RECEIVED

CLERK’S

OFFICE

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD STATE

NOV

OF1W1VOIS

0 6 2000

THE MATFER OF:

)

Pollution Control

Board

)

NATURAL GAS-FIRED PEAK-LOAD

)

ROl-lO

FACILITIESELECTRICAL(PEAKERPOWERGENERATINGPLANTS)

))

NOTICE

TO:

Dorothy Gunn, Clerk

illinois Pollution Control Board

James R. Thompson Center

100 West Randolph, Suite 11-500

Chicago, IL 60601

Amy L. Jackson, Esq.

Hearing Officer

Illinois Pollution Control Board

600 South Second Street

Suite 402

Springfield, IL

62704

PLEASE TAKE NOTICE that I have today filed with the Office of the Clerk of Pollution

Control Board the

Comments of Midwest Ceneration EME, LLC, a

copy ofwhich is herewith

served upon you.

Respectfully Submitted,

Midwest Generation EME, LLC

By:

(~~ej~itsAttorneys

Dated:

November 6, 2000

Mary A. Gade

Cynthia A. Faur

Sonnenschein Nath & Rosenthal

8000 Sears Tower

233 S. Wacker Drive

Chicago, IL 60606

312/876-8000

11164344

THIS FILING IS

BEING SUBMITTED ON RECYCLED

PAPER

RECEIVED

CLERK’S

OFFICE

BEFORE THE ILLINOIS POLLUTION CONTROL

BOARD

NOV 062008

STATE OF IWNOIS

THE MATFER

OF:

Pollution Control

Board

NATURAL GAS-FRED PEAK-LOAD

)

RU1-10

ELECTRICAL POWER GENERATING

)

FACILITIES (PEAKER PLANTS)

)

Comments of Midwest Generation EME, LLC

Midwest Generation EMil, LLC (“Midwest Generation”) hereby submits the following

comments in the Illinois Pollution Control Board’s inquiry hearings concerning the potential

environmental impact of natural gas-fired, peak-load electrical power generating facilities

(“peaker plants”).

Midwest Generation is anew company to Illinois with its headquarters in Chicago. It is a

subsidiary of Edison Mission Energy, which is one of the largest independent power producers in

the world with an installed capacity of over 27,000 megawatts of electrical generation. On

December 15, 1999, Midwest Generation purchased the fossil fuel-fired assets of

Commonwealth Edison (“CornEd”). These assets included coal-fired power plants located in

Chicago, Waukegan, Romeoville (Will County), Joliet, and Pekin (Powerton), Illinois. Midwest

Generation also acquired from Comild agas/oil-fired power plant near Morris, Illinois and9

natural gas peaking sites. Midwest Generation has an installed capacity of approximately 10,000

megawatts in Illinois

—

nearly 1,000 megawatts of which is existing peaking capacity. Midwest

Generation’s existing peaking capacity is acritical component of the overall supply ofelectricity

required to meet demand during peak periods.

While Midwest Generation is an independent power producer, it is currently

contractually obligated to provide power on demand to CornEd to serve CornEd’s customers.

Typically, the peaking units in Midwest Generation’s system are the last plants called upon to

provide power. These plants generally operate only a few hundred hours per year, but they are

an important defense against power outages andbrownouts. As demand for electricity continues

to grow, the need for additional generating capacity in the State is apparent.

To improve its ability to help ensure areliable supply of electricityin Illinois, Midwest

Generationhas applied to the Illinois Environmental Protection Agency (the “Agency”) for a

permit to install an additional 300 MW ofpeaking capacity at its existing Waukegan Generating

Station. Specifically, Midwest Generation has applied for a permit to construct 2 simple cycle

gas turbines, each equipped with dry low NOx combus!.ors for NOx emission control. These

peaking units will be subject to New Source Performance Standards (“NSPS”), which in this

case will be equivalent to Best Available Control Technology (“BACT”), and NOx emissions

from these units will be limited to less than40 tons per year.

As stated above, Midwest Generation intends to install these units at the Waukegan

Station as a modification ofthat existing source. Since purchasing the Waukegan Station from

CornEd in December of 1999, Midwest Generationhas commenced a project to significantly

reduce NOx emissions from that station. Midwest Generation has already installed control

equipment atthe Waukegan station which has reduced NOx emissions from the coal-fired

generating units at that station by

1,253

tons during this past ozone season and 2,300 tons

annually. When (lie NOx emission reduction project is completed, therewill be atotal emission

reduction of 4,000 tons annually and 2,000 tons during the ozone season. In permitting new

peaking capacity at the Waukegan station, Midwest Generation is not using any of these

emission reductions to offset emission increases from thenew peaking units. Instead, Midwest

Generation has elected to accept more stringent operating requirements on the peaking units

themselves. As a result, the net effect of all the projects that Midwest Generation is undertaking

-2-

or proposing at Waukegan

including the installationof 300 MW of new peaking unit capacity

would be to reduce nitrogen oxide emissions by almost 4,000 tons on an annual basis.

As stated above, Midwest Generationbelieves that additional generating capacity is

necessary in the State of Illinois to meet the growing demand for electricity. In these

proceedings, RichardBulley, Executive Director for the Mid-America Interconnected Network

(“MAIN”) testified that peakingplants have been responsible for keeping the electricity reserve

margin in the required 1 7-20

range. $~Transcript of the August 24, 2000 Hearing

(“August 24 Ilearing Transcript”), p. 317. With the increase in electrical demand, however, the

existing peaking capacity in Illinois, not including the new peaker plants that have been

proposed, would have reserve margins for 2001, 2002, and 2003 of 13

11,

and 10,

respectively significantly below the 17 percent reserve minimum.

Additional peaking

capacity is necessary to meet these reserve minimums and keep pace with increasing demand.

Midwest Generationis working to meet this increased demand in amanner that

minimizes environmental impacts, and it believes that under the existingregulatory framework

in Illinois, Midwest Generation and other entities can install new capacity in a manner that

recognizes environmental protection goals. With this preface in mind, Midwest Generation

would like to turn to the questions posed by the Board in this inquiry hearing.’

Do peaker plants need to be regulated more strictly than Illinois’ current air quality

statutes and regulations provide?

Midwest Generation does not believe

that peaker plants

warrant more stringent regulation

than currently provided in existing and proposed Illinois requirements. New peaker plants

constructed in Illinois are required to submit detailed information, including modeling data, to

As several other commenters have addressed the regulatory regimes applicable to peaker plants in other states,

Midwest Generation has not addressed that question in its comments.

-3-

the Agency in order to obtain construction permits for their project. As both Chris Romaine and

Kathleen Bassi of the Agency testified in these proceedings, based upon the modeling performed

and the information provided in the applications, peaker plants do not threaten air quality. See

Transcript ofthe August 23, 2000 hearing (“August 23 Hearing Transcript”), p. 101 (testimony

of Chris Romaine); Transcript ofthe October 6, 2000 hearing (“October 6 Hearing Transcript”),

p. 204 (testimony of Kathleen Bassi); ~ ~

Agency’s Response to Questions, p. 6.

While there has been much focus in these hearings on the permitted N-Ox-emission- levels

for many of the new peaking units being constructed in the this State, it is important to note that

these new peaking units are required to meet the NSPS for Stationary Gas Turbines, 40 CFR §

60.330 et. ~q This NSPS contains requirements which limit the amount ofNOx and S02 that

can be emitted from peaking units. In the case of Midwest Generation’s proposed peaking units

in Waukegan, Midwest Generation is installing BACT-equivalent technology to comply with

NSPS requirements.

Additionally, the construction permits issued for the peaking units contain both short and

long-term emission limitations. Where a peaking unit is located at an existing facility, the

requirements can be more stringent. In the case ofMidwest Generation’sproposed peaking units

to be installed at its Waukegan station, Midwest Generation accepted an annual NOx limitation

of approximately 39 tons on emissions from its two peaking units combined to ensure that the

addition ofthese units would be treated as a minor modification to the Waukegan station. Since

Midwest Generation significantly reduced emissions from the Waukegan station in the past year,

it could have used some of those emission reductions to offset emissions from the new peaking

unit

—

thus enabling the peaking unit to operate for more hours in the year. Midwest Generation,

however, elected not to use any ofthese emission reductions to offset the peaking units.

-4-

Peakerplants generally operate a few 100 hours per year. In fact, in 1999, the peaking units

currently owned by Midwest Generation ran only 2 of the time or less than 200 hours.

The peaker plants proposed for construction in Illinois burn natural gas, which is the

“cleanest” form of fossil fuel. The primaryemissions from these plants will be NOx, but peaker

plants will only be a smallportion of the NOx emitted in the State. Other NOx sources,

including boilers and mobile sources, like cars, account for a large percentage ofthe NOx

emitted in the State. For example, on-road sources accounted for 36 ofall the NOx emitted in

the State according to the Agency’s 1996 emission inventory.

With regard to water use, not all peaking units use a great deal of water. In fact, Midwest

Generation’s existingpeaking units, as well as those proposed to be installed at the Waukegan

station, use very little water. Midwest Generation does not believe that its peaking units have a

noticeable effect on the groundwater supply.

Finally, with regard to noise concerns, peaking units constructed in Illinois are subject to

stringent noise regulations which require the operators ofpeaking units to address noise issues.

As Greg Zak ofthe Agency testified, Illinois has been one of the most active states in regulating

noise, and all of the noise emissions associated with peaker plants will be addressed by the

existing noise requirements. $~August 23 Hearing Transcript, pp. 135, l98Jl99. Mr. Zak

further noted in his testirnony that the Agency has not received any noise complaints with regard

to the existing peaking units in Illinois. August 23 Hearing Transcript, pp. 136-137. Midwest

Generationbelieves that the State’s noise requirements are sufficient to address any noise

concerns with peaking units. Given these noise requirements, Midwest Generation does not

believe that noise from these peaking units will constitute a unique threat.

-6-

3. Should new or expanding peaker plants be subject to siting requirements beyond

applicable, local zoning requirements?

Midwest Generation believes that while the Agency can provide technical expertise on

the air quality impacts ofpeaker plants, local governments are the best suited to make land use

determinations for theirjurisdictions. As the Agency Director, Tom Skinner testified, local

governments have the authority to deny siting approval for apeaker plant even ifthe Agency

grants aconstruction permit for the proposed project. See August 23 Hearing Transcript, p. 63.

Recent actions taken by localities, like the Village of Libertyville, to deny peaker plant

applications evidences this local authority.

Midwest Generationbelieves that in order for zoning requirements to be effective, the

source must be willing to work with local government and citizens to ensure that theyhave the

information that they needregarding the project and that the information is presented in an easily

understood form. Midwest Generation also believes that it is vital to conduct outreach in the

local community and address concerns raised by local citizens. Midwest Generation is

committed to working with local government officials and local citizens to address any questions

or concerns that may arise concerning its proposed projects, and it strives to be flexible when

addressing these concerns. Midwest Generation believes that where there is an open exchange of

information and concerns, local zoning requirements can be sufficient to address the siting of

peaker plants.

Ifthe Board determines that peaker plants should be more strictly regulated or

restricted, should additional regulations or restrictions apply to currently permitted

facilities or only to new facilities or expansions?

Should the Board propose that more stringent requirements be adopted for peaker plants,

Midwest Generation does not believe that such requirements should apply retroactively to

existing peakingunits. Midwest Generation currently operates 9 existing peaking sites

—

all of

which are located in sites that are zoned for that purpose or at existing power plants. These

-7-

peaker plants are a vital portion ofthe Illinois power supply. Generally, these peakers run only

during peakperiods when their ability to rapidly fire up is crucial to meeting demand and

maintaining reliability. In 1999, Midwest Generation’s peakers ran about 2 of the time or less

than 200 hours. As Chris Romaine testified, these existing plants “have had a critical place in

the power supply system as they have operated to meet the demand for electricity when the

demand was at its highest.” August 23 Hearing, p. 73. These peak periods can occur at any

time. Recently, peaker plants were called upon to provide additional power during anuclear

plant outage. If additional requirements were made applicable to these peakers, it could

significantly impact the ability of these units to provide needed power during peak periods.

Therefore, Midwest Generation believes that additional or retroactive regulation ofexisting

peaker plants is not warranted at this time.

-8-

Conclusion

In conclusion, Midwest Generation believes strongly that peaker plants perform a vital

function in meeting the electricityneeds of the citizens andbusinesses in Illinois. Without

additional peaking capacity in the State, it would be difficult, if not impossible, to maintain

reliable electric service. Peaker plants are the final source of supply and defense against power

outages and brownouts. While peak power is necessary in Illinois, Midwest Generation believes

that peaker plants can be constructed in a manner consistent with both the State’s generation

needs and environmental protection goals. Midwest Generation further believes that these needs

and goals can be met through the existing regulatory framework and that owners and operators of

peaker plants can work one on one with local governments and citizens to address concerns and

the needs of individual communities. Midwest Generation thanks the Board for the opportunity

to present these comments.

Respectfully Submitted,

MIDWEST GENERATION EMil, LLC

Dated: November 6, 2000

Mary A. Gade

Cynthia A. Faur

Sonnenschein Nath & Rosenthal

8000 Sears Tower

233 S. Wacker Drive

Chicago, IL 60606

312/876-8000

II 164344v2

THIS FILING IS BEING SUBMITTED ON RECYCLED PAPER

—9-

CERTIFICATE OF SERVICE

The undersigned, an attorney, certify that I have served upon the individuals named

below

true and correct copies of

Comments of Midwest Generation EME, LLC by

Messenger,

as indicated or First Class Mail, postage prepaid on November 6, 2000.

164344v2