UTILITY NSR REFORM TIMEFRAMES EARLY 90’SBEGIN CAAA IMPLEMENTATION MID 90’SNSR REFORM DEVELOPMENT - S/A Principles - EPA Proposals

1999INTENSE STAKEHOLDER EFFORTS - Substantive Industry Proposals - S/A Mediation/Comments - Sector Based NSR Evolves 2000EPA PREPARES NSR REFORM PACKAGE - Industry Opposes Package - EPA Does Not Propose

2001NEW ADMINISTRATION/CONGRESS - Develops Multipollutant Strategies - Reevaluates NSR - S556 Multipollutant Bill 2002LEGISLATIVE FOCUS - Clear Skies Initiative - Multipollutant Legislation? - Utility NSR Reform Part of Leg?

1994S/A PRINCIPLES - HIGHLIGHTS 1.BACT on New Units 2.No Netting Out of Control 3.Control When Modify 4.Simplifed Process, Timeliness, Certainty 5.Air Quality Analysis for Emission Increases

CRUX OF NSR REFORM -What Modifications Should Require Modern Control? -If Some Modifications Are Exempt From Control at the Time of Modification, When Should Modern Control be Installed?

2/99EPA NEW APPROACH CONCEPTS 1.Age Based Upgrades (10 Yrs?) 2.Exempt Most Modifications 3.BACT/LAER for Capacity Expansions of Existing Units 4.BACT/LAER for New/Reconstructed Units

1999UTILITY ALTERNATIVE NSR PROGRAM 1.New Units - Traditional NSR 2.Modified Units - Potential to Emit Increases Trigger NSR (Not Actual Emissions Increase) 3.Netting - No Netting for BACT/LAER - Netting for Air Quality Analysis 4.Age Based Phase-in of NSR for Existing Units - 55 Years After End Date

COMPLEX MANUFACTURING SOURCE PROPOSAL 1.New Units - No Netting out of Control a.100 TPY Units - EPA NSR b.Significant Units - State NSR c.Smaller Units - State Discretion 2.Existing Unit a.PTE Plus Significant Emission Increase - Triggers NSR b.PTE to Significance - State Discretion 3.AQ Analysis a.Netting Allowed b.Triggered if Net Emission Increase More Than Significant 4.Backstop Measures - Assure Good Control Performance at Existing Units

CLEAN ENERGY GROUP 1.Include All Criteria Pollutants 2.BACT/LAER Instead of Current NSPS 3.Shorter Timeframe 4.More Modifications Trigger NSR

6/99S/A GENERAL COMMENTS ON INDUSTRY PROPOSALS (POSITIVES) 1.Good Control on New Units 2.Elimination of Netting for Technology Reviews 3.Increased Control Commitments Deserve Increased Flexibility 4.New Applicability Test for Reconstructed Units 5.State/Local Minor NSR Programs 6.BACT/LAER Clearinghouse

S/A COMMENTS ON UTILITY PROPOSAL (POSITIVE COMPONENTS) 1.Covers entire source category 2.No netting out of BACT for new and modified units 3.Provides certainty on control upgrades for NOx and SO2. 4.Phases in “old source” control

S/A RECOMMEND CHANGES TO UTILITY PROPOSAL 1.Substantially shorten 30 year end date 2.Cover all criteria pollutants 3.Update the NSPS every two to five years to incorporate BACT 4.State and local agency reporting requirements or minor NSR for minor modifications 5.Reconstructions undergo at least state/local agency technology review 6.Need clear and narrow federal definition of “routine repair and maintenance” 7.Include ambient air quality safeguards 8.Include trading safeguards

10/99UARG RESPONSES TO EPA (FROM CONCLUSION) 1.NSR APPLICABILITY - “Change to NSPS maximum achievable hourly emissions increase test” 2.Backstop NSR Program - “reduce aggregate emissions from existing generating units over time”

11/99CLEAN ENERGY GROUP STRATEGY (NSR COMPONENTS) 1.Existing Units NSR trigger - Potential to potential if - Linked to multipollutant caps 2.BACT also on - new units - major repowering - major rehabilitation

S/A ADDITIONAL COMMENTS FOCUSING ON UTILITIES 1.Mandatory program for entire sector (ie coal fired utilities) 2.Useful life trigger (30 years for utility units) 3.Emission trading to meet interim goals 4.All units upgrade to BACT at end of useful life 5.Reasonable time to upgrade 5 years - significant progress 10 years - recommended for most reductions 15 years - maximum

S/A ADDITIONAL COMMENTS FOCUSING ON UTILITIES (CONT.) 6.BACT defined every 5 years - for those units which have not upgraded 7.NOx, SO2, Part., CO 8.Harmonize with Hg and CO2 9.Ambient modelling at PTE 10.New units - No netting & BACT 11.Once at BACT - Clean Unit Test

3/01RUS HARDING LETTER ON NSR -Mostly consistent with S/A NSR recommendations -Shows S/A agency differences on NSR are minor

3/2001S556 CLEAN POWER ACT BILL -Caps and trading -NSPS is a baseline level of control for outdated power plants -Over 30 years = outdated -Does not change NSR

5/2001NATIONAL ENERGY POLICY AND NSR 1.NEP recommendations include: “appropriate measures to address local concerns” 2.NSR addresses local concerns - minimizes emissions - local air quality analysis

S/ACOMMENTS ON 90 DAY REVIEW OF NSR 1.NSR does not prevent electric generation construction (over 100,000 MW approved recently) 2.NSR process can be improved

7/2001MULTIPOLLUTANT STRAW PROPOSAL 1.Modifications - replace 2.New - performance standards (SO2, NOx, PM, CO)

10/2001S/A COMMENTS TO CEQ 1.NSR works 2.NSR can be improved 3.NSR improvements should focus on modifications 4.Other important aspects of NSR - Public comment - Air quality modelling - BACT/LAER Clearinghouse

1/02S/A LETTER OF CONCERN (ABOUT EPA DIRECTION ON NSR) 1.Few, if any, modifications would trigger NSR 2.Less protection of environment

2/02CLEAN SKIES INITIATIVE (LOTS OF QUESTIONS) - No NSR for utilities? - NSR for new plants? - NSR for capacity expansions? - Local air quality modelling?

3/02RAY OF SUNSHINE (JEFF HOLMSTEAD LETTER “EPA remains committed to the air quality benefits provided by the NSR program”