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

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.

Capital Cost

S&L/SRP 

Calculated Cost EPA Revised Cost 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.

Civil Work (Earthwork & Caissons) $1,232,247 $1,232,247

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.

Concrete $3,011,247 $3,011,247

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.

Steel, Ductwork & SCR Box $29,495,996 $29,495,996

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.

Architectural (Elevators, Painting) $23,209 $23,209

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.

Mechanical Equipment (Fan rotating assembly for 

SCR alone cases) $10,780,458 $10,780,458

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.

Anhydrous Ammonia System $416,576 $416,576

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.

Piping $527,082 $527,082

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.

Insulation $4,512,662 $4,512,662

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.

Subtotal SCR System $50,385,980 $50,385,980

Electrical and Instrumentation & Control

Electrical Equipment $825,442 $825,442

Raceways $363,452 $363,452

Cable $471,568 $471,568

Grounding $20,847 $20,847

Lighting $299,231 $299,231

Communication $54,808 $54,808

Construction Power Allowance $189,230 $189,230

Control & Instrumentation $1,207,334 $1,207,334

Relocation & Modification of Existing Electrical 

Equipment $46,106 $46,106

Subtotal Electrical and Instrumentation & Control $3,478,018 $3,478,018

Sitework

Civil Work (Roads, Surfacing, Erosion Control) $0 $0

Concrete $0 $0

Piping for Sitework (Drainage) $0 $0

Subtotal Sitework $0 $0

Other Direct Capital Costs

Construction Equipment $6,769,119 $6,769,119

The 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.

Scaffolding $4,701,733 $4,701,733

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.

Freight $1,974,160 $1,974,160 This cost is included in the EPA Control Cost Manual, and EPA used S&L's estimate for freight.

Sales Taxes $308,300 $308,300

Sales 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.

Subtotal Other Direct Capital Costs $13,753,312 $13,753,312

Total Direct Capital Costs $67,617,310 $67,617,310

Indirect Costs

Engineering, Procurement & Project Services $9,506,574 $9,506,574

EPA 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.

Construction Management/Field Engineering $10,538,367 $10,538,367

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, 

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.

S-U Commissioning $648,515 $648,515

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. EPA used S&L's estimate for SU 

commissioning.

Owners Construction Management, O&M 

Support & Contract Services $6,244,287 $0

The 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. 

Spare Parts & Special Tooling $565,000 $565,000

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.

Owner's Legal Support & Insurance $5,000,000 $0

The 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. 

Lost Generation During Short Outages $5,670,000 $5,670,000

The 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.

Ammonia Unloading Facility at Railhead $0 $0 Ammonia unloadling costs for Units 1 and 2 are covered under Unit 3 as a common cost.

Subtotal Indirect Costs $38,172,743 $26,928,456

Other Construction Indirect Costs

Indirect Labor & Materials Cost $8,597,356 $8,597,356

Overtime $1,832,068 $1,832,068

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 
Per Diem $7,325,012 $7,325,012

Contractor's G&A $5,754,981 $5,754,981

Contractor's Profit $4,247,315 $4,247,315

Subtotal Other Construction Indirect Costs $27,756,732 $27,756,732

Total Indirect Costs $65,929,475 $54,685,188

Contingency $15,224,333 $15,224,333

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 

$17,367,153. EPA used S&L's estimate of contingency.

Escalation $0 $0

The facility did not include any costs for escalation in the BART submittal. Therefore this cost was not included in the 

revised cost.

Allowance for Funds Used During Construction (AFUDC) $3,053,632 $0

The 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 9%

Annual Cost

S&L/SRP 

Calculated Cost EPA Revised Cost Comments

Fixed Annual Costs (FAC)

Operating labor $0 $0

The facility did not present any costs associated with operating labor. Therefore no operating labor cost was included 

in the revised annual costs.

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.

Subtotal FAC $395,000 $395,000

Variable Annual Costs (VAC)

Anhydrous Ammonia Reagent $1,035,000 $1,035,000

The 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.

Auxiliary and ID fan power $1,809,000 $1,809,000

The 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.

Steam $71,000 $71,000

The 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.

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. 

Subtotal VAC $3,587,000 $3,587,000

Total Direct Annual Cost (DAC) $3,982,000 $3,982,000 FAC + VAC

Indirect Annual Costs (IAC)

Capital recovery $17,597,000 $12,981,576

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.

Subtotal IAC $17,597,000 $12,981,576

Total Annual Cost $21,579,000 $16,963,576 DAC + IAC 0.214

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.

line items costs included in the EPA Control Cost Manual. However, EPA included these costs as additional indirect 

costs associated with installation of SCR.
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

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.

Capital Cost

S&L/SRP 

Calculated Cost 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.

Civil Work (Earthwork & Caissons) $1,917,885 $1,917,885

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.

Concrete $4,782,725 $4,782,725

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.

Steel, Ductwork & SCR Box $37,845,393 $37,845,393

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.

Architectural (Elevators, Painting) $23,511 $23,511

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.

Mechanical Equipment (Fan rotating assembly 

for SCR alone cases) $11,515,809 $11,515,809

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.

Anhydrous Ammonia System $420,721 $420,721

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.

Piping $545,564 $545,564

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.

Insulation $6,072,318 $6,072,318

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.

Subtotal SCR System $63,860,124 $63,860,124

Electrical and Instrumentation & Control

Electrical Equipment $673,840 $673,840

Raceways $433,785 $433,785

Cable $433,171 $433,171

Grounding $31,799 $31,799

Lighting $369,037 $369,037

Communication $63,509 $63,509

Construction Power Allowance $224,038 $224,038

Control & Instrumentation $1,245,971 $1,245,971

Relocation & Modification of Existing Electrical 

Equipment $413,338 $413,338

Subtotal Electrical and Instrumentation & Control $3,888,488 $3,888,488

Sitework

Civil Work (Roads, Surfacing, Erosion Control) $0 $0

Concrete $0 $0

Piping for Sitework (Drainage) $0 $0

Subtotal Sitework $0 $0

Other Direct Capital Costs

Construction Equipment $12,156,041 $12,156,041

The 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.

Scaffolding $6,777,893 $6,777,893

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.

Freight $2,347,280 $2,347,280 This cost is included in the EPA Control Cost Manual, and EPA used S&L's estimate for freight.

Sales Taxes $478,700 $478,700

Sales 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.

Subtotal Other Direct Capital Costs $21,759,914 $21,759,914

Total Direct Capital Cost $89,508,526 $89,508,526

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.

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.

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.

Owners Construction Management, O&M 

Support & Contract Services $8,163,050 $0

The 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. 

Spare Parts & Special Tooling $555,000 $555,000

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.

Owner's Legal Support & Insurance $5,000,000 $0

The 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. 

Lost Generation During Short Outages $5,670,000 $5,670,000

The 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.

Ammonia Unloading Facility at Railhead $0 $0 Ammonia unloadling costs for Units 1 and 2 are covered under Unit 3 as a common cost.

Subtotal Indirect Costs $49,656,471 $36,493,421

Other Construction Indirect Costs

Indirect Labor & Materials Cost $12,425,416 $12,425,416

Overtime $2,569,023 $2,569,023

Per Diem $10,656,693 $10,656,693

Contractor's G&A $7,894,783 $7,894,783

Contractor's Profit $5,985,262 $5,985,262

Subtotal Other Construction Indirect Costs $39,531,177 $39,531,177

Total Indirect Costs $89,187,648 $76,024,598

Contingency $23,051,807 $23,051,807

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 $23,115,193. EPA used S&L's estimate of contingency.

Escalation $0 $0

The facility did not include any costs for escalation in the BART submittal. Therefore this cost was not included 

in the revised cost.

Allowance for Funds Used During Construction (AFUDC) $4,059,926 $0

The 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 8%

Annual Cost

S&L/SRP 

Calculated Cost EPA Revised Cost Comments

Fixed Annual Costs (FAC)

Operating labor $0 $0

The facility did not present any costs associated with operating labor. Therefore no operating labor cost was 

included in the revised annual costs.

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.

Subtotal FAC $395,000 $395,000

Variable Annual Costs (VAC)

Anhydrous Ammonia Reagent $1,035,000 $1,035,000

The 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.

Auxiliary and ID fan power $1,809,000 $1,809,000

The 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.

Steam $71,000 $71,000

The 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.

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. 

Subtotal VAC $3,587,000 $3,587,000

Total Direct Annual Cost (DAC) $3,982,000 $3,982,000 FAC + VAC

Indirect Annual Costs (IAC)

Capital recovery $23,853,000 $17,801,090

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.

Subtotal IAC $23,853,000 $17,801,090

Total Annual Cost $27,835,000 $21,783,090 DAC + IAC 0.217420877

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.
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

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.

Capital Cost

S&L/SRP 

Calculated Cost 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 the existing flue and the installation of the new flues and blanking plates. Therefore this cost was 

included in the revised cost.

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.

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.

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.

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.

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.

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.

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.

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.

Subtotal SCR System $59,394,764 $59,394,764

Electrical and Instrumentation & Control

Electrical Equipment $1,248,620 $1,248,620

Raceways $590,614 $590,614

Cable $707,185 $707,185

Grounding $67,123 $67,123

Lighting $633,462 $633,462

Communication $109,616 $109,616

Construction Power Allowance $378,460 $378,460

Control & Instrumentation $1,519,938 $1,519,938

Relocation & Modification of Existing Electrical 

Equipment $42,106 $42,106

Subtotal Electrical and Instrumentation & Control $5,297,124 $5,297,124

Sitework

Civil Work (Roads, Surfacing, Erosion Control) $320,326 $320,326

Concrete $12,736 $12,736

Piping for Sitework (Drainage) $933,463 $933,463

Subtotal Sitework $1,266,525 $1,266,525

Other Direct Capital Costs

Construction Equipment $7,955,564 $7,955,564

The 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.

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.

Freight $2,355,184 $2,355,184

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.

Subtotal Other Direct Capital Costs $17,109,601 $17,109,601

Total Direct Capital Costs $83,068,014 $83,068,014

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.

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.

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.

Owners Construction Management, O&M 

Support & Contract Services $7,504,012 $0

The 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. 

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.

Owner's Legal Support & Insurance $5,000,000 $0

The 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. 

Lost Generation During Short Outages $5,670,000 $5,670,000

The 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

Ammonia Unloading Facility at Railhead $2,000,000 $2,000,000

The 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. 

Subtotal Indirect Costs $46,035,543 $33,531,531

Other Construction Indirect Costs

Indirect Labor & Materials Cost $11,257,983 $11,257,983

Overtime $2,301,644 $2,301,644

Per Diem $9,184,758 $9,184,758

Contractor's G&A $7,089,429 $7,089,429

Contractor's Profit $5,301,914 $5,301,914

Subtotal Other Construction Indirect Costs $35,135,728 $35,135,728

Total Indirect Costs $81,171,271 $68,667,259

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.

Escalation $0 $0

The facility did not include any costs for escalation in the BART submittal. Therefore this cost was not included 

in the revised cost.

Allowance for Funds Used During Construction (AFUDC) $3,729,453 $0

The 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 9%

Annual Cost

S&L/SRP 

Calculated Cost EPA Revised Cost Comments

Fixed Annual Costs (FAC)

Operating labor $0 $0

The facility did not present any costs associated with operating labor. Therefore no operating labor cost was 

included in the revised annual costs.

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.

Subtotal FAC $395,000 $395,000

Variable Annual Costs (VAC)

Anhydrous Ammonia Reagent $1,035,000 $1,035,000

The 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.

Auxiliary and ID fan power $1,809,000 $1,809,000

The 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.

Steam $71,000 $71,000

The 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.

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. 

Subtotal VAC $3,587,000 $3,587,000

Total Direct Annual Cost (DAC) $3,982,000 $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.

Subtotal IAC $21,619,000 $16,074,549

Total Annual Cost $25,601,000 $20,056,549 DAC + IAC 0.216571661

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.
Total Capital Cost (EPA's revisions)

SCR 3+1 reactor SCR 2+1 reactor SNCR + PerNOxide ($40/KW estimate from URS) 2012 SRP cost for SNCR

Unit 1 $137,527,000 $127,527,000 $30,000,000 $13,066,667

Unit 2 $188,585,000 $178,585,000 $30,000,000 $13,066,667

Unit 3 $170,294,000 $160,294,000 $30,000,000 $13,066,667

TOTAL $496,406,000 $466,406,000 $90,000,000 $39,200,000

Total Annual Cost (EPA's revisions) Total Annual Cost Annual Cost w/o O&M

3+1 reactor 2+1 reactor SNCR+PerNOxide (capital recover + annual maintenance cost = 1% of capital costs) 2012 SNCR cost at 7%

Unit 1 $16,963,576 $16,019,647 $3,131,788 $1,233,401

Unit 2 $21,783,090 $20,839,161 $3,131,788 $1,233,401

Unit 3 $20,056,549 $19,112,620 $3,131,788 $1,233,401

TOTAL $58,803,215 $55,971,427 $9,395,363 $3,700,203

Total Annual O&M Costs

3+1 reactor

Unit 1 $3,982,000

Unit 2 $3,982,000

Unit 3 $3,982,000

TOTAL $11,946,000

Ann Cap $46,857,215
Total Annual Cost Annual Cost w/o O&M Total Annual Cost

2012 SNCR at 7% 2012 SNCR cost at 9.8% 2012 SNCR at 9.8%

$7,566,734 $1,513,907 $7,847,240

$7,566,734 $1,513,907 $7,847,240

$7,566,734 $1,513,907 $7,847,240

$22,700,202 $4,541,722 $23,541,721

For Economic Modeling - SCR Costs

Total Capital Cost Annual O&M Cost

Unit 1 $137,527,000 $3,982,000

Unit 2 $188,585,000 $3,982,000

Unit 3 $170,294,000 $3,982,000

For Economic Modeling - SNCR Costs

Total Capital Cost Annual O&M Cost

Unit 1 $13,066,667 $6,333,333

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