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Parts 222, 200 and Subpart 227-2 Revised Regulatory Impact Statement Summary

Distributed generation (DG) sources are engines used by a site to supply electricity outside that which is supplied by the electrical grid. This on-site generation of electricity by DG sources is used by a wide-range of facilities either in non-emergency situations that reduce demand on the electric grid and preserve the overall reliability of the grid, or in emergency situations when the usual supply of power from central station power plants becomes unavailable. Currently, the exact number of DG sources in New York is unknown, but the Northeast States for Coordinated Air Use Management (NESCAUM) estimated that there may be over 15,000 diesel generators in the state,1 which provide electricity in times of high demand or during emergency events.

Therefore, the Department of Environmental Conservation (Department) is proposing to adopt 6 NYCRR Part 222, 'Distributed Generation Sources' and make conforming revisions to Part 200, 'General Provisions' and Subpart 227-2, 'Reasonably Available Control Technology (RACT) for Oxides of Nitrogen (NOx)' to establish emission standards, monitoring requirements and record keeping requirements for certain DG sources in New York State. The proposed rule will apply to DG sources not currently regulated under Subpart 227-2 or a federal New Source Performance Standard (NSPS), as long as the federal standards are less than or equal to the Part 222 emission limits.

The statutory authority to promulgate Part 222 and the revise 6 NYCRR Part 200 and Subpart 227-2 is found in the New York Environmental Conservation Law (ECL), Sections 1-0101, 3-0301, 19-0103, 19-0105, 19-0301, 19-0303, 19-0305, 19-0311, 71-2103 and 71-2105.

As required by the New York State Administrative Procedures Act (SAPA), a Regulatory Impact Statement (RIS) is being submitted with this rulemaking package and sets forth, among other things, the Department's reasoning for this rulemaking, costs for complying with the rule, and a summary of considered alternatives to this rulemaking. A summary of the RIS is presented below.

I. Needs and Benefits

The Department is proposing to adopt Part 222 to reduce NOx emissions from DG sources, thereby helping New York attain the federal 2008 and 2015 ozone National Ambient Air Quality Standard (NAAQS) and protect human health and welfare. In particular, the proposed rule is a critical component in the state's ability to meet the federal 2008 and 2015 ozone NAAQS in the New York City metropolitan area (NYMA), which is currently designated as non-attainment for ozone. The increased utilization of certain DG sources, especially uncontrolled diesel-fired generators, has made it increasingly difficult for the state to comply with the 2008 and 2015 ozone NAAQS. This proposed rule will address attainment of the 2008 and 2015 ozone NAAQS as well as the public health impacts of NOx and PM, pollutants emitted by DG sources. In addition, NYMA is currently meeting the PM2.5 NAAQS, but only by a small margin. The PM controls in the proposed rule will help ensure that NYMA continues to meet the standard.

For purposes of determining which DG sources are subject to the emission limits under proposed Part 222, the Department divided DG sources into two primary regulatory classifications: emergency power generating stationary reciprocating internal combustion engines ("emergency generators") and economic dispatch sources. Emergency generators, defined in 6 NYCRR 200.1(cq), are not subject to the proposed emission limits. Economic dispatch sources are subject to the proposed emissions limits.

Economic dispatch sources are defined in proposed Part 222 as DG sources used to reduce energy costs or ensure reliable electricity for a facility. Any DG source that is not exclusively an emergency generator, is considered to be an economic dispatch source for purposes of the rule, including CHP systems and DG sources enrolled in demand response programs. Generally, economic dispatch sources are used in two ways: peak load generation; and base load generation. Peak load generation is used during times when the cost of electricity supplied by utilities is high. Alternatively, base load generation systems are designed to provide all or a portion of the electricity demand for a facility throughout the year.

DG sources enrolled in demand response programs are typically uncontrolled emergency generators that operate when called upon by a sponsoring organization to reduce demand on the electric grid, thus preserving the reliability of the grid. These sources are typically used on high electric demand days, which generally correspond to days with high ground-level ozone concentrations. Demand response programs are sponsored by the New York Independent System Operator (NYISO), Long Island Power Authority (LIPA), New York Power Authority (NYPA) and Consolidated Edison Company of New York (Con Edison). According to a NYISO filing, DG resources comprised approximately 13 percent of the total capacity enrolled in the NYISO programs in May 2011.2 The remainder of demand response resources consisted of curtailment and load shifting resources. Facilities enrolled in demand response programs receive revenue from the program sponsors for guaranteeing load reductions (kW) or for electricity generated and/or curtailed (kWh).

The total capacity of the DG sources enrolled in the NYISO demand response programs in the New York City metropolitan area was 134.7 MW in May 2011. The average duration of a demand response event is approximately six (6) hours. Assuming all of these DG sources operate during a typical event, these sources would emit approximately 13 tons of NOx per event. This estimate does not include emissions from generation sources enrolled in demand response programs sponsored by Con Edison, NYPA or LIPA. The NOx emissions estimate for DG sources enrolled in NYISO's demand response programs would be reduced to 2.7 tons per day if the sources were required to meet the proposed NOx emission standard. Since demand response programs are typically activated on high ozone days, a 10 ton per day reduction in emissions from these sources is a step towards attaining the 2008 and 2015 ozone NAAQS.

Further, the New York City Energy Policy Task Force estimated that the total capacity of emergency generators in New York City was 1,320 MW.3 Potentially, all of these emergency generators could be enrolled in demand response programs.4 If this estimate is accurate and all such sources are used as demand response sources, the estimated daily NOx emissions would be more than 127 tons. It would be very difficult to develop a regulatory strategy to bring the NYMA into attainment with the 2008 and 2015 ozone NAAQS if all emergency generators in New York City were allowed to participate in demand response programs without requiring pollution controls.

DG sources have short stacks, which means the exhaust plumes are not dispersed as effectively as plumes from central station power plants. Therefore, emissions from DG sources can have a greater impact on populations living and working in the vicinity of the sources. DG sources emit NOx, a precursor to ground-level ozone, which can irritate lung tissues and cause symptoms such as coughing, wheezing and difficulty breathing.5 Additionally, chronic exposure to ground-level ozone may cause permanent lung damage.6 DG sources also emit PM which has been linked to adverse health impacts including aggravated asthma, decreased lung function, irregular heartbeat and heart attacks.7

DG sources should be subject to emission standards to reduce public health impacts since these sources displace the electricity traditionally generated by central station power plants which are subject to strict emission limits. The reliance on demand response programs is a disincentive for building new central station power plants since the electricity generated during demand response events is necessary to maintain the integrity of the grid.

Therefore, the NOx and PM emission limits established for DG sources in this proposed rule will help reduce public health impacts, especially for individuals living and working near them, and the reduction in ground-level ozone from the proposed NOx limits will help the state attain the federal 2008 and 2015 ozone NAAQS.

II. Compliance Requirements

On the effective date of this rule, Part 222 will apply to DG sources that meet the following applicability thresholds:

  1. Mechanical output rating of 200 horsepower (hp) or greater for DG sources located in the NYMA; and
  2. Mechanical output rating of 400 hp or greater for sources located outside of the NYMA.

Emergency generators owned by municipalities or municipal agencies may by operated in cases where the usual supply of electricity is still available if such operation would prevent a violation of the Clean Water Act or Article 17 of the ECL through April 30, 2021. This would allow such generators to run in order to prevent direct sewage discharges to waterways in the state, while giving municipalities time to control emissions from their emergency generators. Beginning May 1, 2021, such sources would be required to meet the standards set forth in Section 222.4 of Part 222 or be replaced with engines meeting standards adopted by the United States Environmental Protection Agency.

On May 1, 2017, the following NOx emission limits will apply to economic dispatch sources subject to Part 222:

  • natural gas-fired simple cycle combustion turbines: 50 parts per million by volume on a dry basis (ppmvd) corrected to 15 percent O2;
  • oil-fired simple cycle combustion turbines: 100 ppmvd corrected to 15 percent O2;
  • natural gas-fired combined cycle combustion turbines: 25 ppmvd corrected to 15 percent O2;
  • oil-fired combined cycle combustion turbines: 42 ppmvd corrected to 15 percent O2;
  • natural gas-fired engines: 1.5 grams per brake horsepower-hour (g/bhp-h);
  • diesel-fired engines: 2.3 g/bhp-h

Also on May 1, 2017, diesel-fired economic dispatch sources must meet a PM emission limit of 0.30 g/bhp-h, or be equipped with a pollution control device designed to remove 85 percent or more of PM from the exhaust stream. Part 222 compliance requirements are further described in the RIS.

III. Costs

Selective catalytic reduction (SCR) systems can reduce the NOx emissions from lean-burn natural gas fired-engines and diesel-fired engines by up to 90 percent.8 The capital cost (installed) of SCR control systems range from $188,000 (1200 hp engine) to $304,000 (2000 hp engine).

The Department evaluated the costs for operating SCR systems under a wide range of scenarios over a 10-year period. Control costs of $5,000 per ton of NOx reduced are considered reasonable under Subpart 227-2. For pre-NSPS engines, the cost per ton of NOx reduced would be less than $5,000 for sources operating 1,500 hours per year or more. For post-NSPS engines, the $5,000 per ton threshold would be met when operating 3,000 hours per year or more. Therefore, in the opinion of the Department, the costs to operate SCR systems are reasonable.

Non-selective catalytic reduction (NSCR) systems can reduce the NOx emissions from rich-burn natural gas fired-engines engines by up to 98 percent.9 The capital cost (installed) of NSCR control systems range from $53,000 (1200 hp engine) to $83,000 (2000 hp engine). The cost per ton of NOx reduced is less than $5,000 when operating more than 200 hours per year.

'Compliance Testing'

The emission testing costs are estimated to be $8,000 (NOx only) to $15,000 (NOx and PM) per source10. Emission testing must be performed once every ten years. Emission testing for PM is not required for engines equipped with pollution control devices verified by the California Air Resources Board (CARB) as meeting the Level 3 or Level 3 Plus Classification per the California Code of Regulations, Title 13, Sections 2700-2711.

'Alternative Compliance Options'

There are five alternative compliance options for owners or operators of economic dispatch sources set forth in Section 222.5 of Part 222. These options include source-specific emission rates in cases where it is economically or technically infeasible to meet the NOx standard; additional time to permanently shut down a DG source; converting a diesel-fired economic dispatch source to fire natural gas; and a credit for using a renewable generation system (photovoltaic or wind generation systems). A one-year extension of the compliance date for sources enrolled in demand response programs established to maintain reliability of the electric grid is included in the rule. This provision is limited to DG sources enrolled in demand response programs in 2014 or 2015.

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1 "Stationary Diesel Engines in the Northeast: An Initial Assessment of the Regional Population, Control Technology Options and Air Quality Policy Issues", NESCAUM, June 2003, pg. 26.
2 "Semi-Annual Compliance Report of Demand Response Programs", New York Independent System Operator, June 1, 2011.
3 "New York City Energy Policy: An Electricity Resource Roadmap", New York City Energy Policy Task Force, January 2004, page 32.
4 At which point such sources would no longer be considered emergency generators.
5 "Health Effects", EPA (www.epa.gov/airquality/ozonepollution/health.html)
6 Ibid.
7 United States Environmental Protection Agency, www.epa.gov/pm/health.html
8 "NOx Control for Stationary Gas Engines", Wilson Chu (Johnson-Matthey), Advances in Air Pollution Control Technology, MARAMA Workshop, May 19, 2011.
9 "NOx Control for Stationary Gas Engines", Wilson Chu (Johnson-Matthey), Advances in Air Pollution Control Technology, MARAMA Workshop, May 19, 2011.
10 Stack testing costs are based upon an informal Department survey of several stack testing companies.


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