM 10 associated with increased lime deliveries. These changes involve:

1. Updating the PM 10 emissions limit for the CFB boiler stack to accoun t for the actual stack test data results for condensible PM 10 . The PM 10 limit will increase from 36.9 lb/hr to 73.8 lb/hr and from 0.015 lb/MMBTU to 0.03 lb/MM BTU. The existing PSD permit allows this updating to be done administratively up to a maximum not to exceed 0.05 lb/MMBTU because no reliable PM 10 condensible data existed during the preconstructio n review process.

2. Increasing the size of the emergency boiler feedwat er pump diesel engine from 400 hp to 430 hp. During the testing of the emergency equipment AES -PRCP will fire the unit at orbelow 400 hp so that the hourly and annual emission s will not increase above the limits in

the current PSD permit.

3. Increasing AES-PRCP’s annual usage limit of lime fr om 6,736 tons/year to 8,950 tons/year. This will be accomplished with an increase in tru ck delivering lime to the facility which will increase the PM 10 fugitive emissions by 0.0210 ton/year (42 lb/year)

. 4. Adding the option of using trucks to haul ash off-s ite for on island beneficial uses. The PSD permit allows truck traffic on-site to haul ash rock (manufactured aggregate) from the batch mixing area to the spread and crush area. AES-PRCP would restrict the number of limestone delivery trucks to offset the PM 10 emissions (due to resuspension of roadway silt) from on-site trucks hauling ash. Therefore, there will be no increase in PM 10 emissions from the combined limestone and ash truck traffic on-site.

5. Introducing a new category of startup that applies to startup following outages. This type of startup can take longer than the 14 hours allowe d in the PSD permit because of the requirement to dry refractory material by subjectin g it to gradually increasing temperature. This “post-outage startup” is likely to be required up to two times a year, for an average of one startup per boiler. Allowable emissions dur ing startup will not increase beyond the allowable lb/hr limits but will increase beyond the lb/MMBTU limits.

6. Increasing the allowed four turnovers per year in t he startup fuel tank to a total of seven turnovers per year in order to accommodate the oil requirements of two post-outage startups per year. There will be no increase in facility-wide VOC em issions allowed in the permit.

7. Changing the cover of the inactive coal yard . This entails removing the layer of dirt and grass and installing a layer of one-foot thick comp acted and hardened manufactured aggregate (allowed to harden to a concrete-like mat erial). In addition to the changes requested by AES-PRCP, E PA is implementing an additional change because of the latest changes to the PSD reg ulations, effective March 3, 2003. EPA will now be requiring that facility records that are req uired to be maintained by this permit be kept for a period of at least ten years (instead of the prev ious 5 years). EPA reviewed AES-PRCP’s proposed changes and has de termined that the changes will not result in any increase in emissions from the fa cility except for a trivial amount of 42 lb/year of PM 10 and that the facility still meets best available c ontrol technology (BACT). Furthermore, the changes will not result in a significant impact of short term PM 10 , SO 2 or CO. There will be a slight increase in the annual average PM 10 concentration near the fenceline due to the proxim ity of the ash truck roadway but this is a trivial change. Indeed, the air quality assessment which included the total modeled AES-PR facility plus rec ent ambient concentrations measured at the Jobos monitors showed that all the impacts are well within the National Ambient Air Quality Standards. Not only is the increase in 42 lb/year below the PM 10 significance level of 15 tons/year, but it is only 0.14% of that level. In addition, AES has agreed to immediatelysupplement its Title V permit application to includ e the new limit along with the other changes so

that there will be an opportunity for public review . In light of these factors, EPA has made a determination to approve AES-PRCP's requested chang es to the PSD permit as administrative changes with no public review. The changes and cla rifications to the PSD permit have been included in Attachment I and II of this permit. Attachment III contains a summary of the air quality impacts for SO 2 , PM 10 and CO which are well within National Ambient Air Quality Standards. This determination is final Agency action under the Clean Air Act (the Act). Under Section 307 (b)(1) of the Act, judicial review of t his final action is available only by the filing of a petition for review in the United States Court of A ppeals for the appropriate circuit within 60 days from the date on which this final permit decis ion is published in the Federal Register. Under Section 307 (b)(2) of the Act, this final permit de cision shall not be subject to later judicial revie w in civil or criminal proceedings for enforcement. If you have any questions regarding this letter, pl ease call Mr. Steven C. Riva, Chief, Permitting Section, Air Programs Branch, at (212) 6 37-4074. Sincerely,

/ Signed by: Ronald Borsellino for/ Walter E. Mugdan, Director Division of Environmental Planning and Protection

Attachments cc: Gladys M. Gonzales, Chairman Puerto Rico Environmental Quality Board (w/attachme nts)

bcc: S. Riva, 2DEPP-APB (w/attachments) F. Jon, 2DEPP-APB “ A. Coulter, 2DEPP-APB " J. Siegel, ORC “ K. Eng, DECA “ M. Kantz, DESA “ Carl Soderberg, CEPD (w/attachments) File 3A “Page 1 of 4

Attachment I AES Puerto Rico Cogeneration Project Project Description General Project Description : AES Puerto Rico, L.P. (AES-PRLP) proposes to constr uct and operate a 454 megawatt (net) coal-fired steam electric cogeneration facility loc ated in Guayama, Puerto Rico. The AES Puerto Rico Cogeneration Project (AES-PRCP) will generate electricity for sale to the Puerto Rico Electric Power Authority (PREPA) and steam for the process and/or heating needs of one or more industries in the vicinity of the site. This cogeneration facility will consist of two bituminou s coal-fired circulating fluidized bed (CFB) boilers which together will have a maximum heat input rate of 4,922.7 million British Thermal Units per h our (MMBTU/hr) at 105% maximum continuous rating (MCR). In addition, each CFB wil l be capable of generating approximately 1.8 million lb/hr of steam at 2,400 psig and 1,000 o F at the superheater outlet. These boilers will supply superheated steam to two extraction/condensi ng turbines to drive electric generators and supply process steam flow to industrial facilities of up to 290,000 lb/hr. Emissions will be controlled through the use of CFB boiler and scrubber designs with limestone and lime injection, respectively, an electrostatic precipitator and a selective non-catalytic reduction system, in conjunction with the use of lo w sulfur coal. No. 2 fuel oil will be used as a start-up fuel. In addition, the facility will include one limeston e dryer with a maximum heat input rate of 13 MMBTU/hr. The limestone dryer will consist of a cru sher, in which a stream of heated air both classifies (separates by size fraction) the ground limestone, and dries the material. The limestone dryer will use propane and combustion controls to m inimize emissions. The applicant also proposes to include a diesel generator, a diesel-en gine driven boiler feed water pump and a dieselengine driven fire water pump to ensure the safe op eration and shutdown of the cogeneration facility in the unlikely event of a complete loss o f off-site power. Cooling System : The exhaust steam coming from the turbines is fed t o a cooling tower. Circulating water flow in the tower will be 225,000 gallons per minute (gpm). The cooling tower will have a drift eliminator which will reduce drift to 0.001% of cir culating water flow. Coal and Limestone Receiving and Handling Systems : In order to minimize fugitive particulate emissions during unloading and to meet physical requirements of docking and unloading, gravity-feed belt conveyor and self-unloading ships willPage 2 of 4 Attachment I (cont'd) AES Puerto Rico Cogeneration Project Project Description be employed for delivering coal to the facility. T he coal will be transported by overland conveyor approximately 3,800 feet to the site and stored in on-site stockpiles. The overland conveyor between the facility and the harbor will be capable of supplying coal and limestone delivered by ship to the facility's coal and limestone stockpile s. Lime Receiving and Handling System : The lime handling system includes equipment for sto ring lime delivered to the site by truck and discharging lime to the circulating dry scrubber re actant preparation system. Trucks delivering lime to the site will be equipped with a pneumatic transport to convey lime to the storage silo. A baghouse design vent filter an d vent fan located on the silo roof will filter the air from the trucks unloading transport air and dis placed air from the silo. Solid Waste Handling and Processing : The facility will process fly ash and scrubber resi due, bed ash, and sludge from the cooling tower sidestream treatment system thickener into manufact ured aggregate. The facility will include a system to receive the solid waste streams and proce ss them into conditioned by-product by gravimetrically controlled mixing of the waste stre am with water. The conditioned by-product will be trucked or conveyed by belt conveyor to the by-product processing yard. Ash in its dry form will be fully contained during removal from th e CFB boilers and air emission control systems, handling, and storage. Two ash storage si los are proposed to be located at the facility: one for bed ash and one for fly ash. Two full-capa city mechanical exhausters will be provided for conveying ash to the silos. Coal Storage : *Coal will be stored at the facility in two outdoor piles. The inactive storage pile contains a nominal 30-day supply and is intended for use in th e event of a coal delivery interruption. This pile will be created when the plant is built, and w ill be covered with one-foot thick layer of hardened manufactured aggregate. This aggregate wi ll be ash mixed with water, spread with trucks, compacted and allowed to harden to a concre te-like material except in the event that access to this supply is needed. A 20-day active s torage pile, compacted to prevent weathering, will be created by the stacking tubes. * Denotes a July 2004 RevisionPage 3 of 4 Attachment I (cont'd) AES Puerto Rico Cogeneration Project Project Description Each of the two coal storage piles onsite will be l ined with a geosynthetic liner. Any stormwater run-off from the coal pile areas will be collected in a lined pond. The water collected will be recycled and utilized within the facility as part o f the zero-water-discharge design. Limestone Storage : A 150-day active supply of limestone will be stored in an enclosed storage area. Dust Control Systems : Dust control and collection systems will be install ed at all material transfer points. The dust collection system will be either induced-draft filt er bag units or insertible cartridge-type filters designed to be inserted directly into a conveyor he ad chute or conveyor loading skirt, as appropriate.

PSD-Affected Pollutants Emitted at the AES Puerto R ico Cogeneration Project and Their Potential to Emit :
The AES-PRCP will have as constituents in the combu stion by-products, the PSD-affected pollutants listed below which are formed in the fol lowing ways: Nitrogen Oxides (NO x ) - formed from the high-temperature oxidation of n itrogen contained in the combustion air (thermal NO x ) and from the oxidation of nitrogen that is bound in the fuel (fuel NO x ). The relative amounts of thermal and fuel NO x formed depend primarily on the flame temperature and the fuel nitrogen content, respecti vely. The potential to emit for NO x is 2,058 tons/year. Sulfur Dioxide (SO 2 ) - formed from the oxidation of organic sulfur con tained in the fuel. Approximately 98% of the sulfur in bituminous coal is emitted as sulfur dioxides. The remaining 2% of fuel-bound sulfur is taken out as sulfate sal ts in the bottom ash or in the boiler itself. The potential to emit for SO 2 is 453 tons/year. *Particulate Matter (PM), Particulate Matter Under 10 Microns (PM 10 ) - consist of coal ash, unreacted limestone and reaction products of the SO 2 removal process (calcium sulfate or gypsum). The potential to emit for PM 10 is 623 tons/year. * Denotes a July 2004 RevisionPage 4 of 4 Attachment I (cont'd) AES Puerto Rico Cogeneration Project Project Description Volatile Organic Compounds (VOCs) - due to incomplete combustion of organic compounds in the fuel. The potential to emit for VOC is 99.5 to ns/year. Carbon Monoxide (CO) - formed as a result of the incomplete combustion of the carbon contained in the fuel. Incomplete combustion can b e caused mainly by fuel-rich conditions, insufficient combustion oxygen, and/or low combusti on temperatures. The potential to emit for CO is 2,055 tons/year.

Fluorides and Sulfuric Acid Mist - released in trace amounts from the combustion of coal. Fluoride emissions vary depending on the fluorine c ontent of the fuel. The potential to emit for fluorides is 9.8 tons/year. Similarly, sulfuric ac id mist depend primarily upon the sulfur content of the fuel and the degree of emission control. The p otential to emit for sulfuric acid mist is 50 tons/year. Fugitive Dust Emissions - derived from the material handling systems (coal , limestone and ash systems) including the following activities: - unloading or loading of ships or trucks; - material transfer points; and - exposure of materials to wind (in open storage p iles).

*************************************************** *************Page 1 of 22 Attachment II AES Puerto Rico Cogeneration Project PSD Permit Conditions

The AES-PRCP as described in Attachment I is subject to the following conditions: I. Permit Expiration

This PSD Permit shall become invalid if constructio n: a. has not commenced (as defined in 40 CFR Part 52.2 1(b)(9)) within 18 months after the approval takes effect; b. is discontinued for a period of 18 months or more ; or c. is not completed within a reasonable time.

II. Notification of Commencement of Construction an d Startup The EPA Regional Administrator (RA) shall be notifi ed in writing of the anticipated date of initial startup (as defined in 40 CFR Part 60.2) of each facility of the source not more than sixty (60) days nor less than thirty (30) days prior to such date. The RA shall be notified in writing of the actual date of commencem ent of construction and startup within fifteen (15) days after such date. III. Plant Operations All equipment, facilities, and systems installed or used to achieve compliance with the terms and conditions of this PSD Permit shall at al l times be maintained in good working order and be operated as efficiently as possible so as to minimize air pollutant emissions. The continuous emission monitoring systems required by this permit shall be on-line and in operation 95% of the time when boilers are operatin g. IV. Right to Entry The Regional Administrator and/or her authorized re presentatives, upon the presentation of credentials shall be permitted: 1. to enter at any time upon the premises where the source is located or in which any records are required to be kept under the terms and conditions of this PSD Permit; 2. at reasonable times to have access to and copy an y records required to be kept under the terms and conditions of this PSD Permit;Page 2 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

3. to inspect any equipment, operation, or method re quired in this PSD Permit; and 4. to sample emissions from the source. V. Transfer of Ownership In the event of any changes in control or ownership of facilities to be constructed or modified, this PSD Permit shall be binding on all s ubsequent owners and operators. The applicant shall notify the succeeding owner and ope rator of the existence of this PSD Permit and its conditions by letter, a copy of whic h shall be forwarded to the Regional Administrator. VI. Types of Fuel AES-PRCP shall combust the following fuels: 1) Low sulfur coal with a maximum sulfur content of 1.0% by weight. 2) Distillate oil with a maximum sulfur content of 0 .05% sulfur by weight (startup and emergency equipment fuel). 3) Propane. VII. Pollution Control Equipment AES-PRCP shall install and shall continuously opera te the following air pollution controls: 1) A Selective Non-Catalytic Reduction (SNCR) syste m (urea injection) for the control of NO x at the CFBs; 2) A limestone injection system and circulating dry scrubber, which uses lime, for the control of SO 2 at the CFBs; 3) An Electrostatic Precipitator (ESP) for the contr ol of PM and PM 10 at the CFBs; 4) Baghouses for the control of PM and PM 10 emissions at the limestone dryer. 5) Drift eliminators for the control of particulates from the cooling tower.Page 3 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

VIII. Best Available Control Technology (BACT) and E mission Limitations for Each of the Two Circulating Fluidized Boilers (CFBs)

1-CFB. Particulate Matter (PM), Particulate Matter Under 1 0 Microns (PM 10 )

a.1 Emissions of PM shall not exceed 0.015 lb/MMBTU or 36.9 lb/hour, whichever is more stringent.

* a.2 Emissions of PM 10 (condensible and noncondensible) shall not exceed 0.03

lb/MMBTU or 73.8 lb/hour, whichever is more stringe nt.

* a.3 Because condensible PM 10 emissions from fluidized bed boilers have not been

widely quantified, there is a possibility that the actual condensible portion of PM 10 would cause the above emission rate to be exceeded. In the event that AESPRCP cannot meet the above limit because of condens ible PM 10 , EPA may adjust the PM 10 emission rate to a level not to exceed 0.05 lb/MMB TU, pending EPA’s review of the stack test results. This change in t he permit will be accomplished administratively. [On April 19, 2004, AES-PRCP submitted a request under this provision. EPA granted this request. ] b. Opacity of emissions shall not exceed 20 percent (six-minute average) except for one six-minute set per hour which shall not exceed 27 percent. c. The control efficiency of particulate matter emis sions shall be established during all particulate performance testing and shall be a mini mum of 99% at all times of normal operation (daily average).

2-CFB. Nitrogen Oxides (NO x ) a. Emissions of nitrogen oxides shall not exceed on a 24-hour rolling average basis 57 parts per million dry volume (ppm dv ) corrected to 7% oxygen, or 0.10 lb/million British thermal units (BTU), or 246.1 lb/hour, whic hever is more stringent.

* Denotes a July 2004 Revision.Page 4 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

3-CFB. Carbon Monoxide (CO)

a. Emissions of CO shall not exceed 0.10 lb/MMBTU on an eight-hour average basis, 94 ppm

dv corrected to 7% oxygen, or 246.1 lb/hour, whicheve r is more stringent.

4-CFB. Sulfur Dioxide (SO 2 )

a. Emissions of sulfur dioxide shall not exceed on a 3-hour average basis 9.00 ppm dv corrected to 7% oxygen, or 0.022 lb/MMBTU, or 54.1 lb/hour, whichever is more stringent.

b. The maximum sulfur content of the coal shall be 1 .0% S by weight. The maximum sulfur content of the No. 2 fuel oil shall be 0.05% sulfur by weight.

5-CFB. Sulfuric Acid Mist

a. Emissions of sulfuric acid mist shall not exceed based on the average of three 1- hour stack performance tests 0.64 ppm dv corrected to 7% oxygen, or 0.0024 lb/MMBTU, or 5.9 lb/hour, whichever is more stringe nt.

6-CFB. Fluorides (as Hydrogen Fluoride)

a. Emissions of fluorides shall not exceed 4.78 x 10 -4 lb/MMBTU or 1.18 lb/hour, whichever is more stringent.

7-CFB. Volatile Organic Compounds (VOCs)

a. Emissions of VOCs shall not exceed based on the a verage of three 1-hour stack performance tests 7.70 ppm dv corrected to 7% oxygen, 0.0047 lb/MMBTU, or 11.6 lb/hour, whichever is more stringent.

8-CFB. Ammonia (NH 3 ) a. The ammonia slip associated with the urea injecti on shall not exceed 10 ppm dv , corrected to 7% oxygen.Page 5 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions IX. Best Available Control Technology (BACT) and E mission Limitations for the Limestone Dryer (LD) 1-LD. The limestone dryer operation shall be lim ited to a 50% capacity factor, calculated on a calendar year basis or 4,380 hours per calenda r year. 2-LD. The limestone dryer shall only burn propan e. 3-LD. The limestone dryer shall utilize combusti on controls to minimize air emissions.

4-LD. Particulate Matter (PM), Particulate Matter Under 1 0 Microns (PM 10 )

a.1 Emissions of PM shall not exceed 0.095 lb/MMBTU or 1.24 lb/hour, whichever is more stringent.

a.2 Emissions of PM 10 shall not exceed 0.095 lb/MMBTU or 1.24 lb/hour, w hichever is more stringent. b. Opacity of emissions shall not exceed 20 percent (six-minute average) except for one six-minute set per hour which shall not exceed 27 percent. c. The control efficiency of particulate matter emis sions shall be established during all particulate performance testing and shall be a mini mum of 99% at all times of normal operation (daily average).

5-LD. Nitrogen Oxides (NO x ) a. Emissions of nitrogen oxides shall not exceed bas ed on the average of three 1-hour stack performance tests 0.15 lb/million British the rmal units (BTU), or 1.95 lb/hour, whichever is more stringent.

6-LD. Carbon Monoxide (CO)

a. Emissions of CO shall not exceed based on the ave rage of three 1-hour stack performance tests 0.02 lb/MMBTU, or 0.26 lb/hour, w hichever is more stringent.Page 6 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

7-LD. Sulfur Dioxide (SO 2 )

a. Emissions of sulfur dioxide shall not exceed base d on the average of three 1-hour stack performance tests 0.02 lb/MMBTU, or 0.26 lb/h our, whichever is more stringent.

8-LD. Volatile Organic Compounds (VOCs)

a. Emissions of VOCs shall not exceed based on the a verage of three 1-hour stack performance tests 0.01 lb/MMBTU, or 0.13 lb/hour, w hichever is more stringent.

X. Best Available Control Technology (BACT) and Emis sion Limitations for the Cooling Tower (CT) 1-CT. The drift rate shall be limited to 2.25 g allons/minute (0.001% of circulating water

flow). This level shall be achieved through the us e of drift eliminators which provide surface area upon which water droplets may impact and fall back into the cooling tower.

2-CT. Particulate Matter (PM), Particulate Matter Under 1 0 Microns (PM 10 )

a. Emissions of PM 10 shall not exceed 0.33 lb/hour.

b. Emissions of PM shall not exceed 15 lb/hour.

3-CT. Volatile Organic Compounds (VOC)

a. Emissions of VOC shall not exceed 0.5 lb/hour.Page 7 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions XI. Storage Tanks 1-ST. The AES-PRCP shall have the following sto rage tanks:

a. 150,000-gallon startup fuel tank. b. 2,000-gallon mobile equipment fuel tank. c. 700-gallon diesel generator tank. d. 300-gallon fire pump tank. e. 200-gallon emergency boiler feed pump tank.

* 2-ST. There shall be a maximum of seven turnover s per year in the startup fuel tank,

producing approximately 83.8 lb/year of VOC emissio ns (AP-42). 3-ST. The remaining tanks shall contain diesel fuel and shall emit less than 5 lb/year of

VOC (AP-42). XII. Emergency Equipment * The emergency equipment consists of a fire wat er pump driven by a diesel engine, a diesel generator, and a 430 hp emergency boiler feed pump driven by a diesel engine. The equipment shall only be operated under the followin g conditions: 1-EE. The maximum annual operating hours for eac h of the above-named equipment

shall be 200 hours/calendar year, except during eme rgencies. This 200-hour allowance is intended to allow for proper maintenan ce of the equipment. 2-EE. The fire pump shall be used for fighting f ires when no electricity is available at the facility. 3-EE. The diesel generator shall be used during emergencies for critical plant functions

(i.e., emergency lighting) when no electricity from PREPA's grid is available at the site (this situation is characterized as "black pla nt mode").

* Denotes a July 2004 RevisionPage 8 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

* 4-EE. The emergency boiler feed pump shall be use d to pump cooling water into one or

both boilers if one or both turbines trip unexpecte dly and are unable to utilize the steam generated by the boilers. However, during r outine testing and maintenance of the 430 hp emergency boiler feedwater pump diese l engine, the load on the engine shall be physically limited to less than 400 hp by operating procedures and the configuration of the associated equipment so th at it complies with the emission rates listed in Condition XII.7-EE below. 5-EE. None of these three emergency equipment sh all be used during a standard startup

or shutdown of the facility as well as during any d ispatch load level requested by PREPA. 6-EE. The emergency equipment shall only burn di stillate oil with a maximum sulfur

content of 0.05% S by weight. 7-EE. Emissions and total annual operating hours from the emergency equipment shall

not exceed:

Pollutant Fire Pump

(lb/hr) Diesel Generator

(lb/hr) Emergency Boiler

Feed Pump (lb/hr) NO x 10.4 14.58 12.34 CO 5.1 0.55 2.67 SO 2 0.13 0.29 0.82 PM 10 0.3 0.68 0.82 VOC 0.5 0.06 0.99 Annual Planned Operating Hours 200 hr 200 hr 200 hr

* Denotes a July 2004 RevisionPage 9 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

8-EE. AES-PRCP shall measure the sulfur content of the fuel oil for each fuel delivery.

The sulfur content of the fuel shall be measured by the most current method applicable to fuel oil promulgated by the American Society for Testing and Materials (ASTM). The results of the testing shall be included in the quarterly reports.

* 9-EE. AES-PRCP shall record and maintain records on the hours of operation for each

emergency equipment and the amounts of fuel fired f or each occurrence. All information shall be recorded in a permanent form s uitable for inspection. The file shall be retained for at least ten years following the date of such measurement, calculation, and record. XIII. Fugitive Emissions The following activities shall be incorporated into the materials storage and handling systems:

1. Coal Handling

a. The coal transfer from ship to boom shall be encl osed. b. The boom transfer at the surge hopper shall be co ntrolled by a dust suppression system. c. All conveyors shall be enclosed and sealed. d. The two transfer houses shall be enclosed and equ ipped with dust suppression systems. e. Enclosed stacking tubes shall be utilized. f. The 30-day inactive coal pile shall be earth-cove red and grassed. g. The transfer at ten (10) reclaim hoppers shall be enclosed in an underground tunnel. * Denotes a July 2004 RevisionPage 10 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

h. The conveyor transfer to crusher, the crusher, th e crusher transfer to conveyor, and the powerhouse bag filters shall be e nclosed and connected to fabric filters.

i. Total PM 10 fugitive emissions from coal handling shall not ex ceed 1.13 tons/year.

2A. Limestone Handling (if Delivered by Ship) a. The limestone transfer from ship to boom shall be enclosed. b. The boom transfer at the surge hopper shall be co ntrolled by a dust suppression system. c. All conveyors shall be enclosed and sealed. d. The two transfer houses shall be enclosed and equ ipped with dust suppression systems. e. An enclosed stacking tube shall be utilized. f. The 150-day pile of limestone shall be enclosed. g. The conveyor transfer to crusher and the crusher shall be enclosed and connected to a fabric filter. h. The pneumatic conveyor shall be connected to a fa bric filter. i. The transfer at reclaim hopper shall be enclosed in an underground tunnel.

2B. Limestone Handling (if Delivered by Truck) a. The 150-day pile of limestone shall be enclosed. b. The conveyor transfer to crusher and the crusher shall be enclosed and connected to a fabric filter.Page 11 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

c. The pneumatic conveyor shall be connected to a fa bric filter. d. The transfer at reclaim hopper shall be enclosed in an underground tunnel.

e. Total PM 10 fugitive emissions from limestone handling (delive red by ship and truck) shall not exceed 1.66 tons/year.

3. Lime Handling a. The pneumatic conveyor shall be connected to a fa bric filter. b. The screw feeder shall be completely enclosed.

* c. Total PM 10 fugitive emissions from lime handling shall not ex ceed 0.0445

ton/year.

4. Ash Handling a. The fly ash pneumatic conveyor, the fly ash silo to mixer, the bed ash pneumatic conveyor, the bed ash silo to mixer trans fer, the batch mixer, and the transfer into truck area shall be enclosed and sealed. b. The ash rock processing lifts shall be wetted and compacted. c. The truck travel to spread and crush area, the tr ansfer from truck area, the ash rock lift fracture area, the ash rock storage w ind erosion, and the bulldozing area shall be wetted. d. The reclaim hopper shall be underground and enclo sed. e. All conveyors shall be enclosed and sealed.

f. Total PM 10 fugitive emissions from ash handling shall not exc eed 0.70 ton/year.

* Denotes a July 2004 RevisionPage 12 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions * g. Trucks may be used to haul unmixed bed ash and fly ash, conditioned ash

(bed and fly ash mixed and wet) and manufactured ag gregate offsite for on island beneficial uses. If so, AES-PRCP shall imple ment precautions to minimize fugitive emissions. XIV. Continuous Emission Monitoring (CEM)/Continuous Opacity Monitoring (COM) Requirements 1. Prior to the date of startup and thereafter, AES- PRCP shall install, calibrate, maintain, and operate the following continuous moni toring systems in each of the two flues of the fluidized bed combustion unit exha ust stack: a. Continuous emission monitoring (CEM) systems to m easure stack gas NO x (as measured NO 2 ) and SO 2 concentrations and a continuous opacity monitoring system. The systems shall meet EPA moni toring performance specifications (40 CFR Part 60.13 and 40 CFR Part 6 0, Appendix B , Performance Specifications 1, 2, and 3, and Appendi x F ). b. A continuous monitoring system to measure stack g as volumetric flow rates. The system shall meet EPA monitoring perfor mance specifications (40 CFR Part 52, Appendix E ). EPA may approve an alternative to this monitoring system, such as using monitored data fo r emission rates on a lb/MMBTU basis and calculated plant heat input data on a MMBTU/hr basis, provided that EPA deems that this procedure will produce representative data. c. A CEM system to measure CO and a continuous monit oring system to measure carbon dioxide or oxygen. These systems, a t a minimum, shall meet EPA monitoring performance specifications of 4 0 CFR Part 60, Appendix B , Performance Specifications 3 and 4, and 40 CFR Pa rt 60, Appendix F

. 2. Not less than 60 days prior to the date of startu p of the boiler(s), AES-PRCP shall submit to the EPA a Quality Assurance Project Plan for the certification of the CEM systems. CEM performance testing may not begin until the Quality Assurance Project Plan has been approved by EPA. * Denotes a July 2004 RevisionPage 13 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

3. AES-PRCP shall notify EPA 15 days in advance of t he date upon which demonstration of the CEM system performance will co mmence (40 CFR Part 60.13(c)). The CEM system performance date shall b e no later than the date of the initial performance testing required under Perm it Condition XV. of this permit. 4. AES-PRCP shall submit a written report to EPA of the results of all monitor performance specification tests conducted on the mo nitoring system(s) within 45 days of the completion of the tests. The continuou s emission monitors must meet all the requirements of the applicable performance specification test in order for the monitors to be certified. 5. AES-PRCP shall submit a written report of all exc ess emissions to EPA for every calendar quarter. All quarterly reports shall be p ostmarked by the 30th day following the end of each quarter and shall include the information specified below: a. The magnitude of excess emissions computed in acc ordance with 40 CFR Part 60.13(h), any conversion factor(s) used, and t he date and time of commencement and completion of each time period of excess emissions. b. Specific identification of each period of excess emissions that occurs during startups, shutdowns, and malfunctions for each flui dized bed combustion unit. The nature and cause of any malfunction (if known) and the corrective action taken or preventive measures adop ted shall also be reported. c. The date and time identifying each period during which the continuous monitoring system was inoperative except for zero a nd span checks and the nature of the system repairs or adjustments.

d. When no excess emissions have occurred or the CEM system has not been inoperative, repaired, or adjusted, such informatio n shall be stated in the report.Page 14 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

e. Results of quarterly monitor performance audits, as required in 40 CFR Part 60, Appendix F

. f. Excess emissions shall be defined as: i) any consecutive 24-hour period during which the average emission of NO x , as measured by the CEM system, exceeds the corresponding mass or concentration emission limit set for NO x in Condition VIII.2-CFB above. ii) any eight-hour period during which the average e mission of CO, as measured by the CEM system, exceeds the correspondi ng mass or concentration emission limit set for CO in Conditio n VIII.3-CFB above. iii) any 3-hour period during which the average emis sion of SO 2 , as measured by the CEM system, exceeds the correspondi ng mass or concentration emission limits set for SO 2 in Condition VIII.4-CFB above. iv) any 6-minute period during which the average opa city, as measured by the CEM system, exceeds 20% opacity, except for one 27% opacity per each one-hour period. g. For the purposes of this permit, excess emissions indicated by the CEM systems, except during startup or shutdown, shall b e considered violations of the applicable emission limits.

* 6. AES-PRCP shall maintain a file of all measuremen ts, including CEM system

performance evaluations; all CEM systems or monitor ing device calibration checks; adjustments and maintenance performed on th ese systems or devices; and all other information required by 40 CFR Part 60 re corded in a permanent form suitable for inspection. The file shall be retaine d for at least ten years following the date of such measurement, maintenance, reports, and records. * Denotes a July 2004 RevisionPage 15 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

7. Emissions in excess of the applicable emission li mit listed under Condition VIII. of this permit, during periods of startup and shutdown , shall not be considered a violation of the applicable emission limit. 8. For the purposes of this permit, startup and shut down shall be defined as:

a. Startup - Circulating Fluidized Bed (CFB) boiler startup is defined as the period beginning with initial use of the burners fi ring low sulfur distillate fuel oil (< 0.05% S) and ending at the time when th e load has increased to 227.15 MW, when both CFB boilers are operating, or 113.58 MW, when a single CFB boiler is operating. The duration of th e startup shall not exceed fourteen (14) consecutive hours for any given indiv idual boiler startup.

* b. Post-Outage Startup - CFB boiler post-outage startup is defined as the

period of time beginning with the initial use of th e CFB’s startup burner after new refractory is installed in the combustor. After the new refractory is installed, it must be dried by subjecting it to gradually increasing temperature. The post-outage startup shall be allo wed up to twice per year for an average of one startup per boiler. The dura tion of the post-outage startup shall not exceed 50 consecutive hours for a ny given startup. The amount of fuel burned shall not exceed 4,200 gallon s per hour, 85,000 gallons per day and a total of 175,000 gallons per startup.

c. Shutdown - CFB boiler shutdown is defined as the period of time beginning with the load decreasing from 227.15 MW, when both CFB boilers are operating, or 113.58 MW, when a single CFB boiler is operating, and ending when the bed material fluidiz ing air has been discontinued. The duration of the shutdown shall n ot exceed eight (8) consecutive hours for any given individual boiler s hutdown.

* Denotes a July 2004 RevisionPage 16 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

9. At all times, including periods of startup, s hutdown, and malfunction, AES-PRCP

shall, to the extent practicable, maintain and oper ate the CFBs including associated air pollution control equipment in a manner consist ent with good air pollution control practice for minimizing emissions. Determi nation of whether acceptable operating and maintenance procedures are being used will be based on information available to EPA and/or PREQB which may include, bu t is not limited to, monitoring results, opacity observations, review of operating and maintenance procedures, and inspection of the facility. XV. Performance Test Requirements 1. Within 60 days after achieving the maximum produc tion rate of the boilers, but no later than 180 days after initial startup as define d in 40 CFR Part 60.2, and at such other times as specified by the EPA, AES-PRCP shall conduct performance tests for SO 2 , NO x , PM, PM 10 , CO, VOCs, lead, fluorides, opacity, sulfuric acid mist, and fugitive emissions. All performance tests shal l be conducted at the maximum operating capacity of the unit(s) being tested and/ or other loads specified by EPA. 2. At least 60 days prior to actual testing, AES-PRC P shall submit to the EPA a Quality Assurance Project Plan detailing methods an d procedures to be used during the performance stack testing. A Quality As surance Project Plan that does not have EPA approval may be grounds to invalidate any test and require a re-test.

3. AES-PRCP shall demonstrate that the lead emission s from the facility do not exceed the PSD significance level of 0.6 tons per y ear. AES-PRCP estimates that its maximum hourly emission of lead from the CFB bo ilers is 0.0208 lb/hour (0.087 ton/year). 4. AES-PRCP shall use the following test methods, or a test method which would be applicable at the time of the test and detailed in a test protocol approved by EPA: a. Performance tests to determine the stack gas velo city, sample area, volumetric flowrate, molecular composition, excess air of flue gases, and moisture content of flue gas shall be conducted usi ng 40 CFR Part 60, Appendix A , Methods 1, 2, 3, and 4.Page 17 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

b. Performance tests for the emissions of NO x shall be conducted using 40 CFR Part 60, Appendix A , Method 7E.

c. Performance tests for the emissions of SO 2 shall be conducted using 40 CFR Part 60, Appendix A , Method 6C.

d. Performance tests for the emissions and control e fficiency of PM shall be conducted using 40 CFR Part 60, Appendix A , Method 5.

e. Performance tests for the emissions of PM 10 shall be conducted using 40 CFR Part 51, Appendix M , Method 201 (exhaust gas recycle procedure) or Method 201A (constant flow rate procedure) and Meth od 202.

f. Performance tests for the emissions of CO shall b e conducted using 40 CFR Part 60, Appendix A , Method 10. g. Performance tests for the emissions of volatile o rganic compounds shall be conducted using 40 CFR Part 60, Appendix A , Method 25A and Method 18 (take the difference between the two results).

h. Performance tests for the emissions of fluorides shall be conducted using 40 CFR Part 60, Appendix A , Method 13B.

i. Performance tests for the emissions of sulfuric a cid mist shall be conducted using 40 CFR Part 60, Appendix A , Method 8. j. Performance tests for the emissions of lead shall be conducted using 40 CFR Part 60, Appendix A , Method 29.

k. Performance tests for the drift rate on two of th e cooling tower cells shall be conducted using the isokinetic sampling system with the heated beak

pack style method (HBIK) to confirm the specified d rift rate of 2.25 gallons/minute.

l. Performance tests for the visual determination of fugitive emissions from the coal, limestone, and ash handling shall be cond ucted using 40 CFR Part 60, Appendix A , Method 22.Page 18 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

m. Performance tests for the visual determination of the opacity of emissions from the stack shall be conducted using 40 CFR Part 60, Appendix A , Method 9 and the procedures stated in 40 CFR Part 6 0.11. 5. The ammonia slip shall be met by maintaining the optimum urea injection flow rate at various operating loads. The optimum urea injec tion flow rate needed to achieve the ammonia slip limit shall be determined during the performance test and shall become a condition of this permit. 6. Test results indicating that emissions are below the limits of detection shall be deemed to be in compliance. 7. Additional performance tests may be required at t he discretion of the EPA for any or all of the above pollutants. 8. For performance test purposes, sampling ports, pl atforms and access shall be provided by AES-PRCP on the combustion exhaust syst em in accordance with 40 CFR Part 60.8(e). 9. Results of emission testing must be submitted to EPA within 60 days after completion of performance tests. 10. Operations during periods of startup, shutdown, and malfunction shall not constitute representative conditions for the purpos e of a performance test. XVI. Other Requirements

1. Coal Sampling Coal samples shall be taken and analyzed monthly to determine ash content (% by weight); sulfur content (% by weight); and heat val ue (BTUs per lb). These shall be measured by the most current methods applicable to coal promulgated by the American Society for Testing and Materials (ASTM). Reports are to be submitted to EPA every calendar quarter.Page 19 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

2.a Coal Lead Content

The lead content of the coal/fuel oil shall be moni tored such that total annual lead emissions from the facility do not exceed the PSD s ignificance level of 0.6 tons per year. AES-PRCP shall demonstrate, at least annuall y starting with the 400th day after facility startup and, no longer than each 365 th day thereafter, that lead emissions are below the PSD significance level. Th e lead content of the fuels shall be measured using the most current applicable ASTM method.

2.b Coal Fluorine Content

The fluorine content of the coal shall be monitored on a monthly basis such that the total annual fluoride emissions from the facili ty do not exceed 9.8 tons per 12- month rolling average calculated every month. The fluorine content of the coal shall be measured using the most current applicable ASTM method.

3. New Source Performance Standards (NSPS) Compliance AES-PRCP shall comply with the requirements codifie d in: a. Standards of Performance for Electric Utility Ste am Generating Units (40 CFR Part 60, Subpart Da) -- boilers. b. Standards of Performance for Coal Preparation Pla nts (40 CFR Part 60, Subpart Y) -- coal handling.

c. Standards of Performance for Nonmetallic Mineral Processing Plants (40 CFR Part 60, Subpart OOO) -- limestone processing.

4. PSD Increment and NAAQS Modeling Analyses AES-PRCP shall conduct air dispersion modeling anal yses of the Prevention of Significant Deterioration of Air Quality (PSD) incr ements and National Ambient Air Quality Standards (NAAQS) for SO 2 which involves the combined impacts from other nearby existing sources. This shall be done under the following conditions:Page 20 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

a. The modeling analyses shall conform with the EPA "Guideline on Air Quality Models" (40 CFR § 51, Appendix W ), air permit regulations (40 CFR §51 and §52), and the approved dispersion model ing protocol submitted to EPA for the AES-PRCP. b. The emission inventory incorporated into the mode ling analysis shall include, at a minimum, the background sources agree d upon by AES-PRLP and EPA in the approved modeling protocol for the A ES-PRCP. Also, the modeling domain shall encompass, at a minimum, the domain agreed upon by AES-PRLP and EPA in the approved modeling protoc ol for the AES-PRCP. (Refer to May 18, 1995 letter from TRC to EPA; July 22, 1995 letter from EPA to TRC; October 2, 1995 lette r from ENSR to EPA and October 17, 1995 letter from ENSR to EPA.) c. The same models, assumptions, and meteorological database used by AESPRCP in the permit application shall be used for th ese air quality standards. d. AES-PRCP shall submit the modeling analyses to EP A within three (3) to six (6) months of the effective date of this PSD pe rmit.

5. Postconstruction Ambient Monitoring

AES-PRCP shall install and maintain an SO 2 ambient monitor in a location which is approved by EPA prior to the operation of the facil ity. The SO 2 ambient monitor shall operate upon commencement of operation of the facility. AES-PRCP shall also meet the following conditions: a. The duration of the monitoring collection shall n ot exceed 365 days unless the monitor records an exceedance of the applicable NAAQS in which case EPA may extend the monitoring. b. The monitor shall operate according to an approve d EPA QA/QC plan. c. The monitoring data shall be recorded and submitt ed to EPA and PREQB on a quarterly basis. If an exceedance is measured , AES-PRCP shall notify EPA and PREQB of such an exceedance in writing with in 15 days of its completion of normal QA/QC procedures for the speci fied month.Page 21 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions

6. Maximum Annual Capacity Factor a. AES-PRCP shall not exceed a maximum annual capaci ty factor of 95% during any period of 12 consecutive months. Compli ance will be demonstrated by limiting facility fuel use to a max imum of 40,966,709 MMBtu during any period of 12 consecutive months. AES-PRCP shall maintain fuel use records to demonstrate compliance with this condition. b. “Annual capacity factor” means the ratio between the actual heat input to the steam generating units from fuel use during a p eriod of 12 consecutive calendar months and the potential heat input to the steam generating units from fuels had the steam generating units been oper ated for 8,760 hours during that 12-month period at the maximum design h eat input capacity of 4922.7 MMBtu/hr. Therefore, a maximum annual capac ity factor of 95% means fuel use will not exceed 40,966,709 MMBtu dur ing a period of 12 consecutive calendar months.

XVII. Malfunction

Any failure of air pollution control equipment, pro cess equipment, or of a process to operate in a normal manner which results in an i ncrease in emissions above any allowable emission limit stated in Condition VIII o f this Attachment II and actions taken on any unit must be reported by telephone wit hin 24 hours to: Chief, Air Permit Division Puerto Rico Environmental Quality Board Santurce, Puerto Rico 00910 (787) 767-8071 In addition, the EPA Regional Administrator (RA) an d the Puerto Rico Environmental Quality Board (PREQB) shall be notifi ed in writing within (15) days of any such failure. This notification shall include: a description of the malfunctioning equipment or abnormal operation; the date of the initial failure; the period of time over which emissions were increased due to the failure; the cause of the failure; the estimated resultant emissions in e xcess of those allowed under Condition VIII of this Attachment II ; and the methods utilized to restore normal operations. Compliance with this malfunction notif ication provision shall not excuse or otherwise constitute a defense to any vio lations of this permit or of any law or regulations which such malfunction may cause

.Page 22 of 22 Attachment II (cont'd) AES Puerto Rico Cogeneration Project PSD Permit Conditions XVIII. Recordkeeping and Reporting Requirements * 1. All records required to be maintained by this pe rmit shall be kept for a period of at

least ten (10) years. 2. All reports required by this permit shall be subm itted to: Chief, Air Compliance Branch Division of Enforcement and Compliance Assistance U.S. Environmental Protection Agency Region 2 290 Broadway - 21st Floor New York, New York 100007-1866 Copies of the reports shall also be submitted to: a. Region 2 CEM Coordinator U.S. Environmental Protection Agency Region 2 Air and Water QA Team

Monitoring and Assessment Branch 2890 Woodbridge Avenue - MS-102 Edison, New Jersey 08837-3679 b. Director, Caribbean Environmental Protection Divi sion U.S. Environmental Protection Agency Region 2 Centro Europa Building 1492 Ponce de Leon Avenue, Suite 417 Santurce, Puerto Rico 00907-4127 c. Director, Air Permit Division Puerto Rico Environmental Quality Board P.O. Box 11488 Santurce, Puerto Rico 00910 * Denotes a July 2004 RevisionPage 1 of 2Attachment IIIAES Puerto Rico Cogeneration ProjectAir Quality ImpactsProjected Maximum Impacts from the AES Puerto RicoCogeneration ProjectAir Quality Impacts (μg/m3) - October 2001POLLUTANTAVERAGINGTIMEAES-PRCP'sMODELEDIMPACTSIGNIFICANCELEVELAES-PRCP+BackgroundSourcesPSDIncrementAES-PRCP+BackgroundSourcesNAAQSPSD Incrt NAAQSNO2Annual 0.81 1 NotCalculated1Not Calculated125 100SO2Annual24-hour3-hour0.554.9720.01525NotCalculated1Not Calculated12091512803651300PM10Annual24-hour2.417.2153.316.644.5112.1173050150CO8-hour1-hour140.3200.55002000IncrementStandard doesnot exist140.3200.5NA10,00040,0001.Since AES-PRCP’s impacts are below the "Significant Impact Level," the facility is not required to perform PSD increment orNAAQS analyses which accounts for impacts from other nearby existing sources.Page 2 of 2Attachment IIIAES Puerto Rico Cogeneration ProjectAir Quality ImpactsProjected Maximum Impacts Resulting from the July 2004 Revisionsto the AES Puerto Rico Cogeneration Project -Air Quality Impacts (μg/m3)POLLUTANTAVERAGINGTIMEAES-PRCP'sModeledImpactPSDSIGNIFICANTIMPACTLEVEL2002/2003Maximum ActualConcentrationsfrom AmbientMonitors in JobosTotalImpacts( Addition ofColumns 3 and 5. )NAAQSNO2Annual This permit revision does not affect theprojected NO2maximum impacts identified inthe previous chart.SO2Annual This permit revision does not affect theprojected SO2maximum annual impactsidentified in the previous chart.24-houra3-houra3.18.6525N/A N/A3651300PM10Annualb24-hourb3.613.315269429.6107.350150CO8-houra1-houra23535002000140.3200.5163.3253.510,00040,000a- Reflects only maximum short-term impacts during the post-outage startup lasting up to 50 consecutivehours.b- Reflects only maximum short- and long-term impacts due to changes affecting PM10made in this permit revision.N/A - Not available.