(iG&E

National

Energy

&:

)

November 6, 2000

Dorothy Gunn, Clerk

Illinois Pollution Control Board

100 West Randolph Street, Suite 11-500

Chicago, IL

60601

Dear Ms. Gunn:

RECEIVED

CLERK’S OFF1C~

East Mifflin Street

cite 905

Madison, WI

53703

NOV

0

8

2000

~

Fax:

608.2562275

STATE

OF IWNOIS

Pollution

Control Board

Please find enclosed one original and five copies of comments by PG&E National Energy

Group in DocketROl-lO concerning peaking power plants.

Please contact me if there is need for clarification or for further information.

Thank you very much.

Sincerely,

Stephen Brick

Director, External Relations andEnvironmental Affairs

---

RECEIVED

CLERK’S

OFFTCE

COMMENTS

OF PG&E NATIONAL ENERGY GROUP

NOV

082000

STATE OF IWNOIS

BEFORE THE ILLINOIS POLLUTION

CONTROL

BOARDp0~~~t,0~

Control

BOar(J

IN TIlE MATITER OF: NATURAL GAS-FIRED, PEAK-LOAD ELECTRICAL

POWER GENERATING FACILITIES (PEAKER

PLANTS)

DOCKET

ROl-lO

September 6, 2000

PG&E National Energy group appreciates the opportunity to offer the following

comments to the illinois Pollution Control Board (IPCB) in connection with the above-

captioned docket.

We have attended the hearings held by the IPCB and have read the

testimony of all parties with great interest.

We commend the members and staff of the

IPCB fortaking the time to hear testimony on this complex and emotional issue.

While we believe that individual peaking power plants do not present unique

environmental threats

per Se,

the sheer number of plants being simultaneously permitted

creates an unprecedented situation.

This potential proliferation of plants creates the

appearance, ifnot the actuality, that a great number of power generation facilities will be

built and operated and that these plants will negatively affect the environment and the

quality of life in areas near these plants.

It is~Critical

that abalance be struck between the pressing need for new sources of

electricity and the desire to maintain and improve environmental quality.

Need

for the

Plants

The testimony in the record

supports the need for additional sources of generation to

serve need in Illinois and elsewhere. Demand in the state and across the region is growing

significantly, with past investments not keeping pace.

By the passage of the state’s

restructuring law, illinois determined that the best way to encourage additional plant

developmentis through market mechanisms.

In such asystem, the market determines the need for new capacity.

Imposing a system in

which need were determined through a regulatory process would hamper the newly

created competitive market.

The state does not determine the need for other types of

industrial facilities,

and it should not do so for power plants. The temptation to adopt a

system for determining whether aspecific plant is needed should be resisted, as

it is anti-

hetical to the competitiveprincipals embraced by the Illinois legislature in 1997.

Local Land Use Control

Decisions concerning the suitability of a proposed project should ultimately be left to the

affectedjunsdiction.

Local zoning boards should determine which landuse

---

classifications are acceptable for power projects and which are not, with present and

future residential land use development patterns being carefully considered.

Many local zoning boards have adequate resources and expertise to conduct-a

comprehensive analysis of a proposed power project.

DuPage County submitted to this

record a comprehensive studyof peaking power plant impacts.

The County also outlined

in testimony aproposed set of standards for siting power plants.

The City of Libertyville

conducted a comprehensive analysis of a proposed project, and was

able to make a

determination

as

to the suitability of the project.

In fact, in the case of Libertyville, the project developer bore the cost of outside experts

for the local zoning authorities; this is common in the industry and something-That

localities can require.

In addition, the local zoning boards can share information and

experiences, and we encourage the state to develop a process to facilitate this sort of

exchange.

State

Environmental Review

The illinois Environmental Protection Agency (IEPA) issues air permits for power

projects.

This is generally the most significant state level regulatory approval needed for

apower plant.

Most of the power projects permitted thus far in illinois have been permitted

as synthetic

minor sources, and in this respect, a great deal of controversy has arisen.

Projects that are

permitted as synthetic minors

are exempted from the air quality modeling requirements of

the Federal Prevention of Significant Deterioration of Air Quality (PSD) program.

This

modeling shows both the expected impacts of the project’s emissions on the National

Ambient Air Quality Standards

(NAAQS) as well as its consumption of PSD increment.

For non-attainment pollutants, synthetic minors are not required to obtain offsets or reach

the lowest achievable emission rates (LAER).

Most of the proposed projects

—

ranging in size from 250 MW to almost 1,000MW

—

have submitted applications that request permits allowing them to emitjust up to the

major source threshold.

For example, numerous developers have requested permits to

emit nitrogen oxide emissions (NOr) in the range of

245

to 249 tons per year.

At present,

the major source thresholdis 250 tons per year.

By contrast, a 1,000 MW gas-fired

combined cycle project will emit in the vicinity of

350

to 400 tons of NO~

per year, and

will be required to carry out full air quality modeling.

Because Illinois was

granteda waiver under Section 182(f) of the Clean Air Act, the

major source threshold forNO~

emissions is 250 tons per

year.

If this waiver were

revoked, the threshold would drop to 25 tons per

year.

In another docket, this Board is

considering proposed rules to implement the so-called NO~

SIP call.

The 182(f) waiver

was granted on the presumption that NO~

emission reductions were counter- productive

to attaining the ozone standard in certain regions.

This has since proven to be untrue, and

states are in the process of implementing the SiP call on

the assumption that broad,

regional reductions of NO~

are needed to attain the ozone standard.

---

The state could revise its permiuing policy, and lower the major sourcethreshold to 25

tons per yearfor NOR.

This would greatly increase the credibility of air permits issued

forpeaking projects.

This would provide more information to local communities and

regulators on the impacts of proposed projects on

local air quality.

In addition, ifpeakers

were treated as major sources, interactive air-quality modeling would be required where

projects are in close proximity to each other or to other sources.

The agency could also take care to insure that US EPA policies are followed in

estimating emissions from start-up and shut-down, and to make sure that potential

emissions estimates and worst case modeling includes these emissions, when appropriate.

Finally, the agency could insure that particulate emissions from proposed projects are

being estimated using the required EPA methods that include both front-half andback-

halfemissions.

We note that the agency has required modeling from some applicants, even though they

applied as synthetic minors.

It is unclear whether the full gamut of regulatory

requirements is being met under this scenario.

By permitting these projects as major

sources, these uncertainties will be removed.

Need

for a State Administered Siting Process

Some parties have argued that a siting process, similar to the one administered by the

IPCB under the SB 172 procedure, is needed.

Although the process could have benefits,

it could also pose significant costs anddelays that couldthreaten reliability.

In most states that have comprehensive power facility siting processes, the decisions of

the state run boards overrule local jurisdictional authority.

This is the case in Wisconsin,

Now York, Massachusetts, Connecticut,

California, andFlorida,

among others. This type

of process has cause delays in facilities siting in a number of these states, with delays

in

California being the most significant.

From the perspective of power plant developers, siting boards offer a venue in which

local concerns can be balanced against other issues.

In some cases, siting boards decide

to certify aproject over the objections of local citizens, deeming a proposed site the best

alternative.

From the perspective of home political authorities and citizens, however,

such boards

have the ability to run roughshod over local preferences.

Perhaps a middle ground is needed to achieve abalance.

A process could be adopted to

allow individuals or organizations with standing in alocal proceeding to appeal to a state

nrn

board for

assistance

This could occur if local

authorities lack adequate resources to

review project proposals, or ifcitizens or developers feel that a local process has

produced an inappropriate result.

The board could promulgate siting criteria in advance

that would be applied to cases brought before the board.

We believe the IPCB would be

the appropriate agency in which to locate such authority.