The U.S. Environmental Protection Agency, in a 107-page notice to be published in the Feb. 5 Federal Register, is proposing a source-specific federal implementation plan (FIP) requiring the coal-fired Navajo Generating Station (NGS) to reduce NOx emissions.
This proposal is under the Best Available Retrofit Technology (BART) regional haze provision of the Clean Air Act (CAA). NGS, which was built over 35 years ago, is the largest coal-fired power plant in the West in terms of generating capacity. It is central to the economies of the Navajo Nation and Hopi Tribe and supplies power to Arizona, Nevada and California. Electricity produced by NGS is also used to power the Central Arizona Project, which supplies surface water to three counties and numerous Indian tribes in Arizona. NGS is projected to continue operating at least until 2044, the agency said.
EPA is proposing to require NGS to achieve a nearly 80% reduction of its current overall NOx emission rate. “Our analysis indicates that installation of controls to achieve this reduction would result in significant visibility improvement that is well-balanced with the cost of those controls,” EPA said. “For a number of reasons, including the importance of NGS to numerous Indian tribes located in Arizona and the federal government’s reliance on NGS to meet the requirements of water settlements with several tribes, EPA is proposing an alternative to BART that would provide flexibility to NGS in the schedule for the installation of new control equipment.”
EPA said it encourages a “robust public discussion of our proposed BART determination and alternative,” and other possible approaches. EPA said it is prepared to issue a supplemental proposal if approaches other than the proposed BART determination or proposed alternative outlined in this notice are identified as satisfying the requirements of the CAA and meeting the needs of the stakeholders.
NGS is a coal-fired power plant located on the Navajo Nation Indian Reservation, just east of Page, Ariz., approximately 135 miles north of Flagstaff, Ariz. The three 750-MW units at NGS were constructed in the 1974-1976 period. It gets coal from the Kayenta mine in Arizona of Peabody Energy (NYSE: BTU), which is a mine that would shut without this business.
NGS is co-owned by six entities: the U.S. Bureau of Reclamation – 24.3%; Salt River Project (SRP), which also acts as the facility operator – 21.7%; Los Angeles Department of Water and Power (LADWP) – 21.2%; Arizona Public Service (APS) – 14%; Nevada Power (NPC) – 11.3%; and Tucson Electric Power (TEP) – 7.5%.
Need for new lease and contracts causes near-term uncertainty
One complicating factor for the plant owners right now is that their tribal lease on the plant property, plus other contracts and agreements, run out in 2019, meaning uncertainty as they negotiate new ones. “Although the owners of NGS are in negotiations with the Navajo Nation for a lease renewal to extend to 2044 and with Peabody Energy for a renewed coal supply contract, the outcomes of these negotiations are also not yet finalized,” EPA noted. Another complication is that LADWP wants to exit its stake in the plant in the next couple of years to meet greenhouse gas reduction requirements from the state of California.
The plant uses hot-side electrostatic precipitators to control emissions of particulate matter (PM) and flue gas desulfurization (FGDs) to control emissions of SO2. Over the 2009–2011 period, the owners of NGS voluntarily installed modern low-NOx burners with separated over-fire air (LNB/SOFA) to reduce emissions of NOx.
EPA is proposing to determine a plantwide emission limit of 0.055 lb/MMBtu as BART for NGS, based on a rolling average of 30 boiler operating days, achievable with the installation of selective catalytic reduction (SCR), the most costly NOx control technology. The agency said it is proposing this emissions limit as BART for NOx because:
- the average and incremental costs of SCR are cost effective;
- EPA anticipates that the installation and operation of SCR to meet the proposed BART limit should not cause the owners of NGS to retire units and that the history of funding air pollution control at NGS suggests that other significant impacts may be avoided or mitigated;
- the voluntary installation of LNB/SOFA in 2009–2011 at NGS has achieved some NOx reductions, but not the level achievable with SCR;
- NGS is projected to continue operation at least to 2044; and
- the anticipated visibility improvements from SCR would be significant at 11 Class I protected areas.
Based on these factors, EPA is proposing to determine that an emission limit of 0.055 lb/MMBtu is BART for NGS. This emission limit represents a reduction of nearly 80% from the existing permitted NOx emission limit.
The break that EPA is willing to grant is extra time to comply
Under the CAA, compliance with emission limits determined as BART must be “as expeditious as practicable but in no event later than five years” after the effective date of the final BART determination. That date would be 2018, if the rule is finalized in 2013, or 2019 if, due to a need for extended public discussion or a supplemental proposal, the rule is finalized in 2014.
EPA’s BART regulations allow an alternative to BART provided the alternative results in greater reasonable progress than would have been achieved through installation of BART. The regulations provide that an alternative to BART must ensure that all necessary emission reductions occur during the period of the first long-term strategy for regional haze, or in 2018 for states that were required to submit regional haze state implementation plans (SIPs) in December 2007.
In this proposal, EPA is putting out a BART alternative (Alternative 1) for NGS that would require the plant to meet a NOx limit of 0.055 lb/MMBtu on one unit per year in 2021, 2022, and 2023. “We also describe and solicit comment on a framework for extending the compliance schedule beyond 2023, and will issue a supplemental proposal if we receive comments supporting a later compliance date,” the agency said.
“EPA is proposing an alternative to provide the owners of NGS options for flexibility in achieving emissions reductions required under our proposed BART determination,” EPA added. “SRP expressed concern that the owners of NGS may choose to retire the facility if faced with the financial risk of making a large capital investment within 5 years without also having certainty that the lease and contract re-negotiations would conclude in a timely and favorable manner. EPA understands that the owners of NGS face numerous uncertainties and the unusual requirement to comply with [the National Environmental Policy Act] NEPA for lease and other rights-of-way approvals, which apply only to NGS and Four Corners Power Plant. EPA also understands the importance of the continued operation of NGS and the Kayenta Mine to the Navajo Nation and Hopi Tribe as a source of direct revenues through lease payments or coal royalties, as well as the importance of Reclamation’s share of NGS to supply water to many tribes located in Arizona in accordance with several water settlement acts.”
Four Corners is another coal-fired power plant in the same region.
EPA added about NGS: “In this proposal, EPA is proposing Alternative 1 as a ‘better than BART’ alternative that addresses the uncertainties described in the previous section. We are also requesting comment on two other alternatives that provide longer schedules for compliance. Because we would need additional information to propose to approve a longer compliance schedule beyond the timeframe in Alternative 1, we would supplement our proposal if we intend to finalize either of the longer compliance schedules discussed below. As discussed below, all of the alternatives include a NOx emission rate of 0.055 lb/MMBtu, but vary in the amount of time provided for compliance. Alternative 1 and the other two on which we are soliciting comment assume that NGS will continue to operate well into the future, but EPA recognizes that there may be changes in energy demand or in how energy is supplied in this region that could form the basis of other options.”