# This spreadsheet provides a summary of capital and annual cost for the retrofit of Selective

Catalytic Reduction (SCR) at the Navajo Generating Station. The spreadsheet includes a revised cost sheet for each of the Navajo electric generating units (3 total), and an other SCR sheet that summarizes and compares the capital and annual costs for other BART analyses in the U.S. with the Navajo units. A more detailed decription of each of the sheets is presented in the following sections.
Revised Costs (Unit 1, Unit 2, Unit 3) - These sheets list a summary of the Navajo BART capital and annual costs for the specified unit that was presented in the Salt River Project, Navajo Generating Station - Units 1, 2, 3, SCR and Baghouse Capital Cost Estimate Report, August 17, 2010 (SL-010214, Revision D). Each of the sheets provides a summary of the line item desciptions and calculated capital and annual costs that were provided in the BART analysis. The sheets also contain a revised cost column and line-by-line analysis of each of the cost items. In some cases, the line item costs were revised or removed based on EPA Control Cost Manual or other cost estimation methodologies for the retrofit of SCR. The revised cost will be used to determine the cost effectiveness of applying SCR to the unit.

### Navajo Generating Station Cost Analysis submitted by Salt River Project (SRP), generated by Sargent and Lundy **Unit 1 Bituminous Coal, 750 MW, Pulverized Coal. Tangential-Fired**  **Hot Side ESP, Wet FGD 2010 Cost estimates from the Salt River Project, Navajo Generating Station - Units 1, 2, 3, SCR and Baghouse Capital Cost Estimate Report, Revision D, August 17, 2010.**  **2013 Cost estimates from the Salt River Project, Navajo Generating Station - Units 1, 2, 3, SCR and Baghouse Capital Cost Estimate Report - 2013 Update, Revision 0, January 2, 2014.**

**Capital Cost 2010 S&L/SRP**  **Calculated Cost EPA Revised** 

**Cost for 2010 $ EPA Comments from 2010**  **2013 S&L/SRP Calculated Cost**  **Percent Change**

**from 2010 EPA Revised Cost** 

**for 2013 Comments**  SCR

Demolition $386,503 $386,503 Demolition is not listed as a separate line item in the EPA control Cost Manual for SCR, however the cost is generally included in the retrofit factor for the SCR capital cost. Demolition for the Navajo facility involves the demolition of the existing flue and the installation of the new flues and blanking plates. Therefore this cost was included in the revised cost. $417,424 8.0% $417,424S&L escalated labor costs from 2010 to 2013 by 8% (or 3% per year).
Civil Work (Earthwork & Caissons) $1,232,247 $1,232,247The cost for civil work is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $1,320,352 7.1% $1,320,352S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Concrete $3,011,247 $3,011,247The cost for concrete work is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $3,227,240 7.2% $3,227,240S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Steel, Ductwork & SCR Box $29,495,996 $29,495,996The cost for the steel, ductwork, and SCR box are included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $29,665,211 0.6% $29,665,211As estimated by S&L.
Architectural (Elevators, Painting) $23,209 $23,209The cost for architectural services are included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $24,780 6.8% $24,780S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.
Mechanical and other Equipment (Fan rotating assembly for SCR alone cases, catalyst) $10,780,458 $10,780,458The cost of the mechanical equipment is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $24,526,209 127.5% $24,526,209The increase is a result of the replacement of baskets on 2 preheaters ($3,022,178), the replacement of 8 sonic horn with 6 sootblowers ($244,695), the addition of a hot water recirculation system ($7,994,602) and the increase of the catalyst size due to the lower NOx design target ($2,481,250 difference from 2010).
Anhydrous Ammonia System $416,576 $416,576The cost of the anhydrous ammonia system is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $444,703 6.8% $444,703S&L escalated material costs from 2010 to 2013 by 6.7% respectively.
Piping $527,082 $527,082The cost of piping included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $992,049 88.2% $992,049The increase in piping is assumed to be a result of the addition of the hot water recirculation system and the sootblowers.

Insulation $4,512,662 $4,512,662The cost of insulation is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $4,694,323 4.0% $4,694,323S&L escalated material costs from 2010 to 2013 by 6.7% respectively. S&L did not provide sufficient explanation to understand the 4% increase.
Subtotal SCR System $50,385,980 $50,385,980 $65,312,291 29.6% $65,312,291 Electrical and Instrumentation & Control

Electrical Equipment $825,442 $825,442 $882,418 6.9% $882,418 Raceways $363,452 $363,452 $408,974 12.5% $408,974 Cable $471,568 $471,568 $531,207 12.6% $531,207 Grounding $20,847 $20,847 $22,451 7.7% $22,451 Lighting $299,231 $299,231 $321,088 7.3% $321,088 Communication $54,808 $54,808 $58,932 7.5% $58,932 Construction Power Allowance $189,230 $189,230 $203,718 7.7% $203,718 Control & Instrumentation $1,207,334 $1,207,334 $1,289,555 6.8% $1,289,555 Relocation & Modification of Existing Electrical Equipment $46,106 $46,106 $49,534 7.4% $49,534

Subtotal Electrical and Instrumentation & Control $3,478,018 $3,478,018 $3,767,877 8.3% $3,767,877 Sitework Civil Work (Roads, Surfacing, Erosion $0 $0 $0 NA $0

Concrete $0 $0 $0 NA $0

Piping for Sitework (Drainage) $0 $0 $0 NA $0

Subtotal Sitework $0 $0 $0 NA $0 Other Direct Capital Costs

Construction Equipment $6,769,119 $6,769,119The cost of construction equipment is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $7,623,533 12.6% $7,623,533

Scaffolding $4,701,733 $4,701,733The cost of scaffolding is not specifically included in the EPA Control Cost Manual for the calculation of the direct capital cost of the SCR (Eq. 2.36). However, scaffolding is required to ensure the safety of the workers and to allow access to the retrofit site. Therefore, this cost was included in the revised cost. $5,501,149 17.0% $5,501,149 Freight $1,974,160 $1,974,160This cost is included in the EPA Control Cost Manual, and EPA used S&L's estimate for freight. $2,612,693 32.3% $2,612,693

Sales Taxes $308,300 $308,300Sales tax is in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $308,300 0.0% $308,300No change in sales tax.
Subtotal Other Direct Capital Costs $13,753,312 $13,753,312 $16,045,675 16.7% $16,045,675 Total Direct Capital Costs $67,617,310 $67,617,310 $85,125,843 25.9% $85,125,843 Indirect Costs

Engineering, Procurement & Project

Services $9,506,574 $9,506,574EPA considers S&L's estimate for "Engineering, procurement & project services" to represent analagous costs in the EPA Control Cost Manual as "Engineering and Home Office Fees" that are estimated as 10% of the direct capital cost (Table 2.5, Engineering & Home Office Fees). EPA is using the S&L estimate for this line item, however, if EPA estimated this cost based on 10% of the direct capital cost, including labor costs, the total cost would be $6,761,731. $11,668,465 22.7% $11,668,465Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Construction Management/Field Engineering $10,538,367 $10,538,367EPA considers S&L's estimate of Construction Management/Field Engineering to represent the "General Facilities" costs that are included in the EPA Control Cost Manual as 5% of the direct capital cost (Table 2.5, General Facilities). The EPA Control Cost Manual also includes a 5% Process Contingency (Table 2.5) under indirect installation costs. The facility estimated this cost as 65% of the direct labor cost (including per diem). EPA is using the S&L cost estimate, however, if EPA estimated this cost as the sum of construction management/field engineering as 10%, to include 5% for general facilities, and 5% for process contingencies, of the direct capital cost, the total would be $6,761,731. $12,330,161 17.0% $12,330,161Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

S-U Commissioning $648,515 $648,515Start-up/commissioning costs are included in the EPA Control Cost Manual as 2% of the total plant cost (Table 2.5, Preproduction Cost). The facility estimated this cost as 4% of the direct labor cost. EPA used S&L's estimate for SU commissioning. $758,779 17.0% $758,779Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Owners Construction Management, O&M Support & Contract Services $6,244,287 $0The S&L/SRP cost analysis included owners costs as typical expenditures that an owner will experience during an air quality control retrofit project. These expenditures include costs for: project development, financing, project management, plant startup/construction support, and taxes/advisory fees/legal. These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate. $7,406,233 18.6% $0These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate.

Spare Parts & Special Tooling $565,000 $565,000The cost of spare parts and special tooling are not specifically included in the EPA Control Cost Manual. Although it is unclear why spare parts and special tooling are necessary, for conservativism, this cost was included in the revised cost. $1,209,000 114.0% $1,209,000Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Owner's Legal Support & Insurance $5,000,000 $0The S&L/SRP cost analysis included the owner's legal support and insurance. The EPA Control Cost Manual does not include legal fees, and states that insurance on an SCR system is a minimal cost and is included in the capital recovery. Therefore, this cost is not included in the revised cost estimate. $5,000,000 0.0% $0These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate.

Lost Generation During Short Outages $5,670,000 $5,670,000The facility assumed that the SCR installation would exceed the scheduled outage by a total of 7 days at a rate of $45/MWh @ 750 MW in lost power generation. EPA included this cost in the revised cost estimate. $6,930,000 22.2% $6,930,000Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided. Ammonia Unloading Facility at Railhead $0 $0Ammonia unloadling costs for Units 1 and 2 are covered under Unit 3 as a common cost. $0 NA $0

Subtotal Indirect Costs $38,172,743 $26,928,456 $45,302,638 18.7% $32,896,405 Other Construction Indirect Costs

Indirect Labor & Materials Cost $8,597,356 $8,597,356 $10,059,304 17.0% $10,059,304 Overtime $1,832,068 $1,832,068 $2,143,168 17.0% $2,143,168 Per Diem $7,325,012 $7,325,012 $8,669,999 18.4% $8,669,999 Contractor's G&A $5,754,981 $5,754,981 $6,264,553 8.9% $6,264,553 Contractor's Profit $4,247,315 $4,247,315 $4,730,087 11.4% $4,730,087

Subtotal Other Construction Indirect Costs $27,756,732 $27,756,732 $31,867,111 14.8% $31,867,111 Total Indirect Costs $65,929,475 $54,685,188 $77,169,749 17.0% $64,763,516

Contingency $15,224,333 $15,224,333The EPA Control Cost Manual includes project contingency costs as 15% of total direct capital costs and total indirect installation costs in the calculation of total capital investment. 15% of direct and indirect costs would be $17,367,153. EPA used S&L's estimate of contingency. $18,501,697 21.5% $18,501,697Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Escalation $0 $0The facility did not include any costs for escalation in the BART submittal. Therefore this cost was not included in the revised cost. $0 NA $0
Allowance for Funds Used During Construction (AFUDC) $3,053,632 $0The EPA Control Cost Manual assumes the allowance for funds used during construction (AFUDC) are zero for the retrofit of a SCR. $3,053,632 0.0% $0The EPA Control Cost Manual assumes the allowance for funds used during construction (AFUDC) are zero for the retrofit of a SCR. Total Capital Cost $151,825,000 $137,527,000 $183,851,000 21.1% $168,391,000 -11%

**Annual Cost 2010 S&L/SRP**  **Calculated Cost EPA Revised** 

**Cost in 2010 $ S&L did not**  **provide 2013 annual costs**  **Percent Change**

**from 2010 EPA Revised Cost** 

**for 2013 Comments**  Fixed Annual Costs (FAC)

Operating labor $0 $0The facility did not present any costs associated with operating labor. Therefore no operating labor cost was included in the revised annual costs. $0 NA $0

Maintenance labor & materials $395,000 $395,000Maintenance labor & materials costs are included in the EPA Control Cost Manual. Therefore, the facility's estimate was included in the revised annual cost. $395,000 NA $395,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Subtotal FAC $395,000 $395,000 $395,000 NA $395,000 Variable Annual Costs (VAC)

Anhydrous Ammonia Reagent $1,035,000 $1,035,000The EPA Control Cost Manual includes costs for raw materials, such as reagent costs. Therefore, the facility's estimate was included in the revised annual cost. $1,035,000 NA $1,035,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values
Auxiliary and ID fan power $1,809,000 $1,809,000The EPA Control Cost Manual includes costs for utilities used by the SCR process. Therefore, the facility's estimate was included in the revised annual cost. $1,809,000 NA $1,809,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Steam $71,000 $71,000The EPA Control Cost Manual does not include costs for steam, however the low pressure steam is used to produce the ammonia reagent used for injection into the SCR. Therefore, the cost provided by the facility was used in the revised cost. $71,000 NA $71,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Catalyst replacement $672,000 $672,000It is unclear from the S&L/SRP cost submittal how the annual catalyst replacement cost was estimated. However, the facility's annual replacement cost is comparable to the calculated annual catalyst replacement cost using Section 4.2, Chapter 2 of the EPA Control Cost Manual. Therefore, the annual catalyst replacement cost submitted by the facility was used in the revised cost. $672,000 NA $672,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Subtotal VAC $3,587,000 $3,587,000 $3,587,000 NA $3,587,000 Total Direct Annual Cost (DAC) $3,982,000 $3,982,000FAC + VAC $3,982,000 NA $3,982,000FAC + VAC Indirect Annual Costs (IAC) The cost of electrical equipment which includes the raceways, grounding, lighting, communication, construction power allowance, control & instrumentation, and electrical equipment relocation is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, all of these costs were included in the revised cost.

Site work costs for Units 1 and 2 are covered under the site work costs for Unit 3.

The cost of indirect labor & materials, overtime, per diem, contractor's G&A, and contractor's profit are not explicit line items costs included in the EPA Control Cost Manual. However, EPA included these costs as additional indirect costs associated with installation of SCR. S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided. Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

### Capital recovery $17,597,000 $12,981,576The facility calculated capital recovery assuming a 9.8% interest rate and 20 year equipment life. However, the design basis for the SCR capital cost estimate states that the SCR is designed for a 30-year life (See SCR and Baghouse Capital Cost Estimate Design Basis, Section 1.7(a), April 16,2010). The EPA Control Cost Manual states the interest rate to use in the CRF computation should be a "pre-tax, marginal (real rate of return" that is appropriate for the investor. However, for those cost analyses related to government regulations, an appropriate "social" interest (discount) rate should be used. For these types of analyses, the Office of Management and Budget (OMB) directs that a real interest rate of 7% be used (October 1992). The latest real interest rate for cost effectiveness analyses published by OMB is 2.8% for a 20 year period (Revised January 2008). EPA calculated capital recoveries using 3% and 7% interest rates in determining cost effectiveness for the Regulatory Impact Analysis for the Final Clean Air Visibility rule and the Guidelines for BART Determinations under the Regional Haze regulations. Therefore, a conservative approach was used to calculate the capital recovery in the revised cost using an interest rate of 7% and an equipment life of 20 years. $21,308,000 21.1% $15,894,919The facility calculated capital recovery assuming a 9.8% interest rate and 20 year equipment life. The EPA Revised Cost was calculated using an interest rate of 7% and an equipment life of 20 years.

Subtotal IAC $17,597,000 $12,981,576 $21,308,000 21.1% $15,894,919 Total Annual Cost $21,579,000 $16,963,576DAC + IAC $25,290,000 17.2% $19,876,919 DAC + IAC 0.079
Note: The capital recovery factor used to calculate the capital recovery is calculated using the following equation: CRF=[i(1+i)n

### ]/[(1+i)n

### -1], where i=interest rate and n=number of years.**Navajo Generating Station Cost Analysis submitted by Salt River Project (SRP), generated by Sargent and Lundy Unit 2**  **Bituminous Coal, 750 MW, Pulverized Coal. Tangential-Fired Hot Side ESP, Wet FGD**  **2010 Cost estimates from the Salt River Project, Navajo Generating Station - Units 1, 2, 3, SCR and Baghouse Capital Cost Estimate Report, Revision D, August 17, 2010. 2013 Cost estimates from the Salt River Project, Navajo Generating Station - Units 1, 2, 3, SCR and Baghouse Capital Cost Estimate Report - 2013 Update, Revision 0, January 2, 2014.** 

**Capital Cost Calculated**  **Cost EPA Revised** 

**Cost in 2010 Comments**  **2013 S&L/SRP Calculated Cost**  **Percent Change**

**from 2010 EPA Revised Cost**  **Comments** SCR

Demolition $736,198 $736,198 Demolition is not listed as a separate line item in the EPA control Cost Manual for SCR, however the cost is generally included in the retrofit factor for the SCR capital cost. Demolition for the Navajo facility involves the demolition of the existing flue and the installation of the new flues and blanking plates. Therefore this cost was included in the revised cost. $795,092 8.0% $795,092 S&L escalated labor costs from 2010 to 2013 by 8% (or 3% per year).

Civil Work (Earthwork & Caissons) $1,917,885 $1,917,885The cost for civil work is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $2,056,090 7.2% $2,056,090S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Concrete $4,782,725 $4,782,725The cost for concrete work is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $5,129,134 7.2% $5,129,134S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Steel, Ductwork & SCR Box $37,845,393 $37,845,393The cost for the steel, ductwork, and SCR box are included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $38,590,824 2.0% $38,590,824As estimated by S&L.

Architectural (Elevators, Painting) $23,511 $23,511The cost for architectural services are included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $25,106 6.8% $25,106 S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Mechanical Equipment (Fan rotating assembly for SCR alone cases) $11,515,809 $11,515,809The cost of the mechanical equipment is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $25,524,593 121.6% $25,524,593The increase is a result of the replacement of baskets on 2 preheaters ($3,022,178), the replacement of 8 sonic horn with 6 sootblowers ($244,695), the addition of a hot water recirculation system ($7,994,602) and the increase of the catalyst size due to the lower NOx design target ($2,481,250 difference from 2010).

Anhydrous Ammonia System $420,721 $420,721The cost of the anhydrous ammonia system is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $449,178 6.8% $449,178 S&L escalated material costs from 2010 to 2013 by 6.7% respectively.

Piping $545,564 $545,564The cost of piping included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $1,397,244 156.1% $1,397,244The increase in piping is assumed to be a result of the addition of the hot water recirculation system and the sootblowers.

Insulation $6,072,318 $6,072,318The cost of insulation is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $6,467,678 6.5% $6,467,678 S&L escalated material costs from 2010 to 2013 by 6.7% respectively. S&L did not provide sufficient explanation to understand the 4% increase.
Subtotal SCR System $63,860,124 $63,860,124 $80,434,939 26.0% $80,434,939 Electrical and Instrumentation & Control

Electrical Equipment $673,840 $673,840 $721,027 7.0% $721,027 Raceways $433,785 $433,785 $486,845 12.2% $486,845 Cable $433,171 $433,171 $495,696 14.4% $495,696 Grounding $31,799 $31,799 $34,256 7.7% $34,256 Lighting $369,037 $369,037 $396,025 7.3% $396,025 Communication $63,509 $63,509 $68,330 7.6% $68,330 Construction Power Allowance $224,038 $224,038 $241,311 7.7% $241,311 Control & Instrumentation $1,245,971 $1,245,971 $1,331,283 6.8% $1,331,283 Relocation & Modification of Existing Electrical Equipment $413,338 $413,338 $444,792 7.6% $444,792

Subtotal Electrical and Instrumentation & Control $3,888,488 $3,888,488 $4,219,565 8.5% $4,219,565 Sitework Civil Work (Roads, Surfacing, Erosion $0 $0 $0 NA $0

Concrete $0 $0 $0 NA $0 Piping for Sitework (Drainage) $0 $0 $0 NA $0

Subtotal Sitework $0 $0 $0 NA $0 Other Direct Capital Costs

Construction Equipment $12,156,041 $12,156,041The cost of construction equipment is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $13,551,835 11.5% $13,551,835

Scaffolding $6,777,893 $6,777,893The cost of scaffolding is not specifically included in the EPA Control Cost Manual for the calculation of the direct capital cost of the SCR (Eq. 2.36). However, scaffolding is required to ensure the safety of the workers and to allow access to the retrofit site. Therefore, this cost was included in the revised cost. $7,934,464 17.1% $7,934,464
Freight $2,347,280 $2,347,280This cost is included in the EPA Control Cost Manual, and EPA used S&L's estimate for freight. $3,019,296 28.6% $3,019,296

Sales Taxes $478,700 $478,700Sales tax is in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $478,700 0.0% $478,700 No change in sales tax.
Subtotal Other Direct Capital Costs $21,759,914 $21,759,914 $24,984,295 14.8% $24,984,295 Total Direct Capital Cost $89,508,526 $89,508,526 $109,638,799 22.5% $109,638,799 Indirect Costs

Engineering, Procurement & Project

Services $14,141,710 $14,141,710 EPA considers S&L's estimate for Engineering, procurement & project services to represent the "Engineering and Home Office Fees" that are included in the EPA Control Cost Manual as 10% of the direct capital cost (Table 2.5, Engineering & Home Office Fees). EPA is using the S&L cost estimate, however, if EPA estimated this cost based on 10% of the direct capital cost, including labor costs, the total would be $8,950,853. $17,019,516 20.3% $17,019,516Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Construction Management/Field Engineering $15,191,829 $15,191,829 EPA considers S&L's estimate of Construction Management/Field Engineering to represent the "General Facilities" costs that are included in the EPA Control Cost Manual as 5% of the direct capital cost (Table 2.5, General Facilities). The EPA Control Cost Manual also includes a 5% Process Contingency (Table 2.5) under indirect installation costs. The facility estimated this cost as 65% of the direct labor cost (including per diem). EPA is using the S&L cost estimate for this line item, however, if EPA estimated this cost as the sum of construction management/field engineering as 10%, to include 5% for general facilities, and 5% for process contingencies, of the direct capital cost, the total would be $8,950,853. $17,784,143 17.1% $17,784,143 Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

S-U Commissioning $934,882 $934,882 Start-up/commissioning costs are included in the EPA Control Cost Manual as 2% of the total plant cost (Table 2.5, Preproduction Cost). The facility estimated this cost as 4% of the direct labor cost. The facility methodology was used in the revised cost. $1,094,409 17.1% $1,094,409Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Owners Construction Management, O&M Support & Contract Services $8,163,050 $0The S&L/SRP cost analysis included owners costs as typical expenditures that an owner will experience during an air quality control retrofit project. These expenditures include costs for: project development, financing, project management, plant startup/construction support, and taxes/advisory fees/legal. These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate. $9,590,143 17.5% $0These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate.

Spare Parts & Special Tooling $555,000 $555,000The cost of spare parts and special tooling are not specifically included in the EPA Control Cost Manual. Although it is unclear why spare parts and special tooling are necessary, for conservativism, this cost was included in the revised cost. $1,199,000 116.0% $1,199,000Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Owner's Legal Support & Insurance $5,000,000 $0The S&L/SRP cost analysis included the owner's legal support and insurance. The EPA Control Cost Manual does not include legal fees, and states that insurance on an SCR system is a minimal cost and is included in the capital recovery. Therefore, this cost is not included in the revised cost estimate. $5,000,000 0.0% $0These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate.

Lost Generation During Short Outages $5,670,000 $5,670,000The facility assumed that the SCR installation would exceed the scheduled outage by a total of 7 days at a rate of $45/MWh @ 750 MW in lost power generation. EPA included this cost in the revised cost estimate. $6,930,000 22.2% $6,930,000Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.
Ammonia Unloading Facility at Railhead $0 $0Ammonia unloadling costs for Units 1 and 2 are covered under Unit 3 as a common cost. $0 NA $0

Subtotal Indirect Costs $49,656,471 $36,493,421 $58,617,211 18.0% $44,027,068 Other Construction Indirect Costs

Indirect Labor & Materials Cost $12,425,416 $12,425,416 $14,508,608 16.8% $14,508,608 Overtime $2,569,023 $2,569,023 $3,091,636 20.3% $3,091,636 Per Diem $10,656,693 $10,656,693 $12,568,948 17.9% $12,568,948 Contractor's G&A $7,894,783 $7,894,783 $8,682,341 10.0% $8,682,341 Contractor's Profit $5,985,262 $5,985,262 $6,711,236 12.1% $6,711,236

Subtotal Other Construction Indirect Costs $39,531,177 $39,531,177 $45,562,769 15.3% $45,562,769 Total Indirect Costs $89,187,648 $76,024,598 $104,179,980 16.8% $89,589,837

Contingency $23,051,807 $23,051,807The EPA Control Cost Manual includes project contingency costs as 15% of total direct capital costs and total indirect installation costs in the calculation of total capital investment. 15% of direct and indirect costs would be $23,115,193. EPA used S&L's estimate of contingency. $27,582,622 19.7% $27,582,622Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Escalation $0 $0The facility did not include any costs for escalation in the BART submittal. Therefore this cost was not included in the revised cost. $0 NA $0

Allowance for Funds Used During Construction (AFUDC) $4,059,926 $0The EPA Control Cost Manual assumes the allowance for funds used during construction (AFUDC) are zero for the retrofit of a SCR. $4,059,926 0.0% $0The EPA Control Cost Manual assumes the allowance for funds used during construction (AFUDC) are zero for the retrofit of a SCR. Total Capital Cost $205,808,000 $188,585,000 $245,461,000 19.3% $226,811,000 -10%

**Annual Cost 2010 S&L/SRP**  **Calculated Cost**  **S&L did not provide 2013**  **annual costs Percent Change** 

**from 2010 EPA Revised Cost** 

**for 2013 Comments**  Fixed Annual Costs (FAC)

Operating labor $0 $0The facility did not present any costs associated with operating labor. Therefore no operating labor cost was included in the revised annual costs. $0 NA $0S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Maintenance labor & materials $395,000 $395,000 Maintenance labor & materials costs are included in the EPA Control Cost Manual. Therefore, the facility's estimate was included in the revised annual cost. $395,000 NA $395,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Subtotal FAC $395,000 $395,000 $395,000 NA $395,000 Variable Annual Costs (VAC)

Anhydrous Ammonia Reagent $1,035,000 $1,035,000The EPA Control Cost Manual includes costs for raw materials, such as reagent costs. Therefore, the facility's estimate was included in the revised annual cost. $1,809,000 NA $1,809,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Auxiliary and ID fan power $1,809,000 $1,809,000The EPA Control Cost Manual includes costs for utilities used by the SCR process. Therefore, the facility's estimate was included in the revised annual cost. $1,809,000 NA $1,809,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Steam $71,000 $71,000The EPA Control Cost Manual does not include costs for steam, however the low pressure steam is used to produce the ammonia reagent used for injection into the SCR. Therefore, the cost provided by the facility was used in the revised cost. $71,000 NA $71,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Catalyst replacement $672,000 $672,000 It is unclear from the S&L/SRP cost submittal how the annual catalyst replacement cost was estimated. However, the facility's annual replacement cost is comparable to the calculated annual catalyst replacement cost using Section 4.2, Chapter 2 of the EPA Control Cost Manual. Therefore, the annual catalyst replacement cost submitted by the facility was used in the revised cost. $672,000 NA $672,000S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Subtotal VAC $3,587,000 $3,587,000 $4,361,000 NA $4,361,000 Total Direct Annual Cost (DAC) $3,982,000 $3,982,000 FAC + VAC $4,756,000 NA $4,756,000 FAC + VAC Indirect Annual Costs (IAC)

Capital recovery $23,853,000 $17,801,090The facility calculated capital recovery assuming a 9.8% interest rate and 20 year equipment life. However, the design basis for the SCR capital cost estimate states that the SCR is designed for a 30-year life (See SCR and Baghouse Capital Cost Estimate Design Basis, Section 1.7(a), April 16,2010). The EPA Control Cost Manual states the interest rate to use in the CRF computation should be a "pre-tax, marginal (real rate of return" that is appropriate for the investor. However, for those cost analyses related to government regulations, an appropriate "social" interest (discount) rate should be used. For these types of analyses, the Office of Management and Budget (OMB) directs that a real interest rate of 7% be used (October 1992). The latest real interest rate for cost effectiveness analyses published by OMB is 2.8% for a 20 year period (Revised January 2008). EPA calculated capital recoveries using 3% and 7% interest rates in determining cost effectiveness for the Regulatory Impact Analysis for the Final Clean Air Visibility rule and the Guidelines for BART Determinations under the Regional Haze regulations. Therefore, a conservative approach was used to calculate the capital recovery in the revised cost using an interest rate of 7% and an equipment life of 20 years. $28,449,000 19.3% $21,409,354The facility calculated capital recovery assuming a 9.8% interest rate and 20 year equipment life. The EPA Revised Cost was calculated using an interest rate of 7% and an equipment life of 20 years.

Subtotal IAC $23,853,000 $17,801,090 $28,449,000 19.3% $21,409,354 Total Annual Cost $27,835,000 $21,783,090 DAC + IAC $33,205,000 19.3% $26,165,354 DAC + IAC 0.059983694
Note: The capital recovery factor used to calculate the capital recovery is calculated using the following equation: CRF=[i(1+i)n]/[(1+i)n-1], where i=interest rate and n=number of years. The cost of electrical equipment which includes the raceways, grounding, lighting, communication, construction power allowance, control & instrumentation, and electrical equipment relocation is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, all of these costs were included in the revised cost.

Site work costs for Units 1 and 2 are covered under the site work costs for Unit 3.

The cost of indirect labor & materials, overtime, per diem, contractor's G&A, and contractor's profit are not explicit line items costs included in the EPA Control Cost Manual. However, EPA included these costs as additional indirect costs associated with installation of SCR. S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided. Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.**Navajo Generating Station Cost Analysis submitted by Salt River Project (SRP), generated by Sargent and Lundy Unit 3**  **Bituminous Coal, 750 MW, Pulverized Coal. Tangential-Fired Hot Side ESP, Wet FGD**  **2010 Cost estimates from the Salt River Project, Navajo Generating Station - Units 1, 2, 3, SCR and Baghouse Capital Cost Estimate Report, Revision D, August 17, 2010. 2013 Cost estimates from the Salt River Project, Navajo Generating Station - Units 1, 2, 3, SCR and Baghouse Capital Cost Estimate Report - 2013 Update, Revision 0, January 2, 2014.** 

**Capital Cost 2010 S&L/SRP**  **Calculated Cost EPA Revised** 

**Cost in 2010 Comments**  **2013 S&L/SRP Calculated Cost**  **Percent**

**Change from 2010**  **EPA Revised**

**Cost Comments**  SCR

Demolition $735,830 $735,830 Demolition is not listed as a separate line item in the EPA control Cost Manual for SCR, however the cost is generally included in the retrofit factor for the SCR capital cost. Demolition for the Navajo facility involves the demolition of $794,698 8.0% $794,698 S&L escalated labor costs from 2010 to 2013 by 8% (or 3% per year).

Civil Work (Earthwork & Caissons) $1,427,672 $1,427,672 The cost for civil work is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $1,529,947 7.2% $1,529,947 S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Concrete $3,714,517 $3,714,517 The cost for concrete work is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $3,980,599 7.2% $3,980,599 S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Steel, Ductwork & SCR Box $30,333,690 $30,333,690 The cost for the steel, ductwork, and SCR box are included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $30,561,651 0.8% $30,561,651 As estimated by S&L.

Architectural (Elevators, Painting) $4,055,395 $4,055,395 The cost for architectural services are included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $4,343,466 7.1% $4,343,466 S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Mechanical Equipment (Fan rotating assembly for SCR alone cases) $10,869,742 $10,869,742 The cost of the mechanical equipment is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost.
$24,622,163 126.5% $24,622,163 The increase is a result of the replacement of baskets on 2 preheaters ($3,022,178), the replacement of 8 sonic horn with 6 sootblowers ($244,695), the addition of a hot water recirculation system ($7,994,602) and the increase of the catalyst size due to the lower NOx design target ($2,481,250 difference from

Anhydrous Ammonia System $2,263,603 $2,263,603 The cost of the anhydrous ammonia system is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $2,416,612 6.8% $2,416,612 S&L escalated material costs from 2010 to 2013 by 6.7% respectively.

Piping $1,426,427 $1,426,427 The cost of piping included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $1,947,685 36.5% $1,947,685 The increase in piping is assumed to be a result of the addition of the hot water recirculation system and the sootblowers.

Insulation $4,567,888 $4,567,888 The cost of insulation is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $4,750,261 4.0% $4,750,261 S&L escalated material costs from 2010 to 2013 by 6.7% respectively. S&L did not provide sufficient explanation to understand the 4% increase.
Subtotal SCR System $59,394,764 $59,394,764 $74,947,082 26.2% $74,947,082 Electrical and Instrumentation & Control

Electrical Equipment $1,248,620 $1,248,620 $1,335,820 7.0% $1,335,820 Raceways $590,614 $590,614 $652,709 10.5% $652,709 Cable $707,185 $707,185 $783,414 10.8% $783,414 Grounding $67,123 $67,123 $72,289 7.7% $72,289 Lighting $633,462 $633,462 $679,521 7.3% $679,521 Communication $109,616 $109,616 $117,864 7.5% $117,864 Construction Power Allowance $378,460 $378,460 $407,436 7.7% $407,436 Control & Instrumentation $1,519,938 $1,519,938 $1,623,799 6.8% $1,623,799 Relocation & Modification of Existing Electrical Equipment $42,106 $42,106 $45,266 7.5% $45,266

Subtotal Electrical and Instrumentation & Control $5,297,124 $5,297,124 $5,718,118 7.9% $5,718,118 Sitework Civil Work (Roads, Surfacing, Erosion $320,326 $320,326 $343,964 7.4% $343,964

Concrete $12,736 $12,736 $13,626 7.0% $13,626 Piping for Sitework (Drainage) $933,463 $933,463 $941,763 0.9% $941,763

Subtotal Sitework $1,266,525 $1,266,525 $1,299,353 2.6% $1,299,353 Other Direct Capital Costs

Construction Equipment $7,955,564 $7,955,564The cost of construction equipment is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $8,909,700 12.0% $8,909,700

Scaffolding $6,135,353 $6,135,353 The cost of scaffolding is not specifically included in the EPA Control Cost Manual for the calculation of the direct capital cost of the SCR (Eq. 2.36). However, scaffolding is required to ensure the safety of the workers and to allow access to the retrofit site. Therefore, this cost was included in the revised cost. $7,055,268 15.0% $7,055,268 Freight $2,355,184 $2,355,184 $3,019,076 28.2% $3,019,076

Sales Taxes $663,500 $663,500 Sales tax is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, this cost was included in the revised cost. $663,600 0.0% $663,500 No change in sales tax.
Subtotal Other Direct Capital Costs $17,109,601 $17,109,601 $19,647,644 14.8% $19,647,544 Total Direct Capital Costs $83,068,014 $83,068,014 $101,612,197 22.3% $101,612,097 Indirect Costs

Engineering, Procurement & Project

Services $10,578,622 $10,578,622 EPA considers S&L's estimate for Engineering, procurement & project services to represent the "Engineering and Home Office Fees" that are included in the EPA Control Cost Manual as 10% of the direct capital cost (Table 2.5, Engineering & Home Office Fees). EPA is using the S&L cost estimate, however, if EPA estimated this cost based on 10% of the direct capital cost, including labor costs, the total would be $8,306,801. $12,677,803 19.8% $12,677,803 Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Construction Management/Field Engineering $13,751,653 $13,751,653 EPA considers S&L's estimate of Construction Management/Field Engineering to represent the "General Facilities" costs that are included in the EPA Control Cost Manual as 5% of the direct capital cost (Table 2.5, General Facilities). The EPA Control Cost Manual also includes a 5% Process Contingency (Table 2.5) under indirect installation costs. The facility estimated this cost as 65% of the direct labor cost (including per diem). EPA is using the S&L cost estimate for this line item, however, if EPA estimated this cost as the sum of construction management/field engineering as 10%, to include 5% for general facilities, and 5% for process contingencies, of the direct capital cost, the total would be $8,306,801. $15,813,531 15.0% $15,813,531 Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

S-U Commissioning $846,256 $846,256 Start-up/commissioning costs are included in the EPA Control Cost Manual as 2% of the total plant cost (Table 2.5, Preproduction Cost). The facility estimated this cost as 4% of the direct labor cost. The facility methodology was used in the revised cost. $973,140 15.0% $973,140 Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Owners Construction Management, O&M Support & Contract Services $7,504,012 $0The S&L/SRP cost analysis included owners costs as typical expenditures that an owner will experience during an air quality control retrofit project. These expenditures include costs for: project development, financing, project management, plant startup/construction support, and taxes/advisory fees/legal. These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate. $8,763,224 16.8% $0These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate.

Spare Parts & Special Tooling $685,000 $685,000 The cost of spare parts and special tooling are not specifically included in the EPA Control Cost Manual. Although it is unclear why spare parts and special tooling are necessary, for conservativism, this cost was included in the revised cost. $1,337,000 95.2% $1,337,000 Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Owner's Legal Support & Insurance $5,000,000 $0The BART analysis included the owner's legal support and insurance. The EPA Control Cost Manual does not include legal fees, and states that insurance on an SCR system is a minimal cost and is included in the capital recovery. Therefore, this cost is not included in the revised cost estimate. $5,000,000 0.0% $0These costs are not included in the EPA Control Cost Manual and are not included in the revised cost estimate.

Lost Generation During Short Outages $5,670,000 $5,670,000The facility assumed that the SCR installation would exceed the scheduled outage by a total of 7 days at a rate of $45/MWh @ 750 MW in lost power generation. EPA included this cost in the revised cost estimate $6,930,000 22.2% $6,930,000 Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Ammonia Unloading Facility at Railhead $2,000,000 $2,000,000The EPA Control Cost Manual includes costs for storage and production of the ammonia reagent. The manual does not include the cost for an ammonia unloading facility at the railhead in the calculation of total capital investment. However, it is believed that this cost is necessary to provide the needed infrastructure to provide a consistent and safe supply of ammonia to the facility. Therefore this cost was included in the revised cost. $2,000,000 0.0% $2,000,000

Subtotal Indirect Costs $46,035,543 $33,531,531 $53,494,698 16.2% $39,731,474 Other Construction Indirect Costs

Indirect Labor & Materials Cost $11,257,983 $11,257,983 $12,902,528 14.6% $12,902,528 Overtime $2,301,644 $2,301,644 $2,745,470 19.3% $2,745,470 Per Diem $9,184,758 $9,184,758 $10,700,866 16.5% $10,700,866 Contractor's G&A $7,089,429 $7,089,429 $7,699,954 8.6% $7,699,954 Contractor's Profit $5,301,914 $5,301,914 $5,867,065 10.7% $5,867,065

Subtotal Other Construction Indirect Costs $35,135,728 $35,135,728 $39,915,883 13.6% $39,915,883 Total Indirect Capital Costs $81,171,271 $68,667,259 $93,410,581 15.1% $79,647,357

Contingency $18,559,039 $18,559,039 The EPA Control Cost Manual includes project contingency costs as 15% of total direct capital costs and total indirect installation costs in the calculation of total capital investment. 15% of direct and indirect costs would be $21,602,790. EPA used S&L's estimate of contingency. $22,037,563 18.7% $22,037,563 Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

Escalation $0 $0The facility did not include any costs for escalation in the BART submittal. Therefore this cost was not included in the revised cost. $0 NA $0
Allowance for Funds Used During Construction (AFUDC) $3,729,453 $0The EPA Control Cost Manual assumes the allowance for funds used during construction (AFUDC) are zero for the retrofit of a SCR. $3,729,453 0.0% $0The EPA Control Cost Manual assumes the allowance for funds used during construction (AFUDC) are zero for the retrofit of a SCR. Total Capital Cost $186,528,000 $170,294,000 $220,790,000 18.4% $203,297,000 -9%

**Annual Cost 2010 S&L/SRP**  **Calculated Cost S&L did not**  **provide 2013 annual costs**  **Percent**

**Change from 2010**  **EPA Revised**

**Cost for 2013 Comments**  Fixed Annual Costs (FAC)

Operating labor $0 $0The facility did not present any costs associated with operating labor. Therefore no operating labor cost was included in the revised annual costs. $0 NA $0 S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Maintenance labor & materials $395,000 $395,000 Maintenance labor & materials costs are included in the EPA Control Cost Manual. Therefore, the facility's estimate was included in the revised annual cost. $395,000 NA $395,000 S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Subtotal FAC $395,000 $395,000 $395,000 NA $395,000 Variable Annual Costs (VAC)

Anhydrous Ammonia Reagent $1,035,000 $1,035,000The EPA Control Cost Manual includes costs for raw materials, such as reagent costs. Therefore, the facility's estimate was included in the revised annual cost. $1,035,000 NA $1,035,000 S&L did not provide updated annual costs for 2013. EPA is using the 2010 values
Auxiliary and ID fan power $1,809,000 $1,809,000The EPA Control Cost Manual includes costs for utilities used by the SCR process. Therefore, the facility's estimate was included in the revised annual cost. $1,809,000 NA $1,809,000 S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Steam $71,000 $71,000The EPA Control Cost Manual does not include costs for steam, however the low pressure steam is used to produce the ammonia reagent used for injection into the SCR. Therefore, the cost provided by the facility was used in the revised cost. $71,000 NA $71,000 S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Catalyst replacement $672,000 $672,000 It is unclear from the BART submittal how the annual catalyst replacement cost was estimated. However, the facility's annual replacement cost is comparable to the calculated annual catalyst replacement cost using Section 4.2, Chapter 2 of the EPA Control Cost Manual. Therefore, the annual catalyst replacement cost submitted by the facility was used in the revised cost. $672,000 NA $672,000 S&L did not provide updated annual costs for 2013. EPA is using the 2010 values

Subtotal VAC $3,587,000 $3,587,000 $3,587,000 NA $3,587,000 Total Direct Annual Cost (DAC) $3,982,000 $3,982,000 FAC + VAC $3,982,000 NA $3,982,000 FAC + VAC Indirect Annual Costs (IAC)

Capital recovery $21,619,000 $16,074,549 The facility calculated capital recovery assuming a 9.8% interest rate and 20 year equipment life. However, the design basis for the SCR capital cost estimate states that the SCR is designed for a 30-year life (See SCR and Baghouse Capital Cost Estimate Design Basis, Section 1.7(a), April 16,2010). The EPA Control Cost Manual states the interest rate to use in the CRF computation should be a "pre-tax, marginal (real rate of return" that is appropriate for the investor. However, for those cost analyses related to government regulations, an appropriate "social" interest (discount) rate should be used. For these types of analyses, the Office of Management and Budget (OMB) directs that a real interest rate of 7% be used (October 1992). The latest real interest rate for cost effectiveness analyses published by OMB is 2.8% for a 20 year period (Revised January 2008). EPA calculated capital recoveries using 3% and 7% interest rates in determining cost effectiveness for the Regulatory Impact Analysis for the Final Clean Air Visibility rule and the Guidelines for BART Determinations under the Regional Haze regulations. Therefore, a conservative approach was used to calculate the capital recovery in the revised cost using an interest rate of 7% and an equipment life of 20 years. $25,590,000 18.4% $19,189,799 The facility calculated capital recovery assuming a 9.8% interest rate and 20 year equipment life. The EPA Revised Cost was calculated using an interest rate of 7% and an equipment life of 20 years.

Subtotal IAC $21,619,000 $16,074,549 $25,590,000 18.4% $19,189,799 Total Annual Cost $25,601,000 $20,056,549 DAC + IAC $29,572,000 15.5% $23,171,799 DAC + IAC 0.094886972
Note: The capital recovery factor used to calculate the capital recovery is calculated using the following equation: CRF=[i(1+i)n]/[(1+i)n-1], where i=interest rate and n=number of years. The cost of electrical equipment which includes the raceways, grounding, lighting, communication, construction power allowance, control & instrumentation, and electrical equipment relocation is included in the EPA Control Cost Manual in the calculation of the direct capital cost of the SCR (Eq. 2.36). Therefore, all of these costs were included in the revised cost.

The EPA Control Cost Manual does not include the costs for sitework in the calculation of total capital investment. However, the manual notes that these costs may be necessary to provide the needed infrastructure to service the facility. Therefore these costs were included in the revised cost.

The cost of indirect labor & materials, overtime, per diem, contractor's G&A, and contractor's profit are not explicit line items costs included in the EPA Control Cost Manual. However, EPA included these costs as additional indirect costs associated with installation of SCR. S&L escalated labor and material costs from 2010 to 2013 by 8.0% and 6.7% respectively.

Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided. Although these percentages are outside the noted escalation of labor and material costs that S&L assumed to be 8.0% and 6.7% respectively, EPA includes S&L's revised cost as provided.

# Total Capital Cost (EPA's revisions_2013 costs) SCR 3+1 reactor 2012 SRP cost for SNCR Unit 1 $168,391,000 $13,066,667 Unit 2 $226,811,000 $13,066,667 Unit 3 $203,297,000 $13,066,667 **TOTAL** $598,499,000 $39,200,000
Total Annual Cost (EPA's revisions_2013 costs)

3+1 reactor Unit 1 $19,876,919 Unit 2 $26,165,354 Unit 3 $23,171,799 **TOTAL** $69,214,072

Total Annual O&M Costs

3+1 reactor Unit 1 $3,982,000 Unit 2 $4,756,000 Unit 3 $3,982,000 **TOTAL** $12,720,000



# Unit 1 **Unit 2 Unit 3** 

Total Capital Cost in 2010 $ $137,527,000 $188,585,000 $170,294,000 Total Capital Cost in 2013 $ $168,391,000 $226,811,000 $203,297,000 Percent Change 22% 20% 19% Costs Estimate d by EPA

# Total Annual

Cost in 2010 $ $16,963,576 $21,783,090 $20,056,549 Total Annual Cost in 2013 $ $19,876,919 $26,165,354 $23,171,799 Percent Change 17% 20% 16% Total Capital Cost in 2010 $ $151,825,000 $205,808,000 $186,528,000 Total Capital Cost in 2013 $ $183,851,000 $245,461,000 $220,790,000 Percent Change 21% 19% 18% Total Annual Cost in 2010 $ $21,579,000 $27,835,000 $25,601,000 Total Annual Cost in 2013 $ $25,290,000 $33,205,000 $29,572,000 Percent Change 17% 19% 16% Costs Estimate d by SRP

# For Economic Modeling - 2013 SCR Costs SRP and S&L 2013 Costs Total Capital Cost Annual O&M Cost Total Capital Cost Unit 1 $168,391,000 $3,982,000 Unit 1 $183,851,000 Unit 2 $226,811,000 $4,756,000 Unit 2 $245,461,000 Unit 3 $203,297,000 $3,982,000 Unit 3 $220,790,000
For Economic Modeling - SNCR Costs SRP $650,102,000

Total Capital Cost Annual O&M Cost EPA $598,499,000 Unit 1 $13,066,667 $6,333,333 8% Unit 2 $13,066,667 $6,333,333 Unit 3 $13,066,667 $6,333,333 From January 20, 2012 letter from Kelly Barr, SRP to Deborah Jordan, EPA
$39,200,001 $18,999,999



# Total

$496,406,000

$598,499,000



# 21%

# $58,803,215

$69,214,072



# 18%

$544,161,000

$650,102,000



# 19%

$75,015,000

$88,067,000



# 17%

# Annual O&M Cost Total Annual Cost

$3,982,000 $25,290,000 8.41% 9% $4,756,000 $33,205,000 7.60% $3,982,000 $29,572,000 7.92%
$12,720,000 $88,067,000 $12,720,000 $69,214,072 21%