BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
SIPC'S COMMENTS ON FIRST NOTICE AND MOTION TO AMEND THE PROPOSED RULEMAKING
I. Initial Allocations
11. Revision of CASA Formula
CERTIFICATE OF SERVICE
SERVICE LIST

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PROPOSED NEW CAIR SOz, CAIR NOx

)

ANNUAL TRADING PROGRAMS,

)

R06-26

1LL.ADM.CODE 225,

(Rulemaking

Air)

CONTROL OF EMISSIONS FROM LARGE

)

COMBUSTION SOURCES,

)

SUBPARTS A, C, D, AND E

)

NOTICE OF FILING

To:

John T. Therriault, Assistant Clerk

Persons included on the

Illinois Pollution Control Board

ATTACHED SERVICE LIST

James R. Thompson Center

Suite 1 1-500

100 West Randolph

Chicago, Illinois 6060 1

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

Pollution Control Board

SIPC'S COMMENTS ON FIRST NOTICE AND MOTION TO

copies of which are herewith served upon you.

Dated: June 25,2007

Sheldon A. Zabel

Kathleen

C. Bassi

Stephen J. Bonebrake

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

3 12-258-5500

Electronic Filing, Received, Clerk's Office, June 25, 2007

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

PROPOSED NEW CAIR SO2, CAIR NOX

)

ANNUAL TRADING PROGRAMS,

)

R06-26

1LL.ADM.CODE 225,

)

(Rulemaking

Air)

CONTROL OF EMISSIONS FROM LARGE

)

COMBUSTION SOURCES,

SUBPARTS A, C, D, AND E

)

SIPC'S COMMENTS ON FIRST NOTICE AND

MOTION TO AMEND THE PROPOSED RULEMAKING

NOW COMES SOUTHERN ILLINOIS POWER COOPERATIVE ("SIPC"), by and

through its attorneys, SCHIFF

HARDIN LLP, and comments upon the Board's First Notice

Order ("Order") for the proposed Clean Air Interstate Rule for Illinois ("CAIR), issued on

April 19,2007. Pursuant to 35

111.Adm.Code

101.500, SIPC also moves that the Board amend

the First Notice rule to address a situation unique to SIPC that

cannot be effectively addressed

through an adjusted standard because of the nature of the needed change to the rule and the

timing involved and to insert provisions that appear to have been inadvertently omitted from the

First Notice rule.

Initial Allocations

Application of Averaging (Converted) Gross Electrical Output to SIPC

In order to comply with the deadline of July 3 1, 2007, for submission of initial

allocations to the U.S. Environmental Protection Agency ("USEPA")

(see Order, p. 8, 3rd

paragraph), the Illinois Environmental Protection Agency ("Agency") has begun the process of

calculating the number of allowances for each affected source and sharing drafts with those

Electronic Filing, Received, Clerk's Office, June 25, 2007

sources. This process emphasized an issue that SIPC raised with the Agency prior to and during

the hearings in this matter, specifically that there were not three years of "normal" operations at

SIPC during the initial look-back period. During the look-back period of 2001 through 2005,

SIPC was winding down operation of old Units

1,2, and 3 and building Unit 123, which is the

circulating fluidized bed boiler

("CFB") at that generating station. The CFB commenced

operation in mid-2003 and went through a shake-down period of a year to a year and a half.' It

was not until 2005 that SIPC experienced what can be characterized as "normal" operation.

Because there were not three years of "normal" operation at SIPC during 2001 through

2005, SIPC is significantly disadvantaged in the calculation of initial allowances for which it is

eligible. While the difference in the number of allowances for which SIPC may be eligible if

true "normal" operations in 2005 and 2006 were considered may be relatively small compared to

the number of allowances to be allocated to other power companies in the state, a difference of

even 10 allowances is significant to SIPC because the number of allowances it will receive is so

small. Ten allowances are equivalent to 10% of a month's allowances for that station.

The first year during which SIPC had "normal" operation was 2005. Averaging the

(converted) gross electrical output of 2005 with other years during the 2001-2005 period does

not allow SIPC to participate in the CAIR on a level playing field with the other

EGUs in the

state. SIPC is unique relative to the initial allocations because of the timing of the construction

of the CFB.

We reiterate the Agency's and Board's observation, at page 14 of the Order, that

SIPC's

CFB is the only electric generating unit ("EGU") in the state utilizing this technology. Neither

SIPC nor the Agency had experience with the operations of a CFB EGU prior to the installation

of the CFB at SIPC. Therefore, the shake-down period may have been

legitimately

longer

than what one might expect of a conventional boiler.

Electronic Filing, Received, Clerk's Office, June 25, 2007

As initial allocations will be based upon an average of (converted) gross electrical output,

a possible acceptable alternative for SIPC would be to rely on only 2005 for its initial allocation.

Another alternative would be to average the (converted) gross electrical output from 2006 with

that from 2005 to determine SIPC's initial allocation. The 2006 data is available, and using such

data would create no hardship for the Agency in calculating SIPC's allocation.

For the reasons set forth above, SIPC moves that the Board amend Sections 225.435 and

225.535 to provide that the Agency shall determine SIPC's initial allocation on the basis of

operations in 2005 alone or, in the alternative, on the basis of the average of operations in 2005

and 2006. Language for reliance on 2005 alone is set forth below:

Section 225.43 5/53 5 Methodology for Calculating Annual Allocations

The Agency will calculate converted gross electrical output, in

MWh, for each CAIR NOx unit

that has operated during at least one calendar year prior to the calendar year in which the Agency

reports the allocations to

USEPA as follows:

For control periods

2009,20 10, and 20 1 1

. . . :

Gross electrical output.

. . .

If the unit does not have gross electrical

output for the 2004 and 2005 control periods, the gross electrical output

will be the gross electrical output data from the 2005 control period. The

gross electrical output data from the 2005 control period will be used for

Unit 123 at SIPC.

. . .

Heat input (HI).

. .

.If the unit does not have heat input from the 2004 and

2005 control periods, the heat input from the 2005 control period will be

used. The heat input from the 2005 control period will be used for Unit

123 at SIPC..

. . .

SIPC has discussed this issue with the Agency, but the Agency has indicated that it does

not agree with this amendment to the First Notice rule, at least in part because it would have to

adjust the allocations it has already submitted to

USEPA for "parallel processing." This

reasoning is inadequate. While

USEPA may habitually review state rules through parallel

Electronic Filing, Received, Clerk's Office, June 25, 2007

processing2 and for good reason, there is no obligation on the part of the Board to adopt what the

Agency has submitted for parallel processing. Further, the Agency was arguably premature in

submitting a rule and particularly this rule for parallel processing prior to Second Notice. SIPC

is aware that the Agency is including a substantial number of amendments, including the

amendment relative to the Clean Air Set-Aside ("CASA") formula pertaining to the CFB

discussed in Section

I1 of these Comments, in its comments on the First Notice rule. Parallel

processing is not a good reason to not accommodate SIPC in this request considering

SIPC's

special circumstances.

Action Deadline in Sections 225.435(a) and 225.535(a)

Sections 225.435(a) and 225.535(a) provide that the owners or operators of EGUs subject

to the CAIR may tell the Agency whether they want their initial allocations determined on the

basis of gross electrical output or heat input converted to gross electrical output. The question of

whether the companies had a choice in gross electrical output or converted gross electrical output

was discussed at some length during the Springfield hearings in this matter, and SIPC

appreciates the Agency's willingness to clarify that it intended that there would be a choice and

the Board's implementing that clarification at First Notice.

However, as the Board noted and invited comment on page

39 of its Order, the deadline

for the owners or operators to submit their choices, in writing, for the initial allocations is June

2007. As the deadline for these comments on First Notice proves, the Board did not adopt this

USEPA will review rules that state agencies submit as substantially complete and in the

form likely to be adopted in order to save time during

USEPA's formal SIP approval process.

Given the number of amendments that the Agency requires for this rule, the rule submitted to

USEPA for parallel processing was not substantially complete and in the form likely to be

adopted.

Electronic Filing, Received, Clerk's Office, June 25, 2007

rule as final by that date. Therefore, the rule improperly contains a deadline that predates the

final adoption and effectiveness of the rule.

SIPC's preference would be to have all allocations based upon heat input. Understanding

that the Board believes that basing allocations on gross electrical output would encourage

efficiency, despite the fact that such efficiencies are not available to SIPC and any other type of

unit that has pollution control as part of the boiler, in light of the pre-adoption deadline contained

in the rule, SIPC encourages the Board to amend Sections

225.435(a) and 225.535(a) to reflect

that initial allocations will be based on heat input only, with no conversions to gross electrical

output and require the Agency to act compliant with the deadline in submitting initial allocations

USEPA.

11.

Revision of CASA Formula

In its comments filed January 5,2007, the Agency proposed a revision to the formulae

found at Sections

225.465(b)(5)(B) and 225.565(b)(5)(B). PC

5, pp. 17-1 8. The Board stated

in its Order that it agrees with the Agency that SIPC's CFB "represents a special circumstance"

and granted the motion to amend Sections

225.465(b)(5)(B) and 225.565(b)(5)(B) by changing

the factor of 1.0 to 1.4 in the equation used to determine the number of allowances that SIPC

may receive from the CASA. Order, p. 37. However, Sections

225.465(b)(5)(B) and

225.565(b)(5)(B) were not included in the First Notice rule. See Order, pp. 91-92.

SIPC believes it was the Board's intention to include the amendment proposed by the

Agency for Sections

225.465(b)(5)(B) and 225.565(b)(5)(B) and hereby moves that the Board

make that amendment, as follows:

Electronic Filing, Received, Clerk's Office, June 25, 2007

Section 225.4651565 Clean Air Set-Aside (CASA) Allowances

The following formulas must be used to determine the number of CASA

allowances that may be allocated to a project per control period:

For highly efficient power generation and clean technology projects

pursuant to Sections

225.460[560](a)(4)(B), (a)(4)(C), and (c)@j, the

number of allowances must be calculated using the number of megawatt

hours of electricity the project generates during a control period and the

formulas set forth in subsections

(A) and (B) of this subsection.

For

proiects other than fluidized bed coal combustion:

[the formula that is currently in the First Notice rule]

For fluidized bed coal combustion proiects:

Where:

The number of allowances for a particular

project.

MWhg

The number of gross MWh of electricity

generated during a control period by a project.

Annual average NOx emission rate based on

CEMS data in

IblMWh.

SIPC has discussed this proposed amendment with the Agency, and the Agency agrees

that the amendment should be made and does not object to it.

WHEREFORE, for the reasons set forth above, Southern Illinois Power Cooperative

moves that the Board amend Sections

225.435(a) and 225.535(a) of the First Notice rule by

providing that the initial allowance allocation for Unit 123 at SIPC will be based upon only 2005

operations or, in the alternative, that such allocation will be based upon the average of 2005 and

2006 operations. SIPC requests that the Board amend the date by which sources must notify the

Agency of their choice regarding use of heat input or (converted) electrical output to a date after

Electronic Filing, Received, Clerk's Office, June 25, 2007

the rule is adopted. Southern Illinois Power Cooperative also moves that the Board amend

Sections

225.465(b)(5) and 225.565(b)(5) of the First Notice rule by inserting subsection (B) in

each section as set forth above and which consists of the formula for determining the CASA

allowances for

SIPC's CFB.

Respectfully submitted,

SOUTHERN ILLINOIS POWER COOPERATIVE

by:

Dated: June 25,2007

Sheldon A. Zabel

Kathleen C. Bassi

Stephen J. Bonebrake

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

3 12-258-5500

Fax: 3 12-258-5600

Electronic Filing, Received, Clerk's Office, June 25, 2007

CERTIFICATE OF SERVICE

I, the undersigned, certify that on this 25" day of June, 2007, I have served electronically

the attached

SIPC'S COMMENTS ON FIRST NOTICE AND MOTION TO AMEND THE

PROPOSED RULEMAKING

upon the following persons:

John T. Therriault, Assistant Clerk

Illinois Pollution Control Board

James

R. Thompson Center

Suite 1 1-500

100 West Randolph

Chicago, Illinois 6060 1

and electronically and by first-class mail with postage thereon fully prepaid and affixed to the

persons listed on the

ATTACHED SERVICE LIST.

Sheldon A. Zabel

Kathleen C. Bassi

Stephen J. Bonebrake

SCHIFF

HARDIN, LLP

6600 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

12-258-5500

Electronic Filing, Received, Clerk's Office, June 25, 2007

SERVICE LIST

(R06-26) 

Amy Antonioli

Hearing Office

Illinois Pollution Control Board

James R. Thompson Center

100 W. Randolph

Suite 1 1-500

Chicago, Illinois 6060 1

antonioaj

Oipcb. state.il.us

Matthew J. Dunn, Division Chief

Office of the Illinois Attorney General

Environmental Bureau

188 West Randolph, 20" Floor

Chicago, Illinois 6060 1

mdunn@/atg.state.il.us

David Rieser

James T. Harrington

Jeremy

R. Hojnicki

McGuireWoods LLP

77 West Wacker, Suite 41 00

Chicago, Illinois 6060 1

drieser@,mcguirewoods.com

harrington@,mc~uirewoods.com

hojnicki@,mcguirewoods.com 

Katherine D. Hodge

LaDonna Driver

HODGE DWYER ZEMAN

3 1 50 Roland Avenue, P.O. Box 5776

Springfield, Illinois 62705-5776

khodge@/hdzlaw.com

nldriver@~hdzlaw.com

Faith E. Bugel

Environmental Law and Policy Center

35 East Wacker Drive, Suite 1300

Chicago, Illinois 6060 1

fbugel @/elpc.org

Rachel Doctors, Assistant Counsel

John J. Kim, Managing Attorney

Air Regulatory Unit

Division of Legal Counsel

Illinois Environmental Protection Agency

102 1 North Grand Avenue, East

P.O. Box 19276

Springfield, Illinois 62794-9276

rachel

.doctors@~illinois.gov

j 0hn.i. kim@,illinois.~ov

Virginia Yang, Deputy Legal Counsel

Illinois Department of Natural Resources

One Natural Resources Way

Springfield, Illinois 6270 1

127 1

virginia. yang@,illinois.

gov

William A. Murray

City of Springfield, Office of Public Utilities

800 East Monroe,

4" Floor, Municipal

Building

Springfield, Illinois 62757-000 1

bmurra~@~cwl~.com

S. David Farris

Manager, Environmental, Health and Safety

City Water Light

Power

201 East Lake Shore Drive

Springfield, Illinois 62757

dfarris@/cwlp. com

Keith I. Harley

Chicago Legal Clinic, Inc.

205 West Monroe Street,

4th Floor

Chicago, Illinois 60606

kharley@,kentlaw.edu

Electronic Filing, Received, Clerk's Office, June 25, 2007

SERVICE LIST

(R06-26)

Sasha M. Reyes

Steven J. Murawski

Baker

McKenzie

One Prudential Plaza, Suite 3500

1 3 0 East Randolph Drive

Chicago, IL 60601

sasha.m.reyes@,bakemet

com

steven.i .murawski@,bakernet.com

Daniel D. McDevitt

General Counsel

MIDWEST GENERATION, LLC

440 South

LaSalle Street, Suite 3500

Chicago, Illinois 60605

dmcdevitt@,mwgen. com

Bill S. Forcade

Katherine M. Rahill

JENNER

BLOCK LLP

One IBM Plaza

Chicago, Illinois 6061 1

bforcade@,j enner.com

krahill@,i enner. com

Bruce Nilles

Sierra Club

122 West Washington Avenue, Suite 830

Madison, Wisconsin 53703

bruce.nilles@~sierraclub.org 

James H. Russell

Winston

Strawn LLP

35 W. Wacker Drive,

4oth Floor

Chicago, Illinois 6060 1

jrussell@,winston.com

Karl A. Karg

Cary R. Perlman

Andrea M. Hogan

Latham

Watkins LLP

5800 Sears Tower

233 South Wacker Drive

Chicago, Illinois 60606

karl.carg(iTlw.com

carv.perlman(iTlw.com

andrea.

h~gan@~lw.com

Electronic Filing, Received, Clerk's Office, June 25, 2007