BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

)

PROPOSED NEW CAIR SO

2

, CAIR NO

X

)

ANNUAL AND CAIR NO

X

OZONE SEASON

)

R06-26

TRADING PROGRAMS, 35 ILL. ADM.

)

(Rulemaking- Air)

CODE 225, CONTROL OF EMISSIONS

)

FROM LARGE COMBUSTION SOURCES,

)

SUBPARTS A, C, D and E

)

NOTICE

TO: Dorothy Gunn, Clerk

Illinois Pollution Control Board

James R. Thompson Center

100 West Randolph, Suite 11-500

Chicago, Illinois 60601-3218

SEE ATTACHED SERVICE LIST

PLEASE TAKE NOTICE that I have today filed with the Office of the Pollution Control

Board the MOTION TO AMEND RULEMAKING PROPOSAL, of the Illinois Environmental

Protection Agency a copy of which is herewith served upon you.

ILLINOIS ENVIRONMENTAL

PROTECTION AGENCY

By: ______________________

John J. Kim

Managing Attorney

Division of Legal Counsel

DATED: October 11, 2006

1021 North Grand Avenue East

P.O. Box 19276

Springfield, Illinois 62794-9276

THIS FILING IS SUBMITTED

217.782.5544

ON RECYCLED PAPER

217.782.9143 (TDD)

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

---

BEFORE THE ILLINOIS POLLUTION CONTROL BOARD

IN THE MATTER OF:

)

)

PROPOSED NEW CAIR SO

2

, CAIR NO

X

)

ANNUAL AND CAIR NO

X

OZONE SEASON

)

R06-26

TRADING PROGRAMS, 35 ILL. ADM.

)

(Rulemaking- Air)

CODE 225, CONTROL OF EMISSIONS

)

FROM LARGE COMBUSTION SOURCES,

)

SUBPARTS A, C, D and E

)

MOTION TO AMEND RULEMAKING PROPOSAL

NOW COMES the Proponent, the ILLINOIS ENVIRONMENTAL PROTECTION

AGENCY (Illinois EPA), by its attorneys, and pursuant to 35 Ill. Adm. Code 101.500 and

102.402, moves that the Illinois Pollution Control Board (Board) amend proposed new Part 225

Sections 225.325, 225.460, 225.560, 225.465, 225.565, 225.430, 225.530, 225.435, 225.535,

225.450, 225.550, 225.475, and 225.575. In support of its Motion, the Illinois EPA states as

follows:

On May 30, 2006, the Illinois EPA filed a proposal with the Board to add new Subparts

to Part 225, 35 Ill. Adm. Code Part 225, entitled "Control of Emissions from Large Combustion

Sources." New subparts A, C, D and E, add SO

2

, NOx Annual and NO

x

Ozone Season Trading

Programs in Part 225. The Illinois EPA's proposal is intended to meet certain obligations of the

State of Illinois under the federal Clean Air Act (CAA), 42 U.S.C. § 7401

et seq

.; specifically, to

satisfy Illinois' obligation to submit a State Implementation Plan to address the requirements of

the Clean Air Interstate Rule (CAIR),

see

, 70

Fed. Reg.

25161 (May 12, 2005). Under CAIR,

states are required to submit State plans to the United States Environmental Protection Agency

by no later than September 11, 2006.

Id

.

at 25319; 40 CFR § 51.123(d)(1)

.

1

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

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The Illinois EPA engaged in extensive outreach on this proposal. In January 2006, the

Illinois EPA commenced regular meetings with representatives of the affected sources and public

interest groups and the Illinois EPA distributed working drafts of the proposed rule to such

parties.

After the filing of the rulemaking proposal, a number of changes and clarifications were

found to be necessary. Therefore, the Illinois EPA is now proposing to amend the rulemaking

proposal as set forth in this motion.

The amendments, as proposed, address the treatment of vintage year SO

2

allowances, the

replenishment of CASA accounts, and changes to dates concerning when portions of the rule

take effect. Accordingly, the Illinois EPA recommends the acceptance by the Board of the

following amendments to proposed new Part 225 to amend Sections 225.325, 225.460, 225.560,

225.465, 225.565, 225.430, 225.530, 225.435, 225.535, 225.450, 225.550, 225.475, and 225.575:

1)

This amendment clarifies portions of the trading program to consider the effect that the

year the allowances are issued, or its “vintage” year, has on the authorization to emit

SO

2

.

Section 225.325

Trading Program

b)

A CAIR SO

2

allowance is a limited authorization to emit SO

2

during the calendar

year for which the allowance is allocated or any calendar year thereafter under the

CAIR SO

2

Trading Program as follows:

1)

For one CAIR SO

2

allowance allocated for a control period in a year

before 2010, one ton of SO

2

For a control period in a year before 2010, the

retirement ratio shall be one ton of SO

2

to 1.0 CAIR SO

2

allowance,

except as provided for in the compliance deductions under 40 CFR §

96.254(b);

2)

For one CAIR SO

2

allowance allocated for a control period in 2010

through 2014, 0.5 ton of SO

2

For a control period in 2010 through 2014,

the retirement ratio shall be one ton of SO

2

to 2.0 CAIR SO

2

allowances,

except as provided for in the compliance deductions under 40 CFR §

96.254(b); and

2

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

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3)

For one CAIR SO

2

allowance allocated for a control period in 2015 or

later, 0.35 ton of SO

2

For a control period in 2015 or later, the retirement

ration shall be one ton of SO

2

to 2.86 CAIR SO

2

allowances, except as

provided for in the compliance deductions under 40 CFR § 96.254(b).

2)

This amendment further addresses handling of allowances for units subject to a court

order or consent decree.

Section 225.460

Energy Efficiency, Renewable Energy, and CleanTechnology

d)

Energy efficiency and conservation, renewable energy, or clean technology projects listed

in subsection (a) through (c) of this Section shall not include nuclear power projects;

projects required to meet emissions standards or technology requirements under State or

federal law or regulation (except for the installation of a baghouse); or projects used to

meet the requirements of a court order or consent decree (except that allowances may be

allocated for emission rates or limits achieved that are lower than what is required to

meet the emission rates or limits for SO

2

or NO

x,

or for installing a baghouse as provided

for in a court order or consent decree entered into before May 30, 2006, and CASA

allowances may be allocated for projects used to meet the requirements of a court order

or consent decree entered into on or after May 30, 2006, if the court order or consent

decree does not specifically preclude such allocations); or a Supplemental Environmental

Project (SEP). CASA allowances shall not be allocated to such projects.

3)

This amendment further addresses handling of CASA allowances for units subject to a

court order or consent decree.

Section 225.465

CASA Allowances

b)4)

For an air pollution control equipment upgrade project pursuant to Section

225.460(c)(1) of this Subpart, the number of allowances shall be

calculated as follows:

A)

For NO

x

or SO

2

control projects, by determining the difference in

emitted NO

x

or SO

2

per control period using the emission rate

before and after replacement or improvement, and the following

formula:

A=

(MWh

g

)

×

K

×

(ER

B

lb/MWh - ER

A

lb/MWh) / 2000 lb

Where:

A

=

The number of allowances for a particular

project.

MWh

g

=

The number of megawatt hours of electricity

generated during a control period by a

project.

K

=

The pollutant factor: for NO

x

, K= 0.1; and

3

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

---

for SO

2

, K = 0.05.

ER

A

=

Annual NO

x

or SO

2

average emission rate

for the applicable control period data based

on CEMS data in lb/MWh.

ER

B

=

Annual NO

x

or SO

2

average

emission rate for the applicable control

period data based on CEMS data in lb/MWh

from the most recent two control periods

prior to the replacement or improvement of

the control equipment in lb/MWh, unless

subject to a court order or consent decree.

For units subject to a court order or consent

decree entered into before May 30, 2006,

ER

B

is limited to emission rates that are

lower than the emission rate required in the

consent decree or court order. For a court

order or consent decree entered into after

May 30, 2006, ER

A

is limited to the lesser of

the emission rate specified in the court order

or consent decree or the actual average

emission rate during the control period. If

such limit is not expressed in lb/MWh, the

limit shall be converted into lb/MWh using a

heat rate of 10 mmBtu/1 MW.

B)

For a baghouse project:

A =

(MWh

g

)

×

(Q lb/MWh) / 2000 lb

Where:

A

=

The number of allowances for a

particular project.

MWh

g

=

The number of megawatt hours of electricity

generated during a control period or the

portion of a control period that the units

were controlled by the baghouse.

Q

=

0.2, unless installed pursuant to a court order

or consent decree which does not specify a

factor, then Q = 0.05, or if installed pursuant

to a consent decree or court order that does

specify a factor then Q equals a factor not to

exceed 0.2.

4

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

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4)

This amendment further addresses handling of allowances for units subject to a court

order or consent decree.

Section 225.560

Energy Efficiency, Renewable Energy, and Clean Technology

d)

Energy efficiency and conservation, renewable energy, or clean technology projects listed

in subsection (a) through (c) of this Section shall not include nuclear power projects;

projects required to meet emissions standards or technology requirements under State or

federal law or regulation; or projects used to meet the requirements of a court order or

consent decree (except that allowances may be allocated for emission rates or limits

achieved that are lower than what is required to meet the emission rates or limits for SO

2

or NO

x,

as provided for in a court order or consent decree, or up to full credit, if the

consent decree provides that for a specific project); or a Supplemental Environmental

Project (SEP). CASA allowances shall not be allocated to such projects.

5)

This amendment further addresses handling of CASA allowances for units subject to a

court order or consent decree.

Section 225.565

CASA Allowances

b)4)

For an air pollution control equipment upgrade project pursuant to Section

225.560(c)(1) of this Subpart, the number of allowances shall be calculated using

the emission rate before and after replacement or improvement, and the following

formula:

A=

(MWh

g

)

×

K

×

(ER

B

lb/MWh - ER

A

lb/MWh) / 2000 lb

Where:

A

=

The number of allowances for a particular project.

MWh

g

=

The number of megawatt hours of electricity

generated during a control period by a project.

K

=

The pollutant factor: for NO

x

, K= 0.1; and

for SO

2

, K = 0.05.

ER

A

=

Annual NO

x

or SO

2

average emission rate for the applicable

control period data based on CEMS data in lb/MWh.

ER

B

=

Annual NO

x

or SO

2

average emission rate for the applicable

control period data based on CEMS data in lb/MWh from

the most recent two control periods prior to the replacement

or improvement of the control equipment in lb/MWh,

unless subject to a consent decree or court order. For units

subject to a consent decree or court order, entered into

before May 30, 2006, ER

A

is limited to emission rates or

limits that are lower than the emission rate or limit required

5

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

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in the consent decree or court order. On or after May 30,

2006, ER

A

is limited to emission rates or limits specified in

the consent decree or court order. If such limit is not

expressed in lb/MWh, the limit shall be converted into

lb/MWh using a heat rate of 10 mmBtu/1 MW.

6)

This amendment incorporates changes for when portions of the rule take effect resulting

from a later effective date for the rule.

Section 225.430

Timing for Annual Allocations

a)

Within 30 days after the effective date of this Subpart By October 31, 2006, the

Agency shall submit to USEPA the CAIR NO

x

allowance allocations, in

accordance with Sections 225.435 and 225.440 of this Subpart, for the 2009,

2010, and 2011 control periods.

7)

This amendment incorporates changes to when portions of the rule take effect resulting

from a later effective date for the rule.

Section 225.530

Timing for Ozone Season Allocations

a)

Within 30 days after the effective date of this Subpart, By October 31, 2006, the

Agency shall submit to USEPA the CAIR NO

x

Ozone Season allowance

allocations, in accordance with Sections 225.535 and 225.540 of this Subpart for

the 2009, 2010, and 2011 control periods.

8)

This amendment incorporates changes to when portions of the rule take effect resulting

from a later effective date for the rule.

Section 225.435

Methodology for Calculating Annual Allocations

b)

For control period 2012, the unit’s converted gross electrical output (CGO) shall

be:

1)

The unit’s two most recent years of control period gross electrical output,

if available; otherwise the unit’s most recent control period’s gross

electrical output. If the unit does not have gross electrical output, heat

input shall be used pursuant to subsection (b)(2) of this Section. If a

generator is served by two or more units, the gross electrical output of the

generator shall be attributed to each unit in proportion to the unit’s share

of the total control period heat input of such units for the control period.

The unit’s converted gross electrical output (CGO) shall be calculated as

follows:

A)

If the unit is coal-fired:

CGO (in MWh) = GO

×

MWh

×

1.0;

6

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

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B)

If the unit is oil-fired:

CGO (in MWh) = GO

×

MWh

×

0.6;

C)

If the unit is neither coal-fired nor oil-fired:

CGO (in MWh) = GO

×

MWh

×

0.4.

2)

If gross electrical output data is not provided to the Agency, heat input

(HI) shall be used. If the unit has two control periods of data, the average

of the unit’s heat inputs from the 2007 and 2008 control periods shall be

used. If the unit does not have heat input from the 2007 and 2008 control

periods, the heat input from the 2008 control period shall be used. The

unit’s converted gross electrical output (CGO) shall be calculated as

follows:

A)

If the unit is coal-fired:

CGO (in MWh) = HI (in mmBtu)

×

0.0967;

B)

If the unit is oil-fired:

CGO (in MWh) = HI (in mmBtu)

×

0.0580; or

C)

If the unit is neither coal-fired nor oil-fired:

CGO (in MWh) = HI (in mmBtu)

×

0.0387.

cb)

For control period 20132012 and thereafter, the unit’s gross electrical output shall

be the average of the unit’s two most recent years of control period gross

electrical output, if available; otherwise the unit’s most recent control period’s

gross electrical output . . .

dc)

For a unit that is a combustion turbine or boiler and has equipment used to

produce electricity and useful thermal energy for industrial, commercial, heating,

or cooling purposes through the sequential use of energy, the Agency shall add

the converted gross electrical output calculated for electricity pursuant to

subsections (a), (b) or (cb) of this Section …

ed)

The affected unit’s gross electrical output and converted useful thermal energy in

subsections (a)(1), (b),

(c) and (dc) of this Section ...

fe)

The affected unit’s heat input in subsection (a)(2) and (b)(2) of this Section for

7

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

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each control period shall be determined in accordance with 40 CFR 75, as

incorporated by reference in Section 225.140 of this Part.

9)

This amendment incorporates changes to when portions of the rule take effect resulting

from a later effective date for the rule.

Section 225.535

Methodology for Calculating Annual Allocations

b)

For control period 2012, the unit’s converted gross electrical output (CGO) shall

be:

1)

The unit’s two most recent years of control period gross electrical output,

if available; otherwise the unit’s most recent control period’s gross

electrical output. If the unit does not have gross electrical output, heat

input shall be used pursuant to subsection (b)(2) of this Section. If a

generator is served by two or more units, the gross electrical output of the

generator shall be attributed to each unit in proportion to the unit’s share

of the total control period heat input of such units for the control period.

The unit’s converted gross electrical output (CGO) shall be calculated as

follows:

A)

If the unit is coal-fired:

CGO (in MWh) = GO

×

MWh

×

1.0;

B)

If the unit is oil-fired:

CGO (in MWh) = GO

×

MWh

×

0.6;

C)

If the unit is neither coal-fired nor oil-fired:

CGO (in MWh) = GO

×

MWh

×

0.4.

2)

If gross electrical output data is not provided to the Agency, heat input

(HI) shall be used. If the unit has two control periods of data, the average

of the unit’s heat input’s from the 2007 and 2008 control periods, shall be

used. If the unit does not have heat input from the 2007 and 2008 control

periods, the heat input from the 2008 control period shall be used. The

unit’s converted gross electrical output (CGO) shall be calculated as

follows:

A)

If the unit is coal-fired:

CGO (in MWh) = HI (in mmBtu)

×

0.0967;

8

ELECTRONIC FILING, RECEIVED, CLERK'S OFFICE, OCTOBER 11, 2006

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