Document ID: EPA-R08-OAR-2010-0406-0324
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2012-04-06T04:00Z

From:	Aaron Worstell/R8/USEPA/US
To:	Gail Fallon/R8/USEPA/US@EPA
Cc:	Jonah Staller/R8/USEPA/US@EPA
Date:	02/27/2012 03:40 PM
Subject:	Comparison of capital costs for Coal Creek Station

The purpose of this message is to clarify differences between SNCR costs at Coal Creek Station as supplied by GRE, as calculated in EPA's proposed action, and as revised for EPA's final action.

For background, in EPA's Control Cost Manual (6th Edition, January 2002), for both SNCR and SCR, direct capital costs (DCC) include the purchased equipment cost AND the direct installation costs.  That is, the cost of the equipment and the (direct) cost of installing that equipment are not treated separately.  Here is a quote from the CCM (Section 4.2, Chapter 1, p. 1-31):

"The direct capital cost estimate includes PEC such as SNCR system equipment, instrumentation, sales tax and freight. This includes costs associated with field measurements, numerical modeling and system design. It also includes direct installation costs such as auxiliary equipment (e.g., ductwork, compressor), foundations and supports, handling and erection, electrical, piping, insulation and painting. In addition costs such as asbestos removal are included." 

You would then add indirect capital costs of 20% (of DCC), plus project contingencies, and miscellaneous other (small) costs.  

By contrast, GRE used the CCM to calculate the DCC ($3,600,000 per GRE's 11/21/2011 report) and then:

(1)  Added 43% for instrumentation (10%), site specific and contractor markup (28%), and freight (5%).  Instrumentation and freight are already explicitly included in the DCC (per CCM quote above).  My opinion is that the DCC already includes the contractor markup as well.  GRE did not supply any documentation to justify site specific costs.

(2)  Arbitrarily applied a 1.6 retrofit factor.  The CCM manual algorithms are already based on retrofit applications.  Here is a quote from the CCM (Section 4.2, Chapter 1, page 1-4):

"The costing algorithms in this report are based on retrofit applications of SNCR to existing coal-fired, dry bottom, wall-fired and tangential, balanced draft boilers. There is little difference between the cost of SNCR retrofit of an existing boiler and SNCR installation on a new boiler [10]. Therefore, the cost estimating procedure is suitable for retrofit or new boiler applications of SNCR on all types of coal-fired electric utilities and large industrial boilers."

Also, to the extent that any retrofit factor should be used, it seems that it is redundant to the site-specific multiplier previous applied above.

(3)  Largely followed the remainder of the CCM to arrive at the total capital investment, including applying indirect capital cost of 21%.

EPA's costs conform to the Control Cost Manual, but were inadvertently not adjusted to 2009$ in the proposed action.

The table below shows the differences between the cost supplied by GRE (11/21/11), EPA's original costs, and EPA's costs adjusted to 2009$.  

See final EPA cost spreadsheet attached.

EPA SNCR Cost Analysis Coal Creek Station Unit 1 Final.xlsx  

Aaron J. Worstell
Environmental Engineer
U.S. Environmental Protection Agency - Region 8
Air Program - Mail Code 8P-AR
1595 Wynkoop Street
Denver, CO 80202
Phone:  303-312-6073
Fax:  303-312-6064