BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
IN THE MATTER OF:
SECTION
27 PROPOSED RULES FOR
NITROGEN OXIDE (NOx) EMISSIONS
FROM STATIONARY RECIPROCATING
INTERNAL COMBUSTION ENGINES
AND
TURBINES: AMENDMENTS
TO 35 ILL.
ADM.
CODE
PARTS 211 AND 217
R07-19
(Rulemaking - Air)
NOTICE OF FILING
TO: Mr. John
Therriault
Assistant Clerk of the Board
Illinois Pollution Control Board
100 West Randolph Street
Suite 11-500
Chicago,
Illinois 60601
(VIA ELECTRONIC
MAIL)
Mr. Tim Fox
Hearing Officer
Illinois Pollution Control Board
100 West Randolph Street
Suite 11-500
Chicago, Illinois 60601
(VIA ELECTRONIC
MAIL)
(SEE PERSONS ON ATTACHED SERVICE LIST)
PLEASE TAKE NOTICE that I have today
filed
with the Office of the Clerk of the
Illinois Pollution Control Board the PRE-FILED TESTIMONY OF KEVIN L.
WAGNER, copies of which are herewith served upon you.
Respectfully submitted,
ILLINOIS MUNICIPAL ELECTRIC AGENCY,
By:
/s/
N. LaDonna Driver
N. LaDonna Driver
Dated: March 26, 2008
N. LaDonna Driver
HODGE DWYER ZEMAN
3150 Roland Avenue
Post Office Box 5776
Springfield, Illinois 62705-5776
(217)
523-4900
T HIS FILING SUBMITTED ON RECYCLED PAPER
Electronic Filing - Received, Clerk's Office, March 26, 2008
CERTIFICATE OF SERVICE
I, N. LaDonna Driver, the undersigned, hereby certify
that I have served the attached
PRE-FILED TESTIMONY
OF KEVIN L. WAGNER upon:
Mr. John Therriault
Assistant Clerk of the Board
Illinois Pollution Control Board
100 West Randolph Street
Suite
11-500
Chicago, Illinois 60601
via electronic filing and by depositing
said documents in the United States Mail, postage
prepaid, in Springfield,
Illinois, on March 26, 2008; and upon:
Mr. Tim Fox
Hearing Officer
Illinois Pollution Control
Board
100 West Randolph Street
Suite 11-500
Chicago, Illinois 60601
Rachel
L. Doctors, Esq.
Illinois Environmental Protection Agency
1021 North Grand Avenue East
Post Office Box 19276
Springfield, Illinois 62794-9276
Renee Cipriano, Esq.
Kathleen C. Bassi, Esq.
Joshua R. More, Esq.
Stephen J. Bonebrake, Esq.
Schiff Hardin, LLP
6600 Sears Tower
233 South Wacker Drive
Chicago,
Illinois
60606-6473
via electronic
mail on March 26, 2008.
/s/
N. LaDonna Driver
N. LaDonna Driver
IMEA/Fil/NOF-COS- Wagner
Testimony
BEFORE THE ILLINOIS POLLUTION CONTROL
BOARD
IN THE MATTER OF:
SECTION 27 PROPOSED RULES FOR
NITROGEN OXIDE (NOx) EMISSIONS
FROM STATIONARY RECIPROCATING
INTERNAL COMBUSTION ENGINES AND
TURBINES: AMENDMENTS TO 35 ILL.
ADM. CODE PARTS 211 AND 217
R07-19
(Rulemaking - Air)
PRE-FILED
TESTIMONY OF KEVIN L. WAGNER
NOW COMES the Illinois Municipal Electric Agency ("IMEA"), by one of its
attorneys, N. LaDonna Driver of
HODGE DWYER ZEMAN, and submits the following pre-
filed testimony of Kevin L. Wagner for presentation at the April 9, 2008, hearing scheduled
in the above-referenced matter:
Testimony of
Kevin L. Wagner
My name is Kevin L. Wagner. I am employed by IMEA as the Director of
Engineering. I am
here today to provide information on how the Proposed Rule will affect
IMEA and its members.
Educational Background and Professional Experience
I graduated from Brigham Young University in 1977 with a Bachelor of Science
Degree in Electrical Engineering. Immediately following graduation, I started working for
Bechtel Power Corporation ("Bechtel")
in Houston, Texas. At Bechtel, I was an Assistant
Engineer, involved in coal-fired power plant design. In 1979, I joined the Missouri Utilities
Company ("Missouri Utilities"),
located in Cape Girardeau, Missouri. While at Missouri
Utilities, I was an Assistant Engineer, supporting various electric utility distribution system
projects. I worked at Missouri Utilities until
1983, at which time I accepted employment
with Central
Illinois Public Service Company ("CIPS") in Springfield, Illinois. I worked at
CIPS for 9 %2 years
in various engineering positions,
including transmission and generation
planning, protective
relaying and system operations. I was then
hired as a Staff Engineer
with IMEA, in January of 1993. Shortly thereafter,
I became IMEA's Manager of
Engineering. In that capacity,
I was responsible for the planning, property acquisition
and
construction oversight
of transmission line and diesel generating
plant projects for IMEA.
My title was changed to Director of Engineering
in 2004. 1 have been a Licensed
Professional Engineer
in the State of Illinois since 1990.
Duties and
Responsibilities in Present Position
As Director of Engineering,
I oversee the work of the IMEA's engineering staff,
which
provides technical support for the planning, implementing
and maintaining of IMEA's
power supply resources, transmission agreements
and member delivery point facilities.
These responsibilities
include the capacity testing and permitting of IMEA
and IMEA
member-owned peaking generators (that consist primarily
of small diesel units) dedicated to
the IMEA's use.
IMEA Background
The Illinois Municipal Electric Agency
was created in 1984 and its primary purpose
is to provide
for the wholesale electric power supply needs of its
members, all of which are
municipally-operated electric distribution systems
within the State of Illinois. These systems
are units of local
government that own, operate and maintain the electric distribution
system
that serves their citizens. IMEA is governed by
a board of directors, with one director
representing each member community.
It operates on a not-for-profit basis and employs a
full-time professional
staff.
Prior to
the creation of the Agency, the municipally-operated electric
systems
provided for their wholesale power needs primarily
in one of two ways. They either
purchased wholesale
power for resale to their citizens from the investor-owned electric utility
in the area in which they were located, or they generated their own electricity
from power
plants located within the
community. The generation in the local power plants was, most
generally, driven by large diesel, or dual-fueled natural gas and diesel,
reciprocating internal
combustion engines.
Economics related to fuel costs in the late 1970s and early 1980s prompted most of
the communities operating these local plants to
migrate to purchasing power from wholesale
providers.
The municipal power plants were then reserved generally for backup use in case
of an interruption of wholesale power deliveries over the electric transmission system.
As noted earlier, IMEA was created
to pool the wholesale power needs of municipal
electric systems and to acquire, through ownership or contract, the power these systems need
to serve their citizens. IMEA currently
has long-term power supply contracts with 30 of the
state's municipally-operated electric systems. These systems vary greatly
in
size.
IMEA's
members include St. Charles (population 31,000)
in suburban DuPage and Kane Counties
and Winnetka (population
12,000) in Cook County. However, the majority of the members
are of 10,000 population or fewer and are located throughout the state.
To serve its communities, IMEA has assembled a power supply
that includes
ownership
of base load and peaking generation, long-term power supply contracts for
capacity and energy and other such arrangements as are
needed to fulfill the Agency's
responsibilities. The members currently require over 700 MW of generating capacity to
serve their combined population of approximately
180,000 citizens.
Specifically, IMEA owns a portion
(12.12%) of Trimble County Unit 1, a base loaded
500
MW coal-fired steam power plant facility located northeast of
Louisville, Kentucky. It is
operated by the majority owner of
the facility, Louisville Gas and Electric Company. IMEA
also holds long-term contracts for wholesale electricity with
Ameren Energy Marketing, the
power marketing arm of Ameren Corporation.
IMEA also enters into shorter-term
arrangements to
meet seasonal requirements and makes purchases on a time to time basis
from the power markets that operate in Illinois. In addition
to these resources, IMEA owns
and operates 10 high speed, remotely-controlled
diesel engine generators. Each of these
peaking
units has a nameplate rating of 1825 kilowatts. These units are located
in
the
IMEA
member communities of Highland, Waterloo and
Flora and are currently permitted with the
respective
member's local generation.
To assure the economic and reliable
delivery of power supply to its members, IMEA
operates a 24-hour
a day, seven-day a week operations center within its Springfield
headquarters. The operations center monitors each member's power
requirements on a real-
time basis, forecasts member load and schedules
the delivery of the needed power.
Power is normally delivered to the members through the high voltage electric
transmission grid and, in most cases, through the lower
voltage sub-transmission system of
power lines and substations
owned and operated by a variety of corporate entities, such as
Exelon and Ameren Corporation. The high voltage grid
is administered by two Regional
Transmission Organizations
("RTOs") known as the Midwest Independent System Operator
("MISO") and the PJM regional transmission organization ("PJM"). Their job
is to
oversee
use of the transmission grid and
assure its availability to all who wish to use it on a non-
discriminatory
basis. Along with their responsibilities for transmission services, MISO and
PJM both operate power markets in which wholesale power
is bought and sold. In Illinois,
MISO has a
footprint that takes in most of the state south of Interstate 80. PJM's footprint is
primarily north of Interstate 80.
How the IMEA and IMEA Member-Owned Peaking Generation Units Fit into IMEA's
Power Supply
As I noted earlier, a number of IMEA's members continue to maintain and operate
locally-sited stationary reciprocating internal combustion generating units. Two of the
members have added small combustion turbine generating units to this mix. As a part of its
power supply arrangements, IMEA has entered into contractual agreements with
these
members for the use of
their
units
as
a part of
the
overall
Agency power portfolio. These
units can be called on to operate by IMEA's operations staff and they are considered an
integral part of the
Agency's
power supply.
The vast majority
of these units are permitted
under Title V permits.
The member-owned units, along with the IMEA-owned diesels, are used in two ways.
First, they are operated for economic reasons. That is, when power purchases through either
MISO or PJM are more expensive than the cost to operate the member units, IMEA's
operations center will ask for the operation of enough member units to fill the need. This
typically occurs during periods of peak summer demand. Such operation provides an
important cap during periods of peak demand on power costs for IMEA's members by
allowing the group to avoid market power purchases during high cost periods. Since peak
usage typically occurs less than 10% of the year, NOx emissions are minimal from operation
of these units during periods of peak demand. Even when the member-owned units are not
running, having them simply available to operate helps reduce the power supply cost for the
members who would otherwise be at the mercy of a capacity market that is expected to
experience a 6-fold price increase over the next five years.
Secondly, the member units can be used for system reliability and support in the
event of a critical transmission or sub-transmission system outage. An example of system
support is when one of the transmission system owners or RTOs asks for our member units to
operate to help reduce the loading of transmission grid facilities or to keep system voltage at
acceptable levels. Unacceptably
low
voltage can damage customer equipment and lead to a
collapse of the power delivery system.
These units are also particularly vital to members who are served radially by a single
transmission line or transformer. Such members are subject to a total power outage in their
communities as a result of weather-related or other types of damage to the radial facilities. In
some circumstances, a weather-related transmission outage can stretch for
days or weeks. If
a transmission equipment failure involves a single substation transformer that supplies the
member,
the outage can sometimes extend several months. These lines and transformers
must also be taken out of service periodically for routine maintenance. Under such
circumstances, the local generation is the only means of providing power to the municipal
system's customers. Similarly, members
with limited capacity backup transmission lines
may be required to run local generation for extended periods to prevent equipment overloads
or low voltage during outages that affect their primary
transmission feed.
As an example of the vital nature of these units in emergency circumstances, you
need look no farther than the experiences of one of our member communities in the last year.
This municipality is located on a radial transmission line fed from the Ameren bulk
transmission system and is one of the IMEA communities that maintains a power generation
facility comprised of stationary reciprocating internal combustion generating
units.
In calendar year 2007 alone, this member suffered six transmission related
outages
that required the operation of their power generating units. The most serious occurred on
December 11, when an ice event took down a portion of the transmission
system serving the
city. The municipal system brought on their generation and was forced to operate the units
for 48 hours, until ice damage to the transmission lines could be repaired and the lines
put
back into service.
As recently as March 5, 2008, the
same community experienced an outage caused by
an industrial accident on the Ameren system. In this case the city was forced to generate
from
10:30 AM until 7:00 PM when transmission service was restored.
IMEA's Involvement in the Rulemaking
Process
Both economics and reliability are of critical importance to our members.
With those
issues in mind, IMEA has held a number
of meetings with representatives of the Illinois
Environmental Protection Agency to discuss the Proposed Rule. As originally proposed,
the
Rule impacted peaking generation
owned by IMEA and IMEA members located throughout
the entire state. The scope of the Rule, as currently proposed, has subsequently
been
modified
to affect only those plants located in the nonattainment areas. However, IMEA's
general concerns continue to relate to the Proposed
Rule's impact on available operation of
the affected members' generating units, both because of their peaking use and most
particularly because
of the members' concerns over their ability to operate for system support
or during transmission outages.
IMEA found the meetings to be productive
in that IEPA staff agreed to modifications
and clarifications
that went a long way toward addressing IMEA's concerns.
I will outline
our understanding of the Proposed Rule's key provisions
for IMEA and its members. The
first such
provision is Section 217.388(c). This section allows units
that would otherwise be
subject to the Proposed Rule's emission
requirements to be in compliance with the Proposed
Rule if they are operated
as low usage units.
Low usage units are defined in one of two ways. First,
low usage units may take a
collective federally enforceable emission
limit
of
100 tons per year of NOx. Units that
qualify
for an exemption from the Proposed Rule's requirements and units that are
complying with the Proposed Rule's emission
requirements are not counted under this
emission limit. Second,
reciprocating engines may take a federally enforceable limit of 8
million brake horsepower-hours annually in the aggregate
and turbines may take a federally
enforceable limit of 20,000
Megawatt-hours annually in the aggregate. IMEA understands
that this second low usage option allows a site with both reciprocating
engines and turbines
to operate the reciprocating
engines up to the 8 million brake horsepower-hours limit and the
turbines
up to the 20,000 Megawatt-hours annual limit and still be considered low usage
units. This approach provides important flexibility for
IMEA's members, which IMEA
strongly supports.
IMEA must note that while the low usage provision
is an important compliance
option,
it will, in some cases, impose severe restrictions upon the members' units as currently
permitted. Many of the IMEA members' units, particularly the older
units, will be forced to
operate as low usage units because
it is economically not feasible to modify these units to
comply with
the emission requirements of the Proposed Rule, particularly
given that these
units operate sporadically.
Some of
the newer member-owned diesel units are of a high speed design
and,
according to our understanding of the manufacturer's
literature, may be capable of operating
within the 660 ppmv NOx
(corrected to 15% dry 02) standard of the Proposed Rule. IMEA
assumes
the compliance strategy under the Proposed Rule will differ for each member with
generation. Those members with
newer high speed units that may be capable of complying
with the proposed
emission limits may operate those units under the provisions in Section
217.388(a), along with the accompanying
testing and monitoring requirements. The balance
of the affected
member units that are unlikely to be emission compliant or are not feasible to
modify to bring into compliance with the emission limits of Section 217.388(a),
will most
likely operate under the Proposed
Rule's low usage provisions at Section 217.388(c).
Members with municipal plants that consist of a combination of emission-compliant and low
usage-compliant units may operate the units respectively
under Section 217.388(a) and
Section
217.388(c).
To understand the full impact of the Proposed
Rule, it is important to understand that
the average
annual plant capacity factor of the nonattainment area IMEA member power
plants, as currently permitted, is slightly less than 13%. That is, the units, on average, are
permitted to operate at full capacity
for about 13% of the total hours in a year or
approximately 1130 hours. Permitting at this level was chosen as the best compromise
between permitting costs and maintaining available hours of operation. This
number
of
operational hours provides
the ability to meet both the peak dispatch requirements and the
unanticipated system support or power emergency situations.
Operating under the most favorable mix of provisions
in
the Proposed Rule as
noted
above, the average annual plant capacity factor of the nonattainment area IMEA member
power plants would decrease to approximately 11.5%, which equates to the units, on average,
being able to run about 1000 hours in a year. If the newer high speed units in our members'
fleets prove unable to feasibly meet the emission requirements under the
Proposed Rule as
noted above, meaning all of the affected units would have to operate as low usage units
under Section 217.388(c), then the average annual plant capacity factor for this group would
decrease to slightly less than 9%, meaning the units, on average, would be able to run about
780 hours in a year. However, for one particular member in this group, the available annual
operating hours for its units could drop to as little as 273 if its newer high speed units could
not meet the emission requirements under the Proposed Rule. This
would equate to an
annual capacity factor of only 3%. Without the option of the low usage exemption, another
member
in
the
group,
which has
only older slow speed diesels
and likely faces
prohibitive
costs to replace them or apply control technologies, would bear a particular hardship. It
should
be
noted that
both of these
members
also
have
very
limited
backup transmission
capacity and must rely heavily on their local generation to maintain service if they lose their
primary feed.
An emissions averaging plan offers little compliance relief due to the uniformity in
design and operation among most municipal units. Thus, the low usage designation is critical
for
our
members to
be
able to comply with this Proposed Rule. A low
usage designation
avoids costly and possibly unfeasible retrofit controls, while assuring proper unit function
due to the
inspection
and
maintenance requirements at Section 217.388(d). Further, low
usage units must document compliance pursuant to the recordkeeping requirements at
Section 217.396(d) and submit reports, as necessary, pursuant
to
Section
217.396(d)(3) and
217.392(c)(3).
Low usage units do not have to follow the Proposed Rule's
testing and monitoring
requirements. The benefit of this provision
to our members is significantly balanced with the
substantial
reduction in permitted capacity that some members will likely face. IMEA has
expressed concern that this cut in capacity may have dire consequences in the rare
circumstance that a low usage
limit would need to be exceeded in response to an emergency
situation. Such an emergency would include interruptions of wholesale power deliveries
from the transmission
grid due to natural disasters, system maintenance or other events
beyond the control of the member, such as noted earlier in the example.
Our concern has been addressed by Section 217.392(c),
which provides that
any
affected unit
may, under certain circumstances specified in the Proposed Rule, use NOx
allowances to meet the compliance requirements in Section 217.388. IMEA understands that
this option is available to IMEA's members
in
the event
such member is required to operate
in exceedance of its emission limits or its annual low usage limits due to a system
emergency, and the NOx allowance provision has not been utilized for
more than two
events
in any rolling five-year period. The NOx allowance provision may be utilized for low usage
units that are under the 100 ton/year NOx emission limit, as well as those units utilizing the
low usage operating
hours limits. For those units using the operating hours low usage limits,
the hours exceedance would be converted to a corresponding amount of NOx emissions that
may then be compensated for in NOx allowances.
The NOx allowance component is crucial for our members to maintain system
reliability. The low usage compliance option would simply not be workable
without
the
NOx allowance provision. Our members would not be able to
limit
their
units under the low
usage designation without the flexibility
to operate as needed in an emergency situation.
Further, the NOx allowance option inherently assures that any impact caused by the limit
exceedance is addressed by retiring the corresponding amount
of emissions from the NOx
allowance market.
Note that NOx emissions from member
municipalities covered by the Proposed Rule
are already
minor, due to the fact that generation operates on an as-needed basis. A summary
of the average NOx emissions over the last five years, from member municipality units that
would be subject to the Proposed Rule, is as follows:
Municipality
Average Annual NOx Emissions (ton/yr)
2003-2007
Freeburg
6.32
Highland
17.27
Mascoutah
4.18
Winnetka
5.94
Waterloo
13.42
This is based on actual unit run times and "not to exceed" NOx lb/hr permitted
emission rates. Clearly, the IMEA and IMEA member peaking units
affected
by
the
Proposed Rule make a negligible contribution to the NOx emissions in the State of Illinois.
The historically low average emissions experienced by our members translate into an
unacceptably
high cost per ton of NOx removed if currently available control technologies
are applied in an attempt to bring the older units into compliance with
the Proposed Rule's
emission
limits. Though IMEA's actual peaking generator usage may be very low, the
critical reliability concerns that directly affect the health and safety of our member
12
communities make it essential
that we nonetheless maintain the ability to operate, and
subsequently emit NOx, for much greater periods of
time than we typically demonstrate.
Consequently, provisions
for low usage and other operating considerations, such as those
identified in Section 217.392(c) of the Proposed Rule, which allow the purchase of
NOx
allowances if unforeseen circumstances
occasionally require emission exceedances, are
considered by IMEA to be absolutely
essential to any Rule under which we could operate.
I appreciate the opportunity to share IMEA's comments on this Proposed
Rule. I
would be happy to answer
questions regarding my testimony.
IMEA reserves the
right to supplement this pre-filed testimony.
Respectfully submitted,
By: /s/ N. LaDonna Driver
N. LaDonna Driver
Dated: March 26, 2008
N. LaDonna Driver
HODGE DWYER
ZEMAN
3150
Roland Avenue
Post Office Box 5776
Springfield, Illinois 62705-5776
(217) 523-4900
IMEA:001/FiUNOx Rule IPCB Comments-
Wagner Testimony 03
