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Parts 222 and 200 Revised Regulatory Impact Statement Summary

Introduction

The Department of Environmental Conservation (Department or DEC) adopted 6 NYCRR Part 222, "Distributed Generation Sources," on November 1, 2016. On March 1, 2017, an Article 78 Petition was filed challenging various aspects of Part 222. On July 26, 2017, a Stipulation and Order was issued whereby the Department agreed to propose a new rule pursuant to the State Administrative Procedure Act to replace the adopted rule. The purpose of this rule making is to promulgate a new Part 222 along with the attendant changes to Part 200, "General Provisions."

Distributed generation (DG) sources are engines used by host sites to supply electricity outside that supplied by distribution utilities. This on-site generation of electricity by DG sources is used by a wide-range of commercial, institutional and industrial facilities either in non-emergency situations when electricity costs are high (price-responsive generation) or to reduce demand on the electric grid (demand response), or in emergency situations when the usual supply of power from central station power plants becomes unavailable.

Summary of Rule

The proposed rule will apply to economic dispatch sources with output ratings of 200 horsepower (hp) or greater in the New York City metropolitan area (NYMA). Economic dispatch sources will be required to meet control requirements beginning May 1, 2021. The proposed rule also sets forth certain monitoring requirements, maintenance and record keeping requirements for economic dispatch sources.

The Department is planning to incorporate Part 222 and the attendant revisions to Part 200 into New York's State Implementation Plan (SIP) and provide the revised SIP to the United States Environmental Protection Agency (EPA) for review and approval.

Statutory Authority

The statutory authority for the promulgation of Part 222 and the attendant revisions to Part 200 is found in the New York State 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.

Legislative Objectives

Article 19 of the ECL was enacted to safeguard the air resources of New York from pollution and ensure the protection of the public health and welfare, the natural resources of the State, physical property, and integrating industrial development with sound environmental practices. The policy of the State is to require the use of all available, practical and reasonable methods to prevent and control air pollution in New York.

Needs and Benefits

There are currently two eight-hour ozone National Ambient Air Quality Standards (NAAQS) established by the EPA. An ozone NAAQS of 0.075 parts per million (ppm) was established in March 2008. Subsequently, the EPA reduced the 8-hour ozone NAAQS to 0.070 ppm on October 1, 2015. Ozone NAAQS attainment status is demonstrated by measurements recorded from a monitoring network set up across the United States. The ozone NAAQS is in the form of an eight-hour concentration average. The ozone design value is calculated as the 4th highest daily maximum 8-hour ozone concentration averaged over three years.1 The current design value monitor for the New York/New Jersey/Connecticut nonattainment area is located in Westport, Connecticut. The 2018 design value for that monitor is 0.082 ppm.2

Emergency generators are operated when the usual source of electricity is unavailable or for facility-related emergencies. Pursuant to Section 200.1(cq), emergency generators are allowed to operate for up to 500 hours per year.3 The New York City building code requires buildings greater than 75 feet high be equipped with emergency generators.4 There are approximately 10,960 buildings in New York City greater than 75 feet in height.5 Assuming a typical emergency generator is 1000 kW,6 the capacity of emergency generation sources in New York City is estimated at 10,960 MW.

In the new Part 222, economic dispatch sources are defined as DG sources enrolled in demand response (DR) programs sponsored by the New York Independent System Operator (NYISO) or transmission utilities as well as price-responsive generation sources located in the NYMA. These source categories encompass DG sources previously classified as emergency generators for economic purposes.

Since 2001, the NYISO and distribution utilities7 in New York have called upon owners of uncontrolled, primarily diesel-fired engines to generate electricity for host facilities on high demand days in order to reduce demand on the electric grid, thus preserving the reliability of the grid. Sources enrolled in these programs, referred to as 'demand response programs,' are generally called upon to operate on hot summer days when ozone levels are typically high. The use of uncontrolled DG sources in demand response programs has correspondingly led to increased emissions from sources previously used exclusively in emergency situations.

Price-responsive generation sources are defined in Part 222 as distributed generation sources used to provide electricity when the cost of electricity supplied by the distribution utility is high. This category of economic dispatch sources was added to Part 222 to counter potential increases in oxides of nitrogen (NOx) emissions resulting from the use of engines previously classified as emergency generators for short periods of time when the cost of electricity supplied by the transmission utility is high.

On July 2, 2018, the maximum 8-hour average ozone value observed in the NY/NJ/CT ozone nonattainment area was 0.115 ppm at a monitor in Rockland County, New York. An 8-hour ozone value of 0.115 ppm is considered very unhealthy for sensitive groups. This marked the first time since June 14, 2008 that a monitored 8-hour ozone value was 0.100 ppm or greater. In that event, the White Plains monitor, located in Westchester County, New York, had a value of 0.101 ppm. Ozone concentrations greater than 0.070 ppm were observed on July 2nd at thirteen monitors in New York. Ozone concentrations greater than 0.070 ppm were also observed that day at six monitors in Connecticut and eight monitors in New Jersey.

The dominant weather feature in the eastern United States on July 2, 2018 was a high pressure system situated along the coast. A weak cold front stalled near the Ohio Valley. A surface trough formed to the east of the front along a line from central New York through the Appalachian Valley. Winds in the nonattainment area were light and variable, and at times, calm. Generally, the air mass moved from south to north.8

Demand response resources were called upon on July 2, 2018 by the NYISO, Consolidated Edison and Orange & Rockland Utilities, Inc. The NYISO called a five-hour event from 1:00 pm to 6:00 pm that day.9 Con Edison and Orange & Rockland called four-hour events that afternoon. The NOx emissions during the four-hour events called by Con Edison and Orange & Rockland on July 2, 2018 are estimated to be 2.15 and 0.08 tons, respectively. The estimated NOx emissions during the NYISO event was 2.92 tons.

Part 222 will also apply to price-responsive generation sources in the NYMA. The potential NOx emissions that could result if all of these sources operate at the same time is as much as 38.4 tons per hour.

Effective May 1, 2021, combustion turbines, compression ignition engines and lean-burn natural gas-fired engines must be of model year 2000 or newer or must have a NOx emission rate less than or equal to 2.96 pounds per megawatt-hour as certified in writing by a professional engineer. Also, effective May 1, 2021, rich-burn natural gas-fired engines must be equipped with three-way catalyst emission controls.

These provisions are expected to result in a NOx emission reduction of more than 3.5 tons for a typical 6-hour demand response event. NOx emission reductions during DR events will come from sources currently enrolled in the NYISO programs. Potential NOx emissions from price-responsive generation sources will be reduced to 11.87 tons per hour effective May 1, 2021.

The following NOx emission limits will apply to DR sources effective May 1, 2025:

(1) combustion turbines firing natural gas: 25 parts per million on a dry basis corrected to 15 percent oxygen;

(2) combined cycle turbines firing oil: 42 parts per million on a dry basis corrected to 15 percent oxygen;

(3) spark ignition engines firing natural gas: 1.0 grams per brake horsepower- hour;

(4) compression-ignition engines firing distillate oil (solely or in combination with other fuels) with nameplate ratings less than 750 hp: 0.30 grams per brake horsepower-hour; or

(5) compression-ignition engines firing distillate oil (solely or in combination with other fuels) with nameplate ratings greater than or equal to 750 hp: 0.50 grams per brake horsepower-hour.

Emissions test reports demonstrating compliance with subdivision 222.4(b) of Part 222 must be submitted to and approved by the Department before a distributed generation source may be operated as an economic dispatch source on or after May 1, 2025. The purpose of the emissions testing requirements in Part 222 is to ensure that sources subject to the rule meet the emission standards set forth in the rule.

Beginning May 1, 2025, the potential NOx emissions from price-responsive generation sources will be approximately 2.56 tons/hour.10 Further, the estimated NOx emissions from DR sources would be less than 0.5 tons per event (based on current enrollment in DR programs).

Costs

The primary cost for complying with Part 222 will be lost income for sources that will drop out of demand response programs. For sources that decide to comply with the emission standards set forth in the rule, the installed capital costs range from approximately $40/hp for rich-burn engines to $160/hp for other types of sources.

Paperwork

The record keeping requirements set forth in new Part 222 are not expected to be burdensome since the data that must be recorded each month should already be recorded as a standard business practice.

Local Government Mandates

There are no specific mandates for local governments. Local governments that operate sources subject to this rule must meet the same requirements as any other source owner.

Duplication Between this Rule and Other Regulations and Laws

EPA promulgated New Source Performance Standards (NSPS) rules for new engines and turbines in 2006 and 2008. The stricter of the NSPS or new Part 222 standards will apply in cases where sources are subject to both regulations.

Alternatives

Three alternatives to the proposed rule were evaluated. Under the No Action alternative, a new Part 222 would not be adopted. In addition, two alternatives for expanding the existing NOx RACT Rule (Subpart 227-2) were considered. One alternative was limited to DG sources statewide. The second alternative would apply the NOx RACT Rule to all non-emergency engines at minor sources statewide. This alternative was not selected because the Department estimated that 84 percent of the sources enrolled in demand response programs would likely drop out of the programs.

Federal Standards

There are three NSPS rules adopted by EPA that establish NOx emission limits for new sources:

  1. 40 CFR 60, Subpart IIII (Compression-Ignition Engines)
  2. 40 CFR 60, Subpart JJJJ (Spark-Ignition Engines)
  3. 40 CFR 60, Subpart KKKK (Turbines)

The emission standards set forth under these rules are discussed in the Regulatory Impact Statement for this rulemaking.

Compliance Schedule

An owner or operator of a DG source that will operate as an economic dispatch source must notify the Department in writing by March 15, 2021 or 30 days prior to operating the source as an economic dispatch source, whichever is later.

The first set of control requirements take effect on May 1, 2021. The second set of control requirements (NOx emission limits) take effect on May 1, 2025.

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1 Code of Federal Regulations, Part 50 Appendix I.
2 https://www.epa.gov/air-trends/air-quality-design-values
3 Facilities may accept a more restrictive operational limit in order to avoid triggering certain regulatory thresholds such as new source review (Part 231).
4 Section 2702 of the New York City Electrical Code.
5 www.emporis.com/city/101028/new-york-city-usa/status/existing/548.
6 The average nameplate for DR sources in New York City is 1102 kW based on the data submitted under Section 222.3(a) of the adopted rule.
7 In addition to the NYISO, demand response programs are currently sponsored by the Consolidated Edison Company of New York (Con Edison) and Orange & Rockland Utilities.
8 https://www.nj.gov/dep/cleanairnj/exceedances/2018/070218.pdf.
9 "NYISO - Called Events & Test", NYISO, dated 7/3/2018.
10 Assuming 10,960 MW of capacity and an emission rate of 0.5 g/bhp-h.


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