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Proposed Subpart 227-3 Regulatory Flexibility Analysis for Small Businesses and Local Governments

The New York State Department of Environmental Conservation (DEC) is proposing new 6 NYCRR Subpart 227-3, "Ozone Season Oxides of Nitrogen (NOx) Emission Limits for Simple Cycle and Regenerative Combustion Turbines." The primary goal of this proposal is to lower allowable NOx emission rates from simple cycle and regenerative combustion turbines (SCCTs) during the ozone season.

Effect of Rule

DEC does not expect the requirements of this proposal to adversely impact employment opportunities with small businesses. Businesses and local governments subject to this proposed rule generate electricity that is injected into the electrical grid and those facilities are required to maintain generation compliant with reliability rules at the federal and state level. The facilities subject to the proposed rule are mostly large businesses and corporations.

The proposed regulation does not contain a mandate on local governments. Local governments have no additional compliance obligations. There are two SCCTs that are owned by local governments that are listed in the table below. While these sources will be subject to the requirements of this proposal, they already comply with the lower NOx rates and so no changes will be required of the facilities. While the two sources will be required to submit compliance plans, as outlined below, their plan requirements are simplified because they already comply with the emissions limits.

Facility Local Government
Freeport Village of Freeport
SA Carlson Town of Jamestown

Table 1: Local Governments Subject to the Proposed Rule

Compliance Requirements

On or before March 2, 2020: All impacted sources must submit a compliance plan that must, at minimum, contain:

  • Nameplate capacity;
  • Ownership;
  • A list of each emission source that includes identifying numbers such as facility number, source number and name;
  • A schedule outlining how the owner or operator will comply with the requirements set forth in the rule;
  • Which emission sources will install controls and what those controls will be; and
  • Which emission sources will be replaced or repowered.

Effective May 1, 2023: The first phase of NOx emission limits will be implemented during the ozone season and SCCTs will be limited to averaging with other SCCTs, storage or renewable energy resources. The first phase of emission limits will be:

By May 1, 2023
NOx Emission Limit
(ppmvd1)
All simple cycle and regenerative combustion turbines 100

Table 2: NOx emission limits for SCCTs beginning 5/1/2023

Effective May 1, 2025: The second and final phase of NOx emission limits will be implemented during the ozone season as follows:

Beginning May 1, 2025
Fuel Type NOx Emission Limit
(ppmvd)
Gaseous fuels 25
Distillate oil or other liquid fuel 42

Table 3: NOx emission limits for SCCTs beginning 5/1/2025

Professional Services

It is not expected that small businesses or local governments are likely to need professional services to comply with this rule. If an affected source currently utilizes professional services, such as consulting engineers, to comply with 6 NYCRR Subpart 227-2, they may continue to use those services to comply with the requirements of this proposal.

Compliance Costs

Compliance costs discussed below are expected to impact larger power generation businesses, not small businesses or local governments. Discussion on the compliance costs to large generation businesses follows.

DEC is proposing to require each source owner to develop a compliance plan to demonstrate how they intend to comply with the proposed rule. The SCCTs installed prior to 1986 are typically not conducive to the addition of retrofit control technology. As a result, DEC expects that most impacted SCCT owners will choose to replace or shutdown the non-compliant SCCTs. To estimate replacement costs DEC looked to information provided by the NYISO and Department of Energy (DOE), Energy Information Administration (EIA).

The EIA describes overnight costs for electricity generating facilities as including2:

  • Civil and structural costs: allowance for site preparation, drainage, installation of underground utilities, structural steel supply, and construction of buildings on the site;
  • Mechanical equipment supply and installation: major equipment, including but not limited to, boilers, flue gas desulfurization scrubbers, cooling towers, steam turbine generators, condensers, photovoltaic modules, combustion turbines, and other auxiliary equipment;
  • Electrical and instrumentation and control: electrical transformers, switchgear, motor control centers, switchyards, distributed control systems, and other electrical commodities;
  • Project indirect costs: engineering, distributable labor and materials, craft labor overtime and incentives, scaffolding costs, construction management start up and commissioning, and contingency fees; and
  • Owners costs: development costs, preliminary feasibility and engineering studies, environmental studies and permitting, legal fees, insurance costs, property taxes during construction, and the electrical interconnection costs, including a tie-in to a nearby electrical transmission system.3

Table 4 presents the full overnight costs developed by EIA and NYISO for full replacement of an SCCT.

Source Overnight Cost ($/kW) Notes
EIA $1,054 - $1,5584 Range is specific for the Long Island and New York City area
and includes conventional and advanced combustion turbines.
NYISO $1,314 - $1,3575 Range is specific for the Long Island and New York City area
and represents replacement with a dual fuel peaking turbine.

Table 4: Estimated range of overnight costs for full replacement of an SCCT

DEC believes that the entire capacity of generation will likely not need to be replaced. Most SCCTs have a capacity factor of less than 5 percent, meaning that they generate less than 5 percent of the electricity output that they are capable of generating. In addition, with the implementation of several New York State initiatives, including the State's recently announced energy efficiency and energy storage targets, Reforming the Energy Vision and the Clean Energy Standard, demand for these units should continue to decline. There are over 3,400 MW of SCCT capacity listed in the NYISO Gold Book6 that are older, pre-1986 SCCTs.

Owners and operators may opt to install after-market emission control devices on sources that are unable to comply. Water injection technology is the after-market technology that a facility owner would likely consider for these older sources. The costs of adding after-market emission control devices varies widely depending on location, operation and land space availability. It has been reported to DEC, anecdotally, that the cost of adding after-market water injection to one of these older sources is approximately two million dollars. Other sources discuss a cost of $10,000 - $15,000 per megawatt,7 and many of the sources that would be impacted are 15 to 20 megawatts each. However, this data does not include installation and other associated costs.

Economic and Technological Feasibility

It is not expected that small businesses will need to comply with this proposed rule. As noted above, the two local governments subject to the emission limits already comply. This is not a mandate on small businesses or local government,

Minimizing Adverse Impacts

To minimize any adverse impacts DEC is proposing a phase-in of requirements as well as a reliability provision. The phase-in of requirements allows for power companies, with affected sources, to plan over a longer term. In addition, DEC is proposing several compliance options to offer compliance flexibility:

1) Owners and operators may elect an ozone season stop where it is recorded in their operating permit that the source may not operate during the ozone season.

2) Owners and operators may elect to adhere to an output-based NOx daily emission rate that includes electric storage and renewable energy under common control with the SCCTs with which they are averaging.

Small Business and Local Government Participation

DEC participated in several stakeholder meetings including those for impacted facilities and local environmental justice groups over a period of eighteen months. In addition, DEC posted a stakeholder outline on the DEC website to encourage stakeholder participation and comment.8 SCCTs, as applicable in this regulation, are electric generating sources and not considered small businesses. Sources identified to be government owned already comply with the proposed standard and had the opportunity to participate in the stakeholder process.

Cure Period or Ameliorative Action

No additional cure period or other opportunity for ameliorative action is included in Subpart 227-3. This proposal will not result in immediate violations or impositions of penalties for existing facilities. To help reduce immediate impacts on affected sources, Subpart 227-3 requires a compliance plan due on March 2, 2020 followed by reduced NOx emission limits phased-in first on May 1, 2023 and later on May 1, 2025. This will allow owners and operators of affected sources time to comply with the proposed Subpart 227-3.

Initial Review

The initial review of this rule shall occur no later than in the third calendar year after the year in which the rule is adopted.

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1 Parts per million on a dry volume basis at fifteen percent oxygen.
2 Overnight costs include the costs for the physical power plant assuming it can be built overnight. As a result, interest on loans are not factored into the cost estimates.
3 EIA, Capital Cost Estimates for Utility Scale Electricity Generating Plants, November 2016.
4 EIA, Capital Cost Estimates for Utility Scale Electricity Generating Plants, November 2016.
5 NYISO, The New York Installed Capacity (ICAP) market Working Group. Available here: http://www.nyiso.com/public/markets_operations/market_data/icap/index.jsp.
6 NYISO, 2017 Load and Capacity Data.
7 The data provided only includes capital cost. "Gas Turbine Combustion." Lefebvre & Ballal. CRC Press, April 26, 2010.
8 https://www.dec.ny.gov/chemical/113887.html.


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