Microsoft Word - R06-26 101206 hearing transcript.txt

ILLINOIS POLLUTION CONTROL BOARD

October 12, 2006

IN THE MATTER OF:

)

PROPOSED NEW CAIR SO2, CAIR ) R06-26

NOx ANNUAL AND CAIR NOx

) (Rulemaking - Air)

OZONE SEASON TRADING

)

PROGRAMS, 35 ILL. ADM. CODE )

225, CONTROL OF EMISSIONS )

FROM LARGE COMBUSTION

)

SOURCES, SUBPARTS A, C, D )

and E

)

RECORD OF PROCEEDINGS

BEFORE JOHN KNITTLE

HEARING OFFICER

This record of proceedings was before the

Illinois Pollution Control Board taken on October 12,

2006, at 9:00 a.m., at the offices of the Environmental

Protection Agency, Springfield, Illinois, before Holly A.

McCullough, an Illinois Certified Shorthand Reporter, a

Missouri Certified Court Reporter, a Registered

Professional Reporter and a Notary Public.

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APPEARANCES:

MEMBERS OF THE ILLINOIS POLLUTION CONTROL BOARD:

Mr. John Knittle, Hearing Officer

Dr. G. Tanner Girard, Board Member

Mr. Thomas E. Johnson, Board Member

Andrea S. Moore, Board Member

Mr. Amand Rao, Board Staff

COUNSEL FOR THE ILLINOIS ENVIRONMENTAL PROTECTION AGENCY:

Ms. Rachel Doctors

Mr. John Kim

COUNSEL FROM SHIFF-HARDIN:

Ms. Kathleen Bassi

Mr. Stephen Bonebrake

COUNSEL FROM McGUIRE-WOODS:

Mr. David Rieser

COUNSEL FROM BAKER & McKENZIE FOR ZION ENERGY:

Mr. Steven J. Murawski

COUNSEL FROM ENVIRONMENTAL LAW & POLICY CENTER:

Ms. Faith E. Bugel

INTERROGATION INDEX:

CONTINUATION OF EXAMINATION OF ROSTON COOPER: PAGE 4

EXHIBITS:

Agency Exhibit No. 5 -- Page 3, 13-14

Agency Exhibit No. 20 -- Page 4, 12-13

Keefe Reporting Company

HEARING OFFICER KNITTLE: Let's go on the record.

Good morning. Today is Thursday, October 12th. We're on

the third day of hearings in this rulemaking R06-26

regarding the CAIR rule. We are still continuing with the

Agency's presentation of witnesses. I don't think I see

anybody who isn't familiar with the Board's rulemaking

process, but if anybody has a question, feel free.

Anybody can ask it. I want you only to raise your hand

and identify yourself both so the Board and the Court

Reporter gets your name down appropriately. So, other

than that, I think we're going to proceed with the

hearing. I think we are on the Agency's last witness; is

that correct, Ms. Doctors?

MS. DOCTORS: Yes.

HEARING OFFICER KNITTLE: And that is --

MS. DOCTORS: Mr. Cooper.

HEARING OFFICER KNITTLE: You understand that you

were sworn in initially and that still stands; correct?

MR. COOPER: Correct.

HEARING OFFICER KNITTLE: Okay. Ms. Doctors, do you

have anything you want to say before we get started with

his testimony?

MS. DOCTORS: I guess I'll just lay some foundation

for Agency Exhibit 5.

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HEARING OFFICER KNITTLE: That will be great. I just

want to make sure there's no preliminary matters over on

the other side of the room.

(No response.)

HEARING OFFICER KNITTLE: Please go ahead.

MS. DOCTORS: And I also have a calculation sheet

that Mr. Cooper prepared last night on SIPCO analysis that

was asked for. So, I can enter that first, or I can lay

the foundation, if you have a preference.

HEARING OFFICER KNITTLE: Your preference.

MS. DOCTORS: Okay. Are we at 20?

HEARING OFFICER KNITTLE: 20.

MS. DOCTORS: Let's mark the Exhibit as Agency

Exhibit 20.

E X A M I N A T I O N O F

Mr. Roston Cooper:

BY MS. DOCTORS:

Q. Could you explain what --

A. This is the example, as per Ms. Bassi's

request, how SIPCO would have fared using 2005 data, which

was taken from CAMD. In this particular exercise, two

pieces of data were needed, the megawatt hours generated,

as well as the emission rate in pound per megawatt. CAMD

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told me that they generated 885,172 megawatt hours, and

CAMD told me that their emission rate was .087, which was

approximately .87. We plugged those particular variables

in, solved the equation, and we end up with 57.5.

BY MS. BASSI:

Q. And this is out of 4,000 in that category?

BY MS. DOCTORS:

Q. How many allowances are in that category?

A. That particular category holds 4,573 annual,

1,842 seasonal.

BY MS. BASSI:

Q. So, what this shows is that SIPC, assuming all

this is correct and everything, would have gotten only 58

allowances from that category?

A. That is correct.

Q. Okay.

HEARING OFFICER KNITTLE: Yes, Ms. Bugel?

BY MS. BUGEL:

Q. I just want to go back to the discussion we

were having yesterday where there was testimony that to be

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eligible for the CASA, there's a certain NOx emission

rate.

A. Yes. It's inherent in the equation. If you

look in the slide or the handout, the middle term 1.0

minus ER, if said unit is not less than 1.0, the resultant

is actually negative. So, build into the equation is a

cleanness of at least 1.0 pound per megawatt hours.

Q. Right. But yesterday we were saying that that

translated to approximately .07 pounds per million BTU,

which does not seem to be the case here.

A. I think what you're referring to is the slide

example, and as I prefaced during my presentation, that

was a totally hypothetical, mythical example. It was not

based in reality. It was simply a numbers exercise.

This, though, is based on real and I believe to be correct

data.

Q. I agree. I'm just trying to clarify here

because I think someone translated for me what 1.0 would

be in pounds per megawatt hours, someone said that that

was approximately equal to .07 pounds per million BTU's.

A. (by Mr. Davis) That would be -- I was saying,

in the example, the .07 would translate into .07, and I

believe I said that pounds per megawatt hour to pounds per

million of BTU is approximately a factor of 10. 1 per

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pound megawatt hour would translate of BTU .1 pounds per

megawatt hours.

Q. I would just like to go over our discussion

yesterday then, because if that's the translation,

yesterday we talked about .07 pounds per million BTU as

being pretty clean, I believe, if I'm characterizing the

testimony correctly.

A. (by Mr. Davis) Yes. And I believe I had

said, you know, .07 as the example given in the previous

handout and the difference between the 1.0 and the .7

would be the only thing that a source would receive.

Q. So, then -- So, now we're saying the cutoff to

obtain any credits is approximately .1 pounds per million

BTU; am I doing the math correctly on that?

A. (by Mr. Davis) Yes.

Q. So, how would you characterize .1 -- I

apologize. I, like everyone else, is surprised when I get

a signal in here. So, how would we characterize -- How

would you characterize .1 pounds per million BTU's in

terms of, for lack of a better word, cleanliness?

A. (by Mr. Roston) Would you please repeat the

question?

Q. How would you characterize -- We're saying

that units that achieve less than .1 pounds per million

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BTU's will be eligible for CASA credits presuming that

they meet the other criteria; is that correct?

A. (by Mr. Ross) We characterized .10 pounds per

million BTU as a fairly clean emission rate, a low

emission rate of NOx.

Q. What is that characterization based on?

A. (by Mr. Ross) Based on existing emission

rates of NOx as we've evaluated for all the coal-fired

EGU's based on the level that CAIR anticipates that EGU's

will reduce to, based on research of existing documents on

achievable emission rates, with the addition of add-on

control devices.

Q. One additional -- One or two additional

questions. Most of the permits -- If we refer back to --

There was a list of -- It's Exhibit 13, new coal and

solvent fired, fuel-fired units for Illinois. Most of

these permits that you're familiar with, are the permitted

emission rates for NOx less than 1.0 -- I'm sorry -- let

me rephrase that -- pounds per million BTU, .1 pounds per

million BTU's?

A. (by Mr. Ross) I really don't know. I'd have

to go back and review them. I would state that typically

emission rates for new units are lower than emission rates

for existing units. Newer units are inherently cleaner.

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They have more advanced technology. Permitting

requirements are more stringent. They typically have to

undergo a best available control technology, do a batch

review. So, therefore, as I stated, typically the

emission rates that we permit new units at is low.

Q. Does anyone on the panel know what BACT is

considered to be for NOx for a new TC plant?

A. (by Mr. Ross) Well, BACT is different for

each case. It's a case by case determination. So, I

think it would be hard to point to one single limit.

A. (by Mr. Roston) It's ever changing.

MS. BUGEL: I have no further questions.

HEARING OFFICER KNITTLE: Mr. Bonebrake?

BY MR. BONEBRAKE:

Q. I have some follow-up. Mr. Ross, do you know

roughly what the typical uncontrolled NOx emission rate

would be for pulverized unit?

A. (by Mr. Ross) Off the top of my head, no. We

had as an Exhibit AP 42, emission factors passed around

yesterday. I believe it's contained in there.

MS. BASSI: You said AP 42?

A. (by Mr. Cooper) It's not the complete AP 42

section, but I believe it would have the relevant table to

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answer the question.

BY MR. BONEBRAKE:

Q. Do you happen to know what the table would be?

A. (by Mr. Roston) If I get it in front of me.

You asked about NOx?

Q. Typical uncontrolled NOx emission rate for a

pulverized unit.

MR. MAHAJAN: The typical is .7 both for the BTU and

for the coal-fired --

MR. ROSS: That's not right. Absolutely not.

A. (by Mr. Roston) I believe Table 1.3.

BY MR. BONEBRAKE:

Q. And can you direct us to a page number?

A. (by Mr. Cooper) It looks like Page 1.1-17, I

believe. And that table carries on for several pages.

Q. Okay. And based upon the table then, what

would be the response to the question I had asked?

A. Your question was?

Q. A typical uncontrolled NOx emission rate from

a pulverized unit.

A. I could calculate an average if you so chose.

MS. DOCTORS: We could address that more in a comment

Keefe Reporting Company

rather than trying to do it --

A. (by Mr. Cooper) The numbers appear to range

from as low as -- for pulverized coal, the numbers appear

to range from at low as 7.2 to as high as 31 pounds per

ton.

BY MR. BONEBRAKE:

Q. And how do you convert pounds per ton to

pounds per megawatt hour?

A. (by Mr. Cooper) Pounds per ton to ton per

megawatt hour? Well, you need to know the heat content of

the particular fuel and then perform a conversion.

Q. We've been talking about roughly a .1 pound

per million BTU number. Is there a rough way to correlate

a pound per ton number to a pound per million BTU number?

A. Not off the top of my head. You would need to

account for the various fuel, bituminous, the

sub-bituminous, the heat content. I believe it could be

done, but I wouldn't venture a guess right now.

Q. Is it true, Mr. Ross -- following up on an

answer that you earlier provided -- that for an existing

unit that undergoes a modification, for instance, might be

very different from BACT for a new unit?

A. (by Mr. Ross) Yes, that's true. Just to give

Keefe Reporting Company

a ballpark number, and this is just a ballpark number and

a guess, I think for an uncontrolled emission rate of NOx

from an existing non-specified type of pulverized coal

boiler is .7 to 1.2 pounds per million BTU per hour.

Q. I'm sorry. That was .7 to --

A. To 1.2.

Q. And that was pounds per megawatt hour?

A. For a million BTU, since we were speaking in

terms of pounds per million BTU, but that's pretty readily

converted into pounds per megawatt multiplied by a factor

of 10.

Q. So, that's between 7 and 12 times. What is

the .1 pound per million BTU threshold for the CASA that

would be applicable to SIPCO; is that correct?

A. (by Mr. Ross) Yes. That's correct.

MR. BONEBRAKE: I had some questions in some other

areas if we're ready to move on.

MS. DOCTORS: Can the document be admitted?

HEARING OFFICER KNITTLE: You're moving to admit

Agency --

MS. DOCTORS: 20.

HEARING OFFICER KNITTLE: Any objection to Agency 20

being admitted into the record?

(No response.)

Keefe Reporting Company

HEARING OFFICER KNITTLE: Seeing none, that will be

admitted as Exhibit 20.

MS. DOCTORS: And I wanted to lay some foundation for

Agency Exhibit 5, or, John, would you like to?

MR. KIM: You can go ahead.

BY MS. DOCTORS:

Q. Mr. Cooper, are you familiar with Agency

Exhibit 5?

A. (by Mr. Cooper) Yes.

Q. Was this -- How are you familiar with this

document?

A. I believe I am the primary author of this

document.

Q. Did you write it for the most part?

A. I think that that's what that meant.

Q. Was this document relied on in preparing the

rule?

A. No, it was not.

Q. Was the document completed, in fact, after the

filing of the rule?

A. Yes, it was.

Q. What was the purpose of the document?

A. The purpose of the document was partially in

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preparation for the hearings. It was, as the title

states, simply a summary of potential emission reductions

and power offsets in attempt to get a grasp on what the

particular program could achieve.

Q. Is the Agency representing that this

information and the document is a hundred percent accurate

or is to be interpreted as providing some estimates?

A. It is definitely to be interpreted as

providing estimates. It's clearly labeled "draft". It

makes many assumptions. I'm sure other people would

perform this analysis differently. This was one approach.

And I hope it to be conservatively estimated.

MS. DOCTORS: That's all I have.

HEARING OFFICER KNITTLE: Are you moving for

admission of this document?

MS. DOCTORS: Yes, I am.

HEARING OFFICER KNITTLE: Any objection?

(No response.)

HEARING OFFICER KNITTLE: Seeing none, this will be

admitted as Exhibit No. 5. Mr. Bonebrake, you had

additional questions. Of whom would you like those?

MR. BONEBRAKE: I think, actually, Mr. Cooper was

involved in drafting the document. That would probably be

the best recipient.

Keefe Reporting Company

HEARING OFFICER KNITTLE: You can proceed.

BY MR. BONEBRAKE:

Q. Did you say that you were the sole author

or --

A. (by Mr. Cooper) No, that is not the phrase I

used.

Q. Who else was involved in preparing this

document?

A. Review and suggestions were taken from the --

as Jim called it, the CAIR advisory group.

Q. And then you implemented those suggestions and

recommendations?

A. As appropriate, I believe so, yes.

Q. So, from your perspective then, you were the

lead author on the document?

A. I believe I would characterize that as

correct.

Q. Again, I think you mentioned that the document

was completed after the CAIR proposed rule was submitted

to the Board; is that correct?

A. As completed as a draft can be, yes.

Q. And did you start drafting it then before --

Did you start drafting the document before the CAIR

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proposal was submitted to the Board?

A. Oh, no.

Q. From your perspective, what was the purpose of

Exhibit 5?

A. I think I already gave that not five minutes

ago.

Q. Maybe I didn't understand. Can you refresh my

recollection?

A. I believe its two purposes were for in

preparation for the hearing process, as well as to

attempt, make an effort to quantify what this particular

program may achieve.

Q. And this particular program is the CASA?

A. Yes. That's all this document has relevance

to.

Q. And I think Ms. Doctors asked you the question

about whether there were estimates in the document, and

the way the question was framed, she also referred -- I

think she used the term "accuracy". It leads me to a

follow-up. Is there any information in Exhibit 5 that you

currently view to be inaccurate?

A. Not to my knowledge.

Q. And I wanted to walk through some of the

numbers on this Exhibit so we all have an understanding

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involved in the general use of some of these things and

what these numbers mean.

A. Sure.

Q. Let's perhaps start with Table 1. To the

left, you have what looks to be the identification for

four different rows, and those are the various CASA

categories; is that correct?

A. Yes, they are.

Q. And then you have the heading "Total," and can

you tell us what's in that column?

A. Those are the percentage of the budget

allotted to each category.

Q. And that would be of both an annual and

seasonal basis?

A. I believe this only addressed annual, but it

would be. Well, I guess --

Q. Are you amending the answer?

A. Yes. I apologize.

Q. It's both annual and seasonal?

A. Yeah.

Q. And the next column is headed "CASA," and then

there are a number of numbers below that?

A. Yes.

Q. What are those numbers?

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A. Those are the percentage breakdowns within the

CASA category.

Q. I see. So, 48 percent for EE/RE --

A. Right.

Q. -- is that percent -- that category represents

48 percent of the total CASA?

A. Of the total 25 percent.

Q. And then the next category column is entitled

"Allowances," and you have annual and seasonal, and can

you tell us what those numbers reflect?

A. Those numbers reflect the percentage of the

budget allotted to that category. 12 percent of the total

budget is 9,150 approximate. I believe it didn't entirely

work out because of the fractions, but as stated in the

rule, those are the values. It's approximately

12 percent, though, I believe.

Q. So, for instance, you're anticipating that

there will be 9,150 annual NOx allowances available in the

EE/RE category?

A. As stated in the rule, the rule carves out

that block. So, I would certainly expect that to be the

case.

Q. And then the next column there's a dollar

amount, 2,250, and it states "per allowance," and can you

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tell us what's reflected in that column?

A. That particular column represents the -- a

potential dollar value that would be associated to that

block of allowances, and as attempted by the footnote,

which is then directed to reference 14, I called from an

EIA document, where they predict, as the footnote notes,

between 2,000 and $2,500 per allowance in the future

between 2009 and 2030.

Q. And you took the middle of those two numbers

and used that as a value of an allowance?

A. It seemed reasonable.

Q. So, what were you projecting in terms of total

dollar value associated with the CASA allowance?

A. I believe it is the summation in the right

most column.

Q. That's $42,882,750?

A. Assuming 2,250 an allowance.

Q. The next table, as we move down the first page

of Exhibit 5, is entitled "Table 2: Potential Emission

Reduction Due in Part of the CASA," and I'd like to

similarly walk through the entries in this table so we

have an understanding of the information that's in this

table. Can you describe for us what's in the left-hand

column with the heading "EE/Conservation/RE"?

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A. You want to know what's in the column?

Q. You have various entries underneath that

heading, and I just wanted to know what those entries

represent.

A. Those entries represent various eligible

project types under the EE/RE category. And then just for

other people looking at this document, Page 1 is the

summary where all of the following pages provide the

justification and estimates and various assumptions to

where these numbers were derived from. So, I wanted to

point that out.

Q. And then you've got a "Capacity" column "Low"

and "High," and what information is reflected in this

column?

A. That column reflects ultimately the analysis

that is later performed in the document, and it simply

summarizes that based on certain data and certain

assumptions, I provided a range of capacity in megawatts

that could be provided.

Q. And, for instance, you have a high of 162 for

wind power -- excuse me -- a low of 162 for wind power and

a high of 270 megawatts for wind power. Is that your

projection of potential wind power to be constructed that

would be eligible for the CASA?

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A. That is my projection based on this analysis.

There are certain assumptions made in that category which

derive those numbers.

Q. But is it correct that that's capacity

generation you're projecting may be constructed?

A. I'm not necessarily projecting. I'm saying

potential.

Q. And I understand that you're looking at the

future, and this is just your estimate of --

A. Using data from what I felt were reputable

sources and making certain conservative estimates that the

American Wind Energy Association states there is this

block of wind capacity expected to be built. I make

certain assumptions that, let's say, only 30 percent of

that block comes to pass, and that's where we get the low

end, and I get the high end the same way by saying, "Let's

assume 50 percent."

Q. And you're looking into the future then, your

crystal ball suggests that there may be as high as

386 megawatts or so of additional capacity that may be

constructed and eligible for EE/RE allowances in the

summary; would that be correct?

A. I wouldn't use the phrase "crystal ball".

Again, everything here is based on data that I have

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called. I'm making no independent assumptions. I'm not a

wind energy expert. I'm not a solar power expert. I've

relied on data I found and made certain assumptions based

on other who I deem to be experts.

Q. Well -- And subject to your comments regarding

my use of the term "crystal ball," would you otherwise

agree with the question that I asked you?

A. Other than that, I believe it to be accurate.

Q. And in the next column is "Capacity Factor".

Can you tell me what information is reflected there?

A. "Capacity Factor" denotes the percentage to

which the capacity is utilized. The first column, for

example, "energy efficiency," I chose 100 percent because

it's not something that you turn on or off. It's inherent

in the technology. Wind power, as we all know, the wind

does not always blow. Various documents suggest that

there's roughly a 30 percent capacity factor. I felt it

important to include these to give a realistic picture of

the actual emissions offsets, as well as power offsets.

Q. Okay. And then the next category is "Output".

Can you tell us what information is in that category?

A. That category affectively combines the before

mentioned capacities with the capacity factors to

determine an annual output in gigawatt hours.

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Q. And, again, that's a prediction into the

future?

A. That is a straight mathematical conversion.

Q. Right. I understand that. But you're

predicting potential output in some future year?

MS. DOCTORS: This is repetitive. We've already

established that this is his estimate, that we don't know

what's going to happen.

MR. BONEBRAKE: I'm just trying to make sure that the

record is clear that this is just a prediction of

something in the future; you're not calculating some

existing generation or output?

HEARING OFFICER KNITTLE: I think the record is

pretty clear at this point that that's what he's trying to

do, and you can move on.

BY MR. BONEBRAKE:

Q. Then you have three columns to the right.

They're entitled "Emission Offsets/Reduction Ton". Can

you describe to us what information is in those columns,

Mr. Cooper?

A. (by Mr. Cooper) These three columns represent

exactly what the column heading says, an emission

offset/reduction tons based on data I called from

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reference 15 and 16, which, if memory serves, reference 15

I believe is the 9-10 report. I believe it provided a

summary of the fleet NOx and SOx emissions. I believe the

year was 2002. And I've labeled those particular emission

rates there. The 9-10 report did not, I believe, account

for PM. That data, I believe, I acquired from CAMD

perhaps is reference 16. Reference 16 was -- actually, I

called from our iceman database, which is comprised of

plant annual emission reports.

Q. And I think you just described for me where

you extracted emission rate information for purposes of

the -- calculated the numbers in that column; is that

correct?

A. I believe that's what I just -- Yeah.

Q. And how did you use those emission rates then

to generate the numbers in that column?

A. Again, it's a straight mathematical. It's an

emission factor essentially using the average fleet

emission factor in pound per megawatt and using the before

calculated, in this case gigawatt, one can determine what

quantity of NOx, SOx and PM would have been created had

this power been generated by the average utility EGU in

Illinois.

HEARING OFFICER KNITTLE: You need a moment,

Keefe Reporting Company

Mr. Cooper?

MR. COOPER: No.

BY MR. BONEBRAKE:

Q. The methodology that you just described for us

in terms of how you calculated the -- I think you

described it -- the emission that would have occurred at

the average generator generated at that level of

electricity, that you're instead, I think for purposes of

this table, assuming would be generated by an EE/RE

source. Is that calculation methodology consistent with

the methodology of the proposed rule for calculating the

allowances that would be available to the EE/RE project

sponsor?

A. (by Mr. Cooper) This has nothing do with

allowances. There is no -- There's nothing to be

consistent with. This simply states, in my opinion, based

on data from what I believe to be experts, that had this

quantity of power been generated at the typical EGU, these

are the emissions. It's a straight multiplication,

gigawatt hours times emission rate divided by 2000.

That's it. There's no allowance methodology. There's no

heat input conversion. There's no de-rating for oil or

gas.

Keefe Reporting Company

Q. So, in other words, in order to calculate what

kind of allocations would be associated with various EE/RE

projects, you have to, for instance, take the output

column for generation and put that through whatever the

appropriate formula is in the proposed rule and then

calculate the allowances?

A. That would be correct.

Q. The next, it looks like it's a separate table,

although you can tell me, the Clean Coal Tech entry, is

that part of your Table 2, or is that from your

perspective a different table?

A. No. It's Table 2.

Q. And below "Clean Coal Tech," you've got a

reference to Taylorville?

A. Yes, I do.

Q. Can you describe for us what the Taylorville

item is?

A. Taylorville is one of the proposed new

coal-fired units. It's actually, I believe, the first

item on reference 13, which was the web printout that I

provided yesterday for Ms. Bassi. It is an IGCC plant.

MS. DOCTORS: Could you say what "IGCC" is?

A. "IGCC" is "integrated gasification combined

cycle" called from the permit filed. It's actual capacity

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as denoted in the table is 770 megawatts. I believe it's

two 335 megawatt units. IGCC is a syn gas process.

BY MR. BONEBRAKE:

Q. And then you're predicting in the NOx, SO2 and

PM columns anticipated emission levels?

A. (by Mr. Cooper) No, I am not.

Q. Can you describe for us what information is in

those columns?

A. As denoted next to the column headings, the

small triangle, for those that don't know, is the Greek

symbol Delta, which means difference. What is attempted

to show in this particular column is the difference in the

emission rate of Taylorville from the average Illinois

fleet EGU. Is that --

HEARING OFFICER KNITTLE: Ms. Bassi?

BY MS. BASSI:

Q. So, you're saying this is a difference between

what your calculations are saying the Taylorville site

might emit more NOx as compared to the average EGU?

A. (by Mr. Cooper) Did you say " more"?

Q. The difference, I said.

A. What this table is attempting to state is that

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in the generation of -- as the middle column shows,

roughly 5,000 gigawatt hours, Taylorville can generate

that much power while producing roughly 8,500 tons less

than the average EGU.

MS. BASSI: Thank you. That clarifies.

MR. COOPER: You're welcome.

BY MR. BONEBRAKE:

Q. And has Taylorville been constructed at this

point?

A. (by Mr. Cooper) No, it has not.

Q. And at the bottom of the first page --

BY MS. BASSI:

Q. I just have to ask another follow-up about

Taylorville just so I understand the differences here.

A. Yes.

Q. On Exhibit 5, under "Capacity Actual

megawatts," you have 770; is that correct?

A. I believe so, yes.

Q. Okay. And if I look at the Taylorville entry

for Exhibit 13, I believe Taylorville -- the one you're

talking about is the very first entry on Exhibit 13; is

that correct?

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A. I don't have it in front of me. I believe it

is -- Now I have it in front of me. Yes.

Q. Okay. In the fifth column from the left on

Exhibit 13, the one that's labeled "Rated Output Megawatt

E," it says that the Taylorville site will have two units

at 330 megawatts E, 278 net?

A. Yes.

Q. How does that -- How does that correlate with

your megawatt at 770?

A. It does not.

Q. Okay.

A. As stated yesterday, I don't maintain this

particular web listing. Through the process, it is

conceivable that their initial application requested two

330 units, and during the permit review, they may have

changed their minds and increased that number. The 770

number I pulled straight from the in-process permit. I

spoke with the analyst who's performing the review, and

this is the data I was given.

Q. Are those two -- Recognizing the differences

then those numbers --

A. I would --

Q. Can I ask my question?

A. You may.

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Q. But the capacity actual megawatt on Exhibit 5

is to equate to the rated output megawatt on Exhibit 13;

is that correct, even though there has been a change at

Taylorville? These are not intended to be different

units?

A. No.

Q. Okay.

A. There are two units, and it's unfortunate that

we have a conflict here. Again, I don't maintain this

list. I'm at least happy that the numbers are close.

It's entirely conceivable that they did change their

minds. They decided to go with a different vendor, a

slightly larger unit. They got a better unit with a

larger unit. I'm not entirely certain. I can say,

though, that the 770 was pulled directly from the

in-process permit after speaking with the engineer

reviewing that particular application.

Q. I was merely trying to verify that these are

not representing different characteristics of the project?

A. No.

MS. BASSI: Okay. Thank you.

BY MR. BONEBRAKE:

Q. A follow-up, as well, regarding the EE/RE

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portion of the Table 2 that we just talked about --

A. (by Mr. Cooper) Yes.

Q. -- and we talked a little bit about how you

calculated the numbers that are the NOx, SO2 and PM table

and columns, and as I understood it, you essentially were

attempting to predict the emission reductions that would

be -- that would occur if a particular level of generation

would be provided by one of the EE/RE projects as opposed

to by an EGU at average emission rate of the state; is

that roughly correct?

A. I believe that is the attempt, and --

Q. My follow-up is, it's true in Illinois, is it

not, that over the next 10 or 20 years we're projecting an

increase in demand for electricity?

A. I believe that to be case.

Q. So, if, in fact, electricity generation from

coal-fired EGU's is not displaced, that is EGU's continue

to generate by buying allowances and the EE/RE projects go

forward, we, in fact, do not have a reduction in

remissions; do we?

A. I do not agree with that, no.

Q. Can you explain to me what's wrong in what I

just said?

A. I believe, as summarized on Page 2 of the

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document, while one potential outcome is that wind or

other EE/RE's could offset and effectively negate the need

for coal-fired capacity, I believe it is my opinion that,

as the statement reads, it effectively elevates the base

load generating capacity high enough that the future power

demand is met or at least offset without the need to add

additional fuel combustion plants that increase emissions.

So, I would not say that there would not be an

environmental gain from adding wind. If, as you stated,

there is a projected increase in demand, that demand could

perhaps be met by the capacity added by the wind.

Q. Well, let me try it a little bit differently.

That same paragraph refers to increases in expected demand

of 24.4 percent by 2025, with a peak of 27.1 percent in

2017. Do you see that?

A. Yes, I do.

Q. And when you said 27.1 percent in 2017, was

that an annual increase, or what's the nature of that

number?

A. I believe that was the increase for the

annual, yes.

Q. In 2017, we're expecting an increasing in

demand of 27.1 percent as compared to 2016?

A. No. As read by the sentence, EGAS shows that

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from the base year 2002.

Q. Okay. Then I guess what you're suggesting

then is that the demand peaks up to 27.1 percent as

compared to that baseline and then drops somewhat to 2025?

A. I believe that's what I'm attempting to say.

Q. If we look at the year 2017 where we're

predicting a 27.1 percent increase in demand, do you

know --

A. I am not predicting. This is not my expert

testimony whatsoever. This is based on a piece of

software developed by USEPA, and admittedly, in this case,

I'm using it as a proxy. As stated, EGAS is used to

generate emission gross factors.

HEARING OFFICER KNITTLE: Mr. Cooper, "EGAS" is what

exactly?

A. I forgot the acronym.

MR. KALEEL: It an economics model. I'm not exactly

sure the --

MR. DAVIS: I can't be sure, but I thought it was

Economic Growth Analysis Software.

HEARING OFFICER KNITTLE: And it's USEPA software?

MR. DAVIS: Yes. It's uses growth factors from USEPA

and DOC.

HEARING OFFICER KNITTLE: Sorry. Mr. Bonebrake, you

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can continue.

MS. DOCTORS: I think we have a clarification.

HEARING OFFICER KNITTLE: First the clarification.

A. (by Mr. Cooper) Just so there's no confusion,

I'm not -- this document does not suggest that between

2016 and 2017, there will be a 27.1 percent increase.

Again, this is what the software that I'm using as a proxy

predicts as an increase from the base year of 2002. Is

that --

BY MR. BONEBRAKE:

Q. And I understand that clarification, and I

appreciate your attempt to present some light on this. My

follow-up question that I had for you was, do you know if

the existing, that is constructed and operating electrical

generating capacity in this state could provide

electricity at a level of 27.1 percent above 2002 levels?

A. (by Mr. Cooper) I do not know.

Q. So, is it, in fact, conceivable that the EE/RE

kind of generation would be needed on top of existing EGU

generation to attain 27.1 percent increase in generation?

A. I believe so.

Q. And then if that is true, wouldn't that, in

fact, mean that the EE/RE projects would not in any way

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displace EGU generation?

A. I don't believe that to be true.

Q. Again, I guess I have to ask you to explain

why you disagree with that statement.

A. When you say "displace," when I think of

"displace" in terms of electrical generating units, I

think of economics comes into play. A unit will run until

there is an economic disadvantage. It's conceivable that

if someone can get power cheaper from a neighboring wind

farm, there may be no need for that particular plant.

It's also conceivable that we may need all of the current

generating base load capacity in addition to EE/RE and

other efforts, as well as new generation capacity.

Q. And my question to you, I think, assumed that

it would be necessary by 2017 to have all of the existing

generation and, in addition, new generation, and in that

scenario, would you agree that existing generation

essentially would be running at capacity, and, so,

therefore, whatever new generation was built would not

operate to displace the existing generation?

A. I honestly don't follow your question.

Q. Your calculation -- I'll say your prediction

of emission reductions assumes, as I understand it, that

EE/RE projects have less or no emissions, and that they

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will generate a level of electricity that had they not

been built would be generated by existing EGU's; is that

correct?

A. I would agree with that.

Q. But if the existing EGU's continue to operate

at existing levels because of an increase in demand, even

with EE/RE projects, there is no reduction in emissions as

compared to the current time with respect to the existing

EGU's; is there?

A. If I'm following you, I believe that to be

correct.

HEARING OFFICER KNITTLE: We have something from Ms.

Bugel.

A. (by Mr. Bloomberg) I have something to add to

that. I wanted to point out that the purpose of the cap

and trade program is not only to reduce emissions, but to

limit future growth in emissions. So, therefore, if there

is this growth in demand, then something is going to have

to be built to supply it, and obviously the EE/RE or zero

emission would be more beneficial to the environment in

reducing further emissions than continuing with

building -- well, with the existing plants.

HEARING OFFICER KNITTLE: Let Ms. Bugel -- she's had

a question for awhile.

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MS. BUGEL: Mr. Bloomberg foresaw my question and

answered it.

HEARING OFFICER KNITTLE: Thank you, Mr. Bloomberg.

BY MR. BONEBRAKE:

Q. And as I understand -- Just to make sure I

understand your testimony, Mr. Bloomberg, you're

suggesting that there's need for additional new

generation, and the new generation would be of the sort

that would be covered by the EE/RE and, therefore, have a

lower emission rate than a new unit burning, for instance,

coal, pulverized or cyclone; that's the scenario that

you're positing?

A. (by Mr. Bloomberg) I'm saying that's one of

the possibilities.

Q. And is it true that, in fact, the CAIR caps do

not include a growth factor?

A. (by Mr. Bloomberg) That's my understanding of

the cap and trade.

Q. And back to Page 1, Mr. Cooper, I had some

questions on what's referred in the bold as "PC Upgrades,"

which is at the bottom.

A. (by Mr. Cooper) Yes.

Q. In the far left column, there are three items

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there, "SCR/SNSCR," "FDG" and "baghouse," and then to the

right of each of those rows, there's the number, and

you've got "2," "7," "5". Can you tell us what those

numbers represent?

A. Those numbers represent -- And this is a

summary. This refers back to attachment 2, which is the

second to last page, Page 8 I believe, and it refers to

the pieces of equipment that are believed to be installed

and the quantity.

Q. And attachment 2, does that list all Amren or

EEI facilities?

A. I'm not familiar with EEI.

Q. Electric Energy.

A. Is the answer "yes"?

MS. DOCTORS: I don't know.

A. Yes.

BY MR. BONEBRAKE:

Q. And on what basis did you include in

attachment 2 only those particular projects?

A. It's my understanding that partially due to

the interaction with the MPS, I believe, and this

particular program working in concert, that these pieces

of equipment may be installed.

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Q. And if these pieces of equipment were to be

installed, would they be eligible for the CASA category

associated with air pollution equipment?

A. I believe that is the intent.

MR. ROSS: I would like to clarify. This is just one

possible list of controls that Amren may install that we

developed through press releases that Amren has put out

there and discussions with Amren. This may or may not be

the actual controls that they install in the future.

BY MR. BONEBRAKE:

Q. I was going to ask about the source of the

controls that are being predicted in attachment 2. Do you

have anything to add to that explanation that Mr. Ross

just gave?

A. (by Mr. Cooper) No.

Q. And if I understood you correctly, you were

indicating that the controls referenced in attachment 2

are being predicted, subject to the caveat that Mr. Ross

provided, as a result of the MPS provisions of the mercury

rule; is that correct?

A. Not entirely. I said the MPS, as well as this

particular program in part.

Q. And then you have some columns with the

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headings "NOx," "SO2" and "PM" in that same portion of the

table. Can you tell us what numbers -- what those numbers

reflect?

A. Those numbers reflect what I believe would be

the emission reductions had those pieces of controls been

applied to the particular units. And as Table 2 shows,

I've provided, again, a range of control levels,

80 percent and 90 percent, which I believe are both

conservative, as well as the .02 and .01 for the baghouse.

Q. Did you assume a level of future generation to

calculate the emission reduction?

A. No, I did not.

Q. So, can you describe for us the calculation

beyond the emission rates?

A. It's simply a subtraction of the control

efficiency that the device would provide. As you can see

in attachment 2, I've provided -- I attempted to use 2002

as my base year since that's what was provided by EGAS.

As labeled there, apparently row 22 from my self

spreadsheet, I'm not sure which Newton units that is, but

in 2002, it would emit 3,037 tons, an 80 percent reduction

would result in the difference, and then the summation is

provided at the bottom. So, it's simply plant submitted

data minus what I had hoped was a conservative estimate of

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that particular control device's emission rate -- or

control device's control level, and it's simply a

difference. That's all it is.

BY MS. BASSI:

Q. What does "CONT" mean?

A. It's an abbreviation for "control".

MS. BASSI: Oh, control. Dah.

BY MR. BONEBRAKE:

Q. And I did have a related question for you on

attachment 2. For the NOx column, for instance, you have

"607" and then "443," and then below that you have a

number to be non-applicable.

A. (by Mr. Cooper) Correct. From the

information, as Jim stated, it's my understanding that

Coffeen, Duck Creek, Edwards and Joppa will be installing

no control device that would be applicable to the CASA.

Q. And I look at "607" and "443," and I go down

to the bottom, and I come up with a number different from

4202.

A. That's the difference. The column, I believe,

is summating the reduction.

Q. Then what does the "607" number represent?

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A. I believe it is the 20 percent leftover.

Q. I see.

A. Perhaps it's -- Again, this was a work in

progress, not totally flushed out.

Q. I'm not a mathematician, but even those

numbers caught my eyes.

A. Well, I sympathize.

Q. And then the predicted emission reduction as a

result of the projects identified in attachment 2, and you

have these emission reductions on Page 1, what would be

necessary to determine the level of allowances that would

become available to Amren and EEI as a result of those

predicted emission levels?

A. In reference to the CASA?

Q. In reference to the CASA.

A. You would need to know the particular

variables in their appropriate equations, the megawatt

hours generated, the two-year baseline emission rate

before based on CEM, and then control periods average

emission rate based from the CEM. Using those three

pieces of data and running the math would calculate the

number of allowances specified by the relevant equation.

Q. And has the Agency made any of those

calculations?

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A. Not to my knowledge.

Q. Mr. Ross, any further information?

A. (by Mr. Ross) What calculations are those?

Q. Any prediction of the level of allowances that

would become available to Amren and EEI as a result of the

pollution controls that are identified in attachment 2 or

that otherwise are predicted?

A. (by Mr. Ross) Yes, we have estimated those.

A. (by Mr. Cooper) I misspoke.

Q. And who is the "we" in the royal we's?

A. (by Mr. Ross) Agency staff.

Q. Does it include Mr. Cooper?

A. (by Mr. Ross) He was involved.

Q. And are the level of allowances predicted to

be available -- Well, first step. The clean coal

technology category of CASA is -- Actually, the pollution

control upgrade category, you have that separately

identified in your Table 1 as a category for which there

would be CASA allowances available; is that correct,

Mr. Cooper?

A. (by Mr. Cooper) Correct.

Q. And the number of annual allowances that would

be available under the program is 3,811 for the pollution

control upgrade category?

Keefe Reporting Company

A. Yes.

Q. And that's a category from which allowances

would be made available to Amren as a result of pollution

control activities that are identified in attachment 2; is

that also correct?

A. Amren and anyone else eligible. As a point of

clarification to your prior question, I thought you -- or

I interpreted your question to mean the entire gamut of

categories. I did misspeak.

Q. And the calculations that have been made with

respect to expected Amren CASA allowances under the

pollution control upgrade category, does that number

exceed 3,811?

A. I believe it does.

Q. So, it's the Agency's expectation that the

pollution control upgrade category will be oversubscribed

solely based upon Amren's anticipated pollution control

activity?

A. It could be.

Q. It sounded like you've made a calculation that

indicates it will be; is that correct, Mr. Cooper?

A. Calculations make certain assumptions. I

don't know what emission rate they will achieve actually.

A. (by Mr. Ross) Or what controls they will put

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on. To be eligible for that category, first you have to

install controls.

Q. I had a related question for you, Mr. Cooper,

and it's in Section 225.460, subsection 3.

MS. DOCTORS: What did you say?

MR. BONEBRAKE: 225.460, subsection 3.

BY MR. BONEBRAKE:

Q. Are you with me?

A. (by Mr. Cooper) Energy efficiency and --

Q. Right.

A. I believe I am.

Q. And this provision of the regulation carves

out certain activities from eligibility for CASA

allowances; is that correct?

A. I believe that is its attempt.

Q. And the first line of that subpart refers to

energy efficiency, conservation, renewable energy of clean

technology. Do you see that?

A. Yes, I do.

Q. And I think, as we discussed yesterday, clean

technology includes both air pollution control upgrades

and clean coal technology projects; is that correct?

A. Yes.

Keefe Reporting Company

Q. So, d would be -- subpart d would be

applicable generally speaking to assessing whether or not

air pollution control projects would be eligible for CASA

allowances?

A. Air pollution control projects would be

select. So, air pollution control would be eligible for

CASA, yes.

Q. But, I mean, one of the assessments that would

need to be made is whether air pollution controls projects

are eligible pursuant to the terms of subpart d of this

particular section; is that correct?

A. Yes.

Q. Now, the provision regarding eligible projects

here reads, "Energy efficiency and conservation, renewable

energy or clean technology projects listed in subsections

a and c through this section shall not include," and then

there's a number of headings. The first category is

nuclear power projects; is that correct?

A. Yes.

Q. And the next category is projects required to

meet emission standards or technology requirements under

state or federal law or regulation (except for the

installation of a baghouse). Do you see that, Mr. Cooper?

MS. DOCTORS: I think we made a motion to amend that

Keefe Reporting Company

section.

MR. BONEBRAKE: I don't think that language has

changed, but you can let me know if -- the phrase I just

read I don't think was affected.

MS. DOCTORS: I'm just going to -- All right.

MR. BONEBRAKE: Did you have a different view?

MS. DOCTORS: Just keep going. I'm sorry I

interrupted you.

MR. BONEBRAKE: I want to make sure that I'm working

with the current set of rules.

MS. DOCTORS: Let's work off the motion and the

current language.

MR. BONEBRAKE: We can do that. We can turn to the

attachment to the motion, but the particular phrase that I

just read, I believe, has not been affected by the red

lining of this document. 225.460d. It's on Page 3 of the

attachment of the motion. Actually, that's a section in

the motion.

BY MR. BONEBRAKE:

Q. And I had just read to you, Mr. Cooper, the

language relating to state or federal law regulation. Do

you recall that?

A. (by Mr. Cooper) Yes.

Keefe Reporting Company

Q. And is the MPS, if adopted, a state

regulation?

MS. DOCTORS: I'm going to have Mr. Ross answer these

questions.

A. (by Mr. Ross) Yes, it would be contained in

the state regulation, but it's not our intent to exclude

those from the use of the CASA.

MS. BASSI: Sorry?

A. The MPS would be a state regulation -- part of

a state regulation in the proposed Illinois mercury rule,

provided that it's adopted as proposed with the MPS

contained therein, but it's certainly not our intent to

exclude those from -- those projects from utilizing the

CASA.

BY MR. BONEBRAKE:

Q. In fact, the MPS, does it not contain emission

standards?

A. (by Mr. Ross) It does.

Q. So, under the reading of this language of this

provision, Mr. Ross, it certainly seems that MPS projects

would be carved out of eligibility for CASA; would you

agree?

A. (by Mr. Ross) I think it's something that we

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need to review. One point may be that the MPS is

voluntary. How that works in here -- Certainly we

appreciate you bringing that to our attention. Again,

it's something that we'll need to review to ensure that

that is not the case.

MR. KIM: Before Mr. Ross goes any further, I wanted

to point something out that was brought to my attention,

and this kind of plays on what you're bringing up,

Mr. Bonebrake. In the motion to amend that we filed

yesterday that we provided copies of yesterday, we made

some language changes to Section 225.460 and 225.465.

Those changes were intended to also be reflected in

Sections 225.560 and 225.565. So -- Which was an

oversight, and I think largely attributed to the case in

which the motion to amend was prepared. So, what I intend

to do over the lunch break is, I guess, put together

another motion and just include those two sections that

did not have that language. Maybe what we can do in

recognition of your question, however, is we can discuss

this over the lunch hour, and if some further -- it's as

good an opportunity as ever -- if there's some way we can

clarify that point you just made and maybe have that

reflected in the language, then we'll take a look at that

because I understand what your point is. But you

Keefe Reporting Company

understand I think what Mr. Ross was saying, as well, but

there was a distinction we were trying to make, and maybe

that's not as well borne out as maybe we could have had

it.

MR. BONEBRAKE: We have to work with regulatory

language, and I understand Mr. Ross' comment regarding

intent, but obviously one of our concerns is the language

of the proposed rule itself.

BY MR. BONEBRAKE:

Q. And, Mr. Ross, I did have a follow-up about

the distinction on the grounds of voluntary consent, and

Mr. Cooper in his testimony also suggested that there were

certain kinds of activities that were going to be carved

out because they were deemed not to be voluntary, and can

you provide for us an explanation as to what the Agency

views to be an involuntary project that would not be CASA

eligible?

A. (by Mr. Ross) Well, I think one example would

be projects that are required to be undertaking --

undertaken as a result of a court order or consent decree

or consent order.

Q. Do regulations impose requirements?

A. (by Mr. Ross) Yes, they do.

Keefe Reporting Company

Q. And when applicable, regulated entities are

required to comply with them?

A. (by Mr. Ross) Absolutely.

Q. Compliance is not voluntary; is it?

A. (by Mr. Ross) No, it is not.

Q. I'm wrestling with the distinction then that

you are attempting to draw between compliance with the

regulation and compliance with a consent decree or court

order.

A. (by Mr. Ross) Well, I think a consent decree

or a consent order is somewhat punitive in nature. It's

usually the result of an enforcement action that's been

undertaken and where the parties are agreeing to a

resolution.

Q. Don't consent decrees typically, in your

experience, Mr. Ross, contain provisions that do not

concede liability?

A. Yes, I have seen that language.

Q. And, in fact, aren't they typically viewed to

be a settlement document by which parties resolve their

disputes?

A. Yes.

Q. Just like the MPS resulted from discussions in

the first instance between the Agency and some company; is

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that correct -- to resolve regulatory language?

A. I don't believe the arrival at the MPS

revisions to the rule were a result of any enforcement

action and certainly not punitive in nature. It was meant

as additional flexibility for that rule given the fact

that we would achieve additional reductions through the

emission limits imposed by the MPS.

Q. Are all enforcement actions punitive in

nature?

A. I don't believe so.

Q. So, for those that are not punitive in nature,

do you have a different response with respect to whether

compliance --

MS. DOCTORS: I'm going to object to this line of

questioning. We've already said that we're going to look

at if there's some ambiguity as to what is meant by the

language and whether something is a voluntary project or

not. So, I think that covers that issue, that there's

something that's unclear here, and we're going to take a

look at it.

HEARING OFFICER KNITTLE: Mr. Bonebrake, I think

they're going to revise that language, and if you have

further questions that --

MR. BONEBRAKE: Well, there's a point of

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clarification that needs to be made here. I think what

we've heard from the Agency is that they're going to look

at the language that deals with the state or federal law

or regulation to make clear their apparent not to carve

out MPS projects. There is a separate provision --

separate language in the same provision that refers to

projects used to meet the requirements of a court order or

consent decree, and I have not heard from the Agency that

it is going to be looking to revise that language. If so,

then perhaps further discussion could be tabled, but I

have not heard that.

A. (by Mr. Ross) No. I believe we made a

decision that the installation of controls and the

achievement of emission rates required by a consent decree

or consent order are not eligible to some extent for

allowances from the CASA. They are eligible, as the

amendment identifies, for the amount of over-compliance

they achieve. "Over-compliance" being defined as by the

amount they go beyond the levels specified in any consent

order or consent decree.

MR. BONEBRAKE: Excuse me just a moment.

BY MR. BONEBRAKE:

Q. Mr. Ross, is it true that parties in

Keefe Reporting Company

litigation will typically enter into consent decrees

voluntarily inasmuch as the alternative would be to go to

trial and obtain a court order?

MR. KIM: I'm going to object to the relevance of

this question. I believe it's already stated that a

decision was made that we were not going to include

certain projects. We're now getting into the what's and

the whereabouts of enforcement actions and consent

decrees, and I don't understand the relevance of that.

MR. BONEBRAKE: If I may. My understanding has been

that the Agency's decision regarding consent decrees is

predicated upon the distinction between voluntary and

involuntary, and I'm trying to probe the Agency on the

issue of what is voluntary and what is the --

HEARING OFFICER KNITTLE: Mr. Ross we understand.

Mr. Kim, anything further?

MR. KIM: Well, again, short of getting into an oral

argument about whether or not an entry into a consent

decree or finding yourself in a situation where you're

negotiating a consent decree is the result of an

enforcement action, which clearly implies some sort of at

least violation on the part of a party, I just don't see

the point of getting into this, other than we've made a

decision, as expressed by Mr. Ross, of certain types of

Keefe Reporting Company

projects would not be included within this language, and

it's not -- I understand what Mr. Bonebrake is saying. If

he wants to ask Mr. Ross what his opinions are about

whether or not a consent decree is voluntary or

involuntary, I don't see that's anything other than maybe

an exercise on what Mr. Ross' views are of the enforcement

cases, but that has nothing to do with the language of the

rule. We've already expressed why we made our decision.

HEARING OFFICER KNITTLE: I'm going to overrule that

objection. I do think that the Agency's rationale as to

why this language is in there as opposed to any other

language is something we want to hear. So, you can go

ahead with the questions, Mr. Bonebrake. Mr. Ross?

A. (by Mr. Ross) Well, I would like to clarify.

He's made the implication that that is the reason that we

excluded companies that have entered into a consent order

from using or from being eligible for the CASA. That is

part of the rationale. Another part of the rationale

would be that there is no need for incentive to be

provided to companies that are already required in a

consent order to install controls. CASA, as we've stated

numerous times, its primary purpose is to provide an

incentive, which in turn provide environmental benefits.

So, if the company is already required to meet certain

Keefe Reporting Company

emission limits and install certain controls as a result

of a consent order, there's absolutely no need for an

incentive from the CASA.

BY MR. BONEBRAKE:

Q. Well, if a company is already required by the

MPS to install certain pollution controls, isn't that the

same incentive question?

A. (by Mr. Ross) The MPS is voluntary, and they

are not required to install any controls. They are just

required to meet certain emission rates. I believe in one

particular consent order for Dynegy, it spells out

specifically what control equipment must be installed to

some level and emission rates or caps that must be

achieved.

HEARING OFFICER KNITTLE: Ms. Bassi?

BY MS. BASSI:

Q. Under the MPS, I believe you just stated that

the MPS requires sources that opted to meet certain

emission rates; is that correct?

A. (by Mr. Ross) That's correct.

Q. Does the MPS also preclude trading emission

allowances?

Keefe Reporting Company

A. (by Mr. Ross) To the extent that those

allowances were obtained as a result of actions taken to

comply with the MPS, there are restrictions on those

allowances.

Q. And, therefore, if a source cannot obtain

allowances to meet those emission rates that are imposed

by the MPS, does it have a choice, other than to shut down

or add equipment or change how it operates, in order to

comply with those emission rates?

A. (by Mr. Ross) The MPS also allows that source

if needed to comply to purchase allowances, to do whatever

needs done to comply.

Q. So, after 2012, the sources purchase

allowances to meet the emission rate?

A. (by Mr. Ross) To meet the emission rates of

the MPS?

Q. Yes.

A. (by Mr. Ross) No, it cannot.

Q. Okay.

A. (by Mr. Ross) But to comply with CAIR, it

can.

Q. That wasn't the question. It was to comply

with the MPS. So, the question is, in order to comply

with the MPS, is there a choice, other than to install

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control equipment or change operation or shut down?

A. (by Mr. Ross) I would concede that the

logical way to comply with the MPS would be to install

control equipment.

BY MR. BONEBRAKE:

Q. The motion to amend, Page 3, contains in

addition to 225.460, in the second part of that addition

in red line indicates that CASA allowances may be

allocated for projects used to meet the requirements of a

court order or consent decree entered into on or after

May 30, 2006. If the court order/consent decree does not

specifically preclude to whom such allocations, so, is it

correct that the Agency is making distinctions regarding

the eligibility of projects undertaken pursuant to the

consent decree based upon the date of the consent decree?

A. (by Mr. Ross) Yes, I think that's true.

Q. What is the rationale for that, Mr. Ross?

A. (by Mr. Ross) Well, we didn't want to

predetermine that any future consent decrees should not

allow the use of a CASA. That should be determined in the

settlement discussions of the consent decree.

BY MS. BASSI:

Keefe Reporting Company

Q. What if the Agency isn't a party to the

consent decree?

A. (by Mr. Ross) Well, then I assume the parties

will be aware of the regulations, and they will discuss it

accordingly. The Agency, I anticipate, would be a party

to a consent decree.

Q. This doesn't distinguish that I can see, and

perhaps I'm missing it, and you can point it out. It's

just says "a consent decree."

A. (by Mr. Ross) That's true.

Q. There could be a consent decree that deals

with SE security issues; is that not right?

A. I'm not sure if I understand the relevance --

Q. Well, that's kind of the point.

A. (by Mr. Ross) I'm just uncertain as to the

implications of the question. If there's a consent order

or consent decree, does it have an environmental issue at

the core?

Q. It doesn't --

HEARING OFFICER KNITTLE: Mr. Rieser?

BY MR. RIESER:

Q. Would a consent decree under the SCP be likely

to require the installation of pollution control equipment

Keefe Reporting Company

or set emission limits?

A. (by Mr. Ross) No, it would not.

Q. And would another distinction between a

consent decree entered before May 30th, the date the

rule is filed -- May 30th was the date the rule was filed?

A. That's correct.

Q. Another distinction would be that the consent

decree entered into May 30th would not -- obviously since

the rule wasn't there, there was no opportunity for the

Agency to decide how that worked on pursuant to the

consent decree would coordinate with the availability of

the allowances under CASA because it didn't exist at that

time; correct?

A. (by Mr. Ross) Correct.

Q. But approved consent decrees after that date

that require the installation of control equipment, the

Agency now has the opportunity to decide whether it should

step in and limit CASA allowances or not limit CASA

allowances depending on the status?

A. (by Mr. Ross) That's correct.

BY MR. BONEBRAKE:

Q. That answer assumes, does it not, Mr. Ross,

that the Agency is a party to the consent decree?

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A. (by Mr. Ross) That answer did assume that the

Agency was a party to the consent decree.

Q. If the Agency is not a party to the consent

decree, then the Agency has no control over the provisions

of the consent decree that might allow a company to

participate in the CASA; is that correct?

A. (by Mr. Ross) Could you repeat the question?

Q. Sure. My question was, if the Agency is not a

party to a consent decree, then the Agency has no control

over whether or not the consent decree contains a

provision that permits participation in CASA?

A. (by Mr. Ross) That's correct.

HEARING OFFICER KNITTLE: Mr. Rieser? Go ahead. I

didn't know you weren't finished.

A. (by Mr. Ross) However, I would say unless the

-- as the language is written, unless the consent order or

consent decree precludes the affected party from utilizing

the allowances of the CASA, then in that case, they would

be able to utilize the allowance.

BY MR. BONEBRAKE:

Q. So, parties that enter into consent decrees

after May 30th, 2006 may well have no preclusion on using

CASA allowances?

Keefe Reporting Company

A. (by Mr. Ross) That may be a result of a

consent order or a settlement agreement, that's correct.

Q. As compared to those who entered into consent

decrees before May 30th, 2006, as you've described,

they're not eligible for CASA allowances simply by virtue

of the fact that they entered into a consent decree

earlier in time; is that correct?

A. (by Mr. Ross) No, that is not correct. They

are eligible for CASA allowances for over-compliance, the

amount they go beyond what is already required.

Q. Okay. I appreciate --

A. (by Mr. Ross) And we are aware of some

consent orders existing. We examined them. They do

contain trading restrictions. They already require

control equipment to be installed. They require certain

emission rates to be met. And there is absolutely no

reason to provide an incentive or a reward, if you want to

use that term, for the installation of controls that are

already required as a result of any existing consent

order.

Q. And I appreciate your clarification regarding

over-compliance because that was something that was

incorrectly assumed not to be present in my question. So,

I appreciate that clarification.

Keefe Reporting Company

MR. KIM: First of all, can I ask just one or two

questions to maybe further clarify this?

BY MR. KIM:

Q. Mr. Ross, let's assume for the sake of

argument, as Mr. Bonebrake suggested, there may be a

consent decree that's negotiated in which the Illinois EPA

is not a party to those negotiations. If such a consent

decree does involve discussions concerning emission rates,

what would the regulations -- what regulations would be

the basis of those discussions? Where would those

regulations be found?

A. (by Mr. Ross) I believe the multi-pollutant

standard of the mercury rule would be one regulation that

would need to be looked at. Another would be CAIR as

proposed in Illinois and existing Board rules and other

applicable rules.

Q. So -- And specifically in terms of the CASA,

what rules would be looked to in terms of -- Strike that.

So, if that's the case, any party that's negotiated, those

cases would be looking at the -- as you've just discussed,

assuming that is adopted by the Board and JCAR, the

Illinois mercury rule and the Illinois CAIR rule; is that

right?

Keefe Reporting Company

A. (by Mr. Ross) That's correct.

Q. And where are the provisions discussing the

CASA that we are talking about today; which set of rules

are those found in?

A. (by Mr. Ross) The proposed CAIR rule.

Q. And, so, is it your assumption then that any

party, regardless of whether the Illinois EPA is or is not

involved, that is negotiating a consent decree with an

identified respondent or defendant would be looking to all

relevant provisions of the Illinois CAIR rule and the

Illinois mercury rule?

A. (by Mr. Ross) That is correct. That would be

a responsible thing to do in negotiating a consent order.

Q. And we generally find our federal counterpart

to be somewhat responsible in that?

A. (by Mr. Ross) For the record, yes.

MR. KIM: That's all I have.

HEARING OFFICER KNITTLE: Mr. Rieser?

BY MR. RIESER:

Q. Well, just following up on that line of

questioning, are you aware -- and you may not be the right

person to answer this question, Mr. Ross, but are you

aware of a consent decrees that require either setting

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emission limits for an Illinois source or requiring

controls, I should say, for a coal-fired generating

facility in Illinois in which the State of Illinois was

not a party?

A. (by Mr. Ross) I am not aware of any or at

least where consultation was not sought.

BY MS. BASSI:

Q. To follow-up a little before on this

distinction between before and after May 30th, 2006 and

how the Agency views consent decrees negotiated before and

after, I believe one of the things that you mentioned is

that a consent decree in the Agency's mind is a result of

an enforcement action; is that correct?

A. (by Mr. Ross) My understanding is typically

that is the case.

Q. And what is the distinction between -- And

setting aside the -- Well, no, not setting aside the

incentives. Why is it more appropriate to provide an

incentive for someone in an enforcement action to enter

into a consent decree after May 30th than before?

MR. KIM: I'm going to object. This question has

already been asked and answered.

MS. BASSI: I don't think we've talked about

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incentives.

MR. KIM: I believe that the distinction was made

concerning dates, and that's what was answered.

HEARING OFFICER KNITTLE: I tend to agree, but let's

let Ms. Bassi ask the question, and then we'll move on.

BY MS. BASSI:

Q. The question is, why would you provide an

incentive to a source entering into a consent decree after

May 30th?

A. (by Mr. Ross) We are providing an incentive

to all sources to install additional control equipment. I

think we are not making a prejudgment that the consent

order would preclude them from any incentives provided by

the CASA.

Q. If a consent order does not contain an

admission of liability, regardless of when it's entered

into, is there some kind of prejudgment involved that

there is liability if someone enters into a consent

decree?

MS. DOCTORS: Objection. This is calling for him

to --

HEARING OFFICER KNITTLE: Calling for what?

MS. DOCTORS: -- to offer a legal opinions about --

Keefe Reporting Company

HEARING OFFICER KNITTLE: I'm going to overrule. I

think it's relevant to hear what Mr. Ross has to say.

A. (by Mr. Ross) Well, I would say I can't

speculate on the intent of why a consent decree is entered

into, or in a future case. There may be a multitude of

reasons. The most obvious one that comes to mind is the

result of an enforcement action.

HEARING OFFICER KNITTLE: Go off for a second.

(A brief recess off the record.)

HEARING OFFICER KNITTLE: Let's go back on the

record. Ms. Bassi or Mr. Bonebrake, I don't know which

one wants to go first.

BY MR. BONEBRAKE:

Q. Mr. Ross, in 225.640d, as we were talking

about before, there is the reference to projects required

to meet emission standards or technology requirement under

state or federal. There's also a reference to projects

used to meet requirements of a court order or consent

decree. In both instances, determination needs to be made

regarding what projects it needed to meet what requirement

whether it be a rule or a consent decree. How is that

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determination going to be made?

A. (by Mr. Ross) I believe that would be part of

a CASA application, that the source would need to

elaborate on their reasons for installing control

equipment for the example that we're discussing. So, they

would need to identify if that control equipment is being

put in place as a result of a consent order.

Q. Or a regulation?

A. (by Mr. Ross) Or a regulation as it currently

reads.

Q. And is there going to be a formal application

where it will have that information required, check off

boxes and such?

A. (by Mr. Ross) We're still discussing that,

whether we develop application forms or not. We would

certainly provide some level of assistance in that area.

Q. We've talked a little bit during this week

about the fact that we could be seeing some beyond CAIR

rules and visibility rules in the future that would

include EGU's within their coverage.

A. I think we may see some future rules that may

include EGU's in their coverage, that's correct.

Q. And to the extent that EGU's were to construct

projects in the future and there were such rules, how

Keefe Reporting Company

would the Agency go about determining whether projects

were being implemented to obtain CASA allowances from an

economic perspective or comply to future rule?

A. (by Mr. Ross) I would think in the same

manner that I just stated, that they would need to address

that in their CASA application.

Q. If a rule contains an emission standard but

not a specific requirement to install technology, if a

company installs a technology, is that required by a rule?

A. (by Mr. Ross) To the extent that it's needed

to meet the standard of emission standard, I would say,

yes.

Q. But apparently your intent nonetheless carves

out MPS out of that general proposition; is that correct,

Mr. Ross?

A. (by Mr. Ross) That is correct.

BY MS. BASSI:

Q. And why is that?

A. (by Mr. Ross) To provide an incentive for the

installation of controls. The MPS requires the meeting of

an emission rate, and it restricts allowances. It

addresses the use of any allowances obtained. We don't

want to remove the incentive to install controls.

Keefe Reporting Company

Q. Can I throw out a hypothetical here? If the

Agency decides that -- You said the Agency may come back

and request -- seek further reductions from EGU's for

purposes of the SIP or RFP or whatever reasons. "RFP,"

"reasonable further progress." If the Agency does that

and it does this by establishing an emissions limitation

on NOx, for example, that would be applicable to all EGU's

in the state, does this cut into the number of allowances

that would be available under the CASA for the MPS?

A. (by Mr. Ross) I don't believe so.

Q. And why wouldn't it, because this would be

required by a different rule, even though you have the

voluntary rule over here, which would be on top of that?

Wouldn't it reduce the number of allowances available

under the CASA from the MPS?

A. (by Mr. Ross) I don't think so. It is a

hypothetical situation.

Q. Is it an unlikely hypothetical?

A. (by Mr. Ross) I can't answer that. We're

still evaluating the need for additional controls from

EGU's to meet our air quality goals. However, I think

they'd need to distinguish in a CASA application between

controls that are installed to meet the MPS limits and

controls that are installed to meet the emission standards

Keefe Reporting Company

of any other regulation.

Q. Wouldn't they overlap?

A. (by Mr. Ross) They may or may not.

BY MR. BONEBRAKE:

Q. Is the cap in a cap and trade program an

emission standard?

A. (by Mr. Ross) No, not technically speaking.

Q. So, when the proposed rule refers to "emission

standards," can you define for us what that term means?

A. "An emission standard" is, in my mind -- there

may be a legal definition, but in my mind, it's a rate or

a -- I would say a rate of emissions that's required of a

unit to be at or below.

Q. And is the term "emission standard" defined

anywhere in the proposed rule?

MS. DOCTORS: I'm referring Mr. Ross to Section 227,

225.130. The pages are not numbered.

A. (by Mr. Ross) The answer is, no.

MS. DOCTOR: It's not there.

MR. BONEBRAKE: I think we can take a break at this

point.

HEARING OFFICER KNITTLE: Are we finished with

consent decrees?

Keefe Reporting Company

MR. BONEBRAKE: I believe so.

HEARING OFFICER KNITTLE: Let's go off the record,

please.

(A brief recess off the record.)

HEARING OFFICER KNITTLE: Let's get back on the

record then. Mr. Cooper, you're still being questioned is

my understanding.

MR. COOPER: Somewhat.

HEARING OFFICER KNITTLE: And, Ms. Doctors, do you

have anything to add before we get started with the

questioning again?

MS. DOCTORS: No, I don't have anything to add.

HEARING OFFICER KNITTLE: I think Mr. Bonebrake.

BY MR. BONEBRAKE:

Q. I have some more questions for Mr. Cooper, and

we were talking about Exhibit 5, and I had a couple

follow-ups regarding calculation that you've mentioned you

had done with respect to CASA allowances in the pollution

control upgrade category.

A. (by Mr. Cooper) Again, this does not

calculate allowances.

Keefe Reporting Company

Q. I know, but we did talk about whether or not

you had made a calculation about anticipated CASA

allowances for Amren and EEI. Do you recall that?

A. Yes, I do.

Q. Okay. And I think you testified that you

anticipated that the allowances that would be made

available to these companies as a result of the pollution

control projects that were identified in attachment 2

would fully exhaust the pollution control upgrade

category?

A. It had the potential.

Q. And would that exhaustion then be, in fact,

assuming it occurs, for a period of 15 years?

A. To the extent that there were no other

eligible projects, but in the current structure, the

pollution control upgrade category is eligible for 15

years. So, I would assume if they depleted it for the

first year, they would for the remaining 15. At some

point as new projects came in, there would be a pro rata

distribution.

Q. And in addition to pro rata distribution, that

scenario would implicate the possibility of flow-over

allowances from other categories, as well?

A. Yes, as discussed during the presentation

Keefe Reporting Company

yesterday, that is the intent of the flowings, that before

we ever get to retirement, we waste -- from the EGU's

point of view, we waste nothing. Every allowance is put

to use.

Q. And I had a couple related questions on that

for you, and I thought maybe we could use one of your

overheads to walk through a couple of the related

questions, and I thought maybe 25.

A. Slide 25?

Q. Yeah, which is where you had the various

columns that were partly full and empty. I thought that

might be useful.

HEARING OFFICER KNITTLE: You're referring to Agency

Exhibit 11, Mr. Bonebrake?

MR. BONEBRAKE: Let me make sure of the number that

is the overhead presentation by Mr. Cooper.

HEARING OFFICER KNITTLE: The CASA presentation?

MR. BONEBRAKE: That is correct.

BY MR. BONEBRAKE

Q. And slide number 25 is entitled

"Over/Undersubscribe Fill In"?

A. Correct.

Q. And that page is bifurcated, and you have

Keefe Reporting Company

before filling and after filling; correct, Mr. Cooper?

A. Correct.

Q. Can you briefly explain then what you were

intending to portray on this slide?

A. The left-hand on the before filling is prior

to allocation during this period, and the right-hand side

is post allocation.

Q. And what are the circumstances then under

which allowances will be taken from one category that's

undersubscribed and placed into another category that's

oversubscribed?

A. I believe, as explained yesterday, the only

circumstance is after a category has filled to over twice

its value, and at that point, as explained yesterday and,

I believe, in the new language, which clarifies our

intent, it first goes to those categories that are

oversubscribed, as the picture details, on a pro rata

basis, and then if there is surplus after those needs have

been met, it continues to fill to the remaining categories

that have yet to double, and that's denoted in the

right-hand picture. I don't know if you have a color

copy, but it's the very small blue squares. Again, the

aim being we want to waste nothing.

Q. How would -- Assuming there's a situation in

Keefe Reporting Company

which there are multiple oversubscribed categories like in

your scenario as depicted on slide 25 and there's an

undersubscribed category where there is more than two

times the base amount of allowances. So, therefore, we're

asking the question of moving these allowances to another

category. How is it that the Agency will decide which of

the undersubscribed categories will receive how much?

A. It's pro rata. There's no decision. The

eligible projects will get as much pro rata as can be

given. It's deterministic.

Q. Well, for instance, in the right portion of

your slide 25, you have the blue amounts there that are

showing some allowances that are going into those

categories; is that correct?

A. That's the intent, yes.

Q. And would it be anticipated by the Agency that

the amounts of oversubscribed allowances that would go

into the undersubscribed categories would be at the same

level in each of the categories?

A. No. At that point, it is also pro rata.

Q. When you use the term "pro rata" here, can you

describe what you mean by that?

A. The mathematical percentage.

Q. I guess what I'm struggling with, it sounded

Keefe Reporting Company

to me like the first thing that would happen is that the

oversubscribed categories would be replenished; is that

correct?

A. Yes.

Q. And then the second thing that would happen is

that those who had not previously received sufficient

allowances would be made whole?

A. No.

Q. Okay. Then maybe I misunderstood. Could you

describe again the sequence?

A. I would refer back to slide 24. Does that

answer your question?

Q. Well, your second bullet says, "Excess for the

double category will pro rata supplement to the

oversubscribed categories first, then pro rata fill all

others that are not yet doubled." And when you're using

the term "pro rata supplement to the oversubscribed

categories first," I guess one of the questions that that

raises in my mind is, will the allowances that get

transferred then go first to the companies in the

oversubscribed category that previously received only a

pro rata portion of their otherwise eligible allowances?

A. I believe so.

Q. Then once those companies are made whole, then

Keefe Reporting Company

what would be the next step in terms of filling the

oversubscribed category?

A. I'm at a bit of a loss.

A. (by Mr. Davis) I believe what you're asking,

in the first round where it says "before filling," what

Mr. Cooper means by "pro rata" is pro rata based upon the

amount of oversubscription. For instance, if one category

was oversubscribed by 90 allowances and one category was

oversubscribed by 10, then they would be filled 90 percent

in the one that is oversubscribed by 90, 10 percent in the

one oversubscribed by 10. In the second one, it's the

same system, except it's pro rata in proportion to the

category size and how much that category may need to get

to double its size.

So, for instance, if the EE/RE category requires 100

allowances to get to double the size and, say, the early

adopters requires 200, the early adopters would get twice

the amount of -- and perhaps if there's only 75 allowances

to go to spill in there, the early adopters needing 75 --

or needing twice the amount would get 50 of the 75, and

the one needing half as many to be fully up to double

would be getting 25, meaning half the amount. So, it's

pro rata based upon the need and the size of the category

on the second one. And the same system applies to the

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oversubscription, the pro rata of the oversubscription and

then pro rata in the second round proportional to the need

in the category.

A. (by Mr. Bloomberg) Just to add, that's pretty

well laid out in the motion to amend.

Q. Can you point us to the particular provision

to make sure we're all --

A. (by Mr. Bloomberg) 225.475b, 2 and 3 in

particular.

A. (by Mr. Davis) And I should note, in both

cases, the oversubscribed categories would reach zero at

the same moment based upon the math, and, also, if all

were not oversubscribed, all would reach double their size

at precisely the same moment.

Q. And when you were describing, Mr. Davis, the

two-step process with the two different pro rata

determinations, were you referring essentially to the

first step being reflected in subsection (b)(2) of 225.475

and then the second step being reflected in subsection

(b)(3)?

MS. DOCTORS: I'd like to clarify. Are you talking

about the initial allocations of the CASA, or are you

talking after the initial allocations from the CASA that

occurred and what we're going to do with the extra

Keefe Reporting Company

allowances?

MR. BONEBRAKE: What we're going to do with the extra

allowances.

A. (by Mr. Davis) Yes, that would be (b)(2) and

(3).

HEARING OFFICER KNITTLE: Mr. Rieser?

BY MR. RIESER:

Q. With respect to (b)(2) in the proposed amended

rule, my understanding from the discussion yesterday --

Strike that. (b)(2) talks about allocating allowances pro

rata to projects rather than to categories. So, it

strikes me that that is a change from how it was

originally proposed, in that originally, it's my

understanding that the additional -- extra allowances

would be distributed to the different categories and then

to specific projects. So, is it correct that now under

the proposed revision that it's going to projects and not

categories?

A. (by Mr. Bloomberg) It's really the same

thing, in that the number of approved -- the number of

allowances for approved projects determine how

oversubscribed a given category is. So -- I don't want to

start throwing out a bunch of numbers and getting confused

Keefe Reporting Company

here. If there were multiple projects in an

oversubscribed category, the overflow would go to that

category as much as possible and be divvied up pro rata

among those projects in that category.

Q. Does an oversubscribed category include one in

which projects had distributions -- previously had

distributions pro rata?

A. (by Mr. Bloomberg) Yes.

Q. In other words, there weren't enough

allowances in that category to take care of all the

projects?

A. (by Mr. Bloomberg) Yes.

Q. By definition, if a project doesn't have the

allowances asked for, it's in an oversubscribed category?

A. (by Mr. Bloomberg) If it doesn't have the

allowances it was approved for.

Q. Excuse me. Thank you. It's in an

oversubscribed category. Okay. I understand. And,

actually, if I can just follow-up on the timing of this.

When -- We talked yesterday about when these things

happened, when these decisions got made. So, given a date

of October 1st set out in the regulations for when the

Agency identifies allocable allocations, although it

doesn't allocate them, with respect to that date, when

Keefe Reporting Company

does this process described in (b)(2) and (b)(3) occur?

A. (by Mr. Bloomberg) It would occur sometime

after October 1st but before the date when you have to

send the allocation in to USEPA.

Q. So, after the Agency decides what allocations

it is approving to distribute, then it can make a decision

as to what categories are oversubscribed and not and

re-distribute within that time frame?

A. (by Mr. Bloomberg) Yes. And let me make a

slight correction. The proposed regulation says "by

October 1st". So, it is possible the Agency could

determine the number approved prior to October 1st and,

therefore, run this whole thing at that point, but --

MR. RIESER: Okay.

BY MR. BASSI:

Q. Did you just say you anticipate it will be

after October 1st?

A. (by Mr. Bloomberg) The regulation says that

by October 1st, the Agency shall determine the number of

allowances that are approvable for allocation. So, if we

took our entire time and went to October 1st, then at some

point after October 1st is when we would run the numbers

to see which overflows, where the overflow goes.

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Q. Okay. Thank you. I have a question about the

motion to amend, if I may. On Page 9 of the motion to

amend, at 225.450(a) and (c), yesterday we talked --

450(a) is referring to the installation of watt meters,

and yesterday we raised the notion that the installation

of a watt meter will require an outage. Does someone

recall that?

MS. DOCTORS: Just let the record note, you had given

a suggestion yesterday -- Mr. Bonebrake had given a

suggestion that there were other ways that units and

sources could measure gross electrical output, and that

perhaps in your comments, you would provide us with some

examples so we could amend to include some other device,

besides the watt meter, to meet this requirement.

BY MS. BASSI:

Q. Okay. The concern I was attempting to raise

here is the January 1st date for installation of watt

meters. I realize this is a little over a year into the

future, and if an outage is required, do you anticipate

that all of the units could install them if they weren't

using some other approach?

A. (by Mr. Davis) Again, I would say that the

Agency wasn't anticipating that anyone would have to

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install any new equipment to measure output.

Q. Okay.

A. (by Mr. Davis) And, so, to the extent that

there may be an amendment there.

Q. Okay.

A. (by Mr. Davis) I think it's really a matter

of the definition of a watt meter for a system for,

measuring wattage or whether it looks like the spinning

wheel on the outside of your house.

Q. Okay. Thank you. With respect to 450(c) as

in cat, this amendment says that "within 15 days of the

effective date of this rule, that owner or operator has to

report to the Agency gross electric output," or -- I

assume it goes on to heat input. How will the sources

know the effective date of this rule?

A. (by Mr. Bloomberg) Their lawyers will tell

them.

Q. How will I know what the effective date of the

rule is?

A. (by Mr. Ross) Public notice. It will be in

the Illinois register. It will be on our web site. I

guess what type of notification do you believe is

appropriate for companies --

Q. I think 15 days is pretty short. It's even --

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And is it not the case that this is even less than the

appeal time for the rule? In other words, the time for a

source to appeal this rule is longer than 15 days; is that

not correct?

MS. DOCTORS: This is an -- Objection. This is

asking for knowledge of the law.

HEARING OFFICER KNITTLE: Excuse me. I'll allow him

to answer it. Mr. Ross?

A. (by Mr. Ross) I'm not certain of the appeal

period for a rule. However, the 15 days, if reasonable

argument could be made, if that needs to be longer, we

could look at that.

MS. DOCTORS: I have a Re-Direct.

BY MS. DOCTORS:

Q. Mr. Bloomberg, do you know of any companies

that have already submitted the information to us?

A. (by Mr. Bloomberg) Yes.

BY MS. BASSI:

Q. Who are they?

A. (by Mr. Bloomberg) Dynegy.

Q. And has anyone else?

A. (by Mr. Bloomberg) No, but there's currently

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no other requirement.

Q. Okay.

BY MR. GIRARD:

Q. Could I ask a related question? Why do you

need the information within 15 days of the effective date

of this rule?

A. (by Mr. Ross) I believe we need the

information as soon as possible to avoid the fifth

requirement, that is that US -- to prevent USEPA from

doing another round of allocations, which would in turn

prevent us from implementing our allocations. So, we are

kind of in a race to allocate emissions with the USEPA.

MR. GIRARD: Thank you.

MS. BASSI: What I have left is kind of a hodgepodge

of questions. So, just start in and let them be

hodgepodge?

HEARING OFFICER KNITTLE: Yes. Though when you start

the hodgepodge, you folks in the back row of the panel, if

you're wanting to ask a question, could you please

identify yourself for the Court Reporter because I don't

think she knows your names. Mr. Bonebrake, do you have

questions for Mr. Cooper?

MR. BONEBRAKE: Yeah.

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BY MR. BONEBRAKE:

Q. Mr. Cooper, turning back to Exhibit 5,

specifically Page 3, and your discussion of energy

efficiency, and in the first paragraph in that section you

discuss a Massachusetts EE/RE set-aside program; is that

correct?

A. (by Mr. Cooper) Yes.

Q. And that would have been under the NOx SIP

Call?

A. I assume.

Q. And that states the EE/RE set-aside program

had a total of 464 allowances; is that correct?

A. That is what it reads.

Q. And that compares to 9,150 annual EE/RE

set-aside allowances in Illinois; is that correct?

A. I'm not sure what you mean by "that compares

to" it.

Q. Well, the counterpart in the Illinois proposal

for EE/RE contains 9,150 annual NOx allowances; does it

not?

A. I believe so.

Q. Now, the term "commenced construction" is used

in various places in the regulations; is that correct,

Mr. Cooper?

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MS. DOCTORS: Are you referring to the definition for

"commenced construction"?

BY MR. BONEBRAKE:

Q. Let's take an example. Let's see if I can

give you concrete. On Page 4 of your testimony, and in

the second full paragraph on Page 4, in the third

sentence, you refer to fluidized bed coal combustion

projects, and then you use the term "commenced

construction". Do you see that in the sentence?

A. (by Mr. Cooper) Yes.

Q. And then similarly in -- just as an example,

of the rule, 225.460(f).

MS. DOCTORS: I'm sorry. Can you repeat that section

again?

MR. BONEBRAKE: 225.460(f) as in Frank.

A. Yes.

BY MR. BONEBRAKE:

Q. And subpart "f" uses the term "commenced

construction"; does it not?

A. (by Mr. Cooper) Yes.

Q. And similarly in 225.470, subpart (a)?

MS. DOCTORS: Say that again.

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MR. BONEBRAKE: 225.470, subpart (a).

A. Yes.

BY MR. BONEBRAKE:

Q. Subparts 1 and 2 of subpart (a) also uses the

term "commenced construction"; is that correct?

A. (by Mr. Cooper) Yes.

Q. I have looked in the definition section of the

rule, and somebody can correct me if I'm wrong, but I do

not see a definition of "commenced construction," although

there are references to "commenced operation".

A. One second, please.

Q. Did you find a definition of "commenced

construction"?

A. I do not believe in the specific proposal, but

I believe we incorporate -- Part 201's definitions contain

both the definition for "commenced" and "construction".

Q. Well, 225.130, the lead in for the definition

section refers to incorporation of definitions from Part

211.

A. It appears that it's not. I believe it's a

comment we need to take under consideration.

Q. What was the Agency's intended definition of

"commenced construction"?

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A. Exactly what is in 201, I believe.

Q. 201 definition is what is intended?

HEARING OFFICER KNITTLE: You'll be able to address

that issue with comments; correct, Ms. Doctors?

MS. DOCTORS: Yes, we'll be happy to address it in

comment after.

HEARING OFFICER KNITTLE: Ms. Bugel?

MS. BUGEL: I just wondered if -- I have more

questions before we move on to the hodgepodge. I have

some more specific questions on --

HEARING OFFICER KNITTLE: Sure. I'm not sure

Mr. Bonebrake is done.

MR. BONEBRAKE: Are these questions for Mr. Cooper?

MS. BUGEL: These are questions for the panel on the

CASA.

HEARING OFFICER KNITTLE: I think these are

hodgepodge questions.

MS. BUGEL: Mine are not hodgepodge questions. My

questions are never hodgepodge.

HEARING OFFICER KNITTLE: I'm sure they're very fine

questions. I don't think Mr. Bonebrake is finished yet.

MS. BUGEL: I will wait.

MR. BONEBRAKE: Hang on just a second. I'm getting

close. I'm trying to find out which of my questions I

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have I have already dealt with. Give me just a minute.

BY MR. BONEBRAKE:

Q. Mr. Cooper, Page 8 of your written testimony,

in the "Economic Impacts" section --

A. (by Mr. Cooper) Yes.

Q. -- the second sentence reads, "In 1999, USEPA

estimated the economic benefits that can accrue from a

five percent energy efficiency and renewable energy

set-aside into the NOx budget trading program across the

SIP Call region," and it goes on from there. Do you know

if, in fact, set-asides under the NOx budget trading

program have had the effects predicted by USEPA?

A. (by Mr. Cooper) No, I do not.

Q. Can anybody on the panel address that

question?

MS. DOCTORS: I don't believe there's anybody on the

panel can answer your question.

BY MS. BASSI:

Q. I have some questions about that particular

spot or issue. Oh, no, I don't. It was number five that

was jumping out. Sorry. Back to my hodgepodge. And I

think we can move on to some other questions.

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HEARING OFFICER KNITTLE: Ms. Bugel, you want to

start us off?

BY MR. BUGEL:

Q. These are questions that are still about the

clean air set-aside, specifically the renewable

energy/energy efficiency aspect of that set-aside.

Mr. Cooper, were you involved in the decision regarding

the size?

A. (by Mr. Cooper) Again, we stated a number of

times, there was no one particular individual that was

responsible for any particular number. I was involved,

but no one person really had the final decision on a

particular number.

Q. I'm just trying to find out who would be best

to answer these questions. Perhaps Mr. Ross then.

A. Perhaps.

Q. Very good. Were higher levels considered than

the -- is it 11 percent or 12 percent --

A. (by Mr. Ross) 12 percent.

Q. -- for renewable energy/energy efficiency?

A. (by Mr. Ross) We looked at a range for the

renewable energy/energy efficiency set-aside. So, I would

say higher levels were contemplated, yes.

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Q. What was the range that was considered?

A. (by Mr. Ross) Anywhere from zero to the

entire pool, I guess.

Q. A hundred percent?

A. (by Mr. Ross) I mean, that's unreasonable. I

would say a reasonable range, in our opinion, was from 5

to 15 percent as recommended by the guidance documents.

Q. And taking as a hypothetical, if 15 percent

had been selected, would the same benefits have been

achieved, just proportionally higher?

A. (by Mr. Ross) Perhaps. I mean, that's hard

to speculate. I mean, we have obviously attempted to

assess and quantify a reduction that could occur as a

result of the use of EE/RE, but there really is no

standard mechanism available to do that. So, we just went

with the premise that the greater the NOx reductions that

could occur as a result of any EE/RE encouragement, the

better. So --

Q. Taking that statement then, the greater the

NOx reductions that could occur, the better, increasing

the size of the renewable energy/energy efficiency

set-aside would have made more incentives available for

energy efficiency/renewable energy; is that correct?

A. (by Mr. Ross) Yes.

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Q. And if in turn more projections were

constructed as a result of those incentives, then those

projects would -- if they were meeting demand for

generation, they would proportionally decrease the demand

for generation that would have needed to be met by new

coal; is that correct?

A. (by Mr. Ross) Yes, that's correct to the

extent -- and there's been a lot of discussion about an

increased need for generating capacity through the years,

but in general, yes, your statement is correct.

Q. So, based on that, why was a higher -- the

highest level of the range you considered based on

guidance, and I believe it's the NOx SIP Call guidance

that said 5 to 15 percent could be set-aside, why was

15 percent rejected and the lower level of 12 percent

selected?

A. (by Mr. Ross) We looked at the total package

of what we are doing. We evaluated different levels. We

looked at potential projects in Illinois that are

currently planned or that could occur. And essentially it

was a policy call, a judgment call on the level of

set-asides in each particular category. Giving 12 percent

to energy efficiency/renewable energy allowed us perhaps

to increase the set-asides to pollution control upgrades

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or clean coal technologies. I mean, it's a trade-off. Of

course, a large set-aside pool in Illinois is going beyond

what any other state we know is doing, including in the

area of EE/RE. To some extent, as has been discussed

here, it could potentially result in additional costs to

the regulated community. So, there is some trade-off

there that we need to take into consideration. So, after

evaluating different levels, we arrived at 12 percent.

12 percent is on the high side. The Governor's energy

policy also promotes energy efficiency/renewable energy.

So, we felt it was an appropriate level. It's on the high

side. It's consistent with the Governor's energy policy.

These are environmentally desired policies. And we

arrived at 12 percent.

Q. And you mentioned the Governor's energy

policy. Do you know in terms of a percentage generation

of electricity from renewable sources, what percentage the

Governor's energy policy selects -- or suggests?

A. (by Mr. Ross) I did. We have discussed that

policy with personnel from the Department of Commerce and

Economic Opportunity. We have internal personnel here who

are familiar with the Governor's policy. I believe it

scales up the amount based on certain years what the final

level is. I think it's in the neighborhood of 8 to 10

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percent.

Q. Does 10 percent in 2015 sound about right?

A. (by Mr. Ross) That sounds about right, yes.

Q. And then referring -- And that is just from

renewable energy; is that correct, or does that sound

right?

A. (by Mr. Ross) That sounds right.

Q. And then referring to Exhibit 5, second page,

could you please for the record indicate what percentage

the CASA allowances might offset -- let me rephrase my

question -- what percentage of future electric need is

expected to be offset as a result of the CASA allowances

for energy efficiency/renewable energy? And I'm looking

in the first full paragraph, about the third to last

sentence that begins, "Through the conservative

estimates."

A. (by Mr. Cooper) You're referring to the

second page?

Q. Yes.

A. (by Mr. Cooper) Are you referring to -- I

don't see the "through the conservative". I think you're

attempting to ask -- Are you referring to the 150 to 275

megawatt?

Q. No. A couple lines up. I'm referring to a

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percentage. A percentage that will be offset through

renewable energy/energy efficiency.

A. (by Mr. Cooper) 5 and 8 percent?

Q. Right. So, is it correct to say that the

expectation is that the CASA will lead to energy

efficiency/renewable energy projects offsetting 5 to 8

percent of electric -- future electrical need; is that

correct?

A. (by Mr. Cooper) That is, I believe, the

intent of the statement.

Q. And in the Governor's energy plan, the goal is

that 10 percent of electricity be generated from renewable

sources not even considering energy efficiency; is that

correct?

A. (By Mr. Cooper) I believe that is correct.

Q. And in light of this, do you believe that a

clean air set-aside is consistent with meeting the goals

of the Governor's energy plan?

A. (by Mr. Cooper) I believe it is a very good

step toward meeting that goal, yes.

Q. And do you believe that if the CASA for

renewable energy/energy efficiency had been set higher, it

would be a step even closer to meeting the goals of the

Governor's energy plan?

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A. (by Mr. Ross) You know, that's really hard to

say. We are providing an incentive for like projects,

projects that would put us on a path to meet the goals set

in the Governor's energy plan. Our intent with this rule

is not to implement the Governor's energy plan. Our

intent is to provide environmental benefits that are

consistent with CAIR. So, the set-asides do, in fact,

promote renewable energy similar to the Governor's energy

plan, but, again, our program isn't designed to achieve

the Governor's goals.

Q. Okay. I just have a couple more questions on

the availability of the whole allowance pool baseline

allocations plus the set-aside. 70 percent of the pool

goes to -- is open to facilities that burn coal through

the baseline allocations; is that correct?

A. (by Mr. Cooper) Not entirely.

A. (by Mr. Ross) Or natural gas or fuel. To

affect the parties, I think we stated there's 59

coal-fired units in over -- or approximately 170 gas or

fuel and oil fire mixed.

Q. But coal can get some appropriate part of that

70 percent; is that correct --

A. (by Mr. Ross) That's correct.

Q. -- coal-fired units? And then the new units

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set-aside, new coal-fired power plants are eligible to get

some of that set-aside; is that correct?

A. (by Mr. Ross) As others are also, correct.

Q. And then new coal-fired units are eligible to

get the clean coal set-aside; is that correct?

A. (by Mr. Ross) Provided they are an IGCC or a

PSB boiler, correct.

Q. And then coal projects -- Coal-fired units

that undertake eligible retrofits are available to get the

pollution control set-aside; is that correct?

A. (by Mr. Ross) Existing coal-fired units are

eligible for the pollution control upgrade category,

that's correct.

Q. And then coal-fired units are also eligible

for the renewable energy/energy efficiency set-aside

specifically if they do energy efficiency demand by

management; is that correct?

A. (by Mr. Ross) Everyone is eligible for that

category. It doesn't exclude anyone.

Q. Is there a category of the ones that I listed

off that excludes coal-fired units?

A. (by Mr. Ross) I don't believe so.

MS. BUGEL: Thank you. I have no further questions.

HEARING OFFICER KNITTLE: Thank you, Ms. Bugel. Ms.

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Bassi, I know you had your hand up somewhere in the middle

there.

MS. BASSI: I was looking at legislative intent for

the Governor's intent.

MR. BONEBRAKE: I had some follow-up.

MR. RIESER: I have a group -- a relatively small

group of questions relating to some of the language in the

rule. So, I don't know where that falls on the continuum

from Ms. Bassi's hodgepodge to Ms. Bugel's focused

approach, but I can go whenever.

MS. BASSI: Part of my hodgepodge includes the

language.

MR. RIESER: So, then it may well be addressed.

HEARING OFFICER KNITTLE: Why don't -- Mr. Bonebrake,

you can go ahead and then Ms. Bassi, and we can wind up

with Mr. Rieser.

BY MR. BONEBRAKE:

Q. Mr. Ross, you mentioned in response to some

questions from Ms. Bugel the 5 to 15 recommendation by

USEPA, and I think I know the answer to this question

based upon earlier conversation, but you were referring,

were you not, to the guidance issued in connection with

the NOx SIP Call as opposed to the CAIR rule?

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MS. DOCTORS: Objection. We've already talked about

the different places that that guidance was carried

forward into the CAIR rule. So, I'm not sure why we're

having to restate the fact.

MR. BONEBRAKE: He referred to it again in his

testimony. So, I want to understand what he was referring

to.

HEARING OFFICER KNITTLE: Mr. Ross, you can --

A. (by Mr. Ross) That is correct.

BY MR. BONEBRAKE:

Q. That is correct?

A. (by Mr. Ross) Yeah, NOx SIP Call specific

guidance has carried forward into the CAIR.

Q. And similarly, Mr. Cooper, you referred to

USEPA's suggested range of 5 to 15 percent in your

testimony. Were you similarly thinking about the NOx SIP

Call guidance?

A. (by Mr. Cooper) Specifically, yes.

Q. I think you said, Mr. Ross, that Illinois'

set-asides are the highest of any state that the Agency is

aware of in response to Ms. Bugel's question; is that

correct?

A. (by Mr. Ross) That is correct.

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Q. And that includes not just the EE set-asides

but the entirety of the set-aside pool?

A. (by Mr. Ross) That's correct.

Q. And I think, Mr. Davis, you had suggested

yesterday that you might have a document that summarized

what other states were proposing or may have adopted in

connection with CAIR set-asides. Is that something that

you've been able to locate?

A. (by Mr. Davis) No. I think I said that I

could track down some of that information, but I didn't

believe that there was any single document that listed

what every state was doing with CAIR.

Q. So, is that information that the Agency is

planning to provide at this point, or what is the status

of my question?

A. (by Mr. Davis) Being on the panel, I haven't

really had the time to actually do that, but, yeah, I

think I stated a couple times that I don't believe that

anyone has come out with a single document. It would most

likely be dealing with -- that lists everything everyone

is doing for CAIR.

A. (by Mr. Ross) We can search for such a

document, and if we find it, we can make it part of our

post-hearing comment.

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HEARING OFFICER KNITTLE: We're going to have some

opportunity for the Agency -- at least it's my intention

to have some opportunity for you to answer some of the

questions, provide some of the documents between the two

hearings. So, we can talk about how long we'll need to do

that, and we'll do that before we leave today.

BY MR. BONEBRAKE:

Q. And one other follow-up question for Mr. Ross

at this juncture. We earlier talked about the consent

decrees before and after May 30, 2006. The follow-up

question for you, Mr. Ross, is, as the Agency thinks about

consent decrees after May 30, 2006, does it have in mind

any particular consent decree or consent decrees at this

point in time?

A. (by Mr. Ross) We recognize the potential for

future consent decrees, consent orders.

Q. Is that a general recognition that they might

be issued, or is there a particular consent decree that

you're referring to?

A. (by Mr. Ross) Well, I think we recognize that

Amren may eventually enter into a consent decree. I'm not

aware of any enforcement action proceeding, any alleged

violation being made at this time or any other existing

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coal-fired power plant in Illinois may also enter into

future consent decrees, who so ever should enter into one.

Q. And in drafting then the provision that we

were earlier discussing that contained the dichotomy based

upon time, that potential Amren consent decree was at

least one of the documents that the Agency was at least

contemplating?

A. (by Mr. Ross) Yes.

HEARING OFFICER KNITTLE: Mr. Rieser?

A. (by Mr. Ross) You said "documents". I

wouldn't say -- There is no document. There is no consent

decree forthcoming or, like I said, there is no alleged

violation that I'm aware of, but the potential for any

future one with Amren was something we contemplated.

HEARING OFFICER KNITTLE: Yes, Mr. Rieser.

BY MR. RIESER:

Q. And in contemplating the consent decrees prior

to May 30th, did you have any specific consent decrees in

mind?

A. (by Mr. Ross) Specifically, as I mentioned

earlier, was the Dynegy consent decree.

Q. And I notice that for consent decrees entered

into prior to May 30th, there is an exclusion from the

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exclusion for baghouses; is that correct?

A. (by Mr. Ross) I believe that's correct.

Q. And was that designed to deal with issues into

Dynegy?

A. (by Mr. Ross) It was put in the rule in

consideration of Dynegy, yes.

MR. RIESER: Okay.

BY MS. BASSI:

Q. Why would Dynegy and Amren be treated

disparately?

A. (by Mr. Ross) I don't believe we're treating

them different.

Q. You don't think that excluding one consent

decree and allowing another is not disparate treatment?

A. (by Mr. Ross) There's only one consent

decree, and that particular consent decree, as we

discussed in detail already, requires that control

equipment be installed and that certain emission caps be

met. So, there is no need to provide an incentive.

Q. So, what's the incentive for someone to enter

into a future consent decree? I'm sorry. I asked this

before and --

A. (by Mr. Ross) I can't speculate on why anyone

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would choose to enter into a future consent decree.

MS. BASSI: Hodgepodge?

HEARING OFFICER KNITTLE: I think so.

BY MS. BASSI:

Q. All right. In the Statement of Reasons at

Page 36, this is -- and, actually, this kind of flows

along with what we've been talking about already, except

for the consent decrees. The Agency states that

12 percent of the allowances set-aside for the EE/RE is

consistent with the general assembly's legislative intent

in Section 910(a)(8), and I don't think the Statement of

Reasons actually cited to that, but that's where it is.

And in 910(a)(8), it says that at least 5 percent of the

energy consumed, I believe, in Illinois is to be -- or by

2010 is to be energy efficiency or renewable energy and at

least 15 percent by 2020. How does the Agency's timing of

the EE/RE set-aside at 12 percent comply with this

legislative intent of only 5 percent by 2010? And perhaps

"comply" is the wrong word. "Comport" would probably be

better.

A. (by Mr. Ross) Well, the timing is different.

I can tell you that. It was a percentage that we looked

at and took into consideration. I guess I would state

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that it doesn't limit us to 5 percent. It says "at least

5 percent."

Q. Would you agree that the timing of the EE/RE

set-aside is accelerated or greater? In other words, you

are requiring -- or you are setting aside a greater

percentage by 2010 than what the legislative intent

suggested as the low end?

A. I would say, yes, it's greater than 910 less

than the Governor's policy. Maybe just --

Q. Sorry. What?

HEARING OFFICER KNITTLE: Ms. Bassi, do you mind if

Ms. Bugel interjects?

MS. BASSI: Oh.

MS. BUGEL: I just had a follow-up on your question

before we get too far afield.

MS. BASSI: I do have one more line to this.

MS. BUGEL: Okay.

MS. BASSI: It's not totally hodgepodge.

BY MS. BASSI:

Q. How does the mandate in the rule regarding the

set-aside comport with the language in the statute that

says "merely should be promoted"?

A. (by Mr. Ross) We are promoting. This says

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"should be". I mean, I think that speaks for itself.

MS. BASSI: Okay.

HEARING OFFICER KNITTLE: Ms. Bugel?

BY MS. BUGEL:

Q. Would you agree that the size of the set-aside

will, in fact, result in a different and lower percentage

of electric demand being met by renewable energy and

energy efficiency?

A. (by Mr. Ross) To the extent that it's

utilized, yes, that is a potential outcome.

Q. So, in fact, the set-aside would not be

inconsistent with a legislative intent of 5 percent?

A. (by Mr. Ross) I believe that's true.

MS. BUGEL: Thank you.

BY MS. BASSI:

Q. I may have asked this before, but have you

identified a series of projects that will use up the EE/RE

set-aside?

A. (by Mr. Ross) No, we have not.

Q. Have you made any --

A. (by Mr. Ross) We've identified some projects,

and I believe those are identified in Mr. Cooper's

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testimony.

A. (by Mr. Cooper) To the extent my document

covers that, specifically I would refer to the section on

wind power.

Q. And when you say your document, you mean

Exhibit 5?

A. (by Mr. Cooper) Agency Exhibit 5. That

particular category has a relatively high degree of

potential of coming to pass.

Q. And just below the wind power section in

Exhibit 5 on Page 3, you have hydro power?

A. (by Mr. Cooper) Yes.

Q. And, again, I apologize if I've asked this

before. Are there hydro electric facilities in Illinois?

A. (by Mr. Cooper) Yes, there are.

Q. Where are they?

A. (by Mr. Cooper) There's one -- I could show

you exactly the document that's referenced is U.S. Hydro

Power Resource. It in gross detail breaks down each of

the existing hydro power sources, as well as all the

potential that exists. I believe there are -- It's not

stated here. One second. It looks like Page 109 of the

TSD, Table 8-2, Hydro Electric Generation Capacity in

Illinois. Apparently there are nine hydro power projects

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currently -- that's the first line on that table -- with

power. The named plate capacity aggregated for those nine

projects apparently is 80 gigawatt hours, and they

actually estimated, according to the document, produce

around 41 gigawatt hours.

Q. What does it mean "without power"?

A. (by Mr. Cooper) The document specifically

makes reference to dams that simply do not have the water

turbine and associated generator.

Q. So, they could generate, but they aren't?

A. (by Mr. Cooper) It's an existing dam. It's

been in place for "X" number of years, and it simply

requires the addition of the turbine and the generator and

then the transmission lines.

Q. Looking at Section 460(b) as in boy (1), I

believe that section precludes or excludes the expansion

of an existing dam --

A. (by Mr. Cooper) Yes.

Q. -- or the construction of a new dam?

A. (by Mr. Cooper) Yes.

Q. And why is that?

A. (by Mr. Cooper) That relates to -- The

Governor's plan points to a -- I'll attempt to find it.

MS. DOCTORS: It was attachment G to the Statement of

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Reasons.

A. (by Mr. Cooper) I don't see it in front of

me. What I believe it is -- All I have in front of me is

the press release. I believe, when you go look at the

actual -- the renewable energy, if you have the document

in front of you, the second paragraph, "Eligible renewable

energy resources," it talks about the renewable

energy/energy efficiency and coal resources development

law of 1997.

Q. This is in Exhibit G?

A. (by Mr. Cooper) Yes. Upon looking into that

particular law, that was a stipulation in that law. So,

in an attempt to be consistent with what the Governor had

suggested, we carried that over. I believe the concern is

new dams have other environmental impacts. So, the goal

of this particular existing 1997 law was to utilize the

existing dams without further impacting the environment.

Q. Just looking at the same document because we

have it open, in the paragraph below --

A. (by Mr. Cooper) Which document are you

referring to?

Q. This is Exhibit G, and it's the paragraph

below where you were just referring.

A. (by Mr. Cooper) "Competitive Procurement" or

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the "For Illinois"?

Q. "For Illinois to Improve Air Quality," and the

section below that, "Competitive Procurement". Could you

tell us please -- Well, it says, "We recommend that

renewable energy procure to meet renewable portfolio

standards generated in Illinois," blah, blah, blah and so

forth. Does that indicate that it is the power generators

who are to provide the renewable energy?

A. (by Mr. Cooper) I'm reading this at face

value the same as you. I make no effort to try to

interpret the intent of the Governor's memo.

Q. Isn't that what you're doing with the CASA?

A. (By Mr. Cooper) I believe that is our goals,

to promote those in this particular case perhaps and

under-realized renewable resource.

Q. No. I meant isn't one of the things you're

doing with the CASA interpreting the Governor's memo?

A. (by Mr. Cooper) I believe we're supporting

it, not necessarily interpreting it.

Q. Okay. Does the Agency intend for the energy

production derived from dedicated crops to apply only

to -- or to only come from smaller EGU's? And this is in

Section 460(b)(2).

A. (by Mr. Cooper) I don't believe we've

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specified what EGU it would come from.

Q. Okay. How much would a larger unit and, say,

a 500 megawatt unit have to burn in terms of crops in

order to satisfy the 50 percent requirement there?

A. (by Mr. Cooper) I would not have any idea off

the top of my head.

Q. Do you think it would be a lot?

A. (by Mr. Cooper) I wouldn't think without

having data in front of me.

Q. Okay. That answers that question. Has the

Agency determined whether there are sufficient biomass

crops available to meet this 50 percent requirement?

A. (by Mr. Cooper) No, we have not. I'm not

really understanding what your intent of the question is.

Q. Well, are biomass crops available to be burned

at a 50 percent rate in a boiler?

A. (by Mr. Cooper) If the boiler was, say, one

horsepower, absolutely.

Q. Is a one horsepower boiler subject to this

rule?

A. (by Mr. Cooper) This rule for CASA allowances

you don't have to be subject.

Q. Okay. Why are burning waste wood, tires,

garbage, general household, institutional lunchroom or

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office waste, landscape waste or construction or

demolition debris excluded from qualify as RE projects?

A. (by Mr. Cooper) Again, that is lifted

directly from the renewable energy/energy efficiency and

coal resources development law of 1997, if memory serves.

Q. Are those terms defined in that law, do you

know?

A. (by Mr. Cooper) I do not know for certain.

Q. Okay. We'll check.

A. (by Mr. Cooper) I believe many of those terms

are defined either as a waste in the act or directly

defined. I believe "used tires" -- I believe there's a

definition in 211 for "used tires," if memory serves.

Q. Could you give me an example of what "general

household waste" is?

A. (by Mr. Cooper) I would consider and I

believe the act defines that "general household waste"

would be normal refuge.

MS. DOCTORS: I'm referring him to Section 3.230 of

the Illinois Environment Protection Act.

A. (by Mr. Cooper) If I may read. ""Household

waste" means any solid waste, including garbage, trash and

sanitary waste in septic tanks, derived from households

(including single and multiple residences, hotels and

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motels, bunk houses, ranger stations, crew quarters,

campgrounds, picnic grounds and day use recreation

areas)."

BY MS. BASSI:

Q. What is "institutional lunchroom waste"?

Would that be like --

A. (by Mr. Cooper) I believe it would be exactly

like it sounds.

Q. Institutional lunchroom. Okay.

A. (by Mr. Cooper) Jailhouse lunch. No, I do

not believe it is explicitly defined.

Q. What constitutes the life of an RE project?

A. (by Mr. Cooper) The life?

Q. Uh-huh.

A. (by Mr. Cooper) Define "life".

Q. That's what I'm asking you to do.

A. (by Mr. Cooper) Where are you -- Are you

referring to the distribution period?

Q. Well, it could be. On Page 22, slide 22 of

Exhibit 11.

MR. BONEBRAKE: Of his overhead presentation.

A. You said Page 11?

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BY MS. BASSI:

Q. Page 22. The renewable energy projects don't

have a termination date, and I just wondered how long you

anticipated renewable energy projects would last?

A. (by Mr. Cooper) I believe, if you look at the

star, it's allowances given to the source as long as the

source is generating. So, hypothetically, until a wind

turbine physically falls off, it would be eligible.

Q. Okay. What if the renewable energy source was

biomass and one year the crops weren't good?

A. (by Mr. Cooper) That's where the 50 percent

criteria comes in.

Q. Okay. And, so, if it falls below

50 percent --

A. (by Mr. Cooper) It's ineligible.

Q. Can it start back up?

A. (By Mr. Cooper) Yes.

MS. BASSI: Okay.

BY MR. BONEBRAKE:

Q. By the way, how did the Agency decide on the

time frames that are delineated on slide number 22?

A. (by Mr. Ross) In one manner how we decided

the percentage of set-asides. We discussed them. We

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looked at internal documents. I mean, for energy

efficiency --

A. (by Mr. Cooper) Energy efficiency projects in

specific are generally technology based. A lighting

retrofit is a good example. Newer technologies are

continually coming out. And this is actually consistent,

I think, with most guidance and what other states have

done. There's generally a finite period of time that they

allow for energy efficiency. We're not going to let

you -- Strike that. We do not wish to let someone change

a light bulb once and then throw back in their older light

bulbs. So, in eight years, we will no longer provide an

incentive. This gives them an incentive again to

re-evaluate whether a new lighting project would need to

take place.

BY MS. BASSI:

Q. With respect to your example with the light

bulbs and stuff as an energy efficiency project -- And I

know these little fluorescent --

A. (by Mr. Cooper) CFL's.

Q. -- have been really promoted lately. Do those

contain mercury?

A. (by Mr. Cooper) I am not aware of that. I do

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not know.

A. (By Mr. Bloomberg) Some do. Some don't.

Q. Are you distinguishing between those as you

allocate your allowances?

A. (by Mr. Cooper) Not as the rule's written.

Q. Okay. When you say on Page 5 of your

testimony that "consideration is given towards the useful

thermal energy associated with combined heat and power

projects," what does this mean?

A. (by Mr. Cooper) I believe it is a recognition

that those particular devices are more efficiently using

the heat content and trained in the particular fuel, and

we're attempting to reward those particular devices for

being more efficient.

Q. In a combined heat and power project, is the

heat often used for some type of a process?

A. (by Mr. Cooper) It could be.

Q. Okay. And then the power -- Is the power

derived from the heat that's captured that would otherwise

be wasted?

A. (by Mr. Cooper) It depends. There's two

types. There's a topping cycle and a bottoming cycle.

Depending on whether they make power first or later.

Q. Okay. Okay.

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A. (by Mr. Cooper) So, I believe the most

prevalent form is a -- and I'll -- is the type that

generates power first, with an example from a turbine, and

there's usually a relatively high amount of high-grade

steam left over that that can be used for a process. The

reverse of that is something -- I believe, basic oxygen

furnace comes to mind, where the heat goes to the process

first, and then you use the steam left over perhaps

supplementing to something to generate power.

Q. Okay. Does this particular category of the

CASA, wherever it falls, provide allowance for both sides

of that -- of the CHP process or just one side of the CHP

process?

A. (by Mr. Cooper) Well, the combination has to

do with how the allowances are allocated. There is an

equation. Someone help me out.

Q. Does it consider all of the heat that goes

into the CHP or just part of it?

A. (by Mr. Cooper) Does the -- Does what?

Q. When you're plugging the numbers into the

formula that's in the rule for a CHP project, do you

consider all of the heat that goes into the CHP or just

part of the heat?

A. (by Mr. Cooper) Well, the CASA category is

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independent of heat input. It's only output.

Q. I'm trying to understand what you mean that

"consideration is given towards the useful thermal

energy."

A. With respect to allowance allocation, not

necessarily to the CASA.

A. (by Mr. Davis) Useful thermal energy in a

topping cycle would be the thermal energy left in the

steam after generating electricity. So, you take the

gross output from the generator, and then you could then

add the thermal energy on to that.

Q. So, it is the whole thing?

A. (by Mr. Davis) I'm not certain what you mean

by "the whole thing".

Q. Well, if you are considering the gross

electrical output that's generated by the heat in the

first place and then you're giving consideration for the

additional heat or the waste heat that's captured in the

use --

A. (by Mr. Davis) Useful amount.

MS. DOCTORS: I need to provide a clarification. I

think we're going down a path that's not quite in line

with what's in the rule.

A. (by Mr. Cooper) The thermal consideration is

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for the allowance allocation. The CASA, as stated in the

equations, are based on electrical output. I do not

believe that we provide a conversion in the CASA to

convert the useful thermal energy for purposes of the

CASA.

BY MS. BASSI:

Q. Okay. So --

A. (by Mr. Cooper) Perhaps that's a

consideration on our part that we may need to reflect.

Q. If there's thermal energy that's not used for

gross electrical output but is used for some process, that

thermal energy is not considered; is that what you're

saying?

A. (by Mr. Cooper) As at least currently

written. It is considered for the allocation.

MS. DOCTORS: For the existing? Are you speaking of

the existing pool versus --

A. (By Mr. Cooper) Yes.

MS. DOCTORS: -- the 25 percent pool for the CASA?

MS. BASSI: Okay. Got it. Thank you.

BY MS. BASSI:

Q. And, further, with respect to the CASA at

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Section 455(b).

A. (by Mr. Cooper) Repeat, please.

Q. -- 455(b), this gets into the -- this is the

section that says that a source has to be in compliance in

order to apply for the CASA, and if the Agency makes a

finding of non-compliance, the source -- after the source

was allocated allowances from the CASA, it must return

them or, I assume, some equivalent allowances. What

comprises an Agency -- Maybe someone needs to answer this.

But what comprises an Agency finding of non-compliance?

A. (by Mr. Bloomberg) One moment.

MS. DOCTORS: We're going to address this in

comments.

BY MS. BASSI:

Q. Okay. Let me ask you some more questions

then, including your comments then. What would be the

Board's role in this Agency finding of non-compliance?

MS. DOCTORS: Same.

BY MS. BASSI:

Q. I understand. Would the Agency agree that the

return or restoration of allowances is a kind of penalty?

MS. DOCTORS: I renew.

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BY MS. BASSI:

Q. Where is the Agency's authority to exact such

a penalty? And if this is some kind of an automatic

thing, what is the State's authority to do this, exacting

of a penalty in the absence of some kind of an

adjudication under the act?

MS. DOCTORS: As I said, we'll address in comment.

MS. BASSI: So, if it's in the transcript, then you

can find the question.

BY MS. BASSI:

Q. Under Section 460(a)(2)(A) -- you may have

answered this yesterday, and if, so I apologize --

(a)(2)(A) -- oh, this is the one that says, "Energy star

qualified new home projects." Does this mean that a

homeowner can apply for allowances under the CASA?

A. (by Mr. Cooper) Potentially.

Q. Okay. Energy source. In 465(c)(1) --

MS. DOCTORS: (c)(1) for 465?

MS. BASSI: Well, I don't know what I was talking

about there. Sorry.

BY MS. BASSI:

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Q. Oh. If a project -- If I apply for CASA

allowances by May 1, 2012, based upon project emissions --

or based upon emissions from a project or non-emissions

from a project, in 2011, will the vintage of the

allowances that I am issued be 2011 or 2012?

A. (by Mr. Bloomberg) I think I answered this

question yesterday. If you apply, you make reductions or

you do whatever it is, your project in 2011, you apply by

May 1st, 2012, you'll be given 2012 allowances.

Q. Okay. Thank you.

A. (by Mr. Bloomberg) Except -- Actually, let me

take a step back. Except that that's presuming that

what's there -- it goes back to the first in and first out

discussion that you brought up.

Q. Okay. I think the question I asked yesterday

had to do with the new source set-aside, new unit

set-aside, which is different. Could you explain just

briefly why the Agency excluded FGD and baghouse projects

from the eligibility for the CASA in the seasonal NOx

program?

A. (by Mr. Kaleel) I think the point to that is

that the seasonal program is intended to address ozone air

quality, and SO2 and particulate matter is controlled by

FGB's and baghouses are not precursors to ozone.

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Q. Thank you. With respect to 225.130 -- I'm now

changing topics.

HEARING OFFICER KNITTLE: Let's go off the record for

a second.

(A brief discussion off the record.)

HEARING OFFICER KNITTLE: Back on the record. After

a short break, and Ms. Bassi has questions that she's

needing to ask of the panel.

BY MS. BASSI:

Q. Okay. With reference to 225.130, the

definitions, the definition of "boiler" -- And these might

be things that you'll just have to list down and comment.

MS. DOCTORS: I think so, it sounds like.

BY MS. BASSI:

Q. And the first question is, is the definition

of "boiler" different from the definition in Part 211?

MS. DOCTORS: Let's address it in comment. I could

comment on it, but I don't think I'm supposed to.

BY MS. BASSI:

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Q. That's all right. And then the next question,

is a list of definitions that are included in 130, and the

question is whether these are different from the

corresponding terms used in Part 217, subpart U and W or

in Part 211, and those terms are the "CAIR authorized

account representative," the "CAIR designated

representative" --

MS. DOCTORS: Wait. I'm going to stop because I just

note for the record that they would necessarily be

different because that program took -- that program is the

NOx SIP Call program, and it didn't contemplate the CAIR

program. So, they would be different definitions. In

terms of "designated representative," there was no such

thing.

MS. BASSI: Is the only difference the use of the

word "CAIR"?

MS. DOCTORS: That I can't speak to at this time, but

they are different because there was no such thing.

BY MS. BASSI:

Q. There's more. The next is the "CAIR NOx

compliance account," other than the word "CAIR"?

MS. DOCTORS: I can't comment on it if it wasn't

contemplated. This definition was not contemplated at the

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time that the NOx SIP Call definition was --

HEARING OFFICER KNITTLE: I understand that. I think

Ms. Bassi wants to know besides the substitution of the

word "CAIR" if the definition is identical.

BY MS. BASSI:

Q. In other words, is the authorized account

representative under CAIR doing the same thing, the same

type of guy or person as the account representative under

the NOx SIP Call or wherever else? And then other ones in

there are "coal-fired," "co-generation unit," "combustion

turbine," "common stack," "electric generating unit,"

"fossil fuel," "fossil fuel-fired generator," "oil fired,"

and "re-powering," and it's possible "re-powering" has a

different meaning. I think the rest of them, though,

you'll find are very similar or the same.

HEARING OFFICER KNITTLE: Ms. Doctors, you're going

to address those in your post-hearing comments, I take it?

MS. DOCTORS: Sure.

MS. BASSI: Thank you.

BY MS. BASSI:

Q. With respect to 225.435(e) --

A. (by Mr. Bloomberg) Did you say "E" as in

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Edward?

Q. "E" as an Edward. And I apologize for jumping

around like this, but I warned you that there was

hodgepodge, and at one time there was a sequence.

HEARING OFFICER KNITTLE: Dually noted.

BY MS. BASSI:

Q. Would you agree that part 96 regulates the

steps that must be used to monitor emissions for the CAIR

that are reflected in 435(e)?

MS. DOCTORS: We'll address it in comment. That's

going to require into looking into different sections.

MS. BASSI: That will be fine. Thank you.

BY MS. BASSI:

Q. If that's true -- And this gets to a wording

thing. If that's true, would you agree that it is

inappropriate to include the language, and I quote, "The

product (an MM BTU per hour) of the gross calorific value

of the fuel (in BTU per pound) divided by 1 million BTU

per million BTU and multiplied by the fuel feed rate into

a combustion device (in pounds of fuel per time)" --

MS. DOCTORS: Where are you reading from?

MS. BASSI: 435(e) I think.

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MS. DOCTORS: No. There's only three lines of text.

MS. BASSI: Well, I don't know.

A. Page 31?

MS. BASSI: 440(a) it looks like. No, that's not it

either. I'll address this in post-hearing comment.

Sorry. I apologize. I guess I ought to look at it before

I speak.

BY MS. BASSI:

Q. Could you please explain what is meant by

410(d)(1)? Oh. In 410(d)(1), in the second line, there

is a phrase "the allowance transfers deadline". Is that

referring to March 1st?

A. (by Mr. Bloomberg) Yes.

Q. So, this is meant to effectively describe what

March 1st of each subsequent year is?

A. (by Mr. Bloomberg) Yes. That's why it's

broken off by commas.

Q. I had -- Okay. With regard to allocation

methodology, what is the incentive to retire older units

under Illinois EPA's chosen allocation methodology? How

does this intensify that?

A. (by Mr. Cooper) Are you referring to a

specific section, first off?

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Q. Well, your allocation methodology is a

two-year look back based on gross electrical output, and

how does this intensify retirement of old plants, which I

think someone must have mentioned was one of the goals?

MS. DOCTORS: I think we've already addressed this

question in detail. I think Ms. Sims addressed it

yesterday maybe.

BY MS. BASSI:

Q. Intensified the retirement of older units?

HEARING OFFICER KNITTLE: Ms. Doctors, I just want to

warn you she's shaking her head "no". So, if you can find

someone --

A. (by Mr. Davis) I think the assumption there

is that older plants would be less efficient, and, also,

we'd like to --

BY MS. BASSI:

Q. So, what you're saying is that because older

plants are less efficient, there is incentive construction

of newer plants that would be more efficient so that they

would get more allowances, plus the bonus of the CASA?

A. (by Mr. Davis) Yes. And with respect to your

question on the look back, in the -- well, in the model

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rule, as we've discussed, older plants will still receive

allocation based on those baselines.

Q. Is that an incentive for the shutdown of older

plants?

A. (by Mr. Davis) Yes.

Q. The fact that they would continue to be

getting allowances, meaning allocated allowances under a

permanent baseline?

A. (by Mr. Davis) I don't believe that is an

incentive to shut down.

Q. Well, if you shut down an old plant,

presumably you're opening a new plant, and, so, you would

be getting the allowances for the old plant, plus the new

plant; is that not incentive to shut down a plant?

A. (by Mr. Ross) In that scenario, that

certainly would be an incentive.

Q. Okay. Going to the federal appeal procedures,

which are incorporated by reference, and I believe this is

one, Ms. Doctors, you indicated yesterday you would want

to comment on.

MS. DOCTORS: Right.

BY MS. BASSI:

Q. The federal appeal procedures at 40 CFR Part

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78 are incorporated by reference in this proposed rule.

Could you explain why?

MS. DOCTORS: We'll address that in comment.

MS. BASSI: Okay. And in that addressing of this in

your comment, could you perhaps provide an example of when

the federal appeal procedures would apply?

MS. DOCTORS: Yes.

MS. BASSI: Thank you.

BY MS. BASSI:

Q. Opt-in. The Agency -- Is the Agency proposing

not to allow opt-ins as -- which is different from the

model rule?

A. (by Mr. Kaleel) Could you repeat the

question? I'm sorry.

Q. Is the Agency proposing not to allow opt-ins?

A. (by Mr. Kaleel) That's right.

Q. And I believe someplace in the Statement of

Reasons -- I'm sorry, I didn't write down the page

number -- I believe the Agency stated that a reason for

not including opt-ins is administrative complexities; is

that correct?

A. (by Mr. Kaleel) I guess that's part of the

reason. The other part of our rationale is that for our

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attainment strategy for ozone and for PM2.5, we may need

to seek specific control requirements on non-EGU's, and

having allowances and having compliance with a specific

state requirement would -- I mean, it's an overlapping

requirement.

Q. When I -- Are you viewing the inclusion of the

non-EGU portion of the NOx SIP Call into the CAIR, which I

believe you said is not occurring, as an opt-in?

A. (by Mr. Kaleel) We're not -- No, that's

not -- I think the federal rule allows opt-ins for

non-EGU's during the summer season. We're not including

that.

Q. Were there any opt-ins in Illinois under the

NOx SIP Call?

MS. DOCTORS: Does anybody know?

A. (by Mr. Bloomberg) None that I'm aware of.

BY MS. BASSI:

Q. Does the Agency anticipate perhaps from that

experience that no one would be interested in opting in

under the CAIR trading program?

A. (by Mr. Kaleel) I think that's a fair

assumption based on the history of that program.

Q. Okay. Economic reasonableness in the

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Statement of Reasons at Page 33, the Agency states that,

"USEPA's energy efficiency/renewable energy guidance

projects certain annual savings if 5 percent of the

regional allowances are set-aside for this purpose." Does

someone recall that?

A. (by Mr. Cooper) Yep.

Q. Are you the economic reasonableness person?

A. (by Mr. Cooper) Not necessarily.

Q. You hope not?

A. (by Mr. Cooper) Not necessarily. I believe

the passage you're referring to was lifted from the 1999

USEPA document.

Q. Okay. And, so, we could find this figure in

that document if we looked; is that correct?

A. (by Mr. Cooper) Yes.

Q. Okay. Can you tell me how much of the 5

billion in consumers' energy bills that the Agency claims

that USEPA estimates could be saved regionally is

attributable to Illinois?

A. (by Mr. Cooper) We don't have that estimate.

Q. Is it likewise then that the Agency does not

know how much of the 150 million dollars in air quality

compliance costs are attributable to Illinois sources?

A. (by Mr. Cooper) Also, we do not know.

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Q. All right. With the 12 percent set-aside for

EE/RE, how much does that translate into for consumer

energy savings and compliance cost savings? In other

words, how much savings in terms of money is there from

the 12 percent EE/RE set-aside?

A. (by Mr. Cooper) I don't believe there is such

a calculation.

Q. Okay. In the Statement of Reasons at Page 42,

the Agency states that it has relied upon the cost

analyses performed by USEPA with respect to the SO2

portion of the CAIR proposal to determine economic

reasonableness. What is the impact on the economic

reasonableness if all companies subject to this rule --

all coal-fired generators subject to this rule opted into

the MPS?

A. (by Mr. Ross) We haven't made that

assessment, but, again, it's an opt-in. So, that puts

forth the premise that those companies are voluntarily

choosing to meet those requirements at the MPS. So, they

are voluntarily accepting any cost associated with meeting

those limits.

Q. On that same page, the Statement of Reasons

says that, "Some Illinois EGU's use coal washing, blending

low and high sulfur coals and FGD's," and that is at the

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top of Page 42, in that first full paragraph. Okay. It

also says -- It also refers to blending with limestone.

Isn't that done in the CFB?

A. (by Mr. Ross) It is done in the CFB.

Q. It says it's not used in Illinois.

A. (by Mr. Ross) Limestone blending in the CFB?

Q. Well, what it says here is, "Blending coal

with limestone is not currently used in Illinois."

MS. DOCTORS: Excuse me. Let me object. This is on

a citation from the TSD Section 5.1. So, in order to

understand how this statement is made, we'll have to look

at that section of the TSD rather than just taking a

statement.

MS. BASSI: Okay.

HEARING OFFICER KNITTLE: Ms. Doctors, is that

something you want to address in comments, as well?

MS. DOCTORS: Yeah, I'd be happy to address it in

comments. If you're referring to just sentences that are

cited under the TSD, let's talk about the TSD document not

the Statement of Reasons because that would be a more

accurate description for the people listening as to what

the question relates to.

MS. BASSI: Well, what I'm getting at is -- What I

want to know is, is this an inaccurate statement because

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somebody is blending limestone or maybe that's not what is

considered?

MS. DOCTORS: We'll address that in comment.

BY MS. BASSI:

Q. Is it not the case that most of the EGU's in

Illinois use low sulfur coal or powder river basin coal

that is not blended?

A. (by Mr. Ross) That's my understanding.

That's correct.

Q. The Statement of Reasons discusses consumer

electricity rate increases projected to result from

implementation of the CAIR, and these are expressed in

terms of percentage rate increases, and I apologize

because I don't have a page number written down, but it's

referenced in the TSD at Section 6.4 on Page 63.

MS. DOCTORS: That's Page 63?

MS. BASSI: Uh-huh.

BY MS. BASSI:

Q. All right. Ready? What is the baseline, I

guess, for which these percentage increases are being

applied? When you say there's a 2.6 percent increase,

from what?

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A. (by Mr. Ross) Well, we went over the IPM

modeling in some detail the first day. Again, they ran

two scenarios, a base case, which is CAIR CAMR being

implemented in Illinois, and a second case, which is CAIR

as proposed by the Illinois EPA and CAMR, and the

difference was the projected increase in electricity

prices.

Q. Yeah. But it says "by 2010," which means

you're comparing it -- This Table 6-10, for example, has a

base case that says "2010," but you're saying that 2.6

increases by 2010. By 2010 from what?

A. (by Mr. Ross) Well, I think it's simply

saying that in 2010, there will be a negligible or very,

very small increase in electricity prices from the

implementation of CAIR in Illinois as Illinois is

proposing to implement it and in comparison to the model

federal CAIR. So, it's evaluating the cost in 2010 in

both cases, and it's saying that the Illinois policy will

result in a very small increase in electricity prices.

MS. BASSI: Okay.

BY MR. BONEBRAKE:

Q. Mr. Ross --

A. Yeah.

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Q. -- doesn't Section 6 of the TSD deal with

USEPA analysis of the federal CAIR model, whereas Section

7 deals with the --

A. I stand corrected. I thought we were talking

about the IPM model. But this is still USEPA's IPM model.

So, we are talking modeling.

MS. BASSI: I would never talk about the IPM.

A. Yeah. Well --

BY MR. BONEBRAKE:

Q. For clarification, for instance, in 2015,

USEPA was projecting that CAIR would increase rates by 4.3

percent as compared to a scenario where CAIR was not in

place; is that correct?

A. (by Mr. Ross) That's how the USEPA did their

modeling, that's correct. The cases they modeled was CAIR

and without CAIR.

Q. And any additional increase in rates

associated with the Illinois proposal, including any

increase that might flow from the CASA -- I think we

talked about whether or not that would occur earlier --

any additional increase in rates would be an add-on to

what USEPA has projected for the federal CAIR program; is

that correct?

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A. (by Mr. Ross) That is correct.

BY MS. BASSI:

Q. And concerning the analysis that was done in

Illinois, without asking a question about IPM, I

presume -- is it correct that this analysis did not

anticipate any of the current rate increases that are

resulting from the death of the moratorium?

A. (by Mr. Ross) Those were not modeled.

Q. Were they considered?

A. No, I don't believe so.

Q. With regard --

MS. DOCTORS: Can you be more specific when you speak

of "the death of the moratorium"? Where are you talking

about?

MS. BASSI: There has been a ten-year moratorium on

electrical rates in Illinois that was an ease into

deregulation, I believe.

MS. DOCTORS: I want the record to be clear as to

what we're speaking about.

BY MS. BASSI:

Q. With respect to SO2, there's currently pending

in the D.C. Circuit of Appeals -- I'm sorry -- there

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currently in the D.C. Circuit appeals of various aspects

of the federal CAIR rule as adopted by USEPA, and the

fundamental challenge to this is to your EPA's reliance on

the acid rain program as the basis for the S02 CAIR. Is

there some provision in Illinois' proposal that recognizes

that if the rule on the federal level is found to be

inappropriate by the court that this will trickle down to

Illinois?

MS. DOCTORS: Mr. Kaleel will answer that?

A. (by Mr. Kaleel) Well, there is a severability

section in the rule. I think it's 225.100 in the general

provisions, and I think it's intended to address that.

For example, if the acid rain program or the SO2 portion

of the trading program is found invalid, that the other

portions of this rule would still apply. The NOx portions

of the rule would still apply.

MS. BASSI: Okay. Thank you.

BY MR. BONEBRAKE:

Q. A related question on that. Severability

provisions relate to the Illinois proposal; correct?

A. (by Mr. Kaleel) Yes, this is an Illinois

proposal.

Q. The challenge in the D.C. Circuit is with

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respect to the federal rule; is that correct?

A. (by Mr. Kaleel) Yes.

Q. Are you suggesting, Mr. Kaleel, that a D.C.

invalidation of the portion of the federal rule would

automatically result under this provision an invalidation

of the implementing provisions of the Illinois proposal?

A. (by Mr. Kaleel) We're implementing the

program through the federal acid rain, at least the S02

portion in the federal program.

MS. DOCTORS: We'll address the legal -- I understand

your question, Mr. Bonebrake, and we'll address the legal

implication of what would happen when that decision comes

out.

MR. BONEBRAKE: Thank you.

BY MS. BASSI:

Q. Also on appeal in the Federal D.C. Circuit is

the NOx portion of the CAIR, and I don't believe that

Illinois is relying on the federal NOx CAIR to the extent

that it is on the federal SO2 CAIR; is that correct?

MS. DOCTORS: As I'm unfamiliar to that lawsuit, I

would ask that you provide me with a copy of what you're

speaking of, and we'll address it in comment.

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BY MS. BASSI:

Q. Well, my question is a little more general

than that. You said that -- I believe your response to my

first question was that if the federal SO2 CAIR falls as a

result of this lawsuit because of the intent of Illinois'

program on that, it would automatically fall, as well, but

Illinois' NOx proposal appears to be very different from

the federal NOx rule, and my question is, what happens if

the federal NOx rule fails, as well?

MS. DOCTORS: And I'd like to address that in comment

because we can't testify as to the legal intricacies of

how Illinois' program is, in fact, implementing the

federal CAIR rule at this time.

BY MS. BASSI:

Q. So, based on the implications of your

non-testimony --

MS. DOCTORS: Right. I mean --

BY MS. BASSI:

Q. -- is it the Agency's position that the NOx

CAIR rule in Illinois is not an independent program?

MS. DOCTORS: It is my statement that we will address

this in comments.

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HEARING OFFICER KNITTLE: Are you asking that of

Mr. Ross?

MS. BASSI: I can ask that of Mr. Ross.

A. (by Mr. Ross) We will address that in

comment.

BY MS. BASSI:

Q. Okay. And all I'm getting at is, as you

address it in comment, is it an independent program that

would have meaning in Illinois if the federal CAIR were

not there. So --

A. (by Mr. Ross) Okay.

Q. Does the SO2 CAIR reduce emissions an

additional 3.8 million tons by 2015 beyond the

3-and-a-half million tons in 2010?

A. (by Mr. Cooper) Where are you looking?

Q. I don't know. It's in the Statement of

Reasons, I'm sure.

MS. DOCTORS: If it's in the Statement of Reasons, it

always refers back to the TSD with a fuller explanation,

more comprehensive.

BY MS. BASSI:

Q. The Statement of Reasons at Page 41 -- I wrote

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this one down -- describes low sulfur coal as an SO2

control measure.

MS. DOCTORS: As I stated, I'm going to state an

objection. The Statement of Reasons is a legal document,

and it represents what's in the TSD. If counsel has a

question about the technical support for the rule versus

some legal arguments or summaries made in the Statement of

Reasons, I believe that the proper place in the section to

be referring to this information is the TSD.

MS. BASSI: Well, then strike my reference.

HEARING OFFICER KNITTLE: And that's been noted, I

think, for the record, Ms. Doctors, and I think Ms. Bassi

understands that you're going to have to refer back to the

TSD to answer some of these question. We can try to do

that.

BY MS. BASSI:

Q. I'll restate. The Agency describes low sulfur

coal as an SO2 control measure. To what extent is this

measure applied in Illinois?

A. (by Mr. Ross) To what extent is the use of

low sulfur coal applied in Illinois?

Q. As an SO2 control measure.

A. (by Mr. Ross) It is widely utilized.

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Q. What SO2 control measures does the Agency

project will be implemented in Illinois in order to comply

with each of the CAIR caps for SO2?

A. (by Mr. Ross) The most likely is flue gas

desulfurization and scrubbers.

MS. BASSI: And I have a few questions with respect

to trading. I have not so many, but I do have one. I'm

done.

HEARING OFFICER KNITTLE: Ms. Bassi, I thought you

were finished with that one portion of your --

MS. BASSI: No. I'm done.

HEARING OFFICER KNITTLE: We will go to Mr. Rieser,

Mr. Bonebrake or Ms. Bugel.

BY MR. RIESER:

Q. Turning to 225.530 of the Page 6 of the

proposal, the date for the Agency's submittal of the

initial ozone seasonal allowance allocations was changed

from October 31st, 2006 to within 30 days of the effective

date of the subpart. Is that 30 days after the effective

date of the subpart expected to be consistent with the

CAIR requirements?

A. (by Mr. Bloomberg) We hope so. The date was

changed in recognition that the rulemaking is taking

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longer than perhaps it was hoped when it was originally

written and may bump up again to the fifth deadline. Then

obviously we're not going to hit October 30th.

Q. So, the basic idea is that you'll get those

allocations into USEPA as soon as you can after the rule

becomes effective?

A. (by Mr. Bloomberg) 30 days for the Agency,

but 15 days for other -- No never mind.

Q. Looking at 225.435, again, in the amended

rule, specifically (d)(1)(C), there's a formula for if the

unit is neither coal fired or oil fired. Do you see that?

Is there anything -- Are there any units that are neither

coal fired or oil fired that are fired by anything other

than natural gas?

A. (by Mr. Davis) Not that I'm aware of.

Q. Is there a reason not to simply reference

"natural gas" here?

A. (by Mr. Davis) That was the language that was

used in the CAIR model rule and just carried it into our

rule.

A. (by Mr. Bloomberg) And it also has the

possibility even if we don't know about something now,

that there was some other fuel that we were unaware of and

it just said "natural gas," we would be left without any

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factors?

A. (by Mr. Cooper) Syn gas would be a potential

candidate.

Q. Again, looking at that same -- (b)(1)(A), (B)

and (C), which of these formula are used if the unit is a

dual-fired unit, in other words, sometimes natural gas,

sometimes fuel?

A. (by Mr. Cooper) I believe it's a definition.

It states -- Coal fired is defined in 225.410.

MS. DOCTORS: He's reading up in the definition. Let

me direct him to --

A. (by Mr. Cooper) 225.130, "coal-fired" means

combusting any amount of coal or coal-derived fuel alone

or in combination with any amount of any other fuel during

a specified year.

BY MR. RIESER:

Q. Okay. So, if it's dual fired and uses coal as

one of the fuels -- I'm sorry?

MS. DOCTORS: Mr. Rieser, can he finish his response?

MR. RIESER: I'm sorry. Of course.

A. There was a definition for "oil-fired unit".

"Oil-fired unit" is defined as -- means a unit combusting

fuel oil for more than 15 percent of the annual heat input

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in a specified year and not qualifying as coal fired.

MR. RIESER: All right. I may have some more.

A. (by Mr. Davis) I can clarify that.

MR. RIESER: Go ahead.

A. (by Mr. Davis) I believe the distinction was

dual fired usually is between gas and oil and not coal.

BY MR. RIESER:

Q. Thank you. In that same section, 225.435, now

we're looking at (b)(2), (b)(2) makes a reference -- I

should say describes what happens if the unit uses heat

input rather than electrical output, but the baseline

years for heat input are 2007 and 2008. In (b)(1), the

unit looks to the two years prior to the year -- prior to

the 2012. So, what is the difference -- What is the basis

for this difference in the baseline years in these two?

MS. DOCTORS: Ms. Sims will answer.

A. (by Ms. Sims) I don't understand your

question. Can you repeat it and give me the section

again?

BY MR. RIESER:

Q. Looking at 225.435, starting with (b)(2) --

MR. COOPER: "B" as in boy?

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Q. "B" as in boy. This is in the new revised

proposal to the rule. For units relying on heat input,

your baseline years are the heat inputs from 2007 and

2008. Under (b)(1), which looks to gross electrical

output, is the two most recent years. And the question

is, what is the basis for this difference in the baseline

years?

A. (by Ms. Sims) Since we allocate for control

period 2012 and 2009, we go back two years, which would be

2007 and 2008. Does that answer your question?

MS. DOCTORS: Are you saying no difference between

the two; it's just stated slightly differently?

MR. RIESER: I see nodding heads.

A. (by Ms. Sims) Yes, there may need to be a

language change here.

BY MR. RIESER:

Q. So, the intent is that you looked at those

same two years, whichever means you're using?

A. (by Ms. Sims) That's correct.

HEARING OFFICER KNITTLE: Ms. Doctors, you'll address

that in comments if there needs to be a language change to

rectify that?

MS. DOCTORS: Yes.

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BY MR. RIESER:

Q. Turning to 225.450(c), which is on Page 9 of

the motion, I believe Ms. Bassi already explored the basis

for the 15 days of the effective date of the rule for

compliance of types of information, and I think the

response was that that was something that you all would be

willing to look at?

MS. DOCTORS: Yes.

BY MR. RIESER:

Q. Okay. Similarly, and I believe we talked to

Ms. Sims about this, in 225.450(d), there's a requirement

for quarterly reports, and the questions we asked before

was what the basis for requiring quarterly reports were,

and I was wondering if the Agency had had a chance to look

at that issue a little more closely.

MS. DOCTORS: Not in the last 48 hours.

BY MR. RIESER:

Q. Okay. Been busy? And in looking at that, I

guess the question is whether it would be possible to

coordinate the dates of whatever that reporting is with

other reports that are due, some of which are due on the

30 days -- excuse me -- quarterly reports are due on the

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30th day after the quarter rather than the 31st of the

month, some of which are due 45 days after the quarter,

and some of which are just due annually.

MS. DOCTORS: Do you have specific reports in mind?

MR. RIESER: The 45 day reports would be the reports

required under the Title 5 permits. The 30 day reports --

The acid rain program reports are 30 days after the end of

the quarter.

MS. DOCTORS: Would you like to submit a suggestion?

MR. RIESER: I'd be happy to.

MS. DOCTORS: Thank you.

A. (by Mr. Bloomberg) One thing I'd like to note

is that these reports would by necessity come in

separately. So, I'm not certain that there's a lot of

benefit gained by making them the same date.

MS. BASSI: May I suggest that administratively

inside the companies there is.

A. (by Mr. Bloomberg) And that's possible.

MR. RIESER: There's definite advantages gained by

having things due at the same time, even if the Agency

treats those reports for different reasons. That's all I

have. Thank you.

HEARING OFFICER KNITTLE: Ms. Bugel?

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BY MS. BUGEL:

Q. I have just a couple of questions on

distribution of the baseline allowances -- or for

allocation of the baseline allowances, and Ms. Sims

suggested that Mr. Ross might be the one to answer these.

Mr. Ross is suggesting he may not be the one to answer

these.

A. (by Mr. Ross) Go ahead.

Q. IEPA concluded that it was -- well, it

proposed that the allowances be allocated without cost to

the industry; is that correct?

A. (by Mr. Ross) Yes.

Q. And were there -- Did the Agency consider

other methods of allocation?

A. Yes. We looked at the possibility of

auctioning allowances.

Q. And did the Agency conclude that there would

be benefits from auctioning allowances?

A. (by Mr. Ross) I believe we concluded that it

would be administratively burdensome for us to auction

allowances. We have no experience in that manner. We

have limited resources. And we also assessed that it

would require some legislation for us to be able to do

that. So, we made a decision not to proceed with

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auctioning the allowances.

Q. Did the Agency examine whether there would be

any benefit?

A. (by Mr. Ross) Benefit in the way of Agency

receiving revenue from auctioning?

Q. Sure, that would be one benefit.

A. (by Mr. Ross) Yes, we looked at that.

Q. And would the benefit of receiving revenue

balance against the cost of resources of auctioning?

A. (by Mr. Ross) We don't know, but receiving

revenue is one thing, being able to utilize it as needed

is another and -- I'll stop there.

Q. Will the Agency have to expend funds to

administer the CAIR program -- resources, revenue?

A. (by Mr. Ross) Yes, to some extent.

Q. And where do those resources come from?

A. (by Mr. Ross) Existing rev -- The resources

come from internal staff, time and effort and --

Q. Have there been any challenges to external

staff in terms of being under-resourced and --

A. (by Mr. Ross) Absolutely. Yes, we have

limited resources and limited ability to remedy that.

Q. Would an auction have been one possibility of

creating more revenue and resources for the Agency as a

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remedy to being under-resourced?

A. (by Mr. Ross) It was a possibility we looked

at and decided it was not appropriate to pursue it.

Q. Is there any benefit to industry of not

pursuing an auction and distributing the allowances at no

cost?

A. (by Mr. Ross) There's the benefit in that an

auction, they would have to purchase the allowances that

we have elected to give away for free.

Q. And in considering an auction, did the Agency

consider that an auction would have imposed additional

cost on an entity subject to CAIR?

A. (by Mr. Ross) Yes.

MS. BUGEL: I have no further questions.

BY MR. GIRARD:

Q. I just have one question along these lines.

Mr. Ross, you mentioned in response to one of the

questions that you felt the Agency would have to go back

to the legislature to be able to auction off allowances.

Is that a way of saying that the Agency's position is it

does not have statutory authority to auction allowances?

A. (by Mr. Ross) I believe, yes, that was legal

advice that was given to the decision makers, that we

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currently do not have the statutory authority to do an

auction.

Q. And if you don't have the statutory authority,

then we can't write a rule that allows the auctioning of

allowances?

A. (by Mr. Ross) That's correct.

MR. GIRARD: Thank you.

HEARING OFFICER KNITTLE: Mr. Rao, do you have any?

MR. RAO: No.

HEARING OFFICER KNITTLE: Mr. Bonebrake?

MR. BONEBRAKE: I have a couple follow-ups, and this

will be quick. They relate to 225.435. Mr. Rieser just

asked a couple questions about it.

MS. DOCTORS: Are you referring to the motion?

MR. BONEBRAKE: Well, perhaps if we have both the

original proposed version and the motion proposed version,

it will be useful. It's Page 6 of the motion.

BY MR. BONEBRAKE:

Q. Yesterday we discussed the fact that for the

initial allocation, the rule permitted the companies to

elect to submit and have the Agency rely upon either heat

input or gross output, and my first question is, the

motion revision to 225.435(b), is one of the purposes of

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the revision to extend to the year 2012 the option to

submit heat input or gross output data?

A. (by Mr. Ross) Yes.

Q. And with that in mind, the section (b)(1), the

lead-in language is, "The units two most recent years in

control period gross electrical output, if available,"

raises, again, the question of whether the rule is

intended to be optional, because the language "if

available" seems to be ambiguous, and in (b)(2), the

corresponding language seems to be, "If gross electrical

output data is not provided." So, I guess my question to

the Agency would be, is the Agency willing to revise

225.435(b), and I think there's a similar issue with

225.435(a) and the other provisions that you talked about

yesterday, to make it clear that for the initial

allocation announcement in the year 2012, as well, that

the rule permits the companies to make the election?

A. (by Mr. Ross) Yes.

BY MS. BASSI:

Q. Does that include changing the word "shall" to

"may"?

MS. DOCTORS: It's unclear exactly what the wording

change will be at this time, but the concept will be

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looked at.

MR. BONEBRAKE: And that is all I have for questions.

HEARING OFFICER KNITTLE: Do we have anything from

anybody else?

(No response.)

HEARING OFFICER KNITTLE: Let's go off the record for

a minute.

(A brief discussion off the record.)

HEARING OFFICER KNITTLE: Let's go back on the

record. After a quick recess -- There's a couple things I

want to note, and I was remiss earlier in not asking --

And this is for you, Ms. Doctors. There's been some

references in your motion to amend the testimony regarding

certain dates, and I'm looking right now at Section

225.460 regarding the May 30th, 2006 date concerning court

orders and consent decrees --

MS. DOCTORS: Yes.

HEARING OFFICER KNITTLE: -- there's been some

questions that have come up, and I think not only to this,

but to other dates, as well, that would at least implicate

a retroactive application of the rule, and we wanted you

to address that in public comments --

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MS. DOCTORS: Okay.

HEARING OFFICER KNITTLE: -- or what we're calling

the post-hearing comments, if you could. Otherwise, I was

also remiss in noting that we've had a large number of

members of the public upwards -- I counted earlier 25

people, and now we're at about 10. So, I want to note

that there has been active public interest, and we've had

a number members of the public who are interested in this

proceeding, and we appreciate that.

Finally, we have had some off-the-record discussions,

and the transcript apparently will be available on

Tuesday, October 17th. Based upon that, the Agency is

going to file its post-hearing comments on or before

October 27th. The mailbox rule will not apply. So, we

need those in our hands on October 27th -- our collective

Board hands. And then on November 10th, we need the

prefile testimony for anybody wishing to testify at the

next hearing, which is November 28th. Once again, the

mailbox rules does not apply. By Cool or if you have any

problems with Cool and you need to get it in on that day,

I would approve a fax filing, but you'd have to contact me

beforehand. That applies to the Agency, as well, of

course.

So, other than that, I just want to thank everybody

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for their participation in the hearing and for your

attention. If anyone has any questions about the

procedural aspects or any aspect of this rulemaking, you

can contact me. My phone number is 217-278-3111, and my

e-mail is knittlej@ipcb.state.il.us, and copies of the

transcript will also be available on the Board's web site

shortly after we receive them on October 17th, and that is

at www.ipcb.state.il.us, and you'll also be able to find

previous Board orders and hearing officer orders on the

site.

So, anything else from you, Ms. Doctors, before we

adjourn?

MS. DOCTORS: No.

HEARING OFFICER KNITTLE: Anybody else?

MS. BASSI: Thank you very much.

HEARING OFFICER KNITTLE: Thank you all for your

time. Hearing is adjourned.

(Proceedings adjourned.)

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STATE OF ILLINOIS

)

COUNTY OF ST. CLAIR )

I, HOLLY A. McCULLOUGH, a Notary Public within and

for the County of St. Clair, State of Illinois, do HEREBY

CERTIFY that the foregoing record of the proceedings was

made before me on October 12, 2006, at the Illinois

Environmental Protection Agency, Training Room, 1021 North

Grand Avenue East, North Entrance, Springfield, Illinois.

IN WITNESS WHEREOF, I have hereunto set my hand and

affixed my Notarial Seal the 16th day of October, 2006.

____________________________

HOLLY A. McCULLOUGH

Notary Public

CSR #084-004265

RPR #821968

CCR #1011

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