209
1 BEFORE THE POLLUTION CONTROL BOARD
OF THE STATE OF ILLINOIS
2
3
IN THE MATTER OF: )
4 )
NATURAL GAS-FIRED, PEAK-LOAD ) R01-10
5 ELECTRICAL POWER GENERATING )
FACILITIES (PEAKER PLANTS). )
6
7 VOLUME II
8
9 The following is a transcript of proceedings
10 from the hearing held in the above-entitled
11 matter, taken stenographically by GEANNA M.
12 IAQUINTA, CSR, a notary public within and for the
13 County of Cook and State of Illinois, before
14 MS. AMY JACKSON, Hearing Officer, at 100 West
15 Randolph Street, Assembly Hall Auditorium,
16 Chicago, Illinois on the 24th day of August,
17 2000, A.D., scheduled to commence at the hour of
18 10:30 a.m.
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1 A P P E A R A N C E S:
2
HEARING TAKEN BEFORE:
3
ILLINOIS POLLUTION CONTROL BOARD
4 100 West Randolph Street
Assembly Hall Auditorium
5 Chicago, Illinois 60601
(312) 814-3629
6 BY: MS. AMY JACKSON, HEARING OFFICER
7
ILLINOIS POLLUTION CONTROL BOARD MEMBERS PRESENT:
8
Ms. Claire Manning, Chairman
9 Mr. G. Tanner Girard
Mr. Nicholas Melas
10 Ms. Elena Kezelis
Dr. Ronald Flemal
11 Ms. Marili McFawn
Mr. Samuel Lawton, Jr.
12 Mr. Anand Rao
13
14
15
MEMBERS OF THE ILLINOIS ENVIRONMENTAL PROTECTION
16 AGENCY AS WELL AS OTHER INTERESTED ENTITIES AND
AUDIENCE MEMBERS WERE PRESENT AT THE HEARING, BUT
17 NOT LISTED ON THIS APPEARANCE PAGE.
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1 I N D E X
2 THE WITNESSES:
3 PAGE
4 TESTIMONY OF GERALD ERJAVEC............ 14
5 TESTIMONY OF ARLENE JURACEK............ 80
6 TESTIMONY OF STEVEN NAUMANN............ 86
7 TESTIMONY OF DEIRDRE HIRNER........... 100
8 TESTIMONY OF RICHARD BULLEY........... 107
9 TESTIMONY OF FREDDI GREENBERG......... 115
10 TESTIMONY OF MICHAEL KEARNEY.......... 128
11 TESTIMONY OF RICHARD TRZUPEK.......... 147
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1 HEARING OFFICER JACKSON: Good morning. I
2 want to welcome all of you. Thank you for coming
3 to this second in a number of inquiry hearings
4 that the Board is holding in order to examine the
5 potential environmental impacts of natural
6 gas-fired peak-load electrical power generating
7 facilities, commonly referred to as peaker
8 plants.
9 My name is Amy Jackson. I am the
10 attorney assistant Board member to Elena Kezelis
11 and at the request of Board Chairman Claire
12 Manning, I am serving as the hearing officer for
13 these proceedings. We are very pleased today to
14 have the entire Board present for this hearing.
15 I would like to take a moment to
16 introduce the Board members to you. To my
17 immediate right is Chairman Claire Manning.
18 MS. MANNING: Welcome. Good morning.
19 HEARING OFFICER JACKSON: Dr. Tanner
20 Girard is next to her.
21 MR. GIRARD: Good morning.
22 HEARING OFFICER JACKSON: And Nicholas
23 Melas is to my far right.
24 MR. MELAS: Good morning.
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1 HEARING OFFICER JACKSON: To my immediate
2 left is Board Member Elena Kezelis.
3 MS. KEZELIS: Good morning.
4 HEARING OFFICER JACKSON: Followed by Dr. Ronald
5 Flemal, Marili McFawn.
6 MS. McFAWN: Good morning.
7 HEARING OFFICER JACKSON: And Samuel
8 Lawton, Jr.
9 MR. LAWTON: Good morning.
10 HEARING OFFICER JACKSON: Actually, to my
11 far right is Anand Rao, who is the head of the
12 Board's technical unit, and he will also be
13 participating in the questioning this morning.
14 Those of you who were present for
15 yesterday's hearing have already heard the
16 opening remarks that I'm about to make. However,
17 for the benefit of those who were not here
18 yesterday, I will be repeating the information I
19 gave out yesterday.
20 As some of you know, this matter was
21 brought to the Board in a July 6th, 2000, request
22 by Governor George Ryan. In that request,
23 Governor Ryan asked the Board to examine the
24 following five issues: First, do peaker plants
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1 need to be more strictly regulated than currently
2 provided under Illinois' air quality rules and
3 regulations; second, do peaker plants pose a
4 unique threat or a greater threat than other
5 types of state-regulated facilities with respect
6 to air, noise, or water pollution; third, should
7 expanding peaker plants be subject to siting
8 requirements beyond applicable local zoning
9 requirements; fourth, if stricter regulations are
10 needed, should new regulations apply to currently
11 permanent facilities or only to new or expanded
12 facilities; and, finally, fifth, how do other
13 states regulate peaker plants.
14 Through the information presented at
15 these hearings, through questions and through
16 public comments, the Board will develop a
17 complete and well-rounded record that will enable
18 it to provide an informed and well-reasoned
19 response to each of the governor's five
20 questions.
21 At this time, the Board anticipates
22 being able to present an informational order to
23 the governor that will include all of the Board's
24 findings and recommendations. This informational
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1 order should be ready for the Governor by the end
2 of this calendar year. The Board's final meeting
3 this calendar year is currently scheduled for
4 December 21st of 2000.
5 Today's hearing will focus on
6 testimony and information from those involved in
7 the peaker industry. We are happy to have
8 representatives from the following groups present
9 today to present testimony: Indeck Energy;
10 Commonwealth Edison; Mid-America Interconnected
11 Network, or MAIN; Midwest Independent Power
12 Suppliers; Ameren; the Illinois Environmental
13 Regulatory Group; and Huff & Huff Environmental
14 consultants.
15 Each of these groups pre-filed their
16 testimony, and that testimony is available on the
17 Board's website. The Board's website can be
18 found at www.icpb.state.il.us. We have provided
19 some extra copies of that testimony, and the
20 extra copies remaining are available on the table
21 at the entrance. We are in the process of making
22 additional copies. So if they were gone when you
23 walked in this morning, please check back a bit
24 later.
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1 Also present to observe today's
2 proceedings is a representative from Midwest
3 Generation, EME, Inc., Mr. Doug McFarland.
4 Mr. McFarland asked to be recognized and wanted
5 me to note that although Midwest Generation is
6 not testifying today, they do anticipate filing
7 written comments for the Board to consider in its
8 deliberations.
9 For those of you who were present at
10 yesterday's hearing, you are familiar with the
11 format that we will be following today. Basically,
12 we will invite each presenter to make their
13 presentation to the Board, and at the conclusion
14 of each presentation, the Board members and our
15 technical unit will be asking questions of the
16 presenters.
17 I already mentioned that extra copies
18 of the pre-filed testimony is available at the
19 table at the top of the room. In addition, there
20 are informational sheets prepared by the Board's
21 public information officer. These sheets contain
22 general information about the inquiry hearings,
23 such as the dates, times, and locations of all
24 hearings and information about submitting written
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1 public comments to the Board.
2 For those of you interested in
3 following this proceeding, we are attempting to
4 keep our website as up-to-date as possible. In
5 addition to the pre-filed testimony, all Board
6 orders, hearing officer orders, transcripts from
7 the hearings, and written public comments will be
8 available for viewing and downloading from our
9 website.
10 As you can see, we do have a court
11 reporter present who will transcribing everything
12 that is said today. We have requested an
13 expedited copy of the transcript from today's
14 proceeding, and that expedited transcript should
15 be available within three to five working days.
16 For the court reporter's sake, I would ask that
17 all presenters please speak clearly and slowly so
18 that she will be able to transcribe everything
19 clearly.
20 I also want to note that we are
21 having the proceedings videotaped today. If any
22 of the presenters object to being videotaped
23 during their presentation, please let me know and
24 we will make sure that the videotape is turned
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1 off during your presentation.
2 I want to note that testifying at a
3 hearing before the Board is not the only way to
4 provide information to the Board in this matter.
5 The Board will be accepting written public
6 comments, and those written comments must be
7 filed with the Board's clerk's office. The
8 address is listed on the public information sheet
9 that I mentioned earlier. The deadline for
10 filing written public comments is currently set
11 at November 6th, 2000.
12 One other thing I want to mention is
13 that we do also have a notice list for this
14 proceeding. Those persons on the notice list
15 will receive copies of all Board opinions and
16 orders as well as hearing officer orders.
17 Persons on the notice list, if they are filing
18 their own documents, do not need to file them
19 with any other person on the notice list. Your
20 only obligation is to file with the clerk of the
21 Board and myself as the hearing officer.
22 If you are not currently on the
23 notice list, but would like to be added to the
24 notice list, I ask you to please contact Kim
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1 Schroeder. She is in our Board's Springfield
2 office. Her telephone number is area code
3 217-782-2633 or you may e-mail Ms. Schroeder at
4 schroedk, s-c-h-r-o-e-d-k, at ipcb.state.il.us.
5 In addition to the hearings this
6 week, the Board has also scheduled three hearings
7 during the month of September. They will be held
8 as follows: September 7th in Naperville;
9 September 14th in Joliet, and September 21st in
10 Grayslake. These are the hearings where we
11 really want to have lots of participation from
12 the public, from local governments, citizen
13 groups, et cetera.
14 Because of the overwhelming public
15 interest we are expecting and the limited time we
16 have for these hearings, the procedures for the
17 hearings will need to be very orderly. If any of
18 you know that you will be attending these
19 hearings and know that you will want to make
20 comments on the record, please let me know in
21 advance. I will be keeping a list of presenters
22 for those hearings as well. There is no
23 obligation to file pre-filed testimony for those
24 hearings, but it will help us to know what to
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1 expect if you contact me in advance. My
2 telephone number and e-mail address are on the
3 informational sheet provided at the top of the
4 room.
5 Our final appearance in this
6 proceeding will be held in Springfield on October
7 5th and 6th. These hearings will provide an
8 opportunity for those outside the Chicago area
9 who may want to make comment to the Board.
10 Additionally, we hope to use these final hearings
11 to wrap up any questions that are still remaining
12 from the previous hearings.
13 Before we get started, I want to
14 emphasize that this is an information-gathering
15 process. It is not an adversarial proceeding. I
16 ask that everyone act appropriately as if you
17 were in a court of law. Finally, please be aware
18 that although the Board members may ask a variety
19 of questions today, you are not to infer anything
20 from the types of questions asked other than the
21 Board's desire to develop a complete and concise
22 record in this matter.
23 The Board has made no conclusions in
24 this matter at this time, and it will not begin
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1 its deliberations until all information is
2 submitted and the record is closed.
3 The order of presentation today will
4 be as follows: Indeck Energy will go first,
5 followed by Commonwealth Edison, Mid-America
6 Interconnected Network, Midwest Independent power
7 Suppliers, Ameren, the Illinois Environmental
8 Regulatory Group, and, finally, Huff & Huff
9 Environmental Consultants.
10 At this time, I will invite Chairman
11 Claire Manning to make any opening remarks that
12 she would like to make. Chairman Manning.
13 MS. MANNING: This morning I would just
14 like to welcome everyone, and we look forward to
15 another productive day of hearings. Thank you.
16 HEARING OFFICER JACKSON: Does anyone have
17 any questions before we get started? Okay.
18 Seeing none, Mr. Erjavec, I'll let you begin your
19 presentation.
20 MR. ERJAVEC: Okay. If we take a moment
21 for the projector to warm up while, I believe,
22 the Board wants to come down this way.
23 HEARING OFFICER JACKSON: The Board will
24 be moving down to the front row. Indeck has
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1 prepared a power point presentation, and they'll
2 be making that first. So the Board members can
3 see, they will move down to the front row.
4 MR. ERJAVEC: Good morning, and my name is
5 Gerald Erjavec, and with me today is a colleague
6 of mine, Greg Wassilkowsky. We are both managers
7 of business development for Indeck Energy
8 Services, and it's my privilege to speak on
9 behalf of Indeck representing independent power
10 developers.
11 A little bit about my background,
12 I've been in the power industry for 22 years.
13 Curiously, I'm a chemist by degree with graduate
14 studies in environmental engineering. I spent
15 the first 12 years of my career at Commonwealth
16 Edison where I worked in their chemistry lab and
17 performed analyses on air, water, emissions, and
18 solid waste. I moved to their environmental
19 affairs department where I was responsible for
20 all water quality permitting.
21 Under that part of my career, I had
22 the privilege to address the Board 12 years ago
23 with regards to water quality standards. When I
24 came to Indeck, I was initially responsible for
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1 full permitting of facilities, evaluating
2 impacts. I've run the air models that we're
3 about to discuss, and I've actually written
4 environmental impact statements. So under
5 those -- with that kind of a background, I'm
6 prepared to discuss the impact of peaker plants
7 on Illinois and the regulation thereof.
8 Indeck is an Illinois company. We
9 are located in Buffalo Grove, Illinois. We've
10 been there for approximately 15 years now. We're
11 a developer, builder, owner, and operator of
12 independent power plants. We have a 15-year
13 history of sales to utility customers, and we
14 right now have 13 stations that deliver 1220
15 megawatts in operation.
16 I'd like to thank the Board for
17 holding these hearings. There's a lot of
18 misinformation out in the public, in fact, much
19 of which generated the hearings, and we
20 appreciate the opportunity to set the record
21 straight. Before we can address the questions,
22 it behooves us a little bit to talk about what a
23 peaking plant is. I'm going to go through these
24 fairly quickly because, as I listened to
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1 Mr. Romaine's presentations yesterday, he covered
2 a lot of this material very well. So in order
3 not to have to reiterate everything Chris said,
4 we'll move fairly quickly.
5 As we discussed, throughout the day,
6 there's a varying amount of electrical need in
7 the system. This can be any system; Commonwealth
8 Edison, the state of Illinois, any system you
9 want to talk about, any country you want to talk
10 about. Peculiar to our area is a daytime
11 afternoon peak pretty much, although, again,
12 that's going to vary by season and by weather.
13 In order to meet those needs,
14 different types of units are used. We talked
15 about baseload capacity. Those are primarily
16 nuclear stations and the most efficient coal
17 stations. Economics pretty much drives what runs
18 at what time. There are stations that will cycle
19 on and off also known as intermediate capacity.
20 I believe Waukegan, the former ComEd station, now
21 Midwest Generation EME has that plant, that would
22 probably fall in that category, and then there's
23 the plants that run just a very small fraction at
24 a time to meet the absolute daily peaks. Those
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1 are the plants we're talking about.
2 You may recall several years ago
3 ComEd had a commercial on about Collins Station
4 where the phone rang and somebody picked it up
5 and said, I'll be on in a half hour. That was
6 their peaking plant or one of their peaking
7 plants at the time. Collins, I believe, probably
8 tends a little bit more towards intermediate
9 capacity right now.
10 Again, the combustion turbine, we
11 spoke about that yesterday. That really -- the
12 name gas turbine is kind of a misnomer. The gas
13 that's being talked about is the air as a working
14 fluid. It passes through the turbine where it's
15 compressed. It's heated with natural gas, and in
16 the case that we're talking about now, these can
17 also be light oil.
18 In some countries, they actually use
19 diesel fuel for these things. That's not common
20 in the United States, and then it's expanded
21 through and expanded through a turbine which
22 turns a generator. We also talked about the need
23 for some water in these peaking plants, primarily
24 used at the front end.
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1 Because these machines pass a
2 constant volume of air, so many cubic feet per
3 minute at one time, the more -- as the
4 temperature gets hotter, the air gets lighter,
5 and the less density that passes through the
6 machine, the less efficient it is, and the output
7 goes down. What we will do in a lot of cases is
8 pass the air through a stream of water, which
9 will cause the air to be become cooler. It's
10 kind of like perspiration on your skin, it
11 evaporates and increases the density and
12 increases the output of the machine in hot
13 weather when they're primarily needed.
14 There are other ways of achieving
15 this effect. Chillers, for example, mechanical
16 or electric chillers are one of them. There are
17 some trade-offs in terms of parasitic load. A
18 chiller also will have a tendency to dehumidify
19 the air, which is not a bad thing, but it just
20 means that some of the energy that's being used
21 is being used to dehumidify and not to chill it.
22 So there are some trade-offs on these.
23 Water consumption can vary by
24 humidity and temperature. For example, on a very
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1 humid day, you'll evaluate very little water. So
2 very little water will be used. On a hot, dry
3 day would probably be your maximum consumption.
4 Typical for, say, a 300 megawatt unit would be
5 about an average of 40 gallons per minute. It
6 can range from about zero to 80, depending upon
7 the temperature and the humidity.
8 This is a picture of a combustion
9 turbine, and I'm a little disappointed. The
10 bottom one from this distance doesn't look as
11 good as you'd like. Major components on the
12 turbine, you've got your air inlet at the top
13 here. Your filters that we talked about are in
14 there. Also, the evaporative coolers would be in
15 that section.
16 The generator for the combustion
17 turbine actually sits right here underneath it.
18 That's at this end of the turbine. The turbine
19 itself is not all that big a part of the unit.
20 The turbine occupies approximately this box right
21 here. Everything else behind it is stack
22 silencing, and then there's your stack here. At
23 the bottom of the picture, you see a cutaway of
24 an actual combustion turbine. This is the bottom
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1 of the air inlet right here. The air compressor
2 section is here. The combustors are right in
3 here, and then your turbine section begins here.
4 Most of the time I've seen these
5 things they were in packaged units which had all
6 of this together. So they were deceptive when we
7 just put our Rockford plant together. This is
8 probably 50 to 60 feet long in here. It's not
9 all that big. It's amazing when you look at it.
10 A little bit about the history of gas turbines.
11 Gas turbines have been around for a long time.
12 They've been around for over 100 years. It's
13 often been said that these are jet engines.
14 Well, actually, a jet engine was
15 adapted from a gas turbine. It's not the other
16 way around. We're not just strapping jet engines
17 on the ground and letting them fly. These
18 machines would not fly. They're way too heavy.
19 The components and the sound muffling and
20 everything else that goes into them would make
21 them entirely different from jet engines.
22 The reason jet engines are brought up
23 is because it's the most similar technology, and
24 if you're trying to explain it to somebody,
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1 that's what we usually use. They're similar to
2 jet engines, but they're not -- they're not just
3 taken off of aircraft. You have -- some
4 improvements from aircraft engines have been made
5 and used in what they call aero-derivatives,
6 which is the one type that Mr. Romaine referred
7 to.
8 The other type is an industrial frame
9 turbine, which is not quite the same thing. It's
10 more of a heavy-duty machine, slightly different
11 construction, a difference in some philosophies.
12 You can see that jet airplanes were actually --
13 turbines were actually adapted to jet airplanes
14 about 55 years ago or so.
15 The heavy-duty turbines began to be
16 produced, again, about 50 years ago. In the
17 '60s, gas turbines were installed to meet
18 peaking loading. In fact, there are
19 approximately 100 utility gas turbines in
20 Illinois as of 1999. While the -- this
21 proceeding is directed at peaking plants. I
22 think it behooves us to talk a little bit about
23 combined cycle because I know that the subject is
24 going to come up.
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1 Being in the industry, we have heard
2 all the things that are being said about peaker
3 plants and we know will be said again. There's a
4 great fear that they'll be converted to combined
5 cycle and that suddenly they will use up all your
6 resources.
7 You can see over in the box on the
8 left-hand side here, this is the peaker plant
9 that I showed you before. They have an
10 evaporative cooler. The air comes in, comes
11 out. What you do in a combined cycle plant is
12 you add a heat recovery boiler. The hot gas
13 enters about a thousand degrees up. It passes
14 through a series of coils, which are filled with
15 water, which will generate the steam. The steam
16 is then taken and used to turn a steam turbine.
17 Sometimes, in the appropriate location, we do
18 what's called cogeneration. We produce steam for
19 industry also.
20 There are a lot of economics and
21 locational issues that drive the decision to do
22 that. By the time it gets to the stack, it's
23 down to about 250 to 200 degrees out. So you've
24 removed all that heat from there. The advantage
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1 to these plants is that they're much more
2 efficient. As Chris noted, they can be up to 50
3 percent more efficient than a peaking unit. The
4 disadvantage is that they take a much longer time
5 to bring on-line. Your capital costs are
6 higher. They're not really suited to peaking
7 applications. So if you talk about -- even if
8 you talked about converting them, there would
9 still have to be peaker plants somewhere.
10 One of the things that's a concern
11 about this type of plant here is the water use,
12 and I would like to bring that up. The water
13 use, there's two places. Number one, there's
14 water in the steam system going around this way.
15 You have to -- you get some trace contamination
16 going in there. So you have to occasionally blow
17 it down. The steam cycle on this plant, this is
18 based on putting a heat recovery unit on the back
19 of a 300 megawatt plant, would probably be about
20 25 gallons per minute, which is not a lot.
21 Now, when you move down to the last
22 section here, you have to cool the steam in the
23 steam turbine. Typically, that's done with a
24 cooling power or some other kind of system. It
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1 can be water cooled. If you're converting a
2 combined cycle plant -- a peaker plant to a
3 combined cycle plant, assuming that water is your
4 only medium in here, you can use about 2500 GPM,
5 which can trend toward, depending upon where you
6 are, significant numbers.
7 Now, the good news is that there are
8 other ways to attack this problem. They've made
9 significant advances in dry-cooling systems,
10 which would not require this water at all. There
11 are some hybrid systems that cut down on the
12 amount of water use. I'll address some of the
13 impacts of that a little bit later, but there are
14 other ways to solve this problem then with
15 evaporating water at this end of the system. I'd
16 like to also talk about the impacts of peaker
17 plants as a preface to addressing the Board's
18 questions.
19 Combustion turbines fueled with
20 natural gas have about the least environmental
21 impact per kilowatt hour of just about any
22 technology available today, particularly for
23 peaking uses, and, again, you have to
24 differentiate peaking from base uses. From an
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1 air pollution standpoint, the impact that's
2 really to be concerned or considered is the
3 impact that we as people have to breathe, and
4 both Mr. Romaine and Rob Kaleel described the
5 ways that this is measured by using atmospheric
6 dispersion models.
7 What happens is the exhaust gas
8 leaves the stack, mixes with the air around it.
9 It then encounters a receptor, and we're most
10 concerned, of course, with the human population.
11 What is used is a five-year history of
12 meteorological data and just about every
13 meteorological condition imaginable to see what
14 is the worst conceivable thing that could happen,
15 and we're required to be conservative. We're
16 required to look for the worst possible cases,
17 whether it's going to happen or not, and that
18 makes a lot of sense because you want to know
19 what your worst possible scenario is going to be,
20 and if that is not of concern, then any other
21 impact should also not be of concern.
22 You predict the air quality impacts,
23 and then you compare them to USEPA amount
24 standards. The USEPA standards, as were
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1 mentioned, are set at levels to provide an
2 adequate margin of safety for the population
3 looking at sensitive populations, such as the
4 very young, the elderly, and those with
5 respiratory difficulties.
6 What I'm presenting up here is
7 modeling that was done for a plant.
8 Specifically, this one is a 300 megawatt plant
9 that's been proposed for Libertyville in Lake
10 County. After atmospheric modeling, look at one
11 of the pollutants NOx, the ambient concentration,
12 the highest over a five-year period, ambient
13 concentration that's expected to be seen, which
14 is measured in units of micrograms per cubic
15 meter is 0.028 micrograms per cubic meter.
16 Now, that needs to be compared
17 against something. Comparison is against the
18 ambient air quality standard, which is 100
19 micrograms per cubic meter. The numbers are in
20 the decimal places here. You're talking 2.8, not
21 even,.028 percent of the standard. It's
22 insignificant. Fifty-nine micrograms per cubic
23 meter is the ambient background now. You're
24 talking something on the order of one-two
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1 thousandth of the ambient background, again, an
2 insignificant impact for a peaking facility.
3 Similarly, carbon monoxide standards,
4 we also did some start-up modeling. They are
5 measured for different time periods because it's
6 been shown that different air contaminants affect
7 people over different periods of time. For
8 example, NOx is a chronic-type thing; whereby
9 long-term exposure has been the one that's
10 demonstrated to be potential problems. That's
11 why it's an annual standard for NOx. Carbon
12 monoxide, much shorter period of type. You've
13 got a one hour and an eight. Again, your
14 standards, 40,000 for one hour versus 23 and
15 eight for a 300 megawatt plant; 10,000 versus
16 three and one, insignificant numbers or at least
17 let's say well, well below any level of concern.
18 Twenty-four hour standards are in
19 place for sulfur dioxide, and PM-10 is
20 particulate matter, ten microgram particulate
21 matter. .01 micrograms per cubic meter, that's
22 to be expected. Natural gas is very clean fuel
23 with respect to the sulfur, and the source of
24 sulfur dioxide is sulfur in the fuel. So for
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1 natural gas, that's to be expected.
2 Particulates, there really isn't much
3 made in the process in the way of particulates.
4 In fact, the air filters tend to clean out
5 particulates on the machine to a great extent.
6 You don't want particulates going through your
7 machine. So, again, very low impacts.
8 Short-term SO2 numbers, again, as
9 would be expected from natural gas fuel, very,
10 very minimal impacts. Now, we'd like to put this
11 into some kind of a context that may be more
12 familiar. You could say, well, what is .028
13 micrograms per cubic meter? What is it? What do
14 I know that's like it? How does it feel? We
15 prepared what we hope are a couple of meaningful
16 comparisons.
17 One of the things that we're all
18 familiar with or most of us are familiar with are
19 gas stoves. We cook with gas stoves. To my
20 knowledge, not too many people have ever
21 experienced an ill effect, you know, when they're
22 cooking from your gas stove. Typical
23 concentrations from a gas stove, I believe, range
24 from something on the order of 14 micrograms per
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1 cubic meter to about 90. That's the air
2 concentrations that are generated in your home
3 when you're cooking. Again, compare that to the
4 ambient concentration that would be experienced
5 or would, on the worst case level, be generated
6 by the power plants; again, far below anything
7 that we experienced from that.
8 Another comparison that we've tried
9 to make is to the impact that you would receive
10 from a home or a school. Now, let me be very
11 clear about this, we're not trying to imply that
12 a home or a school emits on a pounds-per-year
13 basis anywhere near what a peaking plant does.
14 That's just not true.
15 However, what we need to be concerned
16 about is what people experience. If you were in
17 your backyard, what would you breathe? If you
18 were walking down the street, what would you
19 breathe? These are typical numbers. Again, the
20 power plant number we've seen, 0.028 micrograms
21 per cubic meter, in the wintertime, the ambient
22 concentration around the house outside in your
23 yard is about .01. Okay. So if you're standing
24 between about three houses, you'd figure that
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1 might be about what you'd experience. A school
2 actually produces probably in the schoolyard
3 about ten times that concentration.
4 We're not trying to point out schools
5 or homes as bad things. We all know they're not,
6 but we also know that there doesn't seem to be
7 any adverse impact to the people that are there
8 from what they're experiencing every day, and put
9 that in perspective with the peaking plant.
10 Water use, as I noted before, when
11 operating a typical 300 megawatt peaker plant
12 with an evaporative cooler uses a maximum of 80
13 gallons per day, an average of about 40.
14 Technology, the evaporative cooler generally is
15 only used above 60 degrees. That's when the
16 benefits start to be seen in the efficiency
17 pickups. As I noted, it's a function of
18 temperature and humidity. So a hot, dry day, it
19 will use more. A hot humid day, you'll actually
20 use less because you're just not able to
21 evaporate anymore into the machine. So your
22 increase in efficiency is not as good as you'd
23 like to see.
24 What is 80 gallons per minute? Well,
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1 basically it's the equivalent of 11 homes
2 watering their lawns at the same time. If you
3 walk down the street and you saw 11 homes
4 watering their lawns, you probably wouldn't think
5 anything of it. On an annual basis,
6 approximately the consumption of about 30 homes,
7 30 average homes. Other water impacts that need
8 to be considered are wastewater and stormwater.
9 Stormwater is captured on site.
10 It's sent storm sewers after the
11 retention just as you would do with any other
12 development. Wastewater is minimal. If you have
13 a softener in there to treat the water that goes
14 into the evaporative coolers, they have to be
15 backwashed occasionally. They're sent to the
16 local treatment plants. Facilities, such as I've
17 described, that generate, I believe, something on
18 the order of $10,000 gallons of wastewater a day,
19 which is, again, not a big load.
20 Let's talk about sound a little bit.
21 The Board has established and the EPA has
22 implemented regulations that govern the sound
23 that can be emitted by any industry actually.
24 There are standards that go from industrial to
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1 commercial, industrial to residential, and
2 commercial to residential.
3 What we're looking at here is
4 basically industrial to residential sound
5 standards. The actual standard is the table in
6 the center here by octave band. For example,
7 during the day from industrial to residential
8 land at the receptor, which would be at the home
9 that's receiving the sound, in the 31.5 hertz
10 octave band, 75 decibels, 74, 69, et cetera,
11 across the octave bands.
12 Now, on occasion, in order to
13 simplify things, we'll refer to the equivalent as
14 being 61 dba. It's a weighted equivalent.
15 However, again, let's be careful to state here
16 the actual regulation is across every octave
17 band. You have to meet the octave bands. Where
18 you refer to dba in this case it's just to
19 simplify things. We're well aware that this has
20 to be translated back into the octave bands in
21 order for your compliance testing.
22 Because you cannot control when a
23 plant or you don't know when a plant is going to
24 be called upon to operate, number one, and,
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1 number two, the sound attenuation on the plant
2 does not change. You know, you can't increase it
3 at night. You can't increase the amount of
4 treatment or silencing you put in at night.
5 You'll design your plant to meet the nighttime
6 standard at all times. Okay.
7 With this standard in place, and I
8 believe it was also testified to yesterday,
9 Illinois EPA has never received a noise complaint
10 for any of the peaker generating stations in
11 Illinois. As we noted, there are at least 100
12 out there right now. There's probably more.
13 Since 1999, there have been a few more put in
14 place.
15 Board members from McHenry County
16 were taken to a tour of a peaker plant operated
17 by the local utility in Springfield, and, you
18 know, there's a quote, they didn't hear
19 anything. We've also talked to homeowners living
20 near peaker plants that just do not hear them.
21 Mrs. Carver here that I discussed -- I had a few
22 conversations with the lady. She operates a
23 wildlife preserve between the plant that's down
24 there and her home, and the deer come all the
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1 time and there's not been any impact, you know,
2 from a noise issue in terms of deterring them
3 from coming either.
4 With respect to the design of these
5 plants, Mr. Zak's testimony notwithstanding, the
6 noise criteria are being met by these plants.
7 Some of them will apply buffers. Some of them
8 will apply additional noise silencing. If you
9 remember the slide I showed you with respect to
10 the cutaway of the peaker plant, there's an
11 amount of noise silencing that can be built in.
12 These plants can and do meet the noise criteria.
13 I'd like to make one other comment.
14 I didn't have a slide for this one, but with
15 respect to siting, because the subject has come
16 up, and I'm sure it will, and just think about
17 this for a minute, like all businesses, and this
18 is a business or an industry, peaker plants need
19 access to raw materials and need a way to deliver
20 their finished goods. This makes it no different
21 from a stationary store or a food store or a
22 McDonald's or what have you.
23 In this case, we're talking about gas
24 and electricity, and I don't think I'm giving
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1 away any industry secrets when people look out
2 and they say, well, gee, a gas line has come very
3 close to an electric line. That's where a lot of
4 peaking plants are being sited. There's been
5 suggestions that these plants be sited miles away
6 from the gas and electric and that we run lines
7 to them. Yes, it's technically feasible. I
8 think the amount of disruption to be created by
9 that is a lot more than by siting them nearby.
10 We've just discussed the impacts, and they're
11 minimal. It doesn't always make sense. Yes, it
12 can be done.
13 It brings to mind -- in terms of some
14 impacts, actually the impacts can be greater.
15 While we were going through one of our recent
16 proceedings, it was announced that a rail station
17 was being built. It was built adjacent to a
18 parking lot and a rail line. Now, are there
19 impacts from that rail station? Probably.
20 There's traffic. There's noise. There's cars.
21 But at the same time, you've got the
22 infrastructure there, and we would agree with the
23 developer that that makes sense.
24 Now, if I was to turn around and
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1 suggest that he put the rail station three miles
2 away and run a rail spurt, he'd probably think I
3 was nuts, and I think that the same thing can be
4 said in terms of siting peaker plants. Their
5 impact is minimal, and siting them where the raw
6 materials are delivered and the offtake takes
7 place makes a lot of sense.
8 With that -- with that foundation,
9 I'd like to address the questions that were put
10 before the Board. Question number one, do
11 peaking plants need more regulation? First of
12 all, I believe it's been said already, but
13 deregulation is a large, large misnomer here, and
14 I believe that -- I have read some of the
15 pre-filed testimony, and I believe plea ComEd is
16 going to address that also. Restructuring is
17 actually what happened in Illinois, and it's a
18 more accurate term of what's happened.
19 Deregulation refers to utility rates.
20 At one point in time, it made sense
21 for one utility to serve an area. They were
22 granted a quasi monopoly status, if that's the
23 proper term, and someone will correct me, I'm
24 sure, if they want to look at it a little
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1 differently. However, in exchange for that,
2 because they were becoming keepers of the public
3 trust, their rates were regulated. You might say
4 that their rates of return were limited. We
5 being on the other side of the coin, knowing that
6 we have no guaranteed rate of return, we could
7 say they've got a floor on there. So it's a
8 matter of perspective, but deregulation refers to
9 the utility rates and sometimes the ability to
10 spend the money that they're collecting from the
11 rate pairs.
12 Peaking plants are already very
13 regulated. They're regulated by codes,
14 standards, permit requirements. This is a list,
15 just a partial list, of the standards that must
16 be met by peaking plants. Now, you've got your
17 different industry standards between concrete,
18 steel, petroleum, the engineering standards.
19 It's all the same -- I don't know if
20 it's prominent or not, but Illinois EPA has
21 jurisdiction for air permits, noise control. If
22 there's a water discharge associated with the
23 plant, the surface waters of the state, there's a
24 permit to be put in there.
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1 ComEd has interconnection
2 requirements. You've got electric codes,
3 building codes, fire codes, Army Corps of
4 Engineers' approvals, and there are local
5 approvals. Right now under the system that we're
6 operating under, you've got zoning, stormwater.
7 There's local wastewater approval, water supply
8 approval, and ultimately the building permit.
9 All of that must be supplied by the locality.
10 So for someone to say that these
11 plants are not regulated is really, really a
12 misstatement. In our opinion on this basis,
13 additional regulations would seem unjustified and
14 they'd also seem counterproductive.
15 Question number two, do peaking
16 plants pose a unique or greater threat than other
17 state-regulated facilities? I'm going to show
18 you some analyses. First, we've discussed that
19 peaker plants have minimal impacts compared to
20 standards. I want to compare that to also some
21 other existing facilities. What I did here, this
22 refers to some local facilities, and this was,
23 again, prepared for the plant in Lake County.
24 You could see that clearly the -- in cases of
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1 NOx -- in cases of NOx, the largest emitter is
2 the coal-fired power plant. You've also got
3 Abbott Labs. These are some temporary diesel
4 peakers that were installed. They're not there
5 this year. They may be back, maybe they won't.
6 You've got Indeck right here. You've
7 got a coffee roaster. You've got a hospital. In
8 the grand spectrum of things, it's not out of
9 line with the range of impacts of other
10 industries. Looking on a statewide basis, I did
11 an analysis under SIC codes, that's standard
12 industrial classification codes, which are used,
13 among other things, by EPA to set emission
14 standards, and took a look at some industries in
15 the state. This is by no means inclusive of all
16 industries.
17 I took the list of SIC codes, I
18 picked some out, and I just wanted to see where
19 peaker plants would line up with respect to other
20 industries. You could
21 see down the side here we do have some
22 steelworks, refineries, electric, and other
23 services. That's this guy right here. Wait a
24 minute. No, it's not. I apologize. That's this
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1 guy right here for steel. Industrial machinery
2 manufacturers, brick and tile manufacturers,
3 heating and ventilation manufacturers, airports.
4 Caution on this one. Airports refers
5 to the physical plant at the airports. This is
6 not the airplanes. These are stationary sources
7 we're talking about here. So there are some
8 impacts here also. This blue bar here, this is
9 cold rolled steel. For whatever reason, I was
10 not able to make it appear there. I tried for a
11 couple hours, and Bill Gates wasn't returning my
12 phone calls. So I had to leave it out on that
13 one.
14 The point here, and I'm going to go
15 through several these, is not to show that one
16 industry is bad or good or is, you know, bad
17 compared to another, but to show you that the
18 peaker plants, this box here, is the average
19 permitted emissions of all plants that either had
20 received a draft or final permit as of a couple
21 of weeks ago. You could see that in the grand
22 spectrum of things it's probably about in the
23 middle of all of these other industries.
24 NOx emissions by far, electric
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1 services, and this includes utility plants,
2 private plants. There were a number of different
3 plants, 200 and some odd, and I've got the number
4 on a later slide, that contributed to these.
5 This is the average permitted emission in the
6 permit. I used the permit numbers. So those
7 will change over years, again, peaker plants down
8 near this end.
9 Particulate emissions, way down at
10 the low end of things. S02 emissions, natural
11 gas-fired plants, as is expected, way down at the
12 low end of things. VOC emissions, similar
13 picture. This is the total permitted NOx
14 emissions. This is when you've summed up all the
15 plants, okay, in tons per year.
16 Just to give us a feel of where we
17 are, and this is in hundred -- well, you could
18 see, hundreds of thousands of tons. You have
19 several industries that are higher. You have
20 several industries that are lower, right in
21 there. The number above each bar is the number
22 of permits that are being compared for each
23 individual here.
24 For example, can you see that there's
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1 229 permitted electric services. That's by that
2 SIC code. The number of peaking plants on here
3 is 22. Again, this was an older list. As was
4 noted yesterday, I believe the number is now up
5 to about 40 -- 40 or 49.
6 I can't remember exactly what I
7 heard, but even if you doubled this bar, it still
8 pales in comparison to everything else that's out
9 there or, in some cases, it falls right in the
10 range of everything that's out there.
11 Looking at the impacts of these
12 plants, again, we've looked at -- and this is an
13 S02 impact because it was the only information I
14 had available. These are the numbers that were
15 modeled for the plant in Lake County in the
16 blue. What you've got here in the green are the
17 impacts at the same point, which is approximately
18 45 miles away, of a steel plant that's located
19 somewhere around the Illinois/Indiana border. We
20 happen to have numbers for that plant. Again,
21 I'm not saying that a steel plant is a bad
22 thing.
23 What I'm trying to do is put this in
24 perspective. There are other industries out
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1 there that have significantly larger impacts than
2 a peaker plant would have in its own backyard,
3 and this is from 45 miles away. As you get
4 closer to that plant, I'm sure the impacts go up.
5 Water consumption, a million gallons
6 per year. Compare your 300 megawatt peaking
7 plant to a 50-home subdivision, a typical high
8 school, or a retirement home, a 200-bed medical
9 center, or a 400-room hotel, way down at the low
10 end, I think my laser pointer is dying here, of
11 water consumption. Just to put things in
12 perspective, again, this is not to cast
13 dispersions on any of these other enterprises,
14 because I don't think that's our purpose here,
15 and we wouldn't want to do that. That's
16 interesting.
17 Going back to question number two,
18 which I thought I had in here another time,
19 should -- do peaker plants pose a unique or
20 greater threat than other state-regulated
21 facilities? If you look at the emissions that
22 are out there, if you look at the impacts that
23 are out there, I don't see how you can say that
24 they propose a unique or greater threat than any
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1 other facility.
2 They are well within the range and,
3 indeed, toward the low end of anything that's out
4 there right now. I guess the conclusion I would
5 come to on that, if peaker plants are to be
6 regulated more strictly as we referred to in
7 question one, the comparative analysis here shows
8 that other facilities would definitely require
9 stricter regulation or should fall into the same
10 thing. I guess, the long and short of it, in our
11 opinion, is if you're going to regulate peakers
12 more stringently, then you should probably
13 revisit every industry in Illinois because the
14 impacts are well within the range and at the low
15 end of the range, and so if you can justify
16 regulating peakers more strictly, you probably
17 want to reopen every regulation that you have.
18 Question three, should new or
19 expanding peaking plants be subject to siting
20 requirements beyond local zoning? Well, we've
21 already taken a look through peaking plant
22 impacts. For many measure, the impacts are
23 minimal. If you review a lot of local zoning
24 codes, most zoning codes already allow for
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1 somewhere in the code for uses that have greater
2 impacts, whether it be noise, air pollution,
3 water use, what have you. Really, right now,
4 they are handling that end of the things.
5 Finally, any process, in our opinion,
6 new or existing, that is implemented should
7 restrict decisions to facts on record. That,
8 unfortunately, doesn't seem to be the case in a
9 lot of zoning. We've been advised many times
10 that the decision could be whatever they want it
11 to be. So we'll leave that go there.
12 Question four, should any new rules
13 apply to existing facilities or only new or
14 expanding Peaking plants? One of the design
15 bases for power plants and, indeed, anything that
16 you're going to design, whether it's, you know, a
17 building you're designing to conform to local
18 building codes or what have you, is the existing
19 regulations.
20 Trying to design to hit a moving or
21 potentially moving target could bring design work
22 to a halt. It could run into a lot of
23 unjustified expenses. In this or any other
24 industry, again, a period of regulatory certainty
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1 is necessary to allow us to be able to move
2 forward. We're not asking for any special
3 treatment, just that any change in regulatory
4 philosophy should apply to all industry, not just
5 to peaker plants. Again, we don't think that
6 they should be applied to the new or to expanding
7 or to, excuse me, existing facilities. Quite
8 frankly, we don't think any changes are
9 justified.
10 And finally, question five, how do
11 other states regulate peaking facilities? The
12 process will vary by state. Several other states
13 have a process similar to Illinois. It's also
14 known as a segmented process. You'll go to the
15 air bureau for your air permit, the water bureau
16 for your water permit. If there's a solid waste
17 issue, which there's typically not, you'll get a
18 solid waste permit. You will go to locals for
19 zoning.
20 That approach has been successful in
21 many states. Other states have a coordinated
22 approach. All issues are directed through a
23 single siting agency. It should be noted that in
24 most of those states the siting Board then will
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1 overrule any local zoning too. It tends to make
2 it a one-handed process instead of a process that
3 plays off between two different entities, and it
4 works more efficiently for them.
5 Just one other comment with respect
6 to impacts of plants and I just want it noted
7 that on the water issue, the Governor's Task
8 Force will be convening in the near term future,
9 and I think with respect to water impacts, we
10 probably should wait for their report to come
11 out, but really this is -- we like to thank the
12 Board for the ability to present our information
13 here. We think we've addressed the questions
14 that have been asked by the Governor, and we
15 think that we've given the Board some pretty good
16 information to take back, and the, in our belief,
17 should be that the process is sufficient as it is
18 and that any changes to the process really should
19 be examined in light of all industry in the state
20 because it's not an isolated industry. Thank
21 you.
22 HEARING OFFICER JACKSON: Thank you, Mr. Erjavec.
23 MR. ERJAVEC: You're welcome.
24 HEARING OFFICER JACKSON: We'll take some
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1 questions from the Board members.
2 MS. MANNING: Could you please describe
3 the negotiations and input that the village of
4 Libertyville had and the project proposal you
5 have in that village?
6 MR. ERJAVEC: I would --
7 MS. MANNING: Just kind of summarize --
8 MR. ERJAVEC: Okay. If you don't mind,
9 I'll refer that to Greg, because he was -- is a
10 project manager for that project. Okay?
11 MS. MANNING: In terms of just the local
12 input that was given to you in this project, and
13 if you could describe it, from your perspective,
14 what kinds of negotiations took place with the
15 village of Libertyville?
16 MR. WASSILKOWSKY: Really, there's no
17 negotiations. What we do is there's usually an
18 early-on meeting with the zoning staff to
19 understand and clarify filing a petition to the
20 zoning regulations. Sometimes in reading these
21 regulations, you need clarification, and we asked
22 for guidance into how to direct our petition.
23 So it's really an education on our
24 part because the zoning criteria does vary from
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1 municipality to municipality, state to state, and
2 we need these clarifications regarding
3 definitions. So that's what we did with the
4 village of Libertyville. There's really no
5 negotiations. The law is the law.
6 MS. MANNING: Okay. That's all I have
7 right now. I have more questions, but I'll just
8 pass it along right now.
9 MS. KEZELIS: Your material indicates that
10 Indeck has 13 stations which currently operate.
11 How many of those are gas-burning
12 peaker plants?
13 MR. ERJAVEC: Oh, boy. Nine or ten. We
14 had acquired, up in the state of Maine, a couple
15 of wood-burning plants. I believe we've got one
16 in New Hampshire and the hydro plant in Maine.
17 So that would take four. All the rest are
18 natural gas-fired, combustion turbines. I
19 believe most may have an oil backup. We're not
20 proposing that in the state of Illinois, but they
21 are, for the most part, gas combustion turbines.
22 MS. KEZELIS: And how many are you
23 currently proposing or in the process of with the
24 IEPA Illinois?
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1 MR. ERJAVEC: I want to say about four
2 just off the top of my head. There may be five
3 that have been -- for example, we have filed
4 permit applications for four, which, I would
5 assume, would be the answer to your question.
6 MS. KEZELIS: Yes. That is my question.
7 The figures that you addressed with
8 us in your power point presentation concerning
9 the air quality impact charts in micrograms per
10 cubic meter, were those based on modeling?
11 MR. ERJAVEC: Yes.
12 MS. KEZELIS: So although you have peaker
13 plants that you operate, those figures were not
14 based on measurements of actual operations?
15 MR. ERJAVEC: No, they're not, and there's
16 a couple of reasons for that.
17 MS. KEZELIS: I'd like to get to that.
18 MR. ERJAVEC: Okay. There's a few reasons
19 for that. First of all, if you are to -- what
20 happens when you do the modeling, and I almost
21 wish I had the gentleman sitting here because he
22 could probably speak to it better than I can, but
23 I'll do the best I can on this.
24 You establish, on a USGS map, which
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1 takes into account topography and hills and
2 things like that, a receptor grid, and you go out
3 100 meters, 200, 300 meters in every direction to
4 try to figure out where the greatest impact would
5 be predicted. Okay.
6 The model has been verified, and, you
7 know, I haven't developed the models. I've taken
8 some classes on the models and things like that.
9 It's my understanding when you verify these
10 models, because you take five years of
11 meteorological data and you model it every hour,
12 hour after hour after hour for five years, and
13 you try to find the single highest point, the
14 single highest number in that five years, okay,
15 and based on that particular data set, which, in
16 this case, will be five years of data from O'Hare
17 airport, there's a little point on your grid.
18 It's so many hundred meters this way and so many
19 100 meters that way, that has that .028 that we
20 showed.
21 Any variance in that weather, and
22 weather changes all the time, might relocate
23 where that point is. Okay. So it's my
24 understanding, from people who have verified the
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1 models, that the models are pretty good at
2 predicting what the worst day's impact would be.
3 They're not so good at telling you where it's
4 going to be, whether it's going to be -- you
5 know, your model may say here, and it may turn
6 out to be over here, and I'm pointing to
7 different places. It may be southeast as opposed
8 to northwest.
9 So finding that point, number one,
10 would be difficult. Number two, the levels that
11 we're talking about are not measurable, and
12 that's part of the thing. Were we to try to go
13 out and verify compliance, you wouldn't see the
14 difference in the background.
15 We're talking a background of about
16 59 micrograms per cubic meter. We're talking
17 about a difference under the worst case, a
18 temperature inversion where everything is forced
19 to the ground and high winds and everything else,
20 of .028 micrograms per cubic meter, about one-two
21 thousandths. That's well within the range of
22 uncertainty of the test. You wouldn't be able to
23 measure it.
24 MR. WASSILKOWSKY: What I would like to do
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1 is clarify that a little bit. What Gerry is
2 talking about is when the EPA asked for a model
3 and we prepare models to see the ground level
4 impact of the air you breathe, these numbers were
5 very small in our modeling, which is expected.
6 Now, by Indeck, by our consultants,
7 and consultants representing every other
8 developer here in the power generating business,
9 including ComEd, these numbers are not dreamed
10 up. They're very consistent, and we expected
11 them to be this low. Now, from your standpoint
12 you're saying, well, how can -- you can't measure
13 it this low. That's correct. It's
14 nonmeasurable. You'd have to take into
15 consideration the wind, topography, a home's
16 furnace, a high school furnace, all that kind of
17 stuff. We're that low. So that doesn't make
18 sense to measure it out in a block away or two
19 blocks away.
20 You can measure and get guarantees,
21 which we have, and others have gotten guarantees
22 as to the rates from these machines, and you put
23 monitors in stacks to monitor the flow of
24 emissions from the stacks. So if you know what's
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1 coming out, you can easily then verify what the
2 impact is in the local neighborhoods. So once
3 you know that data point, you got the
4 manufacturer to guarantee what's coming out of
5 the stack. That given, the rest of it's just
6 going to, you know, flow out in terms of your
7 topography and wind and so forth.
8 So yes, you need the model because
9 every area's weather pattern will vary. Every
10 area's topography will vary day to day. That's
11 why you have five years' worth of data, the
12 machines burn very consistent and reliable fuel,
13 unlike coal or other solid fuels, where we have
14 to worry about the fuel consistency minute to
15 minute, hour to hour.
16 This fuel is incredibly reliable and
17 consistent in its heat characteristics, and,
18 therefore, we can easily model this and see the
19 impact to the residences nearby.
20 So, yes, it can be modeled reliably,
21 and the data coming from the machine is very
22 reliable and consistent and can be monitored in
23 the stack, but to give you an idea, it's so
24 reliable that you can make a test on one given
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1 day, come back a year later, and test it again
2 and be that consistent. It doesn't wander much
3 once the machine is tuned in.
4 You could also have the monitor
5 continuously, which is called a CEM, a continuous
6 emissions monitor, and you'll find if you're to
7 watch the monitor that this would be basically a
8 straight line. It's that consistent.
9 MS. KEZELIS: Thank you. That was very
10 helpful.
11 Can you tell me the name of the model
12 that you used?
13 MR. ERJAVEC: ISTSD, which was described
14 by Dr. Kaleel. That's an industry standard
15 basically.
16 MS. KEZELIS: It didn't reflect that in
17 your material.
18 MR. ERJAVEC: I apologize for that. Just
19 to be -- if we were to submit any other model,
20 Illinois EPA would have sent it back to us.
21 That's the bottom line. That's what is expected,
22 and sometimes we forget and assume that people
23 know that.
24 MS. KEZELIS: The active facility,
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1 assuming one is in operation or is completed,
2 construction is completed, all the necessary
3 permits have been completed, is this physically
4 manned by a person 24 hours a day, or is it
5 simply left in place until it is needed to be
6 turned on? Can you explain the operation,
7 characteristics?
8 MR. ERJAVEC: The plants are designed such
9 that they can be operated remotely. It is not
10 our philosophy to do that. We man the plants,
11 and we also cooperate with the local villages in
12 terms of their requirements for emergencies and
13 things like that.
14 It became quite clear to us, you
15 know, for example, in some discussions with
16 places we've talked to to say, yes, we want the
17 plant to be manned, and plants will generally be
18 manned, but, you know, there are utility ones
19 right now that have operated reliably for years
20 by remote control. There may be somebody within
21 several thousand feet, but he's not sitting right
22 on top of the thing.
23 MS. KEZELIS: Yesterday we had testimony
24 that it could be turned on through the internet
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1 provided there was a
2 password --
3 MR. ERJAVEC: With all the right things in
4 place, it can be done. There are a lot of things
5 that are technically feasible. Whether they're
6 practically done, we don't do that, but I won't
7 speak for all of my colleagues.
8 MR. WASSILKOWSKY: I think historically
9 you'll find that smaller machines are done
10 remotely. The larger machines, these types of
11 investments, we commonly have one or two people
12 on staff, maybe more. What they would do is they
13 would have the staff up more during periods when
14 you expect generation to be needed, summertime
15 periods obviously, but when you get into the
16 wintertime periods, you may wind up shifting
17 staff away, but do you still have staff on site?
18 You may have less available.
19 So I would think across-the-board I
20 would expect people to have someone on site
21 probably all the time, and that staff can vary
22 depending on when they anticipate to operate more
23 or less.
24 MS. KEZELIS: And the design figure issue
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1 that you addressed with us in the photographs of
2 a turbine and so on that we looked at on your
3 power point presentation didn't highlight, at
4 least that I noticed, or marked for any sound
5 baffling mechanisms.
6 Would you address that please?
7 MR. ERJAVEC: On the far right-hand
8 section, just passed the combustion turbine, I
9 believe there's a thing that says muffler.
10 MS. KEZELIS: And that is the sound
11 baffling --
12 MR. ERJAVEC: That is the sound
13 attenuation. There are also enclosures built
14 around the turbine area itself because some noise
15 can emanate from that area. I mean, the
16 enclosure around is not -- it's not just a sheet
17 metal building. It's a metal fabricated panel
18 with acoustical material in it. It's perforated
19 on the inside. There's an art to designing sound
20 attenuation for these plants, and each one
21 undergoes a rigorous design to ensure that it's
22 going to meet the criteria.
23 There have been occasions where, for
24 example, on start-up there may be something
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1 unpredicted, and I had -- I discussed with a
2 colleague, he had heard of one plant in Illinois
3 that at start-up did not meet its criteria,
4 however, within a short period of time, the
5 problem was identified and solve, and it does
6 meet the criteria now.
7 We've been doing this for a long
8 time. It's not just -- it's not something that's
9 new. All of our plants in New York had to meet
10 the sound criteria. Our plants we're building in
11 the state here have to meet criteria, and it can
12 be done, and it is being done.
13 MR. RAO: May I ask a follow-up question?
14 Do you take actual noise measurements
15 to show compliance with the Board regulations
16 once your facility is built?
17 MR. ERJAVEC: Absolutely.
18 MR. RAO: And would it be possible for you
19 to provide noise measurement data to the Board?
20 MR. ERJAVEC: I think we can do that once
21 we've taken the final measurements. We've built
22 one plant in Illinois so far, and I think we're
23 in the process of getting that done right now.
24 MR. RAO: And also yesterday the Agency's
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1 NOx expert, Mr. Greg Zak, he listed a number of
2 strategies for noise reduction of peaker plants.
3 Are those some of the strategies that
4 you generally considered in your plants?
5 MR. ERJAVEC: Yeah. As a matter of fact,
6 I believe he talked about some of the muffling
7 technology. He also talked about buffering
8 zones. Both are useful. If you've got a larger
9 buffer zone, you may not need to put quite as
10 much acoustical treatment onto your facility.
11 However, the buffer zone does not necessarily
12 have to be as large as I thought was being
13 implied because there are other ways to solve the
14 issue and to make sure that you are in compliance
15 with Board regulations.
16 MR. WASSILKOWSKY: To give you an example,
17 today there are probably 100 gas turbines in
18 Illinois in operation. Gas turbines started
19 operation in Illinois in 1965 and probably
20 started operation throughout the United States
21 since 1965. There are probably thousands of gas
22 turbines in operation.
23 The University of Illinois has gar
24 turbines in the Champaign campus. Across the
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1 street from the hospital has gas turbines. In
2 its Chicago campus, they're installing. I think
3 they've got about 100 megawatts at the Champaign
4 campus, and maybe I've got them mixed up between
5 two campuses, and the other one has about 60
6 megawatts.
7 Acoustical treatment is done on a
8 case-by-case basis and can easily -- not easily,
9 but with many -- much technical calculations and
10 money spent can meet the sound -- they're
11 stringent limits. They can be met. Indeck, in
12 our budgets, in looking at the designs in McHenry
13 and Lake Counties was going to spend about six to
14 $8 million in acoustical treatment alone on the
15 facility to give you an idea how serious we take
16 it.
17 MR. RAO: Thank you.
18 MS. KEZELIS: I have a follow-up question
19 about emissions. One of the items -- one of your
20 references was continuous emissions monitoring.
21 Do you currently perform those at
22 your peaker plants in Illinois?
23 MR. WASSILKOWSKY: Can you repeat the
24 question?
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1 MS. KEZELIS: Do you currently perform any
2 continuous emissions monitoring at any of your
3 peaker plants?
4 MR. WASSILKOWSKY: According to the
5 regulations in Illinois, with the Rockford plant,
6 we don't need one right now.
7 MS. KEZELIS: I understand that.
8 MR. WASSILKOWSKY: On our other
9 facilities, we have combined cycle facilities
10 with CEMs. We don't see a problem putting a CEM
11 in. We have CEMs at all our gas-turbine
12 facilities. So it's not -- it wouldn't matter if
13 it's a peaker or combined cycle.
14 MS. KEZELIS: That's a very good
15 clarification. I appreciate that.
16 My question really is more directed
17 towards if you have such data today with respect
18 to operating gas turbines, would you be willing
19 to provide that to the Board --
20 MR. WASSILKOWSKY: We would. We would,
21 but we don't have a continuous monitor. We
22 certainly could give some data.
23 MR. ERJAVEC: We do have -- if you want to
24 see an example -- for example, if you want to get
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1 an idea of consistency and things like that, we
2 have some combined cycle plants. Most of them
3 are in another state, but they do have continuous
4 emissions monitors on them. Several of them do
5 not have add-on controls. They're a little bit
6 older. So they've had their NOx reduction
7 through, for example, steam injection and some
8 water injection in others. I don't know that
9 there's a dry-low NOx one out there with a CEM on
10 it, but the idea is the same.
11 The technology to control the
12 emissions is very, very effective and very, very
13 predictable, and we could provide, you know, data
14 from those plants if that would meet your needs?
15 MS. KEZELIS: It would be helpful for
16 purposes of developing the record, yes, please.
17 I'll turn it over to somebody else for a bit.
18 DR. FLEMAL: One of the themes we heard
19 regularly yesterday was that there's a need for
20 power in the peaker area in the state of
21 Illinois.
22 What we didn't hear was any
23 evaluation of what the magnitude of that need
24 is. Do you have any perspective you can share
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1 with us as to what we --
2 MR. ERJAVEC: Okay. Let me say this very
3 carefully because there are probably several
4 divergent opinions on this. Everywhere we've
5 looked, there has been -- people fairly much
6 agree that there's a need.
7 Even the proceedings we've been in
8 where we've had opposition, you know, the
9 statement has been, well, we know there's a need,
10 we just don't want it here. I believe you're
11 going to hear from Mr. Bulley from MAIN, and he
12 could probably give you the best snapshot later
13 on, the official numbers. The numbers we've seen
14 published imply that we need to add anywhere from
15 a thousand to 1500 megawatts a year for the next
16 five to seven years to maintain an adequate
17 reserve margin.
18 DR. FLEMAL: That's an annual addition?
19 MR. ERJAVEC: Annual addition, correct.
20 So anything that was built last year doesn't
21 figure into what's needed this year. That's all
22 additive.
23 DR. FLEMAL: How does that translate into
24 numbers of peaker plants? Let me put it in
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1 another way.
2 When the dust all settles, the 50
3 current applications that you're proposing, will
4 those 50 be -- will they be built?
5 MR. ERJAVEC: Well, that's two questions.
6 The first one is a simple one to deal with. It
7 depends on the size of the plant. For example,
8 you know, we've been talking about 300 megawatt
9 plants. If you're going to say 1500 megawatts a
10 year for five years, that's five plants times
11 five is 25 plants.
12 The next issue is, will they all be
13 built? No. I mean, I can't tell you which ones
14 won't be because I don't know, but I could tell
15 you right now that looking at the list that's out
16 there, I'm fairly certain that some are going to
17 make it, some are not. That's just -- you know,
18 just looking at the industry and seeing how
19 things get sited and seeing how it goes, they
20 don't all get built.
21 DR. FLEMAL: You had mentioned that Indeck
22 itself has a number of plants in the east, Maine
23 and New York?
24 MR. ERJAVEC: Correct.
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1 DR. FLEMAL: Do you market the electricity
2 generated from those plants in Maine and New York
3 or is it broader than that?
4 MR. ERJAVEC: I believe it's being sold in
5 New York under contract with the local utilities,
6 and Maine also to Maine utilities or to the
7 northeast grid.
8 DR. FLEMAL: And the power that you
9 propose to generate with peaker facilities here
10 in Illinois would be marketed in Illinois?
11 MR. ERJAVEC: That's a good question. Our
12 expectation is that it would be marketed in
13 Illinois. We are not a retail provider. We're a
14 wholesale provider. With the restructuring of
15 the industry, the door has been opened for other
16 retail suppliers to come into the area.
17 It is our expectation that the
18 offtake from any plant that we propose in
19 Illinois would be sold to someone who is doing
20 retail business in Illinois. Our Rockford plant,
21 for example, is selling to Commonwealth Edison.
22 As other marketers come into the state, there,
23 for example, are requirements that they have
24 generation in Edison's control territory. So we
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1 would be providing that means for that to
2 happen.
3 There has been some discussion as to,
4 gee, selling out of their territory. Quite
5 frankly, if we wanted to serve another area, we'd
6 be building in another area. It doesn't make a
7 lot of sense to build a plant in Illinois to
8 serve Florida, Tennessee, what have you. While
9 that might happen on an occasional basis, there
10 are some constraints. Number one, the
11 transmission system. The transmission system
12 that we have in this country was not designed for
13 bulk transfers with from one site to the other.
14 If that was the case, there wouldn't
15 have been shortages in New England because the
16 plants in Illinois would have met that need.
17 That's not what happened this past year. Number
18 two, there were some discussions yesterday, I
19 believe, from the gentleman from the IPC who
20 briefly touched on transmission tariffs.
21 If I'm going to sell into another
22 state, let's say, I'm going to Tennessee, I have
23 to pay a tariff across Indiana -- my geography
24 is failing me right now, but, you know, there are
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1 several service territories that I have to
2 cross. It makes a lot less economic sense,
3 provided I can sell the transmission issues,
4 which are very constrained on hot days, to try to
5 sell into there.
6 Is there a chance that it could
7 happen? In other words, if I contract to
8 somebody else, could he resell it there? There's
9 probably a rare occasion where the economics
10 might make it make sense, but by and large I
11 would say it would go into this service
12 territory.
13 Now, by the same token, the converse
14 could also happen. It could be happening that
15 there's a shortage here that we receive the
16 benefits of a plant that's built someplace else.
17 I don't think anybody objects to that, but this
18 is to put it in context. It doesn't happen all
19 the time, but, you know, could it conceivably
20 happen? I hate to do it. I've got the
21 engineering syndrome. It's every answer starts
22 with it depends. You know, by and large, no, it
23 would serve the Illinois market. It doesn't make
24 sense to put a plant in Illinois to serve
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1 someplace else.
2 DR. FLEMAL: In a slightly different
3 direction, you had discussed in your testimony or
4 presentation the difference between a simple
5 peaking plant, single cycle, and a combined cycle
6 facility.
7 I believe in part of your message
8 there was that the conversion from a single cycle
9 to a combined cycle is not necessarily a simple
10 matter.
11 Have I captured some of the essence
12 of that direction?
13 MR. ERJAVEC: This, again, the engineering
14 syndrome. Simple is relative. Can it be done?
15 Yes, it can be done. Some of them will be
16 converted. You have to take the plant out of
17 service for a period of time. The message that I
18 was trying to get was to try to address what some
19 of the impacts were to making those conversions.
20 It's probably a year-long process.
21 DR. FLEMAL: I guess in my concept of
22 simplicity I'm looking at it not from the
23 engineering side. I understand engineering --
24 engineers can do things.
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1 I was thinking more from a regulatory
2 approval sort of perspective. Do you need -- in
3 your understanding, for example, would you need
4 to go back through some of the same steps that
5 involved your original siting?
6 MR. ERJAVEC: Here comes the D word
7 again. That's going to depend upon how you
8 permitted the original facility. There are many
9 facilities out there that probably have in the
10 back of their minds the idea to build a peaker
11 and then convert down the road, and they have
12 just permitted it as a peaker, in which case it
13 will have to go back to the local -- to the local
14 zoning probably for -- definitely for building
15 permits because this is a substantial building
16 that gets added to this facility.
17 They will probably also have to go
18 back to the Illinois EPA because they will be
19 turning a minor source into a major source with
20 all the PSD considerations that were discussed
21 yesterday, BACT analyses, and things like that.
22 Now, I do know that there are some
23 entities out there that were forward thinking
24 enough to permit their plants to be combined
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1 cycle from day one. I know that one was
2 mentioned that, you know, was being built
3 initially as a peaker and was going to convert.
4 It has all that permitted already, and, you know,
5 they've bought it and they've done that.
6 So they wouldn't have to go back.
7 Someone else who is contemplating changing a
8 plant that was only permitted as a peaker, yes,
9 would have to go back and go through probably
10 more proceedings than they did to put the peaker
11 in because the impacts have changed
12 significantly.
13 MS. MANNING: In your power point
14 presentation, you gave examples of annual water
15 consumption. You showed that Indeck is small in
16 comparison to a 400-room hotel or a medical
17 center, retirement home, those kinds of things.
18 What basic hours of operation -- when
19 you considered an annual figure, what hours of
20 operation were you basing --
21 MR. ERJAVEC: For the peaker plant?
22 MS. MANNING: -- for the peaker plant in
23 order to get to that figure?
24 MR. ERJAVEC: Again, this was the 300
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1 megawatt plant we're talking about. We're
2 talking a plant that was permitted for
3 approximately 2,000 hours or it was permitted
4 2,000 hours of operation.
5 MS. MANNING: And more generally -- and so
6 that's what those figures are based on --
7 MR. ERJAVEC: Correct, correct. Yes.
8 MS. MANNING: -- per year?
9 MR. ERJAVEC: Yes.
10 MS. MANNING: More generally in the water
11 area, we haven't heard anything in terms of --
12 the water is taken in, I assume, to cool -- for
13 the most part, to cool the operation?
14 MR. ERJAVEC: Okay. The water that we are
15 pointing to on that particular facility is for an
16 evaporative cooler you put at the front end.
17 That is water that is evaporated in the air to
18 cool the air on a day to allow denser air to go
19 through it and increase the efficiency.
20 MS. MANNING: So most of the water is
21 evaporated and not discharged in any way?
22 MR. ERJAVEC: That's correct. That's
23 correct. The only discharge really associated
24 with it is the water treatment for the water
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1 that's being used going in, and that's about --
2 it's five to seven percent of the water that's
3 consumed comes back as wastewater.
4 MS. MANNING: In cogeneration facilities,
5 we've had issues of a thermal -- the Board's
6 thermal regelations being impacted.
7 MR. ERJAVEC: Uh-huh.
8 MS. MANNING: Is it your understanding --
9 and we didn't hear anything from the EPA either
10 about thermal issues.
11 Is it your understanding that peaker
12 plants would not be of concern at all in terms of
13 the Board's thermal regulations?
14 MR. ERJAVEC: I haven't looked at the
15 thermal regulations in probably ten years now.
16 However, my recollection of them would be that
17 they would probably be -- the impact would
18 probably be very little. All of these plants --
19 I don't know if anyone is proposing an open cycle
20 plant. In other words, you know, drain water
21 from the river, sending it through, sending it
22 back, which would definitely have a thermal
23 problem.
24 In fact, I don't know that you could
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1 permit that kind of a plant anymore from a USEPA
2 or from an Illinois EPA standpoint or Pollution
3 Control Board standard standpoint.
4 They would all have cooling powers.
5 The boil down from the cooling power is
6 relatively minor if discharged through surface
7 water, and that's where we would apply the
8 thermal standards. In the discharge of thermal
9 surface water, there could be an impact. I'd
10 have to look at the specifics. Perhaps, a
11 diffuser would be in order or something like
12 that. Many of them will discharge to the local
13 sewers, and it's generally not a problem.
14 MS. MANNING: That's what you're doing at
15 the Libertyville facility, is it not?
16 MR. ERJAVEC: No, no, because that one is
17 not -- the only time that that thermal impact
18 comes into play is when you have -- you've made
19 it into a combined cycle plant where you've got
20 the steam cycle because the heat is generated
21 from cooling the steam that runs through the
22 turbine. That's where the cooling cycle comes,
23 and that's where the thermal discharge occurs.
24 There is really no thermal discharge from a
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1 peaker plant, at least from the ones that we're
2 proposing.
3 MS. MANNING: And on the issue of noise
4 regulation, obviously, you're quite aware of the
5 Board's noise regulations, but it's your
6 understanding as well, is it not, that it's not
7 actually part of the permitting process in terms
8 of the air permitting process with the Agency?
9 MR. ERJAVEC: It's not a part of the
10 process. There are no noise permits issued.
11 We're well aware of that. However, that doesn't
12 relieve us of the obligation to meet the
13 standards. I mean, that's part of the research
14 you do no matter where you're going to build a
15 plant.
16 You know, you go and find out what
17 the state and local regulations are with respect
18 to noise, water, air, what have you, and you make
19 sure that your design considers all those because
20 it's your obligation to meet them.
21 MS. MANNING: Thank you.
22 MR. RAO: From your perspective, would you
23 describe a typical peaker plant in terms of the,
24 you know, size and land that it occupies, and how
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1 much it's built up, and how much open space? Can
2 you provide that?
3 MR. WASSILKOWSKY: The peaker itself, if
4 you were just to look at the area it takes up, is
5 about five acres, maybe even less. What we do is
6 we've looked at sites that are larger for layout
7 and construction, some creating natural barriers,
8 some to aesthetically tend to a setting.
9 So there's several reasons for why
10 some of the sites are bigger than what they are.
11 In some cases, people may look at expansions.
12 Sites that we look at for peakers for the most
13 part were for just buffering standpoints,
14 aesthetics, just management standpoint of how we
15 want to lay out the plan.
16 So from our standpoint, I would say
17 the power plant itself is on about five acres or
18 a little less, and we've probably shown sites
19 where, you know, they've varied even from 20
20 acres and larger, but that's for buffering in
21 most of the cases.
22 MS. McFAWN: Did you say the power plant
23 itself takes up five acres?
24 MR. WASSILKOWSKY: Yeah, because you need
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1 space in between the equipment. You know, you
2 can't put one gas -- there are two gas turbines
3 on a 300 megawatt plant, and you have some other
4 equipment joining with it. So it takes anywhere,
5 I'd say, around five acres, maybe a little bit
6 less.
7 MR. RAO: I have one more question on the
8 turbines themselves.
9 Do turbines used by Indeck utilize,
10 like, any combustion modification techniques to
11 reduce NOx emissions, you know, such as dry-low
12 NOx?
13 MR. WASSILKOWSKY: They're all dry-low NOx
14 combustion. Mostly the large machines today use
15 that technology, and Indeck's also include
16 dry-low NOx.
17 MR. RAO: How do, you know, emission rates
18 from these turbines compare with the emission
19 rates that IEPA has given us with BACT for one or
20 two plants in the state?
21 Are you familiar with those numbers?
22 MR. ERJAVEC: I saw the numbers yesterday.
23 Forgive me. Is it Dr. Romaine or Mr. Romaine?
24 MR. RAO: Mr. Romaine.
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1 MR. ERJAVEC: Okay. Chris, I didn't want
2 to keep doing this. Sorry about that.
3 I don't recall exactly what he said.
4 I thought they were on the order of 15 parts per
5 million, I think.
6 MR. RAO: Yes.
7 MR. ERJAVEC: Okay. That's what we have
8 permitted our plants at is 15 parts. It's 15 to
9 25, I believe. It was in the range right there
10 depending upon the piece of equipment.
11 Quite frankly, you've got basically
12 three competitors out there producing these large
13 frame turbines, and they are all striving to get
14 them as low as they can, but, you know, as any
15 other industry you have, you know, one may get a
16 little bit ahead of the other in the curve. So
17 they're all trying to shoot -- I think the range
18 that's out there for dry-low NOx is somewhere
19 between 25 and nine depending on the
20 manufacturer, and they're all trying to get
21 lower.
22 Frequently, they'll perform better
23 than the design because they have to guarantee
24 the design. So they want to put a bit of a
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1 margin in there for themselves, but, yes, they
2 meet BACT without question for a peaker.
3 MR. RAO: Thank you.
4 HEARING OFFICER JACKSON: Any others
5 questions? Okay. It looks like --
6 MR. ERJAVEC: One thing before I go, they
7 say that one picture is worth a thousand words or
8 in this case of these hearings maybe 10,000 or
9 tens of thousands of words. We've just commissioned
10 a plant in Rockford, and we would be very
11 pleased, if it would work for the Board, to have
12 them come visit the facility.
13 I'm sure that any of my colleagues in
14 the peaker industry who have plants in the state
15 of Illinois would, again, extend such an
16 invitation. So if something would help to
17 enhance the Board's understanding of the issues
18 here, we would be very glad to host a visit.
19 Thank you.
20 HEARING OFFICER JACKSON: Thank you.
21 We'll take that into consideration. At this
22 point, it's just about 12:00 -- were you
23 finished?
24 MR. ERJAVEC: I've just got to pack up.
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1 HEARING OFFICER JACKSON: It's about 12:00
2 o'clock. We'd really like to get started with
3 the next presenter. Commonwealth Edison is
4 scheduled to go next. If we could have the
5 Commonwealth Edison folks come down to the
6 front.
7 Commonwealth Edison, you may begin
8 your testimony.
9 MS. JURACEK: Thank you. Commonwealth
10 Edison is pleased to be here to provide our
11 perspective on the questions that have been
12 raised by the Governor in his request that you
13 investigate the peaker siting in Illinois.
14 Presenting testimony is myself, Arlene Juracek,
15 and Steve Naumann. We both, between us, have
16 more than 50-person years of experience at
17 Commonwealth Edison, and I believe we can address
18 the issues coming from that wealth of
19 experience.
20 My background is in the regulatory
21 and legislative end as well as in the rate-making
22 end. I also participated in the redrafting of
23 the Electric Utility Restructuring Act in the
24 state of Illinois.
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1 HEARING OFFICER JACKSON: I'm sorry to
2 interrupt. Could you speak into the microphone?
3 MS. JURACEK: And Mr. Naumann comes with a
4 wealth of experience on our transmission and
5 distribution services side of the business. We
6 have filed 14 pages of pre-filed testimony. We
7 will be giving you a very brief summary of that
8 testimony, and then we'll be pleased to answer
9 questions.
10 You will note that in my
11 qualifications in that testimony that I am
12 chairman of the Mt. Prospect zoning board of
13 appeals. While that experience has certainly
14 played an influencing role on my business
15 judgment, I am not testifying either on behalf of
16 the village or its zoning board of appeals at
17 this point in time.
18 That being said, Commonwealth Edison
19 does support the restructuring of the electric
20 industry as crafted by the Illinois legislature
21 and the Federal Energy Regulatory Commission.
22 Yesterday, you heard from Mr. Charlie Fisher of
23 the Illinois Commerce Commission on the evolution
24 of that regulation in the state of Illinois, and
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1 we believe that as designed by the Illinois
2 legislature that the free markets in the
3 generation market will lead to ample capacity at
4 reasonable prices in the state of Illinois.
5 Right now, there's a lot of
6 discussion about events in California with
7 respect to their market design and the type of
8 pricing that they have seen, and I'll address
9 that very briefly in a few minutes in my
10 remarks.
11 A critical feature of restructuring
12 in Illinois is the availability of new privately
13 developed electric generation to meet the state's
14 increasing demand for power. In fact, load is
15 continuing to grow. Commonwealth Edison is in
16 the process of beginning its re-evaluation of
17 load growth, and we suspect that that load
18 growth, despite the best efforts of the Energy
19 Conservation Industry and the beginnings of the
20 solar and wind industry in the state of Illinois
21 that, in fact, that load growth will probably be
22 higher than we have experienced in recent years.
23 While no longer will the customers of
24 the utility be at risk that too much generation
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1 will be built by a utility resulting in high
2 rates based on a cost of building it, as a matter
3 of fact, in the restructuring industry we finally
4 get the pricing right.
5 Under the old regulated industry in
6 which utilities built generation and were
7 regulated by the Illinois Commerce Commission, we
8 could not put the value of that plant into our
9 prices until that plant was up and running. So
10 what you have was increasing prices with
11 increasing supply. Well, anyone who has taken
12 Economics 101 knows that's completely backwards.
13 Under the laws of supply of demand, prices go
14 higher when there's a shortage of capacity, thus
15 throwing out economic players to fulfill that
16 need and then get reduced or stabilized to the
17 extent you get into an optimal supply and demand
18 condition. That is the condition that the new
19 marketplace is attempting to mimic.
20 Now, whether the marketplace rather
21 than the regulator or the utility determines what
22 generation is needed, the regulatory scheme has
23 shifted so that while there are still state and
24 federal standards for air, water, and noise
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1 pollution, local governments now have an
2 increased role in the process of siting
3 nonutility generation using the traditional
4 zoning authority. We would point out that that
5 traditional zoning authority and the existing
6 laws and regulations as supplied by both the
7 state and federal agency appear to be working.
8 Of the numerous plants that have been
9 proposed in the state, some are up and running
10 and some are not, but the process is working, and
11 the fact is that the need for these
12 load-following resources is continuing to grow,
13 as I mentioned earlier. So you will see more
14 than possibly we need being proposed, but that's
15 because the process is going to weed out some and
16 allow others to be built, and the fact is with
17 load growth, so long as our customers expect
18 light switches to be flipped and lights to go on
19 and so on, the utilities do retain an obligation
20 to serve in this restructuring marketplace.
21 There will be a need for this new generation.
22 We don't believe that a new or more
23 stringent regulation is warranted and, in fact,
24 would likely have a negative effect on the
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1 state's generating capacity. To the extent any
2 new regulation would slow down the permitting
3 process, it simply does not work in today's
4 marketplace. In the past when utilities were
5 building large baseload generation that had
6 ten-year construction schedules and they were
7 forecasting ten years out, a lengthy permitting
8 process was an accepted piece of the norm and
9 could be accommodated through minor shifts
10 because you were talking about something ten
11 years out.
12 Today, the technology is smaller. It
13 is built more efficiently and, in some cases, in
14 a matter of months rather than years, and
15 following the trends of industry generally with
16 respect to just-in-time resources, any
17 lengthening of supply permitting could, in fact,
18 result in supply shortages which would impact
19 either the liability or the prices of electricity
20 in Illinois.
21 I mentioned California's model for
22 restructuring. It is considerably different than
23 the Illinois model, and, whereas, California has
24 maintained tight regulatory control over
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1 wholesale prices and the approval of new
2 generation, Illinois has allowed prices in the
3 free market to determine what generation needs to
4 be built. California's experience in the summer,
5 in which demand has continued to grow while
6 generation capacity has not, supports the view
7 that the market should be allowed to operate in
8 Illinois as the Illinois legislature intended.
9 It's very important that that generation be
10 located, to a large extent, in the state of
11 Illinois, and Mr. Naumann will address that.
12 MR. NAUMANN: Thank you. Good afternoon.
13 In effect, I'm going to answer the
14 flipside of the question that was asked earlier
15 about whether these plants being built in
16 Illinois can be used to serve load outside of
17 Illinois. The flipside of the question is if
18 plants were built outside of Illinois to support
19 the load within Illinois, could you actually get
20 the power in and could you do so reliably?
21 Of course, the answer is with enough
22 time and money, we could do anything, we believe,
23 but as a practical matter, there's a limitation
24 on the number of transmission lines that can be
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1 built, the cost of those transmission lines, and
2 the ability to site those transmission lines.
3 From a reliability point of view to
4 serve the customers within Illinois, it's much
5 better to have the power plants locally where the
6 transmission is under our ability to build, less
7 transmission is needed, and, in fact, less
8 problems will occur.
9 This summer, for example, we've seen
10 on a daily basis multiple incidents of what we
11 call transmission loading relief where sales
12 from, in this case, one area to another had to be
13 cut or curtailed because the transmission lines
14 were being overloaded in much the way that your
15 house if you tried to draw too much power, a fuse
16 or a circuit breaker would go. We don't get to
17 that point. So from a reliability point of view,
18 it is important to have your generation closer
19 and it's much better.
20 Other than that, we're prepared to
21 answer any questions, both about our testimony or
22 anything else. Thank you.
23 HEARING OFFICER JACKSON: Thank you.
24 Board members may now ask any questions that they
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1 may have.
2 MS. KEZELIS: Good morning, and thank you
3 for being here today.
4 Exhibit D to your joint testimony is
5 Edison announing preferred locations for peaker
6 power restructuring structures.
7 Is it fair to say that the
8 distinction is based on the peaker?
9 MR. NAUMANN: These are preferred
10 locations for any generation from the point of
11 view of the electrical network where we can most
12 easily accept generation without the additional
13 new transmission facilities.
14 MS. KEZELIS: And the purpose of that was
15 to encourage independent producers of electricity
16 to construct facilities in Illinois?
17 MR. NAUMANN: In the right place where
18 they can get access to the network and be able to
19 deliver it to the customers without having to
20 either try to construct lines or the delay
21 involved in actually constructing a major line.
22 MS. KEZELIS: Thank you.
23 MR. RAO: In your testimony, you mentioned
24 that in recent years the maximum peak load faced
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1 by ComEd was 21,000 megawatts I think it was in
2 1998.
3 Could you tell us, you know, what the
4 actual peak demand is in the area and how much is
5 needed to meet the demand, you know, of the
6 existing peakers already in place.
7 MS. JURACEK: The actual peak demand that
8 we experience is highly weather-dependent.
9 Generally, on these systems, a peak day, about 40
10 percent of that peak is coming from residential
11 air-conditioning loads. So you can imagine that
12 if we have a large heat buildup or a
13 temperature/humidity index buildup or other
14 adverse impacts we can see a higher demand versus
15 a more moderate.
16 So you do need to look at what the
17 weather is each day. Our forecast has been
18 something on the order of 20,500 megawatts for
19 the year. I believe Steve knows wires better
20 than I would the number it actually was. In
21 fact, a lot of the demand growth that we're
22 seeing, though, is not coming from the
23 traditional sources that we saw over the last
24 decade, which was increased air-conditioning
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1 saturation as well as economic growth. We're
2 also seeing a technological revolution in terms
3 of additional computers which cause then
4 additional air-conditioning loads, additional
5 facilities such as internet, hotels where we are
6 seeing loading on the order of 150 watts per
7 square foot in a building. This is ten times the
8 type of load we have seen in the past.
9 This is one reason why Commonwealth
10 Edison is embarking on a re-analysis of its load
11 forecast, something it does on an annual basis
12 anyhow, but which has particular interest to us
13 given the phenomenal load growth that we have
14 seen in the last year.
15 MR. RAO: So have you made any specific
16 forecasts for, you know, the demand, the
17 additional power that's needed to meet this
18 demand in Illinois?
19 MS. JURACEK: Generally, the load that
20 Commonwealth Edison delivers has been growing at
21 about one and a half percent a year. That is,
22 again, as I said, going to be revisited. It's
23 going to be interesting because under customer
24 choice, Commonwealth Edison does not supply all
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1 of that load. By the end of the year, all of our
2 nonresidential customers will be able to choose
3 their electric supplier. There is a phase-in to
4 customer choice in Illinois.
5 Approximately, 52 percent of
6 Commonwealth Edison's nonresidential load on
7 October 1st was able to choose a new supplier,
8 and then on June 1st all of our manufacturers are
9 able to choose a new supplier. So you've got
10 folks that are actually shopping for other than
11 Commonwealth Edison to supply that load, and, in
12 fact, 40 percent of the eligible kilowatt hours
13 are already operating under nontraditional
14 supply.
15 Commonwealth Edison in the
16 restructuring marketplace is focusing on having
17 the delivery system in place, and, of course, we
18 need to plan for that peak load for delivery
19 purposes to make sure the wire capacity is
20 there. The marketplace is going to be suppling a
21 lot of the generation capacity in order to meet
22 those delivery requirements.
23 MR. NAUMANN: The number you referred to,
24 the peak load in excess of 21,000, was last year,
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1 which was a rather hot summer, and as we probably
2 all know, this has been a rather cool summer.
3 Yet, last Tuesday, we came within a thousand
4 megawatts of that all-time peak in a very, very
5 cool summer, which shows a great deal of load.
6 Our official numbers that were
7 prepared last year are reported to MAIN, and Mr.
8 Bulley has those aggregate numbers, but as Arlene
9 said, we're going through a re-evaluation on the
10 belief that those official forecasts may be too
11 low for the load that we have seen, especially
12 over the last two or three years given the
13 economy and the other factors that we just
14 mentioned.
15 The other thing is that from
16 Commonwealth Edison's point of view, our load
17 serving responsibility, as Arlene said, is
18 changing with retail access, but if you look at
19 what we call the control area, all the load
20 within the area that will be served and used to
21 be served by ComEd, changing the name on the
22 supplier obviously doesn't change the load, and
23 that load growth within northern Illinois,
24 though, will continue to grow at these higher
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1 rates.
2 I think you should -- you know, in
3 addition to understanding the competitive
4 situation, you need to look at the fact that it
5 is the entire load, whoever sends the bill for
6 it, that actually needs to be served ultimately.
7 MR. RAO: Thank you.
8 DR. FLEMAL: The peaks that you referred
9 to, the 21,000 peaks, are all summer peaks, am I
10 correct, in my understanding?
11 MS. JURACEK: Yes. ComEd is a
12 summer-peaking utility.
13 DR. FLEMAL: And what kind of demand for
14 peak -- peaker power exists in the nonsummer
15 months? Is there any demand at all?
16 MS. JURACEK: Peakers are used in the
17 nonsummer months, particularly if some of the
18 baseload units need to come down for any
19 maintenance, which is when you would typically
20 take some of your baseload units out,
21 particularly in the spring and fall months.
22 It depends on the expected load
23 shape. In the wintertime, you will have peaks
24 which may be spiking and then depending on the
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1 weather situation. We don't have a whole lot of
2 electric space heating, per se, in our service
3 area, but to the extent furnaces are running
4 longer, be they gas furnaces or oil or whatever,
5 they're going to be using their fans more
6 intensively.
7 So we do have a shaped load profile
8 every day of the year to a greater or lesser
9 degree, and there may be some instances in which
10 peakers need to be run. That being said, there
11 is generally sufficient intermediate capacity to
12 fill the need in the nonsummer months, and the
13 more prevalent time that peakers would be run
14 would be in the summer months.
15 MR. NAUMANN: Let me just add one minor
16 point. They're also an insurance policy because
17 occasionally things do go wrong on a large
18 system, whether it be ours or any other system,
19 and sometimes it's nature that causes it.
20 I guess we haven't had a bad winter
21 or a real severe winter for a long time, but
22 there are times that, for example, the river
23 freezes and you're not able to get coal -- any
24 more coal up the river, and on that coldest day
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1 in the winter, you may need to run the extra
2 capacity. There are other times where you get a
3 rain followed by a freeze and people have to deal
4 with things like frozen coal. So there are
5 occasions of emergencies when you would want the
6 peakers there that can be started very quickly
7 that can supply that load during the winter when
8 sometimes it's a matter of public safety
9 obviously to continue service to people.
10 DR. FLEMAL: Is there anything that
11 differs in the economics of running a peaker
12 gas-fired plant in the winter than during the
13 summer, difference in maybe the costs of that or
14 gas or anything like that?
15 MR. NAUMANN: Well, one of the -- someone
16 who knows the gas market could probably answer
17 that. It's fairly hard to predict prices of
18 commodities. I think a lot of people were
19 surprised that the price of gas -- natural gas
20 went up this summer, but it wouldn't be for long
21 periods of time that we would be -- that we, as a
22 load-serving entity, or others would be generally
23 calling on peaking units during the winter.
24 As Arlene said, during periods of
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1 maintenance with very high loads or very severe
2 winters or during times of emergencies, and
3 during short periods of time, the economics do
4 take care of themselves in general.
5 DR. FLEMAL: Thank you.
6 MR. GIRARD: I have a question.
7 A few years into the future when the
8 residential electric market is restructured,
9 could we see the kind of price surges they've had
10 in California this past summer if we get a real
11 hot summer and we don't have enough peak load
12 available in the state?
13 MS. JURACEK: Certainly not in 2002. What
14 happened in California is the way their model was
15 set up, once they exhausted their stranded cost
16 recovery, their customers were essentially put on
17 the spot market for electricity. I think that
18 was a really silly thing to do.
19 It was a simplistic notion of how
20 electric markets actually work because no one
21 buys all of their supply on the spot market.
22 What we saw with San Diego Gas & Electric in
23 particular, because it was able to pay off its
24 stranded cost early, under the regulatory
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1 mandated model, their residential customers did
2 get put on the spot market.
3 In Illinois, residential customers do
4 get choices in the year 2002, but they are still
5 affording the opportunity to take bundled rate
6 service. Bundled rate is the end-to-end
7 traditional service that we have always been
8 providing. Those prices are frozen through 2004,
9 and, in fact, in order to abandon those bundled
10 rates, we would have to petition the Illinois
11 Commerce Commission to abandon those customers
12 and basically put them on the market.
13 That being said, I don't know too
14 many customers in my experience in Illinois that
15 really want spot market pricing. You'll have a
16 steel mill or an air separation plant who,
17 perhaps, can respond to spot market pricing, but
18 most of the suppliers, retail electric suppliers,
19 that are serving retail load on an alternate
20 basis are not sending spot pricing to our
21 commercial and industrial customers.
22 So I think the model is set up
23 differently here, and to the extent the
24 marketplace simply cannot tolerate those spot
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1 prices, we won't see them here.
2 MR. NAUMANN: I'd just like to add to the
3 other side, and that's -- Arlene well described
4 the economics, but there is the -- from my point
5 of view of having to run electrical systems, the
6 ultimate thing is having enough generation
7 capacity to serve the load.
8 Whatever the price is of however
9 insulated customers may be from a price spike,
10 there has to be sufficient capacity to meet that
11 load, and I think if there is not new generation
12 to cover the load growth, you could run into a
13 situation, and it may not be a normal situation,
14 it could be a very hot summer day or there could
15 be outages occur or something else, that would
16 you simply not have sufficient generation, and at
17 that point, price doesn't really matter anymore,
18 unless someone is willing to get off for a lot of
19 money, and that's our ultimate responsibility as
20 a utility is to be able to serve the customers
21 with the generation.
22 MR. GIRARD: Thank you.
23 HEARING OFFICER JACKSON: At this time,
24 would you like to admit your pre-filed testimony
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1 into the record?
2 MS. JURACEK: Yes.
3 HEARING OFFICER JACKSON: It's so
4 admitted. It will be marked by the court
5 reporter. Thank you.
6 This afternoon's schedule will be the
7 same as I mentioned earlier, with one change.
8 When we come back after lunch, the first
9 presentation will be by the Illinois
10 Environmental Regulatory Group. There are some
11 travel issues that need to be met with them. So
12 their presentation will begin first. Otherwise,
13 it's as I had mentioned earlier. We'll reconvene
14 exactly at 1:30. We will try to start exactly at
15 that time. Thank you.
16 (Whereupon, further proceedings
17 were adjourned pursuant to the
18 lunch break and reconvened
19 as follows.)
20 HEARING OFFICER JACKSON: We're going to
21 get started here. We still have five presenters
22 to get through this afternoon. We want to get
23 started as soon as possible. First to present
24 this afternoon is Deirdre Hirner with the
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1 Illinois Environmental Regulatory Group. If you
2 want get started whatever you're ready.
3 MS. HIRNER: Thank you very much. My name
4 is Deirdre Hirner. I am executive director of
5 the Environmental Regulatory Group, which is an
6 affiliate organization of the Illinois State
7 Chamber of Commerce. Madam Chairman and members
8 of the Board, I do appreciate having the
9 opportunity to talk to you about this issue
10 today.
11 What I'm going to present right now
12 is a summary of my pre-filed testimony which we
13 have submitted for the record. We at IERG do
14 not, by any means, hold ourselves out to be
15 experts in the area of peaker plants. However,
16 we do recognize the need for a reliable,
17 dependable, and safe source of electric and
18 thermal power to allow business, particularly the
19 manufacturing sector, to conduct normal
20 operations and to equally, if not more
21 importantly, assure the safety of process
22 operations.
23 Because some of our members do and/or
24 will own and operate peaker units and because
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1 many of our members may well, at some point, have
2 to rely on peaker units to provide energy at
3 critical times, IERG has a strong interest in
4 assuring that peaker plants are able to locate
5 and to operate in the state of Illinois.
6 On review of the Governor's request
7 to the Board to make recommendations whether
8 additional requirements need be imposed on peaker
9 plants to safeguard the environment, the members
10 of IERG would respectfully request that the Board
11 keep the following issues in mind: First, that
12 the scope of the hearings be limited to natural
13 gas-fired peak-load electrical generating plants,
14 and by that we mean those specifically
15 constructed to supply only electrical power and
16 only in times of peak demand, and when making
17 recommendations regarding such units, to bear in
18 mind that with deregulation, utilities no longer
19 will have the obligation to provide adequate
20 power in return for a guaranteed rate of return.
21 Peaker plants will be necessary to
22 ensure a safe and reliable electricity supply at
23 critical times, and each obstacle or cost added
24 to constructing peakers will, at best, be
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1 reflected in the cost of electricity and, at
2 worst, will deter any decision to construct, thus
3 leaving Illinois without necessary electric
4 capacity. We believe that would be an
5 unacceptable outcome.
6 Second, power generating facilities
7 operate within locational constraints. While
8 IERG maintains, and as reflected in my first
9 point, that cogeneration and emergency generators
10 are not within the purview of these hearings, we
11 do want the record to reflect the unique
12 locational constraints of these units. The
13 electricity generating facility must be located
14 on or near the site that will be receiving the
15 energy output. Regarding siting matters where
16 peaker plants that are the subject of these
17 hearings, it is important that local governments
18 are prepared to address siting within the body of
19 law and regulations that is available to them.
20 Third, based on IERG members'
21 knowledge of and experience with not only
22 Illinois' current air quality statutes and
23 regulations, but also additional federal and
24 proposed air quality statutes and regulations, we
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1 unequivocally believe there is no need to more
2 strictly regulate peaker plants. Peaker plants,
3 like any other facility, must, if they trigger
4 regulatory thresholds, demonstrate they meet
5 minimum performance levels by complying, for
6 example, with new source performance standards.
7 Units must demonstrate that prescribed emission
8 levels be met. If the facility cannot meet these
9 levels, it's back to the drawing board for the
10 facility.
11 Similarly, peaker plants, like other
12 facilities, that trigger PSD must undergo
13 rigorous PSD review and analysis to assure that
14 air quality in a given area is not adversely
15 affected. Peakers triggering PSD will be
16 required to implement BACT and the terms will be
17 placed in a federally enforceable permit prior to
18 construction.
19 I would further point out that those
20 facilities that do not have the capacity to
21 trigger PSD review and as you and I heard EPA's
22 testimony yesterday, that most peakers will not
23 trigger PSD review, are by no means without
24 limitations. Restrictions will be placed in
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1 their permits to assure the facility does not
2 exceed the protective upper limit on emissions.
3 Restrictions can include such things
4 as operating limits, allowing the facility to
5 operate only X number of hours per year, or to
6 produce only Y kilowatts of electricity. Permits
7 can and usually do contain monitoring and testing
8 provisions to assure that emission caps are not
9 exceeded.
10 Finally, as it relates to the current
11 state of air regulation, I will reference another
12 proceeding currently before the Board, that
13 proceeding to meet the requirements to
14 demonstrate attainment of the one-hour standard
15 and complying with the NOx SIP call. We heard in
16 IEPA's testimony yesterday that NOx is the
17 primary pollutant of concern associated with
18 peakers. All peakers will be subject to a NOx
19 cap and trade system. New peaker plants will
20 begin operation with an allocation from a new
21 source set aside of existing NOx emissions.
22 If additional allocations are
23 necessary to operate, these will have to be
24 purchased from previously permitted facilities.
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1 The result is a zero sum effect. Fears that
2 additional peaker plants will increase the total
3 tonnage of NOx in the overall region are
4 unfounded.
5 In conclusion, I will note that in
6 our businesses and in our homes, we expect the
7 lights to come on when we flip the switch.
8 Recent newspaper accounts that I have read
9 indicate that that expectation may not hold true
10 in some areas on the west coast, and some of the
11 factors impacting that situation are very similar
12 to those before the Board in this proceeding.
13 Therefore, the members of IERG would
14 urge the Board to consider the need for and
15 benefits of a safe and reliable supply of
16 electric power along with the strength of current
17 regulatory programs and those coming down the
18 pipe before it considers the need for any
19 additional regulation, and that concludes my
20 remarks. I'll be pleased to answer any
21 questions.
22 HEARING OFFICER JACKSON: Thank you. The
23 Board can proceed with any questions. Okay.
24 MS. HIRNER: Thank you.
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1 HEARING OFFICER JACKSON: Richard Bulley
2 from MAIN is our next presenter.
3 I just want to note for the record
4 that a couple of individuals have asked me about
5 presenting testimony today. Those individuals
6 had not pre-filed testimony for the proceeding
7 today, and I just want to reiterate that as
8 stated in my hearing officer order of July 13th,
9 any presenters for the hearing yesterday or today
10 were required to pre-file their testimony.
11 Therefore, we're not going to be able to accept
12 any testimony from persons who did not pre-file
13 their testimony prior to today.
14 However, that certainly does not mean
15 that we are not interested in the information you
16 have to give us. There are five other days of
17 hearings scheduled, both in the northern part of
18 the state and in Springfield, and we invite you
19 to attend any and all of those hearings and make
20 your presentations there. As well, we are
21 accepting written public comments until November
22 6th, and you are also welcomed to file your
23 comments with the Board in the form of written
24 comments.
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1 At this point, we'll proceed with
2 Richard Bulley from Mid-America Interconnected
3 Network. Mr. Bulley, when you're ready.
4 MR. BULLEY: Thank you. As you said, my
5 name is Richard Bulley. I'm executive director
6 of MAIN, and I have a double E degree from the
7 Illinois Institute of Technology and have spent
8 more than 40 years in the electrical utility
9 industry, mostly in the area of generation and
10 transmission system planning and system
11 operations.
12 MAIN is one of ten regional
13 reliability councils which comprise the North
14 American Electric Reliability Council, NERC, and
15 collectively those 11 agencies coordinate the
16 planning and operation of the
17 North American electric system, which includes
18 generation and high voltage transmission.
19 MAIN encompasses more than just
20 Illinois. It includes eastern Wisconsin, eastern
21 Missouri, eastern Iowa, a portion of Minnesota,
22 and the upper peninsula of Michigan. Illinois or
23 even MAIN, for that matter, cannot be evaluated
24 individually because they're all part of an
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1 interconnected system of transmission and
2 generation which stretches from the Rocky
3 Mountains to the Atlantic Ocean. For this
4 reason, NERC and its ten reliability counsels
5 work together to develop standards for planning
6 and operation of the North American electric
7 system.
8 One area of this activity is
9 evaluation of resource adequacy. We had some
10 questions about that this morning, and I think
11 these comments will come directly to that. MAIN
12 performs detailed annual studies to determine the
13 amount of reserve that's required for reliability
14 in the MAIN region. We do the studies every
15 year. The reserve requirement varies slightly
16 depending upon the particular group of units that
17 we're looking at, but over the past several years
18 and as we look to the future, that range is in
19 the 17 to 20 percent range, and this number has
20 been approved by the board of directors.
21 MAIN then takes that -- takes the
22 projected loads and capacity of its member
23 companies and compares the reserves to that -- to
24 the 17 to 20 percent number. Based on these
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1 studies, we've determined that for the summer of
2 2000, the projected reserve margin was 18
3 percent. This is within the 17 to 20 percent
4 range requested by or determined by the studies.
5 However, I'd like to point out that
6 if there had been no IPPs in the capacity that
7 was considered for serving the main loads, that
8 margin would have been only 7.4 percent, clearly
9 well below what is required for reliable electric
10 service.
11 Looking at it another way, if you
12 start with today's electric capacity, including
13 the IPPs that are already there, but excluding
14 IPPs which are planned for the future, our
15 projected reserve margins for the next three
16 years are 13 percent, 11 percent, and ten percent
17 respectively, and these numbers also are below,
18 significantly below, the reserve margin required
19 for adequate resources. That concludes my
20 testimony.
21 HEARING OFFICER JACKSON: Thank you, Mr. Bulley.
22 Any questions from the Board?
23 MS. KEZELIS: I have one quick one for
24 clarification purposes only, Mr. Bulley.
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1 Would you explain the standard that
2 is used in the industry that one day is ten years
3 loss, and is that base peak or is that loss of
4 production capacity? Simply amplify what that
5 is.
6 MR. BULLEY: Okay. Let's see. I'm start
7 back before we ever had computers and people just
8 kind of judged on what was an adequate amount of
9 reserving margin to carry based on the generating
10 units that they had, and then as computers became
11 available and programs where they could look at
12 this analytically, they started making
13 calculations, and the calculation that kind of
14 came close to what everybody was using anyway and
15 to provide the right answer was the criterion of
16 one day in ten years, which means that in a
17 ten-year period, one of -- there has to be one
18 day on a probability basis, one day which the
19 load is going to exceed the available resources.
20 The one day in ten years is arbitrary, but it's
21 based on historic practice and results of
22 historic practice which have been favorable.
23 MS. KEZELIS: Thank you.
24 MR. RAO: I also have a clarification
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1 question.
2 The minimum reserve capacity that you
3 mentioned, is that a reserve in addition to
4 baseload or is that, you know, with reference to
5 the peak loads?
6 MR. BULLEY: I should have clarified
7 that. Reserve margin is the amount of reserve
8 left over. I'll do it another way. The capacity
9 that you have available to serve the load minus
10 the load that you expect, that's the reserve
11 margin, and you express that in percent by
12 dividing it by the load.
13 So if you have in MAIN roughly 55,000
14 megawatts of generation and 50,000 megawatts of
15 load, the reserve -- I didn't think about this
16 ahead of time. This isn't going to come out
17 right, but if you had 55,000 megawatts of
18 generation and 50,000 megawatts of load, you
19 would have 5,000 megawatts reserve, and that
20 translates into a ten percent reserve margin,
21 5,000 divided by 50,000.
22 MR. RAO: Thank you.
23 MS. McFAWN: And when you talk about load,
24 you are including the peak demand as well as the
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1 base demand?
2 MR. BULLEY: Yes. This is the total
3 demand. This is the total demand, I should say,
4 excluding contract interruptible customers.
5 MS. McFAWN: How accurate has your
6 forecasting been?
7 MR. BULLEY: I'll punt on this. Our
8 members do the actual forecasting, and we compile
9 that to use our -- do our studies in. The
10 forecasting is pretty much -- accuracy is pretty
11 much dependent upon the weather. Weather -- as
12 Arlene Juracek said earlier this morning,
13 air-conditioning accounts for about 40 percent of
14 the load on a hot summer day. So if it doesn't
15 get hot, then the load, it doesn't materialize as
16 well. So on an average -- I don't have any
17 specifics on accuracy, but on an average we have
18 fairly good load estimates.
19 MS. McFAWN: Would you explain to me a
20 little bit more about MAIN? You say your
21 members. So are you an independent organization
22 funded by the members or how do you operate?
23 MR. BULLEY: We are an organization funded
24 by our members. Our members are electric
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1 utilities and other entities with interests in
2 the region which I defined as -- I defined before
3 as Illinois, eastern Wisconsin, eastern Iowa,
4 eastern Missouri, the upper peninsula, and a
5 small part of Minnesota.
6 It's not only electric utilities, but
7 it's independent power producers who operate in
8 that area and market. It includes municipal
9 systems and state agency municipals.
10 MS. McFAWN: How many members do you
11 have?
12 MR. BULLEY: Forty-five.
13 MS. McFAWN: When you talk about the
14 reserves and the margins, you were talking across
15 the whole territory of your members of MAIN or
16 just Illinois?
17 MR. BULLEY: Yes, MAIN. We don't
18 segregate -- we don't separate Illinois out of
19 that.
20 MS. McFAWN: Is there any reason for that
21 particular geographical area? Is that a
22 transmission area or is it just random?
23 MR. BULLEY: I don't want to say it's
24 random, but it's somewhat based on transmission
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1 restraints. It's what was formed back in 1968
2 when all the other regions were formed and
3 boundaries were defined. Prior to the formation
4 of NERC in 1968, MAIN was formed in 1964, and
5 they had an area that reached out.
6 I've been to the Twin Cities area and
7 over further east into Ohio and Michigan, and
8 when the other -- after the northeast blackout of
9 1965, the other regions -- other areas of the
10 country set up regions. Some of those took that,
11 some of the territory that had been part of the
12 MAIN region. So there are political reasons,
13 there are electrical reasons that determine the
14 boundaries.
15 MS. McFAWN: Thank you.
16 HEARING OFFICER JACKSON: Are there any
17 other questions? Okay. Thank you, Mr. Bulley.
18 Our next presentation is from Midwest
19 Independent Power Suppliers. I believe Freddi
20 Greenberg is here to testify.
21 MS. GREENBERG: Good afternoon to all of
22 you.
23 HEARING OFFICER JACKSON: If you have
24 others that may be assisting you in your
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1 presentation, just make sure they're identified
2 for the record.
3 MS. GREENBERG: I certainly will do that.
4 My name is Freddi Greenberg, and I am the
5 executive director and general counsel of the
6 Midwest Independent Power Suppliers or, as we
7 call it MWIPS, M-W-I-P-S, and I have with me
8 today members of -- representatives of two of my
9 member companies. On my right is Wendy Lessig of
10 Dynagy, and on my left is Steve Brick of
11 PG & E's National Energy Group.
12 We're delighted to have the chance to
13 be here to talk with you today, and we're also
14 very pleased to see that so many of the
15 presenters who have spoken to you in these last
16 two days have positions that are common with
17 ours, and that will make our presentation
18 actually quite a bit shorter than it might
19 otherwise have been, but we do have pre-filed
20 testimony.
21 Attached to our pre-filed, for your
22 information, is a list of members of MWIPS, and I
23 just want to note that any time we present
24 comments probably, those comments represent the
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1 opinions of the group, but not necessarily of any
2 individual member company. MWIPS is an
3 organization of leading and competitive power
4 suppliers within an interest in participating in
5 the competitive electric markets in Illinois and
6 elsewhere in the Midwest.
7 Our members are committed to
8 providing reliable electricity at a reasonable
9 cost. You've heard presenters in the last two
10 days talk about the need for electric -- for
11 electric capacity in this area. Commonwealth
12 Edison has talked about the extent to which
13 capacity within the control area of their system
14 is beneficial to the system itself and to the
15 reliability of the system, and we just heard Mr.
16 Bulley talk about shrinking reserve margins.
17 We've also all heard about the price
18 spikes that occurred in the wholesale electric
19 markets in the summer of 1998 and all of these
20 are indications that there's a need for
21 generating capacity in this immediate area.
22 MWIPS' members and other members of our industry
23 have stepped up to the plate to meet -- to meet
24 that need.
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1 Our members have committed to invest
2 significant amounts of capital within Illinois to
3 comply with all the applicable laws and
4 regulations and to build a generation that's
5 needed in the short-term in the form of peaking
6 plants.
7 Many of these peaking plants, in
8 fact, are to be located in areas designated by
9 Commonwealth Edison as areas where this new
10 generation would be most beneficial to the
11 existing system, and this also will minimize the
12 need for additional transmission construction
13 which will further benefit the environment.
14 I'm not going to -- and I just want
15 to go back for one moment. I forgot to mention
16 that Indeck is also a member of MWIPS. I'm not
17 going to go into the definition of peaker plant.
18 I think that was more than amply covered by the
19 speakers before us, but I would like to just
20 mention one point about peaker plants. People
21 often refer to these plants as unregulated, and
22 to some extent, we take issue with that
23 designation.
24 These plants are unregulated only in
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1 one aspect, and that is that they are not rate
2 regulated the way that a utility-owned generating
3 plant is regulated. These plants are not
4 included in a utility's reg base, but in all
5 other aspects, they are subject to a multitude of
6 regulations, and we certainly heard a great deal
7 about that yesterday from the speakers from the
8 EPA, and there are many other laws
9 and regulations that apply to these plants, but
10 this being outside of the rate base is the
11 characteristic that distinguishes these plants
12 from utility-owned plants.
13 One benefit to the rate pay of this
14 unregulated unreg-based feature of the plants is
15 that the developer of the peaker plant bears all
16 the risks associated with the plant's
17 construction and all the financial risk
18 associated with the plant. The proposed peaker
19 plants, if constructed, will enhance reliability
20 of electric services to Illinois and to the
21 Midwest by both increasing the generating
22 capacity and by providing voltage support and the
23 other system benefits mentioned by ComEd.
24 In addition, competition will be
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1 increased in the wholesale market, which will
2 further reduce the probability of price spikes in
3 that market in the Midwest, and all of these
4 results are what the legislature envisioned that
5 it enacted its customer choice and reg relief act
6 of 1997.
7 Against this background, I'd just
8 like to very briefly go through the various
9 questions that were asked when this proceeding
10 was noticed. The first question, do peakers need
11 to be regulated more strictly than the current
12 air quality statutes and regulations provided, I
13 think the answer to that that was supported by
14 the various speakers so far is definitely not.
15 There's a strict set of regulations applicable to
16 these plants, and the peakers do not pose a
17 threat to air quality, to human health, or to the
18 environment.
19 In addition, the peakers use
20 state-of-the-art technology, and I'm advised,
21 although I am personally not an environmental
22 expert, that a typical simple cycle plant that
23 might be permitted as a minor source would, even
24 if BACT, B-A-C-T, review were required, meet that
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1 requirement and not require any addtional
2 controls beyond what the plant already has. So
3 the air impact is not a problem at all.
4 The second question was whether the
5 peaker plants pose a unique threat or a greater
6 threat than other types of state-regulated
7 facilities, and, again, I think the presentations
8 that were given, both yesterday by the EPA and
9 this morning, particularly by Mr. Erjavec,
10 clearly state that that's not the case with
11 respect to any of the types of pollution
12 mentioned, and the groundwater issue will, of
13 course, be addressed further by the Governor's
14 Task Force.
15 I did want to mention the question of
16 noise because it seems to have been a theme.
17 Although, I understand that it's not a focus
18 beyond any of the other points, and that is
19 simply that the developers who work for my member
20 companies have indicated to me over and over
21 again when we've discussed this that although air
22 quality is not part of the state permitting
23 process, it is very much in the mind of the
24 developer and in the forefront of the developer's
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1 planning as they design the plant.
2 The developer typically works with
3 the community to address the concerns that are
4 raised with respect to noise, and I think the
5 statement we heard yesterday that there have been
6 no noise complaints to the EPA about peakers is
7 really very telling because what it says to me is
8 that, in fact, these developers have succeeded in
9 addressing the concerns or we certainly would
10 have complaints because people tend to be vocal
11 about their concerns with respect to these
12 plants.
13 I wanted to just share with you one
14 anecdote that I did hear from a member when a
15 group of local officials was visiting one of the
16 peaker plants. The officials came to the plant
17 and started their tour, and at one point,
18 somebody asked when is this plant going to start
19 up so we can hear it, and the answer was, it's
20 been operating since you arrived here.
21 To further illustrate the veracity of
22 that last anecdote, I would like to reiterate the
23 invitation that was offered to all of you and to
24 any of your staff by Mr. Erjavec this morning.
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1 If there is an interest in visiting a peaker
2 plant and looking and particularly hearing what
3 it sounds like, I have more than one member of my
4 group who would be pleased to provide that
5 opportunity, and please do feel free to call on
6 me if that's something that would be of interest.
7 I'd like to turn now to your next
8 question which is, should new or expanding peaker
9 plants be subject to siting requirements beyond
10 the applicable local zoning requirements, and our
11 answer to that, again, is no. Illinois should be
12 very cautious about imposing stricter than
13 necessary siting requirements in order to avoid
14 the very situation that we're seeing in
15 California.
16 We don't want to create a situation
17 that would risk a power shortage and the
18 accompanying increase in the cost of wholesale
19 power as well as possible reliability problems.
20 California has had great delay in plant siting
21 and is now seeking ways to streamline and
22 expedite the process. We've heard from the
23 experts in the EPA that the current siting
24 process addresses the various needs and
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1 requirements for these plants, and our
2 recommendation is that anything stricter would be
3 detrimental and would have no further value.
4 The next question you asked was
5 whether peakers should be more strictly
6 regulated, should additional regulations or
7 restrictions apply to currently -- if they're
8 more strictly regulated, excuse me, should those
9 additional restrictions apply to the currently
10 permitted plants or only to new facilities and
11 expansions.
12 In that regard, we strongly feel that
13 any new more strict requirement or any additional
14 or different requirement should not apply to the
15 plants that are currently permitted, but that new
16 facilities, of course, should adhere to the then
17 existing requirements, and a facility expansion
18 would, of course, have to adhere to the
19 requirements existing when that facility
20 expansion applies for its permits, and, of
21 course, at that time, there would be the
22 opportunity for public input just as there is
23 initially when the facility is first sited.
24 Your next question was, how do other
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1 states regulate or restrict the peaker plants,
2 and we talked a little bit about that in our
3 written testimony, and we've had some other
4 testimony today as well. I will not go further
5 than to say that a number of states handle things
6 the way that Illinois does. There are the state
7 permitting process and a local process, and a
8 smaller number of states have adopted a process
9 for siting and permitting the peaker facility or
10 other generating facilities that's administered
11 in one stop in one place or a combined hearing at
12 the state level.
13 Oftentimes, those proceedings are a
14 carryover from the permitting of utility-owned
15 generation, and in Illinois that's not the case.
16 California is an example of a state that's
17 currently experiencing the consequences of a very
18 bureaucratic and time-consuming process for
19 siting plants. In California, a plant of 50
20 megawatts or more must be approved by the
21 California Energy Commission.
22 Many proposals there have taken more
23 than a year to get through this process, and
24 California has not been able to add the
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1 generation that it needs at a rate which reflects
2 its growth.
3 Currently, there's more than $10
4 billion worth of new generation in California
5 that remains in the queue to be permanent.
6 According to recent statistics presented to the
7 California governor, between 1996 and 1999 in
8 California, 672 megawatts of new generation was
9 added to the system. Demand during that period
10 jumped more than 5500 megawatts. So you can see
11 there's a great disparity there.
12 In response to receiving those
13 statistics, the California governor issued an
14 executive order earlier this month directing the
15 state agencies involved in licensing electric
16 power plants to review the applications and
17 respond to them within 100 days of receiving a
18 complete application. So they are taking steps
19 to reduce the difficulties in getting the plants
20 permitted.
21 In conclusion, you need to keep in
22 mind that an emergent plant developer does not
23 typically wish to build and operate a plant where
24 the plant is not going to be accepted by the
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1 community. They look for a place that's
2 appropriate, appropriate both in terms of the
3 electric transmission and the gas supply and the
4 community and work with the community to achieve
5 community support and to be a good member of the
6 community.
7 Communities which welcome the peaker
8 plants and other generating plants recognize the
9 benefits and positive impacts of this development
10 on their communities. These might include new
11 jobs, increased tax base, and possible attraction
12 of additional economic development. There's also
13 very little strain on the local resources when
14 these plants are sited. They don't use schools,
15 for example. They give a lot to the community
16 and take little. A community that accepts the
17 peaker plant understands that a peaker has these
18 relatively few impacts and that it provides the
19 necessary service to the community and benefits
20 the public welfare by contributing to the
21 electric supply of the community.
22 MWIPS appreciates the opportunity to
23 make these comments, and we would be pleased to
24 respond to any additional questions you might
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1 have, either today or if there are any questions
2 which we might answer as you continue in your
3 inquiry. Thank you very much for your
4 attention.
5 HEARING OFFICER JACKSON: Thank you.
6 Does the Board have any questions.
7 MR. RAO: Ms. Greenberg, in your testimony,
8 you have some power demands projections on a
9 regional basis. That's page two of your
10 pre-filed testimony.
11 MS. GREENBERG: Yes.
12 MR. RAO: Do you have any, you know,
13 perhaps, data for specifically Illinois? You
14 know, if you don't have it right now, would you,
15 you know, have access to such data?
16 MS. GREENBERG: I have a great reservoir
17 of resources among my member companies, and I
18 will contact them about that, and I'm quite sure
19 we'll be able to come up with something for you.
20 MR. RAO: That would be helpful to have
21 that information in the record.
22 MS. GREENBERG: So it's specific with
23 respect to Illinois?
24 MR. RAO: Yes.
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1 MS. GREENBERG: We will definitely look
2 into that and get back to you.
3 MR. RAO: Thank you.
4 HEARING OFFICER JACKSON: Anything else?
5 Thank you, Ms. Greenberg.
6 MS. GREENBERG: May I move that my
7 testimony be admitted?
8 HEARING OFFICER JACKSON: Yes, please.
9 MS. GREENBERG: Thank you.
10 HEARING OFFICER JACKSON: It's so
11 admitted.
12 Our next presenter today is Ameren,
13 and we have Mike Kearney. I do want to say
14 although the Board may not have some questions
15 specifically for the presenters today, if
16 questions do arise in the future, those questions
17 will be provided to the presenters on the Board's
18 website. Whenever you are ready.
19 MR. KEARNEY: Good afternoon. My name is
20 Mike Kearney, and I'm manager of economic
21 development for the Ameren Corporation, and I
22 want to express my appreciation for the
23 opportunity to summarize my pre-filed testimony
24 for the record. I'd also like to introduce
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1 Richard Smith, who is our manager of generation
2 development for our nonregulated generation
3 company, and he'll serve as a resource for me
4 should there be questions from the Board.
5 As I mentioned, I'm manager of
6 economic development, and Ameren Corporation was
7 formed in 1998 with the merger of the Central
8 Illinois Public Service Company and Union
9 Electric Company, both electric and natural gas
10 utilities operating within the state of
11 Illinois. Ameren currently serves 1.8 million
12 electric customers in Illinois and in Missouri
13 under the utility company's of AmerenCIPS and
14 AmerenUE. In 2000, the electric generation
15 activities of AmerenCIPS were transferred to a
16 separate generating company, Ameren Energy
17 Generating Company, which remains part of the
18 Ameren family of companies.
19 Ameren Energy Generating Company is
20 currently developing a number of generating
21 facilities within the state of Illinois and to
22 date, most of these have been in central and
23 southern Illinois. I'm a resident of Missouri,
24 but dedicate at least 70 percent of my time
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1 working in the state of Illinois. I'm a native
2 of Westchester, Illinois, up near Chicago, and I
3 hold a bachelor's degree and a master's degree in
4 urban and regional planning. I've worked with
5 the utility industry since 1986 when I joined
6 Central Illinois Public Service Company as an
7 economic development representative over in
8 eastern Illinois, and through this function, I
9 work with a number of local regional community
10 development organizations to encourage business
11 development and economic growth.
12 In my current position, I also work
13 with the Illinois communities to promote economic
14 development throughout the state. Toward this
15 end, I've been involved in the identification of
16 suitable sites for new generation facilities and
17 have been a liaison between not only our company
18 and the development officials in a number of
19 communities, but also served as a resource for
20 affected communities as they pursued other units
21 of combustion turbine units throughout our
22 region.
23 I've acted as a technical resource to
24 city officials regarding these peaking facilities
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1 and have attempted to advise them on
2 infrastructure issues, tax issues, and other
3 development-related issues as they've tried to
4 attract this type of development to their
5 communities. Such communities include Neoga,
6 Beecher City, and several others in southern
7 Illinois.
8 I think that for those who have
9 landed in Illinois, it's represented a win-win
10 relationship, not only for the development
11 company, but also for the community itself, and I
12 think they've been widely received and well
13 received in this processes.
14 I've also been involved with a number
15 of our own generating projects, and the
16 communities where Ameren Energy Generating
17 Company has sited new generation include Gibson
18 City and Ford County, Patoka, and Pinckneyville,
19 and I think in each case, the communities
20 recognize the important role that generation
21 infrastructure plays, not only for the future
22 development of Illinois, but the entire Midwest.
23 These communities have been receptive to Ameren's
24 proposals when it's become apparent that Ameren
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1 would be a good neighbor, is committed to
2 managing the public and environmental resources
3 in a prudent manner, and was sensitive to the
4 neighboring businesses and residents around these
5 particular facilities. Officials in these
6 communities have strongly endorsed these projects
7 because of the benefits the development has
8 brought to their citizens. Gibson City and other
9 officials have gone on record to commend Ameren's
10 generation development approach.
11 Because of their cooperation over the
12 past several months, Ameren has been able to add
13 more than 400 megawatts of electric generating
14 capacity within the state of Illinois and an
15 additional 560 megawatts of additional
16 Illinois-based capacity are expected to come
17 on-line during the first and second quarters of
18 2001.
19 This generation not only helps to
20 improve the reliability of electric consumers
21 within the state of Illinois, but, again, through
22 the Midwest. All of this development has been
23 accomplished by working closely with officials in
24 preplanning and with the citizens at a community
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1 level. Ameren believes that the current
2 regulations governing the development of new
3 generation facilities within the state of
4 Illinois are appropriate and provide each
5 stakeholder an opportunity to become part of the
6 process.
7 Ameren does not believe that
8 additional regulation of these facilities is
9 warranted nor needed at this time. Again, I'd
10 like to thank you for the opportunity and respond
11 to any questions you may have about our
12 particular development projects. At the same
13 time, I'd like to also extend an invitation to
14 the Board to visit any one of our facilities
15 throughout central and southern Illinois to see
16 firsthand not only the magnitude of the project,
17 but how you can work with community officials and
18 let the community process work.
19 HEARING OFFICER JACKSON: Thank you, Mr. Kearney.
20 Does the Board have any questions?
21 DR. FLEMAL: Mr. Kearney, the facilities
22 that you mentioned as your new facilities,
23 Pinckneyville and Gibson City, are those peaking
24 units or baseload units?
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1 MR. KEARNEY: I think it would be a fair
2 assessment to say they're a part of the
3 baseloading units.
4 DR. FLEMAL: Have you developed peaker
5 units?
6 MR. KEARNEY: Okay. Rick mentioned that
7 we should consider them a peaking unit.
8 DR. FLEMAL: You should consider them?
9 MR. SMITH: Yes.
10 DR. FLEMAL: I gather, though, the way you
11 addressed my question, that there's -- these are
12 made somewhat different than the peaker units
13 that we've been talking about? These are
14 gas-fired --
15 MR. KEARNEY: These are gas-fired. I
16 think they're consistent with what you've been
17 addressing in your Board.
18 DR. FLEMAL: All right.
19 MR. KEARNEY: I think I confused your
20 question with the fact that it's a part of our
21 reserve margin.
22 DR. FLEMAL: And then they do operate on a
23 relatively limited number of hours --
24 MR. KEARNEY: Right.
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1 DR. FLEMAL: -- per year and meet that and
2 carry your typical peakers as well?
3 MR. KEARNEY: Right.
4 DR. FLEMAL: Ameren says, though, it does
5 provide baseload power as its principal
6 production. I'm not sure I'm grasping the words
7 correctly.
8 You would be considered a company
9 whose major provision of power is the baseload
10 area, would you not?
11 MR. KEARNEY: I'm not sure if I understand
12 your question. The AmerenCIPS generating
13 facilities were moved over into the Ameren Energy
14 Generating Company.
15 DR. FLEMAL: Yes.
16 MR. KEARNEY: And we had a contract to
17 provide purchase power from that company for a
18 period of time.
19 DR. FLEMAL: I guess my understanding of
20 the structure here is a bit fuzzy.
21 Where I'm really trying to go with
22 this line of questioning is to develop some
23 understanding for myself and for the record. We
24 have seen, I think, that the principal proponents
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1 of peaker development have been people who have
2 come from outside the long-established electrical
3 generating establishment in this state promoted
4 by the nonregulation, and one of the questions
5 we've had is where have the -- what role have the
6 historic power generators in the state played in
7 the peaker plant development.
8 Are some of the old-line utilities
9 actively pursuing peakers themselves or relying
10 largely on the more recent enterers entering into
11 the system?
12 MR. KEARNEY: That can be a complicated
13 question. I think it's fair to say that
14 obviously the old-line historic utilities in
15 Illinois are actively involved with generation,
16 but it may come through a different corporate
17 structure than what we've experienced in the
18 past. AmerenCIPS and Ameren family of companies
19 are very proud of their reputation and
20 relationship with the communities we've served.
21 So I think that based on that
22 historic record, that historic experience working
23 in Illinois, being an Illinois-based company has
24 certainly played into this process, and we've
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1 gone into the communities very upfront with
2 preplanning efforts, informational efforts,
3 worked with community leadership that we have a
4 longstanding relationship with and trying to
5 address their development issues.
6 So I think it's fair to say that the
7 development process works locally, and we try to
8 use that relationship that we foster with these
9 communities to advance projects of this nature.
10 MR. MELAS: I have a follow up on what Ron
11 was just asking.
12 Do you basically depend on the
13 traditional coal-fired steam generating plants
14 for the bulk of the power that you generate as
15 opposed to gas-fired turbines?
16 MR. KEARNEY: Are you asking if AmerenCIPS
17 does, AmerenCIPS? Yes. We have coal-fired
18 generation.
19 MR. MELAS: And from those generating
20 plants use sort of the bulk of your needs?
21 MR. KEARNEY: I'd say yes.
22 MR. MELAS: When it comes to this peak
23 demand, a 90-degree summer day down there in
24 Springfield, where do you -- where do you turn to
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1 for additional power that you need on a
2 short-term basis, through your own resources or
3 do you buy them from an outside supplier?
4 MR. KEARNEY: I think that's based on the
5 economics of the opportunity, but we have
6 sufficient capacity to try to meet all our load
7 demand internally.
8 MR. SMITH: These new peakers would also
9 help to meet that --
10 MR. MELAS: Pardon me?
11 MR. SMITH: And the new peaking plants
12 that he mentioned would help meet that demand at
13 the time of peak.
14 MR. MELAS: So you are building some new
15 peaker plants of the type that we've been talking
16 about for the last couple of days?
17 MR. SMITH: Yes.
18 MR. MELAS: Have you built anything -- do
19 you have any plans to come into the northeastern
20 part of the state?
21 MR. KEARNEY: I think it's fair to say
22 that there's certainly a market opportunity in
23 the Chicago area, and while we're looking at a
24 number of options, it would be premature to say
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1 that we have advanced that in any way.
2 MR. MELAS: But from a regulatory
3 standpoint, it is possible for you to do that, to
4 serve the demand in this area?
5 MR. KEARNEY: Yes, it is.
6 MS. MANNING: I'm hoping to clarify this
7 for the record. We've heard the terms
8 competitive power supplier, wholesale supplier,
9 and retail supplier.
10 Is it fair to compare that analysis
11 or does a wholesale supplier that has -- does
12 building within your own corporate structure even
13 have trades?
14 MR. KEARNEY: I think it's fair to say
15 that the entire Ameren family of companies is
16 involved not only in wholesale, but also retail
17 opportunities that deregulation offers us.
18 Ameren Energy Generating Company is just one part
19 of that corporate structure.
20 MR. SMITH: Just a little bit more
21 clarification.
22 Ameren Energy Generating Company is a
23 nonregulated company at this point. It's not
24 under the traditional regulating utility
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1 structure anymore. So we are functioning as an
2 IPP or as an independent power producer at this
3 point.
4 MS. MANNING: And for purposes of the
5 record, too, I'm just going to clarify. We've
6 been using the word nonregulated in different
7 contexts, either the old utility context or the
8 environmental context, and I think when you meant
9 nonregulated, of course, you meant it in terms of
10 the old utility regulation than the regular
11 regulation; is that correct?
12 MR. KEARNEY: That's correct.
13 MS. KEZELIS: The Ameren family of
14 companies has several peakers of the sort that we
15 are discussing in these proceedings; is that
16 correct?
17 MR. KEARNEY: That is correct.
18 MS. KEZELIS: All right. And those
19 peakers as the IEPA permits operate; is that
20 correct?
21 MR. KEARNEY: That is correct.
22 MS. KEZELIS: If you know the answer to
23 this question, great. If not, if you could
24 submit it to us in writing. What I'm interested
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1 in knowing is whether your IEPA permit regulates
2 or restricts the hours of operation.
3 MR. KEARNEY: I'll ask Rick to respond to
4 that.
5 MR. SMITH: The broad answer is yes, there
6 is a limitation, and I prefer to answer in
7 writing as to what the limitation is because I'll
8 probably not get it quite right.
9 MS. KEZELIS: If you would do so, I would
10 be very appreciative.
11 I have another question, and it's a
12 more general one. With respect to page one of
13 your testimony, Mr. Kearney, you indicate that
14 your dealings with communities in central and
15 southern Illinois have been generally successful,
16 and specifically you mentioned the few
17 difficulties that have been encountered have been
18 overcome.
19 Would you expand upon that sentence
20 of yours?
21 MR. KEARNEY: Sure. I think in a lot of
22 ways that when we approach the city, obviously
23 there's a number of development issues we have to
24 address, whether that's zoning requirements or
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1 just public information. So, again, the process
2 involves informational meetings open to the
3 public so that we can explain the project, the
4 scope of that, securing the necessary land for
5 this project, and then we typically engage in a
6 developer's agreement with the municipalities so
7 that upfront we respond to issues like water
8 supply, road use for getting facilities in,
9 annexation in some cases, tax issues and others.
10 So each case is, perhaps, unique
11 based on local needs and response to local
12 concerns.
13 MS. KEZELIS: Whichever topics, are those
14 similar to those in our communities up north, at
15 least identified as well?
16 MR. KEARNEY: Sure, and not unique to any
17 other type of development that a community may
18 encounter in central and southern Illinois
19 working through the city regulatory process,
20 engaging in letters of commitment and developer
21 agreements so that each party is fully aware of
22 what their responsibilities are.
23 MS. KEZELIS: Thank you.
24 MS. McFAWN: I'd like to ask a clarifying
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1 question as well.
2 These cities that you site in
3 southern Illinois, were those for peaker plants,
4 and were they done by Ameren Energy Generating
5 Company?
6 MR. KEARNEY: We do site a number of
7 communities, including Gibson City, Petoka,
8 Pinckneyville. Those are the Ameren Energy
9 Generating plants.
10 MS. McFAWN: Those would be the ones in
11 central Illinois?
12 MR. KEARNEY: Right, but I also mentioned
13 in testimony that we've got -- we have a number
14 of other communities that are involved with
15 trying to attract this type of development to
16 their area. There's a number of companies
17 looking for potential development opportunities.
18 In those cases, since we're the local
19 utility, they've turned to us and asked us for
20 resources, information about these units, access
21 to transmission lines, and things like that. So
22 it's been more of a technical advisory role for
23 the communities, just like we do for any type of
24 economic development project as we work with our
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1 allies at the local level.
2 MS. McFAWN: So you were assisting those
3 developers in possibly building peakers?
4 MR. KEARNEY: We don't assist those
5 developers. We respond to the community
6 questions about that type of development.
7 MS. McFAWN: Oh. Thank you.
8 MR. KEARNEY: And they've taken on each
9 of their own local controls, zoning, and water,
10 and things like that.
11 MS. McFAWN: So those would be the
12 communities of --
13 MR. KEARNEY: Neoga and Beecher City, and
14 there's a number of other projects that have
15 looked at our area and would have them move
16 forward.
17 MS. McFAWN: Thank you for explaining
18 those differences.
19 MS. McFAWN: Also, at Gibson City --
20 that's all right. I'm pretty loud.
21 At Gibson City, you said that you
22 added 400 megawatts to available generating
23 capacity?
24 MR. SMITH: Yeah.
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1 MS. McFAWN: Could you explain that to
2 me?
3 MR. SMITH: Sure. Let me clarify
4 briefly. We did actually add to the system this
5 last summer. We commissioned four units at the
6 Pinckneyville site via our aero-derivative simple
7 cycle units. They're each rated roughly 45
8 megawatts. Gibson City we installed to machines
9 that are each rated in the range of 150
10 megawatts. All six units were commissioned
11 within the last several months and have been
12 operating from time to time this summer.
13 The Petoka site that Mr. Kearney
14 mentioned is under construction at this point.
15 We expect to commission two 115 megawatt units
16 there first and second quarter of next year.
17 These are all -- I would classify all of these as
18 peakers under the context of what you're
19 investigating.
20 MS. McFAWN: Thank you.
21 MS. KEZELIS: In the old traditional
22 utility context, there was something known as the
23 useful life of a generating electricity producing
24 plant. That's not a term that's appropriate
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1 anymore in the independent producer context from
2 a rate base perspective, but do these peaker
3 plants have useful lives and can you tell me what
4 they are?
5 MR. SMITH: There certainly is a useful
6 life of this type of equipment from a physical
7 operability viewpoint. What that useful life is
8 will depend upon the mode in which it's operated,
9 the number of hours, the number of starts, the
10 fuel it uses, and so forth.
11 From time to time, equipment failures
12 occur for a variety of reasons which can also
13 shorten the useful life. We aren't really
14 assigning useful lives to these pieces of
15 equipment from an engineering viewpoint at this
16 time.
17 MS. KEZELIS: Thank you.
18 HEARING OFFICER JACKSON: Anyone else?
19 MR. KEARNEY: We'll file this with the
20 clerk.
21 HEARING OFFICER JACKSON: Thank you very
22 much. Your pre-filed testimony will be admitted
23 into the record.
24 MR. KEARNEY: Thank you.
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1 HEARING OFFICER JACKSON: We have one more
2 presenter on our agenda for this afternoon,
3 Richard Trzupek from Huff & Huff Environmental
4 Consultants.
5 MR. TRZUPEK: I'm here today as the air
6 quality manager for Huff & Huff, and although
7 myself and our firm has represented some people
8 peaker plants in their permitting process and
9 testing process, I'm not specifically here
10 representing any one of them, but rather because
11 our concern over the focus of these plants have
12 been under is that in our feeling they represent
13 a positive environmental good for the state, and
14 with the microscope that peakers have been under
15 in the press and through communities, we feel
16 that there may be a lot of misinformation that we
17 can assist the Board in helping to assemble.
18 It's, I think, a view from the
19 trenches that we hope the Board might find
20 useful. My area of expertise is strictly in air
21 pollution, both in permitting these facilities as
22 a consultant and in the days gone by when I
23 actually worked for a living in doing stack
24 testing on these facilities and measuring the
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1 emissions from them, as well as a number of
2 industrial facilities.
3 So I'll limit my remarks strictly to
4 air issues and try to be brief because a lot of
5 the issues that I comment on in my written
6 testimony have been commented on already. I
7 think it's useful to look at the air pollution
8 issues on a macroscopic basis and then come down
9 to the community level because that's -- that's
10 really the areas that EPA addresses in the permit
11 process. How do emissions from these facilities
12 affect the environment as a whole and then what
13 risk and what risk exposures is the community
14 exposed to as a result of their emissions.
15 In the broadest regional view, I
16 think it's useful to look at MAIN as a whole and
17 what is the demand within MAIN because the
18 general theme we can develop here is certainly
19 that demand will be met by some means, and no
20 more electricity will be generated than demand
21 demands.
22 There is a power export issue, but I
23 am convinced through everything I know of the
24 industry and I would hope you would be convinced
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1 that power export is a very minor source of
2 generation demand. If we look at generation
3 within MAIN and assign some peak demand for them,
4 we can look at a certain amount of the capacity
5 that is going to be fulfilled through nuclear
6 power, and I've given you some figures on nuclear
7 power availability. I think that's generally
8 accepted to be the cheapest form of power that
9 provides a great deal of baseload.
10 After that, if you look within MAIN
11 and you look within Illinois, the next most
12 popular option is coal. So the availability of
13 gas-fired units, which without having any --
14 doing any disrespect to coal are unquestionably
15 far apart cleaner than coal-fired units. It
16 simply means to MAIN and to Illinois that demand
17 can be met if those units are dispatched in a
18 fashion that's much cleaner than we currently
19 know. They represent, in my view, if you accept
20 the fact that demand is going to be constant and
21 demand must be met, they represent pollution
22 reductions, not additions to pollution.
23 Further, and what I've given you in
24 my analysis, is that if you look within Illinois,
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1 you have a second level of control that is coming
2 within Illinois beyond the control that demand
3 provides you, and that it is the NOx SIP calls.
4 We have been told by Illinois EPA that NOx SIP
5 regulations are coming, that there's going to be
6 a hard cap on NOx emissions from these
7 facilities, and certainly I think we can all
8 accept that the on air pollutant of real
9 consequence from these facilities is NOx
10 emissions.
11 The generation on a per megawatt
12 basis is far lower than the practical
13 alternative, coal, and the NOx SIP calls means
14 that we are going to have an absolute limit of
15 the number of tons that can be emitted from
16 electrical generating units within the state of
17 Illinois.
18 So the question then will become, how
19 much electricity can we need, how much
20 electricity can we generate to meet the demands
21 that we've heard about today. The availability
22 of units that generate more electricity with less
23 NOx emissions means we can generate and meet that
24 demand more reliability, more easily, and more
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1 cheaply, and certainly gas turbines and peaking
2 facilities provide that opportunity to the
3 state.
4 When he come down from the issue from
5 MAIN and from Illinois and we come to the
6 community level, as a participant in these
7 hearings for clients and also as an observer of
8 these hearings, as a correspondent for a
9 community newspaper on the side, I see issues of
10 risk are the primary issues that are brought up
11 in terms of air pollution emissions. I think the
12 risk issues are easily overblown with the
13 microscope that these plants are put under. It's
14 far, far easy to overblow them.
15 You seen some very good data, I
16 think, on Indeck using NO2 as a model and how low
17 for a criteria pollutant that risk issue is for
18 local communities. That's also true, and I think
19 it would be self-apparent, the SIPs reporting
20 natural gas for toxic emissions. The fact that
21 we can measure any toxic emission at all from
22 natural gas, as a chemist, as a scientist, is a
23 tribute to the technology that we can measure
24 down that low.
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1 The fact that we can read parts per
2 billion to parts per trillion does not imply that
3 that's a health risk, and I don't know that that
4 information is communicated. When you compare
5 the level of emissions, the generation of toxic
6 emissions per BTU for natural gas-fired as
7 opposed to coal as opposed to wood-burning, as
8 opposed to the other myriad of the sources we're
9 exposed to every day, and I've given you some of
10 that data, you see that the generation rates are
11 by far the lowest. I think that overall even
12 though this forum is focusing on peakers, we are
13 really talking about a technology. We're talking
14 about gas turbines. That's overwhelmingly the
15 technology used to fill this demand.
16 I think that technology has developed
17 as a result of what the Board and what he Agency
18 has done. Industry has responded to the need for
19 cleaner power. They've done so very
20 effectively. They've reduced emissions
21 enormously. I can recall as a testing person 15
22 years ago much higher NOx emissions. I can
23 recall not being able to hear myself think when I
24 was next to a gas turbine. Today, they are as
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1 quiet as everyone says, and the emissions are
2 practically undetectable.
3 The fact that industry has responded
4 in this way I think is something that the Board
5 and the state should encourage. This is a step
6 in the right direction. These are emission
7 reductions. These are by far, I think, the best
8 thing to happen in the power market for quite
9 some time, and I think the only real reason that
10 there has been such a focus is because the
11 microscope that they've been placed under on the
12 community level, that's certainly appropriate,
13 but any project of any type, the small internal
14 combustion engines that go into schools and go
15 into commercial facilities, if you put them under
16 that kind of a microscope, I think you would be
17 able to elicit the same reaction.
18 From our view, this is an educational
19 process and the people should understand that
20 these are a boon to Illinois and they're a boon
21 to the environment. That is my testimony.
22 HEARING OFFICER JACKSON: Thank you. Any
23 questions from the Board? Okay. Thank you.
24 It appears then that we've reached
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1 the end of our proceedings for today. I want to
2 thank you all for your patience and your
3 attention yesterday and today. We are looking
4 forward to hearing from everyone else, the
5 general public, local municipalities, citizens
6 groups, anyone else who is interested in
7 testifying before the Board at any of our
8 following hearings.
9 I want to remind you that there is no
10 pre-filing requirement for any of the following
11 hearings in September or October, but I do want
12 to encourage you to contact me in advance if you
13 know you will be at one of the hearings and do
14 want to give comment. I will keeping lists of
15 those people who want to testify at those
16 hearings, and those people on my list will be
17 given priority of presentation; meaning, if you
18 are on my list, you will get to go first, and we
19 may have a large number of people that are
20 wanting to talk. So it will be to your benefit
21 to get in contact with me first.
22 I neglected to introduce a couple of
23 the pre-filed testimony items into the record,
24 and I just want to do that right now. All of the
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1 pre-filed testimony from the presenters today is
2 admitted into the record and will be marked as an
3 exhibit by the court reporter and attached to the
4 transcript from today's hearing.
5 The next hearing in this matter will
6 be held on Thursday, September 7th, at the
7 Naperville City Hall City Council Chambers and
8 will begin at 3;00 in the afternoon and will
9 continue into the early evening hours in order to
10 accommodate those persons who may be working
11 during the day and who would want to come after
12 work and speak to the Board.
13 Do any of the Board members wish to
14 make any statements before we conclude today?
15 Okay. That will do it. Thank you very much.
16 We're adjourned.
17 (Whereupon, the proceedings
18 in the above-entitled cause
19 were adjourned.)
20
21
22
23
24
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1 STATE OF ILLINOIS )
) SS.
2 COUNTY OF C O O K )
3
4 I, GEANNA M. IAQUINTA, CSR, do
5 hereby state that I am a court reporter doing
6 business in the City of Chicago, County of Cook,
7 and State of Illinois; that I reported by means
8 of machine shorthand the proceedings held in the
9 foregoing cause, and that the foregoing is a true
10 and correct transcript of my shorthand notes so
11 taken as aforesaid.
12
13
______________________________
14 Geanna M. Iaquinta, CSR
Notary Public, Cook County, IL
15 Illinois License No. 084-004096
16
17 SUBSCRIBED AND SWORN TO
before me this_____day
18 of_______, A.D., 2000.
19 _______________________
Notary Public
20
21
22
23
24
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