BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
IN THE MATTER OF :
PROPOSED NEW CAIR SO2, CAIR NO,,
ANNUAL AND CAIR NO,, OZONE SEASON
TRADING PROGRAMS, 35 ILL . ADM.
CODE 225, CONTROL OF EMISSIONS
FROM LARGE COMBUSTION SOURCES,
SUBPARTS A, C, D and E
STATC
Or
ILLINOIS
Pollution Control Board
R06-026
(Rulemaking - Air)
POST-HEARING COMMENTS OF AMEREN CORPORATION
Ameren Corporation ("Ameren"), by and through its attorneys, McGuireWoods
LLP, files these Post-Hearing Comments with regard to the above rulemaking
. Ameren
participated in all of the hearings on this matter and presented its own witness in support
of its position expressed below . In general, Ameren supports the Proposal filed by the
Agency as amended by the Amended Proposal filed on November 11, 2006 ("Amended
Proposal") but requests that the Board allow the use of Clean Air Act ("CASA")
allowances to support advanced Over Fire Air ("OFA") NOx reduction strategies and to
adopt the amendment proposed by Ameren in Attachment A to its testimony (Ameren
Exhibit 1).
Ameren supports the Board's adoption of the Agency's Amended Proposal for
First Notice
. The Proposal follows the national CAIR approach adopted by the USEPA
and will allow energy companies in Illinois to participate in the nationwide trading
program for NOx and SOx allowances as part of their compliance strategy
. The SO2
provisions accurately track the CAIR provisions, so that the USEPA and IEPA SO2
reduction program can be implemented seamlessly
. Ameren urges the Board to adopt
these rules to allow Illinois to proceed expeditiously through the SIP process
.
Ameren also supports the adoption of the CASA program for NOx reductions
. As
RECEIVED
CLERK'S OFFICE
AN
0 2007
stated in the testimony of Michael Menne (delivered by Steve Whitworth at the
November 29 hearing, and admitted as Ameren Exhibit 1), Ameren supports the IEPA in
establishing an innovative approach to promote important energy and environmental
goals
. Ameren believes that CASA represents a useful balancing of technology,
economic, energy and environmental considerations in achieving those goals . Ameren
views the CASA as an opportunity for generating companies which can organize their
projected activities to use CASA to meet their own objectives while working with the
IEPA to meet Governor Blagojevich's energy strategy
. Therefore Ameren views the
CASA as a "win- win" for energy companies to deliver efficient, reliable and clean
energy in concert with the goals of the Blagojevich administration .
In this regard, Ameren specifically requests the Board to adopt those portions of
the Amended Proposal which allow Ameren and other companies which seek to utilize
the Multi-Pollutant Strategy ("MPS")
to obtain CASA allowances . In Section
225.460(d)(2)(B) of the Amended Proposal, the Agency specifically identifies projects
undertaken to meet the MPS as eligible for credits, as an exception to the exclusion for
projects performed to meet state and federal legal requirements
. Jim Ross testified that it
was the Agency's intention to include MPS projects as eligible for allowances (October
30, T
. 48, 49) and the IEPA made this change in response to questions regarding this
language
. This change is consistent with Ameren's understanding of the Proposal and
should be adopted by the Board .
Similarly, Ameren asks the Board to adopt language proposed by the Agency also
in Section 225
.460(d)(3) that makes projects performed pursuant to consent decrees
entered into after the date the original proposal was filed eligible for CASA
. A party
which constructs the additional projects to reduce NOx
as contemplated by CASA, by
doing that work either earlier than required or obtaining additional reductions than
required should still be eligible for CASA allowances, even if that work is subsequently
required in a later entered consent decree
.
Ameren was specifically asked by Keith Harley from ELPC whether it had plans
to construct additional renewable energy facilities or energy efficiency projects and to
take advantage of CASA allowances identified for these activities . At this time, Ameren
has not finalized any plans either to construct renewable energy facilities or energy
efficiency projects or to seek allowances for them if they choose to perform these types
of projects . Should Ameren proceed with such projects it would probably seek such
CASA allowances as are provided under these rules .
Ameren respectfully suggests however that the Board should consider Ameren's
position that advanced OFA projects should be eligible for CASA allowances. Sections
225 .460(c)(1) and 225.560(c) specifically exclude "overfired air techniques" from the list
of projects eligible for CASA clean technology allowances
. Ameren included as
Attachment B to its testimony (Ameren Exhibit 1) a proposal to make eligible projects
which provide advanced OFA to achieve at least a 30% reduction of the baseline NOx, or
OFA projects which are included as part of a comprehensive NOx reduction strategy with
other technologies listed in the section . Ameren believes that it has justified this proposed
change and that it should be adopted .
The Agency's basis for not including this proposal in its Amended Proposal is
based almost entirely on policy rather than technical grounds
. In response to questions on
this issue, Jim Ross testified that the Agency excluded OFA because it was not expected
to be as effective as the listed technologies in reducing NOx and because it was not as
capital intensive as the listed technologies
. (October 11 T
. 60-64) . Mr. Ross indicated that
the Agency wanted to preserve the allowances to provide incentives for higher cost
technologies which may not otherwise be economical in the absence of such allowances .
Mr. Ross did state that the Agency would continue to evaluate the issue during the
hearings and did not close the door on any revisions .
Ameren believes that it addressed these objections in its testimony and justified
the proposed revisions . Steve Whitworth testified extensively in support of Ameren's
OFA position (November 29 T. 73-132) . He described how OFA works and the
differences between advanced OFA and first generation OFA . He further described the
results that Ameren had been able to achieve at several of their Missouri facilities and
that a suite of OFA technologies could achieve results similar to the 30% reductions
which the Agency expected for SNCR. Mr
. Whitworth farther testified that OFA had
none of the potential environmental downsides of SNCR
. Prominently among these, it did
not require the storage of reagents such as ammonia or urea
. More importantly, even
advanced OFA would be less costly to install and operate than SNCR and therefore could
result in more cost effective reductions of NOx .
From a policy standpoint, the only issue should be whether, as Mr
. Whitworth
testified, NOx reductions can be achieved
. Substantial NOx reductions achieved cost
effectively benefits the entire process
. Given a choice between two essentially equal
technologies to achieve NOx goals, companies should not be given incentives to choose
the higher cost technology simply because allowance credits may be available
. While the
Agency's goal of preserving credits to help companies pay for higher cost items is
laudable, the Agency presented no evidence that the use of allowances for advanced OFA
would significantly diminish the available pool or, more importantly that it would lessen
the total NOx reductions achieved by use of credited allowances
.
The Agency questioned whether allowances should be available for advanced
OFA if the cost of installing OFA is less than the cost of purchasing allowances
. Yet, the
Agency's implied argument is without support
. First, the cost of allowances has dropped
significantly and with a current market value of around $850 for 2007 vintage NOx
Budget Trading program allowances rather than the $1,500 per ton suggested by the
IEPA. Secondly the costs of advanced OFA controls are estimated to be in a range of
$30/kw to $95kw depending on generating unit size and configuration . Based on
budgetary estimates the capital cost of installing advanced OFA controls would range
from $8 to $10 million for units with capacities of 80 to 350 MW . Ameren estimates that
NOx emissions can be reduced by 40 to 50% with advanced OFA controls .
Ameren's proposed language, included as Attachment B to Ameren Exhibit 1 is
designed to create a narrow and limited eligibility for OFA projects . First, such projects
can only be eligible if they achieve 30% reductions . This number was chosen to represent
a clear dividing line between first generation OFA and advanced OFA and also represents
the level at which advanced OFA becomes directly comparable to SNCR and distinct
from the first generation OFA which is utilized at some facilities in Illinois .
Secondly such projects could be eligible if they were part of a phased NOx
control program which includes an advanced computerized combustion control system or
a NOx control reduction strategy already identified as eligible under Sections 225 .460(c)
and 225.560(c) . The idea of a phased NOx control program is necessary to avoid
potential disincentives to rationally staged NOx control strategies
. As discussed in
Ameren's filed testimony (Ameren Exhibit 1, P . 7) the installation of OFA before an
approved NOx reduction control strategy would have the effect of raising the baseline for
the approved strategy and thus reducing the allowances for which such a strategy would
be eligible
. Under Ameren's proposal, a company could propose to group or phase NOx
control strategies and base its allowance request on the reductions obtained by the whole
system
. This would include both reductions obtained by the first elements in that phased
reduction approach and total reductions obtained by the entire process
.
In conclusion, Ameren believes that the Board should adopt the Agency's
Amended Proposal for First Notice but also include Ameren's proposed amendments for
Section 225 .460(c) and 225
.560(c) . As always, Ameren appreciates the opportunity to
participate in these hearings and to present these comments to the Board
.
RESPECTFULLY SUBMITTED
AMEREN CORPORATION
David L. Rieser
James T
. Harrington
Jeremy Hojnicki
MCGUIREWOODS LLP
77 W
. Wacker Drive
Chicago, IL 60601
312-849-8100
n f its At
BEFORE THE ILLINOIS POLLUTION CONTROL BOARD
IN THE MATTER OF :
PROPOSED NEW CAIR 502
,
CAIR NO,
ANNUAL AND CAIR NO,, OZONE SEASON
TRADING PROGRAMS, 35 ILL. ADM.
CODE 225, CONTROL OF EMISSIONS
FROM LARGE COMBUSTION SOURCES,
SUBPARTS A, C, D and E
R06-026
(Rulemaking - Air)
Pollution
STATE OF
Cont
IL
NOTICE OF FILING
TO: Those Individuals as Listed on attached Certificate of Service
Please take notice that on January 5, 2007 the undersigned caused to be filed with the
Clerk of the Illinois Pollution Control Board the attached Post-Hearing Comments of
Ameren Corporation, a copy of which is herewith served upon you
.
Dated this 05` x' day of January, 2007 .
Respectfully submitted,
James T
. Harrington
David L . Rieser
Jeremy R. Hojnicki
Attorneys for Petitioners
McGuireWoods LLP
77 West Wacker, Suite 4100
Chicago, Illinois 60601
Telephone: 312/849-8100
AMEREN ENERGY GENERATING COMPANY
AMERENENERGY RESOURCES GENERATING
COMPANY
ELECTRIC ENERGY
By:
RECEIVED
CLERK'S OFFICE
JAN 0 5 2007
LINOISof
Board
CERTIFICATE OF SERVICE
The undersigned, one of the attorneys for Petitioners, hereby certifies that
I served a copy of the attached
document, Post-Hearing Comments of Ameren Corporation, upon those listed below on January
5, 2007 via First Class
United States Mail, postage prepaid .
John J . Kim
Rachel L . Doctors
Illinois Environmental Protection Agency
Division of Legal Counsel
1021 North Grand Avenue East
Post Office Box 19276
Springfield, IL 62794-9276
Ms . Dorothy Gunn, Clerk
Illinois Pollution Control Board
James R . Thompson Center
100 West Randolph Street, Suite 11-500
Chicago, IL 60601
Sasha M . Reyes
Steven J . Murawski
Baker & McKenzie
One Prudential Plaza, Suite 3500
130 East Randolph Drive
Chicago, IL 60601
William A . Murray
City of Springfield
Office of Public Utilities
800 East Monroe, 4th Floor
Municipal Building East
Springfield, IL 62757
Sheldon A . Zabel
Kathleen C
. Bassi
Steven Bonebrake
Schiff Hardin LLP
6600 Sears Tower, 233 South Wacker Drive
Chicago, IL 60606
Faith E . Bugel
Environmental Law and Policy Center
35 East Wacker Drive, Suite 1300
Chicago, IL 60601
Matthew J
. Dunn, Division Chief
Office of the Attorney General
Environmental Bureau
188 West Randolph, 20` s Floor
Chicago, IL 60601
Keith I . Harley
Chicago Legal Clinic, Inc .
205 West Monroe Street, 4 th Floor
Chicago, IL 60606
Virginia Yang, Deputy Legal Counsel
Illinois Department of Natural Resources
One Natural Resources Way
Springfield, IL 62702
Daniel McDevitt
Midwest Generation
440 South LaSalle Street, Suite 3500
Chicago, IL 60605
S
. David Farris, Manager
Environmental, Health and Safety
City of Springfield, Office of Public Utilities
201 East Lake Shore Drive
Springfield, IL 62757
John Knittle, Hearing Officer
Illinois Pollution Control Board
James R
. Thompson Center
100 West Randolph, Suite 11-500
Chicago, IL 60601-3218
Bill S . Forcade
Katherine M . Rahill
Jenner & Block
One IBM Plaza, 40th Floor
Chicago, IL 60611
Bruce Nilles, Attorney
Sierra Club
122 West Washington Avenue
Suite 830
Madison, WI 53703
Cary R. Perlman
Karl King
Andrea M
. Hogan
Latham & Watkins
233 South Wacker Drive, Suite 5800
Chicago, IL 60606
James T. Harrington
David L . Rieser
Jeremy R
. Hojnicki
McGuireWoods LLP
77 West Wacker, Suite 4100
Chicago, Illinois 60601
Telephone: 312/849-8100
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