363
1
ILLINOIS POLLUTION CONTROL BOARD
2
August 15th, 2006
3
4
IN THE MATTER OF:
)
5
)
PROPOSED NEW 35 ILL. ADM.
) R06-25
6 CODE 225 CONTROL OF EMISSIONS ) (Rulemaking-Air)
FROM LARGE COMBUSTION SOURCES )
7 (MERCURY),
)
8
9
10
11
TRANSCRIPT OF PROCEEDINGS held in the
12 above-entitled cause before Hearing Officer
13 Marie E. Tipsord, called by the Illinois Pollution
14 Control Board, pursuant to notice, taken before
15 Denise A. Andras, CSR, a notary public within and
16 for the County of Cook and State of Illinois, at
17 the James R. Thompson Center, 100 West Randolph,
18 Assembly Hall, Chicago, Illinois, on the 15th day of
19 August, A.D., 2006, commencing at 1:15 p.m.
20
21
22
23
24
L.A. REPORTING (312) 419-9292
364
1 A P P E A R A N C E S:
2
ILLINOIS POLLUTION CONTROL BOARD:
3
Ms. Marie Tipsord, Hearing Officer
4
Ms. Andrea S. Moore, Board Member
Mr. G. Tanner Girard, Acting Chairman, IPCB
5
Mr. Anand Rao, Senior Environmental Scientist
Mr. Nicholas J. Melas, Board Member
6
Mr. Thomas Fox, Board Member
Mr. Thomas Johnson, Board Member
7
8 ILLINOIS ENVIRONMENTAL PROTECTION AGENCY:
9
Mr. John J. Kim
Mr. Charles E. Matoesian
10
Mr. Jim Ross
Mr. Christopher Romaine
11
12
SCHIFF, HARDIN, LLP,
6600 Sears Tower
13
Chicago, Illinois 60606
(312) 258-5646
14
BY: MS. KATHLEEN C. BASSI
MR. STEPHEN J. BONEBRAKE
15
MR. SHELDON A. ZABEL
16
McGUIRE, WOODS,
17
77 West Wacker Drive
Suite 4100
18
Chicago, Illinois 60601-1815
(312) 849-8100
19
BY: MR. DAVID L. RIESER
20
ALSO PRESENT:
21
Ms. Mary L. Frontczak, Peabody Energy
22
Ms. Dianna Tickner, P.E., Peabody Energy
23
Anne E. Smith, Ph.D., CRA International
24
L.A. REPORTING (312) 419-9292
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1
HEARING OFFICER TIPSORD: Back on the
2 record. I believe we are ready for question No.
3 61, and everyone has been sworn in, so we'll go
4 from there.
5
MR. ROSS: Please compare Ameren's SO2
6 and NOx emission rates to the SO2 and NOx emission
7 rates that would be applicable to other companies
8 after applying the percentage reductions to each
9 of the other five or six, depending upon where EEI
10 is calculated, companies' base rates?
11
A comparison shows that other
12 companies' required emission rates would be lower
13 than Ameren, but again, the percent reduction they
14 are required to achieve would also be lower than
15 Ameren's. We discussed that in some detail
16 yesterday.
17
HEARING OFFICER TIPSORD: And does
18 anyone have follow-up?
19
MR. ZABEL: That would include
20 Southern Illinois Power Co-op; is that correct?
21
MR. ROSS: Yes. We don't have the
22 actual emission rate numbers for Southern Illinois
23 Power Co-op, and if I take out the 1, 2, 3 unit,
24 so I can't speak for Southern Illinois Power
L.A. REPORTING (312) 419-9292
366
1 Co-op.
2
MR. ZABEL: Do you consider the two
3 units at Southern Illinois Power Co-op well
4 controlled?
5
MR. ROSS: Yes, I believe they are
6 well controlled.
7
HEARING OFFICER TIPSORD: Ms. Bassi?
8
MS. BASSI: Mr. Ross, I think you just
9 said -- please confirm or deny -- that the rates
10 for the other companies would be lower but the
11 percent reductions would also be lower?
12
MR. ROSS: They are required to reduce
13 a lower percentage. We went over that in some
14 detail yesterday. For example, Ameren would be
15 required to reduce SO2 emissions 76.3% by 2015,
16 whereas the rule gives an option that you comply
17 with either 0.25 pounds per million BTU's or a
18 percent reduction, whichever is more stringent.
19
MS. BASSI: Are you saying then that
20 the lower rates for the other companies are more
21 stringent than the percentage or are you saying
22 that the percentage results in the lower rate?
23
MR. ROSS: That the percentage results
24 in a lower rate. So whereas, again, Ameren would
L.A. REPORTING (312) 419-9292
367
1 be reducing SO2 76.3%, other companies would only
2 be required to reduce SO2 emissions by 70%.
3
(62) It appears that the
4 structure of the baseline and required reductions
5 for SO2 under the MPS merely brings Ameren's
6 emissions into alignment with what everyone else's
7 emissions are already; is that correct?
8
No, that is not correct. It's
9 really not even close, and we discussed that
10 yesterday as well. The required reduction sets
11 their emission rates well below that of other
12 companies. In fact, Ameren's final emission rate
13 of 0.25 pounds is less than half the emission rate
14 than any other company, their current emission
15 rate.
16
MR. ZABEL: That's applying the MPS to
17 Ameren and no one else?
18
MR. ROSS: That's correct.
19
MR. ZABEL: You are comparing the MPS
20 to before the requirement?
21
MR. ROSS: That's correct.
22
MS. BASSI: I'm going back to the SIPC
23 is well controlled. Does that mean they can be in
24 the MPS or not?
L.A. REPORTING (312) 419-9292
368
1
MR. ROSS: I believe the MPS is open
2 to all systems. So, yes, they could conceivably
3 utilize it. When I say that, I have to -- that
4 was off my current recollection. I believe on one
5 unit they have a scrubber SER and ESP that is
6 considered a well controlled system. On their
7 other unit they have a fluidized boiler, a
8 baghouse that is generally considered good
9 control. I'd have to look at their actual
10 emission rates from that unit. So I'd have to
11 look at that in a little bit more detail before I
12 would make that assessment.
13
HEARING OFFICER TIPSORD: I have a
14 point of clarification. SIPC is Southern Illinois
15 Power Cooperative, and I believe we have
16 established that they have, one of their units is
17 a new unit under the MPS. So I believe the answer
18 was earlier that they would not be able to take
19 advantage of the MPS because they have a system
20 wide had a new unit. That was my understanding.
21 That basically because of that new unit, that was
22 something you were going to look at as a new
23 problem. But just as a point of clarification,
24 earlier testimony was that based on the way the
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369
1 rule is written now, they might not be able to
2 take advantage of the MPS.
3
MR. ROSS: It appears to exclude them,
4 but, again, that wasn't necessarily the intent.
5
HEARING OFFICER TIPSORD: Thank you.
6 I just wanted to clarify that.
7
MR. ROSS: (A) The MPS requires a
8 further ratchet downward from those companies who
9 are already low emitters. Does Ameren and the
10 Agency realize this?
11
The answer is no. The question
12 needs to define the term "low emitters. Low
13 emitters of what? I assume we are talking
14 Mercury, SO2 and NOx. There are, of course, other
15 pollutants, but Ameren as we've discussed in
16 detail, does emit somewhat more SO2 at this time
17 in large part because it burns more Illinois coal
18 as opposed to Western coal. We've been through
19 our position on that in detail.
20
(B) Doesn't this approach penalize
21 historically low emitters?
22
We don't believe so. They need a
23 lower percent reduction. Again, as we have gone
24 over in detail.
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370
1
MR. ZABEL: Just so we're clear, when
2 you say lower percent reduction, are you talking
3 about rate or tonnage?
4
MR. ROSS: We are talking about SO2
5 reduced as explained several times. The MPS has
6 an option, you either meet the emission rate or a
7 percent reduction, whichever is more stringent.
8 For the other companies than Ameren we believe the
9 percent reduction would be the more stringent, but
10 when you compare what Ameren has to meet in terms
11 of that percent reduction, they are actually
12 reducing a higher percent of SO2 than what the
13 other companies would need to reduce.
14
For instance, Ameren would be
15 required to reduce 76%, greater than 76% of their
16 SO2, whereas other companies in the MPS would only
17 be required to reduce 70% of their SO2.
18
MR. ZABEL: And Ameren ends up with a
19 higher rate?
20
MR. ROSS: Ameren ends up at a higher
21 rate because their starting point is again higher.
22
MR. ZABEL: So they've been polluting
23 more in the past by using low sulfur coal and now
24 they will end up with a higher rate?
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1
MR. RIESER: I'm going to object to
2 that characterization.
3
MR. ZABEL: I apologize. Well,
4 they've been emitting more sulfur than the others
5 and will end up at a higher rate than the others?
6
MR. ROSS: I'd say that is a fair
7 statement, yes. That's correct.
8
HEARING OFFICER TIPSORD: Question 63.
9
MR. ROSS: Why must the MPS be based
10 upon the more stringent of the percent reduction
11 from the baseline rate or the rate that happens to
12 equate to that percentage reduction of Ameren's
13 existing emissions?
14
Based on how we analyzed what was
15 the appropriate level of control for other
16 systems, we made that decision. And we've been
17 over several times how we did that. We looked
18 over each system where it has good controls and
19 where it doesn't, and, again, decided that the use
20 of subbituminous coal alone to reduce SO2 does not
21 equal the needed level of SO2 control in Illinois.
22
HEARING OFFICER TIPSORD: And I
23 believe Mr. Martin answered vaguely.
24
MR. MATOESIAN: Right, he did.
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1
HEARING OFFICER TIPSORD: Question No.
2 64.
3
MR. ROSS: In previous rules where a
4 not-to-be-exceeded emission rate was necessary to
5 demonstrate attainment with a National Ambient Air
6 Quality Standard, the Board did not attempt to
7 inhibit trading. Why is trading inhibited and
8 even precluded as a prerequisite for participation
9 in the MPS?
10
The Illinois EPA wants to insure
11 that real emission reductions occur in Illinois.
12 Trading would not insure that reduction in
13 emissions that are needed to meet the National
14 Ambient Air Quality Standard will occur in
15 Illinois.
16
MS. BASSI: If there is a
17 not-to-be-exceeded emission rate, how does that
18 not insure that there would be actual emission
19 reduction in Illinois?
20
MR. ROSS: Well, if you can trade to
21 meet that rate.
22
MS. BASSI: Well, a not-to-be-exceeded
23 emission rate means that you cannot exceed that,
24 and that means reduction has to occur at the
L.A. REPORTING (312) 419-9292
373
1 Illinois units. And my question is, what does
2 that have to do with trading? Why is that not
3 enough?
4
MR. ROSS: Well, we want to insure
5 that the emission reductions that occur as a
6 result of meeting that not-to-be-exceeded emission
7 rate are not somehow entered back into a trading
8 program where they show up in other states. When
9 you retire or surrender those reductions, they are
10 guaranteed to occur.
11
MS. BASSI: Have you done any kind of
12 an analysis that demonstrates that allowances or
13 that emissions -- no, allowances -- that are
14 traded would necessarily impact Illinois?
15
MR. ROSS: We've discussed it. We
16 also did some CAIR modeling which indicates that
17 under a trading program scenario where we would
18 retire 30% of our CAIR allowance, that Illinois
19 can see very little in the way of emission
20 reductions in that context.
21
But to build on that a little, we
22 do intend and we have discussed with our modelers,
23 we do intend to model this Rule, and we expect
24 that the reductions we see will be more
L.A. REPORTING (312) 419-9292
374
1 significant than modeling with trading, some level
2 of trading.
3
MS. BASSI: Do you intend to provide
4 that technical support of the impact of this rule
5 to the Board?
6
MR. ROSS: I believe we are providing
7 it to some extent here in this testimony.
8
MS. BASSI: But not in the modeling.
9
MR. ROSS: Pardon?
10
MS. BASSI: Not this modeling or
11 results of it because you haven't done it yet.
12
MR. ROSS: Well, modeling is usually
13 not something that's provided to the Board. In
14 the context of a state implementation plan,
15 there's kind of two parts to the plan. There's
16 the emission standard, the emission rates which
17 are in the form of rules, which obviously as we're
18 here today talking about emission rates and
19 standards, those do go in front of the Board. The
20 modeling component of the state implementation
21 plan is not something that goes in front of the
22 Board. That is something that's still in the
23 state implementation plan that's in the total
24 package that is submitted to the U.S. EPA. And
L.A. REPORTING (312) 419-9292
375
1 our plan is to bring our two major non-attainment
2 areas into attainment. So modeling, again, is not
3 something that typically is presented to the
4 Board. That's my understanding.
5
MS. BASSI: I'm really trying not to
6 stray too far afield from the scope of this
7 Mercury hearing. However, is it not the case, Mr.
8 Ross, that when the Agency presents a rule to the
9 Board and is supporting that rule to the Board,
10 that it usually says that the modeling has shown,
11 rather than we believe the modeling will show?
12
MR. ROSS: Well, this is a Mercury
13 Rule, and we have presented that modeling for
14 Mercury.
15
MS. BASSI: But haven't you introduced
16 SO2 and NOx into the scope now? And that's what
17 we are talking about? You are talking about
18 inhibiting trading for SO2 and NOx in order to
19 achieve an environmental goal that you haven't
20 demonstrated; is that not the case?
21
MR. ROSS: I think this goes back to
22 what we discussed earlier, and we are still
23 evaluating and contemplating what context we will
24 be presenting the Multi-Pollutant Standard, how we
L.A. REPORTING (312) 419-9292
376
1 will utilize it for our attainment demonstration
2 and whatnot. We went over that in some detail
3 this morning.
4
HEARING OFFICER TIPSORD: And just as
5 a further point of clarification, I believe that
6 Mr. Kelly pointed out yesterday that Ameren has
7 presented this language and they have agreed to
8 the language, but it was their feeling that Ameren
9 would be the presenters. So when you say you
10 introduced, I think technically speaking they made
11 that point yesterday. I'm just trying to make the
12 record clear.
13
MS. BASSI: Just one statement then
14 that I have to make. Ameren has deferred to the
15 Agency to answer a bunch of questions on the Rule
16 that Ameren has presented because Ameren wasn't
17 able to answer them. Therefore, the Agency, the
18 questions are posed to the Agency --
19
HEARING OFFICER TIPSORD: And the
20 Agency is answering the questions.
21
MS. BASSI: Not all of them.
22
HEARING OFFICER TIPSORD: I disagree.
23 You may not be hearing the answers you want to
24 hear, but I think they are attempting to answer
L.A. REPORTING (312) 419-9292
377
1 the questions as best they can. Whether or not
2 they are sufficient is a discussion to be had at
3 another time.
4
Mr. Zabel?
5
MR. ZABEL: Mr. Ross, I heard you
6 answer earlier a question that Ms. Bassi asked,
7 that it was the Agency's intent to preclude the
8 trading of the allowances of these trading into
9 other states? I may not have phrased it quite the
10 way you did, but that was what I thought I heard
11 you say.
12
MR. ROSS: That's correct.
13
MR. ZABEL: That would be true for
14 mercury allowances that would be available if the
15 state followed the CAMR Rule instead of the
16 proposed rule?
17
MR. MATOESIAN: I'm sorry, could you
18 clarify that?
19
MR. ZABEL: I'm going to go down all
20 three pollutants. Under CAMR there's trading, is
21 there not?
22
MR. ROSS: Yes.
23
MR. ZABEL: You would preclude that by
24 having this alternate rule not follow CAMR?
L.A. REPORTING (312) 419-9292
378
1
MR. ROSS: Absolutely. Not trading.
2
MR. ZABEL: Even though you could
3 impose the Mercury emission levels without
4 precluding federal trading because it would be
5 sold to other states?
6
MR. ROSS: We could.
7
MR. ZABEL: Well, that is what happens
8 under this rule.
9
MR. ROSS: Only the overcompliance
10 would be traded.
11
MR. ZABEL: I'm talking about mercury
12 for the moment.
13
MR. ROSS: Mercury, there's no trading
14 of.
15
MR. ZABEL: But you could get the same
16 emission limit on sources in the state by simply
17 adopting the emission; you are also precluding by
18 this rule trading under the Federal CAMR Rule?
19
MR. RIESER: I'm sorry, I don't
20 understand. By this rule, you mean the MPS?
21
MR. ZABEL: The entire rule that's
22 before us.
23
MR. RIESER: The entire rule?
24
MR. ZABEL: Right. I don't think the
L.A. REPORTING (312) 419-9292
379
1 MPS makes a difference in that.
2
MR. RIESER: Correct.
3
MR. ZABEL: Let me pose it to you
4 differently. If you simply impose the emission
5 limits that are proposed in this rule, the basic
6 rule for --
7
MR. MATOESIAN: For mercury?
8
MR. ZABEL: -- for mercury, but did
9 nothing further and allowed the CAMR Rule to come
10 into effect, there would be trading as a result of
11 the overcompliance with the Illinois Rule; is that
12 correct?
13
MR. ROSS: I believe that's correct.
14
MR. ZABEL: Whether it's your intent
15 or not, your result of the Mercury Rule will be to
16 preclude interstate trading of mercury allowances
17 by Illinois sources; is that true?
18
MR. ROSS: Yes, I believe so.
19
MR. ZABEL: You also intend to
20 preclude the interstate trading of SO2 allowances
21 that are generated for compliance under the MPS;
22 is that correct?
23
MR. ROSS: That is correct.
24
MR. ZABEL: And the same for NOx
L.A. REPORTING (312) 419-9292
380
1 allowances under the MPS?
2
MR. ROSS: That is correct.
3
MR. ZABEL: It's the state's intent to
4 preclude interstate trading of those allowances;
5 is that correct?
6
MR. ROSS: That is correct.
7
MR. ZABEL: Thank you.
8
HEARING OFFICER TIPSORD: Question No.
9 67.
10
MR. ROSS: Is there anything that
11 prevents the Agency from re-selling allowances
12 surrendered to it?
13
It is our intent to retire the
14 surrendered allowances, and doing otherwise is
15 contrary to our air quality and emission reduction
16 goals. We will look into this further, but we
17 believe if the allowances are surrendered to U.S.
18 EPA, that the U.S. EPA cannot re-sell them.
19
HEARING OFFICER TIPSORD: Ms. Bassi?
20
MS. BASSI: Will there be something in
21 the rule or something enforceable that says
22 Illinois will actually retire them?
23
MR. ROSS: I don't believe there's
24 anything currently in the rule, but there is
L.A. REPORTING (312) 419-9292
381
1 something in the testimony that it is not our
2 intent to do so, and that would be contrary to our
3 air quality goals. So we certainly have no
4 intention of doing that.
5
HEARING OFFICER TIPSORD: Mr. Zabel?
6
MR. ZABEL: Just for clarity then,
7 it's your intent that those allowances will be
8 taken out of circulation completely and never used
9 to offset pollution?
10
MR. ROSS: That's correct.
11
MR. ZABEL: In other words, it would
12 reduce the size of the market and try to establish
13 some kind control of SO2 allowances; is that
14 correct?
15
MR. ROSS: I believe so.
16
MR. ZABEL: Thank you.
17
HEARING OFFICER TIPSORD: 72.
18
MR. ROSS: In reaching the MPS
19 agreement with Ameren, did the Agency conclude
20 that postponing the effective date of the mercury
21 standard from July 2009 until January 2015 was
22 acceptable for the control of mercury from a
23 public health perspective?
24
And the answer to that is no. The
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382
1 premise of the question is somewhat confusing. We
2 still require that mercury control is able to
3 achieve 90% reduction in mercury emissions to be
4 installed by the end of 2009 on 94% of Ameren's
5 capacity. We simply concluded, as others have,
6 that a broad multi-pollutant standard has far more
7 reaching benefits to public health and the
8 environment by insuring significant reductions in
9 mercury, SO2 and NOx.
10
HEARING OFFICER TIPSORD: Question 73.
11
MR. ROSS: Isn't it true that if each
12 of the generators in Illinois elected to take
13 advantage of the MPS, the mandatory mercury
14 standard, 90% reduction or 0.0080 pounds of
15 mercury per gigawatt hour would not take effect in
16 Illinois until 2015?
17
The answer to that is, yes, and
18 we've been over that in some detail.
19
HEARING OFFICER TIPSORD: Before we go
20 on to the next question, did you get a copy of the
21 questions?
22
(Discussion off the record, after
23
which the following proceedings
24
were had:)
L.A. REPORTING (312) 419-9292
383
1
HEARING OFFICER TIPSORD: The
2 follow-up to question 73, question 74.
3
MR. ROSS: The MPS does not impose the
4 mandatory 90% reduction or 0.0080 pounds of
5 mercury per gigawatt standard on electric
6 generating units that are less than 90 megawatts?
7
And that is true, but it does
8 require them to install mercury controls by the
9 end of 2012.
10
HEARING OFFICER TIPSORD: Question No.
11 76.
12
MR. ROSS: Isn't it true that by
13 postponing controlling emissions of SO2 until late
14 in or after the years used to determine the base
15 rate, a company would be allowed to emit more SO2
16 in the future than if it had controlled SO2 during
17 the years used to determine the base rate?
18
And I believe that is true.
19
HEARING OFFICER TIPSORD: Question 77.
20
MR. ROSS: Isn't it true that a
21 company that had reduced emissions of SO2 during
22 the years used to determine the base rate, would
23 be more likely to have a more stringent SO2
24 emission rate limit under the MPS than a company
L.A. REPORTING (312) 419-9292
384
1 that did not reduce SO2 emissions during those
2 years?
3
I believe that is true.
4
(A) Isn't it true that the
5 provision of the MPS that imposes a percent
6 reduction of the SO2 base rate would generally
7 grant a higher future emission rate to a company
8 if it did not control SO2 emissions during the
9 years used to determine the base rate?
10
I believe that statement is also
11 true.
12
(B) Isn't it true that the
13 provision of the MPS that imposes a percent
14 reduction of the SO2 base rate rewards companies
15 with high emissions of SO2 during the years used
16 to determine the base rate relative to companies
17 with low emissions of SO2 during that period?
18
MR. MATOESIAN: I'm just going to
19 object to the characterization that it rewards
20 them.
21
MR. ROSS: Right. And that's part of
22 my answer. I'm not sure that it necessarily
23 rewards them. I'm not sure in the context of how
24 the term rewards is used, but it is true that such
L.A. REPORTING (312) 419-9292
385
1 companies would have to meet a lower emission
2 rate. But it is also true that they need to
3 reduce emissions at a lower percentage as we have
4 gone over in some detail.
5
(C) Isn't it true that the
6 provision of the MPS that imposes a percent
7 reduction of the SO2 base rate would impose a
8 lower future emission rate on a company that did
9 not control SO2 emissions during the years used to
10 determine the base rate?
11
And the answer is maybe or maybe
12 not. It depends on what a company's starting
13 point for SO2 emission rates is. Assuming for
14 purposes of the question that the company did
15 control SO2 and had a lower base emission rate,
16 then they would likely need to meet a lower
17 emission rate than a company that did not control
18 SO2. But, again, they would need to reduce
19 emissions at a lower percentage as has been
20 explained.
21
(D) Would you agree that the
22 provision of the MPS that imposes a percentage
23 reduction of the SO2 base rate punishes companies
24 with low emissions of SO2 during the years used to
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386
1 determine the base rate relative to companies with
2 high emissions of SO2 during that period?
3
MR. MATOESIAN: Again, I'm going to
4 object to the characterization of punishing them.
5
MR. ROSS: And the answer is, no, I'm
6 not sure in what sense that they are being
7 punished. Are they being punished because they
8 need to reduce emissions to a lower percentage and
9 therefore possibly reduce less or are they being
10 punished assuming in the sense that they would
11 need to meet a lower emission rate?
12
Does that conclude our portion?
13
HEARING OFFICER TIPSORD: I'm checking
14 with the rules. This is Erin Connelley with the
15 Board. I'm going to let Erin go ahead and propose
16 a couple questions. You do not necessarily have
17 to answer them now. You can certainly save them
18 for final comments. She has had a chance to look
19 at the rule's language.
20
MS. CONNELLEY: First of all, I'd like
21 to say, everyone has a lot of declarative
22 questions for me, so thank you. Just real
23 quickly.
24
MS. BASSI: Madam Hearing Officer, who
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387
1 is answering these questions, the Agency or
2 Ameren?
3
HEARING OFFICER TIPSORD: It's a joint
4 question, so like I said I don't expect an answer
5 now. They can look at them and answer them in
6 comments later.
7
MS. CONNELLEY: I'm looking at in
8 C3(D), just one of the issues that we frequently
9 get when we use the word "may," in regulatory
10 matters, the Illinois operator may operate the
11 objection rate or rates. If there's some way we
12 could have clarified language for that, that would
13 specify a little more clearly instead of the word
14 "may" has the option of something, that could make
15 it a little more clear. We will get the question
16 when may they not. That happens at a couple of
17 places. Especially when it's preceded by so many
18 "shalls". And actually I'm going to leave that
19 one right now. A lot of the other questions have
20 already been addressed. So thank you very much.
21
HEARING OFFICER TIPSORD: Thank you.
22
MR. RIESER: Thank you.
23
HEARING OFFICER TIPSORD: Are there
24 any additional questions for the Agency at this
L.A. REPORTING (312) 419-9292
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1 point? Then I believe we'll move on to Dr. Smith.
2 And her testimony has been entered as Exhibit 77.
3
Midwest Generation and Dynergy are the
4 only ones who have proposed questions for Dr.
5 Smith at this time so we'll proceed.
6
MR. ZABEL: I believe I saw questions
7 from Prairie State.
8
HEARING OFFICER TIPSORD: My
9 apologies. They are actually in the back. Did
10 you want to give a brief summary, Dr. Smith?
11
DR. SMITH: Yes, I do.
12
My name is Anne Smith. I'm vice
13 president of CRA International, an economic
14 consulting firm. I have been asked by Ameren to
15 testify on how the provision called the
16 Multi-Pollutant Standard or MPS effects
17 environmental --
18
HEARING OFFICER TIPSORD: Doctor,
19 let's move the microphone. It will amplify it a
20 little bit without garbling.
21
DR. SMITH: I'll go back.
22
I've been asked by Ameren to
23 testify on how the Multi-Pollutant Standard
24 effects environmental and financial outcomes as
L.A. REPORTING (312) 419-9292
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1 compared to those that would occur under the
2 Illinois Rule for mercury without the MPS
3 provision.
4
In my analysis I find that if
5 Ameren were to make use of the MPS provision,
6 annual SO2 emissions would be tens of thousands of
7 tons lower per year than under the Illinois
8 Mercury Rule, and annual NOx emissions would be
9 one to three thousand tons lower than under the
10 Illinois Mercury Rule.
11
Reductions in these pollutants
12 would make real contributions to the efforts that
13 Illinois will need to undertake to achieve
14 attainment with both fine particles and NAAQS,
15 Ambient Air Quality Standards. The trade-off that
16 is made environmentally is a small delay in
17 meeting the full reduction of mercury that would
18 be required under the Illinois Rule without the
19 MPS provision. This brief delay does not impose
20 any attainment issues in the state in the way that
21 SO2 and NOx emissions do.
22
From Ameren's corporate
23 perspective, the rate increase and capital
24 payments would be dramatically reduced on the MPS
L.A. REPORTING (312) 419-9292
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1 compared to the Illinois Rule without the MPS.
2 This could be valuable to the company in terms of
3 enhanced financial stability. It also indicates a
4 more reasonable construction schedule which will
5 improve the company's ability to effectively
6 manage many complex retrofit projects. That in
7 turn suggests greater prospects for avoiding
8 project missteps and cost overrides as well as
9 enhanced prospects for system reliability.
10
In sum, I consider the MPS
11 provision to be a beneficial addition to the
12 Illinois Rule as originally proposed without it.
13
HEARING OFFICER TIPSORD: Thank you,
14 Dr. Smith. You know what, since Prairie State
15 Generating Company has just the one question, why
16 don't we do their question and then go to -- or
17 did you have something else?
18
MR. RIESER: I think there are
19 actually three questions, and I think they are
20 pretty much answered by the answers to the Dynergy
21 questions. So if we can just proceed, that's
22 okay, why don't we proceed that way.
23
HEARING OFFICER TIPSORD: That's fine.
24 We'll do that.
L.A. REPORTING (312) 419-9292
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1
DR. SMITH: Question 1. Did anyone
2 assist you with the preparation of your written
3 testimony on behalf of Ameren or the responses to
4 these questions?
5
(A) If so, who?
6
I read the testimony myself. A
7 CRA associate principle Scott Bloomberg assisted
8 me in performing the analysis that I described in
9 my testimony and in checking the accuracy of the
10 draft. I've been consulting with Ameren and
11 Ameren's legal team in terms of the scope of my
12 testimony and the scope of my questions.
13
(B) Did you receive any guidance
14 from or have any conversation with the Illinois
15 Environmental Protection Agency concerning your
16 testimony or responses to these questions?
17
No.
18
(C) Were you instructed by anyone
19 to include or exclude any analyses or discussion
20 from your testimony or responses to these
21 questions due to input by or concerns of the
22 Agency, any other state agency or employee, or any
23 environmental group?
24
No.
L.A. REPORTING (312) 419-9292
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1
(D) Did the Agency or any other
2 state agency or employee, or any environmental
3 group, review a draft or provide comments on your
4 testimony or the responses to these questions?
5
Not to my knowledge, no.
6
(E) If so, who?
7
Not applicable.
8
(F) Did you perform any analyses
9 or studies for Ameren in connection with this
10 proceeding not discussed or referred to in your
11 testimony?
12
I was retained by Ameren to advise
13 them on a broader set of issues than I've been
14 asked to testify on. I've done other analyses
15 related to Ameren's business planning, but these
16 are not the subject of my testimony on this rule.
17
(G) If so, please describe all
18 such analyses or studies.
19
I estimated the costs of the Rule
20 and the potential effects of the TTBS.
21
2. At page three of your
22 testimony you state that "to simulate the Illinois
23 Rule with the MCS -- I'll say MPS. I used the
24 term MCS showing that I didn't even know what it
L.A. REPORTING (312) 419-9292
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1 was called. That shows how much in the loop I
2 was -- "I assumed that only Ameren would make use
3 of the MPS provision, and that I did not attempt
4 to evaluate whether other companies would also
5 find the MPS provision to be a preferred
6 alternative." Does this mean that:
7
You are not offering testimony
8 concerning whether MPS would be a beneficial
9 alternative?
10
I am not offering any testimony
11 regarding any other company other than Ameren.
12
Does this mean that all of your
13 comparisons of costs and emission levels
14 associated with the proposed Mercury Rule with or
15 without the MPS assume that only Ameren
16 participates in the MPS?
17
Yes.
18
Does this mean that other
19 companies may in fact find that the MPS creates
20 disadvantages for them because, for instance, they
21 have lower NOx or SO2 emissions during the
22 baseline period and the MPS, if adopted, would
23 require them to reduce baseline emissions by
24 specified percentages?
L.A. REPORTING (312) 419-9292
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1
I did not analyze this issue, and
2 I have no testimony to offer on it.
3
3. On page 3 of your testimony
4 you describe three simulations you performed using
5 NEEM.
6
MR. RIESER: NEEM, N-E-E-M.
7
DR. SMITH: The first of these was
8 CAIR/CAMR, C-A-I-R/C-A-M-R. Did that include
9 co-benefits Ameren would obtain from CAIR for
10 complying with CAMR?
11
Yes, it did.
12
Did the first simulation include
13 co-benefits that other Illinois generators would
14 realize under the CAIR/CAMR program?
15
Yes, all three simulations
16 included the same input assumptions regarding
17 possible co-benefits.
18
(B) You describe your second
19 simulation as "the effects of Illinois imposing
20 the IEPA's mercury rule" while the rest of the
21 country implements CAIR/CAMR. Did the cost to
22 Illinois generators for CAIR compliance increase
23 in this simulation?
24
It's not possible to separate the
L.A. REPORTING (312) 419-9292
395
1 cost for CAIR compliance to the cost of any
2 mercury rule, whether it's the CAIR Rule or the
3 Illinois Rule, and this is because of the
4 co-benefits that simultaneously provide mercury,
5 SO2 and NOx reductions. My estimate of the total
6 costs to Illinois generators of the IEPA Rule plus
7 CAIR is higher than that for meeting CAMR plus
8 CAIR alone.
9
If so, why?
10
The cost rises because the IEPA
11 mercury rule requires greater amount of emission
12 control actions by Illinois generators than would
13 be cost-effective for them to undertake under
14 CAMR.
15
MR. ZABEL: Is the timing of controls
16 under CAIR impacted in that cost analysis as well?
17
DR. SMITH: The timing of the controls
18 required under which one?
19
MR. ZABEL: Your analyses here. We
20 are talking about the Illinois Rule and CAIR.
21
DR. SMITH: Under the Illinois Rule
22 the timing of compliance that might occur because
23 of CAIR might be moved up in time because it will
24 provide the mercury reductions, and that will
L.A. REPORTING (312) 419-9292
396
1 increase the costs, if later compliance actions
2 end up being sped up in time because of the
3 mercury provisions.
4
MR. ZABEL: So they would be
5 accelerated to obtain the co-benefits?
6
DR. SMITH: That's right, if they are
7 accelerated to obtain the co-benefits, then that
8 raises the costs.
9
MR. ZABEL: Did your analysis of
10 various facilities in Illinois conclude as to
11 units that would accelerate their CAIR compliance
12 for that reason?
13
DR. SMITH: It was certainly a
14 possibility, and there were not that many, but I
15 believe there were one or two plants that would
16 accelerate SGT installations up to as early as
17 2009 in the acceleration.
18
MR. ZABEL: Did the analyses then
19 include those that didn't accelerate CAIR
20 compliance some duplicative or wasteful costs
21 because they had to comply with mercury before
22 they got the CAIR benefits?
23
DR. SMITH: In the model run there was
24 nothing to prevent them from speeding up controls.
L.A. REPORTING (312) 419-9292
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1 Now, if a sufficient number of the controls would
2 be sped up so early in time in the model that you
3 would say that this is not viable in the real
4 world, that cost, that lack of viability would not
5 be picked up. That's something that a modeler has
6 to look at after the fact. We did not see too
7 much of that, other than the bigger effect in
8 terms of speeding things up was the quantity of
9 baghouses that would have to be added by 2009 to
10 meet the Illinois Rule. Rather than speeding up
11 with FGDs, there just wasn't as much of that as we
12 might have expected. And in part that is because
13 there weren't that many FGDs in the plan for CAIR
14 alone, CAIR/CAMR alone.
15
MR. ZABEL: Your analyses then
16 concluded that the use of baghouses required in
17 the Illinois Rule?
18
DR. SMITH: Yes.
19
MR. ZABEL: I believe that's
20 consistent with Mr. Menne's testimony on the MPS?
21
DR. SMITH: Yes.
22
MR. ZABEL: Your analysis did not
23 assume as the Agency did, that the ACI
24 installation would be sufficient to meet the 90%.
L.A. REPORTING (312) 419-9292
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1
DR. SMITH: It depends on the unit and
2 configuration of the unit whether it would reach
3 90% with ACI alone. The units we are actually
4 using sulfur trioxide, flu gas conditioning, we
5 did not assume they could achieve 90% without
6 baghouses.
7
HEARING OFFICER TIPSORD: I believe we
8 were on (B)3.
9
DR. SMITH: Did you quantify those
10 increased costs?
11
It would help if you could explain
12 what it meant by "those increased costs" just to
13 clarify the specific costs that you are asking
14 about.
15
MR. ZABEL: I think going back to the
16 earlier part of the question, it's the difference
17 in the cost between CAIR/CAMR and Illinois CAIR.
18
DR. SMITH: Yes, I did do that. So I
19 estimated that the Illinois Rule without the MPS
20 provision would cost Illinois generators about
21 $1.13 billion dollars more than CAIR/CAMR. And
22 this cost --
23
MS. BASSI: Is that million or
24 billion?
L.A. REPORTING (312) 419-9292
399
1
DR. SMITH: Billion. $1.13 billion.
2 This cost is the present value to all the costs of
3 the generators between 2006 and 2020.
4
Was your third simulation the same
5 as the second except that you included the MPS
6 with only Ameren utilizing the MPS?
7
Yes.
8
What was the cost difference
9 between this simulation and the second simulation?
10
The cost difference to Illinois
11 generators between the third and second simulation
12 was $220 million present value.
13
MR. ZABEL: Is that an increase or
14 decrease?
15
DR. SMITH: The MPS would cost more
16 than the Illinois Rule with or without the MPS.
17
MR. ZABEL: So the total cost to
18 generators is going $1.35 billion?
19
DR. SMITH: Yes, that's the next
20 question.
21
MR. ZABEL: I'm sorry. I anticipated
22 myself.
23
DR. SMITH: Good math.
24
What were the causes of this
L.A. REPORTING (312) 419-9292
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1 difference?
2
The total investment, higher
3 operating costs that Ameren would undertake by the
4 year 2020 if it were to take the MPS instead of
5 not taking the MPS provision.
6
What was the cost difference to
7 Illinois generators between the first and third
8 simulations?
9
$1.35 billion dollars present
10 value.
11
What were the causes of this
12 difference?
13
This is just a combination of my
14 answers to B and C above.
15
You indicated for Ameren that you
16 included the multi-pollutant controls for meeting
17 the MPS requirements. Did you do any analysis of
18 the increase to other Illinois generators for
19 meeting beyond CAIR SO2 and NOx requirements if
20 Ameren does not have to meet such requirements?
21
No.
22
4. You state that you assumed
23 only Ameren would make use of the MPS provision.
24 What are the reasons or basis for that assumption?
L.A. REPORTING (312) 419-9292
401
1
The reason is that I'm only
2 representing Ameren in this proceeding.
3
Did you have any inputs from or
4 discussions with anyone from Ameren concerning
5 this assumption?
6
When I was asked to prepare the
7 analysis of the MPS provision by Ameren, I asked
8 should the analysis be limited to Ameren's use of
9 the MPS or assume that generally it would be
10 employed, and I was told to limit my assumptions
11 to just the use of the MPS by Ameren only.
12
The question is with whom and
13 when?
14
I took my instructions from
15 Ameren's legal team.
16
(C) please describe the nature and
17 content of these inputs or discussions.
18
Well, throughout the course of the
19 engagement there they were both informal telephone
20 conversations and more formal meetings in person
21 or as conference calls with Ameren's legal team
22 and Ameren to clarify the scope and specifics of
23 the assignment.
24
(D) Did you have any inputs from
L.A. REPORTING (312) 419-9292
402
1 or discussions with anyone from the Agency
2 concerning that assumption?
3
No, I did not.
4
(E) Is not applicable.
5
(F) To your knowledge did Ameren
6 have any inputs from or discussion with anyone
7 from the Agency concerning that assumption?
8
No, not to my knowledge.
9
(G) If so, please describe.
10
That's not applicable.
11
5. On page 6 of your testimony
12 you state the regional haze will be improved by
13 the proposed MPS.
14
(A) What is the basis for this
15 assertion?
16
On page 6 I'm referring to the SO2
17 reductions and how they will be reduced. The
18 basis for this is just that sulfur dioxide
19 converts in the atmosphere to sulfate particles.
20 Sulfate particles block the emission of light
21 through the air. That blocking of light is the
22 cause of regional haze.
23
(B) Did you perform or have you
24 reviewed any haze modeling that both includes or
L.A. REPORTING (312) 419-9292
403
1 excludes the MPS?
2
No.
3
(C) Have you ever performed haze
4 modeling?
5
Yes. I developed the Integrated
6 Assessment Models for the Grand Canyon Visibility
7 Transport Commission which was developed to
8 estimate the regional hazing packs in southwestern
9 parks which are effected as a result from
10 alternative, generic control policies. That of
11 course is not applicable to Illinois.
12
6. On page 6 of your testimony
13 you state that SO2 emissions are a precursor to
14 ambient concentrations of fine particulate matter
15 and that the additional reductions of Illinois SO2
16 emissions would be helpful to Illinois in
17 achieving attainment with the PM2.5 National
18 Ambient Air Quality Standard.
19
(A) Will the Agency require
20 reductions of SO2 beyond the SO2 reductions by
21 Ameren under the MPS, if adopted, and CAIR to
22 achieve attainment with the PM2.5 NAAQS?
23
I don't know this. I did not
24 perform an attainment analyses as I said.
L.A. REPORTING (312) 419-9292
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1
(B) Has the Agency identified
2 electric generating units as a source of such
3 additional SO2 reductions?
4
Honestly, I don't know. I haven't
5 followed it.
6
(C) Is Ameren exempt from any such
7 additional SO2 reductions if the MPS were to be
8 adopted and Ameren opted into the MPS?
9
I don't know the answer to that.
10
(D) To determine what additional
11 SO2 reductions are needed to achieve attainment
12 with the MP2.5 NAAQS, do you need to know what
13 reductions in Illinois would occur as a result of
14 the state's adoption of rules to implement CAIR?
15
Yes, one would need to know this
16 if one were to perform an analysis on attainment
17 which I have not done.
18
(E) At this point Illinois has not
19 adopted any CAIR implementation rule; is that
20 correct?
21
That is correct.
22
(F) Is CAIR implementation the
23 subject of an entirely different rulemaking?
24
Yes, it is.
L.A. REPORTING (312) 419-9292
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1
7. On page 6 of your testimony
2 you state that "five of the FGD projects assumed
3 under the MPS scenario would cost between $3,600 a
4 ton and $4,800 a ton SO2 removed, which is four to
5 five times higher than the range of SO2 allowance
6 prices that is projected by EPA and others."
7
(A) In what document or documents
8 does EPA project such allowance prices?
9
EPA estimates of allowance prices
10 come from IMP. The output files of three sets of
11 sensitivity from CAIR and CAMR Rules are posted on
12 EPA's website, and I'll give you the website name.
13 It's http://www.EPA.gov/airmarket/MP. And these
14 three sets of outputs can be found as items No.
15 12, 19 and 25 on that web page.
16
HEARING OFFICER TIPSORD: Dr. Smith,
17 just as a point of clarification, when you refer
18 to the EPA, you are referring to the United States
19 Environmental Protection Agency?
20
DR. SMITH: Yes, I am.
21
(B) Who are the others?
22
I and my colleagues at CRA
23 routinely use allowance prices at NEEM models
24 which we used in this particular proceeding, the
L.A. REPORTING (312) 419-9292
406
1 analysis for this proceeding. We have done this
2 for many clients and many alternative input
3 assumptions, sensitivity analyses. For my
4 statement for the specific four to five times
5 increase, I relied on a range of price estimates
6 from the specific NEEM runs that were done for
7 this proceeding combined with the estimates
8 reported by IEPA. There are other consulting
9 firms that also produce such price estimates. I
10 have familiarity with their estimates but I cannot
11 rely on them because my access to them has been on
12 a confidential basis. I can say certainly they
13 are in the range of the numbers that I have.
14
MR. BONEBRAKE: When you say you
15 relied on a range of price estimates, did you use
16 an average of a range?
17
DR. SMITH: No, I used a high and low
18 and divided them into the numbers. The price
19 range is basically from $600,000 dollars a ton to
20 a $1000 a ton across all the estimates I relied
21 on.
22
MR. BONEBRAKE: How does that compare
23 to U.S. EPA price range?
24
DR. SMITH: That includes the EPA's
L.A. REPORTING (312) 419-9292
407
1 price range. And those are numbers between,
2 values estimated for the years between 2010 and
3 about 2020.
4
(C) Does this statement mean that
5 the proposed Illinois Rule with the MPS is
6 significantly less cost-effective than CAIR in
7 reducing SO2 emissions?
8
I believe I answered that earlier
9 but under one of Mr. Menne's questions. I can go
10 over it again if you wish.
11
(D) Do you agree that the
12 projected SO2 reduction costs under the MPS are
13 not cost-effective as compared to the SO2
14 reductions required by CAIR?
15
My answer to C applies to this
16 question as well, that I do not agree to using the
17 concept of cost-effectiveness to compare them.
18
(E) Does this mean that
19 Ameren's --
20
MR. ZABEL: Excuse me. When you say
21 no to D, are you referring to Ameren's perspective
22 or generally?
23
DR. SMITH: Generally. The concern
24 here is that the targets are different under CAIR
L.A. REPORTING (312) 419-9292
408
1 and CAMR than they are under the Illinois Rule,
2 the objectives that you are trying to obtain. So
3 it is more costly to obtain a stringent target as
4 one has with the Illinois Rule with or without the
5 MPS provision. That doesn't make them less
6 cost-effective just because they are more costly.
7 They can still be extremely cost-effective.
8
MR. BONEBRAKE: Can you then define
9 for us how you use the term cost-effective? That
10 will help us understand your answer.
11
DR. SMITH: Yes. Cost-effective is
12 defined as what is the cheapest way to achieve
13 your environmental target. If you have a limit on
14 an emissions of a cap of 9 million tons a year,
15 the cost-effective approach would be the one that
16 achieves 9 million tons a year at the lowest cost
17 possible. Any other approach for achieving
18 controls that would get to 9 million tons, if it
19 costs more is less cost-effective. But under the
20 Illinois Rule you are comparing the tighter limit
21 on emissions, in this case mercury emissions, than
22 under the CAIR and CAMR Rules. And the same is
23 true for the SO2 and NOx when you add the MPS into
24 it.
L.A. REPORTING (312) 419-9292
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1
MR. BONEBRAKE: So would it be correct
2 that for answers of C and D we are asking for a
3 comparison of apples to oranges and that's really
4 inappropriate?
5
DR. SMITH: That's right.
6
(E) Does this mean that Ameren's
7 customers and/or stockholders will be subject to
8 costs for SO2 controls that are four to five times
9 higher than Ameren might otherwise have incurred?
10
The answer is no. A higher SO2
11 price does not imply a higher electricity price.
12 So you can draw no such conclusion for customers.
13 Similarly a high cost per ton removed at one or
14 two specific generating units does not imply the
15 total corporate financial costs will be that much
16 higher, nor does it imply that the financial
17 outcome of the company will be worse at all.
18 Financial outcomes for the company could be
19 actually better, if other financial concerns are
20 eased by that choice of making that more expensive
21 control in a few units. And that is the case as I
22 see it in choosing to adopt the MPS provision if
23 Ameren were to be able to do so. Thus no such
24 conclusion can be drawn for the stockholder's role
L.A. REPORTING (312) 419-9292
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1 either.
2
HEARING OFFICER TIPSORD: Mr. Zabel?
3
MR. ZABEL: Your answer to that
4 question is dependent, is it not, on the other
5 benefits you think Ameren will obtain from the
6 MPS?
7
DR. SMITH: That is right.
8
HEARING OFFICER TIPSORD: Mr.
9 Bonebrake?
10
MR. BONEBRAKE: You mentioned that you
11 did modeling of SO2 pricing. I was curious if
12 your modeling included a scenario where some
13 allowances would not be available, that is
14 allowances that would be allocated to Ameren as a
15 result of the trading prohibition included in the
16 MPS?
17
DR. SMITH: I did not analyze such a
18 scenario. I will say that I did estimate the
19 change in what the emissions cap would be, and
20 it's very small, less, about 1% of change in the
21 cap as a result of any reduction in Ameren's
22 emissions.
23
MR. BONEBRAKE: Can you clarify for us
24 what you mean by cap in that CAIR?
L.A. REPORTING (312) 419-9292
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1
DR. SMITH: The national cap for
2 CAIR for SO2.
3
8. On page 7-8 of your testimony
4 you state that the "two SCR projects at Newton
5 assumed under the MPS scenario would cost between
6 $20,000 ton to $26,000 ton removed, which is about
7 ten times higher than the range of NOx allowance
8 prices that is projected by EPA and others."
9
The next set of questions A
10 through E follow up on that and the previous set
11 of questions and my answers are identical.
12
9. On page 6 of your testimony
13 you indicate that the SO2 reduction resulting from
14 Ameren's compliance with the MPS would be unlikely
15 to occur under CAIR/CAMR or CAIR/CAMR with the
16 Illinois Mercury Rule in place.
17
(A) How much of this reduction
18 would occur if Ameren simply reduced its existing
19 average SO2 emission rate to the existing average
20 of the other coal-fired electric generators in
21 Illinois?
22
I haven't done that analysis.
23
(B) Did you analyze what level of
24 SO2 emission reductions would be required in
L.A. REPORTING (312) 419-9292
412
1 Illinois beyond CAIR?
2
No, I did not perform an
3 attainment analysis.
4
(C) Would these reductions be
5 greater than just the reductions from Ameren under
6 the MPS?
7
I don't know because I have not
8 done an attainment analysis.
9
(D) Wouldn't these greater
10 reductions result in a line ultimately lower than
11 either of those shown in Figure 1 of your
12 testimony?
13
I don't know if greater reductions
14 would be required or not.
15
(E) Wouldn't these greater
16 reductions have to be achieved by sources in
17 Illinois other than Ameren because Ameren would
18 not be required to make any reductions beyond
19 those in the MPS?
20
I believe this question has made a
21 presumption, and I don't know if it's true or not,
22 so I cannot answer it.
23
10. On page 7 of your testimony
24 you indicate that the NOx reductions resulting
L.A. REPORTING (312) 419-9292
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1 from Ameren's compliance with the MPS would be
2 unlikely to occur under CAIR/CAMR alone or
3 CAIR/CAMR with the Illinois Rule in place.
4
Did you analyze what level of NOx
5 emission reductions would be required beyond CAIR?
6
No, I did not perform an
7 attainment analysis.
8
I believe B, C and D are identical
9 to my answers to question 9.
10
11. Regarding Figure 3 at page 9
11 of your testimony.
12
(A) Is it correct that this figure
13 shows that in 2009, mercury emissions from
14 existing coal-fired power plants in Illinois would
15 be about 500 pounds higher under the proposed
16 Illinois Mercury Rule with the MPS as compared to
17 the proposed Illinois Rule without the MPS?
18
I estimated the small and
19 temporary delay in the reduction levels under the
20 Illinois Rule would be offset by greater and
21 earlier reductions in SO2 and NOx. Those are the
22 pollutants that present a real quality air concern
23 in Illinois.
24
HEARING OFFICER TIPSORD: Excuse me.
L.A. REPORTING (312) 419-9292
414
1 Mr. Bonebrake?
2
MR. BONEBRAKE: Dr. Smith, I don't
3 think you answered the question. The question was
4 specifically, does Figure 3 show that mercury
5 emissions would be about 500 pounds higher in the
6 one scenario versus the other as described in the
7 question?
8
DR. SMITH: It does in 2009 and the
9 gap declines continuously until they become the
10 same by 2015. So that's the sense in which I was
11 describing it as a small and temporary delay.
12
MR. BONEBRAKE: And would you
13 anticipate, Dr. Smith, that if other companies
14 were to opt into the MPS, that the 500 pounds
15 would increase higher than as shown in Figure 3
16 where you are just looking at Ameren?
17
DR. SMITH: Yes, it would, not
18 necessarily in the same proportion. It would
19 depend on how many of the other companies' units
20 have similar issues with sulfur trioxide which is
21 the real reason why there is a real difference at
22 all in 2009.
23
(B) Please explain why mercury
24 emissions are projected to be higher in 2009 under
L.A. REPORTING (312) 419-9292
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1 the MPS scenario?
2
This occurs because under the MPS
3 Ameren will employ ACI at its noncurrent units,
4 and that the Ameren units that inject SO3 will not
5 be in compliance with the 90% removal or the units
6 with 8 pounds per gigawatt hour of emission rate
7 with ACI alone.
8
HEARING OFFICER TIPSORD:
9 Mr. Bonebrake?
10
MR. BONEBRAKE: Just to follow-up so I
11 understand the answer to that question, your
12 assumption regarding not achieving 90%, was it
13 limited to units using SO3?
14
DR. SMITH: Yes, it was.
15
MR. BONEBRAKE: What was the basis of
16 that assumption?
17
DR. SMITH: It came from the judgment
18 of Mr. Ed Conowitz. His testimony that was
19 submitted will support that point.
20
HEARING OFFICER TIPSORD: Mr. Zabel?
21
MR. ZABEL: Again, Dr. Smith, do you
22 know how many of Ameren's units use SO3 injection?
23
DR. SMITH: I could look it up. I
24 can't tell you off the top of my head exactly.
L.A. REPORTING (312) 419-9292
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1 It's maybe about half the units. I don't know
2 about the gigawatt of capacity.
3
MR. ZABEL: I'm not going to ask you
4 to look it up.
5
DR. SMITH: Sorry.
6
MR. ZABEL: I just wondered if you
7 knew off the top of your head.
8
DR. SMITH: I just don't remember the
9 number.
10
HEARING OFFICER TIPSORD: Proceed.
11
DR. SMITH: (C) To generate the results
12 shown on this figure, what company or companies
13 did you assume would opt into the MPS?
14
Only Ameren.
15
If this figure assumes that only
16 Ameren would opt into the MPS, does that mean that
17 the higher mercury emissions in 2009 under the MPS
18 scenario are attributable solely to lesser
19 reductions of mercury emissions by Ameren?
20
Yes.
21
Does this mean that if other
22 companies were to opt into the MPS, then the
23 difference between the projected mercury emissions
24 levels in 2009 would be even greater?
L.A. REPORTING (312) 419-9292
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1
Yes.
2
HEARING OFFICER TIPSORD: Mr. Zabel?
3
MR. ZABEL: A follow-up question to my
4 earlier one in the calculation of the table that
5 we were just looking at. Was it your assumption
6 that the non-SO3 units would meet 90%?
7
DR. SMITH: Sorry? Was it my
8 assumption that the non-SO3 units would make --
9
MR. ZABEL: Would meet the 90%?
10
DR. SMITH: I believe so. I'm
11 trying to think. If the unit did ACI and had no
12 SO3, we assumed it would make 90%.
13
MR. ZABEL: That excludes the units
14 below 90 megawatts?
15
DR. SMITH: If a unit were to put on
16 ACI at a small unit, it would achieve, if it did
17 not have SO3 as well it would achieve 90%. But
18 you are right that those units less than 90
19 megawatts did not receive ACI in 2009 at all in
20 the simulation that I ran.
21
MR. ZABEL: So your simulation would
22 not have assumed 90% removal for the SO3 units and
23 the small units?
24
DR. SMITH: That's right. The small
L.A. REPORTING (312) 419-9292
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1 units would get zero percent until the date they
2 were put on ACI, and the units that put on ACI but
3 had SO3 conditioner would receive 50% removal.
4
(E) Do you have an understanding
5 as to whether the higher level of mercury
6 emissions under the MPS scenario is acceptable to
7 the Agency?
8
I have no such understanding at
9 all, therefore the remaining questions are not
10 applicable.
11
(F) In projecting mercury
12 emissions under the MPS scenario, what mercury
13 controls did you assume would be installed at each
14 unit subject to the MPS?
15
Okay. In answering this question
16 I need to clarify that I worked from assumptions
17 that were provided to me from the company, by
18 Ameren that is. My analysis of these assumptions
19 does not imply that these actual controls are the
20 ones that will take place, but it was an attempt
21 to estimate the kind of actions that would be
22 necessary to achieve the requirements of the MPS
23 provision.
24
That being said, I assumed that
L.A. REPORTING (312) 419-9292
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1 Duck Creek, it currently has a wet FGD and an SCR
2 and the wet FGD would be upgraded by 2009. I also
3 assumed that both caulking units would have a
4 scrubber by 2010. The units of these two plants
5 would achieve 90% of the mercury control by 2010.
6 I assumed that all units at ED Edwards, Joppa and
7 Newton would have ACI in place by 2009, and then
8 between 2009 and 2015 either scrubbers plus SCR or
9 fabric filters would be installed at ED Edwards,
10 Newton and four of the six Joppa units bringing
11 those up to 90% removal of level of mercury during
12 that time frame.
13
I assumed that Meredosia III, the
14 largest unit at the Meredosia plant would have ACI
15 by 2009, and the Hutsonville units and Meredosia I
16 and II would have ACI by 2015. What level of
17 mercury reduction --
18
HEARING OFFICER TIPSORD: Excuse me.
19 David has a follow-up question.
20
MR. ZABEL: I'm curious why four of
21 six at Joppa?
22
DR. SMITH: Why four of the six? This
23 is what was necessary to basically come down to
24 the SO2 and NOx emission rate limits.
L.A. REPORTING (312) 419-9292
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1
MR. ZABEL: Was that given to you by
2 Ameren?
3
DR. SMITH: These were worked up by
4 Ameren.
5
MR. ZABEL: What I'm curious about is
6 whether the physical layout at Joppa created a
7 problem of doing any of the units?
8
DR. SMITH: I don't know of any issue
9 such as that. It was my belief that it was to do
10 what was necessary to get the SO2 and NOx units up
11 to compliance, but there was no discussion that I
12 was involved in that would say that that was a
13 reason.
14
MR. ZABEL: Did they tell you possibly
15 which of the four units?
16
DR. SMITH: Sorry?
17
MR. ZABEL: Did they tell you which of
18 the four units?
19
DR. SMITH: No.
20
MR. ZABEL: Did they tell you which of
21 the six?
22
DR. SMITH: I could check. They are
23 all similar enough that it wouldn't make a
24 difference in the analysis.
L.A. REPORTING (312) 419-9292
421
1
MR. BONEBRAKE: For Duck Creek I heard
2 you mention an FGD upgrade by 2009, unless I
3 missed it, were you assuming installation of ACI
4 at Duck Creek?
5
DR. SMITH: No, we are assuming that
6 it would achieve 90% with the FGD and the SCR.
7
MR. ZABEL: With an ESP?
8
DR. SMITH: It has an ESP.
9
HEARING OFFICER TIPSORD: Next.
10
DR. SMITH: What level of mercury
11 reduction did you assume for each unit?
12
I assumed that a combination of
13 scrubber and SCR would achieve 90% control if you
14 are burning bituminous coal. I also assumed that
15 if the plant has a fabric filter that it would
16 achieve 90% control regardless of the range of the
17 coal being burned. This 90% control assumption
18 applies to the dry scrubbers suction as well as,
19 assuming non-dry scrubber installation would
20 include a fabric filter.
21
I assumed that at present if a
22 plant applies ACI, it will achieve 90% removal if
23 it does not inject SO3. And it would achieve 50%
24 control if it does inject SO3.
L.A. REPORTING (312) 419-9292
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1
I also assumed that by 2015
2 sorbent technology will have advanced that it
3 could achieve 90% reduction at all plant types
4 without the fabric filters. That's an assumption
5 about technological improvement between now and
6 ten years from now.
7
MR. ZABEL: Both kinds of coal,
8 bituminous and sub-bituminous?
9
DR. SMITH: Yes, both types of coal.
10 Thus by 2015 90% removal would be achieved at all
11 the Ameren units including the two Joppa units,
12 Meredosia and Edwards would have achieved ACI by
13 the end of that time period.
14
What is the basis for these
15 assumptions?
16
The assumptions were taken from
17 the testimony of Mr. Conowitz. I believe the
18 assumptions about the technological improvements
19 may not have been. I don't know that's in his
20 testimony. That is an assumption that was built
21 into our own analysis.
22
Do you agree that ACI without a
23 baghouse would not achieve a 90% emission
24 reduction level in some of or all of Ameren's
L.A. REPORTING (312) 419-9292
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1 units?
2
This is really not my area of
3 expertise so I should not speak to whether I
4 believe it or not. I have relied on the people
5 who understand these issues to provide these
6 assumptions.
7
MR. BONEBRAKE: Just so it is clear
8 then, you are relying on Mr. Conowitz for any
9 assumptions regarding mercury removal?
10
DR. SMITH: For the percent
11 reductions, yes.
12
(H) If you believe that ACI
13 without a baghouse will not achieve 90% reduction
14 at some units, which ones and why?
15
H and I are also questions about
16 my beliefs on the technology which I also would
17 prefer to defer to the experts.
18
12. Regarding page 8 of your
19 testimony where you state that "The Illinois
20 mercury emissions with the MPS provision still
21 achieve, will achieve -- sorry, I'm having trouble
22 with the quote. Let me try it again -- "Illinois
23 mercury emissions with the MPS provisions still
24 achieve 83% of the reduction that would occur
L.A. REPORTING (312) 419-9292
424
1 under the Illinois Rule without the MPS in 2009,
2 rising to 87 percent of the Illinois Rule's
3 reduction in 2010, and 94% by 2013."
4
(A) Please explain how you
5 calculated 83%, 87% and 94% figures.
6
I will start with the 83%. 83% in
7 2009 in the analysis is a reduction of mercury
8 that I estimated would occur if Ameren were to use
9 the MPS and it is stated a fraction of the amount
10 of reduction in mercury that I projected would
11 have to occur under the Illinois Rule if the MPS
12 provision were not available as a part of that
13 rule. The 94% and 87% are the same computations
14 but using the estimated mercury reductions in 2010
15 and 2013 respectively.
16
(B) Do the percentages in this
17 statement refer to reductions only from Ameren
18 units or do they refer to reductions from other
19 units that would also be subject to the proposed
20 Illinois rule if adopted?
21
These percentages refer to all
22 Mercury emissions from all electricity generators
23 in Illinois.
24
(C) Does your statement assume
L.A. REPORTING (312) 419-9292
425
1 that the proposed Illinois mercury rule without
2 the MPS would achieve a 90% reduction in mercury
3 emissions in Illinois from units subject to the
4 Mercury proposal?
5
No, without the MPS I assume that
6 each generating unit in Illinois will achieve
7 either 90% or .0008 pounds per gigawatt per hour,
8 whichever is less expensive.
9
(D) Is each of the percentages
10 listed in this sentence a percentage of 90%, e.g.
11 83% of 90%?
12
No, each of the percentages listed
13 in that sentence is a percentage of the amount of
14 reduction that would be achieved under the
15 Illinois Rule without the MPS, and for the reason
16 I just stated in my responses to the previous
17 questions, I do not estimate that emissions in
18 Illinois would fall to a full 90% even without the
19 MPS.
20
(E) If so, then does this
21 statement mean that if the MPS were adopted in
22 2009 Mercury emissions from units subject to the
23 proposed Illinois Mercury Rule would be reduced by
24 about 75%?
L.A. REPORTING (312) 419-9292
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1
This is not so for the reason I
2 stated in my previous answer. However, the
3 difference in mercury emission is quite small
4 relative to the reduction that would occur without
5 Ameren using the MPS and that difference also
6 declines rapidly after 2009 and is eliminated
7 within just a few years.
8
HEARING OFFICER TIPSORD:
9 Mr. Bonebrake?
10
MR. BONEBRAKE: Just a follow-up
11 question just to make sure I understood your
12 series of answers to these questions.
13
Is it correct then as of 2009 that
14 under the MPS scenario versus the non-MPS scenario
15 -- let me try to put it another way.
16
As of 2009 are the non -- let's
17 start over again.
18
Under the MPS scenario, mercury
19 emissions would be 17% higher as you modeled them
20 in Illinois as a result of Ameren's opting into
21 the MPS; is that right?
22
DR. SMITH: That's not quite
23 right, but you are on the right track. The math
24 does not work quite that way. Yes, they are a
L.A. REPORTING (312) 419-9292
427
1 little bit higher. Not 17% higher. The
2 difference is you get 83% of the way to where they
3 would get under the Illinois Rule. The only error
4 in the question is that it's not 83% of 90%. It's
5 83% of a different number. That other number
6 is -- I estimate that the Illinois Rule would
7 reduce, relative to 2006 estimated emissions would
8 reduce emissions by 84% in 2009. The reduction
9 from '06 to '09 would be 84% without the MPS
10 provision. So then we get 83% of that 84%.
11
HEARING OFFICER TIPSORD: Ms. Bassi?
12
MS. BASSI: Now, I apologize if I
13 really screwed this up but --
14
MR. BONEBRAKE: I didn't.
15
MS. BASSI: -- I don't apologize for
16 him. On question 11(A), I believe you said that
17 the mercury emissions from existing coal-fire
18 power plants will be about 500 pounds higher if
19 someone were opting into the MPS; is that correct?
20
DR. SMITH: If Ameren opted into the
21 MPS.
22
MS. BASSI: If Ameren opts into the
23 MPS and mercury emissions in Illinois are
24 therefore approximately 500 pounds higher in 2009,
L.A. REPORTING (312) 419-9292
428
1 how does that relate to this 83%? Is that what
2 the difference is?
3
DR. SMITH: The difference of 500
4 pounds is the last 17%. 83% of full reduction
5 without the MPS occurs and then there's the
6 remaining 17% of the base to what you would
7 achieve otherwise is the 500 pounds.
8
HEARING OFFICER TIPSORD: Mr. Zabel?
9
MR. ZABEL: Is the projection of 84%
10 reduction over 2006 and 2009 under the Illinois
11 Rule?
12
DR. SMITH: 2009 versus my estimate of
13 2006.
14
MR. ZABEL: The differential between
15 84 and 90 is in some instances 000.80?
16
DR. SMITH: Yes, it is.
17
MR. ZABEL: And the 83%, the 83% would
18 go up to 84%?
19
A. DR. SMITH: Yes, it is.
20
MR. ZABEL: What would the reduction
21 in mercury with the MPS in 2009 be compared to
22 2006?
23
DR. SMITH: 70%.
24
HEARING OFFICER TIPSORD: We are on
L.A. REPORTING (312) 419-9292
429
1 question F.
2
DR. SMITH: Are these calculations
3 based on the assumption that only Ameren opts into
4 the MPS?
5
Yes.
6
(G) Would the percentages be lower
7 if others opted in?
8
I didn't look into this question,
9 but to the extent that they would have and do have
10 units using SO3, the same assumptions would apply
11 that ACI only in those plants would not get them
12 to the 90% removal level.
13
(H) Do these percentages consider
14 any units complying with the TTBS?
15
No. This analysis was done
16 without the TTBS for the comparison.
17
(I) Do you understand that this
18 level of mercury emission reduction is
19 satisfactory to the Agency?
20
I have no such understanding.
21
(J) At page 10 of your testimony
22 you state that the lesser level of mercury
23 emission reductions under the proposed Illinois
24 Rule with MPS is not meaningful. What is the
L.A. REPORTING (312) 419-9292
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1 basis for this statement?
2
Okay. In the sentence I state
3 that the lesser level of mercury reduction is not
4 meaningful in comparison, that goes with the
5 sentence, in comparison to the additional
6 reductions in SO2 and NOx. So the statement is
7 strictly a comparative one, and the basis for my
8 judgment is founded in the fact that Illinois
9 faces real non-attainment issues for air quality
10 concerns that are known to be exacerbated by
11 regional SO2 and NOx emissions.
12
(K) Have you had any discussions
13 with or are you otherwise aware of whether the
14 Agency agrees with that statement?
15
I have not had any discussion at
16 all with any Agency staff, and I'm unaware of any
17 Agency opinions on that statement.
18
13. At page 10 of your testimony
19 you state that modeling may suggest that Illinois
20 is better off (has lower costs) when its
21 generators are harmed competitively by regulation.
22 Please explain what is meant by the quoted phrase.
23
Okay. These cost models of
24 electricity markets determine the least cost ways
L.A. REPORTING (312) 419-9292
431
1 to meet the electricity demands in each of the
2 electrical marketing regions. These markets
3 usually contain more than one state, and also the
4 electricity demands in these regions can be met by
5 transmission from out of the region into the set
6 of states that are officially part of the region.
7 So the measure of cost gets minimized in these
8 cost models. It's the total cost from all of
9 these possible resources both in region and out of
10 region. So if one state's generation is reduced
11 because it becomes relatively more expensive, for
12 instance because of a state specific law, then it
13 may lose some of its generation. It will lose
14 market share because it can't compete as
15 effectively. Now, when it loses market share,
16 then generation falls. That's the same thing.
17 And when generation falls in that state, costs
18 fall. So the model could give the impression that
19 costs have fallen when in fact what's really
20 happened is generation has fallen and that
21 revenues to generators have fallen. So all this
22 means is that when you see a cost fall for that
23 reason in certain states within the model, it may
24 only mean there has been competitive damage to the
L.A. REPORTING (312) 419-9292
432
1 generators in that state.
2
14. On page 10 of your testimony
3 you indicate that a state could seriously mislead
4 itself by relying on standard cost output models
5 such as IPM without additional calculation. Has
6 the Agency in the TSD seriously misled itself?
7
I have no idea how or if the
8 Agency is a relying or interpreting those IPM
9 results.
10
MR. ZABEL: Madam Hearing Officer?
11
HEARING OFFICER TIPSORD: Yes.
12
MR. ZABEL: Does the IPM model suffer
13 from the problem you described in answer to
14 question 13?
15
DR. SMITH: Yes, it does.
16
15. Regarding Figure 4 at page 12
17 of your testimony, does this figure show that the
18 cost of complying with the proposed Illinois
19 Mercury Rule with or without the MPS is
20 substantially more than the cost of complying with
21 both CAIR and CAMR?
22
Figure 4 shows only the capital
23 costs of the various policy scenarios, and it's
24 only showing the costs for Ameren. So it's not a
L.A. REPORTING (312) 419-9292
433
1 statement about the total costs of any rules and
2 it's a not a statement of the total costs to
3 Ameren either. Figure 4 does show that Ameren
4 would face higher annual capital charges under the
5 Illinois Rule with or without the MPS than it
6 would under CAMR and CAIR alone. And it also
7 shows that the Illinois Rule with the MPS has a
8 much more manageable rate of increase in capital
9 payments than the Illinois Rule without the MPS,
10 and that's the critical point in that chart.
11
(B) Are there costs associated
12 with being unable to trade NOx and SO2 allowances
13 under the MPS?
14
I do not know. I did not analyze
15 this element of the MPS rule.
16
(C) I don't know what the costs
17 are.
18
(D) Are they reflected in the
19 Figure 4?
20
No.
21
(E) Will Illinois power companies
22 that are subject to the proposed Illinois Mercury
23 Rule assuming that is adopted be at a competitive
24 disadvantage if neighboring states such as
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434
1 Missouri, Iowa and Indiana adopt CAMR?
2
In a relative sense. That is
3 relative to if Illinois also were to adopt the
4 CAMR, yes.
5
16. Figure 5 on page 13 of your
6 testimony is labeled "Overnight Capital Expense
7 for Ameren Projected Using NEEM under CAIR/CAMR
8 alone, the Illinois Rule and the Illinois Rule
9 with Ameren using the MPS." What is meant by the
10 phrase "overnight capital expense"?
11
First, I should have labeled it
12 "Overnight Capital Costs." This is the total
13 amount of capital that has to be raised for the
14 retrofits that would come on line in that year to
15 which then -- so the year that the plant would
16 retrofit would come on line and be a functioning
17 piece of control equipment, all of the capital
18 costs associated with that project, that retrofit
19 project would be assigned to that year, that's the
20 overall capital cost of that project. It's like
21 saying if you have a homeowner who wishes to buy a
22 $300,000 home, that homeowner has to find a lender
23 that's willing to allow him to raise that amount
24 of capital at the time the home would be
L.A. REPORTING (312) 419-9292
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1 purchased. So it's not the actual money or
2 expenditure of cash to the firm. The actual cash
3 flow for the payments associated with the
4 overnight capital costs are spread over time, just
5 as the payments of a home mortgage are spread over
6 time, and it's those capital payments per year
7 that are shown in Figure 5.
8
HEARING OFFICER TIPSORD:
9 Mr. Bonebrake?
10
MR. BONEBRAKE: I think you said
11 Figure 4. Did you mean Figure 5?
12
DR. SMITH: No. Figure 5 is the
13 overnight capital costs and the annualized
14 payments for those overnight cap costs. Those are
15 the expenditures per year and those are in Figure
16 4.
17
MR. BONEBRAKE: And with respect to
18 Figure 5, does this Figure 5 show then that under
19 the Illinois Rule without the MPS that Ameren
20 would be required to expend capital of over $600
21 million dollars in 2009?
22
DR. SMITH: Without the MPS, yes.
23
HEARING OFFICER TIPSORD: 17.
24
DR. SMITH: 17. On page 13 of your
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1 testimony, you indicate the MPS is "a good
2 environmental deal" for Illinois. Doesn't that
3 deal include higher mercury emissions in the short
4 term at least compared to the Illinois mercury
5 rule without the MPS and no greater mercury
6 reductions in the long-run?
7
The reason that I consider this to
8 be a better approach is stated in my testimony.
9 Illinois faces air quality issues of many types,
10 and many of these issues are contributed by
11 multiple pollutants that come from the same
12 sources. Additionally, many of those pollutants
13 would be controlled by the same control projects.
14 So the MPS would give companies greater
15 flexibility in actions to three specific
16 pollutants SO2, NOx and mercury.
17
My assessment of how Ameren might
18 make use of the MPS is that the state would gain
19 again because, two reasons, the SO2 and NOx that
20 are present well-known federal air quality
21 management attainment concerns for Illinois would
22 be lower, and in return that would be achieved by
23 a temporary and relatively small delay in meeting
24 the mercury targets that the state of Illinois has
L.A. REPORTING (312) 419-9292
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1 elected to take on its own. That temporary
2 difference in mercury emissions would not contrast
3 and undermine Illinois' ability to comply with any
4 air quality requirements.
5
Additionally, by accepting this
6 type of trade-off, Illinois would be improving the
7 prospects of the financial stability of one of the
8 major sectors contributing to the commerce growth
9 and the reliability of a system. That is also a
10 worthy concern if there's no net loss to the
11 environment when considered from a broad
12 perspective. So the extra SO2 and NOx emissions
13 production reduction therefore provides more
14 potential savings to the state than the delay in
15 mercury reductions.
16
HEARING OFFICER TIPSORD: Mr. Zabel?
17
MR. ZABEL: Is the answer to the
18 question yes, Dr. Smith?
19
DR. SMITH: I have to read the
20 question again.
21
Doesn't that deal include higher
22 mercury emissions in the short term -- the answer
23 is yes, and the trade-off is a wise one.
24
(B) If reductions of NOx and SO2
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1 beyond those obtained under CAIR are required in
2 Illinois, doesn't that deal mean that those
3 additional reductions will be borne
4 disproportionately by Ameren's competitors?
5
I do not know that because I did
6 not analyze this question.
7
18. On page 13 of your testimony
8 you indicate for several reasons the MPS is a
9 prudent trade-off for Ameren. Are you aware of
10 any other reasons this was a prudent trade-off or
11 a good deal for Ameren?
12
I consider the MPS to present a
13 prudent trade-of for Ameren even when considering
14 all of the reasons I described in my written
15 testimony.
16
(B) Would being exempt from any
17 beyond CAIR SO2 and NOx requirements be a good
18 deal for Ameren?
19
Same answer as A.
20
(C) Are you aware of anything else
21 Ameren received or would receive from the Agency
22 and/or the state administration for agreeing to
23 the MPS?
24
No, I am not aware of any such
L.A. REPORTING (312) 419-9292
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1 thing.
2
HEARING OFFICER TIPSORD: Ms. Bassi?
3
MS. BASSI: In going back to question
4 18(B) about the beyond CAIR, the delay in applying
5 the CAIR requirements to Ameren if it opts into
6 the MPS and beyond CAIR, and accepting that beyond
7 CAIR requirements would be for the purposes of
8 ozone and MP2.5 attainment issues or requirements
9 which you have alluded to a number of times, if a
10 company is not required to make those beyond CAIR
11 reductions at least as quickly as other companies
12 might be, is that still a prudent trade-off in
13 terms of the environmental results?
14
DR. SMITH: Ameren is making beyond
15 CAIR reductions already if they adopt the MPS. So
16 they are not delaying them. They are actually, if
17 anything, accelerating them.
18
MS. BASSI: According to the joint
19 statement, it states that there could be
20 additional beyond CAIR requirements that Ameren
21 would not be first in line to have to do, and in
22 that context is it still a prudent trade-off
23 environmentally.
24
DR. SMITH: Again, the reason they are
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1 saying in this joint statement that they would not
2 be subject to any beyond CAIR, additional beyond
3 CAIR controls is the presumption that these
4 controls, these extra controls that are being
5 agreed to now are their share or at least a good
6 part of their share.
7
MS. BASSI: Is it a prudent trade-off?
8
DR. SMITH: The prudence comes from
9 the fact that they are able to trade off the
10 mercury control so they can coordinate those
11 additional controls. They know that these are
12 coming, and they can plan to achieve the mercury
13 reductions simultaneously when these volunteered,
14 if you will, additional reductions of SO2 and NOx
15 under the MPS, and that's prudent because of the
16 way it manages the rate of increase. It's prudent
17 for Ameren because of the way it manages their
18 rate of increase in their capital payments which
19 is a serious issue for a company.
20
HEARING OFFICER TIPSORD: Mr. Zabel?
21
MR. ZABEL: What do you mean by a good
22 part of their share.
23
DR. SMITH: Well, I do not know what
24 that line means in the joint statement first of
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1 all. I had no hand in writing it so I should not
2 be interpreting it too much. But my understanding
3 from what's been said so far over the last day and
4 a half has been that -- seems like three -- my
5 understanding of it is that there's no guarantee
6 that more won't be needed eventually. It's just a
7 statement that they are taking their action and
8 then first the state would look to others as the
9 next step. But that doesn't mean as far as I know
10 that they won't come back.
11
MR. ZABEL: So it's prudent because
12 they might not have to comply had the proceedings
13 gone with SO2 or NOx in this and some beyond CAIR
14 statewide requirements was laid on them, they
15 would not have to meet that more stringent, that
16 increment that would be applied?
17
DR. SMITH: I do not know what they
18 would have to do later in time. I really do not
19 know what that sentence says. But I do not see
20 that there's any guarantee from anything I've seen
21 written that there would not later have to be
22 additional controls. Maybe sometime if the
23 attainment analysis determination that those are
24 really the most cost-effective controls for
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1 Illinois to be undertaking to achieve attainment.
2 The other thing that's difficult to understand
3 here is we don't even know what the MP2.5 standard
4 is going to be. It could be tighter so we may be
5 working from assumptions about the needed
6 reductions that are incorrect at this point in
7 time. Ten years from now it may be a very
8 different story.
9
HEARING OFFICER TIPSORD: Do you have
10 any additional questions? Do you feel your
11 questions were addressed by Dr. Smith?
12
MS. CONNOLLY: I think we should be
13 fine.
14
HEARING OFFICER TIPSORD: Thank you
15 very much. Let's take a break.
16
(At which point a brief recess was
17
taken, after which the following
18
proceedings were had:)
19
HEARING OFFICER TIPSORD: Let's go
20 back on the record. And I believe next in our
21 order is Diane Tickner with Prairie State
22 Generating Company.
23
(WITNESS SWORN.)
24
HEARING OFFICER TIPSORD: And if
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1 there's no objection, I will enter Ms. Tickner's
2 pre-file testimony as Exhibit No. 80. I
3 understand you have a short summary?
4
MS. TICKNER: My name is Dianna
5 Tickner. I'm vice president of Generation and BTU
6 Development for Peabody Energy and vice president
7 of Prairie State Generating Company, LLC, in
8 charge of air permitting and financing. I have a
9 BS in mining engineering from the University of
10 Missouri-Raleigh and an MBA from the University of
11 Montana. I also completed the executive program
12 at the Darden School at the University of
13 Virginia, and I am a registered professional
14 engineer.
15
Since 2001 I have been heavily
16 involved in the development and permitting of
17 three coal-fired power plants, Prairie State
18 Generating Station here in Illinois, Thoroughbred
19 Generating Station in Kentucky and the Mustang
20 Generating Station in New Mexico and several other
21 coal conversion projects, including the Cardinal
22 Generation Station in Illinois.
23
During the course of those years I
24 have attended numerous conferences and symposia
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1 where mercury in its control from power plants was
2 one of the primary topics. I have had in-depth
3 discussions with vendors about the capabilities of
4 the various technologies available to reduce
5 mercury emissions from power plants and the
6 guarantees that are available from those vendors.
7
I'm here to today to testify about
8 the impact the rule as currently proposed will
9 have on Prairie State Generating Station, a
10 proposed 1500 megawatt EGU designed to burn high
11 sulfur Illinois coal. I'm not here as an expert
12 but as a stakeholder who is directly impacted by
13 the proposed rule.
14
HEARING OFFICER TIPSORD: Ms. Tickner,
15 could we have you move the microphone a little bit
16 towards you.
17
MS. TICKNER: As indicated in my
18 pre-file testimony and will be discussed in detail
19 by the experts who will testify later, Prairie
20 State has significant reservations about the
21 capabilities of the control technologies to
22 achieve over the long-term IEPA's proposed
23 standards, particularly for high sulfur coals.
24 Dr. Stoudt has even acknowledged that high sulfur
L.A. REPORTING (312) 419-9292
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1 coals will be difficult. Vendors are not willing
2 to offer a guarantee on a several billion dollar
3 plan at the level required by IEPA. The
4 guarantees offered by the activated carbon vendors
5 do not begin to cover the actual losses a facility
6 would experience if it could not comply with the
7 standards. Those reservations are what lead us to
8 request that IEPA include a technology based
9 exception in our March 13, 2006 comments provided
10 as attachment 1 to my pre-file testimony. We are
11 pleased that IEPA has proposed a technology based
12 standard, the TTBS, but as indicated in my
13 pre-file testimony and comments submitted to the
14 IEPA on June 1, 2006 Prairie State has some
15 general questions and concerns about the proposed
16 TTBS.
17
One of our primary concerns with
18 the TTBS is the one-size fits all approach with
19 respect to the quantity of halogenated activated
20 carbon required. While the proposal includes the
21 opportunity for a different quantity to be used
22 for existing units. The proposal for these new
23 units lacks that provision. Prairie State would
24 like to see the rule amended to make it easier to
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446
1 do a case by case determination. One approach is
2 what IEPA included in the Prairie State permit for
3 determining the optimum amount of sorbent
4 injection.
5
In addition, Prairie State is
6 concerned IEPA's provision of specific monitoring
7 conclusions in addition to IEPA's requirements.
8 If IEPA or if EPA changes its monitoring
9 requirements, there is the potential for
10 inconsistencies between the EPA and IEPA
11 requirements that could make it difficult for
12 facilities in Illinois to obtain monitors that
13 comply with IEPA's requirements. This concern is
14 what lead us to comment that IEPA should just
15 adopt the CAMR monitoring requirements.
16
HEARING OFFICER TIPSORD: Thank you,
17 Ms. Tickner, would you prefer -- would you prefer
18 to do Dynergy or the Agency first?
19
MS. TICKNER: How about if I do IEPA
20 first, and it might cover some of the others.
21
HEARING OFFICER TIPSORD: Follow the
22 same format. If you'll read the question and
23 answer.
24
MS. TICKNER: Question No. 1. In your
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1 March 13, 2006 letter attached to your testimony,
2 attachment to page 4 and 5, are you suggesting
3 that compliance be determined on a monthly basis?
4
I assume the question is referring
5 to attachment 1, not 2. No, I am suggesting that
6 compliance be determined on a monthly basis.
7
(A) If yes, isn't it true that the
8 rule does in fact term in compliance on the entire
9 12 months of data?
10
It's kind of not applicable but,
11 yes, the rule does require that.
12
Question No. 2. On page 6 of that
13 same letter, do you suggest that the definition of
14 the rolling 12 month basis would cause problems
15 when units operate only a few days during a given
16 month?
17
Yes.
18
If yes, isn't it true that no such
19 problem would occur because the equations in the
20 proposed Illinois Rule address the entire past
21 year, not just a single month?
22
Yes, the equations do help to
23 smooth out the data by summing the quantity of
24 mercury emitted each month for the past 12 months
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1 and then dividing by the sum of the gigawatt hours
2 for the same 12 months. The definition does not
3 really appear to reflect that. So that's our
4 issue. The definition, not the equation. It just
5 could be a little clearer.
6
Question No. 3, in the same
7 letter, attachment 3, page 5, do you suggest that
8 the monitoring requirements of the proposed
9 Illinois Rule are inconsistent with CAMR? What
10 are the supposed inconsistencies?
11
Prairie State points out that
12 EPA's monitoring provision in CAMR are being
13 challenged which may lead to their being revised
14 and recommended that IEPA simply reference CAMR to
15 avoid future inconsistencies instead of
16 referencing some provisions, including some
17 specific monitoring requirements.
18
MS. ROSS-PORTER: Gina Ross-Porter
19 with the Illinois EPA, a follow-up. Which of the
20 comments made in the attachments to your testimony
21 were not addressed by the Illinois EPA at the June
22 hearing?
23
MS. TICKNER: That one specifically.
24 I mean, in the context of the difference. I
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1 couldn't go by point by point and tell you. Some
2 of them were. The ones related obviously to what
3 was included in our permit, and how the permitting
4 process were addressed.
5
HEARING OFFICER TIPSORD: Question No.
6 4?
7
MS. TICKNER: No. 4. Isn't it true
8 that if this rule is submitted to U.S. EPA as part
9 of the state implementation plan and once approved
10 will indeed be federally enforceable like all such
11 rules that go through this process?
12
Before responding to this
13 question, let me note that I'm not a lawyer and
14 that my response is based on various discussions I
15 have with legal counsel.
16
I presume this question results
17 from a statement in Prairie State's March 2000
18 comments that Illinois' new source standard is not
19 federally enforceable. I still believe this to be
20 the case. Under section 111(B), EPA established
21 new source limits for mercury emissions from
22 coal-fired power plants. Illinois' proposed
23 standards that are more stringent than EPA. While
24 Illinois has authority to impose more stringent
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450
1 standards than EPA under Section 116 of the Clean
2 Air Act, those more stringent limits are state
3 enforceable, not federally enforceable. The state
4 implementation plan that Illinois will permit to
5 EPA to meet it's Section 111(B) obligation applies
6 to existing units and EPA's acceptance of the plan
7 has no effect of the federal enforceability for
8 new units.
9
HEARING OFFICER TIPSORD: Question No.
10 5.
11
MS. TICKNER: No. 5. On page 7 of the
12 same letter do you object to having to certify
13 monitoring within 90 days? Isn't it true that you
14 are requesting Illinois to incorporate by
15 reference the monitoring requirements of CAMR? So
16 why are you asking that the Illinois Rule deviate
17 from part 75 now?
18
After further discussions and
19 intervening developments of mercury CEMS, I think
20 Prairie State is no longer concerned with this
21 issue. We still have serious doubts that the
22 monitoring will be capable of measuring at the
23 level required to demonstrate EPA's very low
24 standards, and I believe Mr. McRanie provides
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451
1 testimony on that later.
2
The suggestion to incorporate the
3 CAMR monitoring requirement by reference is just
4 to preclude these inconsistencies that could
5 occur, especially if EPA modifies its monitoring
6 requirements in response to the litigation that's
7 pending.
8
No. 6. Also on page 7 of that
9 letter you suggest that Illinois should not be
10 allowed 120 days to review monitoring
11 certification. Once again, why are you asking the
12 Illinois Rule deviate from Part 75?
13
Prairie State is no longer
14 concerned about this issue, especially given the
15 provisional approval during that 120 days.
16
Has your company made an
17 assessment of what level of mercury control the
18 control configuration at the proposed Prairie
19 State facilities would achieve?
20
Yes.
21
(B) If yes, what were the results
22 of that assessment?
23
Prairie State is reasonably
24 comfortable that it can meet the new source
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452
1 standard of CAMR based on the technology that
2 would be installed, and that includes SCR, ESP,
3 wet FGD, wet ESP and sorbent injection which would
4 most likely be activated carbon or halogenated
5 activated carbon.
6
Even with this technology, Prairie
7 State is skeptical that 90% removal could be
8 achieved on a consistent basis.
9
(C) Who conducted this assessment
10 and what measures did they utilize to reach their
11 conclusion?
12
This evaluation was conducted by
13 Prairie State in consultation with its EPC
14 contractor, engineering consultant and vendors,
15 and those vendors included at Time Wheel Abator
16 (sic), which has now become Siemens, Hitachi and
17 Babcock Power were the final bidders. We did go
18 out to all the major pollution control vendors,
19 and in this case we don't consider ACI providers
20 major pollution control vendors. We are doing a
21 multi-pollutant installation here of about
22 somewhere between 500 and 700 million dollars so
23 it needs to be a total solution, not just ACI.
24
HEARING OFFICER TIPSORD: Question No.
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1 8?
2
MS. TICKNER: I just had a little bit
3 more. When you require a standard of 90%, that
4 does not mean that you design the plant to just
5 achieve 90%. It is the first principle of
6 engineering design that you include a margin of
7 safety. The testing today indicates that there is
8 no margin of safety with a 90% standard.
9 Additionally, all existing testing has been
10 conducted under ideal conditions for short time
11 frames. For example, like the mileage sticker on
12 a car, you rarely achieve what the sticker says
13 and then only under ideal conditions.
14
MS. FRONTCZAK: We have an exhibit
15 that will help demonstrate what she is saying. If
16 we can have that marked and admitted?
17
HEARING OFFICER TIPSORD: Sure. Could
18 you identify yourself for the court reporter.
19
MS. FRONTCZAK: For the reporter, I'm
20 Mary Frontczak.
21
HEARING OFFICER TIPSORD: And
22 Mr. Harrow is not here. I have been handed a
23 document that's titled short tests, are not long
24 term percentages. I will mark this as Exhibit 81,
L.A. REPORTING (312) 419-9292
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1 if there's no objection.
2
MR. BONEBRAKE: Have you marked her
3 testimony already?
4
HEARING OFFICER TIPSORD: Yes. It's
5 Exhibit 80. Seeing no objection, we'll mark this
6 Exhibit 81.
7
MS. TICKNER: This is a slide put
8 together by Larry Monroe who is the head pollution
9 control person at Southern Company, and he
10 provided it to me and I thought it was pretty
11 good.
12
Basically the point it's trying to
13 make is that all of these tests were done under
14 somewhat artificial conditions, under the best
15 conditions that were available, not changing load,
16 not changing operations and really didn't have
17 time to evaluate balance of plant types of issues
18 that you would only see over a longer term, say
19 six months to a year. The other thing is that the
20 mileage may vary. Everybody gets their sticker
21 and they are so excited about their 22 miles per
22 gallon, and in the end they don't really ever get
23 that because there's wind on the highway or they
24 don't drive 60 miles an hour. And the same thing
L.A. REPORTING (312) 419-9292
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1 may be true for ACI. So all of these perfect
2 tests were done and just kind of demonstrates that
3 as you change load, as conditions change, as your
4 coal quality varies, that there's opportunity for
5 quite a bit of variability. And at the very, very
6 low levels of emissions that we're talking about
7 here, there are certainly opportunities to not be
8 in compliance if you are not at somewhere around
9 92, 93% removal efficiency to make sure that you
10 take into account those variabilities.
11
No. 8. Has your company evaluated
12 whether compliance would be achieved with the rule
13 by utilizing either the 90% reduction option, the
14 .0008 per gigawatt per hour option or the
15 temporary technology based standard?
16
And, yes, we have.
17
(A) If yes, what were the results
18 of this evaluation?
19
As indicated in the comments we
20 submitted to IEPA, Prairie State believes that the
21 TTBS is necessary to insure that it will be able
22 to comply with the proposed rule. There is great
23 uncertainty regarding the capabilities of mercury
24 control which others with more knowledge will be
L.A. REPORTING (312) 419-9292
456
1 testifying about. Particularly, there is very
2 little data available with respect to high to
3 mercury control on high sulfur coals. The
4 preliminary information we have seen from the
5 Conesville study indicates that 90% is not
6 achievable.
7
Conesville did not even achieve
8 50% removal. There is no track record for mercury
9 removal to achieve a high degree of confidence
10 that the propose rule is achievable.
11
HEARING OFFICER TIPSORD: Excuse me.
12 Ms. Bassi?
13
MS. BASSI: Ms. Tickner, I have to
14 confess I haven't read the new source text section
15 of the TTBS in great detail, or if I did, I don't
16 remember. Is that section limited to 25% of
17 capacity for new sources just as it is for
18 existing sources?
19
MS. TICKNER: I believe it is
20 available to all sources. There's not a
21 limitation that I recall any way.
22
MS. BASSI: Would the Agency confirm
23 that?
24
MR. MATOESIAN: That is correct.
L.A. REPORTING (312) 419-9292
457
1 However another criteria to be eligible for that
2 TTBS is that the unit be equipped with best
3 available control technology.
4
MS. BASSI: Wouldn't your unit be
5 equipped with that any way?
6
MR. MATOESIAN: We are just making it
7 clear that this is required.
8
MS. TICKNER: (B) Who conducted this
9 evaluation and what measures did they use?
10
The evaluation was conducted by
11 Prairie State in consultation with its EPC
12 contractor, engineering consultants an vendors.
13
No. 9. Has your company assessed
14 what additional control equipment measures and/or
15 costs other than those currently planned for
16 installation in accordance with your construction
17 permit, if any, would be required to comply with
18 the proposed mercury rule?
19
Our permit already contemplates
20 and we plan to install activated carbon injection
21 systems. We are not aware of any additional
22 viable control equipment. Although, we have added
23 or appears that we will be adding an additional
24 layer of catalyst to the SCR, which is selective
L.A. REPORTING (312) 419-9292
458
1 catalytic reduction. We have assessed the cost of
2 halogenated activated carbon using the TTBS.
3
(A) If yes, what were the results
4 of this assessment?
5
Under the TTBS assessment it would
6 cost over $25 million dollars a year just for the
7 halogenated activated carbon alone. Even with the
8 additional layer of catalysts compliance with the
9 proposed standard is not assured and vendors have
10 still been unwilling to step up to guarantee it.
11 To add the additional layer of catalyst to the SCR
12 would require an additional $7.5 million capital
13 investment.
14
(B) Who conducted this assessment
15 and what measures did they utilize to reach their
16 conclusion?
17
Our assessments were done by our
18 engineering consultants Berns & McDonald which
19 were Steve Bjorklun and Carl Weilert. For the
20 TTBS evaluation he looked at the cost of the
21 activated carbon that would be required under the
22 TTBS, and based on Mr. Nelson's testimony at the
23 first set of hearings, assumed that the
24 halogenated activated carbon would cost
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1 approximately a dollar per pound.
2
Question 10. Under the federal
3 CAMR, do you expect your plant will achieve enough
4 mercury emission reductions such that it will be
5 able to sell and/or bank mercury allowances?
6
Prairie State has a new unit, and
7 this question cannot be answered without making
8 numerous assumptions. IEPA has not indicated what
9 the new source set aside would be assuming it
10 would be participate in a trading program.
11 Obviously since it's not participating, it has not
12 made an assessment. So we really have no basis to
13 do that computation.
14
Question 11. Do you have any
15 formal training in engineering?
16
Yes, I have a BS in engineering.
17 I'm a registered professional engineer.
18
12. Do you have any formal
19 training in economics.
20
Yes, I have an MBA.
21
Question 13. Do you have any
22 experience with mercury controlled technology?
23
Yes, I have attended numerous
24 seminars on mercury control, air pollution vendor
L.A. REPORTING (312) 419-9292
460
1 demonstrations and participated in numerous
2 discussions with vendors bidding on numerous
3 projects.
4
HEARING OFFICER TIPSORD: Please keep
5 your voice up.
6
MS. TICKNER: I'm sorry.
7
14. What experience have you had
8 with pollution control technology?
9
I have been working with the
10 details of design of pollution control equipment
11 for major power plants and industrial facilities
12 for Peabody Projects since 2001.
13
Question 15?
14
HEARING OFFICER TIPSORD: I think
15 you've answered 15.
16
MS. TICKNER: Question 16. Would you
17 provide or explain your previous work experience?
18
I have been working with
19 permitting, plant design and development for
20 various power plant projects in several states
21 since 2001. I had sales and training roles for
22 the prior five years and 11 years with Montana
23 Power and subsidiaries and various engineering and
24 environmental sales prior to Peabody Energy.
L.A. REPORTING (312) 419-9292
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1
Question 17. Would you explain
2 your current job responsibilities?
3
I am president of Thoroughbred
4 Generating Company developing 1500 megawatt power
5 plant in Kentucky; responsible for permitting and
6 financing for Prairie State; development of a 330
7 megawatt project in New Mexico. Several major
8 coal to synthetic nature gas projects in Illinois
9 and Kentucky, and coal to liquids and synthetic
10 natural gas in some early feasibility stages in
11 the states of Montana and Kentucky.
12
18. In attachment 1 to your
13 testimony it states corrected July 28, 2006.
14
(A) Who made those corrections?
15
Prairie State in conjunction with
16 our legal counsel.
17
(B) Are all corrections noted?
18
Changes from the March 13, 2000
19 version of the letter are noted. In making the
20 corrections we inadvertently omitted the
21 attachments to the original letter that was sent
22 to Mr. Kroack. One is a letter from Steve
23 Bjorklun to Martin Kelly dated March 13, 2006.
24 The other is a dated press release. We would like
L.A. REPORTING (312) 419-9292
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1 to offer the letter to Ms. Kroack with the
2 attachments as an exhibit.
3
HEARING OFFICER TIPSORD: I've been
4 handed a March 13, 2006 letter to Ms. Kroack from
5 Prairie State Generating Company. And if there's
6 no objection, I will mark this as Exhibit 82.
7 Seeing none, we'll mark this as Exhibit 82.
8
MS. TICKNER: In considering our
9 response to these questions, we also discovered
10 that some of the concerns we had previously
11 identified based on our earlier drafts of the
12 proposed rule had been corrected by IEPA. This
13 may or may not be all inclusive of the changes
14 IEPA made to the regulation, but the ones we
15 identified.
16
No. 19. Attachment 1 to your
17 testimony is signed by Collin M. Kelly.
18
(A) Is he the sole author?
19
No.
20
(B) If not, who else participated
21 in the creation of the document?
22
In addition to Collin, myself,
23 engineering consultants, legal counsel, partners
24 and staff participated in the creation of the
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1 document.
2
(C) What are their, including
3 Mr. Kelly's, educational and work experience?
4
We have resumes for Mr. Kelly and
5 all of our, or at least three of our engineering
6 consultants who were the primary people provided.
7
MR. FRONTCZAK: We'd like to admit
8 those as exhibits.
9
HEARING OFFICER TIPSORD: You want
10 them marked.
11
MS. FRONTCZAK: One exhibit is fine.
12
HEARING OFFICER TIPSORD: Okay. The
13 first page then is a resume of Collin M. Kelly.
14 We also have Stephen Bjorklun and Carl Weilert and
15 Clark W. Collier. A resume for all of them we
16 will mark that as one exhibit, Exhibit No. 83, if
17 there's no objection. Seeing none, those are
18 exhibit 83.
19
(D) Did you participate in the
20 creation of the document?
21
Yes.
22
20. You identify a study at
23 Conesville, unit 6.
24
(A) Have you reviewed the complete
L.A. REPORTING (312) 419-9292
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1 study?
2
To my knowledge the field testing
3 was conducted in March 2006, but the study has not
4 yet been completed. Based on Mr. Nelson's
5 identification of Conesville as a site where
6 mercury removal on high sulfur coal was being
7 tested. I went out on the Internet to find out
8 what information about that study was available.
9 I found the presentation dated June 23, 2006.
10 That is attachment 3 to my testimony. I believe
11 that was Mr. Nelson's testimony from June 22.
12
(B) Has that study been published
13 or is it available for public review?
14
Not to my knowledge. Just the
15 preliminary information that DOE summarized at the
16 AWA conference was available.
17
(C) Would it be possible for you
18 to provide that study for the record?
19
I've provided what is publicly
20 available on this study.
21
21. You state that Prairie State
22 to date has been unable to obtain a guarantee for
23 90% mercury removal on its high sulfur coal.
24
(A) What companies has Prairie
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1 State contacted?
2
Prairie State through consultants
3 and contractors have contacted all the major
4 pollution control equipment vendors, and I think I
5 mentioned most of the ones that are out there of
6 substantial size. I think Babcock and Wilcox is
7 the only one I did not mention earlier. Our
8 vendors did talk to them. Due to the time frame
9 of when our construction is going to occur, they
10 selected not to participate.
11
What mercury control technology
12 have these companies been unable to guarantee?
13
The combination of SCR, wet
14 scrubber, wet ESP and carbon injection all
15 operating together as a multi-pollutant stream.
16
Would you provide or explain the
17 reason each of the other companies was unable to
18 provide a guarantee for 90% mercury removal?
19
90% is outside the comfort level
20 of all of those vendors. They basically said they
21 were not willing to bet their company they could
22 make the guaranteed level. Basically they were
23 willing to guarantee something in the mid-80s.
24 And, I guess, maybe just to clarify, when we are
L.A. REPORTING (312) 419-9292
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1 talking about guarantees on a new power plant,
2 it's a make-hold guarantee up to the value of the
3 entire plant, and we are talking about a 2-1/2
4 billion dollar facility. So it's not a million
5 dollars or we'll give you some additional
6 activated carbon. It's they really want to be
7 sure they can make it, and compliance is very
8 important to us too. We're not interested in
9 building a plant that will not comply with the
10 regulations that we have to achieve.
11
(B) Is it the practice of
12 activated carbon injection companies to guarantee
13 a plant or unit without field testing?
14
First, let me explain. Not all
15 vendors are equal as I mentioned. What we're
16 really looking for is an EPC contract to guarantee
17 the project, and a project of this size there's
18 only two or three of those in the U.S. EPC
19 contractors can just not get comfortable with
20 guarantees from carbon vendors. Just to give you
21 an example. The two EPC contractors that we've
22 narrowed it down to are Fluor and Bectile (sic),
23 which are huge companies. I think Fluor is
24 publically held. Their market caps is about $8
L.A. REPORTING (312) 419-9292
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1 billion dollar. ADA-ES is probably one of the
2 largest vendors of activated carbon. I think
3 their market cap is somewhere around $80 million.
4 So by contrast somebody that's only worth about
5 $80 million isn't going to be able to stand behind
6 a $2-1/2 billion facility.
7
HEARING OFFICER TIPSORD: Ms. Bassi?
8
MS. BASSI: Do you get such guarantees
9 from the vendors of these other pollution control
10 equipment devices, I guess I'd say from those
11 other pollution control equipment vendors for
12 whatever it is that they, that the equipment is
13 designed to reduce? For example, from a SCR
14 vendor, do you get a guarantee at what some rate
15 of NOx removal?
16
MS. TICKNER: Yes, on all the other
17 criteria pollutants, the EPC vendor has guaranteed
18 all the other pollutants in the air permit on a
19 make-hold guarantee. So, for example, we have a
20 requirement to remove 98% of the SO2 regardless of
21 the SO2 coming to the plant. That vendor, that
22 EPC contractor is comfortable enough with the
23 vendor that they are willing to make that
24 guarantee because there is a track record.
L.A. REPORTING (312) 419-9292
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1
HEARING OFFICER TIPSORD: That
2 completes the Agency's questions, and we'll go to
3 Dynergy's questions.
4
MS. TICKNER: Question No. 1. What is
5 the basis for Prairie State's general concerns
6 with the feasibility of a 90% reduction in mercury
7 emissions -- and hopefully this is not exactly
8 duplicative of the Agency's questions.
9
But we will be burning a high
10 sulfur coal up to about 5.3% sulfur with a mean of
11 about 3.8%. Limited testing on high sulfur units
12 indicates that 90% has been very hard to achieve,
13 if achievable at all. The testing has been
14 limited to the short-term test and there's little
15 or no information on the effect of activated
16 carbon on the balance of a plant with that much
17 equipment. EPC contractors as I mentioned are
18 unwilling to provide those kind of guarantees.
19
Question 2. Why is it important
20 that vendors provide guarantees for 90% removal of
21 mercury?
22
Guarantees are essential for
23 obtaining financing. Banks are reluctant to lend
24 billions of dollars for projects that may not be
L.A. REPORTING (312) 419-9292
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1 capable of meeting emission limits.
2
Question 3. What is the typical
3 sulfur content of the coal that Prairie State
4 plans to burn?
5
I think I mentioned it's about
6 3.8%. It can be as high as 9.1 pounds per million
7 BTUs.
8
Question 4. Has there been any
9 testing to your knowledge at units burning coal
10 with a sulfur content higher than that at
11 Conesville power plant?
12
Not that I am aware of.
13
Question 5. Do you intend for
14 your specific comments on the proposed rulemaking
15 that are included in the attachments to your
16 testimony to be considered by the Board as
17 testimony as opposed to comments?
18
I'm not sure really in this
19 proceeding what difference it makes, but I guess,
20 yes, we did intend them to be testimony.
21
Question 6. Were any of your
22 comments addressed by the way of alterations to
23 the proposed mercury rule before it was submitted
24 to the Board or since then?
L.A. REPORTING (312) 419-9292
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1
Yes. As indicated in the
2 corrections and the inclusion of the TTBS.
3
Question 7. Is Prairie State
4 subject to the federal acid rain program?
5
Yes.
6
(A) If so, is Prairie State
7 allocated allowances under Title IV?
8
No, not as a new unit, we are not
9 allocated any credits.
10
(B) If Prairie State is not
11 allocated allowanced under Title V, will Prairie
12 State be required to purchase allowances?
13
Yes.
14
(C) If Prairie State must purchase
15 allowances for the acid rain program, would it be
16 the same for CAIR?
17
Yes. It's my understanding that
18 CAIR will have the same, that we still won't have
19 any credits for CAIR for SO2.
20
I'm sorry, on B I meant Title IV
21 instead of Title V. That there still won't be any
22 credits for SO2.
23
(D) If all of the eligible EGU's
24 in Illinois opted into the MPS, would this have
L.A. REPORTING (312) 419-9292
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1 any effect on Prairie State's ability to obtain
2 sufficient SO2 allowances to operate?
3
It certainly causes us great
4 concern in that that would be a very, very
5 significant number of credits potentially retired.
6 I guess the state did say they were going to get
7 the credits back. So maybe it's possible that
8 they could sell some of those retired credits to
9 new units, but all new units in the state, which I
10 think there are four or five in this state, will
11 be forced to go out on the open market to buy
12 credits. So there are going to have to be credits
13 somewhere. So there will be an addition of new
14 generators in the State of Illinois.
15
HEARING OFFICER TIPSORD: Are there
16 any other questions? Thank you.
17
MEMBER GIRARD: Going back to the
18 vendors who guarantee 90% removal, you mentioned
19 that they might be more comfortable in the
20 mid-80s. Did they give you any specific point
21 they would be willing to write up a contract?
22
MS. TICKNER: Basically they gave us a
23 guarantee for the CAMR limits, which on our worst
24 case goal works out to be about 84% I think.
L.A. REPORTING (312) 419-9292
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1
HEARING OFFICER TIPSORD: Anything
2 else? Thank you very much.
3
Next is Mr. Cichanowicz.
4
We're going to do some
5 rearranging. I think we are going to move this
6 table over here or we can move you guys, you guys
7 can move up and we'll move that table.
8
(WITNESS SWORN.)
9
HEARING OFFICER TIPSORD: If there's no
10 objection, we will admit Mr. Cichanowicz's
11 testimony as Exhibit No. 84.
12
MR. ZABEL: Thank you, Madam Chairman.
13 Before we start with our case -- I'm sorry.
14
HEARING OFFICER TIPSORD: Go ahead.
15
MR. ZABEL: -- I just want to make
16 something clear for the record. We asked the
17 Board in a motion to strike testimony of Dr.
18 Keeler, which the Board denied. I understand that
19 the rules of evidence are fairly relaxed in these
20 proceedings. My concern was a piece of that order
21 suggested that our introduction of information on
22 the Stubenville Study supported the EMISSION of
23 Dr. Keeler's discussion of it. That was used
24 purely for rebuttal and cross-examination. During
L.A. REPORTING (312) 419-9292
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1 the course of presentation of our witnesses there
2 will be further on that subject. But I believe
3 despite the Board's flexible and relaxed rules of
4 evidence, that when a witness testifies, I have
5 evidence that proves X and it's in my pocket and I
6 won't show it to you, we believe the Board should
7 have struck that evidence. So I just want it
8 clear that when we refer further to the
9 Stubenville studies, we are not waiving our rights
10 to the objection to the Stubensville Study. I
11 wanted to get that on the record before we started
12 with our case.
13
Now we'll turn to Mr. Cichanowicz.
14
MR. KIM: Just before, just so it's
15 clear from the Agency's perspective, the questions
16 from Mr. Cichanowicz will primarily be coming from
17 Mr. Ayres. To a much more limited extent,
18 Mr. Stoudt may ask the really technical questions
19 that nobody else other than Mr. Cichanowicz will
20 understand, and I will probably just sit quietly
21 with a few exceptions.
22
MR. ZABEL: Now you committed to a
23 very few questions, Mr. Kim. Now, can we hold you
24 to sitting quietly?
L.A. REPORTING (312) 419-9292
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1
MR. KIM: I didn't write any.
2
MR. ZABEL: Then you lived up to it.
3
HEARING OFFICER TIPSORD: Did you want
4 to give a summary?
5
MR. ZABEL: No, I didn't plan on it.
6
If you can't hear me or
7 Mr. Cichanowicz, that goes for you or the
8 reporter, we will try and speak louder, but I am
9 trying desperately to avoid using this microphone.
10
MEMBER MOORE: I don't believe it
11 shuts off, so if you feel the need, use the George
12 Bush whisper in the ear.
13
HEARING OFFICER TIPSORD: Let's go
14 ahead with question No. 1.
15
MR. CICHANOWICZ: Question No. 1. Do
16 you consider yourself an expert on utility mercury
17 controls? If so, please describe your background
18 particularly with regard to experience in the area
19 of power plant mercury emissions control --
20
HEARING OFFICER TIPSORD: You are
21 going to have to speak up quite a bit or plug in
22 the microphone.
23
MR. CICHANOWICZ: Last part of the
24 question.
L.A. REPORTING (312) 419-9292
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1
Describe any specific training,
2 clients or contracts.
3
I consider myself an expert. My
4 most recent assignments as a consultant have been
5 for TXU Electric, evaluating the capabilities of
6 environmental control equipment for mercury
7 control --
8
HEARING OFFICER TIPSORD: You need to
9 slow way down.
10
MR. CICHANOWICZ: My most recent
11 assignments as a consultant have been for TXU
12 Electric, evaluating the capabilities of
13 environmental control equipment for mercury
14 control for a new lignite-fired power station.
15 This included providing a detailed third-party
16 review of field test studies and pilot plant work
17 that was conducted for them by organizations such
18 as the University of North Dakota and URS
19 Corporation.
20
Before that, I assisted an
21 investment bank in evaluating the risks of mercury
22 control for a new power station which included
23 reviewing the designs provided by the plant
24 supplier.
L.A. REPORTING (312) 419-9292
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1
Before that I assisted First
2 Energy Corporation in quantifying the mercury
3 removal they could derive from a newly retrofit
4 SCR process to an existing plant as dependent on
5 the types of catalyst purchased. I evaluated the
6 cost of deriving mercury removal in this manner
7 compared to installing activated carbon injection
8 on other fabric-filter equipped units at the
9 station. Before that, I evaluated for Olgethorpe
10 Power mercury control options for Wansley and
11 Scherer Stations, including soliciting bugetary
12 equipment bids from fabric filter suppliers to use
13 with estimates of activated carbon removal.
14
Question 2.
15
MR. KIM: Can I ask one follow-up on
16 question 1? When you were describing clients,
17 could you just make it clear who you are
18 representing in your testimony today?
19
MR. CICHANOWICZ: Today I am
20 representing Midwest Gen, Dynergy,
21 Dimunion/Kincaid and the Southern Illinois Power
22 Co-operative.
23
MR. KIM: Thank you.
24
MR. CICHANOWICZ: Question No. 2.
L.A. REPORTING (312) 419-9292
477
1 Please provide a list of your publications in the
2 field of power plant mercury control.
3
I have not published control
4 technology papers in mercury.
5
MR. AYRES: Could I interject for a
6 moment. Have you ever acted as an onus engineer
7 or prepared a specification for design or
8 construction of a mercury specific program, Mr.
9 Cichanowicz, sorbent or otherwise?
10
MR. CICHANOWICZ: I have assisted some
11 of my clients in preparing draft specifications.
12 I am not an onus engineer, but I do provide the
13 process engineering expertise. That was one of my
14 deliverables for Oglethorpe Power, and in fact for
15 First Energy -- I'm going to talk a little bit
16 about NOx, but we know NOx and mercury are
17 related, I helped them in the design of an SCR
18 process. And we specifically solicited bids from
19 catalyst suppliers for varying levels of mercury
20 removal. So that was part of a procurement in
21 which we were able to review responses from
22 suppliers in terms of the types of catalysts. So
23 I've done that to a limited degree.
24
HEARING OFFICER TIPSORD: Question No.
L.A. REPORTING (312) 419-9292
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1 3.
2
MR. CICHANOWICZ: Do you consider
3 yourself an expert on electrostatic precipitators?
4 If so, please describe your background
5 particularly with regard to experience in the area
6 of power plant electrostatic precipitator design?
7 Describe any specific training, clients or
8 contracts.
9
I have a working knowledge of
10 electrostatic precipitators. Based on three
11 decades of experience with field tests and
12 diagnosing the interactions of ESPs with controls
13 for NOx and SO2. I do not consider myself an
14 expert in the context of someone who has devoted
15 their entire life to exclusively working on
16 electrostatic precipitators.
17
MR. AYRES: I'll ask the same question
18 I did before. Have you ever acted as an onus
19 engineer or prepared a specification for design or
20 construction of an ESP?
21
MR. CICHANOWICZ: No, I have not.
22
MR. AYRES: Related question. Do you
23 consider yourself an expert on statistical process
24 control?
L.A. REPORTING (312) 419-9292
479
1
MR. CICHANOWICZ: No, I do not.
2
Not MR. AYRES: Okay, that's fine.
3 Thank you.
4
HEARING OFFICER TIPSORD: Question No.
5 4.
6
MR. CICHANOWICZ: Please provide a
7 list of your publications in the field of power
8 plant electrostatic precipitation.
9
I have not published in the field
10 of power plant electrostatic precipitation.
11
HEARING OFFICER TIPSORD: Question No.
12 5.
13
MR. CICHANOWICZ: Have you ever been
14 an employee of a company that designs or
15 constructs power plant air pollution control
16 equipment, particularly electrostatic
17 precipitators or mercury emissions control?
18
No, I have intentionally not
19 worked for such suppliers to maintain the
20 independence to conduct a third-party assessment
21 of various suppliers' technologies and
22 capabilities.
23
HEARING OFFICER TIPSORD: Question No.
24 6.
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480
1
MR. CICHANOWICZ: Are you an
2 expert on mercury measurements or mercury CEMS?
3 If so, please describe your background
4 particularly with regard to training and
5 experience in the area of measure measurements or
6 mercury CEMS. Describe any specific training,
7 clients or contracts.
8
No, I'm not an expert on mercury
9 CEMS.
10
HEARING OFFICER TIPSORD: Could you
11 for the record explain what CEMS is?
12
MR. CICHANOWICZ: Thank you. CEMS is
13 one of those many acronyms we use, Continuous
14 Emission Monitoring Systems.
15
HEARING OFFICER TIPSORD: Thank you.
16 Question No. 7.
17
MR. CICHANOWICZ: Are you being paid
18 to testify today?
19
Yes.
20
MR. ZABEL: 7(A) I believe has been
21 answered.
22
HEARING OFFICER TIPSORD: It has.
23
MR. CICHANOWICZ: 7(B). What
24 percentage of your clients are utilities versus
L.A. REPORTING (312) 419-9292
481
1 the public sector?
2
All clients are utilities with
3 occasionally a manufacturer or producer of
4 chemicals or reagents.
5
HEARING OFFICER TIPSORD: I lost that.
6 I'm sorry. Could you repeat the last sentence?
7
MR. CICHANOWICZ: All clients are
8 utilities with occasionally a manufacturer or
9 producer of chemicals or reagents.
10
MR. AYRES: Mr. Cichanowicz, roughly
11 how many times since starting your business have
12 you appeared on behalf of utility clients,
13 including UR and other similar groups or provided
14 testimony or provided comments for the purposes of
15 supporting their arguments regarding air pollution
16 control regulations would you say?
17
MR. CICHANOWICZ: Well, in terms of
18 testifying this might be the third time in a
19 quasi-judicial or judicial setting. In terms of
20 preparing white papers, I have probably prepared
21 20 or 25 over the last ten years.
22
HEARING OFFICER TIPSORD: And for the
23 record, a white paper is?
24
MR. CICHANOWICZ: A white paper is a
L.A. REPORTING (312) 419-9292
482
1 topical report or topical review evaluating the
2 feasibility and cost of a technology that is
3 basically submitted into the public domain,
4 primarily to the Environmental Protection Agency.
5
MR. AYRES: You did mention comments
6 prepared for clients to be used with governmental
7 agencies.
8
MR. CICHANOWICZ: That would be --
9 those are the white papers that have been prepared
10 under the sponsorship of the Utility Air
11 Regulatory Group. I don't recall ever doing that
12 for a utility to the best of my knowledge.
13
HEARING OFFICER TIPSORD: Question No.
14 8.
15
MR. CICHANOWICZ: On page 2 of your
16 testimony you state that "the targeted outlet
17 content of mercury, in many cases less than 1
18 microgram per cubic meter, is too low to be
19 accurately monitored for compliance.
20
Are you in any way qualified to
21 verify Mr. McRanie's testimony that you by
22 reference include in yours?
23
I'm not an expert in mercury
24 control measures. I accept Mr. McRanie to be so.
L.A. REPORTING (312) 419-9292
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1
MR. AYRES: So the statement that you
2 make is based on just Mr. McRanie's testimony; is
3 that correct?
4
MR. CICHANOWICZ: The statements
5 regarding?
6
MR. AYRES: The statement that we have
7 quoted here, that's a quote in the question.
8
MR. CICHANOWICZ: Yes, that particular
9 statement is based on discussions with
10 Mr. McRanie.
11
MR. AYRES: Okay, thank you.
12
HEARING OFFICER TIPSORD: Question No.
13 9.
14
MR. CICHANOWICZ: You subsequently
15 state that "In this testimony, I will accept,
16 without verification or other validation, that
17 such measurements can be made to within a
18 reasonable degree of accuracy, precision and
19 bias." And later add, "Section 2.42 and 2.4.3
20 describe why I believe the cumulative effect of
21 measurement uncertainty, variability in coal
22 composition, and variability in process operation
23 require a design mercury removal target of at
24 least 93-95% to consistently deliver 90%." Are
L.A. REPORTING (312) 419-9292
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1 these inconsistent statements? If yes, which
2 statement is correct?
3
I believe these statements are
4 consistent. I assumed that reasonable accuracy,
5 precision and bias are achievable, and that a
6 total of 20% measurement error could result from
7 these variations, which is reasonable in my
8 opinion. Combined with the variability in coal
9 composition, this level of uncertainty may require
10 a 93% to 95% design target will be necessary to
11 account for such variations.
12
MR. AYRES: Does that represent
13 accepting that such measurements can be made
14 within a reasonable degree of accuracy, precision
15 and bias? It seems inconsistent.
16
MR. CICHANOWICZ: Well, I guess it all
17 depends on what your definition of reasonable is,
18 but when I look at the literature and the number
19 of citations I had in my testimony, measurement
20 errors of plus or minus 20% were not uncommon.
21 And I believe -- again, I'm not an expert in
22 mercury CEMS -- but I believe one of the
23 yardsticks for success for the CEMS measurements
24 is a RATA test. And my understanding is that if
L.A. REPORTING (312) 419-9292
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1 the RATA test is met to within 20%, the unit, the
2 particular instrument is assumed to have past that
3 test and those are criteria according to my
4 understanding defined by the EPA.
5
HEARING OFFICER TIPSORD: Excuse me,
6 RATA test?
7
MR. ZABEL: What does RATA stand for?
8
MR. CICHANOWICZ: It's a Relative
9 Accuracy Test.
10
MR. AYRES: I think later on we will
11 get into some questions about the assumptions
12 about accuracy and bias and maybe we'll get to
13 those further down.
14
HEARING OFFICER TIPSORD: Question No.
15 10.
16
MR. CICHANOWICZ: On page 3 of your
17 testimony you state, "First, as noted in Section
18 3, the history of environmental control evolution
19 has taught us long-term experience, on the order
20 of one year, is required before commercialization.
21 Operating trials of a 30-day duration, although an
22 impressive and a necessary first step, are
23 inadequate." Would one-year programs be much more
24 expensive than 30-day programs?
L.A. REPORTING (312) 419-9292
486
1
Perhaps, depending on the scope of
2 the demonstration test and manpower needs. For
3 activated carbon injection an additional 11 month
4 supply of sorbent will be necessary. If mercury
5 CEMS are employed, there will likely be a need for
6 additional instrumentation and technical staff to
7 calibrate and maintain the process
8 instrumentation. Depending on the operations and
9 maintenance needs of the sorbent injection
10 equipment, additional operator attention may be
11 necessary, at least for sorbent receiving.
12
MR. AYRES: Mr. Cichanowicz, are you
13 familiar with the DOE budget for its mercury
14 control program and what's happened to it in the
15 last couple of years?
16
MR. CICHANOWICZ: I'm somewhat
17 familiar with it. I've read what some of the
18 investment numbers are.
19
MR. AYRES: Do you know that it's been
20 cut significantly in 2005 and 2006?
21
MR. CICHANOWICZ: I'm sorry, I missed
22 that, please.
23
MR. AYRES: Did you know that the
24 budget has been cut significantly in 2005 and
L.A. REPORTING (312) 419-9292
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1 2006?
2
MR. CICHANOWICZ: I didn't know that.
3
MR. AYRES: Doesn't that mean that
4 fewer tests can be performed if that's true, since
5 many of them are paid for with federal money?
6
MR. CICHANOWICZ: Perhaps. Again, I
7 haven't really followed the DOE budgetary process.
8 A lot of these tests are co-funded by the
9 industry, but certainly a cut in DOE funding might
10 restrict the testing.
11
MR. AYRES: Again, if the budget is
12 cut, the number of tests are reduced, won't that
13 delay the date when the technology reaches a level
14 that you would be willing to accept?
15
MR. ZABEL: I know these are open
16 hearings, and I don't want to make a lot of
17 objections, but the DOE budget seems pretty
18 irrelevant to Mr. Cichanowicz's testimony.
19
MR. AYRES: I happen to think the
20 contrary. It's very relevant because he is urging
21 that we have a lot of additional tests before we
22 move forward to control mercury. If the money is
23 not there to do the tests, I think it's quite
24 relevant.
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1
MR. ZABEL: You are making
2 assumptions, Mr. Ayres. The money may not be
3 there from the DOE. That doesn't mean that the
4 money isn't there from private or other sources,
5 and that's not what he is testifying about.
6
HEARING OFFICER TIPSORD: I think we
7 are also running into the problem that we don't
8 know what the DOE budget is. So we are building
9 assumption upon assumption.
10
MR. AYRES: Let me ask one more
11 question. Is it your opinion that environmental
12 technology cannot be successfully reduced in the
13 electric industry without one year demonstrations?
14
MR. CICHANOWICZ: I believe a one year
15 demonstration is preferred. When you look at what
16 other plant components are, when you talk to
17 boiler suppliers and they talk about introducing
18 perhaps a new condenser or new water heater or new
19 burner, they talk about first of a kind
20 applications, and what they tell me is that what
21 they try to do is find a willing participant so to
22 speak that will work with them on this first of a
23 kind demonstration. And the rule of thumb is to
24 operate these components for one year before they
L.A. REPORTING (312) 419-9292
489
1 offer the technology to other clients. So,
2 therefore, all I'm saying is that environmental
3 controls ought to be on the same order as other
4 plant components. That is the risk in my opinion
5 should be commensurate with other actions that the
6 utility takes.
7
HEARING OFFICER TIPSORD: Question No.
8 11.
9
MR. CICHANOWICZ: On page 3 of your
10 testimony you state, "The use of ACI with existing
11 ESPs could endure the same fate as hot-side ESPs,
12 the accumulation of carbon could assert
13 detrimental effects on particulate matter removal
14 or reliability, similar to the way the yearlong
15 accumulation of sodium on emitting electrodes
16 compromised the hot-side ESP."
17
First, I misspoke on a minor point
18 regarding the role of sodium on hot-side EPS
19 performance. The shortcomings related to hot-side
20 ESPs was due to the depletion and not accumulation
21 of sodium in a fly ash layer that was adhered to
22 an electrode.
23
Question 11(A). Doesn't fly ash
24 from many boilers contain significant levels of
L.A. REPORTING (312) 419-9292
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1 carbon?
2
Yes, but the nature of the carbon
3 is different. Residual carbon generated as a
4 residue from combustion can be integral with a
5 matrix of coal inorganic constituents. Carbon
6 intended as sorbent is a separate fine particle,
7 averaging about 20 microns in size, and features
8 low density and electrical resistivity. The
9 differences in these physical features compared to
10 residual carbon can make the carbon behave
11 differently than the ESP.
12
HEARING OFFICER TIPSORD: Go ahead, B.
13
MR. CICHANOWICZ: You describe later
14 in your testimony that there was high LOI, loss on
15 ignition, at Yates 1. Do you recall what that
16 level was?
17
MR. CICHANOWICZ: The Yates station
18 can typically generate flash ash with between 6
19 and 13% LOI with occasional spikes higher.
20
MR. AYRES: I'm going to ask you to
21 explain LOI or define it. Let me ask a follow-up
22 question. Have you ever observed fly ash from a
23 power plant having 10% or more carbon?
24
MR. CICHANOWICZ: Occasionally.
L.A. REPORTING (312) 419-9292
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1
MR. AYRES: You would consider that to
2 be high I think?
3
MR. CICHANOWICZ: I would consider it
4 to be high under normal circumstances. The
5 situation with Yates is that those units were
6 retrofit with low NOx burners. I don't know when.
7 I think in the early 90's. And the way we control
8 NOx in a low NOx burner is to delay, stage-out,
9 put off the combustion process so you can make a
10 whole bunch of reactions happen in the flame that
11 only Dr. Stoudt and I care about, and I won't bore
12 you with it, but the point is by delaying all the
13 mixing, you inherently have problems with carbon
14 burnout. Yates is having a bit more of a problem
15 with this, and it is I believe -- well, it may be
16 due to the fact that it's a furnace that is just
17 relatively small and doesn't allow you to achieve
18 the burnout within the design of the unit.
19
MR. AYRES: If the company switched
20 coal, used a different coal with significantly
21 higher ash loadings, would that potentially impact
22 the ESP performance?
23
MR. CICHANOWICZ: Yes.
24
HEARING OFFICER TIPSORD: Question No.
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1 12.
2
MR. CICHANOWICZ: On page 3 of your
3 testimony you state concerns about triggering NSR
4 due to increased PM emissions. Does not the
5 Illinois Rule, particularly the TTBE, specifically
6 address the risk of PM emissions?
7
HEARING OFFICER TIPSORD: Excuse me.
8 For the record, is that TTBS?
9
MR. AYRES: Yes. Wherever you see
10 that, it's an S. That's code.
11
MR. CICHANOWICZ: The flexibility to
12 select a sorbent injection rate that does not
13 induce operating problems will mitigate the risks
14 of consequential damages. It is possible that the
15 TTBS, depending on the ultimate mode of adoption,
16 interpretation and enforcement by IEPA, could
17 provide such flexibility. However, there are many
18 details on the TTBS that must be addressed, and
19 also there are many sources for which the TTBS as
20 structured at present may not be available.
21
MR. AYRES: A follow-up on the NSR
22 point for a moment, Mr. Cichanowicz. Are you an
23 attorney or otherwise qualified to do legal
24 interpretation?
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1
MR. CICHANOWICZ: No.
2
HEARING OFFICER TIPSORD: Question 13.
3
MR. CICHANOWICZ: On page 3 of your
4 testimony you state, "Notwithstanding the belief
5 by the Presque Isle project team that 90% mercury
6 removal is certain, to date there is no data
7 defining such results for more than brief
8 periods." Do you believe that they are wrong or
9 their beliefs are unfounded? If so, why?
10
The Presque Isle demonstration is
11 based on encouraging results at Gaston, and
12 numerous small-scale test sorbent screening
13 facilities, and is well-founded. However,
14 commercial feasibility of achieving 90% mercury
15 removal at large-scale, on the basis of 24 x 7
16 operation, and without operating problems that may
17 compromise reliability, has yet to be proven.
18
MR. AYRES: Mr. Cichanowicz, on page 3
19 you say even for this approach, 90% mercury
20 removal is not commercially proven. Results from
21 the one-year trial completed in 2004 at Gaston,
22 another power plant, did not document 90% removal,
23 but suggested such outcome may be possible. I'd
24 like to draw your attention to a report that was
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1 prepared by three people from the Southern
2 Company, Mark McCreer (sic), Dick Bourbon -- four
3 people -- Larry Monroe and Ramsey Chang, which I
4 believe is in evidence. It's called, "Field Test
5 Program For Long-term Operation of a COHPAC" --
6 that's C-O-H-P-A-C -- "System for Removing Mercury
7 From Coal-Fired Flue Gas." It's document No. 42
8 in the record in the TSD.
9
HEARING OFFICER TIPSORD: All right.
10 So it's part of the TSD.
11
MR. AYRES: Have you had a chance to
12 look at it?
13
MR. CICHANOWICZ: Was there a specific
14 item you wanted me to look at?
15
MR. AYRES: Yes, several. Do you know
16 any of the four people who are the authors?
17
MR. CICHANOWICZ: I know three of the
18 four.
19
MR. AYERS: Do you believe that they
20 are qualified to reach conclusions regarding the
21 test results at the site?
22
MR. CICHANOWICZ: Yes.
23
MR. AYRES: If you would take a look
24 at page 15 of the document, where the conclusions
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1 are stated. They state "At the time this paper
2 was written, all but the last couple of weeks of
3 testing was finished. The primary conclusions
4 include." Could you read what the bullet points
5 there beginning with the word "TOXECON"?
6
MR. CICHANOWICZ: "TOXECON units
7 designed at lower air-to-cloth ratios than COHPAC
8 units are capable of high, 90% mercury removal.
9 For TOXECON baghouses, it is recommended that the
10 maximum design gross air-to-cloth ratio be 6.0
11 feet per minute."
12
MR. AYRES: And the next bullet I
13 believe is beginning with "Activated carbon."
14
MR. CICHANOWICZ: "Activated carbon
15 injection systems are simple, reliable, and
16 commercially available. The control programs can
17 be easily adapted to varying operating
18 requirements."
19
MR. AYRES: Do these two statements
20 state that 90% reduction is achievable with a
21 baghouse design and proper air-to-cloth ratio?
22
MR. CICHANOWICZ: And I believe that's
23 what my document suggests or states.
24
MR. AYRES: I'm not sure I read it
L.A. REPORTING (312) 419-9292
496
1 that way. If you'd like to point to something.
2
MR. CICHANOWICZ: Just give me a
3 minute, please. I will read my words.
4
HEARING OFFICER TIPSORD: Could you
5 clarify what page.
6
MR. ZABEL: Page 3.
7
MR. CICHANOWICZ: Page 3.
8
(Reading:)"Even for this approach,
9 90% mercury removal is not commercially proven.
10 Results from the one-year trial completed in 2004
11 at Gaston did not document 90% removal but
12 suggests such that the outcome may be possible."
13
What I'm referring to is that the
14 one-year test showed about 86% mercury removal
15 with a low sulfur bituminous coal, and that was
16 the conclusion of the 12-month testing program.
17 Once that work was done, the test looked at a
18 different air-to-cloth ratio for shorter periods
19 of time and did indeed derive 90% removal, and
20 that I think is basically consistent with what I
21 wrote because I had that in mind when I wrote that
22 sentence because I know that work. So I was
23 saying that such an outcome may be possible,
24 meaning that the shorter period of testing at 90%
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1 removal do indeed suggest you could get those
2 kinds of numbers. But the 12-month data was for
3 85.6%.
4
MR. AYRES: Would you say "suggest" is
5 the same concept of "are capable of"? Those are
6 the words used in the conclusion.
7
MR. CICHANOWICZ: Are capable of for
8 five days. You know, my command of the language
9 and nuances of the words perhaps aren't as deep as
10 yours. To me what I was thinking was that
11 basically 90% removal was shown for shorter
12 periods of time, not for 12 months, and that's why
13 I think it's possible.
14
MR. AYRES: Let me qualify your
15 statement about the length of time. It says are
16 capable of high, 90% mercury removal. That's the
17 statement of the authors of the study. It doesn't
18 say for five day periods.
19
MR. ZABEL: I would point, Mr. Ayres,
20 it doesn't say anything about time, one day, one
21 year, five years. It speaks for itself.
22
HEARING OFFICER TIPSORD: I think the
23 point he is making is there's two different terms
24 used. Do you agree with the conclusions?
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1
MR. CICHANOWICZ: I agree with my
2 conclusions, and I read the conclusions in this
3 paper to be consistent with my statement.
4 Mr. Ayres and I just have a different way we use
5 words, and I'm sorry, I'm an engineer.
6
MR. AYRES: You would agree that
7 activated carbon injection systems are simple,
8 reliable, and commercially available, wouldn't
9 you?
10
MR. CICHANOWICZ: Yes, I agree that
11 activated carbon injection systems are simple,
12 reliable, and commercially available. But, again,
13 it's a general statement. It doesn't say what
14 type of performance or application. It's a
15 general statement.
16
MR. AYRES: Do you know if the Gaston
17 baghouse was originally designed and constructed
18 with the intent of putting a TOXECON System on it
19 to capture the additional particulate from the
20 TOXECON System?
21
MR. CICHANOWICZ: No, it was not
22 designed initially for mercury removal.
23
MR. AYRES: It was just a plant that
24 happened to have a baghouse, wasn't it?
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1
MR. CICHANOWICZ: It was a plant that
2 had a mal-performing hot-side ESP that it
3 purchased in the late 70's. When it didn't meet
4 the performance requirements, they had, like many
5 people, to retrofit the technology, and they chose
6 this type of baghouse.
7
MR. AYRES: So you agree with the
8 conclusions of the authors of that piece that the
9 baghouse was originally designed to capture the
10 small amount of particulate matter that made it
11 past the ESP, not designed to be a control system
12 for an ACI system?
13
MR. ZABEL: Is there a specific place
14 you want him to look at, Mr. Ayres?
15
MR. AYRES: I don't have it.
16
MR. ZABEL: You are characterizing the
17 entire document. It's hard for him to answer the
18 question without specific reference.
19
MR. AYRES: Pass that question.
20
One last question. I'm sorry. If
21 the Gaston baghouse had been designed for the
22 purpose of being a TOXECON System, and within the
23 specifications determined by the long-term test
24 program, do you have any doubt whether the 90%
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1 removal rate would have been demonstrated?
2
MR. CICHANOWICZ: I think there is a
3 very good chance it would have been demonstrated,
4 but as a person who spent 25 years going from
5 pilot to small scale to commercial, you know, you
6 don't know until you do it. But I think it would
7 be, yes, very highly likely.
8
MR. AYRES: But I think the point is
9 the unit was not designed to be a TOXECON System
10 in the beginning, and had it been, that would have
11 made the difference?
12
MR. CICHANOWICZ: I think that would
13 have made a big difference, that is true. Please
14 keep in mind if there were any uncertainty,
15 perhaps the Presque Isle Station would not have
16 been funded. At some point somebody in the
17 Department of Energy thought it was a good idea to
18 take the process conditions and run it for a year.
19 We know it was run on PRD coal, and we know coal
20 type is very important in everything we do here,
21 but I think the fact that the Department of Energy
22 funded Presque Isle is in itself a statement that
23 they feel there's some certainties to be ironed
24 out.
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1
HEARING OFFICER TIPSORD: Mr.
2 Cichanowicz, the 5:00 o'clock hour has approached
3 us today. We went zipping by. So I think we're
4 going to conclude for the day.
5
Before we do conclude, there's a
6 couple housekeeping matters that I want to bring
7 up. First of all, we discussed this morning a
8 schedule for a motion concerning additional
9 hearings, et cetera. I'm going to do a Hearing
10 Officer Order. I will try to get that done and
11 ready to be distributed by tomorrow. I am not
12 guaranteeing that I can because we also have a
13 Board meeting coming up.
14
MR. ZABEL: We have the schedule.
15 It's on the record.
16
HEARING OFFICER TIPSORD: Right, but I
17 want to immortalize it for anybody who isn't
18 physically here.
19
The other issue is, it tickled my
20 memory with Ms. Tickner's testimony, Mr. Nelson
21 filed written responses to his remaining
22 questions. Most of those were for Ameren. If
23 anyone has any follow-ups to those written
24 responses to those questions, we can either enter
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502
1 them on the record or try and get them provided
2 some other way. And I understand, Mr. Kim,
3 there's no guarantee if there are follow-up that
4 Mr. Nelson will respond to them, but at least we
5 can get them on the record and try.
6
MR. KIM: Let's get everything on the
7 record.
8
HEARING OFFICER TIPSORD: Ladies and
9 gentlemen, we'll see you at 9:00 o'clock tomorrow
10 morning. Thank you very much.
11
(The hearing was continued to
12
August 16, 2005 at 9:00 a.m.)
13
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L.A. REPORTING (312) 419-9292
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1 STATE OF ILLINOIS. )
2
) SS.
3 COUNTY OF COOK
)
4
I, DENISE A. ANDRAS, CSR, and
5 Notary Public in and for the County of Cook and
6 State of Illinois, do hereby certify that on the
7 15th day of August, 2006, at 1:00 p.m., at the JR
8 Thompson Center, Chicago, Illinois, this hearing of
9 the POLLUTION CONTROL COMMISSION was had.
10
I further testify that the said
11 hearing was by me reported and witnesses were sworn
12 to testify and that the foregoing is a true record
13 of the testimony given on that day.
14
I further certify that I am not
15 counsel for nor related to any of the parties
16 herein, nor am I interested in the outcome hereof.
17 In witness hereof, I have hereunto set my hand and
18 seal of office this 18th day of August, 2006.
19
20
______________________
21
Notary Public
22
CSR No. 084-00343
23
24
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