1286
    1
    ILLINOIS POLLUTION CONTROL BOARD
    AUGUST 18, 2006
    2
    3 IN THE MATTER OF:
    )
    )
    4 PROPOSED NEW 35 ILL. ADM. CODE 225 ) R06-25
    CONTROL OF EMISSIONS FROM LARGE ) (Rulemaking-Air)
    5 COMBUSTION SOURCES (MERCURY)
    )
    6
    7
    Report of proceedings had at the hearing in
    8 the above-entitled cause before HEARING OFFICER
    9 MARIE E. TIPSORD, called by the Illinois Pollution
    10 Control Board, pursuant to notice, taken before Martina
    11 Manzo, Certified Shorthand Reporter and Notary Public
    12 within and for the County of Cook and State of
    13 Illinois, at the James R. Thompson Center, 100 West
    14 Randolph Street, Assembly Hall, Chicago, Illinois,
    15 commencing at 1:40 p.m. on the 18th day of August,
    16 A.D., 2006.
    17
    18
    19
    20
    21
    22
    23
    24
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    1 APPEARANCES:
    2 ILLINOIS POLLUTION CONTROL BOARD
    3
    Ms. Marie E. Tipsord, Hearing Officer
    Mr. G. Tanner Girard, Acting Chairman
    4
    Mr. Nicholas J. Melas, Board Member
    Mr. Timothy J. Fox, Board Member
    5
    Ms. Andrea S. Moore, Board Member
    6 ILLINOIS ENVIRONMENTAL PROTECTION AGENCY
    7
    Mr. Richard E. Ayres
    Mr. Charles E. Matoesian
    8
    Dr. James E. Staudt
    Mr. John J. Kim
    9
    SCHIFF, HARDIN, LLP
    10
    Mr. Sheldon A. Zabel
    11
    Ms. Kathleen C. Bassi
    Sears Tower
    12
    233 South Wacker Drive
    Suite 6600
    13
    Chicago, Illinois 60606
    Phone: (312) 258-5540
    14
    THE CHICAGO ENVIRONMENTAL LAW CLINIC
    15
    Mr. Keith I. Harley
    16
    205 West Monroe Street
    Suite 400
    17
    Chicago, Illinois 60606
    Phone: (312) 726-2938
    18
    19
    20
    21
    22
    23
    24
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    1
    MR. ZABEL: This may not have been clear
    2 on the record in answer to a question Ms. Moore asked.
    3 Under the 1990 amendments, there really is no
    4 grandfathering. All existing sources under Title 4,
    5 the ASRE provision, had to be allocated allowances and
    6 had to comply. Grandfathering was generally used to
    7 refer to the distinction between new and existing
    8 sources in the 1970 amendments.
    9
    Thank you, Madam Hearing Officer.
    10
    HEARING OFFICER TIPSORD: Thank you.
    11
    UNIDENTIFIED SPEAKER: Madam Hearing
    12 Officer, I have a follow-up question from this
    13 morning's issue.
    14
    HEARING OFFICER TIPSORD: All right.
    15 Let's go ahead and do that then, Mr. Harley.
    16
    And do you have his card?
    17
    THE COURT REPORTER: No.
    18
    HEARING OFFICER TIPSORD: It's Keith
    19 Harley.
    20
    MR. HARLEY: I'll give you my card in a
    21 moment. For the record, my name is Keith Harley. Good
    22 afternoon.
    23
    Earlier in your testimony in
    24 response to a question that I asked you, you indicated
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    1 that installation of pollution control equipment had an
    2 expense of 1.5 to $3 million and may be regarded as a
    3 major capital improvement at some facilities --
    4
    MR. MARCHETTI: Yes.
    5
    MR. HARLEY: -- is that true?
    6
    You said it would be regarded as a
    7 major capital improvement at older and smaller
    8 facilities?
    9
    MR. MARCHETTI: Yes.
    10
    MR. HARLEY: Could you elaborate on what
    11 you mean by "older facilities," please?
    12
    MR. MARCHETTI: Well, what I would be
    13 referring to about older facilities and -- older and
    14 smaller facilities, I'd usually be referring to an
    15 older property in excess of 50 years old and a unit
    16 that would probably be less than 200 megawatts.
    17
    MR. HARLEY: I see. Is it correct to
    18 say, also, that for that category of facilities, the
    19 installation of pollution control equipment, you were
    20 also factoring in the ongoing operating costs as well
    21 related to the operation of the pollution control
    22 equipment?
    23
    MR. MARCHETTI: Yes.
    24
    MR. HARLEY: If capital improvement of
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    1 $1.5 million could be regarded as a major capital
    2 improvement, could any expense related to installing
    3 pollution control equipment at an older, smaller
    4 facility be regarded as a major capital improvement if
    5 it also involved operating costs on an ongoing basis?
    6
    MR. MARCHETTI: Operating costs in terms
    7 of operating costs of the pollution control equipment?
    8
    MR. HARLEY: Yes.
    9
    MR. MARCHETTI: Yes.
    10
    MR. HARLEY: So capital improvement at
    11 an older facility, 50 years old, 200 megawatts or less,
    12 that costs $1,000 but had ongoing operating costs could
    13 be regarded as a major capital improvement?
    14
    MR. MARCHETTI: If it happens -- If a
    15 capital improvement was only $1,000, I don't think it
    16 would be considered a major capital improvement.
    17
    MR. HARLEY: $100,000?
    18
    MR. MARCHETTI: I would think it would
    19 have to be, you know, in terms of -- it would have to
    20 be in terms of something that would (inaudible).
    21
    THE COURT REPORTER: I'm sorry --
    22
    HEARING OFFICER TIPSORD: We lost it.
    23
    MR. MARCHETTI: The range (inaudible).
    24
    MR. ZABEL: Are you having trouble
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    1 hearing?
    2
    THE COURT REPORTER: Yeah. I think it's
    3 the microphone, actually.
    4
    MR. ZABEL: Let's try it here. This
    5 one's a little more sensitive.
    6
    MR. HARLEY: So it would have to be an
    7 improvement that was in excess of $1 million?
    8
    MR. MARCHETTI: I would believe so.
    9
    MR. HARLEY: So one of the assumptions
    10 that's gone into the way that would you characterize
    11 the installation of pollution control equipment at many
    12 Illinois facilities that would be a major capital
    13 improvement would be anything in excess of $1 million
    14 that entailed ongoing operating expenses related to
    15 that pollution control equipment; is that correct?
    16
    MR. MARCHETTI: Yes. But, I mean, it
    17 would also take into account the age and size of it.
    18
    MR. HARLEY: Thank you. I believe we're
    19 prepared now to resume with other questions.
    20
    MR. AYRES: I would just like -- I have
    21 one question to ask.
    22
    HEARING OFFICER TIPSORD: Sure.
    23
    MR. AYRES: Could you tell us,
    24 Mr. Marchetti, what a typical yearly maintenance budget
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    1 might be for a 500 megawatt power plant?
    2
    MR. MARCHETTI: No, I can't.
    3
    MR. AYRES: I'm sorry?
    4
    MR. MARCHETTI: I cannot.
    5
    MR. AYRES: Okay.
    6
    HEARING OFFICER TIPSORD: Then I believe
    7 we're ready for Question Number 4.
    8
    MR. MARCHETTI: On page 5, we note that
    9 there was a five percent reduction in the output of
    10 Illinois coal generating units in the model as a result
    11 of the implementation of the Illinois rule. Please
    12 identify which Illinois units have their output reduced
    13 in the model compared to the CAIR/CAMR run. In
    14 addition, please provide the variable operating costs
    15 for each of these model runs.
    16
    This information is being provided
    17 in exhibit --
    18
    MR. ZABEL: That would be whatever the
    19 next number is.
    20
    MR. MARCHETTI: I think it's 121.
    21
    HEARING OFFICER TIPSORD: 121?
    22
    MR. MARCHETTI: I guess it would be 121.
    23
    MR. ZABEL: It's two exhibits.
    24
    HEARING OFFICER TIPSORD: I've been
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    1 handed a multipage document, a table captioned
    2 "Generation-CAMR." If there's no objection, I will
    3 mark this as Exhibit 121.
    4
    MR. MATOESIAN: Excuse me. Could I have
    5 a copy, please?
    6
    MR. ZABEL: I'm sorry.
    7
    HEARING OFFICER TIPSORD: Seeing no
    8 objection, we'll admit this as Exhibit 121.
    9
    MR. AYRES: I'll repeat the same thing I
    10 said earlier in that this is a fairly large chart which
    11 we requested sometime ago, and we now have been given
    12 it too late for any analysis on it.
    13
    MS. BASSI: Madam Hearing Officer, there
    14 was -- I have to object to his objection, I guess,
    15 because there was no -- there was no request in the
    16 written questions that anything be provided ahead of
    17 time. All we got were written questions.
    18
    MR. ZABEL: To expedite this, I will
    19 just incorporate our response to that from the last
    20 time.
    21
    HEARING OFFICER TIPSORD: And I
    22 understand your concern. I understand that this is,
    23 unfortunately, the pattern as a result of the quick
    24 turnaround in both testimony and questions in this
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    1 proceeding. And I would note that you obviously have
    2 the opportunity to file comments in response to
    3 anything.
    4
    MR. AYRES: That doesn't give us an
    5 opportunity to cross-examine him, but ...
    6
    HEARING OFFICER TIPSORD: I've been
    7 handed "Generation-Illinois Rule," which we will mark
    8 as Exhibit 122. If there's no objection -- Seeing
    9 none, it's Exhibit 122.
    10
    MR. AYRES: Could I ask a question about
    11 this material that's just been handed out?
    12
    MR. MARCHETTI: Sure.
    13
    MR. AYRES: Is this output from Charles
    14 River Association?
    15
    MR. MARCHETTI: I think they call it
    16 CRA (inaudible) --
    17
    MR. AYRES: CRA (inaudible) --
    18
    MR. MARCHETTI: -- (inaudible) --
    19
    THE COURT REPORTER: Excuse me. Hold on
    20 a second --
    21
    HEARING OFFICER TIPSORD: Mr. Ayres, you
    22 can't talk over him. You have to let him answer, okay,
    23 because she can't get everything.
    24
    MR. AYRES: Sorry.
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    1
    HEARING OFFICER TIPSORD: Let him speak,
    2 and then you could talk.
    3
    MR. MARCHETTI: I think for purposes of
    4 discussion, we'll just use CRA, and that would be
    5 appropriate.
    6
    MR. AYRES: That's fine.
    7
    Is this the output of the CRA
    8 model?
    9
    MR. MARCHETTI: Yes. That's the output
    10 they provided us for the CAIR/CAMR simulation for oil
    11 and gas in our units in Illinois as well as for the
    12 CAIR/Illinois simulation.
    13
    MR. AYRES: Okay. Thank you.
    14
    MR. MARCHETTI: Okay --
    15
    MR. AYRES: I'm sorry. Your answer to
    16 Question 4, I'm not quite sure --
    17
    MR. MARCHETTI: Okay. I've got to
    18 finish up one portion of it.
    19
    MR. AYRES: Okay. CRA International did
    20 not compute individual unit variable costs, so this
    21 information was unavailable.
    22
    Number 5: Table 1 found on page 6
    23 of your testimony shows a reduction not only in
    24 coal-fired generation but also in gas- and oil-fired
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    1 generation in the years 2009 and 2010 for the Illinois
    2 rule run relative to the CAIR/CAMR run. Please explain
    3 the result.
    4
    The increase in natural gas-fired
    5 generation by Illinois generators beginning in 2010 is
    6 attributed to the declining price of natural gas as
    7 modeled by CRA International.
    8
    Number 6 --
    9
    MR. AYRES: I wondered if I could ask a
    10 follow-up question on that.
    11
    I believe it's at that point where
    12 your testimony notes that the Illinois reduction -- the
    13 reduction in Illinois generation over this period
    14 represents a cost -- or a lost profit of about
    15 $672 million over a ten-year period.
    16
    MR. MARCHETTI: Yes.
    17
    MR. AYRES: What accounts for this?
    18
    MR. MARCHETTI: The principle --
    19 According to what I said in my testimony, two principle
    20 factors account for that drop in coal-fired generation,
    21 and that value is presented in what is some change in
    22 dispatch over some units, but the majority of the
    23 reductions in the coal-fired generation is a loss of
    24 export sales to -- export sales of electricity out of
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    1 Illinois.
    2
    MR. AYRES: If these plants are
    3 currently that profitable -- it think it was
    4 600 million over ten years -- what would make them shut
    5 down? What would make them stop generating? Why would
    6 a company do that?
    7
    MR. MARCHETTI: There's nothing in here
    8 that talks about shutting down units --
    9
    MR. AYRES: I'll withdraw that.
    10
    But why would the company not
    11 generate electricity with plants that are that
    12 profitable?
    13
    MR. MARCHETTI: It's basically that
    14 generation forecast from CRA that I could best try to
    15 answer that question based upon that. It's that the
    16 variable costs of the Illinois rule makes a unit exceed
    17 the wholesale energy price as being sold into the
    18 region. So basically they do -- the generation is
    19 reduced.
    20
    MR. AYRES: So this is really also a
    21 number which depends entirely on the choice of
    22 technologies, and costs of those technologies are given
    23 in the modeling that's been done by you and CRA and
    24 Mr. Evans (phonetic)?
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    1
    MR. MARCHETTI: Yes. Costs are based
    2 upon fuel and variable costs, and the capital is not
    3 included. Hopefully, you try to recover capital based
    4 upon whatever that last unit does to assess most
    5 technology costs.
    6
    MR. AYRES: Thank you.
    7
    MR. MARCHETTI: Number 5 -- Oh, I
    8 already did that.
    9
    Number 6, Number 6: Table 4 found
    10 on page 8 of your testimony shows a cumulative
    11 annualized compliance cost for mercury controls of
    12 2.63 billion for the Illinois rule for the years 2009
    13 to 2018. The total capital investment was
    14 1.77 billion. Please identify the capital recovery
    15 factor used in this analysis. Please identify the
    16 itemized annualized cost in detail and any increase in
    17 operating costs included in this number.
    18
    The fixed charge rates that were
    19 utilized are included --
    20
    MR. ZABEL: Excuse me. Do you want this
    21 one first?
    22
    MR. MARCHETTI: No, the fixed charge
    23 rates.
    24
    MR. ZABEL: Let's get this out first,
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    1 and then you can continue.
    2
    HEARING OFFICER TIPSORD: I have "Fixed
    3 Charge Rates by Unit," which we'll mark as Exhibit 123
    4 if there's no objection.
    5
    MR. ZABEL: 123, Madam Hearing Officer?
    6
    HEARING OFFICER TIPSORD: Yes.
    7
    MR. ZABEL: Okay. Now continue.
    8
    THE COURT REPORTER: Can we turn that
    9 mike off?
    10
    HEARING OFFICER TIPSORD: You know what?
    11 With the mike -- We'll have to switch mikes because
    12 with my cough, they can't hear him over here. We'll
    13 switch microphones again. They can't hear him on the
    14 other side of the room without the mike.
    15
    THE COURT REPORTER: It's too muffled.
    16
    HEARING OFFICER TIPSORD: We'll try this
    17 one. We've had problems with mikes all week. But,
    18 yeah, they can't hear him across the room without a
    19 mike. We tried that this morning --
    20
    THE COURT REPORTER: It's just real
    21 muffled.
    22
    HEARING OFFICER TIPSORD: Mr. Zabel, I
    23 didn't get one of those.
    24
    Okay. "Fixed Charge Rates by Unit"
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    1 is admitted as Exhibit 123, and "Illinois Rule Totals,"
    2 if there's no objection, it will be marked as
    3 Exhibit 124. Seeing none, it's Exhibit 124.
    4
    MR. MARCHETTI: The fixed charge rates
    5 that were utilized are included at the unit level in a
    6 document prepared as an exhibit. This rate not only
    7 includes the annual capital charge or amortized payment
    8 but also includes the costs for insurance and taxes
    9 when applicable. There are different fixed charge --
    10 FCRs, or fixed charge rates, for the class of
    11 generator -- investor, slash, merchant, cooperative,
    12 and public -- and the recovery period for these rates
    13 is 15 years. The breakout of the annualized capital
    14 costs, fixed and variable O&M costs for all Illinois
    15 generators, we have also prepared an exhibit which that
    16 would be 124.
    17
    MR. ZABEL: 124.
    18
    MR. MARCHETTI: Number 7: On page 13
    19 you conclude that the Illinois rule would increase the
    20 cost of operating the state's coal-fired facilities by
    21 $200 million per year. Please explain this
    22 statement -- I'm reading the question.
    23
    MR. ZABEL: I'm sorry.
    24
    MR. MARCHETTI: Please explain this
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    1 statement, identifying the operating costs to which you
    2 refer.
    3
    This is simply done by dividing the
    4 cumulative $2 billion by ten years for the years
    5 between 2009 and 2018, which yields $200 million per
    6 year annualized costs. This figure is comprised of the
    7 annual capital charge for control technology, annual
    8 fixed and variable O&M costs for control technologies,
    9 changes in annual fuel costs due to compliance and
    10 allowance purchases minus allowance sales. Of
    11 particular note, this 200 million per year is over and
    12 above what Illinois generators would pay for CAIR and
    13 CAMR.
    14
    HEARING OFFICER TIPSORD: Mr. Ayres.
    15
    MR. AYRES: Is there -- I don't want to
    16 interrupt.
    17
    MR. MARCHETTI: I finished. Go ahead.
    18
    MR. AYRES: Okay. Is there anyplace in
    19 your testimony where you have indicated what all these
    20 charges are? You've added to your testimony with this
    21 answer to that, correct?
    22
    MR. MARCHETTI: In terms of charges --
    23
    MR. AYRES: The annualized ...
    24
    MR. MARCHETTI: The annualized
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    1 compliance costs?
    2
    MR. AYRES: Yes, exactly.
    3
    MR. MARCHETTI: Okay. There is -- In
    4 the testimony, there's cumulative numbers, and then
    5 there is also a -- in there as well, there is some -- I
    6 don't know what the page is specifically, but there's a
    7 discussion or some sentences to indicate 200 million.
    8
    MR. AYRES: And now you've given a
    9 number of subcategories for that total figure that
    10 you're using.
    11
    Can you supply us with information
    12 as to how much of these -- of the annualized costs'
    13 total is broken -- or is coming from each of the
    14 categories that you describe?
    15
    MR. MARCHETTI: Oh, you mean what's
    16 coming from allowance sales, things of that --
    17
    MR. AYRES: Exactly.
    18
    MR. MARCHETTI: Yeah, we can provide
    19 that.
    20
    MR. AYRES: Thank you.
    21
    MR. MARCHETTI: Number 8: In
    22 Appendix A, first page on page 17 of your testimony you
    23 state, EEMS identifies a combination of control
    24 options, technology versus allowances, that
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    1 approximates the least cost solution for a given
    2 utility system and regulatory trading regime. Would
    3 you agree that the EEMS model is specifically designed
    4 to model environmental regulations based on emissions
    5 trading?
    6
    No. EEMS is designed to evaluate
    7 any type of regulatory regime whether it's market-based
    8 or command-and-control. We set up parameters in the
    9 model structure that reflect the compliance regime of a
    10 particular rule in terms of timing, phasing of the
    11 rule, emission limits, caps, standards outlined in the
    12 rule and the level of banking, trading, and averaging
    13 that's allowed.
    14
    Number 9: In Appendix A, first
    15 page on page 17 of your testimony, you state under a
    16 command-and-control regulatory regime, which is
    17 effectively what the Illinois rule is because of the
    18 lack of flexibility in the rule, EEMS systematically
    19 assigns control technology until the reduction target
    20 is achieved at the least possible cost. Please explain
    21 exactly how control technologies are selected and apply
    22 to this model.
    23
    I believe my response to
    24 Question 3B answers this question.
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    1
    MR. AYRES: I wondered if I could
    2 interject at this point.
    3
    HEARING OFFICER TIPSORD: Yes, please,
    4 Mr. Ayres.
    5
    MR. AYRES: On page 5 of 35 in your
    6 testimony, it says capital and operating costs were
    7 developed based upon Illinois electric generators'
    8 experiences in retrofitting recent SO2, NOx, and
    9 mercury-control technologies, closed quote. What
    10 recent retrofits do you refer to there?
    11
    MR. MARCHETTI: That's in -- That is in
    12 regard -- I believe I responded to that in Question 2.
    13
    MR. AYRES: Could you respond, again?
    14 Because I didn't hear it.
    15
    MR. MARCHETTI: Okay. Question 2 -- Do
    16 you want me to read the question and everything?
    17
    MR. AYRES: No. I'd just like the
    18 response to --
    19
    MR. MARCHETTI: Oh, okay. Several
    20 Illinois generators provided us with unit-specific
    21 capital and operational cost information to retrofit
    22 SO2, NOx, and mercury-control technologies --
    23
    MR. AYRES: I'm sorry to stop you.
    24
    You mentioned here that you based
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    1 your cost figures, in part, upon Illinois generators'
    2 experience in retrofitting recent SO2, NOx, and
    3 mercury-control technologies, and what I'm interested
    4 in, what are those experiences? What plants have
    5 recently been retrofitted by Illinois utilities with
    6 any of those technologies?
    7
    MR. MARCHETTI: I think what I meant by
    8 "recent" is basically the programs Illinois generators
    9 are currently going through to evaluate SO2, NOx, and
    10 mercury controls in response to CAIR and the various
    11 engineering work that's either being done internally or
    12 externally.
    13
    MR. AYRES: So they're estimates.
    14 They're not based on any experience at all, not recent
    15 experience installing any of these control
    16 technologies.
    17
    MR. MARCHETTI: Yes. It's based upon
    18 what people are evaluating now. It's not based upon a
    19 scrubber that was put in 1985 and 1990.
    20
    MR. AYRES: And these are -- The
    21 information you're talking about, the estimates that
    22 you're talking about which are what you meant by this
    23 statement, these are -- this is the information of
    24 which you said earlier you couldn't provide to us; is
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    1 that correct?
    2
    MR. MARCHETTI: That is correct.
    3
    MR. AYRES: Thank you.
    4
    Further on the same page, it says,
    5 quote, It should be noted that the above-mentioned
    6 control assumptions represent realistic assumptions in
    7 terms of applicability and performance. How is this so
    8 if actual facilities over 50 years old are being
    9 retrofitted with controls?
    10
    MR. ZABEL: I don't understand that --
    11
    MR. MARCHETTI: I don't understand that
    12 question.
    13
    MR. ZABEL: Neither one of us understand
    14 it.
    15
    MR. AYRES: I'll withdraw the question.
    16
    On page 11 of your testimony, you
    17 state specifically almost 72 percent, or
    18 10,737 megawatts, of the projected mercury-control
    19 technology will be filter technology, and thereby
    20 removal costs will average around $75,000 per pound.
    21
    As you know, the Illinois EPA does
    22 not expect so many units to require fabric filters. So
    23 is your figure based on the input of Mr. Cichanowicz?
    24
    MR. MARCHETTI: Yes, it is.
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    1
    MR. AYRES: And on page 14, you say the
    2 primary factor is in control assumptions used in both
    3 analyses. Specifically, the MCH takes into account
    4 more detailed specific facilities, slash, unit
    5 characteristics than the TSD which ultimately affects
    6 the unit investment costs in dollars per kilowatt and
    7 effective removal of the mercury-control equipment.
    8 And you further provide examples of why you believe
    9 this.
    10
    Are you testifying as an expert on
    11 mercury-control technologies?
    12
    MR. MARCHETTI: I'm not testifying as an
    13 expert on mercury-control technologies.
    14
    MR. AYRES: So you're not in the
    15 position to testify as to the validity of
    16 control-technology assumptions made by either
    17 Dr. Staudt or Mr. Cichanowicz?
    18
    MR. MARCHETTI: No, I'm not. But the
    19 purpose of -- The purpose of this was to kind of
    20 clarify some considerations to be taken into -- in
    21 determining the costs and the employment of
    22 technologies at a particular unit, looking at
    23 whether -- SO3 conditioning, the size of the SCU, which
    24 is the basis of Mr. Cichanowicz's control assumptions.
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    1
    MR. AYRES: Thank you.
    2
    HEARING OFFICER TIPSORD: Off the record
    3 for just a second.
    4
    (Discussion off the record.)
    5
    HEARING OFFICER TIPSORD: Question
    6 Number 10 -- I'm sorry. Mr. Harley has a follow-up.
    7 I'm sorry.
    8
    MR. HARLEY: How does your model account
    9 for the provisions of the proposed rule that are
    10 characterized as the temporary technology-based
    11 standard?
    12
    MR. MARCHETTI: We did not evaluate the
    13 TTBS.
    14
    MR. HARLEY: In light of the fact that
    15 you did not evaluate the temporary technology-based
    16 standard, does that change your answer regarding the
    17 inflexibility of the Illinois rule?
    18
    MR. MARCHETTI: It could change in terms
    19 of if something -- if a technology in the TTBS was
    20 implemented and it allowed utilities through 2015 or
    21 someday to make compliances in testing equipment, it
    22 could change. But right now, based upon the
    23 information that we have, any potential risk that may
    24 be associated with the deployment of these
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    1 technologies, it seems like the deployment filter
    2 technology was the most predominant.
    3
    MR. HARLEY: But your model does not
    4 take into account the TTBS?
    5
    MR. MARCHETTI: It did not take into
    6 account the TTBS.
    7
    MR. HARLEY: Were you able, since the
    8 introduction of the multipollutant standard amendment
    9 to the rule-making proposal, to evaluate how that might
    10 affect the flexibility of EGU operators in Illinois?
    11
    MR. MARCHETTI: We did not evaluate the
    12 MPS.
    13
    MR. HARLEY: Are you familiar with it?
    14
    MR. MARCHETTI: Yes, I am.
    15
    MR. HARLEY: Would that also provide a
    16 measure of flexibility to operators in Illinois?
    17
    MR. MARCHETTI: It could, yes. It could
    18 provide some level of flexibility, but it also may
    19 provide some additional costs.
    20
    MR. HARLEY: Thank you.
    21
    MR. MARCHETTI: Okay.
    22
    HEARING OFFICER TIPSORD: I actually
    23 have a little bit of a follow-up along those same
    24 lines, and I apologize for not asking this earlier. I
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    1 found it as I was going back through the testimony.
    2
    The modeling is based on the
    3 federal CAIR rule and not the Illinois/CAIR rule; is
    4 that correct?
    5
    MR. MARCHETTI: It's based upon federal
    6 CAIR. It does not -- If you're talking about the
    7 Illinois/CAIR with the specific NOx provisions, it does
    8 not include that in terms of the 30 percent set aside.
    9
    HEARING OFFICER TIPSORD: I, frankly,
    10 don't know what's all in the Illinois/CAIR rule, but I
    11 will take your word for that.
    12
    MR. MARCHETTI: We modeled the federal
    13 CAIR as is -- Let me just explain a little further.
    14
    We modeled the federal CAIR as is
    15 presented in the model cap and trade program in the
    16 federal CAIR rule.
    17
    HEARING OFFICER TIPSORD: Okay. Thank
    18 you.
    19
    Question Number 10.
    20
    MR. MARCHETTI: In Dr. Smith's addendum
    21 to your testimony on page 23, she states that she
    22 provided you with annual generation and coal prices for
    23 Illinois coal-fired generation and allowance prices for
    24 SO2, NOx, and mercury for both CAIR and CAMR policies.
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    1 Did she also provide you with this information for a
    2 model implementation, including the Illinois rule?
    3
    Yes, and they are discussed in the
    4 addendum to my testimony on pages 34 and 35.
    5
    HEARING OFFICER TIPSORD: Number 11.
    6
    MR. MARCHETTI: Number 11: If so,
    7 please provide the annual output by generator for each
    8 CAIR/CAMR case and the Illinois rule case.
    9
    I believe that was the -- Yeah,
    10 that would be -- I believe that's 120 and 122, the
    11 exhibits.
    12
    HEARING OFFICER TIPSORD: Okay.
    13
    MR. MARCHETTI: Dr. Smith also states
    14 that NEEM was designed specifically to be able to
    15 simultaneously model least-cost compliance with all
    16 state, regional, national, seasonal, and annual
    17 emission caps for SO2, NOx, and mercury. The
    18 least-cost outcome is the expected result in a
    19 competitive wholesale electricity market. Do you
    20 conclude that the compliance scenario produced by the
    21 model is, in fact, the least-cost compliance scenario
    22 for each of the CAMR and the Illinois rule cases?
    23
    We did not evaluate whether NEEM's
    24 output was a least-cost scenario; therefore, I cannot
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    1 comment as to whether CRA's compliance simulations were
    2 least-cost.
    3
    Number 13: The NEEM model also
    4 produced pollution control installation decisions. Was
    5 this function of the NEEM model used in your analysis?
    6 If so, how did the outcome of the model compare with
    7 the installation decisions made by the EEMS model?
    8
    No, it was used in -- it was not
    9 used in our analysis. CRA was responsible to provide
    10 us with future unit generation levels, SO2, NOx, and
    11 mercury allowance prices, based upon our control
    12 assumptions, and delivered coal and natural gas prices.
    13 It was our responsibility to incorporate these inputs
    14 into having determine system-level compliance and the
    15 level of technology deployment under CAIR/CAMR and the
    16 CAIR/Illinois rule.
    17
    14: Table 1 presents 22 coal
    18 plants in Illinois that would be subject to the
    19 proposed rule, which together comprise 51 operating
    20 units. Please provide the capacity factors or each of
    21 these units for each of the model cases.
    22
    I believe that's in 21 --
    23 Exhibits 121 and 122.
    24
    Number 15: Table 8 shows a large
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    1 increase in the consumption of Illinois coal in the
    2 Illinois rule case relative to CAIR/CAMR. Was this
    3 switch exogenous to the model or based on the model
    4 output? Please explain.
    5
    This is based upon a model output
    6 that is attributed to the projected new coal-fired
    7 generation coming on-line beginning 2010. Those
    8 units --
    9
    HEARING OFFICER TIPSORD: Mr. Marchetti,
    10 you picked up speed-reading again.
    11
    MR. MARCHETTI: Okay. I'll do it again.
    12
    HEARING OFFICER TIPSORD: We can hear
    13 you just fine. It's just you're going really fast.
    14
    MR. MARCHETTI: This is based upon a
    15 model output that is attributed to the projected new
    16 coal-fired generation coming on-line beginning in 2010.
    17 Those units are Dallman 4, 2010; Prairie State, 2011;
    18 and Indeck Elwood, 2011. This generation represents
    19 2,368 megawatts of new coal-fired capacity.
    20
    16: Comments and testimony
    21 indicate that several power plants support a federal
    22 CAMR rule. Was an assessment done on a plant-by-plant
    23 and unit-by-unit basis of all Illinois
    24 electric-generating units that determined what
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    1 additional control equipment, control measures, and
    2 costs, if any, would be required to comply with federal
    3 CAMR in Phase 1? Same question for Phase 2 of CAMR.
    4
    We undertook a system-wide
    5 compliance evaluation for both CAIR/CAMR for all
    6 Illinois generators between 2009 and 2018 and this
    7 appears in our testimony -- in my testimony. I cannot
    8 speak to whether other compliance evaluations were
    9 undertaken by Illinois generators.
    10
    Number 17: If yes, what were the
    11 results of this assessment? Please provide the
    12 expected additional control equipment, control
    13 measures, and costs needed to meet CAMR for each plant
    14 and unit for each phase of CAMR.
    15
    The results of our CAIR/CAMR
    16 simulation are presented in Table 2 of my testimony.
    17 Those units that were assigned mercury-control
    18 technology under CAMR are presented in Exhibit 119.
    19 However, as stated in response to Question 1B, we
    20 cannot provide unit-specific compliance costs due to
    21 the proprietary nature of this data.
    22
    Number 18 --
    23
    MR. AYRES: Mr. Marchetti, Mr. DePriest
    24 testified this morning that the technical assumptions
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    1 and costs provided did not allocate the cost of
    2 scrubbers between mercury control and SO2 CAIR
    3 requirements, if I heard his testimony correctly.
    4 Could you explain how those scrubber costs are
    5 accounted for in your model of the Illinois regulation;
    6 in other words, to what extent the scrubber costs
    7 contributed to the Illinois mercury rule?
    8
    MR. MARCHETTI: Are you talking in
    9 terms -- What we model, as you see in my testimony, is
    10 that we did break out the SO2, NOx, and mercury-control
    11 costs for both capital and annualized for CAIR/CAMR and
    12 CAIR/Illinois, and it's a cumulative cost from 2009
    13 through 2018. So CAIR SO2 is modeled separately. CAIR
    14 NOx models separately. And then the results of those
    15 models depend because of the co-benefits associated
    16 with SO2 and NOx control that we model the mercury
    17 element which would have been CAMR or the Illinois
    18 rule.
    19
    MR. AYRES: When you model the Illinois
    20 rule, which is about mercury, not about the pollutants,
    21 and came up with cost figures that you came up with, to
    22 what extent are the costs attributable to those
    23 scrubbers included in the costs of the Illinois mercury
    24 rule?
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    1
    MR. MARCHETTI: There are no
    2 scrubbers -- There's no scrubber costs attributed to
    3 the Illinois mercury rule. We did not deploy or model
    4 any FGD systems to control mercury. Any FGD systems
    5 which were modeled and we didn't -- that were deployed
    6 in our simulations was to SO2. And in terms of SO2
    7 compliance, what we found was we did not model any SO2
    8 scrubbers beyond what was already announced by various
    9 generators in this country -- in this state.
    10
    MR. AYRES: So in the table that you
    11 gave us earlier, the one you called CAIR/CAMR Cap and
    12 then it's in the other one as well, CAIR/Illinois Rule
    13 Cap, what does FS mean? Is that fuel switch?
    14
    MR. MARCHETTI: Fuel switch.
    15
    MR. AYRES: There's no scrubber?
    16
    MR. MARCHETTI: No scrubbers.
    17 Coffeen -- No. Let me go back. Coffeen 1 and 2 did
    18 get a scrubber, but that was already announced. And
    19 that was incorporated into our analysis.
    20
    MR. AYRES: Are those costs then seen as
    21 exogenous to both these programs, or are they --
    22
    MR. MARCHETTI: They're not exogenous.
    23 They're indigenous. They're included in there.
    24
    MR. AYRES: They're included in there?
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    1
    MR. MARCHETTI: Yeah.
    2
    MR. AYRES: Let me ask the same question
    3 with respect to the SNCRs. In the circumstances where
    4 a scrubber is installed or where certain other things
    5 may play a role in achieving co-benefits for mercury,
    6 how are those costs handled? Are the SNCR costs -- I'm
    7 sorry -- SCR or SNCR, either one, are they attributed
    8 to the mercury program --
    9
    MR. MARCHETTI: They're attributed --
    10
    MR. AYRES: -- in any way?
    11
    MR. MARCHETTI: They're attributed to
    12 the NOx program within CAIR.
    13
    MR. AYRES: So none of those costs
    14 appear in your analysis of the Illinois mercury
    15 program?
    16
    MR. MARCHETTI: They do appear because
    17 if you take -- In the testimony that I said -- In my
    18 testimony, because of the change in generation due to
    19 the Illinois rule, we did two SNCRs which were deployed
    20 under the CAIR/CAMR rule and were not deployed under
    21 the Illinois rule because of the drop in generation for
    22 these two particular units; and it was, therefore,
    23 increased a dollar per ton (inaudible) for NOx and
    24 resolved for separate purchase allowances.
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    1
    HEARING OFFICER TIPSORD: Excuse me. I
    2 need to back up a minute because I think I may have
    3 misheard something you said, and I want to be clear.
    4
    MR. MARCHETTI: Sure.
    5
    HEARING OFFICER TIPSORD: When Mr. Ayres
    6 asked you about the mercury -- the modeling you did for
    7 the mercury rule -- Illinois mercury rule, did I
    8 correctly hear you say that your modeling did not
    9 include scrubbers?
    10
    MR. MARCHETTI: In modeling the Illinois
    11 rule, we did not -- Let me -- In modeling CAIR, because
    12 that's where the scrubbers come in, we do not deploy
    13 scrubbers to control mercury. We deploy scrubbers to
    14 control SO2 in our -- You know, I mean, we may end
    15 up -- And I think you find this in a lot of modeling
    16 exercises. You know, people will move scrubbers
    17 around. You know, something is supposed to go in 2009
    18 or 2011. They may move it up a year to get the mercury
    19 co-benefits, and, you know, most models do that. But
    20 in terms of when we model CAIR, aside from the
    21 scrubbers that have already been NOx'd by Illinois
    22 generators, which would be Ameren and Dynegy, those
    23 scrubbers were included in the analysis and, you know,
    24 embedded. And we did not come up with any other
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    1 scrubbers modeled because the costs were greater than
    2 the allowance prices.
    3
    HEARING OFFICER TIPSORD: Okay. Thank
    4 you.
    5
    MR. AYRES: While we're on these charts,
    6 may I ask a couple of more questions?
    7
    MR. MARCHETTI: Sure.
    8
    MR. AYRES: We're trying to understand
    9 what they mean and are unable to understand what S7MO
    10 means. Could you tell us about that?
    11
    MR. MARCHETTI: That's taking an
    12 existing SCR and operating it additional seven months
    13 year-round. So what you get there is, it increases
    14 variable costs. These are --
    15
    MR. AYRES: I understand. And then I
    16 wanted to see if you had the same reaction I do to
    17 these two when I look at them next to each other.
    18 Obviously, the one four CAIR shows technology being
    19 installed at a lot of plants. It runs into two pages.
    20 And the one for -- I'm sorry -- for CAIR of Illinois --
    21 excuse me -- for the Illinois rule. The one for CAIR
    22 and CAMR, which includes trading, is a list perhaps
    23 half as long. Would that indicate to you that the
    24 mercury reductions within the state of Illinois under
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    1 CAIR would be substantially smaller than they would be
    2 under the Illinois mercury rule?
    3
    MR. MARCHETTI: That's correct.
    4
    MR. AYRES: Do you have any figures for
    5 what the proportion might be?
    6
    MR. MARCHETTI: It's in my testimony.
    7 There's, I believe, Table 2 in my testimony, and this
    8 is a response to a question that's been coming. It
    9 would be the SO2, NOx, and mercury emissions under
    10 CAIR/CAMR and CAIR/Illinois.
    11
    MR. ZABEL: On page 7.
    12
    MR. MARCHETTI: Number 18: Who
    13 conducted this assessment, and what measures did they
    14 utilize to reach their conclusions?
    15
    I really don't understand this
    16 question. I think some of these questions were pulled
    17 from another set of questions for another witness, so I
    18 really don't understand this question. It seems to be
    19 pointed at other analyses undertaken to evaluate CAIR
    20 by other groups of individuals, and I'm not aware of
    21 these other analyses.
    22
    MR. AYRES: I think -- Doesn't this
    23 refer back to Question 16 which asks, was an assessment
    24 done on a plant-by-plant and unit-by-unit basis from
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    1 all of Illinois electric-generating units that
    2 determined what additional control that equipment
    3 measures and costs would be required to comply?
    4
    MR. ZABEL: Maybe, but, quite frankly,
    5 Mr. Ayres, it's related to Number 17 in which he said
    6 he didn't know of other assessments.
    7
    MR. AYRES: In which he said he didn't
    8 know such assessments.
    9
    MR. ZABEL: Yeah, that was his answer to
    10 17 because 16 asks about other assessments, and part of
    11 the answer to that was he didn't know of any. 17 says,
    12 if yes, what were the results of this assessment? He
    13 answered it as to his, but we thought 18 was addressed
    14 to the others. If we misunderstood it, if you can
    15 rephrase it, we'll be happy to have him answer it.
    16
    MR. AYRES: Well, I think what we'd
    17 like -- the question we'd like to have answered is
    18 Number 18.
    19
    MR. ZABEL: Well, then why don't we go
    20 to 19.
    21
    MR. AYRES: 18 --
    22
    MR. ZABEL: Oh.
    23
    MR. AYRES: -- was whether an assessment
    24 was done for your analysis on a plant-by-plant or
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    1 unit-by unit basis of all of Illinois' units.
    2
    MR. MARCHETTI: It was done on a unit-by
    3 unit basis. Depending on the regime that we were
    4 looking at, if it was CAMR -- CAIR/CAMR or if it was
    5 based on system-wide compliance of all the units within
    6 a particular system, like Dynegy, all those units, if
    7 it was on a CAIR/Illinois rule, it was also done on a
    8 unit-by-unit basis. But the CAIR portion is a
    9 system-wide compliance, and the Illinois rule is
    10 facility averaging.
    11
    MR. AYRES: So your assessment was done
    12 on a unit-by-unit basis?
    13
    MR. MARCHETTI: Yes, it was.
    14
    MR. AYRES: Was that based on a
    15 unit-by-unit investigation?
    16
    MR. MARCHETTI: It was based upon
    17 unit-by unit data that we have in our database.
    18
    MR. AYRES: In your database?
    19
    MR. MARCHETTI: As well as contacts with
    20 the individual utilities specifically on such issues as
    21 SO3 conditioning.
    22
    MR. AYRES: Are you aware that IEPA made
    23 visits to each site and made a comprehensive assessment
    24 of boiler ductwork configurations, the use of gas
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    1 conditioning, ESP sizes, et cetera?
    2
    MR. MARCHETTI: I'm aware of it based
    3 upon testimony this week. I'm not familiar with the
    4 documents.
    5
    MR. AYRES: Are you aware that the
    6 extensive detail in this report was sufficient to raise
    7 concerns by power companies regarding homeland security
    8 considerations?
    9
    MR. ZABEL: I think that's --
    10
    MR. MARCHETTI: I'm not aware of that.
    11
    MR. ZABEL: He can answer it, but I
    12 think that's beyond the scope.
    13
    MR. AYRES: And are you aware that IEPA
    14 testified that the information in this report was a
    15 factor in developing the TTBS?
    16
    MR. MARCHETTI: I'm not aware of that
    17 statement, that they used that in developing the TTBS.
    18
    MR. AYRES: And are you aware that
    19 Dr. Staudt testified that this report and the resulting
    20 TTBS were factors in the revision of his testimony?
    21
    MR. MARCHETTI: I'm not aware of that.
    22
    MR. AYRES: And these were not factors
    23 in the preparation of your testimony, I take it?
    24
    MR. MARCHETTI: They were not.
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    1
    MR. AYRES: Do you or Mr. Cichanowicz
    2 visit every power plant in Illinois as a part of this
    3 project?
    4
    MR. MARCHETTI: I have not visited any
    5 power plants in Illinois. I believe Mr. Cichanowicz
    6 has visited a number of power plants in Illinois. I
    7 cannot give you a number. I believe he mentioned that
    8 he visits -- he has visited over 100 -- you know,
    9 hundreds of power plants over his 15 years -- or
    10 25 years of working in this field.
    11
    Number 19 --
    12
    MR. AYRES: I'm sorry. I have one more
    13 question.
    14
    MR. MARCHETTI: Okay.
    15
    MR. AYRES: Didn't you testify that the
    16 IEPA did not use site-specific data in your testimony?
    17
    MR. ZABEL: Do you have a specific
    18 reference?
    19
    MR. AYRES: We're trying to find it
    20 right now.
    21
    MR. ZABEL: Okay. Well, we'll wait.
    22
    MR. AYRES: It's at page 14, the third
    23 sentence in the bottom paragraph on that page.
    24
    MR. ZABEL: The one beginning "for
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    1 example"?
    2
    MR. AYRES: No, the one beginning
    3 "specifically."
    4
    MR. ZABEL: That's the second sentence.
    5
    MR. AYRES: Would you care to revise
    6 that testimony given what we do know about the Illinois
    7 investigation?
    8
    MR. MARCHETTI: Well, no, I probably
    9 would not want to. I mean, I've seen that data that
    10 you just talked about. I've also heard that some of it
    11 may be confidential and that this modeling exercise,
    12 like any modeling exercise, is based upon a set of data
    13 that we have in our database, plus discussions with
    14 individual utilities. I think I mentioned that early
    15 on in my testimony before we got into the analysis that
    16 we applied a set of assumptions based -- across a whole
    17 board of a population based upon a set of parameters we
    18 have.
    19
    Now, we do not have information in
    20 there on ductwork, but we did have information on flue
    21 gas emissions. And since that was an issue dealing
    22 with activated carbon, we contacted all the generators
    23 to find out if they used SO3, if that flue gas
    24 conditioning was used for SO3. So we modified the
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    1 database. That's how we do a lot of analyses. We talk
    2 to people. It's not just getting information off of
    3 federal forms.
    4
    MR. ZABEL: Maybe I'm lost, Mr. Ayres.
    5 There was a question before that referred to the
    6 inspection that led to the TTBS. Mr. Marchetti's
    7 statement in his testimony refers to the preparation of
    8 the TSD. They were not done at the same time. So I
    9 don't know what this temporal sequence is of your
    10 questions.
    11
    MR. AYRES: I believe the temporal
    12 sequence is not of significance.
    13
    MR. ZABEL: I'm sorry?
    14
    MR. AYRES: Temporal significance is not
    15 of significance to the question.
    16
    MR. ZABEL: Well, but the record says,
    17 did you know that they did these inspections, and he
    18 gave his answer. And you said, isn't this statement
    19 wrong, and you had said they did those inspections for
    20 the TTBS. But his statement here doesn't address the
    21 TTBS. It represents the TSD. So the timing of the TSD
    22 seems to be what's important in relation to when those
    23 inspections were done. And, frankly, I think the
    24 record shows those inspections were done after the TSD
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    1 was prepared. Is that not correct?
    2
    MR. AYRES: No. The point of the
    3 comment, I assume -- The testimony provided here is to
    4 suggest that the analysis -- the modeling -- the
    5 database used by MSH -- MCH takes into account more
    6 detailed, specific facility/unit characteristics than
    7 does the TSD. That would not be true when the State of
    8 Illinois had made site-by-site visits, would it?
    9
    MR. ZABEL: It would not be true if they
    10 made them before the TSD was prepared. If they were
    11 made after it, it's somewhat irrelevant to the TSD. I
    12 don't remember the timing sequence. That's why I
    13 raised my question. I mean, I'm sure the record will
    14 reflect that.
    15
    MR. AYRES: I think it will.
    16
    MR. ZABEL: But the TSD, I think, long
    17 predated those inspections.
    18
    HEARING OFFICER TIPSORD: I think the
    19 point has been made. I think we can move on.
    20
    MR. ZABEL: Fine.
    21
    MR. MARCHETTI: 19: What are the
    22 expected reductions, if any, in mercury emissions in
    23 pounds reduced per year and percentage reduced per year
    24 from a given base year as a result of each plant's
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    1 federal CAMR compliance strategy in Phase 1? Same
    2 question for Phase 2. Please use a year from 2000 to
    3 2005 as the base year, if available. If not, please
    4 identify the base year.
    5
    In terms of our CAIR/CAMR
    6 simulation, the reductions for 2005 can be computed
    7 from our table in my testimony, which I believe is on
    8 page --
    9
    MR. ZABEL: 7.
    10
    MR. MARCHETTI: -- page 7. And I think
    11 I mentioned that in response to an earlier question.
    12
    Number 20: Have you conducted an
    13 assessment in which coal-fired power plants and
    14 electric-generating units in Illinois would likely
    15 delay or completely avoid the installation of mercury
    16 controls such as that they would need to purchase or
    17 use banked allowances for a period under the federal
    18 CAMR due to the installation of controls being
    19 uneconomical, difficult, or any reason?
    20
    Yes.
    21
    If yes, what were the results of
    22 this assessment? Please identify which plants and
    23 units would likely purchase or use banked allowances.
    24
    Since we evaluated CAIR/CAMR
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    1 compliance at a system level, each unit within a system
    2 receives an allowance allocation; therefore, we only
    3 computed the level of allowances that would have to be
    4 purchased at the system level. It should be noted that
    5 the level of allowance purchases is the difference
    6 between the emissions and allocations for the entire
    7 system. In conjunction with this analysis, we also
    8 computed the level of allowance sales for a given
    9 system, which are banked, slash, excess allowances
    10 within a system. I could give you systems that we
    11 computed, you know, that were purchasing allowances if
    12 you wish: Ameren Energy Generating, Ameren Energy
    13 Resource Generation, EEI, Indeck, which is a new coal
    14 unit, Kincaid, Midwest Generation.
    15
    MR. AYRES: And those are the systems
    16 which would purchase allowances?
    17
    MR. MARCHETTI: Purchase allowances at
    18 some time.
    19
    MR. AYRES: Can you give us an
    20 indication of how much those purchases would be, or is
    21 that ...
    22
    MR. MARCHETTI: Between 2009 through
    23 2018, $410 billion in 2006 constant dollars.
    24
    MR. AYRES: That's for all those
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    1 companies together total?
    2
    MR. MARCHETTI: Yeah.
    3
    What measures were utilized to
    4 reach your conclusions?
    5
    In our particular analysis, we
    6 utilized EEMS and the data inputs and CAMR
    7 allocation -- allowance allocation assumptions
    8 discussed in my testimony and the control assumptions
    9 presented in Mr. Cichanowicz's testimony.
    10
    23: What is the expected duration
    11 of use of purchased or banked allowances at the plants
    12 and units identified to use the means -- to use these
    13 means of compliance?
    14
    There's no time limit on the use of
    15 banked or purchase CAMR allowances according to the
    16 CAMR model cap-and-trade program. Our analysis only
    17 goes through 2018, and there are no allowance
    18 purchases, although no significant banks, through that
    19 year. There are -- Let me just read that last sentence
    20 again: Our analysis goes through 2018, and there are
    21 allowance purchases, although no significant banks,
    22 through that year.
    23
    MR. AYRES: Just a final follow-up
    24 question, if I may.
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    1
    HEARING OFFICER TIPSORD: Go ahead.
    2
    MR. AYRES: If the Pollution Control
    3 Board were to conclude that given the time available
    4 between now and the compliance date and the flexibility
    5 elements built into this rule, ACI will be capable of
    6 achieving the reductions needed to meet the standard at
    7 most locations. Would that change your testimony on
    8 costs of the program?
    9
    MR. ZABEL: Could I have that question
    10 back, please?
    11
    (Record read as requested.)
    12
    MR. MARCHETTI: Well, it's an "if."
    13 Based upon information that we used in our control
    14 assumptions, which is what -- which is currently
    15 available, and I guess based upon the discussion that's
    16 taken place this week, there seems to be a lot of
    17 uncertainty. I mean, there's differences in opinions
    18 on the performance of these various control
    19 assumptions. And based upon our analysis right now and
    20 based upon the information that we have, we feel
    21 that -- you know, that the coal packs and the filter
    22 technology would be the dominant technology. And I
    23 guess that information has been somewhat supported by
    24 the Ameren testimony given in the early part of the
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    1332
    1 week in regard to what they feel they're going to have
    2 to do based upon their MPS proposal.
    3
    MR. AYRES: But the Board has to
    4 evaluate the weight it wants to give to the differing
    5 testimony received and come to its own conclusion about
    6 what it thinks the technology is capable of. I'm only
    7 asking, if they came to the conclusion, despite the
    8 testimony of Mr. Cichanowicz and others, that the
    9 technology was -- the ACI technology was capable of
    10 achieving most of the goals of this rule, would that
    11 change your estimate of the costs?
    12
    MR. MARCHETTI: If ACI was able to
    13 achieve the performances that it has been -- you know,
    14 that has been presented -- Well, if -- Let me just stop
    15 and start over.
    16
    If ACI was able to achieve
    17 90 percent removal at the expected costs, as has been
    18 presented by some individuals, which is lower than coal
    19 pack or filter technologies, yes, the compliance costs
    20 would probably be less.
    21
    MR. AYRES: Thank you.
    22
    MR. ZABEL: May I ask one follow-up
    23 question?
    24
    HEARING OFFICER TIPSORD: Sure.
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    1
    MR. ZABEL: Mr. Marchetti, in your work
    2 and your analysis and your discussions with the utility
    3 companies, regardless of what the Board may conclude
    4 about the technology, is it your understanding that
    5 they have concluded they would not take the risk, that
    6 ACI alone would be sufficient?
    7
    MR. MARCHETTI: That's correct.
    8
    MR. ZABEL: I have nothing further.
    9
    HEARING OFFICER TIPSORD: Anything
    10 further of Mr. --
    11
    MR. AYRES: Nothing further from us.
    12
    HEARING OFFICER TIPSORD: Anything
    13 further for Mr. Marchetti?
    14
    MR. AYRES: Thank you, Mr. Marchetti.
    15
    HEARING OFFICER TIPSORD: Thank you very
    16 much, Mr. Marchetti.
    17
    MR. MARCHETTI: You're welcome.
    18
    MR. ZABEL: And thank you for the
    19 expedition this afternoon.
    20
    HEARING OFFICER TIPSORD: We have
    21 reached the last of the witnesses that were prepared
    22 for this week. That being the case, we're going to
    23 adjourn in just a second -- or recess, is I guess is
    24 more correct term. Next week, we begin on Monday.
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    1 We'll start at 1:00 o'clock on Monday. I think we'll
    2 be fine at 1:00 o'clock on Monday. We'll begin with
    3 Krish Vijayaraghavan, Gail Charnley, Peter Chapman,
    4 Richard McRanie, then followed by C.J. Saladino, and
    5 Andy Yaros.
    6
    MS. BASSI: There's a possibility that
    7 next week we may want to switch the two Dominion
    8 witnesses with McRanie.
    9
    HEARING OFFICER TIPSORD: We'll talk
    10 with that when the two -- when they're present to
    11 discuss that.
    12
    MS. BASSI: One's here.
    13
    HEARING OFFICER TIPSORD: Oh, I'm sorry.
    14 But Mr. Forcade isn't and neither is the other person
    15 who has filed an appearance on behalf of Dominion. So
    16 I would feel more comfortable talking with their
    17 counsel before we ...
    18
    Mr. Kim.
    19
    MR. KIM: Yes. I just wanted to let you
    20 know I have been working on this Stubenville report and
    21 what I have learned is this, that Dr. Keeler is on
    22 vacation. I have his cell phone number. I've
    23 contacted him and left him a long voice mail. Our
    24 librarian was able to get in touch with the editorial
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    1335
    1 offices of the Environmental Science and Technology
    2 publisher, and the response she got back was,
    3 unfortunately, you need to be one of the primary or
    4 co-authors of the manuscript so they can give you
    5 information as to the specific publication date. She
    6 gave us the telephone number for the person -- for an
    7 author to call along with the request that the author
    8 have a manuscript number. And I passed all that
    9 information on to Dr. Keeler in the voice mail. So
    10 hopefully, if nothing else, maybe if he gets our
    11 message, he'll contact them and maybe get that
    12 information for us. Apparently, they have many, many
    13 on-line articles that they're just waiting to publish,
    14 so I assume it's somewhere in the queue. But maybe
    15 Monday we'll hear something more.
    16
    HEARING OFFICER TIPSORD: Thank you,
    17 Mr. Kim. With that, we'll recess until Monday at
    18 1:00 o'clock, same Bat time, same Bat channel.
    19
    (The hearing in the above-entitled
    20
    cause was adjourned until Monday,
    21
    August 21, 2006, at 1:00 p.m.)
    22
    23
    24
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    1336
    1 STATE OF ILLINOIS )
    ) SS.
    2 COUNTY OF COOK
    )
    3
    Martina Manzo, being first duly sworn, on
    4 oath says that she is a Certified Shorthand Reporter
    5 doing business in the City of Chicago, County of Cook
    6 and the State of Illinois;
    7
    That she reported in shorthand the
    8 proceedings had at the foregoing hearing;
    9
    And that the foregoing is a true and correct
    10 transcript of her shorthand notes so taken as aforesaid
    11 and contains all the proceedings had at the said
    12 hearing.
    13
    14
    15
    ____________________________
    MARTINA MANZO, CSR
    16
    17
    CSR No. 084-004341
    18
    19
    SUBSCRIBED AND SWORN TO
    20 before me this 23rd day of
    August, A.D., 2006.
    21
    22 ____________________________
    NOTARY PUBLIC
    23
    24
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