1 BEFORE THE POLLUTION CONTROL BOARD
OF THE STATE OF ILLINOIS
2
3
4 IN THE MATTER OF: )
)
5 NATURAL GAS-FIRED, PEAK-LOAD ) PCB No. R01-10
ELECTRICAL POWER GENERATING )
6 FACILITIES (PEAKER PLANTS) )
7
8
9
10 Proceedings held on October 5, 2000, at 1:00 p.m., at
11 the William G. Stratton Building, 401 South Spring
12 Street, Springfield, Illinois, before Amy L. Jackson,
13 Hearing Officer.
14
15
16
17
18
19
20
21
22
23 Reported by: Karen Bristow, CSR, RPR
CSR License No.: 084-003688
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1 APPEARANCES
2
3 Board Members present:
4
5 Chairman Claire A. Manning
Board Member Nicholas J. Melas
6 Board Member G. Tanner Girard
Board Member Ronald C. Flemal
7 Board Member Marili McFawn
Board Member Elena Z. Kezelis
8 Board Member Samuel T. Lawton, Jr.
9 Anand Rao, Senior Environmental Scientist
Alisa Liu, Environmental Scientist
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1 INDEX
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3 WITNESS PAGE NUMBER
4
5 Roger Finnell 15
6 John Smith 23
7 Brent Gregory 29
8 James R. Monk 36
9 Patricio Silva 57
10 Brian Urbaszewski 105
11 Elliot "Bud" Nesvig 134
12 Carol Dorge 139
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1 EXHIBITS
2
3 NUMBER ENTERED
4
5 IDOT Exhibit No. 1 19
6 Monk Exhibit No. 1 36
7 Monk Exhibit No. 2 36
8 Gregory Exhibit No. 1 57
9 American Lung Association Exhibit No. 1 117
10 Nesvig Exhibit No. 3 133
11 Nesvig Exhibit No. 4 134
12 Nesvig Exhibit No. 5 134
13 Dorge Exhibit No. 1 139
14 Dorge Exhibit No. 2 139
15 Dorge Exhibit No. 3 139
16 Dorge Exhibit No. 4 148
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1 PROCEEDINGS
2 (October 5, 2000; 1:00 p.m.)
3 HEARING OFFICER JACKSON: I want to welcome
4 everyone to the final two days of hearing that the board
5 has scheduled in order to examine the potential
6 environmental impact of natural gas-fired electrical
7 power generating facilities, commonly referred to as
8 peaker plants. My name is Amy Jackson, and I'm the
9 attorney assistant to Board Member Elena Kezelis, and at
10 the request of Board Chairman Claire Manning, I'm
11 serving as the hearing officer for these proceedings.
12 I'll ask you all to bear with me. I'm fighting a bad
13 cough and throat thing, so if my voice goes out at some
14 point during the hearing, please just bear that in mind.
15 We're very happy to have the entire board present
16 today, and I want to take a moment to introduce all of
17 our board members to you. Board Chairman Claire Manning
18 is immediately behind me.
19 CHAIRMAN MANNING: Welcome. Good afternoon,
20 everyone.
21 HEARING OFFICER JACKSON: To my immediate left is
22 Board Member Elena Kezelis.
23 BOARD MEMBER KEZELIS: Good afternoon.
24 HEARING OFFICER JACKSON: Marili McFawn.
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1 BOARD MEMBER MCFAWN: Hello.
2 HEARING OFFICER JACKSON: And Ronald Flemal.
3 BOARD MEMBER FLEMAL: Hello.
4 HEARING OFFICER JACKSON: To my right is Tanner
5 Girard.
6 BOARD MEMBER GIRARD: Good afternoon.
7 HEARING OFFICER JACKSON: Nicholas Melas.
8 BOARD MEMBER MELAS: Good afternoon.
9 HEARING OFFICER JACKSON: And up next to Chairman
10 Manning is Samuel Lawton, Jr.
11 BOARD MEMBER LAWTON: Good afternoon.
12 HEARING OFFICER JACKSON: We also have the board's
13 technical unit present, and they are also sitting up
14 here at the head tables. Anand Rao is up to my right.
15 MR. RAO: Hello.
16 HEARING OFFICER JACKSON: And Alisa Liu is to my
17 left.
18 MS. LIU: Hello.
19 HEARING OFFICER JACKSON: Before I continue with
20 some brief procedural matters, I will invite Chairman
21 Manning to make any opening remarks that she has.
22 Chairman Manning?
23 CHAIRMAN MANNING: Good afternoon, everyone. Thank
24 you, Amy. Welcome to this our last two days of
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1 scheduled hearing in the board's inquiry hearings
2 concerning peaker plants. As most of you know-- I see a
3 lot of familiar faces here this morning-- this
4 afternoon; a lot of unfamiliar faces as well. Most of
5 you know, however, that Governor Ryan has asked us to
6 look into the potential environmental impacts of
7 proposed peaker plants. He's done this in response to
8 the myriad of citizens' concerns he's heard throughout
9 his travels in the state, particularly in the northwest
10 area of the state. We're happy to be in Springfield
11 today too to address any concerns that we have downstate
12 and to address all the remaining concerns during these
13 last two days of hearing.
14 The board is especially well-equipped to address
15 these concerns for the Governor and for interested
16 members of the General Assembly. That's because-- and
17 I've explained in previous proceedings-- we're an
18 independent body of seven technically-qualified
19 individuals, and our general responsibilities are to
20 promulgate the State's environmental regulations and to
21 adjudicate any environmental matters that occur under
22 the Environmental Protection Act.
23 The Governor when he issued the letter to me asking
24 us to engage in these proceedings outlined five specific
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1 issue areas, and in terms of the context of this
2 proceeding, I would like to address those, actually read
3 those issue areas to you for a full context of this
4 proceeding.
5 The first issue is whether peaker plants need to be
6 regulated more strictly than Illinois current air
7 quality statutes or regulations provide.
8 The second issue is whether peaker plants pose a
9 unique threat or a greater threat than other types of
10 state-regulated facilities with respect to air
11 pollution, noise pollution or groundwater or surface
12 water pollution.
13 The third question is whether new or expanding
14 peaker plants should be subject to siting requirements
15 beyond applicable zoning requirements.
16 The fourth question is if the board determines that
17 peaker plants should be more strictly regulated or
18 restricted, should additional regulations or
19 restrictions apply to currently permitted facilities or
20 only to new facilities and expansions.
21 And finally and lastly, the Governor's asked us to
22 determine that-- whether-- to determine how other states
23 regulate or restrict peaker plants.
24 On each of these questions and in each of these
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1 issue areas, the board in the course of five days of
2 hearing thus far, two days in Chicago and three days in
3 the suburbs, in the collar counties, have received
4 excellent information on each of these questions, and I
5 can assure you that the full board has given its entire
6 attention to all of the information we've received thus
7 far.
8 At the conclusion of this process and probably
9 around the end of the year, the last board meeting in
10 December, we're expecting to issue a written
11 informational order. This order will analyze all of the
12 information that's been presented in these proceedings
13 in light of the issue areas outlined by the Governor.
14 Importantly, the order will set forth the board's
15 recommendations on whether further state environmental
16 regulation or legislation is necessary to adequately
17 protect the environment for the citizens of the state of
18 Illinois.
19 Now, for those of you who have been at our other
20 proceedings, I'm sure you're familiar with the order of
21 those proceedings. Let me say that Hearing Officer
22 Jackson is here to ensure that the proceedings are done
23 in an orderly fashion, giving everyone who wants to the
24 opportunity to speak, ensuring that the court reporter
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1 gets everything recorded accurately for purposes of the
2 board's publication of this transcript on the Web page
3 and for our purposes when we review all of this
4 information so that it's adequately transcribed, and
5 finally, to give us time-- the board time to ask
6 whatever questions we think are necessary to ensure that
7 we have the right information.
8 Hearing Officer Jackson thus far has done an
9 excellent job at maintaining order and keeping these
10 proceedings fair, and I commend her for that, and I now
11 turn the rest of the proceedings over to her very
12 capable and qualified hands.
13 HEARING OFFICER JACKSON: Thank you, Chairman
14 Manning. For those of who you have been following this
15 process, you know that we have already held a number of
16 hearings. Those have been held in downtown Chicago,
17 Naperville, Joliet and Grayslake. You also know that we
18 are maintaining much of the information we receive in
19 this proceeding on the board's Web site. All prefiled
20 testimony, public comments, hearing transcripts, board
21 opinions and orders and hearing officer orders are
22 currently maintained on the board's Web site. For those
23 of you who do not know the address of that Web site, I
24 will give it to you now. It is www.ipcb.state.il.us.
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1 Hard copies of any document filed with the board in
2 this matter may also be obtained from the board's
3 clerk's office, and the board's clerk may be reached at
4 telephone number 312-814-3620.
5 We have approximately ten people who have
6 preregistered to speak today. A list of those persons
7 is available at the table near the entrance to the
8 room. There is also a sign-up sheet on that table for
9 those persons who are interested in addressing the board
10 either today or tomorrow and who have not already
11 preregistered with me. Please be aware, however, that
12 if you do sign up on that sign-in sheet, it may be
13 tomorrow before we have time to call you for your
14 comments.
15 If you are speaking to the board today, when your
16 name is called, I will ask that you please step
17 forward. We have a witness table here in front. State
18 your name clearly for the record and indicate on whose
19 behalf you are here today to testify. You should bring
20 with you any documents or exhibits that you would like
21 to have entered into this matter. If you do have
22 documents to introduce into the record, you must be
23 prepared to leave at least one original copy with myself
24 so the court reporter can mark it as an exhibit in this
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1 matter. Any extra copies that you have may be passed
2 out to the board members today.
3 Once you have made your statement, any of the board
4 members or members of the board's technical unit may ask
5 you questions pertaining to your statement. Please do
6 not infer any preconceived conclusions or opinions on
7 the part of the board by the types or number of
8 questions they might ask. Questions are asked solely in
9 an attempt to develop a complete and accurate record for
10 the board to review during its deliberations in this
11 matter. The board has made no conclusions at this time,
12 and it will begin its deliberations only after all
13 information is submitted and the record is closed.
14 Because the purpose of these inquiry hearings is to
15 provide the board with an opportunity to gather
16 information regarding the environmental impact of peaker
17 plants, only board members and members of the board's
18 technical unit will be asking questions of witnesses
19 today and tomorrow. This is an information-gathering
20 process as opposed to a debate on the pros and cons of
21 peaker plants. Therefore, no cross-examination or
22 cross-questioning will be permitted.
23 Having said that, let me assure you that the board
24 is interested in hearing what you have to say. If any
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1 statements are made today that you feel need to be
2 expanded upon, clarified or even questioned, we invite
3 you to do so in one of two ways. Sign up to speak at
4 either today or tomorrow's hearing, or two, you may
5 submit your comments in written form to the board's
6 clerk's office. The public comment process is a very
7 simple one, and it is explained on the public
8 information sheet that is at the back of the room and
9 that has been prepared by the board's public information
10 officer.
11 As you can see, we do have a court reporter present
12 today. She will be transcribing everything that is
13 said. It is imperative that when you speak, you speak
14 slowly and clearly so that the court reporter can take
15 down everything you have said.
16 We have requested an expedited transcript of this
17 proceeding, so the transcript will be available in the
18 board's office within three to five business days of
19 this proceeding, and as soon as we receive it, we will
20 ensure that it is posted to our Web site.
21 One other thing I want to mention is that we do
22 have a notice list for this matter. Those persons on
23 the notice list will receive copies of all board
24 opinions and orders as well as hearing officer orders.
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1 There is no obligation for those on the notice list to
2 serve other persons on the notice list. If you are on
3 the notice list and file a document with the board, you
4 need only file the document with the clerk's office. If
5 you are not on the notice list and would like to be
6 added, you must contact the following person: Kim
7 Schroeder, S-C-H-R-O-E-D-E-R. Her telephone number is
8 area code 217-782-2633, or you can e-mail Kim at
9 schroedk-- S-C-H-R-O-E-D-K-- @ipcb.state.il.us.
10 If you have any questions at all that are not
11 covered by my opening remarks, please feel free to see
12 Connie Newman at the back of the room. As I mentioned
13 earlier, she is our public information officer. Connie,
14 if you want to wave? Thank you. Connie will be more
15 than happy to try to answer any questions that you might
16 have.
17 I do want to mention also that we have a citizens'
18 group that is videotaping the proceeding today. If any
19 of the witnesses do not feel comfortable being
20 videotaped, please let me know and we will turn the
21 videotape off during your presentation.
22 Those are the only opening remarks I have right
23 now. The first witness scheduled to speak to us today
24 is Mr. Roger Finnell with the Illinois Department of
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1 Transportation, and I'll ask you to please step forward
2 and we will begin.
3 MR. FINNELL: Good afternoon.
4 HEARING OFFICER JACKSON: Good afternoon.
5 MR. FINNELL: My name is Roger Finnell,
6 F-I-N-N-E-L-L. I'm an engineer with the IDOT Division
7 of Aeronautics, Bureau of Airport Engineering, and I've
8 been asked to address the Illinois Pollution Control
9 Board with a prepared statement, and then I'll follow up
10 with any questions you might have on that.
11 On behalf of the Illinois Department of
12 Transportation, Division of Aeronautics, we thank the
13 board for the opportunity to comment on the impacts that
14 peaker electrical generating facilities may have upon
15 air navigation.
16 There are several issues associated with electrical
17 generating facilities that have the potential for
18 creating an aeronautical safety hazard. The main
19 aviation concerns associated with peaker plant
20 developments are as follows: Physical height of the
21 structure-- including construction equipment--
22 penetrating critical airspace; emission of visible
23 discharge obscuring pilot and/or controller vision
24 within the airport environment; electromagnetic
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1 interference with aeronautical, navigational and
2 communication radio signals; and finally, the exhaust
3 plume's vertical velocity and its effect on aircraft
4 structural integrity and aircraft controllability.
5 The first three issues have been addressed by the
6 department in our Airport Hazard Zoning Rules.
7 Presently there are 56 airports which have airport
8 hazard zoning enacted and enforced by the department.
9 These rules effectively limit the height of structures
10 around individual airports as well as address smoke
11 emissions and electromagnetic interference. They can be
12 adopted by the department for publicly-owned airports,
13 but only at the request of the airport sponsor.
14 Alternatives, publicly-owned airports may adopt their
15 own hazard zoning rules that apply to hazards partially
16 or totally within the public owner's territorial limits.
17 IDOT has not been granted authority under Illinois
18 statutes to enact airport hazard zoning for
19 privately-owned open-to-the-public facilities. The only
20 protection these airports have from structures
21 encroaching on their airspace is local land use control.
22 To date, we have not had a peaker plant proposal
23 violate any airport hazard zoning surface nor create an
24 adverse electromagnetic or visible plume concern.
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1 However, this does not preclude conflicts with future
2 proposals.
3 A concern to our office is the impact the vertical
4 velocity of the plume has on flight safety. The
5 majority of these plants are a gas turbine-fired-- I'm
6 sorry-- gas turbine facilities which have relatively
7 high exhaust velocities and temperatures. While the
8 exit velocity of the plume dissipates rapidly upon
9 leaving the stack, the buoyancy of the plume due to its
10 heat still causes a significant vertical velocity
11 several hundred feet above the point of discharge.
12 The situation where this is an aeronautical issue
13 is if the plant is within the traffic pattern to the
14 airport. While pattern size is dependent on the speed
15 and number of aircraft within the traffic pattern, the
16 lateral dimensions of the pattern are usually within a
17 mile of the airport. If a generating facility is within
18 this area, it can result in arriving or departing
19 aircraft passing only a few hundred feet over the
20 smokestack of the facility.
21 We have entered into discussions with Federal
22 Aviation Administration and manufacturers of general
23 aviation aircraft to find out what the effect of flight
24 into an exhaust plume would have on aviation. To
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1 receive certification from the FAA, an airframe must be
2 capable of withstanding a vertical gust of 30 feet per
3 second. However, an aircraft in a landing or takeoff
4 configuration at typical approach and departure speeds
5 will likely lose lift and experience a momentary stall
6 if subjected to a vertical gust of 15 feet per second or
7 more. This is certainly an aviation safety concern.
8 We would like to emphasize that this concern is
9 only for generating facilities within the immediate
10 airport environment. Once away from the airport,
11 aircraft are bound by FAA regulations to be at least 500
12 feet above the highest obstacle within a horizontal
13 distance of 2,000 feet over sparsely populated areas and
14 1,000 feet above the highest obstacle within a
15 horizontal distance of 2,000 feet over congested areas.
16 Aircraft operating outside the traffic pattern are also
17 at higher operating speeds and therefore are not as
18 prone to stalling should they encounter larger vertical
19 gusts of more than 15 feet per second.
20 IDOT is currently reviewing our rules and
21 regulations to determine if further action is necessary
22 to prevent discharges from interfering with air
23 navigation and compromising aviation safety. During
24 this time, we request that the Illinois Pollution
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1 Control Board forward to IDOT any notification it
2 receives of a generating facility being proposed within
3 two miles of a public-use airport for further
4 evaluation. This will afford us an opportunity to work
5 with the proponent to mitigate any impact to aviation.
6 It is signed by James V. Bildilli, Chief Engineer
7 of the Bureau of Airport Engineering of IDOT. And the
8 original to you?
9 That being said, some of my qualifications, to give
10 you some background with regards to questions I'll
11 respond to, I am a registered professional engineer with
12 the State of Illinois. I've been with the Illinois
13 Department of Transportation, Division of Aeronautics,
14 for nearly ten years in their planning section. In
15 addition, I'm also a commercial pilot, licensed by the
16 FAA in both multi-engine and instruments, and I'm also a
17 certified flight instructor. That gives you some
18 background for the questions you may ask.
19 HEARING OFFICER JACKSON: Thank you. The document
20 that you provided to the court reporter we will mark as
21 IDOT Exhibit 1, and it will be entered into the record.
22 Are there any questions at this time?
23 CHAIRMAN MANNING: I just want to say thank you,
24 Mr. Finnell, and thank you to the Department of
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1 Transportation for your participation in these
2 proceedings. We welcome your expertise on the
3 particular question of aviation safety.
4 I should mention that the reason that-- for IDOT's
5 participation is as a result of an informal request that
6 the board has made to the Department of Transportation
7 as a result of issues that were raised on the record by
8 citizens in terms of aviation concerns, and so we
9 informally requested that the Department of
10 Transportation provide us its expertise on those
11 questions.
12 I have no specific questions myself, but I'd be
13 happy to open it up to the board members who might. Ms.
14 Kezelis.
15 BOARD MEMBER KEZELIS: Thank you, Mr. Finnell. I
16 do have one question. Would you for the record describe
17 briefly an example of a sparsely populated area as
18 opposed to a more heavily-concentrated area of
19 population?
20 MR. FINNELL: Certainly. The FAA's interpretation
21 of sparsely populated basically incorporates all of the
22 population area within Illinois. A congested area would
23 be that of a metropolitan area, a village or town with a
24 relatively high density of people living, places of
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1 public assembly. So certainly within metropolitan
2 regions, that would require the 1,000 foot, as well as
3 flying over any established town.
4 BOARD MEMBER KEZELIS: Okay. Thank you.
5 BOARD MEMBER FLEMAL: I believe you indicated that
6 airports have the opportunity to request hazard zoning.
7 There are 56 who have?
8 MR. FINNELL: Yes.
9 BOARD MEMBER FLEMAL: Is that correct? Are there
10 any who have not?
11 MR. FINNELL: Quick math, there are currently 73
12 publicly-owned air facilities. Of those, only 56 have
13 requested us to adopt airport hazard zoning on their
14 behalf.
15 BOARD MEMBER FLEMAL: Have any of those other
16 facilities adopted hazard zoning on their own?
17 MR. FINNELL: Yes, they have.
18 BOARD MEMBER FLEMAL: So most-- or do all the
19 airports have hazard zoning, either yours or theirs?
20 MR. FINNELL: There is a requirement as a condition
21 of accepting federal or state funding that the airport
22 will protect their approaches. The degree to which that
23 protection is enforced or enacted varies greatly, if
24 that is sufficient. Some are very stringent as far as
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1 the actual airspace they protect and can be somewhat
2 limited. Others have larger territorial limits and can
3 afford a greater degree of protection.
4 BOARD MEMBER FLEMAL: In your experience, are you
5 aware of any circumstances or occurrences where vertical
6 plumes have been a hazard to flight patterns--
7 MR. FINNELL: We have--
8 BOARD MEMBER FLEMAL: -- anywhere in the country?
9 MR. FINNELL: In the country, no. In the state of
10 Illinois, certainly no, okay? I will qualify that by
11 saying I have not researched that fully throughout the
12 United States. There has not been an enforcement action
13 within the state of Illinois to my knowledge.
14 HEARING OFFICER JACKSON: Mr. Finnell, could you
15 please speak into the microphone?
16 MR. FINNELL: I'm sorry.
17 HEARING OFFICER JACKSON: They're having trouble
18 hearing you in the back of the room. Thank you.
19 MR. FINNELL: Would you like me to move this over,
20 or--
21 BOARD MEMBER FLEMAL: Does that answer that you
22 just gave reflect all types of stacks, or are you
23 referring specifically to peaker stacks?
24 MR. FINNELL: We're referring to all types of
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1 discharges.
2 BOARD MEMBER FLEMAL: Okay. Thank you.
3 MR. FINNELL: It's not singled out to peakers, no.
4 HEARING OFFICER JACKSON: Are there any other
5 questions? All right. Thank you very much, Mr.
6 Finnell. We appreciate you being here.
7 MR. FINNELL: Thank you.
8 HEARING OFFICER JACKSON: Next on our list of
9 speakers is Mr. John Smith with the City of Decatur. I
10 believe you indicated that Brent Gregory is also
11 speaking with you?
12 MR. SMITH: Yes.
13 HEARING OFFICER JACKSON: Would you like for him to
14 come up at this time as well?
15 MR. GREGORY: You can go ahead.
16 HEARING OFFICER JACKSON: All right. And speak
17 into the microphone, please.
18 MR. SMITH: Sure.
19 HEARING OFFICER JACKSON: Thank you.
20 MR. SMITH: Good afternoon. My name is John Smith,
21 and I represent the Illinois Section of American
22 Waterworks Association. ISAWWA is the state section of
23 the American Waterworks Association. Membership
24 includes water utilities, operators and professionals
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1 throughout the state. And I appreciate the opportunity
2 to speak before the board on the issue of peaker plants
3 and on the use of water resources.
4 Number one: Do peaker plants need to be regulated
5 more strictly than Illinois' current air quality
6 statutes and regulations provide? ISAWWA does not feel
7 that peaker plants should be singled out and regulated
8 more strictly than any other power plant types in
9 Illinois with regard to air quality statutes. Adequate
10 generation of electric power is important to the future
11 economic growth of Illinois.
12 Number two: Do peaker plants pose a unique threat
13 or a greater threat than other types of state-regulated
14 facilities with respect to air pollution, noise
15 pollution or groundwater or surface water pollution?
16 ISAWWA believes that peaker plants pose no greater
17 pollution than any other type of industry and that
18 existing regulations are adequate for protection.
19 Number three: Should new or expanding peaker
20 plants be subject to siting requirements beyond
21 applicable local zoning requirements? ISAWWA believes
22 that peaker plant siting requirements should encourage
23 the siting of these plants near a sanitary water
24 treatment plant, if practical, so as to utilize the
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1 discharge from the sanitary water treatment plant known
2 as gray water or cooling water.
3 Number four: If the board determines that peaker
4 plants should be more strictly regulated or restricted,
5 should additional regulations or restrictions apply to
6 currently permitted facilities or only to new facilities
7 and expansions? We only wish to comment on the use of
8 water resources by these facilities. Number one, the
9 State of Illinois must manage, protect and enhance the
10 development of the water resources of the state as a
11 natural and public resource. Number two, water
12 resources have an essential and pervasive role in the
13 social and economic well-being of the people of Illinois
14 and is of vital importance to the general health, safety
15 and economic welfare. Number three, water resources of
16 the state must be used for beneficial and legitimate
17 purposes. And number four, waste and degradation of
18 water resources must be prevented.
19 ISAWWA is not opposed to the use of water resources
20 by peaker plants. We are only asking for the
21 responsible use of water resources by these facilities
22 and all major new water consumers. We believe the
23 regulation or permitting of large water resource
24 withdrawals should be the responsibility of regional
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1 agencies, such as municipalities, counties or water
2 boards, and that a state agency should have oversight of
3 these regional agencies.
4 We believe that the basis for the decision on how
5 much water can be safely used from a designated water
6 resource be based on the existing knowledge and
7 scientific studies of that resource, and, if knowledge
8 of that resource is lacking, then additional research
9 into the adequacy of this source should be done before
10 allowing major withdrawals. The decision to allow the
11 development of existing or new water resources must be
12 based on sound science, not politics. We believe that
13 funding must be adequate for the state agency to perform
14 these studies.
15 In conclusion, Illinois Section AWWA is not opposed
16 to peaker facilities. We are calling for the rules and
17 regulations of water resources be based on scientific
18 studies of our valuable water resources and that an
19 unbiased state agency be charged with oversight of
20 regional water use. Adequate funding for the state
21 agency must allow for the scientific study of our state
22 water resources, and the State must have a plan for the
23 efficient management of water resources. Thank you.
24 HEARING OFFICER JACKSON: Thank you, Mr. Smith.
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1 MR. SMITH: Questions?
2 HEARING OFFICER JACKSON: Any questions?
3 CHAIRMAN MANNING: Thank you for being here today.
4 I do have just one question. Are you aware of any
5 projects right now that are ongoing between a peaker
6 plant developer and a sanitary treatment facility in the
7 state we could speak to?
8 MR. SMITH: I'm not aware of any.
9 CHAIRMAN MANNING: Thank you.
10 HEARING OFFICER JACKSON: Anything else for Mr.
11 Smith?
12 BOARD MEMBER GIRARD: I have a question.
13 HEARING OFFICER JACKSON: Okay.
14 BOARD MEMBER GIRARD: So what you're advocating is
15 that we have a state water resources board that
16 allocates these large withdrawals? Is that what you're
17 saying?
18 MR. SMITH: What we are saying is that we believe a
19 state agency such as the Illinois State Water Survey
20 should have some oversight over the regional agencies
21 that normally would have some control over water. We
22 believe that in most cases, the regional agency has at
23 least some knowledge of the water resource and how much
24 of that resource can be used safely without impacting
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1 other consumers or their industries. However, if the
2 local agency has-- unreasonably tries to restrict the
3 use of these water resources, then a state agency could
4 have oversight of the local agency.
5 BOARD MEMBER GIRARD: Are you familiar with any
6 other eastern states that might have a setup that you
7 would consider a model for these kinds of decisions?
8 MR. SMITH: No. I've not researched that.
9 BOARD MEMBER GIRARD: Thank you.
10 MR. SMITH: We would be glad to look into that.
11 CHAIRMAN MANNING: Could you explain a little bit
12 about your association for us?
13 MR. SMITH: Yes. Illinois Section of American
14 Waterworks Association represents most of the both
15 public and private water utilities throughout the state
16 of Illinois from the very small ones to the very large
17 ones, and we represent the operators of these plants; we
18 represent water resource people, such as lake managers.
19 CHAIRMAN MANNING: Thank you. Anybody else?
20 BOARD MEMBER MCFAWN: Is your association involved
21 at all with any studies of water resources, be they
22 groundwater or surface water, and their adequacy or even
23 just their quantity?
24 MR. SMITH: Yes, we are. Illinois Section of AWWA
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1 is involved with the Mahomet Aquifer Consortium, which
2 has-- is trying to secure federal funding to do further
3 studies of the Mahomet aquifer located in the central
4 part of Illinois. This consortium and the action that
5 we are doing to try to study this reservoir has already
6 generated interest from other states in that they have
7 inquired how we have put together the consortium and how
8 we are going about to try and initiate these studies.
9 BOARD MEMBER MCFAWN: Does that consortium cross
10 state lines? I mean, are there participants from
11 Indiana, for example?
12 MR. SMITH: No, it does not cross state lines,
13 although there are some of the water people right across
14 the state line in Indiana that are aware of the
15 consortium and of the study.
16 BOARD MEMBER MCFAWN: Thank you.
17 HEARING OFFICER JACKSON: Thank you, Mr. Smith.
18 Brent Gregory with the Illinois-American Water Company.
19 MR. GREGORY: Good afternoon.
20 HEARING OFFICER JACKSON: Afternoon.
21 MR. GREGORY: My name is Brent Gregory, and while I
22 work for Illinois-American Water Company, I'm here today
23 representing the National Association of Water
24 Companies, Illinois Chapter, and I appreciate the
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1 opportunity to address the board, specifically on the
2 issue of peaker plants and also in a more general sense,
3 some of the related environmental and water resource
4 issues. I do have a prepared statement.
5 My name is Brent Gregory, and I'm here today
6 representing the Illinois Chapter of the National
7 Association of Water Companies, or NAWC.
8 HEARING OFFICER JACKSON: Just slow down just a
9 little bit for the court reporter.
10 MR. GREGORY: Certainly.
11 HEARING OFFICER JACKSON: Thank you.
12 MR. GREGORY: I told myself to do that ahead of
13 time.
14 HEARING OFFICER JACKSON: It's hard to do when
15 you're reading.
16 CHAIRMAN MANNING: It's hard.
17 MR. GREGORY: NAWC is the principal trade
18 organization that represents the private and
19 investor-owned water utility industry. NAWC member
20 utilities serve over 1 million people in Illinois and 22
21 million people nationwide. I appreciate the opportunity
22 to address the Illinois Pollution Control Board today on
23 the issues of peaker plants and water resource
24 management in Illinois.
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1 The ability to provide water of sufficient quality
2 and quantity to sustain commercial, industrial and
3 residential growth goes hand-in-hand with the
4 availability of electrical power. Water suppliers rely
5 on adequate available electricity, and generating plants
6 rely on an adequate supply of water. NAWC supports the
7 development of new electrical generating capacity as
8 needed for the economic advancement of Illinois.
9 We do not believe that peaker plants pose a unique
10 threat to the environment compared to other types of
11 state-regulated facilities. We believe that existing
12 environmental regulations are adequate to address air
13 and water quality concerns from peaker plants. As much
14 of the water used by peaker plants is discharged to the
15 environment, it is important that current discharge
16 regulations be consistently applied in order to protect
17 the quality of our groundwater and surface water
18 resources.
19 NAWC agrees that it is in the best interests of all
20 to have sound legislative and regulatory oversight of
21 the state's water resources. The primary management of
22 the water resources should be provided by an assemblage
23 of local and regional stakeholders with the State having
24 final oversight.
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1 We emphasize the need for water use decisions to be
2 based on sound scientific assessment of local and
3 regional water resources. Where existing knowledge is
4 insufficient, the state technical agencies should
5 provide the scientific studies needed to permit or deny
6 water withdrawals. State funding must be adequate to
7 support these efforts. The right of existing public
8 water supplies to condition withdrawing at their current
9 installed capacities should be grandfathered into any
10 program that is developed. The State should consider
11 competent third-party assessments presented by those
12 seeking to utilize the water resource.
13 We believe that permitting of new peaker plants and
14 siting requirements should encourage conservation
15 measures such as recycling of cooling water and use of
16 other discharges for cooling when possible, such as
17 those from sanitary treatment plants.
18 In summary, NAWC believes that the ability to
19 expand power and water resources is important to the
20 economic growth of Illinois. Peaker plants, as all
21 state-regulated facilities, should be subject to the
22 consistent application of existing laws to ensure
23 protection of our environment and natural resources.
24 There is a need for more comprehensive oversight of
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1 Illinois' water resources. Such oversight appropriately
2 resides with the State but must be based on sound and
3 current science and not on politics. Thank you.
4 HEARING OFFICER JACKSON: Thank you, Mr. Gregory.
5 Are there any questions? Go ahead.
6 BOARD MEMBER MELAS: Mr. Gregory, earlier in your
7 statement you mentioned you thought that there was
8 adequate control as far as water quality, and twice I
9 heard the words water quality. Do you have any comments
10 about the quantity of the-- or the adequacy of
11 particularly groundwater supplies? Those concerns have
12 been raised in--
13 MR. GREGORY: Yes.
14 BOARD MEMBER MELAS: -- previous testimony, and
15 that's why I would like to know what your take on that
16 is.
17 MR. GREGORY: Well, we recognize that in certain
18 areas of the state in particular, there may be some
19 quantity concerns. We're traditionally known as a
20 water-rich state, and yet due to concentrations of
21 industry and populations and other circumstances, there
22 are areas where, particularly in long-term outlook,
23 water quantity is a concern. That's why we concur that
24 there is a need for sound comprehensive management of
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1 the state's water resources with regard to quantity.
2 BOARD MEMBER MELAS: Thank you.
3 BOARD MEMBER MCFAWN: Wait. I have a question. I
4 was just waiting. You mentioned you thought that the
5 quantity-- I believe it was the assessment of it should
6 be done by an independent third party? Could you
7 explain that a little bit more?
8 MR. GREGORY: Yes, I can. If there is some
9 legislative or regulatory control set up over the use of
10 Illinois water resources, it needs to be based on sound
11 scientific assessment of the resource, which we believe
12 that the State has-- is the appropriate-- has the
13 appropriate technical resources to conduct those.
14 However, if there would arise a dispute over the use or
15 the application for the use of water or withdrawal of
16 water and there is better science to be presented by a
17 petitioner for the use of that water, that should be
18 allowed.
19 BOARD MEMBER MCFAWN: We are talking about just
20 quantification, not quality?
21 MR. GREGORY: That is really in the context of
22 quantity.
23 BOARD MEMBER MCFAWN: Okay.
24 MR. GREGORY: Yes.
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1 BOARD MEMBER MCFAWN: I just want to make sure
2 that--
3 MR. GREGORY: If somebody wants to withdraw water
4 from an aquifer or from a watershed and is able to hire
5 a qualified consultant to demonstrate the reasonableness
6 of that petition, then that should be considered.
7 BOARD MEMBER MCFAWN: Thank you.
8 HEARING OFFICER JACKSON: Any more questions for
9 Mr. Gregory? No? All right. Thank you, sir.
10 MR. GREGORY: Okay. Thank you.
11 HEARING OFFICER JACKSON: Next we have Ashley
12 Collins with Citizen Action Illinois. Is Ms. Collins
13 here?
14 MS. ZINGLE: I think she thinks she's testifying
15 tomorrow.
16 HEARING OFFICER JACKSON: I'm sorry?
17 MS. ZINGLE: I think she thinks she's testifying
18 tomorrow.
19 HEARING OFFICER JACKSON: Okay. James Monk,
20 Illinois Energy Association. Give me a second and I'll
21 pass this around.
22 MR. MONK: Sure.
23 HEARING OFFICER JACKSON: While those are being
24 passed out, I'll just indicate that I've been handed a
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1 document entitled "Testimony of James R. Monk," and we
2 will mark that as Monk Exhibit 1, and also a handout
3 entitled "System Peak-Load and Capacity," some
4 historical data, and that will be Monk Exhibit 2. Thank
5 you. Whenever you're ready.
6 MR. MONK: Thank you, Hearing Officer Jackson,
7 Chairman Manning and members of the board. My name is
8 James R. Monk. I'm the president of the Illinois Energy
9 Association. The Illinois Energy Association is a trade
10 association representing investor-owned electricity and
11 combination electricity and natural gas companies
12 serving customers in the state of Illinois. The
13 association was formed in 1994 and has eight member
14 companies. Those are listed in my formal testimony, but
15 they include what you would normally, I think, term as
16 the incumbent electric utilities in the state of
17 Illinois, Commonwealth Edison, Illinois Power, CILCO,
18 CIPS, etc. The Energy Association serves as a
19 spokesperson for the investor-owned electricity and
20 combination natural gas and electricity industries here
21 and as a vehicle to develop policy positions and
22 policies on issues dealing in the public policy arena.
23 On behalf of the association, I want to express my
24 appreciation to the board for providing the opportunity
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1 to testify as part of this inquiry into peaker plants.
2 Our member companies are active in both the power supply
3 and the power transmission and distribution sectors of
4 the industry, and we believe peaker plants play a
5 critical role in both of those areas, and we stand ready
6 as an industry to provide whatever information the board
7 deems necessary to assist you in your inquiry.
8 To that end, I'd like to respond to a request I
9 think that was made by the board and its staff at the
10 initial hearings in Chicago regarding current generating
11 capacity and expected demand growth for electricity here
12 in Illinois, and I've attached Exhibit A-- which is a
13 document I think that's been distributed to you-- to my
14 testimony that shows both historical and projected
15 system peak-load capacity-- load and capacity for the
16 Commonwealth Edison system. Hopefully this will give
17 the board a flavor of-- for where we are as a state in
18 both of these respects.
19 These figures indicate a rather dramatic increase
20 in peak-load in recent years. While peak-loads on the
21 ComEd system have grown at 2.8 percent over the last 15
22 years from 1984 to 1999, we note that the growth rate
23 has nearly doubled in the last five years. From 1994
24 through 1999, peak-loads have grown at 4.2 percent.
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1 Clearly, meeting demand was very tight in 1999, and I
2 think most of you remember the summer of 1999.
3 Virtually no extra reserves remained to cover
4 contingencies at time of peak demand. New independent
5 power capacity was critical to meeting that demand.
6 Similarly, while this past summer was cooler than
7 normal, it was still necessary to have new IPP capacity
8 in order to provide adequate reserves. For your
9 information, about 1500 megawatts of reserve capacity is
10 needed to provide what we call reliability insurance on
11 the ComEd system for forced plant outages and additional
12 deratings at peak. If the summer of 2000 weather had
13 been normal rather than cooler than normal, total
14 capacity would not have provided targeted reliability
15 reserves or that reliability insurance that I spoke of.
16 The diagram also shows projected growth through the
17 year 2003. These figures are based on average
18 peak-making weather; not cooler than normal, not hotter
19 than normal, but our historical average. In this
20 respect, the existing total capacity is inadequate going
21 forward, even with average peak-making weather. Forced
22 outage reserves are below target beginning in 2001.
23 Demand exceeds supply in 2002 considering higher recent
24 demand growth rates. Even if you look at the relatively
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1 lower historical demand growth rates for the 15-year
2 period, demand still exceeds supply in 2003. And
3 remember, these projections are for normal summer
4 weather. Extremely hot weather could add an additional
5 2 to 3 thousand megawatts of demand next summer.
6 The bottom line here is that even under the best of
7 circumstances, additional capacity is critically
8 necessary in order to keep the system functioning at
9 peak times. In the short term, that additional capacity
10 will come almost exclusively from peaker plants.
11 I realize that the focus of the board's inquiry is
12 on the environmental aspects of these plants, and I
13 certainly do not wish to diminish those concerns. In
14 fact, I'm of the opinion that the record in this inquiry
15 shows that peaker plants are the best power supply
16 option from an environmental standpoint as well as an
17 economic standpoint. However, peaker plants must also
18 be viewed in the larger context of the role they play in
19 making sure that our state has adequate, reliable and
20 affordable electricity throughout the year.
21 One need only look at the situation in California
22 to see the disastrous results of a shortsighted power
23 supply policy. While much of the blame for highly
24 publicized failure of the electricity market in
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1 California can be laid at the feet of those who designed
2 the faulty marketplace mechanism, it is also undoubtedly
3 true that lack of adequate power supply is at the heart
4 of the problem in that state. California has allowed
5 only limited investments in new power plants in the last
6 20 years. Between 1996 and 1999, California added only
7 2 percent to its generating capacity. Several state
8 policies discouraged new construction at a time when
9 demand continued to surge.
10 In that same time period between 1996 and 1999,
11 California's growing economy caused a peak demand
12 increase of over 5500 megawatts. California's demand is
13 expected to grow faster than new power plants can be
14 built for the next several years, even with some recent
15 modifications to their siting procedure which should
16 make it easier to build power plants. Much of that
17 demand growth in California is caused by the booming
18 digital economy in that state that gobbles up
19 electricity at a much higher rate than traditional
20 industries have in the past. Obviously, here in
21 Illinois and in the Midwest, we hope to be part of that
22 digital economy as well, and we have to deal with the
23 impact of that digital economy in the power supply sense
24 as well.
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1 I'd also like to comment on the issue that I think
2 was raised in Chicago and maybe at the suburban hearings
3 of whether much of the electricity generated by peaker
4 plants constructed here in Illinois will be exported to
5 other states. I think the information that I've
6 provided in my testimony indicates that there's a need
7 for power here in Illinois. On top of that fact,
8 geographic and transmission constraints in our region
9 are such that it's very difficult to transmit large
10 amounts of electricity on an export basis. Strangely
11 enough, I've talked to my counterparts in both Wisconsin
12 and Indiana, and that same export of power argument has
13 been used in both of those states by opponents of peaker
14 plants who say they're building power plants in
15 Wisconsin to ship power to Illinois or they're building
16 them in Indiana to ship power to Illinois. Just the
17 basic facts of electricity and the physics of
18 electricity are-- make that difficult, especially
19 considering the transmission constraints we have in the
20 region.
21 The board has received testimony from many sources
22 that are involved in the generating side of the
23 industry, including some of my own member companies.
24 However, there's also a distribution component, and all
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1 of my member companies are part of that side of the
2 business, the distribution utilities. Even under our
3 state's landmark deregulation law, distribution
4 companies maintain a duty to provide safe, adequate,
5 reliable and affordable electricity to our retail
6 customers. We are also still the, quote, providers of
7 last resort that we have always been to our native load
8 customers. In order to fulfill those duties,
9 distribution companies must have an adequate supply of
10 electricity even at peak times. That is why, even for
11 electricity distribution companies, much is at stake in
12 the debate over construction of peaker plants here in
13 Illinois.
14 Thank you for the opportunity to present testimony
15 in this proceeding. The member companies of the
16 Illinois Energy Association are pleased to be a part of
17 this process and stand ready to assist the board as your
18 inquiry goes forward, and I'd be pleased to try to
19 answer any questions that you might have, although I
20 will tell you I'm not a technical expert. I'm a-- I'm
21 what they call a policy guy. Thank you.
22 HEARING OFFICER JACKSON: Thank you, Mr. Monk.
23 BOARD MEMBER MELAS: Mr. Monk, in mentioning
24 earlier in your statement the booming shortage, the
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1 shortfall, you said that demand will have to come from
2 peaker plants.
3 MR. MONK: In the short-term, I think peaker plants
4 is where that's most exclusively going to come from.
5 BOARD MEMBER MELAS: I've heard a lot of testimony
6 in the last month or two. The electricity which is
7 generated by the peaker plants is the most expensive
8 type of electricity; is that correct?
9 MR. MONK: I think that's a little overbroad. It
10 depends on a lot of factors, given the market situation
11 at the time that the peaker plants are operated or not
12 operated. It's a little too broad, I think, to say that
13 it's the most expensive power.
14 BOARD MEMBER MELAS: We've heard that statement
15 made at previous meetings.
16 MR. MONK: Right.
17 BOARD MEMBER MELAS: That's why I asked. Whereas
18 the power that's generated through a so-called
19 base-load, whether it's coal or nuclear, is much
20 cheaper.
21 MR. MONK: I'd say on the whole, that's probably
22 true.
23 BOARD MEMBER MELAS: Would not the construction of
24 another one or two major base-load plants obviate the
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1 problem, in your opinion?
2 MR. MONK: Well, I think if you were able to
3 construct base-load power plants, certainly that would
4 obviate some of the problems. The difficulty with the
5 base-load power plant is the time frame that you're
6 talking about in terms of the design, construction,
7 operation, is much longer than we can afford to
8 undertake here in Illinois.
9 BOARD MEMBER MELAS: Are any of your members at the
10 present time contemplating any new base-load plants that
11 you know of?
12 MR. MONK: Not--
13 BOARD MEMBER MELAS: Anywhere within the state of
14 Illinois?
15 MR. MONK: Not that I'm aware of. There may be
16 internal planning processes that are underway that I'm
17 not aware of, but I'm not aware of any at the present
18 time.
19 BOARD MEMBER MELAS: That's all. Thank you.
20 MR. MONK: Of course I would add that part of
21 what's going on in the industry is a-- what we call an
22 unbundling of the industry, and, you know, you will have
23 distribution companies-- all of my members are
24 distribution companies, and depending on how this all
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1 develops over the next few years, the distribution
2 companies for the most part won't be owning generation
3 in the first place. That will come from generation
4 companies, some of who may be part of an overall company
5 that the distribution company is, many of whom will not
6 be related to a distribution company whatsoever.
7 BOARD MEMBER MELAS: Thank you.
8 BOARD MEMBER KEZELIS: I have one question, Mr.
9 Monk. The chart that you've given us--
10 MR. MONK: Yes.
11 BOARD MEMBER KEZELIS: -- and I understand you're a
12 policy person as opposed to perhaps a predictor or an
13 analyzer of figures-- but the chart you've given us
14 notes a significant drop in 1992 for peak-load demand.
15 Was 1992 an anomaly? Was it an usually cold year, or do
16 you know?
17 MR. MONK: I don't know, but that would be my
18 guess, because if you can look and compare 1999 to 2000,
19 you see a similar drop, and I do know that those two--
20 BOARD MEMBER KEZELIS: That was weather-related.
21 MR. MONK: That was weather-related, and I would
22 guess the other one was weather-related.
23 BOARD MEMBER KEZELIS: Okay. Thank you.
24 CHAIRMAN MANNING: I have a more general question
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1 on the graph itself, and that kind of relates to the
2 question of the applicability of the graph. When you
3 look at the total capacity, you've got ComEd's capacity
4 and installed IPP capacity. What do you mean by
5 installed IPP? Maybe I missed that in your remarks, but
6 what are you referring to when you say-- when the graph
7 refers to the installed IPP capacity?
8 MR. MONK: That would be-- For the most part, that
9 would be peaker plants that are already up and running.
10 CHAIRMAN MANNING: Okay. So that if you look at
11 the gray shaded area on the graph itself, that's the
12 total capacity of energy currently being generated for
13 what market?
14 MR. MONK: This is for the ComEd system.
15 CHAIRMAN MANNING: Okay.
16 BOARD MEMBER KEZELIS: There are two shades of
17 gray.
18 MR. MONK: Right.
19 BOARD MEMBER KEZELIS: They're difficult to
20 distinguish.
21 CHAIRMAN MANNING: Right. The shaded gray without
22 the black line and the gray-- the shaded gray with the
23 black line.
24 MR. MONK: Right, and then the dotted line above
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1 that is the projection that shows that even with that,
2 we need more power.
3 BOARD MEMBER MCFAWN: Does the IPP stand for
4 independent power producers?
5 MR. MONK: Yes, it does.
6 BOARD MEMBER MCFAWN: Thank you.
7 BOARD MEMBER FLEMAL: The dropoff between 1997 and
8 1998 reflects what change in the system?
9 MR. MONK: Are you talking about the dropoff in
10 the--
11 BOARD MEMBER FLEMAL: The installed capacity. 1997
12 shows the 22,000 megawatts and then '98--
13 MR. MONK: I would-- I don't know for sure, but my
14 guess is that would reflect-- at least in one respect,
15 that would reflect the retirement of the Zion plant.
16 There may be other factors, but I think that would
17 probably be a large factor involved in that.
18 CHAIRMAN MANNING: Mr. Monk, in our proceedings too
19 we've heard various definitions of the word peaker plant
20 itself. I would assume your association has a
21 definition they would use for peaker plant. Do you want
22 to give us what that would be?
23 MR. MONK: My definition would be an economic
24 definition, and that is power that is primarily for use
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1 at peak demand times, and, you know, that--
2 CHAIRMAN MANNING: However it's generated?
3 MR. MONK: Well, I mean, I-- yeah. I think, you
4 know, if you're talking about a plant that is dedicated
5 primarily to that purpose, then I would call that a
6 peaker plant. Now, there-- you know, that may be an
7 older plant that is only used at peak time, and there
8 are those around, but I think, you know, in the general
9 context of your inquiry, we're talking mostly about the
10 new natural gas turbine-fired facilities.
11 CHAIRMAN MANNING: Right.
12 MR. RAO: Just as a follow-up to Chairman Manning's
13 question, when you say, you know, a peaker plant is a
14 plant that serves you in peak demand, can peak demand
15 be, like, the whole summer season, like a-- you know, if
16 there's combined-cycle plant that operates just during
17 the summer, would that be considered a peaker plant?
18 MR. MONK: Well, I'm treading on pretty thin ice
19 here, but peak demand is actually a figure that's
20 reached once per season, I guess, but what I would call
21 the peak season would be the summer. Our systems, as
22 are other systems around the country, the base-load
23 demand is built to meet a regular demand, and then the
24 peak is on top of that.
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1 Now, you might have a run of-- period of two weeks
2 which could be considered a peak period because every
3 day is 100 degrees and every day the same huge amount of
4 electricity is being demanded, but at some point in
5 time, a few days or a while later, it's going to go back
6 to a normal demand scenario, so, I mean, that's kind of
7 the difference. Peak is what it implies, and that is
8 the highest point of demand for a particular day or a
9 particular few days together. It is-- It's-- I don't
10 know that we've ever had a peak that lasted an entire
11 summer season or even more than a couple weeks.
12 MR. RAO: So you say it's more based on days rather
13 than months or weeks.
14 MR. MONK: Yeah. Well, yes. I mean, in terms of--
15 it depends again, as I answered the gentleman's question
16 a moment ago, on the market conditions, but, you know,
17 peaker plants will run for certain periods of times when
18 it's economic to run them, and then when it's probably a
19 nonpeak period, they won't because it's not economic to
20 run them.
21 MR. RAO: I had a question on the chart that you
22 submitted, and, you know, you show growth rates for
23 those dotted lines. The growth rate, those lines, do
24 they represent base-load, or is it the peak-load growth
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1 rate that you're projecting?
2 MR. MONK: That's peak, and the reason there are
3 two there is to show you that historically we had one
4 particular growth rate and we've accelerated that growth
5 rate rather dramatically in the last few years.
6 MR. RAO: Okay. And one last question I have is
7 about the required reserves that you show in the chart.
8 What percent of the base-load does required reserves
9 represent; do you know?
10 MR. MONK: I don't know in this particular figure.
11 I think if you go back to Mr. Bulley's testimony from
12 MAIN, their standard is 15 percent reserve.
13 MR. RAO: That's what I just wanted to make sure,
14 you know, that this percent is what Mr. Bulley was
15 talking about.
16 MR. MONK: And-- So, I mean, that's the-- I think
17 that's-- the industry standard is the 15 percent reserve
18 margin.
19 MR. RAO: All right. Thank you.
20 BOARD MEMBER MCFAWN: So when it said on your chart
21 required reserves, is that what you mean? What do you
22 mean by required?
23 MR. MONK: There's some-- I would hesitate to say
24 with 100 percent accuracy that we're talking about that
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1 15 percent margin here, because the testimony-- the
2 figures that were supplied from Commonwealth Edison
3 talked about the-- let's see what-- I want to get the
4 exact phrase-- the reliability insurance, which I'd have
5 to check to make sure that we're talking about the true
6 15 percent system reserve as opposed to that reliability
7 insurance reserve that they're talking about. My guess
8 is we're talking about the 15 percent, but I can check
9 that and be sure on it. I wouldn't want to give you an
10 inaccurate answer.
11 MR. RAO: If you could answer that in your
12 comments, it would be helpful.
13 MR. MONK: Sure. I'd be glad to.
14 HEARING OFFICER JACKSON: Anything else?
15 BOARD MEMBER MCFAWN: I had a question. You
16 mentioned that it's hard to export energy from
17 Illinois. Could you expand on that?
18 MR. MONK: Well, for instance, the State of
19 Wisconsin has-- is undertaking a program right now to
20 increase its transmission capacity, because they have
21 very serious transmission constraints caused by two main
22 factors; geographic, the fact that this little lake kind
23 of gets in the way of transmitting electricity around,
24 and then they also have a shortage-- frankly, a shortage
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1 of transmission capacity, just the physical capacity to
2 transmit. We have other constraints that are related to
3 the-- to our geography as well as the transmission
4 capacity.
5 Transmission capacity, frankly, is another area
6 that has not kept up with the growth of the market in
7 terms of especially wholesale electricity transfers.
8 We-- You know, it-- I think it's no secret to anybody
9 here that it's very difficult to site and build a
10 transmission line, and we have not been able to keep up
11 with that demand that's taken place in the last few
12 years, with the growth that's taken place in the last
13 few years of the wholesale electricity market.
14 You hear people who talk about deregulation tell
15 you that we're starting into, at least on the wholesale
16 basis, power transfers from one state to another, etc.
17 We're starting into a wholesale bulk power market, but
18 our system is really a Balkanized system that was built
19 for the old electricity style of control area here,
20 control area here, control area here, and that we do
21 need to make-- one of the things that the industry is
22 looking at and the government is looking at very
23 seriously is how are we going to upgrade and modernize
24 our transmission system in order to make the wholesale
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1 bulk power market work? It wasn't built for all the
2 transfers that are taking place now between utilities in
3 Pennsylvania and utilities in Wyoming.
4 BOARD MEMBER MCFAWN: Do we have problems
5 internally in Illinois?
6 MR. MONK: No, not internally. I think our system
7 internally is a sound system, and I'm not saying we have
8 problems in terms of getting power when we need it.
9 It's just that the transmission system that's there now
10 does have constraints, and it needs to be modernized in
11 order to be up to speed for the new industry that we're
12 headed into, and it's very difficult to do, frankly, for
13 some of the same reasons that building peaker plants is
14 very difficult to do.
15 BOARD MEMBER MCFAWN: We heard in another hearing
16 that the transmission system up by Zion of course is
17 underused with the closing of Zion. With that freed-up
18 transmission line, does that make it more difficult or
19 easier to move power around in Illinois?
20 MR. MONK: That-- I couldn't answer that except to
21 say that electricity unfortunately doesn't pay too much
22 attention to the laws of man. There-- It's kind of into
23 the laws of physics. And I don't know that simply
24 freeing up a transmission line in and around Zion would
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1 help a situation even as close as the western suburbs.
2 I'm not that technically expert enough to give you an
3 answer on that.
4 BOARD MEMBER MCFAWN: On a different topic, you
5 talked about California.
6 MR. MONK: Popular topic these days.
7 BOARD MEMBER MCFAWN: It is, it is, and I would
8 certainly like to learn more about it. You mentioned
9 that between '96 and '99 they only added 2 percent to
10 their capacity. I would assume their base-load capacity
11 or just their capacity in general?
12 MR. MONK: Their capacity in general. I don't know
13 the breakdown. I don't think-- It would probably be a
14 peaking type of capacity, because I don't think they've
15 built a base-load plant there in a long, long time.
16 BOARD MEMBER MCFAWN: Okay. And then you later
17 mentioned that they had a demand or an increase of 5500
18 megawatts?
19 MR. MONK: In that same period of time.
20 BOARD MEMBER MCFAWN: In that same period? What
21 kind of percentage? I mean, how would I compare those
22 two figures?
23 MR. MONK: I have-- Let me look just a second. I
24 believe their total system capacity is something like
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1 60,000 megawatts, so whatever 5 percent of-- whatever
2 5,000 megawatts out of 60 would be was what it increased
3 in that period of time.
4 BOARD MEMBER MCFAWN: I don't know if you can help
5 me with this or not, but we do hear a lot and-- about
6 California and are we comparable or similar problems and
7 that type of thing. Do you know of any resource that
8 describes what California has suffered through most
9 recently as far as its marketing and its capacity and
10 all that?
11 MR. MONK: Well, there are several trade
12 publications and industry newsletters and things that
13 follow that situation very closely. I have a file about
14 that thick on it that I can give you some information.
15 You know, I-- if you don't mind, I can give you my
16 personal opinion.
17 BOARD MEMBER MCFAWN: That would be great.
18 MR. MONK: There are two problems with California
19 that we-- number one, the first problem, we avoid it
20 here in Illinois, and that is they designed a system
21 that was doomed from the start, in my opinion. They
22 didn't really deregulate their system. They just
23 shifted regulation around. They set up a situation
24 where their utilities could only buy power from a
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1 state-mandated, state-operated power exchange. There's
2 no-- There really isn't an open market for power per se
3 in the California system that was designed. It really,
4 you know, shifted things around, but it didn't really
5 create a competitive marketplace, and that's one of the
6 major problems.
7 The other major problem is what I touched on in my
8 testimony, and that is they have-- they had before they
9 even started their process of deregulating a tremendous
10 supply problem. They were importing a lot of power from
11 out of state at that point, and they haven't added any
12 power to speak of since then. Their demands are growing
13 exponentially, and what really happened on the power
14 supply side this time was they couldn't get out-of-state
15 power suppliers to sell power into California at the
16 artificially low prices that the government was setting,
17 so that's a big part of their supply problem. And so
18 those two things kind of came together, and
19 unfortunately the people in San Diego were the first
20 ones to feel the effect of that.
21 BOARD MEMBER MCFAWN: Thank you. That does help a
22 lot.
23 MR. MONK: Thank you.
24 HEARING OFFICER JACKSON: Anything else?
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1 CHAIRMAN MANNING: Thank you.
2 HEARING OFFICER JACKSON: Thank you very much.
3 MR. MONK: Thank you very much.
4 HEARING OFFICER JACKSON: At this point, before we
5 call our next speakers forward, why don't we take a
6 short ten-minute break, and we'll come back in ten
7 minutes, then.
8 (Brief recess taken.)
9 HEARING OFFICER JACKSON: Okay. We'll go back on
10 the record now. One point of clarification. Mr.
11 Gregory left an exhibit with the court reporter that I
12 was not aware of, so we've now marked that as Gregory
13 Exhibit 1, and it has been admitted into the record in
14 this matter. Our next speaker, I believe, Mr. Silva?
15 MR. SILVA: Yes.
16 HEARING OFFICER JACKSON: Okay. Whenever you're
17 ready.
18 MR. SILVA: Thank you. My name is Patricio Silva.
19 I am the Midwest Activities Coordinator for the Natural
20 Resources Defense Council. The Natural Resources
21 Defense Council is a membership organization of 400,000
22 members nationwide originally organized in 1970, and
23 we've been working on clear air and clean water issues
24 and most recently electric restructuring heavily in both
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1 California and in New York, and I'm here today in part
2 to convey the experience of our offices in the New York
3 and California examples to offer what lessons they may
4 have to hold for Illinois.
5 First, I just wanted to kind of step back and point
6 out a couple of general trends that we've noticed of
7 interest to us vis-a-vis what's occurring in California
8 and in the eastern United States in terms of the siting
9 and construction of gas turbines. Particularly,
10 starting in New England, about four to five years ago,
11 there was a massive influx of new capacity being
12 proposed, approximately 25,000 megawatts. Eventually,
13 only about 9,000 megawatts of that capacity was actually
14 permitted and came to construction. Many of the units
15 were-- smaller merchant developers sold them. There was
16 regular consolidation in the IPP industry during that
17 time, so it was actually kind of hard to keep track of.
18 But in the end, today we have a large number of
19 units that are all combined-cycle units. Many of them
20 are load-following, a few are base-load units, but
21 clearly, the overwhelming majority are not peaking
22 single-cycle units. Part of the reason was the
23 attraction for mainly the host communities was in having
24 units that had a clear value, and in terms of benefits
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1 to the community and the state, there was a definite
2 need and recognition of need for additional capacity,
3 but also, given the status of the severe non-attainment
4 area and serious non-attainment areas, a classification
5 for many of the locations where these units went in,
6 there was a strong argument, and successfully, many of
7 them were permitted with fairly stringent air and also
8 cooling water requirements.
9 A number of the units rely on dry cooling with low,
10 if any, water withdrawals. Many of them rely on
11 closed-loop systems that have a one-time withdrawal of
12 water, and the permit restrictions are unusually
13 restricting in that many of them are solely natural
14 gas-fired. They have no option of fire oil.
15 Now, that trend is being repeated across the United
16 States, and the Energy Information Administration now
17 forecasts that by 2020 there will be a need for
18 approximately 300 gigawatts, otherwise known as 300,000
19 megawatts, of new capacity across the United States.
20 Now, approximately 100,000 megawatts is supposed to
21 arrive by 2010, so what we're actually seeing is a
22 run-up to what should be a very hectic period in the--
23 across the United States as a large number of units will
24 be sited and permitted and built across the country to
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1 serve different reliability regions and isolated local
2 pockets.
3 One of the concerns that we have is that some of
4 the locations that are being selected now early in the
5 process may not be ideal and may actually frustrate the
6 siting of new, more advanced units later in this
7 construction cycle. We as an organization are in favor
8 of replacing and backing out older fossil fuel
9 fired-units, particularly coal-fired units, so we have
10 fought and continued to advocate in both federal and
11 state regulatory and in legislative forums for
12 comprehensive legislation that would essentially call
13 for the repowering of coal-fired units and replace them
14 with combinations of more natural gas-fired units,
15 greater reliance on renewable resources, and also a
16 greater investment in energy efficiency.
17 This actually has two different goals. One is the
18 short-term benefit that it can actually essentially
19 shave off enough of the demand to avoid some of the peak
20 demand episodes that we've suffered both here in Chicago
21 in 1999 and also across northern California this summer
22 and in isolated pockets elsewhere across the eastern
23 seaboard.
24 In terms of the questions put to the Illinois
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1 Pollution Control Board by Governor Ryan, we do not feel
2 that per se individual single-cycle units require more
3 rigorous analysis than they currently have. Now,
4 that's-- there are a couple of caveats I'd like to make
5 with that statement. We believe that it was a mistake
6 for EPA to issue the 182(f) NOx waiver for the Lake
7 Michigan area. We think that the results of that
8 decision have been counterproductive and will continue
9 to be so.
10 We're also concerned that that waiver is actually
11 discouraging the siting of the most and cleanest
12 categories of generation in the region in favor of less
13 efficient units which will have a longer lease on life
14 than they otherwise would had the full gamut of Title I
15 requirements under the Clean Air Act been in effect in
16 this region.
17 In the area of-- And one of the areas that we're
18 also concerned with is also water withdrawals for the
19 single-cycle units. We note that there are in many
20 parts of the state and also across the Great Lakes
21 region units being suggested that would require
22 significant withdrawals on limited aquifers, and that
23 also may jeopardize the ability of future units to come
24 in at a time when additional demand is required.
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1 So one of the things that we have sought in several
2 states, particularly in California and New York-- and
3 I'd like to go into the California experience in-- at
4 some detail in a few minutes-- that a more comprehensive
5 assessment of the actual need for the units be taken
6 into account. Essentially, we would suggest that
7 Illinois consider a process whereby a more comprehensive
8 total energy strategy is developed with stakeholder
9 input that would essentially serve as a blueprint to
10 help guide decisions of various state agencies, whereby
11 the communities right now, many municipalities in the
12 state have complained, rightfully so, that they feel
13 somewhat bereft of state assistance in assessing whether
14 or not some of these projects are a best fit for their
15 particular communities.
16 And understanding that, some of these kind of
17 centralized processes that are available in states such
18 as California and New York allow for participation of
19 the public and fund that participation as part of the
20 permit applications for the plants. They essentially
21 provide for intervenor funds based on a prorated share
22 of the proposed generation capacity of the unit which is
23 allocated for expert witnesses and technical assistance
24 to the communities and the stakeholders.
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1 For example, under Article X of the New York Public
2 Service Law, it's a 50-50 split on projects where
3 projects are assessed at $1,000 per megawatt up to
4 $300,000 maximum for a project, and that-- those funds
5 can actually be split between the municipality involved
6 and interested stakeholders. Any balance of funds that
7 are not exhausted are then returned to the applicant.
8 That would be-- That's one part. We're not saying that
9 that's the only solution or the best solution for
10 Illinois. That's an option that we thought it was
11 important to mention and provide some solution and a
12 greater sense of control.
13 Many of us in these communities have been pointing
14 out that there's a sense of loss of control under the
15 local zoning decisions, and those issues are ones that
16 we feel will only worsen in the future if they're not
17 addressed now. Again, we're most concerned, again,
18 looking at the future where we see a situation where
19 we'll essentially have a Balkanized area where some
20 communities are more willing or tolerant to accept these
21 projects, others will fight them at any cost regardless
22 of the actual value or how meritorious future projects
23 may be, and we're talking both about natural gas
24 combustion turbine units and also renewable projects,
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1 which we believe are going to have similar problems in
2 the future as some of those projects try to move
3 forward.
4 One of the things that has been mentioned in prior
5 testimony at length is the experience of California and
6 what happened this summer, and I'd just like to go into
7 those particular details for a few minutes. The
8 conventional wisdom was that this summer that the entire
9 energy system in California was essentially surging out
10 of control, that the Internet was creating a huge demand
11 for electricity and a booming economy was to blame. The
12 actual reality is slightly different.
13 The system peak grew between 1990 and 1999 by less
14 than 2 percent per year and up to about 50,000 megawatts
15 with 41,000 megawatts representing total demand on the
16 three largest investor-owned systems. Total state-wide
17 consumption of electricity increased at less than 1
18 percent per year from 1990 to 1998. That's actually
19 less than one-third of the rate that California
20 experienced during the 80's.
21 The most recent data from this summer indicates
22 that the short-term consumption increases over the first
23 six months of this year compared to a same period last
24 year were not particularly unusual, even with warmer
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1 weather playing a strong role. For example, in the June
2 2000 electricity spike, there was a 13 percent increase
3 in consumption compared to a much cooler June of the
4 year earlier.
5 This was used repeatedly by-- in the media to point
6 out that there was something clearly amiss, when in fact
7 we're talking two slightly different situations. It was
8 a much cooler year last year in California and also a
9 much hotter year earlier than anyone expected this year,
10 and there was also an unusual situation going on
11 throughout the Pacific Northwest this summer that was
12 not the case last year or the year before. Hydros
13 contribution across the region was significantly
14 curtailed. Essentially, rainfall across the Sierra
15 Nevadas, the Cascade, was much lower and was actually
16 near historic low, so much of that generation capacity
17 was reduced, and in many cases there were constraints in
18 the system that prevented exports into California.
19 Complicating matters were that those-- that heat
20 spike also coincided with a spike in natural gas prices,
21 sending them above $5 per million BTU. The first three
22 weeks of July saw more moderate weather in California,
23 and then both electricity and peak consumption were down
24 compared to the same period a year earlier. The average
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1 wholesale electricity price dropped about 40 percent.
2 However, it is still quite high. It's ranging at around
3 7 cents per kilowatt hour, and even-- we believe that
4 that could return to be a problem in the coming weeks
5 and months ahead.
6 One of the things that was pointed out was that--
7 again and again in some of the testimony was that there
8 hasn't been new generation added to the system recently,
9 in the last 20 years. There are two different things
10 that work. One was the decision by California to invest
11 heavily in energy efficiency and renewables, and in the
12 early 1990's there was a compromise reached whereby
13 there was going to be a great deal of additional natural
14 gas capacity built, but due to federal intervention,
15 none of that capacity was actually added to the system.
16 Now, that energy efficiency actually has already
17 done a great deal of good. Peak electricity demand has
18 been reduced about 10,000 megawatts and total annual
19 consumption has been reduced about 15 percent. Since
20 1990 alone, energy efficiency investments have reduced
21 state-wide electric bills by approximately 2.8 billion.
22 The Rand Corporation recently pegged the per capita
23 benefits from 20 years of energy efficiency programs in
24 California at about $1,000 per capita with cumulative
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1 utility investment for such purposes averaging only
2 about $125 per capita, which is a sizable return.
3 There was also in the last week a spate of good
4 news for the region, and California-- Governor Davis
5 allowed several bills to be enacted which will add
6 approximately 2500 megawatts of new renewable capacity,
7 including geothermal, wind and some small-scale hydro to
8 the grid over the next ten years. There's also an
9 extension of energy efficiency building on accredits
10 which are rated as offering 150 megawatts per year in
11 sustained load reduction. There's also a separate R&D
12 fund which will allow about 5 billion dollars in
13 investment for energy efficiency, renewable energy and
14 clean energy over the next ten years. It's a renewal of
15 an existing fund that expired this year.
16 The California experience to us demonstrated that
17 there are several issues at hand. One is that that
18 market is very much in transition. They are incomplete
19 market mechanisms that work today that will not be fully
20 converted for several years, and as a result, there are
21 going to be price spikes and dislocations in the system,
22 but we don't think that the system itself is
23 fundamentally wrong. We think that there's significant
24 opportunities for improvement, but we think that system
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1 will improve in weather, and it offers Illinois and
2 other parts of the Midwest some lessons on what could be
3 used and what might not be the most useful tools.
4 I'd like to cut short the rest of my comments and
5 place them in the record and use the remaining time to
6 answer any questions that I hope you have.
7 HEARING OFFICER JACKSON: Thank you, Mr. Silva.
8 Any questions now?
9 BOARD MEMBER KEZELIS: I do. Thank you, Mr. Silva,
10 for coming here today. I do have several questions.
11 You referred early on in your testimony to your
12 organization's preference that states such as Illinois
13 focus on renewable sources of energy. When you use the
14 term renewable, for the record, could you clarify what
15 you mean?
16 MR. SILVA: By renewable, we would mean wind,
17 sustainable biomass, small-scale hydro and other
18 products that amass certification requirements through
19 green or other third-party certification processes that
20 have evaluated the energy source and have certified that
21 it actually is provided in a sustainable manner and
22 qualifies.
23 I'd be remiss also not in mentioning of
24 photovoltaic and solar thermal. We're particularly
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1 interested in what Spire Technology is doing in Chicago
2 with its thin-film photovoltaics, but that is
3 something-- all of those technologies are ones that we
4 support. That also doesn't mean that there aren't other
5 renewable technologies in the future that we won't turn
6 and become advocates for, but those are the available
7 ones that we see now that hold the most promise for
8 making immediate contributions.
9 BOARD MEMBER KEZELIS: For making immediate
10 contributions.
11 MR. SILVA: Yes.
12 BOARD MEMBER KEZELIS: You would agree, would you
13 not, though, that something like hydro on a larger scale
14 is simply not practical for a state like Illinois?
15 MR. SILVA: Gee, probably not.
16 BOARD MEMBER KEZELIS: Okay. Thank you. You also
17 focused a great deal of your attention today-- and for
18 that we're very appreciative-- on your experiences and
19 your organization's experiences in California and in New
20 York. We've heard testimony earlier that other states
21 which have experienced some of the controversies
22 associated with peaker plants include Wisconsin and
23 Indiana. Are you aware of any other states?
24 MR. SILVA: I'm aware of a variety of unsuccessful
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1 single-cycle combustion turbine projects that failed
2 across New England, mainly because the permitted
3 developers failed to make the case with communities that
4 they would be useful additions. There are some projects
5 that were permitted also in California as single-cycle
6 projects but they failed to acquire necessary financing
7 and were withdrawn after obtaining the necessary
8 permits.
9 I'd offer we recently took a look at the available
10 permitting databases and found that there were in the
11 last three years 750 combustion turbines that received
12 permits across the United States that we had quick data
13 for. We believe that number's closer to 1,000, so--
14 BOARD MEMBER KEZELIS: Single and combined.
15 MR. SILVA: Single and combined, and I would say
16 that the majority of those units was clearly
17 combined-cycle configurations. Many of them were going
18 in initially or were proposed as in phase one, with the
19 second phase intended to augment them to combined-cycle
20 operation, but very few of the units were being proposed
21 as dedicated single-cycle units.
22 CHAIRMAN MANNING: Those figures are nationwide?
23 MR. SILVA: Those figures are nationwide, and I
24 would offer the caveat that they were from EPA's
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1 permitting division, and they actually have a database
2 that is not up to date. It's at least six months old.
3 And we did a considerable amount of research on our own,
4 contacting the regions individually to actually augment
5 that database and fill in some gaps in theirs.
6 HEARING OFFICER JACKSON: I just want to clarify
7 too for the record you just mentioned EPA, and you did
8 earlier regarding the NOx waiver. You're referring to
9 USEPA as opposed to IEPA, correct?
10 MR. SILVA: Yes. I would refer to it as EPA for
11 the U.S. Environmental Protection Agency and IEPA for
12 the Illinois Environmental Protection Agency.
13 HEARING OFFICER JACKSON: Thank you.
14 BOARD MEMBER KEZELIS: Thank you, Mr. Silva.
15 BOARD MEMBER LAWTON: I would just want to comment
16 that I'm so happy that the NRDC is here today and
17 participating in our hearings, your organization. Can
18 you hear me? Maybe it's not on.
19 HEARING OFFICER JACKSON: That's better.
20 BOARD MEMBER LAWTON: I'll repeat what I said, for
21 what it's worth. I'm happy to see that the Natural
22 Resource Defense Council is participating in our
23 hearings. I think your organization has played an
24 outstanding role in the last 30 years, and it's nice to
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1 see you. You had mentioned some of the-- Maybe the
2 principal part of my question you answered part of
3 already since I wrote the question up, but you mentioned
4 that the interest in peaker plants was at least in part
5 attributable to the fact that it would cause-- I'm not
6 sure I'm using the right expression-- but you mentioned
7 a legal backing out of coal-fired units or at least a
8 diminution of coal-fired units?
9 MR. SILVA: Yes.
10 BOARD MEMBER LAWTON: I wondered whether you had
11 given that-- your organization had given thought to some
12 of the areas of concern that have been expressed in the
13 various hearings we've had as to matters that might not
14 be favorable from the use of peakers. One is the noise
15 that's attributable to them, the nitrogen oxide that you
16 at least commented on in part, the extraction of
17 groundwater, which you also had mentioned, and the
18 matter of proliferation. I just wondered whether those
19 matters stand alone and apart from the fact that they
20 might supplant coal-fired units that have been
21 considered by your organization.
22 MR. SILVA: It's something that we have definitely
23 not come to any final agreement or decisions on. It--
24 There are several different strategies that work. One
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1 of our-- the overriding principles in our air and energy
2 program is that the cleanest form of energy is
3 absolutely without question energy efficiency. If you
4 don't have to generate the electricity in the first
5 place, that's the greatest benefit to the environment
6 without question.
7 As a result, we devote a considerable amount of our
8 resources and advocacy efforts to energy efficiency
9 improvement measures. We currently have a bipartisan
10 bill before congress which we are hopeful will actually
11 offer new tax incentives for energy-efficient
12 residential and commercial building construction. We
13 also obtained a similar commercial building construction
14 tax code for the State of New York and California.
15 We've also been at work on upgrading and improving
16 national major appliance energy efficiency standards.
17 Getting back to the peaking units themselves, the
18 natural gas-fired combustion turbine technology has
19 several benefits over coal, most noticeably or both the
20 fact that in terms of the demands on water and their
21 resulting air emissions are a fraction of what a
22 coal-fired unit is. However, we're currently facing
23 somewhere between 55 and 70 proposed projects, and many
24 of the combinations that I've seen are projects
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1 involving six to ten turbines. On a hot summer day when
2 you have background ozone conditions already near or at
3 the one-hour or let alone the eight-hour ozone health
4 standards, the prolonged operation of any of those
5 natural gas-fired units will exacerbate ozone smog
6 pollution. You'll also have fairly modest but
7 noticeable particulate pollution from these plants.
8 However, in comparing them to coal, they are by far and
9 away the preferred solution, and in our minds, the real
10 urgency is backing out as much of that coal.
11 Unfortunately, these units are going in on top of
12 it. We're under no illusions that these units will be
13 looking for the sweet spot in the market, and I would
14 just note that the owners of the existing natural gas
15 combustion turbine capacity, including peaking capacity,
16 in California enjoy a bonanza that boggles the mind and
17 has actually pushed two of the incumbent investor-owned
18 utilities towards what they describe artfully as
19 technical bankruptcy just from this summer generating
20 season alone. So this-- there are no easy solutions,
21 unfortunately, to this matter.
22 Regarding the question of noise, I think that some
23 of the units arguably could have better noise abatement
24 technologies installed. In some cases it's either the
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1 structure that surrounds the unit might require
2 additional acoustic shielding, but frankly, there may be
3 situations where we found that there are projects in the
4 state of New York that were entirely inappropriate for
5 the proposed location based on aesthetic, water, noise
6 and air pollution contribution, in part because many of
7 those host-- potential host communities were already
8 bearing a heavy load in terms of pollution, whether it
9 be aesthetic, noise, air or water.
10 BOARD MEMBER LAWTON: Thank you.
11 CHAIRMAN MANNING: Could you follow up on the New
12 York example? Did it-- Does New York-- the State of New
13 York have some sort of siting requirements that were
14 brought to bear on those issues you just talked about in
15 terms of the New York examples?
16 MR. SILVA: In the New York example, we actually
17 are an intervenor in the TG&E Athens, New York, project,
18 which is a 1,080 megawatt combined-cycle unit,
19 state-of-the-art technology, and actually, no question
20 that its air pollution controls are going to be among
21 the best in the nation, but what we found was the unit's
22 going to be on the shoreline of the Hudson River in the
23 most scenic section of the Hudson River Valley.
24 Aesthetically, the 150-foot tower stack leaves something
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1 of a footprint or a visual eyesore, and the water
2 withdrawals for the unit would have been considerable.
3 One of-- We were not satisfied with the conditions
4 proposed entirely on the unit in the granting of its
5 permit by the siting board. It was required to adopt
6 dry cooling. And this is something that I think we're
7 going to have to go through again and again on a
8 case-by-case basis, where are those most advanced or
9 best available control technologies, to borrow a phrase
10 from the Clean Air Act, necessary to preserve particular
11 qualities in the host community that merit such
12 attention or safeguards.
13 BOARD MEMBER MCFAWN: You mentioned the need for
14 the siting authority.
15 MR. SILVA: Uh-huh.
16 BOARD MEMBER MCFAWN: Could you explain, was that a
17 local siting authority or was it a state siting
18 authority? And before I forget, also could I ask you to
19 explain that-- you said that best available control
20 technology and that type of thing and you mentioned that
21 that particular site or unit had to agree to dry
22 cooling, and then you mentioned the Clean Air Act, and I
23 would have thought the water withdrawal question would
24 be unrelated to the Clean Air Act.
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1 MR. SILVA: I'm sorry if I created any confusion
2 regarding your last question. Yes, it's unrelated to
3 the Clean Air Act. The water withdrawals were in part
4 because there was some concern about adverse impact from
5 the water withdrawals on the Hudson River for several
6 fish species in that section of the Hudson River. I
7 cannot remember off the top of my head if there was any
8 impacts for nesting birds, but I don't believe so.
9 The siting process for the State of New York is
10 based on Article X of the New York Public Service Law.
11 It creates a New York state board on electric generation
12 siting and the environment. Most of the board members
13 are appointees of the governor or are actually the heads
14 of various state agencies or their appropriate
15 representatives. It actually requires a multistep
16 review process. There's a preliminary scoping statement
17 that's first required to be submitted. The applicant
18 then has to publicize the project and actually establish
19 a presence in the potential host community to ensure
20 that there's adequate opportunity for the public to gain
21 information.
22 I mentioned in passing that there was a requirement
23 that when the full application is filed that a fee equal
24 to the prorated amount of its maximum generating
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1 capacity up to $300,000 be made available to provide for
2 expert witnesses and public assistance to the host
3 community and any interested parties or organizations,
4 and that it go through an open hearing process and-- but
5 ultimately-- and we're not taking a position one way or
6 the other-- the-- under Article X, the siting board does
7 have the authority to supersede local municipal zoning
8 ordinance, so that's something that I wanted to point
9 out. We're-- Quite frankly, the law was actually
10 amended in 1999. The Athens project is one of a handful
11 that are currently in that process, and so we are
12 waiting to see what actual experience tells us about in
13 that process and whether or not it has any pitfalls.
14 CHAIRMAN MANNING: The Athens project is the one on
15 the Hudson River you just referred to?
16 MR. SILVA: Yes.
17 CHAIRMAN MANNING: I assume that that is not a
18 natural gas-fired peak-load facility; that's something
19 other than that. It's probably a base-load.
20 MR. SILVA: I believe it's-- I was looking for a
21 representative to come-- I believe it is intended to be
22 a load-following unit that we'll be selling onto the
23 wholesale market. I am-- I don't know off the top of my
24 head whether or not they had a long-term contract with
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1 anyone or for any industrial uses, but I believe they're
2 intending to go onto the wholesale market, but I would--
3 I can actually find that out easily enough and simply
4 insert it into my comments.
5 CHAIRMAN MANNING: Thank you.
6 BOARD MEMBER MCFAWN: She mentioned it-- whether--
7 is it natural gas-fired or is it--
8 MR. SILVA: Oh, yeah. No, it most certainly is.
9 BOARD MEMBER MCFAWN: Thank you.
10 BOARD MEMBER MELAS: Just a follow-up on that
11 previous question in the New England experience. As
12 congested an area as that is, have you heard of any
13 instances where there have been any interference with
14 aviation with the velocity of these fumes of-- plumes
15 going up?
16 MR. SILVA: As in with commercial aviation?
17 BOARD MEMBER MELAS: Commercial or private. It's
18 probably more likely to interfere with the smaller
19 planes.
20 MR. SILVA: No, I'm not aware of, and I would note
21 that there's actually-- I grew up in Boston, and if
22 anyone's ever flown into Boston airport, into Logan,
23 when they're making the final approach, they have to fly
24 over one of-- a very large coal-fired power plant in the
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1 final approach, and we've always wondered what that was
2 doing to some of the commercial aircraft and the jet
3 engines, but I've never heard of any aircraft actually
4 suffering any harm from the flue gas exposure. There
5 has--
6 BOARD MEMBER MELAS: Of course I would imagine that
7 the gas-fired turbine chutes, they exhaust up at a much
8 higher velocity than the coal-fired plant would.
9 MR. SILVA: It does, and I'd also note that one of
10 the things is that natural gas just in the-- as a
11 working fluid and even as an-- there's considerably less
12 volume to deal with. I mean, the-- just the quantity of
13 the pollutant expelled by similar-sized coal-fired power
14 plant compared to similar-sized natural gas-fired
15 facility, it's rather astonishing.
16 BOARD MEMBER MELAS: Oh, no-- yeah, no question
17 about that. I'm talking about velocity of the
18 pollution--
19 MR. SILVA: Yeah.
20 BOARD MEMBER MELAS: -- flow going up, because you
21 have a substantial amount of testimony both in
22 Naperville and up in Grayslake about that question.
23 MR. SILVA: It can create-- and one of the things
24 that-- some of the dispersion models have to be quite
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1 sophisticated to account for it. There are local
2 microclimate variations that can be created, especially
3 if the unit is going to be located in a river valley,
4 for instance, where there is a thermal clime that
5 develops during winter months. So there are some areas
6 that we're aware of where there are some issues,
7 especially on low or high pressure days. I know there
8 are several instances along the Ohio River Valley where
9 some stacks are actually at more or less eye level with
10 some communities on-- located on bluffs overlooking
11 them, and those-- they actually do experience hitting
12 and other downwash effects, but that's fairly unusual
13 meteorology and not something that we've ever seen as a
14 common or more difficult problem.
15 BOARD MEMBER MELAS: One last item. Getting back
16 to the renewables, you wouldn't-- would you or would you
17 not consider a nuclear plant to be renewable?
18 MR. SILVA: That's like my favorite trick question,
19 and I've got an easy out, because when we're looking at
20 any generation technology, we look at the life cycle of
21 the technology, and one of the things that we've
22 actually been looking at is the waste products in the
23 construction to the decommissioning of the facilities.
24 Nuclear has an ongoing and well-recognized waste product
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1 handling issue that I think until that particular issue
2 is resolved, it puts the future of the industry in some
3 question. I'd just like to note, though, that NRDC is
4 not opposed to nuclear technology as a technology. We
5 feel that in its current application, the risks outweigh
6 the current benefits.
7 BOARD MEMBER MELAS: Would that be true were you
8 ever to achieve fusion rather than fission?
9 MR. SILVA: Well, we could conceive some
10 applications of nuclear technology where there are
11 actually adequate safeguards in the handling and storage
12 of spent fuel that would be appropriate. Fusion, we
13 don't even-- I mean, it's too far down to--
14 BOARD MEMBER MELAS: Pie in the sky.
15 MR. SILVA: Pie in the sky, but a lot of this pie
16 in the sky--
17 BOARD MEMBER MELAS: So was the Manhattan Project.
18 MR. SILVA: Right. But so was solar-- thin-film
19 photovoltaics, but now we're actually manufacturing that
20 in Chicago. So while we recognize that we don't know
21 exactly what's going to happen, again, we go back-- we
22 go through the whole life cycle of the product and see
23 what it contributes and what its downsides are.
24 BOARD MEMBER MELAS: Thank you.
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1 BOARD MEMBER FLEMAL: Did I understand correctly
2 that the gas-fired power plants you were referring to in
3 the northeast were largely combined-cycle?
4 MR. SILVA: Almost exclusively.
5 BOARD MEMBER FLEMAL: Almost exclusively?
6 MR. SILVA: I can probably include in my comments a
7 list of all the units.
8 BOARD MEMBER FLEMAL: The-- And are those
9 dominantly peaker plants or are they base-load, cover
10 the range?
11 MR. SILVA: The-- There are several units that have
12 been proposed but not yet constructed by several
13 successors to the incumbent utility generating assets.
14 Some developers actually came in and bought coal-fired
15 and oil-fired units and have announced recently that
16 they intend to repower them, and those units are
17 intended to operate as base-load units. The great
18 majority in my understanding-- and I don't believe the
19 economics have changed dramatically-- is that the
20 combined-cycle units that are operating today are
21 load-following units.
22 BOARD MEMBER KEZELIS: Are what?
23 MR. SILVA: Load-following.
24 BOARD MEMBER KEZELIS: Thank you.
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1 MR. SILVA: They are intermediate. They are
2 dispatched-- They are not the first to dispatch, but
3 they certainly would be operating well before any peak
4 demand conditions.
5 BOARD MEMBER FLEMAL: What's your understanding
6 about the nature of the peaker plants that have been
7 proposed in Illinois in terms of whether they're single-
8 or combined-cycle?
9 MR. SILVA: My understanding is that your-- the
10 overwhelming majority of the projects are single-cycle
11 units. I've seen some breakouts, and I've only-- I
12 believe out of fifty or sixty, five or ten seem to
13 suggest that they're actually intended to be base-load
14 units. Some of them include some repowerings in
15 Illinois.
16 BOARD MEMBER FLEMAL: Well, is there a difference
17 here, then? Are we talking about two different kinds of
18 facilities, those that you're encountering in the
19 northeast and the ones that are down to the spur of why
20 we're here today?
21 MR. SILVA: At first glance, yes, except that's--
22 there was a kind of gold rush mentality four years ago
23 in New England. It-- The perception was you had to get
24 in quickly into the market, and quickly meant getting--
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1 bulking a jet engine on the ground, and a single-cycle
2 was frequently the way to go. Many of those projects
3 failed. They encountered a rather wilting opposition
4 from the communities and in some occasions the
5 permitting agencies that felt that this was not the
6 appropriate technology to be using, and in some of-- in
7 many occasions the public service commissions also had a
8 say, and they were looking for combined-cycle because
9 the units are often more efficient.
10 At the time there was a limited amount of natural
11 gas supply available in New England. I know that that's
12 an issue that is maybe slightly resolved in that the
13 Alliance Pipeline is starting to serve parts of northern
14 Illinois, and there's expectation that there will be
15 additional capacity expansions in the region. But for
16 New England, there was also the issue of some of the
17 units, there was also a race to get and lock in
18 available natural gas supplies. In fact, two units to
19 my knowledge are intending to rely exclusively on
20 liquefied natural gas imported from Algeria.
21 BOARD MEMBER FLEMAL: But those are facilities in
22 New England.
23 MR. SILVA: In New England. They are intending to
24 ship it over by tanker from Algeria, and those units
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1 over there have figured out that's economical.
2 BOARD MEMBER FLEMAL: Do you see anything in that
3 experience in New England that ought to be object
4 lessons for us here in Illinois?
5 MR. SILVA: Well, one of them was that there was
6 some fairly recent arguments put forward against what we
7 thought were some fairly marginal projects. I mean,
8 it's similar numbers. It was just a huge volume, 20,000
9 megawatts, I think, in proposed projects at one point,
10 and there was some-- and many of them were being sited
11 on top of one another, and there were questions about
12 just-- about whether it would be-- unduly tax not only
13 the natural gas delivery system with construction of all
14 the laterals; also the question of the host communities
15 and the adverse impacts.
16 There's a region in Massachusetts, Blackstone
17 Valley, immediately north of the Rhode Island border
18 that at one point had six or seven projects, and I think
19 that ultimately four were built, and it was again a
20 case-by-case assessment by a variety of siting agencies,
21 and in many cases it uncovered that some of the
22 developers were actually simply preparing three or four
23 sites, and simply whichever site came through first they
24 were permitting, so it may be a case that not all of the
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1 units we're currently facing will actually go in, but I
2 would say that if anything that kind of came clear was
3 that there wasn't necessarily the need to rush to a
4 decision on every single project; that it might be a
5 situation where, you know, the first 8 to 10 thousand
6 megawatts might be a logical place to stop when you
7 consider where you are and see if this is actually in
8 the best interests.
9 BOARD MEMBER FLEMAL: A lot of the downside that
10 you just mentioned regarding New England's experience
11 seems to be a downside that was borne by the investors.
12 MR. SILVA: Uh-huh.
13 BOARD MEMBER FLEMAL: A lot of money was obviously
14 poured into planning some of these and for one reason or
15 another they weren't built. Were there downsides as
16 well to the environment in that experience?
17 MR. SILVA: Well, in terms of-- and there were
18 potential downsides just in the sheer volume of the
19 number, and there's also-- I mean, much of Illinois is
20 in attainment for most of the criteria of pollutants, so
21 much of Massachusetts is not in attainment. For
22 example, a big chunk of Maine is free and clear, but
23 there are portions of it as well. Most of the states
24 are all impacted by ozone precursor pollution, so there
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1 was also some different issues there. There were
2 already adverse impacts. In the case of Illinois, you
3 have somewhat of a luxury that you can avoid forcing the
4 situation as to what's currently experienced across New
5 England and the eastern seaboard, so in one way we would
6 offer the object lesson that choose carefully.
7 BOARD MEMBER FLEMAL: In a slightly different
8 direction-- but it actually ties in a little to what you
9 just noted-- you had stated your opinion that the
10 presence of a NOx waiver in Illinois acted in some way
11 to discourage what you would consider to be the optimum
12 setup of a power generation mix. Could you walk us
13 through some examples or an example as to how you see
14 that nexus between NOx waiver and the ultimate mix of
15 power generation that develops?
16 MR. SILVA: In our eyes, the 182(f) NOx waiver has
17 essentially extended the status quo. It's bought
18 Illinois additional delays for several more years than
19 it arguably would have had so that we would be farther
20 along in actually pursuing reductions from a variety of
21 sources, not just-- power plants I know are your primary
22 focus in this series of hearings, but there are also
23 other industrial boilers, which for Illinois are also a
24 substantial inventory of NOx emissions on their own-- in
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1 their own right.
2 There's been mention in passing about combined heat
3 and power facilities. That's a very innovative
4 technology where the-- in addition to generating
5 electricity, they also create thermal heat in the form
6 of steam that's used usually on site or at an adjacent
7 facility for a useful process. Projects like those
8 arguably have been in some ways frustrated, because
9 those projects arguably would have been moving in if--
10 because the Clean Air Act is supposed to be
11 technology-forcing and it's supposed to be pushing
12 existing sources to clean up. The-- Under the Title I,
13 sources would have been facing diminishing allowances
14 that are required to have been offsets, so there would
15 have been an incentive to replace these same sources of
16 pollution with cleaner sources.
17 Instead, the 182(f) waiver simply stalled
18 everything where it was, and now we're waiting for the
19 NOx SIP call, hoping it will be a cure-all for all the
20 woes, and frankly, we don't believe it will get Illinois
21 into attainment on its own without additional
22 reductions, so in a way, that it's actually discouraged
23 the introduction of the most innovative,
24 state-of-the-art facilities. And also, from the
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1 regulatory assessments that we've seen on the air
2 permits for existing facilities, the region is not
3 looked at elsewhere in the country as a technology
4 leader in terms of requiring the best and
5 state-of-the-art pollution controls, which we think it
6 should be doing in recognition of the severity of the
7 ozone problem. In fact, we expect it's going to worsen
8 considerably over the next decade here without firm
9 regulations.
10 BOARD MEMBER FLEMAL: You don't believe that the
11 NOx SIP call will be technology-forcing?
12 MR. SILVA: The NOx SIP call is going to get
13 Illinois towards attainment of the-- I mean, in our
14 mind, the NOx SIP call is just a tool to achieve
15 assignment of the one-hour ozone standard and hopefully
16 eventually the eight-hour ozone standard, but it will
17 have a technology-forcing edge to it, but arguably, the
18 182(f) NOx waiver has-- will mute its-- the ability. I
19 mean, we're going to see elsewhere across the upper
20 Midwest a great deal more in the way of technology for
21 some turnover in fleets and in sources, and we're going
22 to see some fairly innovative strategies from some of
23 the affected sources.
24 We saw a whole range of tactics and behaviors in
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1 the existing ozone-- I'm sorry-- NOx trading market that
2 serves the ozone transport region in the northeastern
3 United States, which started in 1999 and entered its
4 second year this year, and we've seen a lot of activity
5 happening there, and a lot of the sources report to us
6 and in trade publications that they're motivated in
7 large part by the requirements of those programs. In
8 our minds, that's kind of a lost opportunity. They're
9 not going to recover ability because of the 182(f) NOx
10 waiver.
11 BOARD MEMBER FLEMAL: I guess I still don't quite
12 understand how the presence of the caps that occur under
13 the NOx SIP call won't effectively demand that power
14 generators generally apply some of the cleanest possible
15 technology simply so that they can emit under the caps.
16 MR. SILVA: Well, in part-- and I'm kind of hedging
17 here because I don't want to rob Brian Urbaszewski of
18 the American Lung Association of a large part of his
19 argument-- but one of the things that we find
20 problematic about the way NOx allowances are being
21 allocated under the NOx SIP call on several state
22 rule-makings is that they're favoring the incumbent
23 sources at the expense of future sources and that
24 cutting-edge technology.
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1 If you're a coal-fired power plant and you're
2 sitting on just enough allowances to squeak by, it's
3 going to cost a-- four or five years down the road,
4 when-- it's not that first or second year, but it's
5 going to be the fourth or fifth year of the NOx SIP call
6 where it's going to become increasingly difficult for
7 new sources to get in. They're going to have to be out
8 there looking and knocking off an incumbent source,
9 whereas an incumbent source will have a fully amortized
10 point source doing whatever it does, maybe manufacturing
11 process, maybe generating electricity. They're going to
12 have no incentive unless that new source that wants to
13 get into the market is willing to outbid them,
14 essentially, and we believe that in some cases,
15 incumbent sources are simply going to hoard their
16 allowances and they won't be willing to offer them into
17 the marketplace. So in that sense, we believe that
18 there's actually disincentive being created.
19 BOARD MEMBER MCFAWN: But that's not really
20 related, then-- wait a minute. I think-- I lost my
21 train of thought here. But you're saying, then, that
22 that's because of the way that the trade program and the
23 allocation program under our SIP call is currently
24 proposed. I thought your question went to a different
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1 topic than that, the waiver. Excuse me. It took me a
2 moment to think back, and we've jumped from topic to
3 topic, but I think Dr. Flemal was saying, well, how does
4 the waiver act as a disincentive to innovative
5 technology?
6 MR. SILVA: The waiver essentially excuses or
7 actually conditions NOx reductions within the affected
8 area, which for our purposes is the Chicago
9 non-attainment area and the rest of the Lake-- the
10 affected Lake Michigan area under the waiver. Without
11 that waiver, the technology-forcing requirements of
12 Title I of the Clean Air Act would require offsets that
13 would actually be valuable enough to existing sources
14 that there would be an essential-- an incentive for them
15 to turn over. And we would not see a wholesale
16 turnover. It wouldn't be anything approaching 100
17 percent. We're seeing behavior in similar markets.
18 About 20 percent of resources would turn over, but that
19 would be enough for better, cleaner technologies to get
20 a foothold.
21 And I'm drastically oversimplifying the-- that
22 argument, and this is one that I've been involved with
23 for four or five years, and we've argued at length in
24 various regulatory forms, but I'll be happy to take
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1 another crack at it in the comments I'll actually submit
2 to see if I can--
3 BOARD MEMBER MCFAWN: We would appreciate that. It
4 is a difficult topic.
5 CHAIRMAN MANNING: Going on to a different one and
6 maybe final one, if I might, we've-- you testified early
7 in your comments about the growth of total electric
8 demand in the country.
9 MR. SILVA: Yes.
10 CHAIRMAN MANNING: I think you said in 2020 we'd
11 have something like another 300,000 megawatt capacity
12 needed. Do you have any specific information regarding
13 Illinois' place in all of that and what maybe Illinois'
14 total electrical demand increases are going to be over
15 the next several years?
16 MR. SILVA: The 2020 figure is based on the--
17 CHAIRMAN MANNING: It was 2020 instead of 2012?
18 I'm sorry.
19 MR. SILVA: Well, no, out to 2020. The Energy
20 Information Administration using a forecast model, which
21 they have adjusted and is subject to peer review
22 analysis by some economists on a biannual basis, they
23 tweak to recognize changes such as the restructuring in
24 various states, changes in industry, ownership, the
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1 entrance of new market participants and changes in
2 demand across the country to essentially forecast. The
3 snapshot that they offer is that 300,000 megawatts of
4 new capacity will be required by 2020 at a minimum.
5 That model also points out that if you look to
6 2010, there's going to be an intermediate need of at
7 least 100,000 megawatts. Now, using that-- their model
8 forecasts that the overwhelming majority of that new
9 capacity will be natural gas-fired. We-- There are a
10 variety of other industry-- or in some of the
11 proprietary analyses that indicate that there are slight
12 differences and different estimates. It assumes that--
13 a fairly healthy economy with a load growth that more or
14 less tracks future growth in gross national product.
15 Some people actually take issue with that, noting
16 that there's actually been a slight decoupling in the
17 energy intensity of the U.S. economy over the last few
18 years. We don't know if that number is accurate. It
19 serves as a useful planning benchmark. Unfortunately,
20 that model is very difficult to run on a regional basis,
21 and we are aware that the reliability councils do some
22 planning out to-- usually in ten-year increments-- a
23 year ahead in ten-year increments for their own
24 reliability planning purposes, but we haven't seen a
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1 fairly sophisticated model that we have access to, and
2 being a nonprofit-- a corporation or trade association
3 may have access to information, so that might be a
4 question you might want to put to some of the industry
5 participants.
6 I did see in several instances in testimony
7 submitted already examples for-- specifically for MAIN,
8 but quite frankly, I spent about four days looking for
9 similar data and could find it nowhere anywhere on the
10 Internet without paying several thousand dollars for it.
11 CHAIRMAN MANNING: Thank you.
12 BOARD MEMBER KEZELIS: I have one more question.
13 CHAIRMAN MANNING: Go ahead.
14 BOARD MEMBER KEZELIS: As you know, California and
15 Illinois are both in various stages of deregulation of
16 their electric utility industries, and we've heard
17 testimony over the last number of days about the effect
18 of deregulation and the encouragement that it may have
19 caused to the peaker industry here in this state. What
20 is your opinion or your organization's opinion with
21 respect to the flurry of activity for peaker plants in
22 the New England states? What precipitated that?
23 MR. SILVA: Part of it was that there was
24 deregulation in quite a few of the states. That was the
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1 driving mechanism. You can also go back to simply FERC
2 with their Order 888 when they opened up the wholesale
3 market, creating conditions where you saw nationwide
4 interest in new capacity, and it really was the driver--
5 restructuring has been the ultimate driver behind this.
6 Also, frankly, unabashedly, we've been trying to
7 hitch our wagon to the train, because we see this as an
8 opportunity to recognize and capture some of the
9 environmental externalities associated with electric
10 generation. We don't think that people should be
11 polluting air and water to generate electricity in the
12 way they're currently doing, and we're maximizing the
13 opportunity. In some cases we've been at a state level
14 very successful. Massachusetts, for example, we're
15 backing out of a lot of coal-fired capacity right now
16 and replacing it with much cleaner natural gas
17 generation. There's a renewed emphasis on energy
18 efficiency opportunities and such. So in a way, there
19 are a lot of-- restructuring is the big driver, but
20 there are also some interesting and in some cases fairly
21 unique issues at hand. In some cases, some people
22 simply hate incumbent utility.
23 BOARD MEMBER MCFAWN: If you will indulge me, I
24 have a couple of questions, one that follows up on your
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1 last comment. You mentioned just now that the northeast
2 is moving towards more efficient energy production and
3 also reduction in demand, and you mentioned that
4 throughout your testimony, and can you tell me, what was
5 the impetus in California and New York, and now you just
6 mentioned the Northeast too, for this move toward energy
7 efficiency and renewable resources and also shaving the
8 need or the demand? Because other trade journals
9 actually say that we've moved away from that.
10 MR. SILVA: Well, I guess there are-- incumbent
11 electric utilities-- and if you look at the-- there are
12 various articles tracking this-- it's really quite
13 astonishing-- have largely abandoned energy efficiency
14 measures, mainly because they were largely mandated
15 programs by public service commissions across the
16 country, and as-- for various reasons, including
17 restructuring, public service commissions withdrew those
18 requirements, and the result was you've seen a wholesale
19 kind of abandonment of energy efficiency.
20 BOARD MEMBER MCFAWN: That's why they moved away
21 from that, but why did California go-- you mentioned
22 that California went towards it.
23 MR. SILVA: California actually took the opposite
24 tact. It actually goes back to a day starting in 1974,
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1 with legislation. They actually decided that one of the
2 things that they were going to pursue was trying to
3 diversify the energy resources. It was-- '74, obviously
4 it was a reaction in part to the energy crisis, and they
5 felt that they needed to kind of diversify their energy
6 portfolio, and energy efficiency was seen as an
7 opportunity to lower demand and kind of soften the blow
8 in the economy.
9 That actually-- And NRDC was very much engaged in
10 that advocacy very early along, along with a host of
11 other organizations. As much as we'd like to claim all
12 the credit, there were a lot of very good people making
13 some very good arguments, including the Union of
14 Concerned Scientists, utility rate payers, Consumer
15 Federation of America and others that pushed those very,
16 very hard in states like California, which frankly had
17 very sympathetic regulators and legislatures that wanted
18 to see those programs succeed and created the conditions
19 for them to succeed.
20 BOARD MEMBER MCFAWN: And they were sustained over
21 the last 25 years, then.
22 MR. SILVA: Yes.
23 BOARD MEMBER MCFAWN: Okay. On a point-- just a
24 clarification point, you said that NRDC was concerned
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1 about water use in single-cycle units. I've always
2 thought that the single-cycles didn't cause that concern
3 and it was the combined-cycles.
4 MR. SILVA: There-- A great many single-cycle
5 combustion turbine projects that we've seen-- not just
6 the few that we've looked at in Illinois, but in--
7 elsewhere across the country-- rely on once-through
8 cooling. Water is used once for evaporative cooling at
9 the inlet duct and then essentially discarded. That,
10 depending on the size of the unit-- and remember, the
11 single-cycle turbines, we've seen anywhere from 80, some
12 projects have 1,000 megawatts, so the water demand is
13 going to be quite dramatic. Some of the combined-cycle
14 units we've seen actually rely on dry cooling where
15 there is essentially a process that involves a closed
16 loop and one-time withdrawal of water.
17 So the demands-- even though the unit-- the
18 technology's more efficient, in some applications the
19 combined-cycle units can be hogs as well. They can be
20 quite water intensive. So-- But there is-- there are
21 technology options. They also do have some drawbacks.
22 One of the things is that they usually suffer derates,
23 meaning losses of efficiency, up to about 5 percent when
24 you impose thrifty or water conservation measures on
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1 those.
2 BOARD MEMBER MCFAWN: In your-- When you say the
3 word "unit" in that context, are you talking about
4 single and/or combined, the derate question?
5 MR. SILVA: The derate question would apply to both
6 a single- or combined-cycle unit. Derate may not be the
7 perfect term, but it would suffer a loss of efficiency
8 of up to 5 percent. I think that is what I've seen most
9 recently in literature.
10 BOARD MEMBER MCFAWN: Okay. One last question.
11 You mentioned that the NRDC has sought in California and
12 New York more comprehensive assessment of the need for
13 the units and the siting and all that, and then you
14 explained to us about New York's way of siting units.
15 Was the NRDC involved in New York adopting that
16 approach, or how-- have you been successful in seeking
17 this--
18 MR. SILVA: We lobbied for portions of amendments
19 to the Article X law. It's my understanding that
20 several NRDC staff-- and this law-- parts of this law
21 have been enacted ten to fifteen years-- were integral
22 in its formulation and also in its implementation. Some
23 of them actually left when the law was originally
24 enacted, went over to the New York State government, and
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1 we now have to deal with them, and they don't always
2 listen to our arguments, as the Athens project showed us
3 that. We were pointing out that no-- this really should
4 be somewhere else, and they were saying, no, they did
5 everything they actually had to, and we're going to
6 approve it.
7 BOARD MEMBER MCFAWN: And it was approved?
8 MR. SILVA: And it was approved.
9 BOARD MEMBER MCFAWN: Thank you.
10 MR. SILVA: Thank you.
11 BOARD MEMBER GIRARD: I just have a brief question
12 to clarify the role of that state board in New York.
13 Does it then rule on the siting application for every
14 new generating facility in the state, or does it only
15 act as an appeal board if a local decision is contested
16 by one of the parties?
17 MR. SILVA: I'm searching for the-- What I'm
18 searching for is there's a threshold amount generation.
19 Eighty megawatts.
20 BOARD MEMBER GIRARD: Okay.
21 MR. SILVA: So any unit over 80 megawatts, it goes
22 through the New York Siting Board, and it actually
23 coordinates with New York Department of Environmental
24 Conservation in the issuance of the state public water
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1 discharge permit and the Title V clean air permit for
2 the facility, so the intention and driver behind the
3 process is one-stop shopping, and that's when the issue
4 of the local zoning-- well, the local zoning process
5 happens in parallel. If it actually does come in
6 conflict with the siting decision, there is an
7 opportunity for judicial review, but it trumps local
8 zoning decisions against approved projects.
9 BOARD MEMBER GIRARD: Could you give us your
10 opinion on whether that's a model that would be useful
11 in Illinois?
12 MR. SILVA: I think that for Illinois, it would be
13 quite worthwhile to look at most of these processes that
14 offer integrated evaluation. I don't think that it's
15 necessarily the best approach. Another example that's
16 immediately adjacent to you is Wisconsin, which has a
17 long and a fairly well-- highly regarded among energy
18 officials and energy analysts as having a very good
19 process of evaluation.
20 Now, that doesn't mean that the-- it's going to be
21 a great fit for Illinois' circumstances. I think when
22 it comes down to it, frankly, you're going to have to
23 pick and choose among what the existing programs are
24 defined, what works best. I'm also saying that,
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1 frankly, recognizing political realities, that a lot of
2 the stakeholders in this process have interests that
3 they're seeking to protect, and they will probably lobby
4 quite forcefully to protect those interests.
5 So I am not suggesting that a comprehensive perfect
6 siting law is the only thing you should be looking at,
7 but I think the whole process of looking at good siting
8 laws that offer an inclusive process for municipalities
9 in particular that currently are feeling like they're
10 getting battered by the current existing process, and
11 it's kind of football we have going on between, you
12 know, the regulative and state agencies over whether or
13 not they can stop this, whether or not they have the
14 authority to make-- issue a moratorium or not.
15 I think it would be more useful actually seeing
16 where you can actually collaborate and add some
17 certainty, because the other thing is that many of these
18 projects that you're looking at are worthwhile and will
19 add a significant reliability to the system. The
20 question is that, you know, which ones and how do you
21 avoid adverse public health and environmental hotbeds.
22 BOARD MEMBER GIRARD: Thank you.
23 MR. SILVA: Thanks.
24 HEARING OFFICER JACKSON: Thank you very much, Mr.
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1 Silva. We know you've come quite a distance to speak
2 today, and we really appreciate it.
3 CHAIRMAN MANNING: Thank you.
4 MR. SILVA: Thank you very much for the
5 opportunity.
6 HEARING OFFICER JACKSON: Thank you. Mr. Silva,
7 you were going to submit public comments later on,
8 right, as opposed to filing something?
9 MR. SILVA: Yes.
10 HEARING OFFICER JACKSON: Mr. Urbaszewski? Oh,
11 hang on one second. Let's go off the record here, five
12 minutes.
13 (Brief recess taken.)
14 HEARING OFFICER JACKSON: We're back on the record.
15 MR. URBASZEWSKI: My name's Brian Urbaszewski. I'm
16 the Director of Environmental Health Programs for the
17 American Lung Association. I'm also a board member of
18 the Illinois Environmental Council, and I'm offering
19 joint comments for both organizations.
20 As you know, the American Lung Association was
21 founded in 19-- well, the American Lung Association of
22 Metropolitan Chicago was founded in 1906, and it
23 actually predates the American Lung Association national
24 organization. We advocate for people with lung disease
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1 in Cook County. That's over 14,000 people. The
2 Illinois Environmental Council is a state-wide group
3 representing several dozen environmental groups and acts
4 as an environmental education resource and a legislative
5 aid to those various groups around the state.
6 We are both actively involved in the policy
7 question of how to reduce power plant emissions in the
8 state of Illinois. We have been vocal in a current
9 rule-making before the board that will mandate
10 significant reductions in NOx emissions from large
11 electrical generation units state-wide. Likewise, we
12 believe significant pollution reductions from existing
13 and future power generation facilities are warranted to
14 protect the health of Illinois citizens.
15 I'd like to again support the testimony submitted a
16 while ago by Mr. Keith Harley before this board-- I
17 believe that was at the Lake County hearing, but I can't
18 be certain on that-- but stating again that the NOx
19 waiver for the Chicago Metro area should be repealed.
20 We believe Governor Ryan has it in his power to do
21 this. The State of Illinois asked for the NOx waiver
22 several years ago based on preliminary airshed modeling,
23 and USEPA granted it. However, this occurred prior to
24 the call for significant NOx reductions in Illinois and
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1 19 other states under the provisions of the NOx SIP call
2 from USEPA.
3 Due to improved regional ozone modeling and the
4 requirements of the NOx SIP call, Illinois will now be
5 requiring all EGU's in Illinois, regardless of
6 geographic location in the state, to significantly
7 reduce ozone season NOx emissions. Illinois EPA has
8 also proposed significant NOx reductions from power
9 plants state-wide more than a year before the SIP will
10 be in effect, largely due to commitments needed to
11 achieve NOx emissions to get the St. Louis Metro East
12 area into attainment with the one-hour standard. That
13 would occur in 2003. The NOx SIP call would occur in
14 2004.
15 The state is being logically inconsistent in
16 retaining the NOx waiver. The waiver is premised on the
17 contention that the NOx reductions in the-- that NOx
18 reductions in the Chicago ozone non-attainment area, the
19 six-county region, would increase ozone levels due to a
20 NOx disbenefit. Yet in constructing the proposed
21 Illinois NOx rule for electrical generation units, the
22 state is requiring EGU's within the Chicago ozone
23 non-attainment area to reduce NOx emissions as well as
24 EGU's located outside this area. The reasoning used in
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1 granting this conditional waiver is moot if reductions
2 within the area are being required in order to achieve
3 regional attainment with the one-hour ozone standard.
4 The continuing presence of this waiver is precisely
5 why peaker simple-cycle unit power plants are counted as
6 minor NOx sources in the Chicago ozone non-attainment
7 area when they emit less than 250 tons of NOx per year.
8 For the same reason, combined-cycle steam generation
9 plants could be treated as major sources only when they
10 emit more than 100 tons of NOx per year. There's a
11 difference between the way federal law treats a steam
12 unit or steam-powered unit versus a combustion turbine
13 unit. That accounts for the difference between the two
14 numbers.
15 Absent the waiver, any power plant emitting more
16 than 25 tons a year of NOx would be required to meet
17 stricter major source standards. New major sources of
18 NOx within the Chicago non-attainment-- ozone
19 non-attainment area would therefore be required to meet
20 lowest achievable emission rates, or LAER, for NOx and
21 be required to submit offsets in a ratio of 1.3 to 1, as
22 stated in the Clean Air Act Amendments of 1990.
23 The proliferation of these additional NOx sources,
24 whether classified as major or minor, will invariably
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1 erode benefits achieved through the-- an Illinois cap
2 and trade program for NOx under the NOx rule. As these
3 projects will require NOx credits, all these credits--
4 all these units that are going in will require NOx
5 credits under the trading rule, the State of Illinois
6 could become a net importer of NOx credits in a
7 multi-state trading arena. As such, the State would in
8 actuality be emitting more NOx than assumed in the
9 airshed modeling which is being used to assert that
10 Illinois will meet the one-hour ozone standard
11 requirements. Simply, with more NOx being emitted in
12 the state, it is likely that ozone levels will be higher
13 than they otherwise would be and as they are assumed in
14 the attainment model.
15 In addition, ozone has been shown to be dangerous
16 even at levels below the one-hour standard, and this
17 fact prompted the USEPA to set a tighter eight-hour
18 ozone standard in 1997. Industry has fought this
19 standard in litigation, but even the courts have noted
20 that a scientific basis for establishing a tighter
21 standard has been more than adequately proved. The main
22 question in the case, the court case, is whether
23 congress is allowed to give USEPA the authority to set
24 scientific health standards and not whether a real
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1 public health need for such a standard exists. We
2 expect the standard will be upheld when oral arguments
3 are made before the U.S. Supreme Court next month,
4 starting next month.
5 The vast majority of new peaker or simple-cycle
6 combustion turbine power plants in northeastern Illinois
7 are being permitted for NOx emission rates in the range
8 of 15 to 25 parts per million, although there is one
9 project that ranges as high as 42 parts per million.
10 There are similar simple-cycle facilities in other
11 states that are being permitted at levels as low as 3.5
12 parts per million. These are achievable rates and are
13 potentially several times lower than what is being
14 permitted in Illinois. This is the LAER, the lowest
15 achievable emissions rate, target generators in
16 northeastern Illinois should be meeting for simple-cycle
17 turbines.
18 We should not be repeating past mistakes in
19 approving new power plants when we know with certainty
20 that these new power plants could and should be required
21 to meet significantly lower NOx levels than those at
22 which they are currently being permitted. By not asking
23 for the removal of the waiver, the Governor is ignoring
24 this problem and activity discouraging new power plants
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1 from meeting tighter and achievable emission standards.
2 I'd also like to talk about energy efficiency and
3 renewable energy. Energy efficiency and renewable
4 energy sources could provide a significant portion of
5 electrical demand in Illinois. Encouraging the wise use
6 of electrical power through the use of more efficient
7 lighting, climate control and mechanical systems would
8 negate the need for a portion of new power generation
9 and the associated-- and remove the need or remove the
10 presence of associated air pollution, noise and water
11 demands due to fuel combustion at electrical
12 generators. For unavoidable growth in electrical
13 demand, greater use should be made of nonpolluting or
14 less polluting renewable sources of electricity, and I
15 would rely on the definition that Mr. Silva gave for
16 renewable sources.
17 The State apparently wishes to gift significant NOx
18 allocations under the NOx SIP call, allocations worth
19 significant dollars in the market, to the oldest and
20 most polluting facilities in the state. Very few NOx
21 allocations are also being set aside for cleaner,
22 although potentially unneeded, new fossil-fueled
23 generation facilities, largely natural gas peakers and
24 combined-cycle plants. At this point in time, it
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1 appears the State does not support NOx allocations for
2 energy efficiency and renewable energy products, even
3 though such projects-- sorry-- renewable energy
4 projects-- that's a typo-- even though such projects
5 would actively displace NOx emissions in the state. As
6 Mr. Silva said, energy efficiency is the best system.
7 It means you don't have to burn fuel and create the
8 pollution to get the electricity you need.
9 We have actively called for a set-aside in IEPA
10 meetings and before the board in hearings on the EGU NOx
11 rule. We do so here again, as such a strategy could
12 displace unneeded and polluting additional electrical
13 generation units in the state.
14 The board is charged with determining whether
15 peaker power plants need to be more strictly regulated
16 than Illinois' current air quality standards and
17 regulations provide. Even though it can be convincingly
18 argued that natural gas-- and has been convincingly
19 argued that natural gas power plants are significantly
20 cleaner and produce far fewer emissions per unit of
21 electricity produced than existing coal plants for a
22 number of pollutants, this should not be cause for
23 celebration, and I include both simple-cycle and
24 combined-cycle as being cleaner than existing coal
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1 generation. This should not be cause for celebration.
2 Nor should this fact lead to a dismissal of the question
3 as to whether new peaker power plants need to meet
4 regulations far more stringent than these existing coal
5 plants. We believe stronger standards are warranted,
6 particularly in ozone non-attainment areas where we have
7 an existing problem and will continue to have a problem
8 under the eight-hour ozone standard.
9 Peaker power plants, simply because they are being
10 built after 1977, are already meeting more stringent air
11 quality regulations than the coal plants. All coal
12 plants in Illinois are already grandfathered out of ever
13 meeting LAER or even the lesser best available control
14 technology performance standards plants built in recent
15 years have had to meet, and anything built since 1977
16 that is going to be a major source would have to meet
17 BACT and LAER.
18 The real question the board should be examining,
19 whether as part of the charge from the Governor or of
20 its own initiative, is why so much deadly pollution
21 continues to pour from the existing fleet of largely
22 coal plants.
23 Fine particulate matter is composed of a number of
24 tiny particles, both solid and liquid aerosol, that have
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1 a diameter of less than two and a half microns.
2 Inhalation of fine particles are associated with the
3 following health impacts: Upper and lower respiratory
4 infections, asthma attacks, development of chronic
5 bronchitis and, most importantly, premature deaths. Due
6 to these public health threats, USEPA established a fine
7 particulate standard in 1997 based on the available
8 medical evidence at that time. New studies done in
9 subsequent years have validated the health impacts
10 established in prior studies.
11 Elevated levels of fine particulate matter are a
12 problem in northeastern Illinois as well as several
13 downstate areas. In 1999, the Illinois EPA collected
14 accurate annual samples of ambient levels of fine
15 particulate matter for the first time. Last year, that
16 annual standard set by the USEPA was exceeded at twelve
17 of thirteen monitors in the six-county Chicago region,
18 four monitors in the Metro East region, as well as at
19 monitors in Decatur, Springfield, Moline and Peoria.
20 Nationally, fine particulate levels cause over 60,000
21 premature deaths annually, including an estimated over
22 3,000 deaths annually in Illinois.
23 Research has shown that 30 to 48 percent of fine
24 particulate matter in northern Illinois is composed of
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1 sulfate particles. Sulfates are the oxidized products
2 of sulfur dioxide, a product emitted from power plants
3 burning coal. Illinois coal-fired generation
4 facilities, in fact, remain the single largest
5 industrial sources of sulfur dioxide in Illinois,
6 accounting for over 75 percent of sulfur dioxide
7 emissions from all stationary sources.
8 In addition, two of the most impressive national
9 studies on particulates, the 1993 Harvard Six Cities
10 Report and the 1995 American Cancer Society Study, have
11 been dismissed by industry as junk science in recent
12 years. However, this past July, the Health Effects
13 Institute, an institution jointly funded by USEPA and
14 industry to act as a neutral arbitrator in such
15 disagreements, announced the results of their reanalysis
16 of these landmark studies. The HEI found that the
17 studies were valid and surprisingly found slightly
18 higher associations between particulate levels and
19 premature deaths than the original authors claimed.
20 Although it is appropriate to mention that this PM 2.5
21 standard is in final litigation and is now before the
22 U.S. Supreme Court, the federal Court of Appeals for the
23 D.C. Circuit has accepted the fact that the science
24 behind the standards-- the standard verifies that fine
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1 particulates are both dangerous and deadly.
2 It is clear that we have-- already have a serious
3 air pollution problem due to the emissions from coal
4 plants in Illinois. The State should ensure we do not
5 create a similar problem for the future by allowing
6 newer plants to be permitted at higher emission levels
7 than are prudent and possible. We should hope that the
8 State would not repeat this mistake of continuing the
9 grandfather status of old facilities and make new gas
10 facilities as clean as possible. Likewise, the board
11 should begin the process of examining solutions to the
12 problem of high PM 2.5 levels in Illinois, especially as
13 they relate to power generation.
14 In conclusion, we believe Governor Ryan should
15 officially request USEPA repeal the NOx waiver; new
16 generation facilities should meet LAER standards in the
17 Chicago ozone non-attainment area; the State of Illinois
18 should support energy efficiency and renewable energy by
19 including the 10 percent energy efficiency/renewable
20 energy set-aside in the Illinois NOx SIP call rule, as
21 suggested by USEPA; the existing fleet-- and finally,
22 the existing fleet of older coal-fired power plants
23 significantly contributes to unhealthful levels of
24 airborne fine particulate matter in the areas where the
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1 majority of Illinois citizens live.
2 Such high air pollution levels, tied to thousands
3 of premature deaths in Illinois every year, ought to be
4 addressed through board-established limits on sulfur
5 dioxide emission from electrical power generation
6 facilities.
7 Thank you. I'd be more than happy to answer any
8 questions you may have.
9 HEARING OFFICER JACKSON: Thank you, Mr.
10 Urbaszewski. I will note for the record that you
11 provided a copy of your comments, and we will mark those
12 as American Lung Association Exhibit 1.
13 MR. URBASZEWSKI: Also for the Illinois
14 Environmental Council.
15 HEARING OFFICER JACKSON: Right, right.
16 MR. URBASZEWSKI: I'm afraid Mr. Silva drained all
17 the questions out of the board.
18 BOARD MEMBER FLEMAL: We're just warming up.
19 CHAIRMAN MANNING: I do. I'll start. One of our
20 speakers in Lake County called for the State to have an
21 energy-- I think you called it energy strategy, and I
22 assume you're-- some of your remarks are along that same
23 vein. In terms of energy reductions and energy
24 efficiencies that you're calling for, does either IEC or
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1 American Lung Association have any specific ideas in
2 terms of programs or incentives that they would urge
3 upon the State to look into?
4 MR. URBASZEWSKI: Well, the one-- I-- as for broad
5 strategies, I probably couldn't provide that right now.
6 One important building block towards a comprehensive
7 strategy and a way to encourage energy
8 efficiency/renewable energy is to make it part and
9 parcel of the NOx EGU rule that's before the board right
10 now. We've advocated for this for well over a year,
11 before the Illinois EPA proposed or gave language to the
12 board for that rule. I've continued to advocate for
13 that in board hearings on that rule.
14 USEPA has put forth guidance that suggests that a
15 set-aside be pulled out of the existing EGU budget and
16 set aside for energy efficiency and renewable energy
17 projects. Anything that is not used for those projects
18 would go back to the existing EGU pool, so if it's not
19 used, it's not permanently lost to existing polluting
20 facilities.
21 However, energy efficiency or renewable energy
22 produces electricity or saves electricity and prevents
23 pollution from going into the atmosphere and causing
24 ozone problems downwind. Since these allegations have
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1 been essentially monetized, a credit is worth money on
2 the open market. You can buy and sell it. If people
3 are spending money to install an energy efficiency
4 system, they are preventing pollution from going out of
5 a power plant somewhere at the other end of the line.
6 The people who are spending the money to save that
7 electricity should get the monetized value of that
8 credit. It shouldn't be going to a coal plant or gas
9 plant that doesn't need that credit because it didn't
10 emit the pollution. We believe that that system should
11 be instituted.
12 BOARD MEMBER MCFAWN: Is that the one that's-- Are
13 you referring to the third item under your conclusion?
14 MR. URBASZEWSKI: Let me see what the third item--
15 there's so many numbers there. Yes. And I should also
16 say that Mr. Dan Rosenblum from the Environmental Law
17 and Policy Center is planning to submit extensive
18 comments, written comments, in the board hearing on the
19 EGU NOx rule on specifically this subject. I just
20 touched upon it in my testimony for the board
21 previously.
22 BOARD MEMBER FLEMAL: I want to say first of all,
23 hello, Brian. We're seeing you on a regular basis these
24 days. For those of you who may not be aware, we are
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1 conducting, simultaneously with these hearings, hearings
2 on a proposal that the agency has given us to implement
3 the NOx rule, and Mr. Urbaszewski has been an active
4 participant in that proceeding as well and has offered
5 us some good perspective on that additional rule.
6 Let me pose to you a scenario and just get your
7 reaction on it. The scenario is this: That what we do
8 with the NOx waiver or what we do with imposition of
9 LAER or even BACT standards on power plants is largely
10 irrelevant because with the severe cap that the NOx SIP
11 call imposes on us, all of the objectives of LAER in
12 fact are going to be practically met anyway. Right or
13 wrong?
14 MR. URBASZEWSKI: Well, as I said, there are
15 numerous plants that are being permitted out there right
16 now that have emission rates, and there are various
17 peaker plant proposals out there that are being
18 permitted at levels far higher than are achievable. If
19 there was an understanding that the NOx SIP call was
20 going to put a lid on this and we were going to be-- we
21 as, you know, someone who would be building a peaker
22 power plant would say, wow, we're going to have to meet
23 LAER, why aren't they being permitted at those levels?
24 I--
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1 BOARD MEMBER FLEMAL: Your concern is the fact that
2 somebody's going to actually be emitting at the level
3 they're permitted.
4 MR. URBASZEWSKI: Correct. Why would they ask for
5 that if they weren't going to use it?
6 BOARD MEMBER FLEMAL: Well, I guess there's some
7 possible answers to that, but if in fact-- well, if we--
8 if in fact we can rely on the NOx SIP call putting this
9 cap on emissions, which for large electrical generators
10 would be something just in excess of 30,000 tons per
11 year, way below what current emissions are, is it not
12 possible that-- permit limits aside, that none of the
13 emissions will occur at those levels?
14 MR. URBASZEWSKI: Well, there is-- Okay. Let me
15 see if I can separate out. If I take the coal plants
16 getting an allocation and emitting their allocation as a
17 given and shunt that off to one side, we have all the
18 existing new facilities that have been permitted, peaker
19 and combined-cycle, that as you know are vastly
20 oversubscribing the new source set-aside by a factor of,
21 I don't know, I think six or seven to one. There's six
22 or seven times as much need as there are actual
23 allocations that the State can give out, but those units
24 that are going to-- are still going to operate, they're
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1 going to be forced to buy credits on the market, and if
2 you assume that the existing coal plants are going to
3 use their existing allocations to cover their own
4 emissions and there's only going to be a portion of
5 the-- the new source set-aside is only going to cover a
6 portion of all the new units that are coming on line,
7 we're going to have to import NOx credits into this
8 state, which is to say we're going to exceed what our
9 NOx budget is, but because you have a multi-state
10 trading area, that's allowed.
11 Now, the NOx modeling that's looking at what the
12 ozone levels are going to be in Chicago at some point in
13 the future are saying, we're assuming that what's going
14 to be emitted in Illinois is only what Illinois is
15 getting now. I believe that's not true. I believe that
16 we're going to have significant importation of credits
17 to cover the emissions that are coming out of these
18 plants. Now, if you say that rather than having a
19 peaker plant emitting at twenty-five parts per million,
20 it's going to be required to emit at three and a half
21 parts per million, that means the importation goes
22 significantly down, meaning less NOx emitted actually in
23 Illinois and less ozone in the Chicago non-attainment
24 area. Does that answer your question?
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1 BOARD MEMBER FLEMAL: You just did.
2 MR. URBASZEWSKI: That's what we had hoped.
3 BOARD MEMBER FLEMAL: Good.
4 BOARD MEMBER MCFAWN: But wouldn't you think that
5 perhaps the power plant-- peaker power plant in your
6 example would choose to overcontrol maybe down to 3.5
7 parts per million so that it doesn't have to rely on
8 finding credits to buy or paying the price for them?
9 MR. URBASZEWSKI: We're not seeing that, though.
10 They're being permitted at--
11 BOARD MEMBER MCFAWN: I know they're being
12 permitted, but won't the market force possibly change
13 that example to where they will overcontrol voluntarily?
14 MR. URBASZEWSKI: I think for that-- for the
15 economic vision of that peaker plant owner, it would
16 probably be cheaper to buy credits on the open market,
17 and as you've said, as you've seen before the-- in the
18 NOx hearing, that the costs of those credits are coming
19 down as people understand how the market works and how--
20 you know, that's the whole idea behind the market. It's
21 going to lower the cost of compliance.
22 My beef with that is is that I'm not buying that
23 NOx credit, I'm not emitting it, but I'm breathing it,
24 as are the hundreds of thousands of people with hung
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1 disease ultimately going to be breathing the ozone that
2 NOx creates.
3 BOARD MEMBER FLEMAL: But nonetheless, barring some
4 significant import of allowances, we would still be
5 capped at that 30,000 tons, whether it comes from a coal
6 line, power line, a peaker power plant or any other.
7 Isn't the net effect on the environment, with that one
8 exception of whether or not we get into a significant
9 import market, it is irrelevant as to where the-- what
10 the source is?
11 MR. URBASZEWSKI: I'm not too sure I follow your
12 question.
13 BOARD MEMBER FLEMAL: If the environmental impact
14 is measurable by the total amount of emissions and that
15 emissions is capped, does it not make-- or is it
16 irrelevant where the emissions are coming from, what
17 type of owner they're coming from, old or new,
18 base-load, peaker, whatever?
19 MR. URBASZEWSKI: For the purposes of ozone
20 generation, yes. However, you have to put the caveat on
21 it that if you have an existing coal plant and an
22 existing natural gas-powered plant that are essentially
23 for all other respects equal in size, etc., capacity to
24 generate, you're going to see a significantly lower NOx
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1 rate with the natural gas plant. You're also going to
2 see a very, very significant drop in sulfur dioxide
3 emission levels. You're also going to see significant
4 drops in the amount of mercury emitted from that plant.
5 There's an interesting study where a plant in
6 southern-- south central Illinois, the Grand Tower
7 plant-- it's owned by Ameren-- is repowering from coal
8 to run on natural gas, and they're actually increasing
9 the capacity of the plant. It's going to put out more
10 megawatts than it does or historically has. And if I
11 remember correctly, the amount of sulfur dioxide emitted
12 from that plant is going to go from the neighborhood of
13 20,000 tons a year down to approximately 20, 2-0, tons
14 per year, so in addition to the NOx and the ozone
15 effects, there are secondary effects.
16 BOARD MEMBER KEZELIS: The name of that facility
17 again, please?
18 MR. URBASZEWSKI: I think it was Grand Tower.
19 BOARD MEMBER KEZELIS: Brand Tower.
20 MR. URBASZEWSKI: Grand.
21 BOARD MEMBER KEZELIS: Grand. For the court
22 reporter. Thank you.
23 BOARD MEMBER MELAS: Brian, getting off the topic a
24 little bit, I appreciate very much those points of your
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1 conclusion. I'd like to see, do you have any comments
2 or any thoughts on the specific charges that the
3 Governor gave us in setting up these hearings, that we
4 meet stronger site requirements for peaker plants, etc.,
5 all those points that were laid out by Claire at the
6 beginning of the-- do you think you could comment on any
7 of those?
8 MR. URBASZEWSKI: Well, from my perspective, what I
9 know most about is the air pollution health effects.
10 BOARD MEMBER MELAS: Right.
11 MR. URBASZEWSKI: I mean, that's what I tailored my
12 comments to. And I guess the one point that I would say
13 is that, yes, we should have tighter standards for newer
14 power plants, and it largely revolves around the
15 continuing existence of that NOx waiver, which in
16 reality shouldn't be there. The State in getting the
17 waiver said we don't need to have NOx reductions within
18 the Chicago ozone non-attainment area, because if you
19 reduce NOx in that six-county area, you actually make
20 ozone go up.
21 Well, now, under the NOx SIP call rule, we're
22 seeing reductions being required from power plants
23 state-wide, everywhere, whether you're in the ozone
24 non-attainment area or not in the ozone non-attainment
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1 area. Why would the State be doing that for attainment
2 reasons if it wasn't reducing ozone, if it wasn't
3 necessary for attainment of the ozone standard?
4 Likewise, why would USEPA be requiring the State to do
5 that if it wasn't needed for attainment of the ozone
6 standard? So to us, it just doesn't make sense that
7 that continues to exist out there, and it's just sort of
8 going on inertia, but we believe that's one thing the
9 Governor can push along and potentially solve part of
10 the problem of bringing a lot of new capacity into the
11 region by requiring the capacity that is added to the
12 region meet much tighter standards.
13 BOARD MEMBER MELAS: Okay.
14 BOARD MEMBER GIRARD: I have a question, Brian.
15 Thank you. My question is about your second conclusion,
16 which deals with new generation facilities meeting LAER
17 standards in the Chicago ozone non-attainment area. We
18 have two non-attainment areas in the state. The Metro
19 East area is the other one. Did-- Are you not making
20 the same conclusion for the Metro East because it's a
21 different level of non-attainment?
22 MR. URBASZEWSKI: I don't have to. The NOx waiver
23 does not affect Metro East St. Louis non-attainment
24 area, and so facilities built in the Metro East area are
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1 already required to meet LAER, and I believe there's at
2 least one combined-cycle facility that is proposed for
3 that region. There may be more. They are going to be
4 required to meet LAER standards.
5 BOARD MEMBER GIRARD: Thank you.
6 BOARD MEMBER MCFAWN: I had a question about-- it's
7 a factual question.
8 MR. URBASZEWSKI: Sure.
9 BOARD MEMBER MCFAWN: You mentioned that there are
10 3,000 premature deaths annually in Illinois because of
11 pollutants other than NOx, but is that--
12 MR. URBASZEWSKI: Fine particulates.
13 BOARD MEMBER MCFAWN: Exactly. And I was
14 wondering, is that number taken from your American
15 Cancer Society study?
16 MR. URBASZEWSKI: It's originally derived from a
17 study done by NRDC several years ago. It has been
18 discounted. I believe the original number was a range
19 of 3500 to 5,000 deaths state-wide. It was an
20 estimate. And because of some overestimations on their
21 part, we discounted it to say more than 3,000. The
22 corresponding number to the Chicago area is about 2,000
23 out of that 3,000.
24 BOARD MEMBER MCFAWN: If we wanted to review that
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1 article, could we?
2 MR. URBASZEWSKI: Sure. It's actually a report.
3 BOARD MEMBER MCFAWN: A report?
4 MR. URBASZEWSKI: It's a very thick report,
5 actually. I can get the title for it. I'd also like to
6 point out that this is based on a number that said
7 60,000 deaths. There's a professor at Harvard School of
8 Public Health who has said that it's potentially as high
9 as 70,000 premature deaths, so I just wanted to let you
10 know that I've discounted this to a very conservative
11 estimate.
12 BOARD MEMBER MCFAWN: For us to be able to cite to
13 that number, it would be very helpful for us to review
14 this--
15 MR. URBASZEWSKI: I can find that.
16 BOARD MEMBER MCFAWN: Thank you. The report, and
17 if it was you that-- the Chicago chapter that discounted
18 it or if it was discounted by another report.
19 MR. URBASZEWSKI: I can find that information for
20 you.
21 BOARD MEMBER MCFAWN: Thanks. I had-- Just walk me
22 through this a little bit. If in fact the waivers was
23 repealed, where we voluntarily ask for it to be
24 withdrawn, then the requirement for LAER would come into
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1 being for major sources, now defined at 25 tons per
2 year.
3 MR. URBASZEWSKI: Correct.
4 BOARD MEMBER MCFAWN: And then you also mentioned
5 the offsets in a ratio of 1.3 to 1. Is that a critical
6 element in the scheme to the American Lung Society?
7 MR. URBASZEWSKI: Yes, and it's operated somewhat
8 separately from the NOx SIP call trading scheme. It
9 preexists that. This was written in the later half of
10 1990. The general idea behind the offsets is that if
11 you're going to build a new major facility in a
12 non-attainment area, you have to draw the permission to
13 emit NOx in that area at 1.3 times what you would be
14 actually emitting, so the idea is there's a net drawdown
15 of the total NOx being emitted in that non-attainment
16 area.
17 BOARD MEMBER MCFAWN: Okay. I thank you for that
18 explanation, and I somewhat understand the offset
19 requirement, but what I wondered is how important is
20 that element to the American Lung Society? Because
21 we've been talking about LAER and BACT, and other states
22 have adopted BACT even when they're not required to, and
23 the same could be done with LAER possibly, so I wonder
24 if you could just address this.
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1 MR. URBASZEWSKI: We believe it's very important.
2 It's something that's written into the Clean Air Act.
3 It should be being done right now, but because of this
4 inertia of the NOx waiver-- which is actually only
5 granted as a temporary fix before the final NOx SIP call
6 was announced. It doesn't only affect peaker plants.
7 It affects any large major source of NOx, large
8 industrial facility or, you know, anything else that
9 would be emitting a large amount of NOx, so it's not
10 exclusively linked to this. We believe all major
11 sources should be meeting these standards. And again,
12 the same goes for LAER. Any large facility that's
13 coming in emitting NOx, peaker or some other type of
14 industrial facility, should also be required to meet
15 those standards.
16 BOARD MEMBER MCFAWN: Can I ask a real fundamental
17 question that I probably should know the answer to?
18 MR. URBASZEWSKI: I hope I do.
19 BOARD MEMBER MCFAWN: The waiver, does it have to
20 do with SO2 emissions?
21 MR. URBASZEWSKI: No, no. It's only exclusively
22 connected to NOx.
23 BOARD MEMBER MCFAWN: That's what I thought. Okay.
24 MR. URBASZEWSKI: And it's related to the ozone
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1 problem.
2 BOARD MEMBER MCFAWN: And the definition of major
3 source, then, is the 25 tons for SO2?
4 MR. URBASZEWSKI: For NOx.
5 BOARD MEMBER MCFAWN: For NOx. And a major source
6 of SO2 in the non-attainment area is defined at what
7 level?
8 MR. URBASZEWSKI: I'm not too sure.
9 UNIDENTIFIED AUDIENCE MEMBER: There's no
10 non-attainment areas.
11 MR. URBASZEWSKI: We're not-- We aren't--
12 UNIDENTIFIED AUDIENCE MEMBER: There are no
13 non-attainment areas.
14 BOARD MEMBER MCFAWN: Oh, that's correct. Thanks.
15 MR. URBASZEWSKI: Particulate matter is a secondary
16 pollutant, like ozone, and it's derived from SO2.
17 BOARD MEMBER MCFAWN: Sorry. Thank you for that.
18 MR. URBASZEWSKI: Even though SO2 itself is a
19 criteria for--
20 BOARD MEMBER MCFAWN: I lost sight of the SO2
21 attainment. Forgive me.
22 MR. URBASZEWSKI: You're very welcome.
23 BOARD MEMBER MCFAWN: Thank you.
24 CHAIRMAN MANNING: For purposes of the record, the
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1 IEPA indicated that they had indicated before to us that
2 we're in attainment for SO2.
3 BOARD MEMBER MCFAWN: Lost sight of it.
4 HEARING OFFICER JACKSON: Thank you, Mr.
5 Urbaszewski.
6 MR. URBASZEWSKI: Thank you for giving me the
7 opportunity to speak to you.
8 CHAIRMAN MANNING: Thank you.
9 HEARING OFFICER JACKSON: We're going to skip
10 around a bit on our list. The two next listed
11 participants, Susan Zingle and Carol Dorge, will be
12 available tomorrow morning, so we're going to hold off
13 on calling them forward at this time and proceed with
14 Mr. Bud Nesvig. Before you begin, I do want to note for
15 the record you've handed me three documents, and I think
16 we've already had one exhibit entered on your behalf.
17 Let me double-check. Two, actually. So what we will
18 do, the first document you've handed me I guess is-- are
19 your comments for today?
20 MR. NESVIG: That's right.
21 HEARING OFFICER JACKSON: The comments will be
22 marked as Nesvig Exhibit 3. Second document appears to
23 be a hard copy of a Powerpoint presentation. It looks
24 to be entitled "Elwood Energy II and Elwood Energy III,"
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1 and we will mark that as Nesvig Exhibit 4. And then
2 finally, a one-page document. At the heading at the top
3 of the document it reads, "Figure 1, U.S. Electricity
4 Imports and Exports 1995-1999," and that would be Nesvig
5 Exhibit 5, and I-- you can go ahead and begin your
6 comments, and I'll pass these documents out to the
7 board.
8 MR. NESVIG: Thank you.
9 HEARING OFFICER JACKSON: Thank you.
10 MR. NESVIG: Thank you for listening. I come from
11 a little different interest than polluting as such, but
12 first, my name is Nesvig-- that's N-E-S-V as in Victor,
13 I-G as in George. My first name is Elliot,
14 E-L-L-I-O-T. I am a licensed professional electrical
15 engineer, retired. My main reason for being here is to
16 emphasize the fact that I did get the opportunity to go
17 through the Elwood site, which all of you had that
18 opportunity.
19 In going backward as reminders, ComEd sold their
20 coal-fueled electric generating plants; approximately 55
21 percent of the normal needs, about 13,000 megawatts of
22 capacity. The coal plants are still operating and
23 polluting.
24 ComEd has a four-year declining usage contract with
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1 Mission Energy, which is owned by Southern California
2 Edison, to purchase the output of the coal plants. So
3 ComEd must add at least 3,000 megawatts of sustainable
4 capacity per year during these four years. Plus, they
5 need a source of summertime periodic capacity of about
6 5,000 megawatts per year, depending on how hot it is in
7 the summertime.
8 I attended the IEPA permit meeting for Elwood II
9 and III. Prior to the meeting, I was allowed to tour
10 the Elwood Energy I site, as did this board on September
11 14, 2000. I was impressed. The four operational
12 gas-fired peaker turbine generators are the larger
13 peaker units that I have ever seen. Each of the four
14 can produce 150/172 megawatts of electricity. The
15 higher amount of 172 is reached when the outside
16 temperature is at or below 60 degrees Fahrenheit or
17 water spray is used to cool the incoming air. The
18 output of the generator is connected to a high-voltage
19 transformer and then to a 345,000-volt ComEd
20 transmission line. This is a major effort.
21 These four units can produce 600/688 megawatts,
22 which is more than half the output of a nuclear power
23 generator. This is not what we formerly called a peaker
24 generator. This is all new General Electric equipment
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1 packaged into impressive units. Probably General
2 Electric because they are in the finance and credit
3 business came up with the 75 to 100 million dollars
4 needed to fund the equipment and installation. Also,
5 which has been passed out in the data on Elwood I and
6 proposed Elwood II and III, which was presented that
7 evening.
8 During the tour, I was startled to find the Elwood
9 control center manned by four individuals, and this was
10 late September. Were they waiting for requests for
11 power? I understood that these peaker plants would only
12 be used in the summer on 90 degree plus days.
13 At the IEPA meeting, there were approximately
14 fifteen people, three from IEPA, about ten or eleven
15 representing the owner, and myself. It was suggested
16 that as I had no financial or employment interest in
17 Elwood Energy or the Illinois government, I helped to
18 legitimize the small permit hearing. It lasted about 30
19 minutes total.
20 The IEPA permit hearing was to finalize the issues
21 of Elwood II and III construction permits. They would
22 add five more single-cycle gas turbine generators, 750
23 to 860 megawatts in addition to the 600/688 already
24 operational. The total at this site would then be 1350
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1 up to 1548 megawatts, and 1548 megawatts would be 50
2 percent more than a ComEd nuclear unit. This is a lot
3 of stuff. But on top of that, as I'm sure you know,
4 there has been permitted for that site but not built is
5 twenty-- no, is ten 250-megawatt units, so if they
6 decide to construct them, there will be 2500 more
7 megawatts of electrical power available from that single
8 site. As I said earlier, that's a lot of stuff. With
9 more than 19 sites to fill with peaker units, why are
10 you doing this?
11 Other questions: What happened to the idea of
12 seeking alternatives before polluting? Two alternative
13 electric power sources are Mexico and Canada. Both have
14 fuel and already sell power into the United States.
15 Attached is the 1999 import/exports with Mexico and
16 Canada.
17 Have you determined that the ComEd transmission
18 system is accepting electric power from all present and
19 future peaker plants, accepting electric power from
20 Mission-- formerly ComEd-- coal plants which may be
21 selling all or part of their output out of state,
22 polluting Illinois and benefiting other states, and
23 allowing Unicom or ComEd to continue to sell-- to send
24 electric power by contract to other users, such as
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1 utilities in state and out of state? They are in the
2 wholesale business. Why can't we be told what Unicom
3 and ComEd and our political leaders have planned for us
4 in the way of electric power? Thank you.
5 HEARING OFFICER JACKSON: Thank you, Mr. Nesvig.
6 Are there any questions? Thank you very much.
7 MR. NESVIG: Thank you.
8 HEARING OFFICER JACKSON: We appreciate your
9 interest in this proceeding.
10 MR. NESVIG: Thanks.
11 HEARING OFFICER JACKSON: Sure. Let's go off the
12 record for one brief second.
13 (Brief recess taken.)
14 HEARING OFFICER JACKSON: Okay. Back on the
15 record. We will go ahead and take testimony from Carol
16 Dorge at this point on behalf of Lake County
17 Conservation Alliance. At this point it looks like Ms.
18 Dorge will be our last presenter this afternoon, and
19 then tomorrow we will start with Ashley Collins, Susan
20 Zingle, and then conclude with the Illinois
21 Environmental Protection Agency. They'll have a panel
22 of speakers here tomorrow.
23 Okay. Before we start, let me just identify these
24 documents that you've given me. First of all, we have
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1 your comments, correct?
2 MS. DORGE: Correct.
3 HEARING OFFICER JACKSON: Okay.
4 MS. DORGE: You have-- The first group of documents
5 includes my comments from September 7.
6 HEARING OFFICER JACKSON: Correct. I was just
7 checking to see if we had any other exhibits from you in
8 this proceeding yet, and I don't think we do, so we will
9 mark the first set, being your comments, Dorge--
10 D-O-R-G-E-- Exhibit 1. Dorge Exhibit 2 will be the
11 handout entitled "Peaker Natural Gas-Fired Turbines
12 Permits Issued." Dorge Exhibit 3 will be the handout
13 entitled "Peaker Natural Gas-Fired Turbines Permits
14 Issued -- PSD." Whenever you're ready.
15 MS. DORGE: Thank you. My name is Carol Dorge, and
16 I'm an attorney representing the Lake County
17 Conservation Alliance. I presented an initial set of
18 comments--
19 BOARD MEMBER MELAS: Slow down.
20 MS. DORGE: -- on September 7.
21 HEARING OFFICER JACKSON: Thank you.
22 MS. DORGE: As I struggled with the additional
23 thoughts I had on the subject of peaker plants and the
24 question of the many tools and programs we think we have
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1 to address environmental concerns, at least in your
2 area, I kept coming back to the thought of these tools
3 are not working. They cannot be working if 30 years
4 after the Clean Air Act was adopted, it will still be
5 non-attainment for ozone. They're not working if IEPA
6 is supposed to be issuing permits within 180 days of
7 receiving a complete application and routinely asks for
8 more time.
9 This begs the question of when an application is
10 complete, and we will have more on that subject later.
11 They are not working if they allow sources with truly
12 major impacts to be permitted as minor sources. These
13 merchant power plants all look major and should be
14 treated as major, and I will have more on that later.
15 The sources can theoretically be permitted to emit
16 NOx at levels of about 75 parts per million under a
17 20-year-old new source performance standard when they
18 can easily achieve 15 parts per million or less with
19 widely utilized technology.
20 The tools are not working if they allow the
21 permitting of these sources without reliable
22 manufacturers' data on emissions of conventional
23 pollutants and toxins during routine operations and
24 start-up. They are not working if 40 some permit
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1 applicants can threaten a large increase in emissions of
2 NOx and other pollutants in Illinois without securing
3 offsets and their combined impact is not addressed.
4 They are not adequate if they allow major sources
5 to be permitted without utilizing state-of-the-art
6 catalytic technology, which we argue is truly LAER.
7 They are not adequate if they allow the kind of
8 variation and quality of information that we have seen
9 in the applications that we have reviewed. They're not
10 adequate if citizens are denied a meaningful opportunity
11 to comment in the permitting process, and that includes
12 providing access to manufacturers' performance data and
13 the calculations that these permits are being based on
14 and to a timely appeal of granting of a permit. They
15 are not adequate if we do not really know who is going
16 to own and operate a facility and who will assure that
17 it's properly decommissioned.
18 The costs to IEPA and the public in terms of
19 dollars and time suggest that there must be a better
20 way. You could even argue that the public anxiety
21 caused by these proceedings has its own human health
22 implications.
23 We believe a number of things are required in the
24 context of air permitting, and I would like to refer you
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1 to my comments of September 7, which is in the packet
2 marked Exhibit 1. On pages 3 and 4 we list items of
3 information we had asked that the manufacturers be
4 subpoenaed to provide this information. It is not being
5 supplied in the permit applications, and we feel that
6 it's critical information and that permit decisions
7 should not be made without this very critical
8 information, particularly data on emissions of toxins
9 and emissions during start-up.
10 We are also asking for a better definition of what
11 constitutes a complete application. We've identified
12 this information which we believe should-- is
13 necessarily part of a complete application. At this
14 point I would like to demonstrate the need for this
15 information by walking you through some application
16 materials.
17 HEARING OFFICER JACKSON: Slow down just a little
18 bit, please.
19 MS. DORGE: As many of you know, I have been
20 practicing law in the environmental area for about 20
21 years. I also have a master's in environmental
22 engineering and worked as an engineer in the Air
23 Enforcement Branch of the EPA. I represented the LCCA
24 in two Zion peaker plant proceedings, Carlton and Zion
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1 Energy, which by the way are across the street from each
2 other, and also worked closely with Scott Evans of Clean
3 Air Engineering, who provided technical assistance in
4 those proceedings and who's been involved in the
5 permitting of many of these facilities on behalf of the
6 applicants.
7 I'm going to discuss portions of the Carlton
8 application, which was presented as a synthetic minor.
9 We also have many concerns involving Zion Energy, and
10 I'll touch on those. Zion Energy is a much larger
11 facility being permitted as a major source. I've also
12 prepared a copy of the application, one copy for the
13 record, which includes the original application to
14 permit three simple-cycle GE turbines dated December
15 1999, a supplemental application for an alternative
16 configuration with six simple-cycle GE turbines dated
17 March 2000, and the applicant's calculation of emissions
18 during start-up and emissions of toxins which was
19 presented for the first time at the public hearing on
20 August 14. IEPA also requested modeling, which has not
21 been included but which was submitted May 25, 2000. The
22 emission calculations were based on internal Mostardi
23 Platt data that was claimed to be proprietary and was
24 not substantiated anywhere on the record.
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1 The second document in the packet I've handed you
2 includes some of my notes on what we felt was missing
3 from the application. I'm going to go through some of
4 the things that we felt were essential and that were
5 missing. First--
6 HEARING OFFICER JACKSON: And this is in Exhibit
7 1?
8 MS. DORGE: This is Exhibit 1 titled "Notes
9 10-4-00." The owner/operator of this facility is
10 identified as Carlton, Inc. Carlton, Inc., is a
11 home-based business located at John Notch's home in
12 Wilmette, and I checked the phone book yesterday and
13 confirmed that the residential address and phone number
14 were the same. John, who by the way is a very nice guy,
15 may not even be easy to reach at home because he
16 probably is spending most of his time on his boat in
17 Waukegan Harbor. He is a very pleasant fellow, but
18 that's who was filing the operation-- filing to own and
19 operate this facility.
20 The address was not included. There was a general
21 address on Ninth Street, so the address was not included
22 in the application. Form APC-203, which is for start-up
23 emissions, was not completed.
24 You've seen the kind of general schematics that are
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1 being included in these applications to show how the
2 unit operates. We have questions about a number of
3 things, but one question we ask is how-- who's going to
4 turn it on, who's going to run it. We've heard that GE
5 runs some of these things from a central computer. We
6 don't even know who's turning the facility on and who's
7 going to make sure it only goes on once a day and some
8 of the other things that are required.
9 I could go through all of these. They did not
10 complete hours of operation. Their-- They purported to
11 limit their emissions by limiting the amount of fuel
12 that they would burn. They had conflicting stack
13 heights. There was no toxins information in the permit
14 application itself submitted at the hearing, and one
15 figure was off, I believe. One figure for gas usage was
16 off by several orders of magnitude. That was never
17 corrected. The second set of comments applied to the
18 supplemental permit application and are similar.
19 Now I would like to turn your attention to the next
20 group of documents, which are three pages of performance
21 data for the two-turbine configurations, and I would
22 like to review just a few of the items on the list.
23 Excuse me. I coded the columns to allow me to direct
24 you to some of the items of greatest interest, at which
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1 time I will refer you to it. Very difficult to read.
2 This is somewhat typical performance data. This is
3 really the only meaningful information that's contained
4 in the permit applications.
5 It's my understanding that these sheets are
6 typically provided by GE sales department and that some
7 numbers are added, particularly the temperatures, and
8 the first line you will see-- this is so hard to read--
9 line A, a little bit off, but that would be ambient
10 temperature. Line H is percent of total operation at a
11 particular temperature.
12 What you find as you study these sheets is that
13 pollutants such as NOx and CO go off-- they increase in
14 terms of pounds per hour at lower temperatures. They're
15 also higher when line C is on, the evaporative cooler.
16 This sheet reflects operation at 95 degrees. Look at--
17 let's see-- H2 and H4. That's 25 percent of the time
18 with the evaporative cooler on and 10 percent of the
19 time with it off, so that gives you 35 percent of your
20 time at 95 degrees. Shouldn't be computed that way.
21 They should have assumed some sort of middle temperature
22 range.
23 As you go across to 11-H, I, J, you see they're
24 proposing to emit 219 pounds of NOx in this case and 243
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1 tons of CO. On the next sheet, or two sheets further
2 on, they're the same sorts of issues, but in their case
3 they're at 247.7 for NOx and 228.6 for CO. This
4 information stated does not include emissions during
5 start-up. The source is clearly major. We obviously
6 made those arguments in the permitting proceeding.
7 We stated at the proceeding that we were concerned
8 that the agency's resources were stretched, that we
9 couldn't possibly see how they could be handling the
10 volume of applications that they're getting. What we--
11 The point we're trying to make here is that it's very
12 important that if the agency's resources are stretched
13 that citizens have input in these proceedings and that
14 there be an early appeal of these decisions so that we
15 don't make the mistake of building these facilities if
16 they aren't going to be able to operate as minor
17 sources.
18 HEARING OFFICER JACKSON: Let me just clarify real
19 quick for the record. The pages you were referring to,
20 the charts that were kind of difficult to read, were the
21 last--
22 MS. DORGE: Three or four pages.
23 HEARING OFFICER JACKSON: -- last three pages of
24 what we've marked as Dorge Exhibit 1.
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1 MS. DORGE: Correct.
2 HEARING OFFICER JACKSON: Thank you.
3 CHAIRMAN MANNING: And what permit application is
4 this?
5 MS. DORGE: This is Carlton, Inc., being permitted
6 as a synthetic minor.
7 BOARD MEMBER MCFAWN: As a synthetic?
8 MS. DORGE: Yes, synthetic minor.
9 BOARD MEMBER KEZELIS: It's also called North Shore
10 Power Project.
11 MS. DORGE: Correct. Carlton is the operator. I'm
12 going to hand the court reporter this packet, which has
13 our written comments in the Carlton proceeding, our
14 written comments in the Skygen proceeding, the Carlton
15 application minus the modeling, and it also includes
16 Skygen's calculation of air toxins, which I'll talk
17 about a little later too.
18 HEARING OFFICER JACKSON: We'll mark that packet,
19 then, as Dorge Exhibit 4.
20 MS. DORGE: I noted that the data we reviewed did
21 not represent emissions during start-up. Our
22 consultant, Scott Evans, had access to information from
23 GE, which some of the applicants said they did not have,
24 that they were not able to get information from GE, but
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1 our consultant had access to some information and did
2 his own calculations.
3 Assuming one start-up per day, which is what the
4 permit allowed, emissions were as much as 30 percent
5 higher than reported on an annualized basis, and what
6 we're hearing is that-- this is coming from GE-- that it
7 could be as much as ten times higher for, say, a period
8 of twenty minutes, so we think we're being fairly
9 conservative in our calculations, but if you're
10 operating for five hours a day or even ten hours a day,
11 they become very significant at that level, and that
12 affects your-- it affects your CO primarily, your NOx to
13 a lesser extent, but would also affect the volatiles
14 such as your toxins, which is-- in this case,
15 formaldehyde is the primary one of concern. And Scott
16 Evans' calculations are included in Exhibit 4.
17 Now I'd like to refer you to Exhibit 2. This is a
18 summary that Susan Zingle prepared of peaker draft
19 permits. These are the synthetic minors, and if you run
20 down the center of the page, the NOx column, you see how
21 close so many of them are to their major source
22 threshold. The same is true for CO. You can also see--
23 We believe that if start-up emissions were included,
24 most of these sources would be major and that they are
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1 not being properly accounted for.
2 There are also problems with the sources that are
3 being permitted as major sources. Turning to Exhibit 3,
4 these are your PSD sources, your major sources. And we
5 can just look at-- eyeball this, but you can see they're
6 being permitted at levels-- NOx levels as high as 25
7 parts per million but in many cases 9 to 15 parts per
8 million without catalytic controls, where a number of
9 them have demonstrated a clear ability to achieve the
10 lower levels, which are under 5, in this case reporting
11 4.5 parts per million with catalytic controls.
12 We also question why things are so different. I'm
13 looking at Enron, for example, which I understand has GE
14 turbines. This is a 664-megawatt facility with 432 tons
15 of NOx, where Skygen, our 900-megawatt facility, has 716
16 tons, which doesn't-- you would think Skygen should be
17 able to achieve emission levels that Enron can achieve.
18 They may not be because they have diesel. They're
19 permitted to use diesel for up to 500 hours per
20 turbine. We don't understand how that could possibly be
21 BACT for these turbines.
22 And just this questioning, why do these numbers
23 seem so odd? Again, Enron is at 714 for CO. Skygen is
24 at 258 for CO. How could they be so different when
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1 they're using very similar technology?
2 So the question is, why are we permitting these
3 sources this way? Why are they not being required to
4 account for start-up in their modeling? I didn't
5 mention that, modeling. Of course modeling did not
6 include emissions for start-up because they weren't
7 calculated until the last minute. Why aren't we getting
8 the data we need to calculate emissions and guaranteed
9 performance according to manufacturers' specifications
10 for the manufacturers? This information is essential.
11 The agency seems to feel compelled to act on these
12 applications because of the 180-day clock. There's so
13 much depending on when an application is deemed
14 complete. I think we need regulations to make clear
15 what is required, perhaps a history of acting on working
16 with the applicants and being very flexible, but with
17 that 180-day clock in the statute, I think it's
18 necessary at this point to make it more clear that
19 certain things are absolutely required in the case of
20 these peakers.
21 Just a couple comments responding to some of the
22 other questions that were raised earlier. We're
23 obviously concerned about the fact that Illinois seems
24 to be permitting even the major sources at levels that
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1 are higher than other states, and we think that all of
2 these merchant power plants-- we can exclude some of the
3 very small ones-- seem to be utility boilers, but
4 they're just so close to the line that they should
5 absolutely be treated as major and be subject to BACT.
6 We're concerned that with the SIP call, are-- these
7 peakers here in Illinois will just purchase their EGU's
8 from out of state, and perhaps there's some East Coast
9 states that are so much more advanced that we won't see
10 any impact on our air quality. You know, I decided to
11 focus on air again because I think that the problems are
12 just so blatant. Of course we continue to be concerned
13 about noise and the other issues that have been
14 identified.
15 I also want to mention that next week I'm attending
16 an ABA meeting in Pennsylvania, and peaker plants and
17 NOx are on our agenda. I'm going to try to learn as
18 much as I can about what other states are doing, and
19 we'll still get back to you in writing with the
20 information that we've collected. Thank you.
21 HEARING OFFICER JACKSON: Thank you very much.
22 MS. DORGE: Can I answer any questions?
23 BOARD MEMBER KEZELIS: Ms. Dorge, how many
24 megawatts is the Carlton facility, if you can tell me?
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1 MS. DORGE: Uh-huh.
2 BOARD MEMBER KEZELIS: The North Shore Power
3 Project.
4 MS. DORGE: They're two-turbine configurations.
5 Let's see.
6 BOARD MEMBER KEZELIS: Let me short-circuit. Your
7 Exhibit 2 suggests several figures and I'm not sure how
8 to read that best, and I don't know whether questions
9 should be directed to you with respect to that Exhibit 2
10 or to Ms. Zingle, because you indicated she prepared
11 this document.
12 MS. DORGE: No, I can get that for you and give it
13 to you I think tomorrow. I don't recall. There are
14 two-- There were two determined configurations, and it's
15 different for the two.
16 BOARD MEMBER KEZELIS: And should I direct my
17 questions on Dorge Exhibit 2 to you or to Ms. Zingle?
18 MS. DORGE: I can probably answer more of the
19 technical questions.
20 BOARD MEMBER KEZELIS: Then would you bear with me
21 for a moment? Take Reliant-Aurora, that line on Exhibit
22 2, and just so I understand how to read this and so the
23 court reporter can take this down for the record, could
24 we go through very quickly those columns and then what's
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1 indicated there so we know how to read them? For
2 example, name, Reliant-Aurora, that's pretty
3 straightforward. Date, I assume, is the date the permit
4 was issued by IEPA?
5 MS. DORGE: I believe it's the date of the
6 application. Can Susan come up? I think I can answer
7 most of your questions.
8 BOARD MEMBER KEZELIS: There's a lot of material,
9 but I'd rather we know what it means.
10 HEARING OFFICER JACKSON: Ms. Zingle, I would just
11 ask that you identify yourself for the record.
12 MS. ZINGLE: My name is Susan Zingle with the Lake
13 County Conservation Alliance.
14 HEARING OFFICER JACKSON: Thank you.
15 MS. ZINGLE: The date is the date the application--
16 the date on the application when it was sent to the
17 IEPA.
18 HEARING OFFICER JACKSON: And you need to speak
19 into the microphone too.
20 BOARD MEMBER KEZELIS: And not the date the permit
21 might have been issued, right?
22 MS. ZINGLE: Correct. It's when the clock--
23 BOARD MEMBER KEZELIS: And continue--
24 MS. ZINGLE: When the clock started ticking.
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1 BOARD MEMBER KEZELIS: Thank you. Continue to the
2 next column, please.
3 MS. ZINGLE: That's the number of turbines.
4 BOARD MEMBER KEZELIS: Okay. We're still-- We're
5 talking about Reliant-Aurora, okay? Continue on,
6 please.
7 MS. ZINGLE: Megawatts is the total number of
8 megawatts from those ten turbines.
9 BOARD MEMBER KEZELIS: Thank you.
10 MS. ZINGLE: The next column, the limit method,
11 some of the permits are limited by the amount of natural
12 gas that is burned. Others are limited by the number of
13 hours. A few of them in the application I couldn't find
14 that data, so I left it blank.
15 BOARD MEMBER KEZELIS: And SCF means?
16 MS. ZINGLE: Standard cubic feet.
17 BOARD MEMBER KEZELIS: Thank you. Continue on.
18 MS. ZINGLE: NOx tons, that is the total number of
19 tons of NOx that would be emitted by that plant.
20 BOARD MEMBER KEZELIS: Okay.
21 MS. ZINGLE: NOx parts per million--
22 BOARD MEMBER KEZELIS: Oh, that's per year, tons
23 per year?
24 MS. ZINGLE: Per operating period. So if it's for
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1 2300 hours, for that amount of gas that's burned, that's
2 how much NOx will come out.
3 BOARD MEMBER KEZELIS: Thank you.
4 MS. ZINGLE: NOx parts per million is
5 self-explanatory. I couldn't necessarily find it in the
6 applications.
7 BOARD MEMBER KEZELIS: Okay.
8 MS. ZINGLE: Tons of carbon monoxide, tons of
9 VOC's, tons of PM 10, tons of sulfur dioxide, and then a
10 note on the NOx control method the plant is using, if I
11 could find it.
12 BOARD MEMBER KEZELIS: And for the record, DLN and
13 WI refer to?
14 MS. ZINGLE: DLN is dry low NOx; WI is water
15 injection.
16 BOARD MEMBER KEZELIS: Thank you. Thanks.
17 MS. ZINGLE: Thank you.
18 CHAIRMAN MANNING: Can we go back to that limit
19 method? I don't-- I still don't know what 9878mmScf
20 means.
21 MS. ZINGLE: That means that they'll allow the
22 plant to burn 9800 million cubic-- standard cubic feet
23 of natural gas.
24 MS. DORGE: The example was Carlton. Rather than
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1 set a limited number of their operating hours, set the
2 limit based upon the gas usage, although they do
3 estimate their operating hours, and that is in last
4 three pages of this exhibit, 8700 for six turbines,
5 six-turbine configuration, and a total of 5400 hours for
6 the three-turbine configuration.
7 HEARING OFFICER JACKSON: And again, you're looking
8 at Exhibit 1, Dorge Exhibit 1.
9 MS. DORGE: Exhibit 1, yes.
10 MS. ZINGLE: For the record, I should say I would
11 like to thank Marilyn Clardy and Betty Asher for their
12 help that went into getting this information together.
13 They really did a lot of work.
14 BOARD MEMBER MCFAWN: Can I just verify, these
15 permits have been issued, then?
16 MS. ZINGLE: Draft permit.
17 CHAIRMAN MANNING: A draft permit-- If it's a draft
18 permit, it's not been issued. I mean, I don't
19 understand whether the draft permit been issued. The
20 permit's issued, I would assume it's a legally-- a legal
21 document, a draft permit.
22 MS. DORGE: These are draft permits.
23 MS. ZINGLE: The most recent ones are drafts. The
24 older ones are in fact final permits.
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1 BOARD MEMBER MCFAWN: Now, the missing information,
2 is that because it was missing from the application?
3 MS. ZINGLE: Or I just couldn't find it.
4 BOARD MEMBER MCFAWN: Even in the draft permit?
5 MS. ZINGLE: It may very well exist. It may be
6 more my skill.
7 MS. DORGE: Just to clarify the record, the agency
8 did make some assumptions as to emissions during
9 start-up, but they were never-- they were not supported
10 by any inquiry or manufacturers' information.
11 BOARD MEMBER MCFAWN: Were there assumptions
12 factored into the numbers here?
13 MS. DORGE: They were factored into the draft
14 permit.
15 MS. ZINGLE: Sometimes.
16 MS. DORGE: Sometimes.
17 MS. ZINGLE: We went-- On Coastal, if you look
18 about two-thirds of the way down the page, Verena and I
19 attended the public hearing for the Coastal plant in Big
20 Rock, and it was of particular interest because you can
21 see it says-- I need a little-- 249.3 tons, which is the
22 closest I'd ever seen to the 250, so-- I had not read
23 the application, so my first question in public comment
24 was did that include start-up, and Mr. Romaine's answer
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1 was no, so obviously immediately it's over the 250 tons
2 and it's going to be a major source. That air hearing
3 was August 3, and that final permit has not yet been
4 issued, so I don't know what changes they would make to
5 it.
6 CHAIRMAN MANNING: Could we maybe go to a facility
7 we're little bit familiar with at least? And that's in
8 your-- in the PSD, the ones that are PSD, the Elwood
9 facilities particularly. You have two listed, Peoples,
10 dash, Elwood and Elwood, and one of them you have as
11 having fourteen turbines, I assume, when you say number
12 fourteen, and then the other one numbered two. The
13 facility-- The Peoples energy facility, Peoples-- old
14 Peoples gas facility that we visited at Elwood had four
15 turbines. Which of these would be that facility?
16 MS. ZINGLE: From this, I can't tell you. I have
17 the permits and the applications both at home. I could
18 go back and find it. I can't tell you here today.
19 CHAIRMAN MANNING: Okay.
20 BOARD MEMBER KEZELIS: Back to Dorge 2 for a
21 moment. If you read the line that starts with Rolls
22 Royce, under NOx parts per million, there appears to be
23 the beginning of the word "yes." What is that a
24 reference to?
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1 MS. ZINGLE: I-- That was an editorial comment.
2 BOARD MEMBER KEZELIS: Okay.
3 BOARD MEMBER MCFAWN: You have Reliant listed twice
4 in the middle of Dorge Exhibit 2.
5 MS. ZINGLE: Reliant is building three plants. I
6 don't know why I didn't put the cities next to the first
7 two, and then the one in Aurora. It's three separate
8 permits, three separate facilities.
9 BOARD MEMBER KEZELIS: Do you know which is which
10 city?
11 MS. ZINGLE: I'm sorry. I don't.
12 BOARD MEMBER KEZELIS: Okay.
13 CHAIRMAN MANNING: The Indeck on the list, is that
14 the Indeck that's been referred to in Libertyville
15 several times in the proceeding?
16 MS. ZINGLE: I believe so, because the date is
17 February of this year.
18 CHAIRMAN MANNING: Thank you.
19 MS. ZINGLE: Thank you.
20 HEARING OFFICER JACKSON: Anything else for Ms.
21 Dorge or Ms. Zingle? And I do note that Ms. Zingle will
22 be speaking to us again tomorrow morning.
23 BOARD MEMBER MCFAWN: Wait. One quick question.
24 The-- Ms. Dorge, I'm hurrying, so maybe the answer is--
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1 maybe you've given us the answer. Forgive me if I
2 missed it. What is the status of the Carlton permit
3 application?
4 MS. DORGE: Public hearings were held on both
5 August the 13th for Skygen and 14th for Carlton, and we
6 understand that they're proposing to-- planning to issue
7 the permit at the end of November.
8 MS. ZINGLE: October.
9 MS. DORGE: October. Excuse me. The end of
10 October.
11 BOARD MEMBER MCFAWN: Thank you.
12 HEARING OFFICER JACKSON: Thank you very much.
13 CHAIRMAN MANNING: Thank you.
14 HEARING OFFICER JACKSON: As I said earlier, that's
15 going to do it for our presentations today. We will
16 reconvene tomorrow morning in this same room at 10 a.m.,
17 and we have Susan Zingle, Ashley Collins and the IEPA on
18 the agenda. I do want to reiterate that anyone who has
19 made a presentation either today or any of the other
20 hearings can obviously supplement their oral
21 presentations with written public comments, and the
22 written public comments will be accepted by the board
23 until November 6.
24 That's all I have, so at this point we will go off
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1 the record and see you tomorrow morning at 10. Thank
2 you very much.
3 (Whereupon the proceedings were
4 adjourned until October 6, 2000, at
5 10:00 a.m.)
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1 STATE OF ILLINOIS )
) SS
2 COUNTY OF ST. CLAIR)
3
4
5 I, KAREN BRISTOW, a Notary Public and
6 Certified Shorthand Reporter in and for the County of
7 St. Clair, State of Illinois, DO HEREBY CERTIFY that I
8 was present at the William G. Stratton Building, 401
9 South Spring Street, Springfield, Illinois, on October
10 5, 2000, and did record the aforesaid proceedings; that
11 same was taken down in shorthand by me and afterwards
12 transcribed upon the typewriter, and that the above and
13 foregoing is a true and correct transcript of said
14 proceedings.
15 IN WITNESS WHEREOF I have hereunto set
16 my hand and affixed my Notarial Seal this 9th day of
17 October, 2000.
18
19
20 __________________________
21 Notary Public--CSR
22 #084-003688
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