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BEFORE THE ENVIRONMENTAL APPEALS BOARD
US ENVIRONMENTAL PROTECTION AGENCY WASHINGTON DC
+ + + + +
ORDER SCHEDULING STATUS CONFERENCE ~I
EXPEDITED ORAL ARGUMENT ~ I
IN THE MATTER OF
LA PALOMA ENERGY PSD Appeal No CENTER LLC 13-10
PSD Permit No TX-1288-GHG
Wednesday February 12 2014
Administrative Courtroom Room 1152 EPA East Building 1201 Constitution Avenue NW Washington DC
The above-entitled matter came on for hearing pursuant to notice at 323 pm
BEFORE
THE HONORABLE CATHERINE R MCCABE Environmental Appeals Judge
THE HONORABLE RANDOLPH HILL Environmental Appeals Judge
THE HONORABLE KATHIE A STEIN Environmental Appeals Judge
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bull APPEARANCES
LLC
bull and
Energy -=-=-==-=-=-shy
RICHARD ALONSO ESQ SANDRA Y SNYDER ESQ Bracewell amp Giuliani LLP 2000 K Street NW Suite 500 Washington DC 20006 (202) 828-5861 (202) 857-4824 fax
Club
DAVID C BENDER ESQ McGillivray Westerberg amp Bender 211 S Paterson Street Suite 320 Madison WI 53703 (608) 310-3566 (608) 310-3561 fax
TRAVIS RITCHIE ESQ Sierra Club Environmental Law Program
2nd85 Street 2nd Floor San Francisco CA 94105 (415) 977-5727
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On Behalf Environmental Protection Agency Region Q
BRIAN TOMASOVIC ESQ US Environmental Protection Agency Office of Regional Counsel Region 6 1455 Ross Avenue Dallas TX 75202 (214) 665-9725 (214) 665-2182 fax
and
MATTHEW MARKS ESQ BRIAN DOSTER ESQ US Environmental Protection Agency Office of General Counsel Air and Radiation Law Office 1200 Pennsylvania Avenue NW Washington DC 20460 (202) 564-3276 (202) 564-5603 fax
PRESENT
Eurika Durr Clerk of the Board
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P-R-O-C-E-E D-I-N-G-S
323 pm
MS DURR All rise Environmental
Appeals Board of the United States
Environmental Protection Agency is now in
session for a status conferenceexpeditedoral
argument in re La Paloma Energy Center l LLC
rmit Number PAS-TX-1288-GHG PSD Appeal
Number 13-10 The Honorable Judges Kathie
Stein l Catherine McCabe Randolph Hill
presiding
Please turn off all cell phones
and no recording devices lowed Please be
seated
JUDGE MCCABE Good afternoon I
am Judge McCabe On my right is Judge Stein
and on my left is Judge Hill We are the
three panel members for this case
Id I ike to welcome you all to
Washington on this non-snowy day But first
why dont we take appearances of counsel who
will be presenting for each of the parties
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MR BENDER Good ternoon
David Bender for petitioners the Sierra Club
JUDGE MCCABE Okay Welcome
MR ALONSO Good ternoon
Richard Alonso on behalf of La Paloma
JUDGE MCCABE Welcome
MR TOMASOVI C Good afternoon
Brian Tomasovic from the EPA Region 6 Dallas
Office l joined at table by from the Office of
General Counsel Matthew Marks and Brian
Doster
JUDGE MCCABE Thank you And do
we have anyone else on the phone
MR RI E Yes I your Honor
This is Travis Richie with the Sierra Club
JUDGE MCCABE Okay Before we
beginl let me ask who will be speaking for
Sierra Club Is that just Mr Bender I or will
Mr Richie also be speaking Okay I thank you
Well first of all I would really like to
thank you all those of you especially who had
to change travel plans l for being here today
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on short notice and I realize that not only
disturbs flight arrangements but probably
disturbs your preparation time The good news
for all of you of course is that we are
going to do this a little differently today
so hope ly that wont make as much a
difference as it might in the ordinary case
Before we begin let me do a
travel check as to what time your flights on
leaving I understand a number of you are
eager to be back out of town and ahead of the
snow this evening Mr Bender
MR BENDER I f everything goes as
planned 700
JUDGE MCCABE Seven 0 clock is
your flight time And whats your airport
MR BENDER National
JUDGE MCCABE National Okay
Mr Alonso can I assume youre remaining in
town
MR ALONSO Yes
JUDGE MCCABE I assume this is a
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representative of a company with you
MR ALONSO Yes Im sorry This
is Sandra Snyder with Bracewell also
representing La Paloma and we do not have any
travel restrictions tonight
JUDGE MCCABE Thank you And
from the EPA side
MR TOMASOVIC My flight departs
at 8 pm
JUDGE MCCABE All right Then I
think we should have plenty of time Weve
scheduled an hour and a half for this We
will try our best to get you out on timel so
you can run for the airports Snow is not
supposed to begin until later this evening
We are doing this slightly
differently than our normal procedure because
this is a status conference as well as an
expedited oral argument As usual well go
ahead and allocate one half an hour
approximately to each party But the order
the parties will be slightly different than
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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yet
MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
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142
The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
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C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
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bull APPEARANCES
LLC
bull and
Energy -=-=-==-=-=-shy
RICHARD ALONSO ESQ SANDRA Y SNYDER ESQ Bracewell amp Giuliani LLP 2000 K Street NW Suite 500 Washington DC 20006 (202) 828-5861 (202) 857-4824 fax
Club
DAVID C BENDER ESQ McGillivray Westerberg amp Bender 211 S Paterson Street Suite 320 Madison WI 53703 (608) 310-3566 (608) 310-3561 fax
TRAVIS RITCHIE ESQ Sierra Club Environmental Law Program
2nd85 Street 2nd Floor San Francisco CA 94105 (415) 977-5727
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On Behalf Environmental Protection Agency Region Q
BRIAN TOMASOVIC ESQ US Environmental Protection Agency Office of Regional Counsel Region 6 1455 Ross Avenue Dallas TX 75202 (214) 665-9725 (214) 665-2182 fax
and
MATTHEW MARKS ESQ BRIAN DOSTER ESQ US Environmental Protection Agency Office of General Counsel Air and Radiation Law Office 1200 Pennsylvania Avenue NW Washington DC 20460 (202) 564-3276 (202) 564-5603 fax
PRESENT
Eurika Durr Clerk of the Board
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P-R-O-C-E-E D-I-N-G-S
323 pm
MS DURR All rise Environmental
Appeals Board of the United States
Environmental Protection Agency is now in
session for a status conferenceexpeditedoral
argument in re La Paloma Energy Center l LLC
rmit Number PAS-TX-1288-GHG PSD Appeal
Number 13-10 The Honorable Judges Kathie
Stein l Catherine McCabe Randolph Hill
presiding
Please turn off all cell phones
and no recording devices lowed Please be
seated
JUDGE MCCABE Good afternoon I
am Judge McCabe On my right is Judge Stein
and on my left is Judge Hill We are the
three panel members for this case
Id I ike to welcome you all to
Washington on this non-snowy day But first
why dont we take appearances of counsel who
will be presenting for each of the parties
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MR BENDER Good ternoon
David Bender for petitioners the Sierra Club
JUDGE MCCABE Okay Welcome
MR ALONSO Good ternoon
Richard Alonso on behalf of La Paloma
JUDGE MCCABE Welcome
MR TOMASOVI C Good afternoon
Brian Tomasovic from the EPA Region 6 Dallas
Office l joined at table by from the Office of
General Counsel Matthew Marks and Brian
Doster
JUDGE MCCABE Thank you And do
we have anyone else on the phone
MR RI E Yes I your Honor
This is Travis Richie with the Sierra Club
JUDGE MCCABE Okay Before we
beginl let me ask who will be speaking for
Sierra Club Is that just Mr Bender I or will
Mr Richie also be speaking Okay I thank you
Well first of all I would really like to
thank you all those of you especially who had
to change travel plans l for being here today
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on short notice and I realize that not only
disturbs flight arrangements but probably
disturbs your preparation time The good news
for all of you of course is that we are
going to do this a little differently today
so hope ly that wont make as much a
difference as it might in the ordinary case
Before we begin let me do a
travel check as to what time your flights on
leaving I understand a number of you are
eager to be back out of town and ahead of the
snow this evening Mr Bender
MR BENDER I f everything goes as
planned 700
JUDGE MCCABE Seven 0 clock is
your flight time And whats your airport
MR BENDER National
JUDGE MCCABE National Okay
Mr Alonso can I assume youre remaining in
town
MR ALONSO Yes
JUDGE MCCABE I assume this is a
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representative of a company with you
MR ALONSO Yes Im sorry This
is Sandra Snyder with Bracewell also
representing La Paloma and we do not have any
travel restrictions tonight
JUDGE MCCABE Thank you And
from the EPA side
MR TOMASOVIC My flight departs
at 8 pm
JUDGE MCCABE All right Then I
think we should have plenty of time Weve
scheduled an hour and a half for this We
will try our best to get you out on timel so
you can run for the airports Snow is not
supposed to begin until later this evening
We are doing this slightly
differently than our normal procedure because
this is a status conference as well as an
expedited oral argument As usual well go
ahead and allocate one half an hour
approximately to each party But the order
the parties will be slightly different than
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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yet
MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
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The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
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asking 9920 17 411443519101 22 10711 10812118214 12259 36416195714 4519473 4915 averaging 41 20 109 1 0 19 110 191239 12568 1132 49 19 5081218aware33149120 111311 112215 12819 13513
assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922
B70197137610 9121 1121911720 1189163911 172 B4417assigned 15 1 0 12021 140211991416 1203 basically 313 363 back6112916607679 7322 boards 48 15 88212113 122121738 1 395 46 16
4819514632174 17 86522 1423123 1 124916 4622 5622 622 641 8119848 Bracewell 25 73 128 13 12516 126515642814 1039 9113 1109assigning 61 816 brand 56221285 129 1510821 11721 12020 Brian 3210581061 176312 714 1301222 13148 basing 104 10 12316 13720 brief5447511assignment 778 13114 132414basis 1756 1821 13816 13914assigns 70 12 7913 80281111346 13551036361206510 1404 14321assume 61922 87 841090511531361620 1372 6521 6815612
back-end 62 143221 1119 13591387 139517681469345 background 91 1913217 briefing 879 1401722 1446 70 15 718 7822 BACT 261722assumes 101 22 143 1 0 144 1 1 7 14420831085178616
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auxiliary 8913 base 50 15 69 1 14412biggest 9820 benchmarking
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666 684 69315 7711 10912
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decision 181315 18162016227
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decisions 58 18 8922904
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deviations 7612 device 33] 6343
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differentiate 63 1 1 12118 1291216 129 17
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difficult 387 143 17
difficulty 22 16 direct 1032 direction 259 directly 872 disagree 94 11
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duct-burning 11210
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eager611 earlier 32 18 66 1
6718 11910 13516
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efficient 159 17 11 33834183512 413 572 6022
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C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
1323 RHODE ISLAND AVE NW
(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom
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On Behalf Environmental Protection Agency Region Q
BRIAN TOMASOVIC ESQ US Environmental Protection Agency Office of Regional Counsel Region 6 1455 Ross Avenue Dallas TX 75202 (214) 665-9725 (214) 665-2182 fax
and
MATTHEW MARKS ESQ BRIAN DOSTER ESQ US Environmental Protection Agency Office of General Counsel Air and Radiation Law Office 1200 Pennsylvania Avenue NW Washington DC 20460 (202) 564-3276 (202) 564-5603 fax
PRESENT
Eurika Durr Clerk of the Board
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
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P-R-O-C-E-E D-I-N-G-S
323 pm
MS DURR All rise Environmental
Appeals Board of the United States
Environmental Protection Agency is now in
session for a status conferenceexpeditedoral
argument in re La Paloma Energy Center l LLC
rmit Number PAS-TX-1288-GHG PSD Appeal
Number 13-10 The Honorable Judges Kathie
Stein l Catherine McCabe Randolph Hill
presiding
Please turn off all cell phones
and no recording devices lowed Please be
seated
JUDGE MCCABE Good afternoon I
am Judge McCabe On my right is Judge Stein
and on my left is Judge Hill We are the
three panel members for this case
Id I ike to welcome you all to
Washington on this non-snowy day But first
why dont we take appearances of counsel who
will be presenting for each of the parties
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
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MR BENDER Good ternoon
David Bender for petitioners the Sierra Club
JUDGE MCCABE Okay Welcome
MR ALONSO Good ternoon
Richard Alonso on behalf of La Paloma
JUDGE MCCABE Welcome
MR TOMASOVI C Good afternoon
Brian Tomasovic from the EPA Region 6 Dallas
Office l joined at table by from the Office of
General Counsel Matthew Marks and Brian
Doster
JUDGE MCCABE Thank you And do
we have anyone else on the phone
MR RI E Yes I your Honor
This is Travis Richie with the Sierra Club
JUDGE MCCABE Okay Before we
beginl let me ask who will be speaking for
Sierra Club Is that just Mr Bender I or will
Mr Richie also be speaking Okay I thank you
Well first of all I would really like to
thank you all those of you especially who had
to change travel plans l for being here today
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom
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on short notice and I realize that not only
disturbs flight arrangements but probably
disturbs your preparation time The good news
for all of you of course is that we are
going to do this a little differently today
so hope ly that wont make as much a
difference as it might in the ordinary case
Before we begin let me do a
travel check as to what time your flights on
leaving I understand a number of you are
eager to be back out of town and ahead of the
snow this evening Mr Bender
MR BENDER I f everything goes as
planned 700
JUDGE MCCABE Seven 0 clock is
your flight time And whats your airport
MR BENDER National
JUDGE MCCABE National Okay
Mr Alonso can I assume youre remaining in
town
MR ALONSO Yes
JUDGE MCCABE I assume this is a
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representative of a company with you
MR ALONSO Yes Im sorry This
is Sandra Snyder with Bracewell also
representing La Paloma and we do not have any
travel restrictions tonight
JUDGE MCCABE Thank you And
from the EPA side
MR TOMASOVIC My flight departs
at 8 pm
JUDGE MCCABE All right Then I
think we should have plenty of time Weve
scheduled an hour and a half for this We
will try our best to get you out on timel so
you can run for the airports Snow is not
supposed to begin until later this evening
We are doing this slightly
differently than our normal procedure because
this is a status conference as well as an
expedited oral argument As usual well go
ahead and allocate one half an hour
approximately to each party But the order
the parties will be slightly different than
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
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The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
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assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922
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164
C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
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P-R-O-C-E-E D-I-N-G-S
323 pm
MS DURR All rise Environmental
Appeals Board of the United States
Environmental Protection Agency is now in
session for a status conferenceexpeditedoral
argument in re La Paloma Energy Center l LLC
rmit Number PAS-TX-1288-GHG PSD Appeal
Number 13-10 The Honorable Judges Kathie
Stein l Catherine McCabe Randolph Hill
presiding
Please turn off all cell phones
and no recording devices lowed Please be
seated
JUDGE MCCABE Good afternoon I
am Judge McCabe On my right is Judge Stein
and on my left is Judge Hill We are the
three panel members for this case
Id I ike to welcome you all to
Washington on this non-snowy day But first
why dont we take appearances of counsel who
will be presenting for each of the parties
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MR BENDER Good ternoon
David Bender for petitioners the Sierra Club
JUDGE MCCABE Okay Welcome
MR ALONSO Good ternoon
Richard Alonso on behalf of La Paloma
JUDGE MCCABE Welcome
MR TOMASOVI C Good afternoon
Brian Tomasovic from the EPA Region 6 Dallas
Office l joined at table by from the Office of
General Counsel Matthew Marks and Brian
Doster
JUDGE MCCABE Thank you And do
we have anyone else on the phone
MR RI E Yes I your Honor
This is Travis Richie with the Sierra Club
JUDGE MCCABE Okay Before we
beginl let me ask who will be speaking for
Sierra Club Is that just Mr Bender I or will
Mr Richie also be speaking Okay I thank you
Well first of all I would really like to
thank you all those of you especially who had
to change travel plans l for being here today
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on short notice and I realize that not only
disturbs flight arrangements but probably
disturbs your preparation time The good news
for all of you of course is that we are
going to do this a little differently today
so hope ly that wont make as much a
difference as it might in the ordinary case
Before we begin let me do a
travel check as to what time your flights on
leaving I understand a number of you are
eager to be back out of town and ahead of the
snow this evening Mr Bender
MR BENDER I f everything goes as
planned 700
JUDGE MCCABE Seven 0 clock is
your flight time And whats your airport
MR BENDER National
JUDGE MCCABE National Okay
Mr Alonso can I assume youre remaining in
town
MR ALONSO Yes
JUDGE MCCABE I assume this is a
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representative of a company with you
MR ALONSO Yes Im sorry This
is Sandra Snyder with Bracewell also
representing La Paloma and we do not have any
travel restrictions tonight
JUDGE MCCABE Thank you And
from the EPA side
MR TOMASOVIC My flight departs
at 8 pm
JUDGE MCCABE All right Then I
think we should have plenty of time Weve
scheduled an hour and a half for this We
will try our best to get you out on timel so
you can run for the airports Snow is not
supposed to begin until later this evening
We are doing this slightly
differently than our normal procedure because
this is a status conference as well as an
expedited oral argument As usual well go
ahead and allocate one half an hour
approximately to each party But the order
the parties will be slightly different than
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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yet
MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
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142
The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom
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C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
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MR BENDER Good ternoon
David Bender for petitioners the Sierra Club
JUDGE MCCABE Okay Welcome
MR ALONSO Good ternoon
Richard Alonso on behalf of La Paloma
JUDGE MCCABE Welcome
MR TOMASOVI C Good afternoon
Brian Tomasovic from the EPA Region 6 Dallas
Office l joined at table by from the Office of
General Counsel Matthew Marks and Brian
Doster
JUDGE MCCABE Thank you And do
we have anyone else on the phone
MR RI E Yes I your Honor
This is Travis Richie with the Sierra Club
JUDGE MCCABE Okay Before we
beginl let me ask who will be speaking for
Sierra Club Is that just Mr Bender I or will
Mr Richie also be speaking Okay I thank you
Well first of all I would really like to
thank you all those of you especially who had
to change travel plans l for being here today
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on short notice and I realize that not only
disturbs flight arrangements but probably
disturbs your preparation time The good news
for all of you of course is that we are
going to do this a little differently today
so hope ly that wont make as much a
difference as it might in the ordinary case
Before we begin let me do a
travel check as to what time your flights on
leaving I understand a number of you are
eager to be back out of town and ahead of the
snow this evening Mr Bender
MR BENDER I f everything goes as
planned 700
JUDGE MCCABE Seven 0 clock is
your flight time And whats your airport
MR BENDER National
JUDGE MCCABE National Okay
Mr Alonso can I assume youre remaining in
town
MR ALONSO Yes
JUDGE MCCABE I assume this is a
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representative of a company with you
MR ALONSO Yes Im sorry This
is Sandra Snyder with Bracewell also
representing La Paloma and we do not have any
travel restrictions tonight
JUDGE MCCABE Thank you And
from the EPA side
MR TOMASOVIC My flight departs
at 8 pm
JUDGE MCCABE All right Then I
think we should have plenty of time Weve
scheduled an hour and a half for this We
will try our best to get you out on timel so
you can run for the airports Snow is not
supposed to begin until later this evening
We are doing this slightly
differently than our normal procedure because
this is a status conference as well as an
expedited oral argument As usual well go
ahead and allocate one half an hour
approximately to each party But the order
the parties will be slightly different than
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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yet
MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom
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The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
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194 9317962311149978010 823 841 6421 6716794 articulated 785 bite 709 1001015 10115 1008 1301516 84 11 90212
black 5520aside 538 10271022 1036 13520 98 1 1002 10220 board 1 1 3 22 44 asked 1010 5214 Avenue 114 3414 1031721 10448 1037 1043422
55126113 103 2820 3315 average 40 1920 104 121521105 1011 113 45 124 11 342 364 39217 42147712 1061317211141811616
asking 9920 17 411443519101 22 10711 10812118214 12259 36416195714 4519473 4915 averaging 41 20 109 1 0 19 110 191239 12568 1132 49 19 5081218aware33149120 111311 112215 12819 13513
assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922
B70197137610 9121 1121911720 1189163911 172 B4417assigned 15 1 0 12021 140211991416 1203 basically 313 363 back6112916607679 7322 boards 48 15 88212113 122121738 1 395 46 16
4819514632174 17 86522 1423123 1 124916 4622 5622 622 641 8119848 Bracewell 25 73 128 13 12516 126515642814 1039 9113 1109assigning 61 816 brand 56221285 129 1510821 11721 12020 Brian 3210581061 176312 714 1301222 13148 basing 104 10 12316 13720 brief5447511assignment 778 13114 132414basis 1756 1821 13816 13914assigns 70 12 7913 80281111346 13551036361206510 1404 14321assume 61922 87 841090511531361620 1372 6521 6815612
back-end 62 143221 1119 13591387 139517681469345 background 91 1913217 briefing 879 1401722 1446 70 15 718 7822 BACT 261722assumes 101 22 143 1 0 144 1 1 7 14420831085178616
29230171910820 briefly 84 9 18beneficial 23 3871 1081819 312233133519assuming 12922 331benefit 68 17 1 1 8 1 822 122 1 0 361181739713713 briefs 913 102 bennie 122 10123 14 143 12 39134361214assumptions 9616 9718best713 811 449 basket 21 15
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automatically 1447 building 114 5614 8213 10251010010 10812 4418 balance 30 12 5618757 13310 103911 8 1920 139 14
auxiliary 8913 base 50 15 69 1 14412biggest 9820 benchmarking
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107810861182 caps 1104 capturing 83 11 carbon 617 careful 1448 Carlton 593910 Carolina 458 case418 67 8215
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class 261921 357 358144419 78415 8015 81208216917 8317 100614 10531111716
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2218 cleaner 634 clear 237 50 1
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combination 9769 10518 11621
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come 122021 161 1620251231 5 451862136321 6420 654665 829 84 17 8820 989991017 10319
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comment 32 18 3363510406 727784811 9022 9437 102171719 10526 13013 136789 13722 13814151820 13822 139 18
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666 684 69315 7711 10912
decided 63 19 642021 6815 717 745 777 81114
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decision 181315 18162016227
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decisions 58 18 8922904
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20725172917 30513
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9021 104 17 10514 12722 134 17
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4612527 13313 13416 13710 141 20
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development 422 429
deviations 7612 device 33] 6343
483 566 120 10 devices 4 13 26 19
27433183513 dictate 125 10 dictated 198 difference 67
65 1720 6735 711011121314 71 1522 7214
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differences 7536 75 17768 777 127620 128 17 129720
different 7 22 3210341011 3551718366 4288 4321 453 4564621 506 567 573 59 19 60225146315 656813 67 12 691770131921 7022 71 19779 771019228217 8910928958 975991314 10031819 1066 10818 11211 1143 11511 11635 11748 1195 12014 121111712222 1232477 1253 125 1921 1262 1366 13879
differentiate 63 1 1 12118 1291216 129 17
differently 65 7 17 2114999
difficult 387 143 17
difficulty 22 16 direct 1032 direction 259 directly 872 disagree 94 11
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6821 7720 884 9222
discussed 134 19 13421
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2919 971 dispatched 1622
109 22 110 1 dispatching 1615
972 disproportionate
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126 12 1284 distinguishable
140 11 distinguished
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1407 doing 7 16 85
3018353 10114 1067 1272 134 11
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duct-burning 11210
duplicative 716 Durr 32243
eager611 earlier 32 18 66 1
6718 11910 13516
ears 353 earth 126 11 East 1 14 easy 743 1445 economic 233 492 economizer 35 12 effect 99 18 101 13
1062022 1074 effective 1326
1335 effectively 40 15 efficiencies 34 11
7816831 1173 efficiency 30 13
3415 3563812 6311 645 6517 6911 71151718 712021 721515 72161921 797 8311 84128913 9722981022 1 04 35 11 11 7 16 141 111319
efficient 159 17 11 33834183512 413 572 6022
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64 10 1115 65 11 701773128012 83179720984 9821 10071214 102214 1073 10810 111 20
efficiently 537 effort 574 1338
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1814273910 27112817298 33193623820 3994021 413 4212438455 46211 4711 5920 66 19 67 11e 7013 815 825 98 11 992122 100 116 101 1 102819 10421 10591020 1083 10914 11014 1141620 12318 125681120 1261718 12710 12722 128614 128 19 1327 13517 1434
emissions 17 12 36123811 4311 43 1521 4489 44 14 61 1819 637869 10318 10419 1069 10945 1104 11210 11810 12921
emit 1174 emitting 1077
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83 3043114 3554918 5117 511753612 565 78179410 104 11
enforce 114 14 enforceable 46 12
1135 11415 enforcement 62 18 engine 71 20 engineering 118
393 56 1222 574
engineers 143 16 engines 77 10 ensure 292 entering 1447 entertain 952 entity 199 environment 1716 environmental 1 1
12192122215 31311 435 171415
envisioning 131 14 EPA 1145877
91 179239 39184716579 57118141011 11413 12018 1269
EPAs 10410 EPC 118 equation 29 19 equipment 5919
619631010 6518413 10610 106 12 1518 1081613112
equivalence 111 16 equivalency 1251
1254 1286 equivalent 75 14
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C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
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on short notice and I realize that not only
disturbs flight arrangements but probably
disturbs your preparation time The good news
for all of you of course is that we are
going to do this a little differently today
so hope ly that wont make as much a
difference as it might in the ordinary case
Before we begin let me do a
travel check as to what time your flights on
leaving I understand a number of you are
eager to be back out of town and ahead of the
snow this evening Mr Bender
MR BENDER I f everything goes as
planned 700
JUDGE MCCABE Seven 0 clock is
your flight time And whats your airport
MR BENDER National
JUDGE MCCABE National Okay
Mr Alonso can I assume youre remaining in
town
MR ALONSO Yes
JUDGE MCCABE I assume this is a
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representative of a company with you
MR ALONSO Yes Im sorry This
is Sandra Snyder with Bracewell also
representing La Paloma and we do not have any
travel restrictions tonight
JUDGE MCCABE Thank you And
from the EPA side
MR TOMASOVIC My flight departs
at 8 pm
JUDGE MCCABE All right Then I
think we should have plenty of time Weve
scheduled an hour and a half for this We
will try our best to get you out on timel so
you can run for the airports Snow is not
supposed to begin until later this evening
We are doing this slightly
differently than our normal procedure because
this is a status conference as well as an
expedited oral argument As usual well go
ahead and allocate one half an hour
approximately to each party But the order
the parties will be slightly different than
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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yet
MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
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The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
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C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
1323 RHODE ISLAND AVE NW
(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom
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representative of a company with you
MR ALONSO Yes Im sorry This
is Sandra Snyder with Bracewell also
representing La Paloma and we do not have any
travel restrictions tonight
JUDGE MCCABE Thank you And
from the EPA side
MR TOMASOVIC My flight departs
at 8 pm
JUDGE MCCABE All right Then I
think we should have plenty of time Weve
scheduled an hour and a half for this We
will try our best to get you out on timel so
you can run for the airports Snow is not
supposed to begin until later this evening
We are doing this slightly
differently than our normal procedure because
this is a status conference as well as an
expedited oral argument As usual well go
ahead and allocate one half an hour
approximately to each party But the order
the parties will be slightly different than
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
1323 RHODE ISLAND AVE NW (202) 234-4433 WASHINGTON DC 20005-3701 wwwnealrgrosscom
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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yet
MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
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The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
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assert 567 5022 5412 5514 10922 113321 114519 137314 assign 63 19 69 10 581578198911158 1165 1171 baseload 15 1922
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4819514632174 17 86522 1423123 1 124916 4622 5622 622 641 8119848 Bracewell 25 73 128 13 12516 126515642814 1039 9113 1109assigning 61 816 brand 56221285 129 1510821 11721 12020 Brian 3210581061 176312 714 1301222 13148 basing 104 10 12316 13720 brief5447511assignment 778 13114 132414basis 1756 1821 13816 13914assigns 70 12 7913 80281111346 13551036361206510 1404 14321assume 61922 87 841090511531361620 1372 6521 6815612
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164
C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
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usual
We will start in this case with
the permitee with La Paloma Energy Center
who I will refer to briefly as La Paloma I
suspect the other judges will be doing that
too for the record Because we have some
status questions for you which I assume will
not surprise you given our scheduling order
Those answers to those questions may inform
the rest of the discussion that we have here
today so we thought it best to begin with La
Paloma
Normally of course our practice
would be to begin with the petitioner the
Sierra Club So in this case Mr Bender Im
going to give you your choice as to whether
you would like to go second or third Some
people like to have the first word some
people like to have the last word
You also have the option if you
choose to go second after La Paloma to
reserve five minutes of your time for rebuttal
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after EPA What would you like to do
MR BENDER I I 11 combine both and
do it all together
JUDGE MCCABE Okay Thats the
way weIll proceed then WeIll begin first
with La Paloma
mentioned l if we didnt we should have in ourI
order to you l were not expecting you or
asking you to make any formal presentations
today I as you would in the normal oral
argument
In the interest of timel please
presume that weve read your briefs l that
were famil with the records And in the
interest of saving time and getting you out of
here weld like to focus right away on the
judges questions If you have anything that
you would like to say very briefly first l
thoughl please 1 us know that and feel free
Mr onso
MR ALONSO Thank you Judges
And we just want to first start off by
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recognizing and thanking you for expediting
this appeal I believe the briefs were
submitted on December 27th and the Board
reached out to us just a couple of weeks later
to schedule this argument So were really
appreciative of that We are prepared to
answer your questions presented in your order
as well as any other issue thats before the
Court
As to your first issue you asked
us to report on the status of the projects
First 1 me address the construction time
line We currently have all government
approvals that are required for pre-
construction as well as agreements that we
need wi th governments We have tax agreements
that were completed We have a water supply
agreement with the local water works We have
land agreements in place We have our TCEQ
Air Permit that was finali in February of
2013
The two main components that we
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are missing right now is number one
financing Financing is contingent on
receiving a final PSD permit Once we receive
a final agency action on the permit we expect
to close that financing in short order right
ter that
As far as construction we have in
EPC the engineering procurement and
construction contract completed That was
executed in September of 2013 So shortly
er this closing we can start construction
shortly right after that That was wi th
Bechtel Power Corporation and again they are
standing by ready to start construction
JUDGE MCCABE Most importantly
Mr Alonso could you address whether youve
selected your turbine yet
MR ALONSO Yes we are prepared
to talk about that We have preliminarily
identified the preferred turbine that we would
like to install at this site It is the GE
7FA turbine However we are currently
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various escalation clauses of our existing
contracts including for the turbine in the
sense that we have planned to be done with
this process on January 1st Not just the
contract for the turbine but for other
components of the site every day that goes on
the cl is paying escalation fees on that
contract
JUDGE MCCABE So do you have a
turb contract or not
MR ALONSO We do have a spot for
manufacturing of the turbine
JUDGE MCCABE So is that like
reserving a place in case you decide to put in
your order
MR ALONSO Correct And that
deadline is April 1st On April 1st we have
what happened ter January is that we
negotiated our escalation clauses through
April 1st Come April 1st I think that the
weIll come April 1st I we would have to
renegotiate that contract And most likely I
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we can maybe even consider selecting one of
the other turbines that are in this permit
So if we dont have a final permit
in the next you know -- and Im not putting
any pressure on you guys but as of April
1st I think that the well I know the
developer would like the flexibility to
install anyone of these three turbines
JUDGE MCCABE Im not sure Im
completely following you What happens -shy
lets try it this way What happens if you
get your permit tomorrow
MR ALONSO If we get our permit
tomorrow we would close our financing a
couple of weeks later and we could start and
then we would put in a notice for the
procurement finalizing the GE 7FA turbine
contract
JUDGE MCCABE And how soon could
that happen or would that happen
MR ALONSO That would happen
upon closing and we would -shy
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JUDGE MCCABE So are we talking
about a week two weeks a month
MR ALONSO Yes My
understanding the information that I have is
that closing can happen in its a matter of
weeks a couple of weeks after we receive a
final permit
JUDGE MCCABE Okay So when you
say youve preliminary picked this GE 7FA
turbine -- can we just refer to that as the GE
turbine
MR ALONSO Sure
JUDGE MCCABE Its the only one
right thats a GE Okay Well call this
the GE turbine Youve preliminary selected
that If you get your permit tomorrow is
there any reason that youll change that
choice
MR ALONSO Most likely not If
we get our permit tomorrow if we get it
before April 1st we are probably we are most
likely yes going to select we are going to
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select the turbine
JUDGE MCCABE Okay If you get
your permit before April 1st you will select
the GE turbine is that correct
MR ALONSO That is yes
JUDGE MCCABE And my
understanding of this turbine is that its the
smallest of the three and according to heat
rates the least efficient the one to which
the region has assigned the highest GHG
ssion limit is that correct
MR ALONSO That is correct
JUDGE MCCABE Okay That will
very much inform the rest of our discussion
Thank you Mr Alonso Do you know yet
another question on your preparation here do
you know yet where the facility will be placed
in the ERCOT dispatch order and whether it
will be operated as a baseload or load cycling
facility
MR ALONSO Our plan is to
operate this as a baseload uni t However we
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will respond to the ERCOT orders as they come
I mean in Texas our business plan is to
operate this as a baseload unit
JUDGE MCCABE Does ERCOT give you
any preview of that
MR ALONSO Excuse me
JUDGE MCCABE Does ERCOT give you
any advanced notice as to whether youre going
to be likely operated as a baseload or not
MR ALONSO Our intention is to
operate it as a baseload Im not qui sure
about we can follow up with you on that as
far as ERCOT notices Im not prepared to
talk about the ERCOT notices But to the
extent that ERCOT manages dispatching we will
comply with their orders
JUDGE MCCABE Okay And you
expect at this point based on current
condi ons which I understand can change if
other plants come online or other things
happen you expect based on current
conditions that youll be dispatched high
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enough in the order that this will be a
baseload plant and therefore it will be
operated at 100-percent capacity
MR ALONSO Pretty close to it
JUDGE MCCABE On a regular basis
MR ALONSO On a regular basis
we would like to have you know utilize this
as much as possible Keep in mind though
while we do have the you know as an EPA
administrative record yes larger turbines
may be more efficient But at the end of the
day they also have higher mass emissions
And so when you look at it from an
environmental perspective to the ent that
an environmental impact plays into that the
environment really feels the impact of the
mass limit more than anything else I believe
JUDGE MCCABE Understood Okay
Can you tell us a little bit about what was
the chief factor that drove the companys
selection of the turbine how important was
the capacity or size for example
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MR ALONSO I dont know the ins
and outs why they selected that turbine
I believe its just commercial terms It was
the better commercial term -shy
JUDGE MCCABE Would you like to
consult with your client at all to see if you
can clarify that answer
MR ALONSO Sure Shes here
JUDGE MCCABE This may help you
Some of the questions that were also
interested in are how important was the
capacity or size the uni t in terms of your
decision to s the GE turbine and how do
the relative heat rates or the GHG emission
rates affect decision Did they affect
that decision if its made
MR ALONSO The way that this
project was developed is that we went out for
competitive bids of at least three turbines
And based on the necessary heat rate the
forecast of demand that was the basis of the
select ion It was not based on you know any
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other factors except for trying to meet the
purpose of the proj ect which is to supply the
load and the heat rates and the financial
arrangements that resulted from that bid
process
JUDGE HILL Was that forecast of
demand strictly internal or was it something
dictated by either EReOT or some other
external entity
MR ALONSO La Paloma is a
merchant power plant Wei re not regulated so
its not that wei to extent that your
question is to whether or not we had any
regulatory oversight -shy
JUDGE HILL Or just external
information or some sort of external driver
I guess
MR ALONSO me consul t wi th
- sorrYI I just wasnt prepared
JUDGE HILL No thats okay
MR ALONSO So specific
questions Okay
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JUDGE MCCABE But we appreciate
your corning
MR ALONSO But Im glad that
Kathleen the proj ect developer Kathleen
Smi th is here wi th us today When you develop
these projects yes they went out they had
third party evaluations of load demand and
what would fit for this market absolutely
JUDGE HILL Okay
MR ALONSO I mean its -shy
JUDGE HILL Let me ask one other
follow-up You said at the very outset Mr
Alonso that you had preliminarily identified
the GE turbine and the record before us is
that certainly at the time of the application
that decision hadnt been made Im not
asking for a specific date but roughly when
was that determination made relative
because Im curious how it relates to this
proceeding
MR ALONSO So again we made
the selection based on closing in January but
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the selection of the turbine was made in
August expecting to be you know
manufactured and installed in January So to
answer your question it was August of 2013
JUDGE HILL Did you communicate
that to the region at that time
MR ALONSO No because again
because of the timing of this permit it is a
preliminary determination At that time in
August if we were 100-percent certain that we
would get a permi t in January sure we
probably would have you know told the region
and maybe the final permit may have looked
differently But we couldnt put our eggs
all our eggs in that one basket at that time
JUDGE MCCABE What was your
understanding Mr Alonso of what the region
planned to do once you made your turbine
section Will they revise your permit or
leave in those three original limits
MR ALONSO We have a special
condition in the permit that requires that La
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Paloma submit an amended permit application to
remove the other two turbines that are not
selected from the permit So it would be a
deletion of the two other turbines that are
not selected
JUDGE STEIN Why if youve made
the decision to proceed with this particular
turbine if you receive your permit within the
time frame that is necessary for you would
you be revisiting that question if you dont
get the permit until May
MR ALONSO If we -shy
JUDGE STEIN Just hypothetically
if you get the permit a month after why is it
that suddenly thats an open question again
Im having difficulty understanding that
MR ALONSO Correct Our current
negotiations on the escalation clauses of the
contracts we have currently negotiated terms
through April 1st At that point youre
right we would have an option to negotiate
further or more likely than not we could we
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might go through another bid process to
determine whether or not maybe another turbine
might be more beneficial from an economic
perspective to install
JUDGE STEIN Thank you
JUDGE MCCABE Just to make sure
the record is clear on this though at this
point youre telling us that if the company
gets its final PSD permit from EPA before
April 1st it will be the GE turbine
MR ALONSO That is my
understanding
JUDGE MCCABE Okay Would you
like to qualify that statement
MR ALONSO Right The problem
is that again we cannot make a final
decision on the turbine until after we get the
permit because youre only going to reserve
your place line for a certain amount of
time at the manufacturing plant
JUDGE MCCABE But if you get your
permit tomorrow or anytime before April 1st
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or perhaps you need a week advanced notice
then you would be choosing the GE turbine We
can rely on that
MR ALONSO Yes
JUDGE MCCABE Is that correct
MR ALONSO More likely than not
we will be selecting that turbine
JUDGE MCCABE When you say more
likely than not or preliminary then Im not
sure what youre telling me Mr Alonso
Which is it Will you have that GE turbine be
your selection
JUDGE HILL What else might
prevent you from going ahead with the GE
turbine if there were a decision before April
1st is another way to ask the question
MR ALONSO To maintain
flexibility I mean thats one of the
purpose were here I mean if we get a call
tomorrow from Siemens saying that theyre
going to give us the turbine at five cents
maybe wed go with the Siemens
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JUDGE MCCABE So price matters
MR ALONSO Absolutely
JUDGE HILL Price really I I meant
but
MR ALONSO The likelihood of
that is minimal
IJUDGE HILL But let s explore
that for a second because it sort of takes us
to the other direction So if you so ifl
Siemens were tOI you know I mean I and I can
certainly relate to this 11m trying to do
some home maintenance But so they come in
with a bid youre not expecting l and you saYI
You know what That I s the one we should go
with thats going to be one of the larger
turbines So what will happen in terms of
your demand forecast or I I meanl how will you
operate that plan
MR ALONSO It may not fit the
business plan at the time I meanl we would
like to maintain the flexibility of selecting
the turbine as much as we can in this final
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permit Everything is in place that if we
were to get a final permit tomorrow that the
GE turbine would be used However we still
want I dont want to tell you that its 100shy
percent guaranteed We would like to maintain
that flexibility
JUDGE MCCABE But you understand
s your very desire to maintain that
flexibility that leads us all to be here
today right As I understand it the main
issue that the petitioners have with the limit
that was chosen in this case is the fact that
you are reserving flexibility to make this
choice after you get your permit
MR ALONSO But the limit is the
limit doesnt satisfy region as appropriate
and valid under BACT What the permitee is
arguing here today is that somehow we start
off with a class of control devices The
region has identified combustion combined
cycle turbines as a control class That is
your step one BACT is an evolution all the
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way through step five Once you get to step
five the purpose and the intent of step five
is to impose an emission limit looking at
those control devices and its not just
combined cycle We have a whole list of
technologies that were identified by the
region that apply to each of these turbines
At that point you look at the
ssion unit and you develop a unit-specific
emission rate that reflects the technology as
its supplied to that particular emission
unit
JUDGE MCCABE Dont you also look
at comparable units located at other
facilities when the permitting authority makes
that decision
MR ALONSO Absolutely You look
at technologies at other through the
clearinghouse and other technical information
That is your step two analysis absolutely
JUDGE MCCABE Then why wouldnt
you look at other turbines that are available
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MR ALONSO Im sorry
JUDGE MCCABE Then why wouldnt
you look at these other turbines that are
available
MR ALONSO You look at the other
turbines as - - well f are you saying the other
turbines that are mentioned
JUDGE MCCABE The Siemens
turbines
MR ALONSO The Siemens turbines
and the GE turbines have the exact same
technology installed Again at the end
and Siemens does not make the identical
products Theres going to be some
variability amongst those products and I
would argue that the actual impact of these
units or these emission rates arent that
off from each other But in step five the
region looked at the turbines and looked at
as this board has approved in the past and in
particular in Prairie State the ability to
take into consideration operational
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variability compliance headroom and other
factors made to ensure that the BACT limit at
the end of the day is workable and something
that can be achievable from a compliance
perspective
JUDGE MCCABE Mr Alonso wed
like to go on to that subject of the relative
heat rates and therefore the GHG emission
rates of these three turbines But before we
leave the subj ect that we are on of the
criteria that the company used perhaps past
tense or might in the future if something
unexpected happens use in the future to
select the turbine I heard you say two
primary things And I know were several
beats back on the questioning now But I
heard you say the forecast of demand how much
power you can 1 -- Im sure where ERCOT
will dispatch you is part of that equation -shy
and the heat rates Are those the two most
important factors to the company in selecting
the turbine Price obviously has something
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to do with this too
MR ALONSO Yes I mean and the
result of the bidding process and how that
and the third-party analysis of the energy
demand and everything else Absolutely
JUDGE HILL So are you really
saying to a large extent price is the
primary driver
MR ALONSO No not necessarily
I mean its what fits for this particular
you know looking at the forecast -shy
JUDGE HILL But its the balance
of price to demand to efficiency
MR ALONSO Sure Im sure
There is a cost component to this but its
not a cost component as specified in step four
of the BACT analysis
JUDGE HILL No Im not doing
BACT right now Im talking about just the
decision of which one to install
MR ALONSO Sure Its a
business decision and the product developer
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would like to maintain that flexibility At
the time the permit was submitted we
concurrently went and did basically a dual
process of trying to get a PSD permi t and try
to come to terms with all these agreements
whether the turbine or your tax agreement
your water use agreement And thats why our
initial application had three turb s in it
To say that we had to do I that
work up-front and then wait another two years
to get a PSD permit it would really delay the
proj ect and lose a window opportunity
currently right now at ERCOT where there are
some energy constraints in Texas This is a
very good time to build a gas-fired power
plant in Texas
JUDGE STEIN I want to follow up
Are you -shy
JUDGE HILL Yes yes
JUDGE STEIN I wanted to follow
up on your decision of the ous steps of
the BACT process I understand your wanting
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to have flexibility to the last possible
moment At the same time ordinarily in the
step two analysis you would be looking at
whether technologies are available and
applicable And if somebody was going to
drive the company to say you should build a
size thats too small or too large its my
understanding that there would be an
opportunity at that point for commenters to
explain why a different size unit might be
appropriate and you in turn would have an
opportunity to say well that doesnt work
for us
But by keeping the flexibility
until the end of the process my question is
whether you have deprived either citizens
groups or other comn1enters of the opportunity
to meaningfully comment at an earlier phase of
the process And therefore by keeping your
flexibility to the last moment you are
perhaps you should assume the risk for having
done that
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I mean in pio Pico we briefly
talked about the sizing issues Weve
acknowledged I understand your points on you
get to pick the size But if you pick it so
late in the process that nobody else can
meaningfullycomment notwithstandingthe size
you want to pick if you pick it a little
bigger its much more efficient how can that
happen if you wait until the end the
process to choose to say what technology you
the company want to go with
MR ALONSO First of 1 you
know recognizing BACT and step two Im not
aware of any precedent in PSD permitting or
from this board that somehow size and
itself is a control device Step two and to
a certain extent I step one is to identify
control devices you know technology that
would be applied to a given emission unit or
a given source And I believe that its been
pretty well established that the permittee has
a lot of flexibility in deciding the design
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factors in how the plant is designed I
would you know ask the Board to consider
that size is not a control device its more
a design criteria that is used by permittees
when they go to design a source
IJUDGE STEIN Yes I m not
thinking of size as a control technology I
see the control technology as combined cycle
turbines But when you look at combined cycle
turbines youve looked at three different
models They have different efficiencies We
can get later people can tell us whether
theyre comparable or theyre not But if the
company is headed towards a particular
efficiency and the agency or other commenters
think they should be headed elsewhere that
this particular technology combined cycle
turbines can get you a more efficient
process where in the process are they
supposed to raise that
MR ALONSO They could raise that
in how the technologies are defined and
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developed in step two
JUDGE MCCABE You may be hurting
Mr Richies ears doing that so
MR ALONSO Sorry sorry Region
6 identified roughly four different energy
efficiency and processes or practices that
apply to the class of this technology which
is a combined cycle class The public has
full opportunity and they had in this permit
to comment on exactly that whether its
installation whether its installing an
efficient heat exchanger design economizer
exhaust steam These are the control devices
that apply to the class of technology which is
whats known as combined cycle
That list today is what we have
today That list was different ten years ago
and its going to be different ten years from
now because BACT evolves That is where the
public has its say
To set a one-level you know all-
combined cycle must be 90 the 9092 pound
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I Iper C02 megawatt hour that s not BACT BACT
is set on a case-by-case emission unit-
specific basis What Sierra Club is basically
asking this board to consider is taking that
one limitl the 90921 and apply it to two
other totally different combined cycle
turbines I and I dont see that as what is
intended by BACT
JUDGE MCCABE That brings us to
an interesting question Can the GE turbine l
which you are most likely to select l to quote
you l achieve the GHG emissions rate that the
region established the Siemens turbine
MR ALONSO First of all weI
think that to require the GE turbine to meet
that limit would be asking the permittee to
over comply with an adequately-developedBACT
limit We dont think -shy
JUDGE MCCABE 11m asking you for
a factual answer l Mr Alonso
MR ALONSO From a factual
question l I mean l 1 1 m not
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JUDGE MCCABE Would you like to
consult with your client
MR ALONSO Yes okay We are
not prepared at this time to say 100 percent
whether or not we can meet that limit What
we would have to do is possibly de-rate We
might have shy
JUDGE MCCABE Possibly what
MR ALONSO De-rate the unit
JUDGE MCCABE De
MR ALONSO The unit may be not
at its maximum capacity
JUDGE MCCABE What would that do
Explain that
JUDGE HILL You mean run it
greater than capacity
JUDGE MCCABE Yes he means if
they de-rate it that they would operate it at
less than its 1 capacity What would that
do to your heat rate
MR ALONSO Probably not much
But they would have to do something
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operational to unit to basically comply
with that limit Plus we would not have the
compliance headroom that was developed for
degradation factors We might be able to meet
it day one but who knows in ten years And
just operation flexibility It would be
really difficult to commit to that limit
JUDGE MCCABE Let me see if Im
understanding you correctly I hear you say
that de-rating it would be one option to meet
that GHG emissions limit because its a total
limit even though your efficiency rate would
clearly go down if you de-rated it I hear
you saying that option number two would
essentially be to take it out of your
compliance margin which the petitioner has
characterized as generous I believe in its
comments on this permit Are those the only
two ways that the company could meet the heat
or the GHG emission limit that the region set
for the Siemens turbines in using the GE
turbine
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MR ALONSO I mean we can follow
up wi th the Board on this but to the extent
of whether or not theres other engineering
solutions or modifications to that turbine
that could be done tOI you know l basically
change the design of this unitl I meanl I
think that I s why we went through the BACT
process l though I meanl the end-of -day
emission limit is based on vendor information
that we obtain from GEl and the region took
that and applied the control technologies to
those numbers I and thats how we establish
BACT limits at the end of the day is you take
those control technologies and you impose them
onto the uni t that s supposed to be buil t I youI
work in compliance headroom l and it wasl you
know I and this board is generally deferred to
EPA techni staff on issues about compliance
headroom and whats -shy
JUDGE MCCABE I dont even think
thats an issue on this appeal l so you dont
need to go there
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MR ALONSO Well no no no To
the extent that you said that the Sierra Club
thinks that compliance headrooms are generous
JUDGE MCCABE That was just a
comment They didnt raise it on appeal
MR ALONSO Okay
JUDGE MCCABE But let me ask you
this Mr Alonso Im hearing essentially
that the only two ways that you could that
the company could meet the limit on the GE
turbine would be to either de-rate it in
which case youre not getting the power that
you want out it or to take it out of your
compliance margin which is effectively
somewhat lowering your limit really
But Im puzzled about one thing
Didnt the company in its original permit
application propose to use the average of
propose to set the permit limit at the average
the GHG emission rates or heat rates of the
three uni ts the three turbines And if
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thats the case isnt that an admission that
you can actually meet the more-demanding
emission limit on the less efficient unit
MR ALONSO Let me just say when
we initially submitted this permit
application we used the LCRA permit that
Region 6 had processed and finalized in a
period of six months
JUDGE HILL Im sorry What is
LCRA
MR ALONSO The Lower River
Colorado Authority They permitted a gas
plant in Region 6 It was not appealed to
this board So we modeled it after that
application
JUDGE MCCABE You modeled your
application after theirs
MR ALONSO To a certain extent
because it worked at Region 6 as far as this
averaging It turns out that once between
draft and final LCRA was able to select the
turbine and they selected a turbine The
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timing worked for them given their
development path
JUDGE MCCABE Im sorry You
said they selected theirs between the draft
and final permits
MR ALONSO They did And ir
final permit came out with one turbine But
thats a different project dif
development path
JUDGE HILL Well but I think the
question is youre saying that if you were to
apply the Siemens emission limit to the GE
turbine that that would over comply But if
the permit limit were set at the average of
the three and you would as you apparently are
almost likely to do select the GE turbine
then youre going to meet a lower limit than
the limit that would have been set on the GE
turbine alone So would you have been arguing
that that was over-compliance as well
MR ALONSO I mean the record
speaks for itself I mean obviously if we
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submit a permit application agreeing to a
certain limit we would have to you know
probably shave our compliance headroom But
it doesnt it doesnt I mean the issue
before the Board though I believe is whether
or not Region 6 acted properly in its BACT
analysis of these three turbines of these
particular emission units Whether or not a
unit can over comply or whether a permittee
can take a voluntarily limit to reduce its
emissions I believe thats outside of the
BACT process
JUDGE STEIN But I think what is
inside the BACT process is whether or not the
emissions limit that the region has selected
is in fact BACT And thats what Im
struggling with This case comes to us in a
somewhat unusual setting in that I dont
recall in my many years on the Board ever
seeing a situation and its possible that we
did in which three different emissions limits
were picked for the same unit
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Now Im not saying its not
happening Im simply saying that I dont
have any experience with that And what Im
more famil with is a control technology
being p whether its I you know a
scrubber or something else and within thatl
technology I the company being called upon
through the BACT process to meet an emissions
limit that reflects the best emissions limit
that that technology can achieve
And if the technology is combined
cycle then clearly there are certain sizes
of combined cycle that may be able to achieve
a better emissions than the unit that youre
picking And I dont have a problem with
somebody saying to me well we can I t do that
because of A B and C But my problem is
whether BACT automatically gets picked by
size rather than what the class of technology
is capable of performing
MR ALONSO Again I think two
points as to previous practices I meanl we
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have identified seven GHG permits or Im
sorry PSD permits that have throughout the
country and different permitting authorities
further research identified five more where
you have two or three emission units and all
units have dif rates They range from
California Arizona Florida Oregon North
Carolina So it is an established
practice out there in the permitting
JUDGE STEIN Were those
federally-issued permits or state-issued
permits if you know
MR ALONSO They were well you
know they were all state-issued permits but
some of those were in delegated states such
as Washington the s of Florida so they
are federal permits I agree that I dont
believe that this issue has come before the
Board but keep in mind BACT is a progression
And I think in step one the technology is
combined cycle And you take that technology
and you run it through the five steps But at
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the end of the day in step five if you take
the design of the emission unit thats being
proposed to be installed and you take those
technologies you know the use of rehea t
cycles the exhaust steam condensers the
generator design and all these things apply
to each of the three turbines
And at the end of the day in step
five whats the purpose of step five The
purpose of step five is to take that
progression and look at the emission unit
being proposed and develop an enforceable BACT
limit BACT is a limit based on technology
thats being identified through the step one
through four
JUDGE HILL Thats basically the
three separate applications argument am I
correct
MR ALONSO At the end of the
day we could have possibly submitted three
different applications and you would have had
to - - to do otherwise you would be basically
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setting sort of like an NSPS where you say all
combined cycles need to meet this one limit
across the board No matter where you are l
who you are l which manufacturer you use l what
color your turbine iS you need to meet thisI
limit Thats not what BACT is
JUDGE MCCABE Well the problem
with that analysis of course Mr Alonso isl
that if we take it to the full ent of what
youre suggesting you get to pick the
emission limit according to which turbine you
pick And I dont believe thats what the
permitting authority is supposed to do But
we dont need to debate this issue further
Wed like to turn before we leave
you and go to EPA 1 to the solar issue And my
question to you is is it possible -- again
here were talking facts not legal conclusion
to install some solar-generating capacity
at this proposed facility And what
information in the record can you cite us to
support your answer l whatever that answer is
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MR ALONSO On the solar pre-heat
issuel first of alII solar pre-heat is not a
control device to be identified in step one
Your factual question l can it be inst led at
this ilitYI in a meaningful waYI no We
only have 20 acres left over after we build
this proj ect
JUDGE HILL Is that in the
record
JUDGE MCCABE Is that in the
record
MR ALONSO NO I it is not Its
not in the record because againl what is in
the record is that Region 6 determined that
installing based on this boards precedent l
installing solar pre-heat or using solar as
some type of alternative fuel for this plant
would be re-designing the source
JUDGE MCCABE Well go back to
your explanation about the 20 acres Explain
to us
IMR ALONSO Okay First theres
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the 20 acres There s not enough space I landI
to make solar pre-heat a feasible or economic
technology Palmdale had 250 - something acres I
you know l a vast amount of land
Second l this plant is pretty close
to the Texas coast vulnerable to hurricanesI
Who knows if regulators of local communities
would even let us build such a large solar
field in this areal given the threat of
hurricanes
JUDGE MCCABE Is there anything
in the record for us to look at on that
IMR ALONSO No I again in the
record solar pre-heat is defined aS I would bel
redefining the source And this board has
already ruled on this issue In Palmdale thel
petitioner sought to have Palmdale install
even more solar energy than it already had
proposed and this board said that that wouldl
be redefining the source
JUDGE MCCABE I don I t bel ieve
lthat s what we said Mr Alonso I believe we
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said that redefining the source was clear if
you were talking about making it a 100-percent
solar facility
MR ALONSO Correct
JUDGE MCCABE That is quite
different from what youre talking about here
MR ALONSO Well I point the
Board then to Sierra Pacific In that case
there was a dual fuel plant biomass as well
as natural gas and the petitioner sought to
have the permitting authority to force
installation of solar and this board there
said it was redefining the source
JUDGE MCCABE And what did they
base that on
MR ALONSO Im sorry
JUDGE MCCABE I dont believe
that the Board made such a broad statement
that any time you introduce solar that it
would be redefining the source Do you recall
in Sierra Pacific what the reason was that the
Board concluded that
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MR ALONSO I do not
JUDGE MCCABE Okay Well I
wont make you do that homework right now We
actually know that Go ahead back to if you
would to the factual question because thats
the one were most interested for todays
purposes about whether its actually possible
and what there is in the record that t Is us
yes or no on that
MR ALONSO Okay Well first Il
mentioned that theres not enough land l the
hurricane situation The second issue is
Paloma is not in the renewable business They
doni t have the resources to go out and do
solar studies They would need to retra or
redo their business model in order to look at
alternative energy or renewable energy
JUDGE MCCABE Do they build their
own turbines
MR ALONSO They build gas
turbines yes
JUDGE MCCABE They build them or
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they buy them
MR ALONSO They dont do wind
they dont do solar
JUDGE MCCABE Do they use
subcontractors
MR ALONSO I mean this is
something that they would have to develop as
a business unit and will take time to go out
and get experts hire them on staff or go get
third-party folks Its just not part of
their business plan
JUDGE MCCABE Mr Alonso what do
you think the company responded the first time
the first company was asked to put on an SCR
MR ALONSO They probably said it
was unfeasible
JUDGE MCCABE They probably did
They probably also said they werent in the
business There has to be a first time
doesnt-shy
MR ALONSO No I think that as
far as being in the business I mean theyre
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in the business of burning coal And they
know that they have to put on pollution
control -shy
JUDGE HILL And I think Sierra
Clubs argument would be that La Paloma is in
the business of generating energy as
efficiently as possible in South Texas I
mean put aside the hurricane issue for a
moment but if there were enough land you
know the stated business purpose in the
application is to produce between 637 and 735
megawatts of energy I mean thats the
stated business purpose not to produce it
per se exclusively with natural gas That
may be their preference but Im not sure
thats what the record shows
MR ALONSO I mean the purpose
of citing this plant is to use the reclaimed
water from the municipality as cooling water
Theres also a natural gas pipeline close by
to this facility That is -- and the intent
is to maximize the use of that gas pipeline
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You know shy
JUDGE HILL And that is in the
record
MR ALONSO That is in our brief
JUDGE HILL Okay
MR ALONSO But again I dont
believe that solar pre-heat would even survive
step one I mean youre king about a
redesign the source by forcing folks to
consider renewable energies at a fossil fuel
plant where thats not the intention of the
design And this board has allowed and has
recognized the ability for permit to
define the parameters of their design what
they want to build and I dont think we you
know well you guys can do what you want but
to force folks that want to build fossil fuel
natural gas plants to build wind turbines I
dont know that sounds like -shy
JUDGE MCCABE Do you know if
theres any situation where any permitting
authority has done that in the United States
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yet
MR ALONSO I have not seen a
BACT analysis resul ting in or you know to do
as an alternative particularly in step one
to consider the feasibility of a renewable
project I dont have any knowledge of that
occurring at other permitting authorities
JUDGE STEIN But what about a
hybrid pI I mean I dont think whats
being suggested here is that you convert the
principal purpose of the gas turbines I
think the question thats being asked is
whether any component of it could be solar
and I think what the Board is struggling with
is in a si tuation in which solar is not
already part of the plant design is it proper
or improper to raise questions about that If
so what is the regions obligation
I mean I dont see this as sort
of a black and white issue I see it as
youre lling us theres 20 acres Maybe
thats the record maybe its not That
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may be relevant to how you answer that
question in this case as opposed to some
other case
MR ALONSO It really goes to
whether or not solar or renewable energy
should be considered a control device in step
one And I would assert no its a different
fuel source Youre redesigning when people
go to build solar plants or hybrid plants
even hybrid plants you go in and thats what
you want to build and you have a business plan
and an engineering design for a hybrid plant
and thats what you want to get permitted
But if youre out building a gas-
fired power plant and solar is not a
component I mean nowhere in the record is
there anything about La Paloma interested in
building a solar plant We want to build a
natural gas fire plant and thats the source
that should be permitted not some alternative
design And a hybrid plant would be forcing
basically brand new engineering you have to
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study you know solar rays and the impact
whether or not its efficient in this area
It would just be a totally different design or
engineering effort to design a hybrid plant
versus the plant that were trying to permit
here
JUDGE MCCABE Okay Thank you
Mr Alonso We take your point and you may
be seated And we will hear next from EPA
and Judge Hill will take the lead on questions
for EPA but be resting assured that we will
all have questions for you
JUDGE Let me start by
asking how you pronounce your name so I dont
mess it up
MR TOMASOVIC I will generally
say Tomasovic but
JUDGE HI Tomasovic
MR TOMASOVIC - - Tomasovic is
fine if you want to go old country
JUDGE HILL What do you prefer
MR TOMASOVIC Tomasovic
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JUDGE HILL Tomasovic okay So
this is purely a hypothetical question but
in your experience or in the experience
generally of the region when does a permit
applicant decide what their you know what
their turbine is going to be or what their
size is going to be or the precise design
factors of the source Does it typically
happen before they submit the permit
application after both
MR TOMASOVIC I think it could
be a variety of things your Honor Looking
through historical permitting actions we did
find that there are a couple of cases that
happened before the Board that had permit
structured such as this that had permitted
multiple turbine options You wouldnt be
able to see it from the face of the decisions
and it wouldnt be something that you could
discern from the challenges that were raised
but the Three Mountain Power decision in 2001
is one such example and there was a case
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where a petition was dismissed for being a
minor source permit But clearly on the
face of that decision which was Carlton Inc
North Shore Plant in 2001 it described a
minor NSR permit with multiple turbine
options
JUDGE MCCABE Could you repeat
the name of that one please
MR TOMASOVIC Carlton Inc
JUDGE MCCABE Carlton Inc
MR TOMASOVI C North Shore
Plant
JUDGE HILL Do you have a cite on
that or you said it was dismissed as -shy
MR TOMASOVIC It was 2001 and
it was a published decision your Honor
JUDGE HILL Okay Now my
understanding of Three Mountain Power is that
they allowed for different equipment but they
only specified a single emission limit
MR TOMASOVIC It does show that
in the RBLC sir but we tracked down the
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permit and actually what happens is
different permit issuers will input different
data into the RBLC We gave you approximately
ten RBLC numbers and in almost all those
cases you are going to see different BACT
limits depending on what types of BACT limit
is being assigned
And under the Three Mountain Power
permit that was issued there were multiple
types of limits other than the concentration
limits So the hourly limits the pounds per
hour limits the annual ton per year limits
just as in our permit show that with each
turbine option different limits apply
JUDGE HI And what was the
control technology in those cases or can you
generalize on that I mean one of the things
that makes this a challenging case I think
in part is because the control technology is
I I mean you know is also essentially the
plant design because what youre trying to do
is simply maximize the effici use
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inherently Are those others cases are any
of those similar or are they all about add-on
technologies
MR TOMASOVIC I bel ieve these
days the conventional thing is that for add-on
control technology wi th turbines is SCR For
other limits such as PM and carbon monoxide
youre assigning limits inherent to good
combustion practices inherent to the equipment
that is selected And thats reflected in the
TCEQ permit that was issued for La Paloma in
this case which like ours followed an
application that asked for the flexibility to
consider multiple options And as a
practical matter when the permit writer is
assigning those limits they have to look at
the specs inherent to the turbine in assigning
both the worst case emissions but also those
emissions that reflect whats good operation
on an hourly basis
JUDGE HILL Does the TCEQ permit
have this condition that says that once the
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turb selection decision is made then the
permit is going to be amended to basically
take out reference to the other two turbines
MR TOMASOVI C It does and I
believe that may be a practice that varies by
permit issuer I didnt notice that when I
looked at the Three Mountain Power permi t I
also have on hand a listed RBLC number for a
orida permit in 2000 I didnt notice
provision there
For what we have as a special
condition theres no time set requirement on
when they would need to come in and modify it
Its more of a back-end cost-keeping
requirement where they indicate what their
selection would be and the permit issuer
would simplify the permit so its more
readable enforcement purposes
JUDGE HILL And thats the reason
to do it Because if you take Mr Alonsos
argument kind of to its logical conclusion
then they get to select the turbine and
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therefore they get the limit that applies to
that turb But youre saying that that
condition was put in there just to make the
permit cleaner to read in essence
MR TOMASOVIC Its not the case
as the petitioners have argued that they get
to choose their emissions rate Thats not
what they to choose They get to choose
their capacity they get to choose the
equipment and the various designs of equipment
that we couldnt differentiate for efficiency
purposes in assigning limits for a final
permit
So even as those limits look
numerically different in the permit we have
a technical decision on the part of the permit
issuer that says these are comparable and they
dont implicate a weakening of the BACT
requirement that we decided to assign the
limits this way
LL I want to come back
to the comparable because I think that thats
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an important issue But getting back to this
full issue of basically the selection
decision Sierra Clubs essential argument is
that since the control technology here is
maximum efficiency within a range and given
that La Paloma defined the business purpose as
build a plant thats between the capacity of
the smallest capacity turbine and the largest
capacity turbine that they should have to use
the most efficient control technology which
in this case would be the most efficient
turbine Do you agree Could the agency have
told La Paloma look you can pick whatever
turbine you want but youve got to run it as
if it were the most efficient because thats
BACT Does the agency have that authority
MR TOMASOVIC Speaking for
Region 6 with this permit there are multiplel
ways that I think permit issuers could have
decided to come out in the final permit We
decided l based on the design heat rates the
best data we had for the operational factor
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that would apply to this equipment plus a
consistent safety margin for all three
options that there are these three limits
that come out
And if we chose to express those
limits in their different format for instance
the net heat rate the picture would actually
be qui different So it is a distorted a
bit of a distorted picture to say that GHG
BACT on a gross output basis is the ultimate
measurement of what is efficient
JUDGE HILL Why would it look
different Please explain that further What
would happen if you use net
MR TOMASOVIC So what appears
from the of the permit is that the
largest difference in efficiency is 27
percent In our response to comments on page
II we actually provided the numbers to show
what that dif would look like on a net
basis which is I believe the format that
the limits were expressed in the Palmdale
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decision l as well as even earlier permits
issued by Region 6
And permit issuers do have
discretion at this timel in the absence of
guidance to consider the comments that comeI
in and decide which type of limit is going to
be most meaningful for putting BACT in place
But -shy
JUDGE LL So I cant do math in
my head but Im looking at those numbers So
youve got for the GE turbine the net heat
rate would be 7527 and for the Siemens it
would be 7771 Isnt that about two and a
half percent I or is it less than that
MR TOMASOVIC WeIll I think what
you want to look to is if you can see a 9452I
number -shy
JUDGE HILL Okay That I S the
emission limit
MR TOMASOVIC -- and the 9444
number
JUDGE HILL And then a 965
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number
MR TOMASOVI C I f you were to ask
what the percent difference is there you
would have one-tenth of one percent of a
difference which expressed as gross shows
up as 27 percent And this is one of the
challenges with such a narrowly-written
petition It didnt challenge the reasonable
compliance margins that we assigned to each
option and it doesnt bring up issues like
the start-up emission limits which in factiI
give a different rank order if you could usel
that terminology for each of the turbine
options
JUDGE HILL All right So are
you saying that if you I mean I based on thisI
chart on page 111 that I I mean I the response
comments references the 26 earl on butl
its also got this chart And youre saying
that that chart shows that its really tiny
MR TOMASOVIC Yes your Honor
If we chose to place a final permit final
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limits in the permit on a net basis using the
same calculation methodology it would be one-
tenth of one percent
JUDGE HILL How do you decide
whether you set the limit on a gross basis or
a net basis Because I know Ive seen both
MR TOMASOVIC In this case we
evaluated the adverse comments on the issue
we looked at what was going on for instance
with the proposed NSPS which expresses those
limits at least in a proposal form on a gross
output basis We saw that in general a lot
of the performance data that is out there is
available on a gross output basis so we
decided that for permitting purposes
permitting administration purposes and for
the benefit of other permitting actions it
seemed that gross output made sense for this
permit
JUDGE HILL Okay But you had
the discretion to pick net
MR TOMASOVI C Well we dont
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close off ourselves from choosing net base
1 imi ts in future permits if for instance the
NSPS were to on the basis of comments decide
that net basis really is a preferred way to
go But we have a reasonable basis for this
permit to say so And in saying that were
not purporting to say anything that would be
determinative of how state permitting
authorities or even other regions might choose
to assign the limits for a permit that
guarantees efficiency and control of GHGs
JUDGE MCCABE I just want to get
some clarity on again the facts I love
facts If the numbers here that were going
to be looking at when we decide whether we
agree with the regions position that these
limits are really not different that theyre
comparable or whatever language you use to
describe them how would we describe that Is
it 01 percent are you telling us now Is it
27 percent Is it a range from 01 percent
to 27 percent The world looks closely at
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the facts of what we were looking at when we
draw the conclusion l so the facts matter and
311 m a Ii Ie unclear about them right now
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MR TOMASOVIC Yes l your Honor
So 111 try and go over the notes I have on
the comparability of the limits in maybe an
orderly shy
give me a
feel free
that the
JUDGE MCCABE I was hoping youd
sound bite in the end but please
to go through the notes
MR TOMASOVIC The first thing is
permit actually assigns three
different kinds of emission limits the ton
per year the start-up limits which are on a
pound-per-hour basis and this gross output
when its sendingelectricityto the grid how
efficient is in relation to the output
So if you look at those three
different limits and were to assign a rank
order under kind of turbine model I you I re
actually going to get three different orders l
permutations I suggest thatthere dif
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the net limits was another possibility for us
You would get a fourth order if you were to
assign -- and actually nothing would have
permitted us from assigning both kinds of
limits and that limit and a gross limit but
that would have been duplicative So we
decided these are the limits for the permit
So looking just at that the basis
for the challenge which is the gross limits
you have a smallest difference of one-half of
one percent Thats the difference between
909 to 912 The largest apparent difference
is 27 percent which is the difference from
909 to 9345 And this difference is not a
difference in efficiency In the commenters
letter they do throw around the term
efficiency but sometimes thats using the
context of what is power plant efficiency
which gives you a different comparison If
youre talking about engine efficiency or
power plant efficiency the 27 percent
difference is actually 12 percent
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JUDGE HILL Why is that I was
with you until that sentence
MR TOMASOVIC So
JUDGE MCCABE I think we need a
chalkboard
MR TOMASOVIC That calculation
and I think maybe the footnotes in the comment
letter explain it as 3412 divided by the heat
rate And another issue is that the
commenters use actually lower heat value for
their descriptions of the heat rate whereas
our permit is using the high heat rate
information to get the limits
But that 12 percent difference in
efficiency that kind of efficiency power
plant efficiency were talking about is what
you may read in -shy
JUDGE HILL Can you define power
plant efficiency for that purpose for me
MR TOMASOVIC Yes sir The
definition of power plant efficiency would be
what is the heat rate value of the kilowatt
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hour divided by the heat rate for the power
plant or the turbine
JUDGE HILL Okay
MR TOMASOVIC And in our case
our limits arent just the heat rate for the
turbines as though they were in simple cycle
mode but the heat rate for those turbines in
conjunction with the heat recovery steam
generator with duct burner firing So theres
a number of things going on
And we had explained that as
turbines get larger they get more efficient
And thats actually true for several reasons
but in this case its not actually because
the GE turbine is demonstrated to be
inefficient Thats not the case Its
actually the influence of the duct burners
which wasnt something that the petitioners
raised in their appeal Because each scenario
has the same size duct burners they have a
disproportionate impact in the overall heat
rate We assigned limits that included
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everything l and thats why I when Mr Alonso
was talking about de-rating that may be a
situation where is easy to figure out that
youre just cutting into the compliance margin
if we had decided to set them all the same
limit but also might be a case where they
really put limits on their use of duct
burners which cuts into the operational
flexibility that they want to have as base
load plant that has peaking type capabilities
JUDGE HILL In other words you
cant sort of size the duct burner to the size
of the turbine or
MR TOMASOVIC No your Honor
In this case the HRSG with the duct burners
is assigned to be the same for all three
scenarios
JUDGE HILL Okay all right So
is 27 percent the largest when you talk
about tons per year startup gross output and
net heat rate is 27 the largest difference
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MR TOMASOVIC Well sir if you
were to count the annual ton per year
differences each capacity scenario is
actually about 10 percent larger than the
next If you look at the annual ton per year
limits I think the differences might be 6 or
7 percent but youre just building up your
plant with the bigger greenhouse gas impact
overall and -shy
JUDGE HILL Well the reason I
ask that question is because in your brief
you talk about that you dont need to look at
alternative control technologies that are
essentially equivalent In response to
comments it talks about these turbines are
quote highly comparable and there are
marginal differences between them So theres
a lot of words thrown around that all seem to
imply small or not significant but which one
do we use I mean the argument seems to be
essentially -- see Im coming up with a new
phrase -- essentially equivalent How do we
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judge that Well first of all is there a
single term that is most relevant from a
legal standpoint And then my second question
will be and how do we judge that
MR TOMASOVIC Well the two
explanations that we gave in the record I
think are pertinent and that is that the
differences are mere fractions of the
compl iance margin The compl iance margins we
assign to each turbine is reflective of the
uncertainties in terms of variable load
performance deviations from the iso
conditions degradation over time So if -shy
JUDGE HILL Well but how does
that cut I mean if you accept a compliance
margin at 30 percent then yes everything is
probably going to get swamped by that But if
you set the compliance margin at 2 percent
you might not
JUDGE MCCABE Or 126
MR TOMASOVIC And we set the
compliance margin at 12 percent and I think
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what that illustrates is that the difference
between the 2 percent which is approximately
a quarter of that total compliance margin
shows these are all these are all comparable
They are all going to be expected to be
performing in range of each other but we
decided that there are subtle differences that
allowed for the assignment of that reasonable
safety factor They are different sizes and
different engines but theres no fact-based
reason for us to decide to set them all at the
same limit or average them or round them up to
the nearest 50 pounds per megawatt hour
although other permit issuers may well choose
to do that in order to simplify things
JUDGE HILL If we want to give
guidance to future permit writers how would
you propose we say youve got three turbines
with different heat rates but they are
essentially equivalent How much discretion
do you think the agency has to figure out to
declare two different GHG limits to be
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essentially equivalent
MR TOMASOVI C Well I would
start your Honor with the fact that these
are all F class turbines and at the comment
period there wasnt any articulated difference
between the turbines in terms of the
technology they have You may find that in
other cases where heres a turbine that uses
dry cooling and heres a turbine that uses wet
cooling and thats a technological difference
that would allow us to elaborate on it
explain perhaps why one option is necessary
and the other isnt
But in this case where you have F
class turbines that are all modern at least
in the last several years type efficiencies
placed into an energy system that has its own
subtle impacts on what the overall limits
would be I think the way that the Board
should land on that is deference to the permit
issuers technical judgment in this case on a
case-by-case basis that this apparent
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difference of 25 pounds per megawatt hour was
not significant And we made that decision
without any written guidance from OAPPS or
OGC but it was based on our permit issuer
technical judgment And all is not as it
seems if you were to look at for instance
that net efficiency which illustrates that
that 27 percent difference which the
petitioners now complain about is only a 01
percent difference
JUDGE HILL At what point does it
become too big I mean you talk in your
brief or the response comments document talks
about well unless its poorly designed or
non-representative of the capabilities of the
technology is that the standard we should
adopt
JUDGE MCCABE Were wondering
where that came from actually
MR TOMASOVIC Well that phrase
you might find a phrase in the GHG guidance on
performance benchmarking Im not saying its
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straight transferrable to that to the way
that we used it in the brief but it does
reference performance capabilities of
technology as a starting point And we were
looking at the GHG guidance that does say in
the case of a gas-fired plant if its
considering single cycle for example you
should consider as an option combined cycle
Combined cycle isnt broken down into the
world of turbines that are available on the
market Go larger if you can if that shows
its more efficient
Instead it was more us taking
this application as it came in a conventional
combined cyc plant using modern F class
turbines with the heat recovery steam
generator and the duct burners Its a
standard type of permit It is similar to
LCRA permit that we issued It was the first
permit issued which incidentally in that
case the application came to us with the
request to permit multiple options and they
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decided before public comment that the GE 7FA
turbine was the one that they would go with
JUDGE HILL So can you cite to
any permit where EPA basically allowed the
size or model of the main emission unit to be
selected after the permit is issued as
happened here Are the -shy
MR TOMASOVIC As far as a
regionally- issued permit I sir No The
Washington State permit that is referenced in
our brief is a delegated state Sierra Club
submitted adverse comments on it and that wasl
one case where they for similar reasoning to
us decided that they would defer to the
applicants request to have multiple options
and not make them pick one of two acceptable
turbine models
JUDGE HILL Okay
JUDGE MCCABE Just going back to
your point about the F class turbines 11m
wondering if what you l re saying to us is that
it is sufficient for the permitting authority
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to look at that class of turbines and say
step one combined cycle technology is the
best available control technology here and
then when we get all the way down to step five
to set the emission limit that anything within
class F is good enough is that what youre
saying
MR TOMASOVIC No your Honor
The proj ect did come to us wi th F class
turbines You may see that in the response to
comments one of the things that Sierra Club
had said is choose larger turbines make a
bigger power plant and we quickly said that
we didnt believe that was appropriate in our
case because they had selected theyre
looking at a power plant of a certain size
using three different types of F class
turbines
But all of those were open to
commenters adverse commenters that may say
well these three turbine models of these
three turbine models this one doesnt show
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anything that shows modern day efficienc s
But at the same time its likely not a good
permit practice to say with absoluteness that
this turbine that was designed in the last
five years is not acceptable for BACT purposes
or for project purposes in other cases
because if you rest solely on that one piece
of information then the net heat rate
expresses as the pounds per megawatt hour on
a gross basis youre not necessarily
capturing all that is relevant to efficiency
JUDGE HI What if La Paloma had
said were going to build a plant thats 637
megawatts no more no less and theres only
one turbine on the market that will allow us
to do it even though there are several other
F class turbines that are much more efficient
Would the region have any authority to look
behind that
MR TOMASOVIC I think general
permit issuers do have authority to say have
you considered this or that thats so
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available In that case your Honor I think
youre presenting a case where the source is
defined binarily
JUDGE HILL Exactly
MR TOMASOVIC However it
doesn t necessarily mean that the selection of
that turbine model is unjustified If you are
to look at going back to the NSR workshop
manual I believe we cited we said in our
brief in one of our footnotes that customer
selection factors can be based on a number of
things including reliability and efficiency
experience with the equipment And all of
those are things that you can find in the NSR
in the NSR workshop manual as an example of
how you step into the BACT analysis for a
turbine Its really something that we come
in with we have a contractual commitment to
use these turbines can you see what limits
would apply to it at the front end
JUDGE HILL Let me ask if Judge
Stein or Judge McCabe has anymore questions on
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the turbine issue because then I want to move
to solar real fast
JUDGE STEIN I do
JUDGE HILL Okay
JUDGE STEIN Did I hear you say
that another facility in Region 6 that was
recently permitted is using the same turbine
as will be used by La Paloma
MR TOMASOVIC Yes your Honor
JUDGE STEIN And does the record
reflect what that BACT limit is for that
facility and how it compares to the BACT limit
here
MR TOMASOVIC s your Honor
So the name of the facility is the LCRA
Ferguson Plant And I believe that was
referenced in the statement of basis as well
as discussions sections of the response to
comments all cases looking at other
facilities that are out there including LCRA
we deemed the limits to be appropriate when
theyre placed in the appropriate context
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The Sierra Club presents Palmdale which isnt
reflective of the same design that were using
that we permitted here They referenced the
Pioneer Valley and we had to contextualize
the limits that were assigned to the Pioneer
Valley permit because that particular facility
wasnt using duct burners
JUDGE STEIN Okay So if Im
correct the BACT emissions limit for the
Lower Colorado River was 918 pounds of C02 per
megawatt hour And the limit that were
looking at here is 934 is that correct Im
not purporting to say that I have a correct
understanding Im just trying to clarify
MR TOMASOVIC Is this in the
response to comments or statement of basis
your Honor
JUDGE STEIN Oh its in my
little cheat sheet that somebody gave me
JUDGE MCCABE Its extracted
MR TOMASOVIC I may be mistaken
but I believe the limits assigned for LCRA
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were in fact on a net basis so they
wouldnt be directly comparable But we might
well have had some discussion that tried to
reconcile them
JUDGE MCCABE Yes the
comparability of all of these numbers is
somewhat perplexing to us so well address
that at the end because were thinking that we
might need some supplemental briefing to try
to get us on an agreed-on comparison table
here so that we at least understand and that
others who read the decision can understand
the import of what were deciding Do you
want to turn to solar
JUDGE HILL Yes So Mr Alonsos
argument is in essence that including any
solar into this proj ect would have been
redefining the source Do you agree wi th
that or do you think the agency has any
authority to consider some solar at an
electric plant even if it hasnt been
proposed by the applicant
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MR TOMASOVI C Your Honor I
believe that the Boards precedent on
redefinition of the source allows that a
permit issuer in their discretion may
require consideration of options that may
constitute a redefinition of the source
However if that is in conflict with the
fundamental business purpose of the applicant
then it is against our policy to do that
JUDGE HILL Do you think that the
agency has some -- okay So you believe the
agency has the authority to require
consideration Do you think the agency has
the obligation to do so if it wasnt proposed
if somebody raises it in comments as happened
here
MR TOMASOVIC I believe that the
agencys responsibilities in responding to the
comments in many ways are calibrated off of
the specificity of the comments that come to
us In this case the comments that we
received on solar are not in the same shape as
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they carne to the board in the petition in that
theyve attached the exhibits for two permits
that werent part of their comments that were
submitted to us and they specifically focused
on Palmdale and Victorville as two facilities
that we should have had a further discussion
about in our response to comments
But in terms of how the comments
carne to us which actually raised the issue of
solar in a lot of different ways where at
times it wasnt even clear whether they were
referencing photovoltaic versus stearn
auxiliary contributions to efficiency I
believe that the regions responses were
appropriate
JUDGE HILL Mr Alonso
essentially argued that our decision in
Palmdale said that it is appropriate to
classify addition of extra solar as
essentially redefining the source and he also
cites to Sierra Pacific Do you agree with
that characterization of those decisions
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MR TOMASOVIC Our decision is
based on the facts of our administrative
record and not a broad reliance on those
decisions stating that As was argued in our
br f we think the administrative record
shows that the considerationof solar options
at least as we understood it coming from the
commenters would redefine the source
The administrative record does
show l fact that the property limits are no
more than 80 acres and from that l it can be
discerned that there iS I based on the
footprint of the plant l not a lot of
additional acres which might approximate the
20 acres that the permittee was able to
substantiate with the affidavit that they gave
with their petition
JUDGE HILL So does the region
believe itl s not feasible to install any solar
capacity at the site
MR TOMASOVIC WeIll depending on
how that comment might be construel l your
l
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Honor rooftop solar is an option that
presumably is not what the commenters were
trying to talk about although its not always
clear In the case of the Palmdale decision
it does illustrate that as a rough measure to
contribute 10 percent of that plants total
capacity
JUDGE MCCABE Does someone have a
cell phone going Where is that music coming
from
(Whereupon the foregoing matter
went off the record at 450 pm
and went back on the record at
4 52 p m )
JUDGE MCCABE Okay Lets
proceed We dont have to cut Mr Ritchie
off Lovely music anyway
MR TOMASOVIC I was saying your
Honor as a background matter the Region 6
was aware of the factual setting that was
recited by the Board in the Palmdale case
which was the fact that to generate just 10
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percent of the capacity for that Palmdale
plant it required 250 acres And in fact
and I believe some lang-uage in the opinion
came close to this you need acreage to be
able to have power in a significant amount
You may well need more than 20 acres just to
get steam that could be used in the process
but you know thats a different technical
issue in any event
If we were to just sort of roughly
say 250 acres 10 percent of the plants power
reduced down to 20 or 25 acres youre talking
about something that doesnt substantially
influence the overall plant -shy
JUDGE HILL But thats not in the
analysis the region did in the record
correct
MR TOMASOVIC No your Honor
JUDGE HILL Okay
JUDGE MCCABE Is it the regions
position that as a matter of exercising its
discretion it would never consider solar it
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would always consider adding a supplemental
solar or whatever we call it here to be
redesign and therefore against at least the
regions policy if not the agencys to even
consider
MR TOMASOVI C No your Honor I
dont think anything in the regions response
was intended to cut off comments on solar
technology as a general matter for any other
permitting case
JUDGE MCCABE You just think the
comments here were insufficient to get you
where you needed to go in order to give it
serious consideration here i is that what
youre saying
MR TOMASOVIC Yes your Honor
I mean we had a bit of a technical discussion
in there that it is the case that for any
process that uses fuel to generate heat you
can get that from something else which might
be geothermal or solar And you could get
into the myriad permutations that go on
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in terms of whatever a commenter might
bring but it isl
JUDGE MCCABE Comment clearly
focused on solar in this case l so you dont
need to go there
MR TOMASOVIC However I there are
other parts of the comment which seem to
suggest that the l that l in their view l this
project was defined to be within a range of
capacity that could be energy generated by any
means I which we disagree with because this is
a combined cycle plant thats meant to use
natural gas as its fuel and take advantage of
the rastructural advantages specific to
that location including the waterl
availability of the pipelines and the local
need this particular kind of power to be
delivered for grid stability reasons
JUDGE MCCABE I hate to put you
on the sPOtl Mr Tomasovic l but do you think
you could reduce to one or two sentences the
reason the region did not consider solar here
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or considered it to be redesign that the
region would not entertain
MR TOMASOVIC In the way that
the comments came your Honor we believe that
that solar auxiliary preheat was not well
defined because it was it was actually raised
as a substitute for duct burners when duct
burners have a different purpose than solar
auxiliary preheat And Im already past my
two sentences but
JUDGE MCCABE Thats okay
Youre close enough Thank you Those are
all the questions we have for you at this
time Mr Tomasovic Thank you And Mr
Bender you have been very patient and I bet
youre watching your watch National Airport
flight at 700 You probably need to leave
here by what would folks who are
Washingtonians say given that it is Wednesday
rush hour before a storm
JUDGE HILL If you take a cab
Id say 545 at the latest
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JUDGE MCCABE Okay So 5 30 i
will that work for you Mr Bender
MR BENDER I think so your
Honor
JUDGE MCCABE Okay I would hate
to give you short shrift after you were so
gracious as to choose the last position or to
suggest that your judgment perhaps might need
to be revisited the next time youre offered
that choice
MR BENDER I wouldnt want to
miss this even if I had already gone
JUDGE MCCABE Okay
MR BENDER Is this better
Thank you your Honors I think to address
one thing that kind of permeates the briefs
from respondents and some of the discussion
here today theres kind of two pieces or two
sides of the same coin maybe Were talking
about size or capacity Were talking about
megawatts right And when were talking
about ERCOT or any other regional system
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operator the dispatch is to meet a load
Were talking about dispatching to meet a load
in megawatts
And the size of the units are
different here Its actually kind of a
combination of things turbines plus heat
recovery stearn generator turbine that adds
up to certain numbers Its 637 for the GE
combination for example Thats megawatts as
their peak You know if you throttle full
thats what youre going to get
The Siemens turbines can generate
637 Its not that you have a turbine you
turn it on and you get 637 megawatts or you
turn it off and you get zero and its a
binary on or off situation
In fact the other argument or the
other piece of this argument in the briefs was
that turbines as they get larger get more
efficient And if you want a large turbine at
a reduced rate less than full youre
decreasing its efficiency and thats simply
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not true And thats not true based on the
evidence in this record because that last
increment of power comes from duct burning
which is less efficient than the turbines and
stearn generator
And so as you throttle down or as
you de-rate or decrease your generation all
saying the same thing youre actually until
you hi t the point where the duct burners corne
off youre actually improving the efficiency
and decreasing the emission And we can see
that among other places in one of the tables
that counsel for Region 6 pointed to in the
response to comments where in addition to net
and gross theres also without duct burner
fire on page 11 of response to comments
which is Petition Exhibit 3 you can see that
the GE the smallest of the turbines piece is
75275 without duct burner firing The
biggest turbine the Siemens 5 is 77717
Less efficient right And you only get the
increased efficiency from the larger turbines
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as a system because theyre able to generate
more of their power before turning the duct
burners on
JUDGE MCCABE Well does this
mean youre happy to hear that theyve
selected the GE turbine
MR BENDER If they have a permit
limit that reflects what they could do If
the question is phrased differentlYI right
If the draft permit had come out and said our
project purpose is to build a plant thats
capable of generating 637 megawat ts you know II
this would be a different case The comments
would have been different l and we mayor may
not be here
But then wed saYI the comments
would come in among other things l something
to the effect of the Siemens I you know l 5 or
the Siemens 4 can generate 637 megawatts In
facti when it does so it does it at a reduced
emission
So were dealing with emission
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rates The final permit emission limits are
set based on operating full out But full out
is a different number of megawatts for each
right
JUDGE MCCABE Thank you for that
clarification Do you agree that the F class
turbines are among the most efficient turbines
available for combined cycle combustion
technology
MR BENDER I believe theyre
among I dont know that they are the most
efficient
JUDGE MCCABE Do you know of a
class thats more efficient
MR BENDER I dont The
question though is the emission limits too
which is the end of everything So were
talking about turbines and different turbines
but were really talking about different
turbines put in front of the same 271 megawatt
steam generator in this case
JUDGE MCCABE Well to you and to
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EPA of course the emission limit is the
ultimate most important thing here But of
course to the company the most important
thing is which turbine do they get to use and
is it the one that will fit whatever their
business purpose is
Your petition Im a little
confused about something Your pet it ion says
that youre not suggesting that the company
should be required to pick any particular
turbine but just that they should meet the
lowest GHG limit that any of the turbines
could meet But arent you in effect by
doing that forcing their choice of turbine
MR BENDER No Its not
requiring a turbine Whether youre forcing
it or not raises some other internal issues
I think at the company which is you know
their risk appetite for that headroom margin
thats built in how much theyre actually
going to operate because this is a 12-month
rolling average and assumes operating at 100
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percent including those duct burners wide
open which is one of the least efficient ways
to operate
JUDGE MCCABE So your preference
would be that they have to build a bigger
turbine and operate it at a lower load
MR BENDER Our preference is
they have to meet the emission limit that
JUDGE MCCABE But in concept
MR BENDER To build a bigger
turbine and operate it with less duct burning
and using more of the waste heat from the
turbine the way that the three options are
set up in this record is the most efficient
And
JUDGE HILL But that wasnt your
comment was it Your comment was simply to
pick the limit that reflects the lowest
emission rate Your comment wasnt
essentially to recalculate the rate based on
the lack of duct burning
MR BENDER Thats correct
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Sorry Im trying to answer a question a
direct question Im not representing that
thats what the comments were
JUDGE HILL Okay Fair enough
Im sorry to interrupt Keep going
MR BENDER I should speci fy this
is based on our understanding from the record
Because the Siemens turbines are capable of
basically more heat because theyre bigger but
theyre going into the same size heat recovery
steam generators as would the turbines
More of the total heat going in is coming from
waste heat from the turbines with the Siemens
compared to the GE so theres less need for
duct burning Thats what
JUDGE MCCABE What is your goal
Mr Bender Are you looking for the
lowest total amount of GHG emissions that can
possibly come out of this facility or are you
looking for something else
MR BENDER We I re looking for the
lowest BACT rate but were also looking for
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JUDGE MCCABE But the BACT rate
is based on efficiency yes
MR BENDER Its based on
efficiency here yes
JUDGE MCCABE Do you have any
objection to that
MR BENDER Im sorry
JUDGE MCCABE Do you have any
obj ection to EPAs basing the BACT rate on the
energy efficiency of the turbines
MR BENDER Not in this petition
JUDGE MCCABE Okay Well it is
this petition were talking about
MR BENDER Right Its
JUDGE STEIN But given that they
have indicated that depending on the timing
that theyre going to go with the GE turbine
what is your position as to what the emissions
limit should be for that turbine
MR BENDER The emission limit
for any of these turbines based on this
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record and the draft permit that we were able
to comment on should be -- Ill put it this
way If F class category of turbines
followed by heat recovery steam generator is
the control option and thats what we were
able to comment on And if thats the control
option that theyre going to treat as the same
control option through steps one through four
then in step five the emission rate should be
based on the lowest emission rate achievable
by that class And based on the record here
thats represented by the Siemens F4 at least
that line in the permit right
So depending on how your question
was intended your Honor if they came in and
said draft permitr project purpose 637
megawatts on peak 100-percent capacity you
know r we would look at what combination of
turbine heat recovery steam generator gives
you the lowest emission rate at that But
want to be clear thats not this case thats
not this record
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JUDGE STEIN Well Im a little
confused I mean Im with you to a point
but what I thought I heard the region say is
that when they chose the BACT limit that they
chose that they couldnt necessarily translate
between these different turbines in quite the
same way that you were doing the translation
And I mean if for example youre saying
that they need to meet emissions rate X what
if they cant meet that with this equipment
Does that mean that they cant install the
equipment
MR BENDER If La Paloma cannot
meet 909 pounds per megawatt hour gross with
the GE equipment is the hypothetical
JUDGE STEIN Yes
MR BENDER Yes then they cant
install that equipment
JUDGE MCCABE So you are forcing
their choice of turbine in effect
MR BENDER Only as a secondary
effect But just like if you cannot meet a
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BACT limit for 802 on a coal fire power plant
wi th a dry scrubber are you forcing the
selection of a more efficient wet scrubber as
a secondary effect Thats true
JUDGE MCCABE Do you think thats
a fair analogy Were talking here about the
main emitting unit and the main unit that
produces the capacity of product that the
facility wants to produce The choice between
a wet and dry scrubber doesnt affect that
MR BENDER Well according to
the region its a category and its not
affecting the category If the category as
a region says is combined cycle turbine with
heat recovery stearn generator then youre not
changing anything You may be foreclosing
business choices that are made later but I
would suggest thats true with every BACT
limit There are choices that a permittee may
want to make but cannot make because they have
to comply with their BACT limit
JUDGE HILL 80 Mr Tomasovic says
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that pointed out that the Siemens
going to get it wrong the Siemens 4 turbine
has the lowest emission limit hourly but that
the GE turbine has the lowest annual tons per
year primarily because its operating at a
lower capacity Is your argument that the
limit that the region should have set have
been the lowest of each of those or is your
argument that they should use the limits that
they got for the most efficient turbine which
was the Siemens 4
MR BENDER I believe that the
BACT limit is the primary driver BACT limit
is the pounds per megawatt hour and thats
the limit that we think that the La Paloma
facility whatever equipment it ultimately
chooses should meet That will result in
different tons on an annual basis but tons on
an annual basis is I would submitt not a
limiting limit It assumes 100 percent
operation You know t itts basicallYt itts
JUDGE HILL Wellt but heres my
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point If Mr Alonso had gotten up and said
its most likely were going to pick the
Siemens 5 or Im sorry the Siemens 4 then
theres going to be more total emissions of
GHGs a lower rate but more total emissions
So by your argument should the region have
had to pick the lowest limit for each of the
three parameters on which they set the limit
And if not why not
MR BENDER We didnt address the
total tons because we dont feel that its
going to limit If they decide that they want
to generate 630 megawatts thats the number
that multiplied by the emission rate is
going to generate the tons
JUDGE HILL But if they had
picked the Siemens 4 or the Siemens 5 they
could be operating at 735
MR BENDER They could be
operating at 735 but there are other things
that go into it obviously your Honor as Im
sure youre aware of when theyre dispatched
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how theyre dispatched And the focus here is
the per megawatt hours because thats the one
that the Sierra Club sees as actually limiting
emissions here because the annual caps are set
such a high rate that theyre not going to
be approached Even the lowest is not going
to be approached
JUDGE MCCABE Let me bring you
back to this table thats I dont know if
you have it Its page 11 of the response to
comments These numbers are all starting to
sound fungible so lets try to anchor
ourselves again Im looking at the middle
column here that says output-based emission
limit which is net without duct burning And
the GE turbine that limit is 894 and for
the Siemens 4 turbine is 909 Theyre picking
the GE turbine What limit do you want
MR BENDER Well first of all
question the accuracy of these numbers because
some of them are the same as the gross with
duct burning
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JUDGE MCCABE Theyre saying
what
MR BENDER The Siemens F4 number
in that column is the same as the permit limit
for that turbine which is expressed as gross
wi th duct burning So looking at these right
now I suspect that theyre not correct Some
of them may not be correct
JUDGE MCCABE Can we assume for
the moment that these numbers are correct
MR BENDER Yes
JUDGE MCCABE And if that turns
it into a hypothetical question so be it
Im trying to understand where youre going
there conceptually Im looking at a lower
number 894 you know its C02 equivalence of
per megawatt hour without duct burning net
wi thout duct burning Its 894 for the
turbine they want Its 909 for the one that
you were saying was the most efficient
turbine Which limit do you want for the GE
turbine Do you want the 894 or do you want
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the 909
MR BENDER It depends on this
your Honor It depends on whether were going
to set this as the ultimate rate or if were
going to s another limit as the ultimate
rate because this is a part this is without
duct burning right But the permit allows
duct burning So if we say we want 8947
without duct burning and then well leave the
duct-burning caused emissions kind
unmeasured and unregulated as a different
JUDGE MCCABE Okay Go to
next column with duct burning Youve got
9452-shy
MR BENDER Yes
JUDGE MCCABE for the GE
turbine And just a hair under that youve
got 9444 for the Siemens 4 Are you telling
us thats what you want Board to do to
tell the region that that kind of difference
is significant and that they should force this
company when it installs the GE turbine to
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meet the 944 limit for the Siemens 4 Is that
what youre asking us to do
MR BENDER Your Honor if that
if the limits were set based on this as final
enforceable limits based on that Im not
sure that we would be here on this issue
JUDGE HILL So how much of a
margin is too big Because the regions
initial submission is that even with the
limits that they actually set the difference
is 26 percent and thats just not that big
JUDGE MCCABE And looking at
these latest numbers they actually said the
range for all three turbines there was on
that net with duct burning column that the
total range was 01 percent So seeing how
close those numbers are between 945 and 944
thats obviously a lot less than 01 percent
Is that a significant difference that the
agency should be concerned about
MR BENDER The limits were
talking about are the ones in the final
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permit which are gross And they are -shy
JUDGE MCCABE Okay Would you
like to point us to a different table to look
at
MR BENDER Sure Ill point you
to the permit which is Exhibit 1 to our
petition and the permit limits themselves
Because the permits measured we commented
that the region should be looking at net
among other things And the region said no
It made that choice It made this permit the
way it did and so were addressing it the way
it came out What we and EPA and the state
can enforce are the limits and the limits are
what drive what we can count on as enforceable
emission reductions
JUDGE MCCABE Wait a minute You
wanted the limits to be based on net
MR BENDER We commented that you
should look at the net emission rates and the
region said no were going to base this on
gross
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JUDGE HILL Okay But my
question is how do you respond to the argument
the region made in its brief and that Mr
Tomasovic stated here which is okay so the
permits got gross and the difference in these
gross numbers is 26 percent and thats in the
noise
MR BENDER Its not And the
reason why I know that its too big to be
insignificant is that the region thought that
margins even around that for different
pieces because the margin is an aggregate
was significant enough to start bumping the
limit up And when they got to step five
they said thats a big enough difference
between these turbines that we cant expect
the one to meet the limit for another So I
know because its significant enough in step
five that it should be significant enough in
step one to not count them all as you know
the same
JUDGE HILL So your argument so
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if their error was at step one then what
youre really saying is that the GE turbine is
a different technology than the Siemens
turbines
MR BENDER It is a different
let me put it this way Control option in
step one should be the same as control option
in step five As counsel for La Paloma put
it its a sequence right It starts at one
it goes to five and the definition of the
control option stays the same And if and
were saying well grant the argument that
they should be treated as one option in step
one well if thats the case they should be
treated as the same option in step five and
the limit based on what that option as a
whole can achieve But if youre going to
start parsing them the appropriate time to
parse between turbines or in this case
turbine plus heat recovery generator
combination -shy
JUDGE HILL Understood
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MR BENDER is step one so
that we can look at their relative
efficiencies their relative costs what they
do emit at different levels at production
Its got to be one or the other It makes
hash out of the five-step process to look at
one definition of control option in step one
right And then look at a different
definition of control option and start
applying limits in step five Thats the
argument It has to be consistent all the way
through
I think we would get to the same
option or the same result whether we looked at
them in step one as separate or if we applied
the maximum control efficiency for that class
as a whole in step five But you run into
problems when you separate them and thats
what weve done here
JUDGE MCCABE Okay Mr Bender
could we back up again to the question that
was raised by your saying that you preferred
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and said in your comments that you preferred
limits based on gross capacity I was trying
to use the table on page 11 of the response to
comments to try to understand exactly what you
want If theyre picking the GE turbine you
said the limits these are net limits and
gross is a better measure Have you found a
place where I can look at gross limits
MR BENDER For what gross
emissions are relative to
JUDGE MCCABE Is re any place
in the record that we can look to see how
these net limits would be stated as numbers
for these turbines if it were based on gross
Is that in the record any place
MR RICHIE Your Honor if I may
this is Travis Richie Page 16 of the
statement of basis which was included I
believe as Exhibit AA of La Palomas
response I believe has that same table listed
with pounds of C02 per megawatt hour on a
gross basis with duct firing
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JUDGE MCCABE Thank you Mr
Richie So glad you stayed on the phone I
have this Do the other judges have it
Okay Its the same thing Well how are
these different They look like theyre the
same ones that we were looking at on page II
Whats the difference between the gross and
the net rates
MR BENDER Thats what I was
suggesting earlier that Im not sure that
theyre correct
JUDGE MCCABE Youre not sure
which is correct
MR BENDER I dont know
JUDGE MCCABE You dont know
MR BENDER But I dont think the
net and the gross can be the same number and
thats what I was maybe failing to highlight
before
JUDGE MCCABE But whatever the
gross is you would prefer it You just dont
know what it is or youre not sure which of
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these numbers it is is that what youre
saying
MR BENDER Your Honor there has
to be other details in the hypothetical to
know the answer It depends on if were
measuring If were measuring just whats
coming out of the turbines or if were
measuring whats coming out of the stack
because theres another pollution-causing
device in the middle and thats the duct
burner So if were saying whats the net
without duct burning and were measuring it
but were still allowing duct burning its a
different question
JUDGE MCCABE Yes I understand
This gets very complicated which is why
judges usually defer to the technical
expertise of the EPA people that are charged
with this Now in this case lets try to
bring it back to sort of principles that the
Board can focus on more appropriately I was
hoping through this argument that people
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would be able to give us the numbers that we
should be looking at to consider this argument
that I understand the region to be making that
whatever the variation among these turbines is
so close the variation in the heat rates and
accordingly the GHG limits is so close that
it is something that is essentially
equivalent to use one phraseology another
negligible difference marginal difference
Do you agree that these are so close that they
are marginally different or essentially
equivalent
MR BENDER Two answers your
Honor They are not What the permit
includes is the gross with duct burning and
that number again I would say those are
different enough that the region thought
necessary to differentiate between them And
if thats true then its not negligible and
its not inconsequential
JUDGE HILL So let me ask you a
question So if the region had said theyre
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close enough I so weI re going to set the
highest one and if they happen to pick al
turbine that we could limit more closely I
were comfortable with that
In other words I based on that
argument I okay so if the region had instead
concluded they are negligible GE looked good
enough and so were going to set the limits
based on GE And if they pick Siemens I they
get a bennie out of it would you have a basis
for challenging
MR BENDER Yes I for the same
reason Because the record says that 9092 is
achievable And then we have -shy
JUDGE HILL Well but they would
conclude that 909 is not achievable for GE
MR BENDER I think it depends on
what the record is to support that conclusion
And thats not this case and its not this
record
JUDGE HILL So the regions
mistake was setting three different limits
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MR BENDER The regions mistake
was setting three different limits for what it
says is the same control If it had
identified them as three different control
options in step one and you have a continuity
through the rest of the steps and it set three
different limits it would be a different
problem which is BACT is all limit and you
would rank them and set them based on the top
rank control option in step five But again
it depends on what happened in the prior four
steps to be able to say whether that would
have been a mistake or not and thats not
this record and its not the basis that we had
to appeal
JUDGE MCCABE Coming back to the
factual question of the variation in these
emission limits that the region has permitted
for the three turbines Mr Tomasovic
described them it may not be fair to call
this a range but he mentioned numbers that
to my mind ranged from 01 percent up to 27
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percent Is a 01 percent difference
significant enough that the agency should have
to distinguish between them in setting and
distinguish between these turbine models and
force the companys choice Point one If we
just had point one I realize theres a
range but just look at point one for a
moment Is that significant
MR BENDER I think its
contextual And I would say although you
asked that as a factual question I would
point to the Prairie State decision your
Honor
JUDGE MCCABE The what Prairie
State
MR BENDER Because its cited by
both respondents to say when theres a
negligible difference you dont have to
consider them as separate control options
And I think that Prairie State actually stands
for the opposite On page 37 in the footnote
I think its footnote 36 it rejects that
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argument that just equivalency alone is
sufficient to ignore a difference between two
different control options There has to be a
demonstrated equivalency or a negligible
difference and especially if that difference
is based on emission factors or something else
that is inherently also perhaps not specific
So if its based on an emission
factor that has a margin of error that helps
dictate what amount of difference between two
emission rates may be negligible and even if
they are exactly the same thats not enough
to ignore them You have to -shy
JUDGE MCCABE If theyre exactly
the same
MR BENDER To ignore one of the
control options because of the requirement
that you also look at what their collateral
impacts are because two different controls
options may have the same emission limit but
they may have different collateral impacts -shy
JUDGE MCCABE Thats absolutely
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true of a control option but were talking
about two different turbines here If the
turbines had the same limit would we be here
If they had the same GHG limit
MR BENDER If they had the same
GHG limit and it was -shy
JUDGE MCCABE Because thats just
the way they say that was the manufacturers
the vendors number and EPA permitted it at
that number and there was no comparable that
showed a bet ter performance why on earth
would we require them to distinguish between
those What practical difference would that
make
MR BENDER In this record and to
my knowledge there is no other distinction
between them other than emission rates But
if youre saying hypothetically the emission
rates are all the same -shy
JUDGE MCCABE No Im simply
following up on what you thought Prairie State
stood for that even if things are the same
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you cant ignore the di f f erence I just think
were doing apples and oranges here because
in Prairie State if I recall correctly and
maybe Judge Stein can help us out with this
I think they were comparing you know much
larger differences
Here Im concerned that were
getting down in the margins We are getting
dangerously close to micromanaging here on
what this GHG emission limit should be So is
o 1 percent micromanaging Is that a
difference that we dont need to worry about
Is 05 percent -- 27 percent obviously is too
much for you You think thats over the level
of significance Were wondering where is
that level of significance in difference And
Im not talking about the exact numbers Im
talking conceptually here Thats why I used
percentages to iron it out
If the range of differences
between these two turbines and their GHG
emission rates ranges somehow and depending
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on how you calculate it from 01 percent to
27 percent why should we worry about this
Why should the region be required to
distinguish
MR BENDER Your Honor the
equivalency of emission rates is an issue or
a concept thats tied together wi th the
topdown BACT analysis process and that was in
Prair State Thats the point of that
footnote that I cited to If you did this
again this is not what was done so in the
hypothetical if they had ranked them as
separate control options and they had assigned
emission rates and there was somewhere
between I think it was 01 in your
hypothetical difference and there was no other
collateral impacts differences between them
would that be enough to say -- and it was not
and it was based on you know some emission
calculations that themselves have some
variable in them I think in that
hypotheti this would not be the issue for
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appeal It wouldnt be because you know
were assuming were assuming away all of the
problems with this particular decision which
is theyre not treated as separate theyre
not distinguished in the first few steps we
dont know if theres collateral impact
differences and theres no record made to
support those findings at each of the rest of
the steps
JUDGE MCCABE So is the critical
piece of your argument that they didnt
differentiate between the turbines at step
one Is that really what Sierra Clubs
concerned about
MR BENDER If theyre going to
differentiate between them in step five they
need to differentiate between them in step I
guess it would be one through four because
then wed have an opportunity to look at
whether or not there are differences in
emissions at that point and under what
scenario and everything else that goes into a
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five-step BACT process And that was just
shunted all to the side and we only looked at
the difference between them when we got to
step five after the opportunity to address all
those other issues had passed
JUDGE MCCABE Okay Lets turn
quickly because Im watching your flight time
here to solar Is it your position that
solar is feasible on this site Supplemental
solar as youve described it And if so
please explain how
MR BENDER Your Honor the
comment was step one you need to cast as big
a net as possible to identify potentially
feasible available and applicable and we
say yes its available its applicable Is
it feasible Well we dont know the acreage
They say 20 We dont - - because we never got
to this
JUDGE MCCABE Theres a site plan
in the record isnt there
MR BENDER There are some maps
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in the record We dont know
JUDGE MCCABE Have you looked at
them
MR BENDER Ive looked at some
of the maps in the record yes
JUDGE MCCABE Have you looked at
the site plan
MR BENDER Im not sure -shy
JUDGE MCCABE The site plans
shows where things are situated on the si
where the turbines will go and the other
equipment what the footprint of the si te is
how much space is open or not
MR BENDER Im envisioning a
color map with I think that information
JUDGE MCCABE Mine is not in
color but I saw one like that Have you
looked at that and considering that is it
feasible And Judge Stein please add your
question
JUDGE STEIN If these maps show
or you can deduce from whats in the record
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that what is at play here is approximately 20
acres do you still contend that solar is
ible at this site
MR BENDER I would say to the
extent its scalable its feasible Whether
its cost effective and whether it achieves
emission reductions I dont think I dont
know and I dont think any of us know and
thats the point Thats why you go through
the five steps because you gather that
information at the later steps It was -shy
JUDGE STEIN So Im sorry
Finish I didnt mean to interrupt
MR BENDER It was excluded from
step one as not as redefining the source
And I think it would be inappropriate to
assume fact findings from what we have the
limited amount of information we have in the
record to say it would necessarily be rej ected
in the following steps unlike in Palmdale
where the issue of incremental increase was
looked at and the record was clear that there
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was zero space And the difference between
zero space for no addition and where to draw
the line when theres some space but it mayor
may not be enough to make it feasible cost
effective and everything else is something
that needs to be done by a fact finder with
the public input
JUDGE STEIN But how much effort
and work must a permit applicant go through
when theyre primarily building a particular
kind of plant and theres fairly limited
space I mean do they need to go do a I
scale investigation and develop models
space if what youre dealing with is a very
small area I mean thats a question Im
struggling with because you know this is not
lmdale and I dont buy the characterization
what Mr Alonso said about what Palmdale
stood for in terms of redefining the source
But I am troubled by what may be in the
record perhaps not as fulsome as someone
would like but there may be sufficient
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information in the record to establish that
theres only a very limited amount of space
there And if thats the case are you still
insisting that people do a full-scale analysis
of solar under those circumstances
MR BENDER I think that when
you get into the later steps two three
four the scale of the analysis is probably
relative to you know some reasonableness
right But in step one the whole point is
you cast the net and then you start doing that
analysis And it would be inappropriate to
start making assumptions because we dont
agree with all the assumptions in La Paloma
about hurricanes about other things and wed
like the ability to develop the record in
response depending on what is said about
feasibility
But feasibility wasnt discussed
until the response to comments And then it
was discussed as not not that it was not
technically feasible but it was redefining the
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source And based on in our mind in one of
the main reasons that we brought this appeal
is based on a very problematic definition of
redefining the source
JUDGE HILL Mr Bender the region
argues that Sierra Clubs comments on this
didnt ly raise this issue to any level of
specificity that youre now raising it in your
brief or here How do you respond to that
MR BENDER When they say that
they point to one of the multiple comments
looking at solar hybrid And they say it was
mentioned as an al ternative to duct burning
in addition to other things that could be
looked as alternative to duct burning
Earlier in the comments is the Palmdale
permit and the C02 BACT emission limit saying
its conservatively lower they get that and
they get a chunk of it from solar you need to
look at solar because its available its
applicable it meets the step one criteria
lets look at it And that I s what was
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ected
Elsewhere we said instead of
duct burning did you consider these other
things And yes theyre talking about the
same concept but theyre talking about two
different areas So its inappropriate to
look at only one comment and say well that
one comment about solar didnt raise this
other issue when the other comment did
JUDGE MCCABE Are you suggesting
that permitting authorities whenever theyre
faced with a PSD application by someone who
wants to build a power plant have to analyze
solar in all cases if theyre not proposing it
to begin with
MR BENDER Solar hybrid in a
combined cycle plant when it I S raised by the
public-shy
JUDGE MCCABE Okay And that -shy
MR BENDER Then the region has
an obligation to look at it
JUDGE MCCABE Expand on that
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please What do you mean by look at it
MR BENDER Include it in step
one or deem it redefining the source based on
a correct interpretation of redefining the
source And here it was an incorrect
interpretation of redefining the source It
should have made it into step one when raised
by the public And to go to your question
Judge Stein how much detail they need to do
to develop whether to reject it in later
steps I would agree theres some
reasonableness to it But I dont agree that
even assuming that 20 acres is all that there
is that we can say based on this record
that its reasonable that thats not enough to
generate solar
JUDGE STEIN But if you have a
circumstance where the BACT analysis has been
done the regions looked at it theres been
back and forth between the permit applicant
and the permittee I mean and the region
they proposed the permit for comment and a
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comment comes in about solar youre
suggesting that they have to go redo the BACT
analysis or cant they simply respond to the
comment by saying on this particular site on
these facts we dont think solar is feasible
for X Y and Z reason
MR BENDER Thats different than
the answer here
JUDGE STEIN Why is it different
than here I mean I understand what the
region did in its analysis of redefining the
source you know didnt do exactly what Im
describing here but Im concerned about
taking us to a place where in responding to
a publ ic comment where there may be an answer
that you have to go back to square one on the
BACT analysis because I dont think you do
I think you need to respond to the comment
I think you need to respond fairly to the
comment But wed never I mean how in the
world would we ever get a permit out if every
time theres a public comment that relates to
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the BACT analysis youve got to go back and
redo the BACT analysis Yes t may be
cases where you need to supplement it but I
dont think we go back to square one
MR BENDER Well two responses
your Honor Here we had raising solar in the
context of another facility a similar
facility that has solar hybrid and has a
permi t wi th lower limi ts Thats the context
So to the extent were talking about you
know how much or how real does this have to
be to generate a more substantive response
thats the context
In Knauf Fiberglass I believe Kshy
N-A-U-F however thats pronounced
JUDGE MCCABE Knauf
MR BENDER Knauf Fiberglass
The first the 1999 decision a comment was
raised another production process for
fiberglass The response was thats
proprietary to a competi tor We dont have to
look at it because well reject it later
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anyways so you know why look at it And
the Board reversed and said you cant preshy
judge Thats the point of the process You
cant pre-judge the process Go back look at
it and make a record so we know and the
public knows that you really did look at it
and you really did document your analysis and
we know you did your procedural job
Thats what should be done here
and it follows that precedent And I would
suggest if its distinguishable this is even
a clearer case than Knauf because its not
proprietary that we know of You can go out
and buy it So to the extent theres a line
this is even further on the petitioners side
of the line
JUDGE MCCABE Mr Bender Im
worried about your plane If you would like
to take a minute to just wrap up please do
And then we will let you go on your way Its
getting late
MR BENDER Sure Thank you
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your Honors I and thank you for the opportuni ty
to address these issues From Sierra Clubs
perspective this is an important permit tol
get right on these issues raised And there
are other issues that were commented on l
potent lyother issues that could have been
raised You know I dont want to suggest
that Sierra Club loves this permit even if
its corrected but this issue of what you
have to consider and how you consider
efficiency and how you consider supplemental I
in this case solari that helps improve the
efficiencyof a plant is critically important r
especially as we start into greenhouse gas PSD
permits and getting the definition of what is
the control option were looking at correct
and making sure that thats consistent all the
way through the process and that were
correctly addressing efficiency Its going
to be critical especiallyuntil we develop an
end of the pipe technology that facilities
s installing
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142
The other is this now perennial
redefinition of the source issue I
understand the Boards prior precedents and
in some cases unfortunately theyre being
applied incorrectly And this is one of those
cases And when that happens its important
to correct it make it clear and give guidance
to not only Region 6 but other permitting
authorities what redefining the source means
and whatit doesnt mean And here it doesnt
mean that if a control option is not within
the two-sentence description of the
application of the project purpose that it
cant be considered because that opens a door
to all kinds of problems not just greenhouse
gasses but every - - I mean and SCR al so
wasnt in that two-sentence description
Thank you your Honor
JUDGE MCCABE Thank you very much
Well thank you all for your presentations and
for your valiant efforts to answer our very
often detailed questions
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I would make one observation that
theres such factual confusion l at least in
the argument around the issue of how do we
compare apples to apples with the emission
numbers that we really should be looking at
for these turbines that there is a
possibility and I regret to say this because
I know its a PSD case and we are in a big
hurry but theres a possibility that we will
ask you to do a supplemental briefing on that
or ask you all perhaps to confer to get on one
sheet if its possible to give us some basisl
comparison so that we have the facts
straight in our opinion It is a lot to ask
judges like us We have some technical
training l but we are not engineers I and it is
really quite difficult for us to understand
which numbers we should be comparing to which
here
We will however make a valiant
effort to go back and to see if we can figure
that out And weill only ask you to do a
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supplemental briefing if we think its very
necessary If we do do that we will get to
you quickly on that because we do intend to
move quickly on making this decision These
are not easy issues They are important
issues and we take your point Mr Bender
that as we are entering the world of GHG BACT
permitting we do need to be careful about
what precedent were setting But we also are
very very cognizant of the need for speed
here because we dont want to hold up the
building of something that should proceed
unnecessarily
So with that well take this
matter under submission with the caveat that
you may get a request for a supplemental
briefing And we will wish you all
travels home those of you who are traveling
far especially And good luck catching that
plane Mr Bender
(Whereupon the foregoing matter
was concluded at 547 pm)
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C E R T I F I CAT E
This is to certify that the foregoing transcript
In the matter of La Paloma Energy Center
Before US EPA
Date 02-12-14
Place Washington DC
was duly recorded and accurately transcribed under
my direction further that said transcript is a
true and accurate record of the proceedings
Court Reporter
NEAL R GROSS COURT REPORTERS AND TRANSCRIBERS
1323 RHODE ISLAND AVE NW
(202) 234-4433 WASHINGTON DC 20005-3701 wwwneairgrosscom