Adopted Part 246, Mercury Reduction Program for Coal-Fired Electric Utility Steam Generating Units - Revised Regulatory Flexibility Analysis for Small Businesses and Local Governments
Proposed 6 NYCRR Part 246, Mercury Reduction Program for Coal-Fired Electric Utility Steam Generating Units and 6 NYCRR Part 200.9, Referenced Material
The Department is proposing to adopt 6 NYCRR Part 246 which will require coal-fired electric utility steam generating facilities above a certain size threshold to control emissions of mercury. New York currently has two cogeneration facilities and thirteen coal-fired electric utility steam generating facilities, two of which are on cold standby and have not operated since October 2000. The facilities have electric generation capacities per plant ranging from 50 MW to 800 MW. One of these coal-fired facilities is owned by a local government, the Samuel A Carlson Generating Station owned by the Jamestown Board of Public Utilities. None of the facilities is owned or operated by a small business. As discussed in more detail below, and in the other rulemaking documents, the adoption of Part 246 is not expected to result in increases in electricity prices to consumers. The adoption of Part 246 will therefore not have an adverse impact on small businesses and/or local governments.
For the thirteen operating facilities to achieve compliance with the proposed regulation emission limits, the Department envisions two options for mercury control devices. The owner of a facility with an existing cold-side electrostatic precipitator (ESP) for particulate control may select the addition of a powdered activated carbon injection unit to work with the existing cold-side ESP or may choose to utilize a fabric filter baghouse to work in conjunction with a powdered activated carbon injection unit. Facilities installing control systems for the purpose of controlling SO2 or NOx for the Clean Air Interstate Rule (CAIR) may realize mercury reductions at their facility as a co-benefit. Those co-benefit control systems may require some modification to achieve the year 2015, Phase II, level of control required in Part 246.
The Department will utilize the CAMR emission budgets to set facility-wide annual emission limitations in the first phase and a traditional unit level emission rate limit based program in the second phase. In 2010, Phase I, Part 246 establishes annual facility-wide emission limitations based on the New York State trading budget identified in 40 CFR 60.4140. Unlike CAMR, Part 246 will not allow mercury allowance trading between applicable coal-fired utility units in New York State or with units outside of New York State. The annual facility-wide emission limitation will be in effect from 2010 to 2014. In 2015 - Phase II, in conjunction with other electric sector regulations such as the Regional Greenhouse Gas Initiative (RGGI) and the second phase of the CAIR, establishes a facility average mercury emission rate at each facility representing a 90 percent overall State reduction of mercury emissions from 2005 levels. Part 246, will be submitted to EPA for approval as the State's mercury control plan in lieu of adopting CAMR.
Effect of Rule
Part 246 regulates private and public electric generating utilities and will not have any significant adverse impact on small businesses directly. The Department in coordination with the New York State Energy Research Authority (NYSERDA) estimates that the majority of cost passed on to the consumer in the form of electricity price increases, including small businesses, of the two rules, the federal Clean Air Interstate Rule (CAIR) and the New York State mercury rule, will be from CAIR. There is virtually no retail or wholesale electricity cost impact from the implementation of the proposed mercury rule. The modeled impact on the average New York wholesale electricity price resulting from the mercury proposal without CAIR is predicted to be $0.003/MWh or about 0.01 percent. It is important to recognize that the estimated impacts on wholesale electricity prices are not directly related to the implementation costs incurred by the affected generator owners, because coal generators generally do not set the marginal market price of electricity. The day-ahead and hour-ahead marginal market prices are more commonly set by those facilities utilizing fuels other than coal to generate electricity. Electric generation at those facilities is more costly primarily because of fuel cost. NYSERDA estimates the Department's proposed Part 246 will not be more costly than the federally mandated CAMR.
The one municipally owned electric generating facility affected by Part 246 is the Samuel A. Carlson generating Station in Jamestown, NY, Chautauqua County. All electric generators, including Jamestown Power, will experience a small increase in the cost of electric generation due to the adoption of Part 246 which will directly reduce the operating margin of the affected units1.
Compliance Requirements
Facilities subject to Part 246 will have to achieve compliance with the annual facility-wide emission limitations during Phase I and meet emission rate requirements in Phase II. In addition, Mercury Reduction Program facilities (facilities) will be subject to recordkeeping and reporting requirements. The recordkeeping and reporting requirements imposed by Part 246 are mandated under the federal Clean Air Mercury Rule and are necessary to receive approval from the Administrator. Thus, these requirements would apply whether the Department adopted CAMR or Part 246.
Section 246.8, "Monitoring and Reporting," requires facilities to install a continuous monitoring system, a continuous emission monitoring systems (CEMS) or sorbent trap monitoring system (STMS), to measure and record the mass of total mercury. This section also acknowledges an excepted monitoring methodology allowing facilities to deviate from continuous monitoring system requirement. This excepted monitoring methodology is available to those facilities that can qualify as low mercury mass emitters as identified in 40 CFR 75.81(b). EPA has adopted an annual mass of 464 ounces (29 lb) of mercury emitted per year as the qualifying low mass emission threshold. Section 246.9, "Initial Monitoring Certification and Recertification Procedures," requires facilities to certify continuous emissions monitoring systems and any excepted sorbent trap monitoring system. Section, 246.12, "Recordkeeping and Reporting," requires all facilities to submit reports detailing monitoring plans, certification and recertification plans, and quarterly reports to the Department and the Administrator.
Professional Services
Each coal-fired steam generating facility is unique in setup and site layout and requires site specific considerations in the planning, design, construction, and installation of an air pollution control device. The professional services that Jamestown Power will require will consist of engineering services from an environmental consulting firm and one or more vendors of pollution control equipment. In order to reduce the burden to the regulated community of complying with Part 246, CAIR, and RGGI, the department has coordinated the implementation of Part 246 with the other rules. All three rules have common implementation dates, enabling facilities to more effectively schedule construction timeframes and outage periods for the implementation of pollution control systems. Some control systems may provide a co-benefit control for emissions of sulfur dioxide, oxides of nitrogen, and mercury. Thus, mercury emissions can be reduced with the same pollution control technology that may be installed for the reduction of sulfur dioxide, particulate matter, and oxides of nitrogen.
Compliance Costs:
The future actual costs of regulating mercury emissions from the electric generating utility sector are directly related to the costs of installing and operating additional pollution control devices, and are determined on a case-by-case basis. Jamestown Power's Samuel A. Carlson Generating Station, a municipally owned electric generating facility, operates four boilers in total, which are divided into two emission units; emission unit U-00003 contains boilers No.9 and No.12 (rated at 190 and 297 MMBtu/hr, respectively) exiting to a single stack, emission point 00003. U-00004 contains boilers No.10 and No.11 (each rated at 190 MMBtu/hr), exiting to a single stack, emission point 00004. The facility exhausts flue gas through one stack per generator for a total of two stacks. Taking for example the installation an activated carbon injection system and use of an enhanced activated carbon at an insufflation rate of three lb carbon/MMACF, electric use to operate any additional pollution control equipment and operating costs in addition to reagent materials and land filling of additional fly ash; the installation would have an associated incremental cost of generation (implementation cost) in the range of 0.23 to 0.63 mills/kWh. The facility would also be required to install, operate, and maintain a continuous monitoring system to measure and record mercury mass emissions, unless it qualifies as a low mass emitter and can implement an the excepted monitoring methodology as previously discussed. Based upon Staff discussions and interviews with mercury emissions monitoring companies, the Department estimates that the purchase and installation of a mercury monitoring system is currently in the range of $130,000 to $200,000 per unit. An annualized cost per monitoring unit is predicted by EPA to be on the order of $89,500 per year for testing, maintenance, and operation2. Although increases may be minimal, the on-site cost of installing, operating, and maintaining mercury emission control equipment would directly increase the cost of generation associated with the Mercury Reduction Program units3.
Economic and Technological Feasibility
For the Samuel A. Carlson Generating Station to achieve compliance with Part 246's emission limitations, the Department envisions two options for mercury emission control systems. Based on Staff research, a facility with an existing cold-side ESP for particulate control will select one of the following options: (1) the addition of a powdered activated carbon injection unit to work in series with an existing cold-side electrostatic precipitator; or (2) the installation of a fabric filter baghouse following the existing ESP, or a fabric filter baghouse replacing the existing cold-side ESP, working in conjunction with a powdered activated carbon injection unit. Facilities not requiring additional add-on control devices would be those already equipped with wet flue gas desulfurization systems (wet scrubbers), which in conjunction with the cold side ESPs, may demonstrate a near equivalent degree of control as a pulse jet fabric filter baghouse in combination with an activated carbon injection system. Jamestown may decide to install a wet scrubber or a dry lime injection system with fabric filtration for particulate capture for the control of sulfur dioxide to meet its obligations under CAIR and realize a co-benefit of mercury emission reductions. A future addition of an oxidizing catalyst or precipitant additive may be required if Jamestown installs wet scrubbers to promote further oxidation of elemental mercury with subsequent precipitation yielding greater capture and control.
The information used to determine costs to the affected industries is based upon the Department of Energy's National Energy Technology Laboratory (DOE/NETL). DOE/NETL have conducted over 20 pilot studies involving slip stream tests and full scale tests involving many innovative technologies to determine mercury control4 and have determined that mercury control is economically and technically feasible.
6. Minimizing Adverse Impacts
Although the promulgation of Part 246 may result in a modest increase in the cost of electric generation, this cost is not expected to impact small business generators since none of the 13 facilities subject to the rule are owned by small businesses. Only one local government owned facility is subject to the rule. Part 246 does offer options for regulatory flexibility which will minimize the impact of installing pollution control equipment. During Phase I of the rule, facilities can choose which units to control to meet the facility-wide cap, enabling them to target the most economically feasible units. Phase one also allows facilities to realize a mercury emission reduction co-benefit through the installation of control devices for CAIR. Although a cap-and-trade program structure is feasible for other pollutants with different transport qualities, that are emitted in great quantities (i.e. tons), and that are produced by many fuel burning facilities involving all fuels, mercury is emitted in pounds an often measured in increments as low as ounces. The Department believes that the administrative expenses associated with a mercury cap-and-trade program could result in increased costs to both electric generators and consumers of electricity beyond costs projected for the implementation of Part 246.
The Department and NYSERDA have conducted an electricity system modeling analysis to estimate the incremental cost on the price of electricity realized through the implementation of the Clean Air Interstate Rule (CAIR) and a mercury rule in New York. Inputs to the modeling analysis included capital costs per kilowatt produced ($/kW), fixed operation and maintenance costs, and variable operation and maintenance costs. Model inputs were developed through use of the CUECost model5. The CUECost economic analysis workbook is a Y2K-compliant system designed to produce study level cost estimates (+30 percent/-30 percent accuracy) of the installed capital and annualized operating costs for air pollution control systems installed on coal-fired power plants to control sulfur dioxide, nitrogen oxides, and particulate matter. The workbook is capable of calculating estimates of an integrated air pollution control system or individual component costs for various air pollution control technologies currently used in the utility industry6.
The Department in coordination with NYSERDA compared a reference or business-as-usual case (absent either CAIR or a mercury control program) to each of three policy cases: New York's proposed approach for implementing both CAIR and a mercury control program, CAIR only, and mercury only. CAIR and Mercury policies (implemented together, as proposed) could increase wholesale electricity prices by an average of 1.7 percent or $1.14 per MWh over the 2010 to 2020 timeframe. For a typical residential customer (using 750 kWh per month), this translates into a monthly retail bill increase of $0.86. Model runs assuming CAIR only (i.e., without a mercury control program) and mercury only control program (i.e., without CAIR) indicate that virtually the entire incremental electricity price impact of implementing CAIR and a mercury rule together is due to CAIR. There is virtually no incremental electricity price impact due to mercury control in conjunction with sulfur and NOx CAIR program7.
In satisfying the requirements of section 202-b for minimizing adverse impacts for small business, the requirements of the State Administrative Procedures Act (SAPA) require that each proposal address the following:
* Establishment of differing compliance or reporting times. The compliance and reporting times are established in CAMR and States are required to implement CAMR or other mercury control programs which meet these requirements. Even if New York did not adopt Part 246, CAMR would apply and the facilities subject to part 246 would be subject to the requirements of CAMR.
* Use of performance rather than design standards. Part 246 is based on performance standards. Part 246 requires a specific level of reduction in mercury emissions but does not dictate what control strategies facilities must implement to achieve those reductions. The Department ruled out the possibility of the federal cap-and-trade program as a performance option due to the public health consequences of allowing mercury pollution credits to be sold upwind of current ecological hotspots such as the Western Adirondacks.
Exemption from coverage by the rule for small business and local governments. CAMR dictates what facilities are subject to mercury control. The Department cannot alter the applicability of requirements found in CAMR without losing the parity required by the EPA Administrator.
Small Business and Local Government
The Department will directly notify interested parties on the requirements of Part 246, including the City of Jamestown. By law, the public, including small business and local governments will be able to comment on the proposed rule under the mandatory 30-day noticing of all Department regulations.
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Footnotes
1 Modeling results for CAIR and Mercury, New York State Energy Research and Development Authority - NYSERDA, May 18, 2006
2 Federal Register / Vol. 70, No. 95 / Wednesday, May 18, 2005 / Rules and Regulations, pp 28634
3 Modeling results for CAIR and Mercury, NYS DEC and the New York State Energy Research and Development Authority - NYSERDA, May 18, 2006
4 USDOE/NETL, Preliminary Cost Estimate of Activated Carbon Injection for Controlling Mercury Emissions from a Un-Scrubbed 500 MW Coal-Fired Power Plant, prepared by Science International Corporation, May 2003
5 CUECost - Coal Utility Environmental Cost Model, developed for EPA by Raytheon Engineers & Constructors and Eastern Research Group, Version 1, November 25, 1998 (revised 2-9-00 as CUECost 3.xls)
6 cuecost.txt, version 2-9-00
7 NYSDEC, NYSERDA, and ICF International, Modeling Results for CAIR and Mercury. May 18, 2006
