1. Indiana Power Plant Mercury Rulemaking Recommendation Thomas W. Easterly, Commissioner Indiana Department of Environmental Management

2. Utility Mercury Regulation Options Hoosier Environmental Council Petition requesting a 90% reduction in uncontrolled mercury emissions from all Coal Fired EGUs with no trading Adopt Federal Clean Air Mercury Rule (CAMR) Some combination? The workgroup process did not reach consensus

3. Where are we in the Rulemaking Process? We have published the first notice We did not publish the second notice which includes the proposed rule language because of the lack of consensus on which option to select. We did not publish the second notice which includes the proposed rule language because of the lack of consensus on which option to select. IN will not have a final regulation by EPA’s 11/06 deadline We need to chose a direction and move ahead

4. Other IN Mercury Initiatives We are implementing the program with bounties to remove mercury switches from end of life (motor) vehicles (ELVs) We are also pursuing Regulations to implement the program Utility mercury emissions estimated at 4,500 lbs—mercury in scrapped autos initially estimated at 2,400 lbs, but may be much less

5. What is Known About Mercury Mercury is a potent neurotoxin Studies have shown that high levels of mercury result in reduced IQs in newborns Some studies have shown that high levels of mercury in adult males are associated with higher rates of heart attacks and death (but studies also show that eating fish generally reduces the risk of heart attacks)

6. What is Known About Mercury In the US, most mercury exposure is through fish consumption In Indiana, there are many fish consumption advisories for mercury As shown on the next slide, using Indiana’s fish consumption advisory standard, we would warn against consumption of common commercial fish available in the supermarket

7. IN Commercial Fish Advisories Fresh or canned salmon; shellfish like shrimp, crab, and oysters; tilapia; herring; canned “light” tuna; scallops; sardines; pollock; cod; and catfish—Unlimited for all adults One meal per week ** Canned albacore “white” tuna (6 oz.), tuna steak, halibut, and lobster—1 meal per week for adults One meal per month** Shark, swordfish, tile fish, king mackerel—1 meal per month for adult males and females Do not eat** References: –USDHHS and US EPA - 2004 EPA & FDA: Advice for Women Who Might Become Pregnant –Choose Wisely 2004, Wisconsin DNR –An Expectant Mother's Guide to Eating Minnesota Fish, 2004 **Consumption guidelines for the at-risk population: women of childbearing years, nursing mothers, and all children under the age of 15 years.

14. Mercury Questions Are US Power Plant mercury emissions deposited near the power plants or spread around the world? –If spread around the world, elimination of US mercury emissions will reduce mercury in fish by about 1% –If emissions are locally deposited, reductions may result in significant reductions in local fish mercury concentrations Will a reduction in mercury deposition result in a corresponding reduction in fish mercury levels?

23. Is There a Safe Level of Mercury? USEPA has established a “Reference Dose” of 0.1 micrograms/kg body weight/day. This calculation is based upon limiting the mercury in the fetus of a pregnant woman to the no observed affects level and a safety factor of 10. 88.4% of the Midwest population that consumes non-commercial fish is believed to be below the reference dose. Full implementation of CAMR will increase that value to 90.6%.

24. Value of Health Benefits Based upon published studies, the Hoosier Environmental Council has estimated the following health costs: –Loss of IQ due to US power plant mercury emissions—$1.5 Billion for the US, $30 Million for Indiana and $78 Million for Indiana Power Plant Emissions –Cardiovascular--$3.9 Billion for the US, $78 Million for Indiana and $203 Million in the US from Indiana Power Plant Emissions –Increased mental retardation--$289 Million for the US, $6 Million for Indiana and $15 Million in the US from Indiana Power Plant Emissions

25. Value of Health Benefits Based upon published studies, the North East States Consortium of Air Unit Managers has estimated the following benefits from full implementation of CAMR: –Improvement in IQ due to US power plant mercury emissions—$119 Million for the US, $2.5 Million for Indiana and $6 Million for Indiana Power Plant Emissions –Cardiovascular—Between $48 Million and $4.9 Billion for the US, (Between $1 Million and $98 Million for Indiana and between $2.5 Million and $255 Million in the US from Indiana Power Plant Emissions

27. Health Benefit Uncertainties Value of avoiding a fatal heart attack is valued at $6,000,000 while average lifetime earnings are about $1,000,000—while people may be willing to pay $6,000,000 to avoid a heart attack, they cannot afford to pay that much. The value of IQ loss is based on a 0.6 IQ point reduction in IQ due to mercury causing a $16,900 reduction in lifetime earnings times total births

28. Health Benefit Overstatement Assumption that health benefits are linearly related to reductions in US power plant emissions when: Assumption that health benefits are linearly related to reductions in US power plant emissions when: –USEPA expects that a 69% reduction in US power plant emissions will reduce the deposition of mercury in the US by about 10% –Reductions in US power plant mercury emissions have a very small impact on migratory ocean species such as tuna

29. Health Cost per Pound of Emissions Using the HEC Health Costs and the 1999 Indiana Power Plant mercury emissions of 4,884 pounds, we can calculate a health cost per pound of mercury emissions –IQ loss = $78,000,000/4,884 = $15,970/lb –Cardiovascular = $41,464/lb –Mental Retardation = $3,071/lb TOTAL = $60,500 per pound

30. What are the Emission Reductions? The HEC Petition requires 90% Reduction from uncontrolled emissions or 0.6 lbs Hg/Trillion BTU—meeting this limit is estimated to result in between 1,095 and 1,260 lbs of mercury emissions per year in Indiana starting in 2010 EPA’s CAMR Phase 2 emission limits will cap IN power plant emissions at 1,656 lbs, but due to banking and trading, actual emissions are estimated at 2,001 lbs by EPA and 1,492 by the Indiana Utility Group

31. IN Power Plant Mercury Emissions (Lbs)

32. Mercury Control Issue Is it physically possible to meet the 90% reduction target at every power plant? –Many people assume that the control device combination of ESP, SCR and scrubber will result in a 90% reduction in mercury emissions—tests on production units show removals of 40 to 90% –Reported tests indicate that mercury emission reductions of 90 to 94% can be achieved on plants fueled with PRB (western) coals using brominated activated carbon, but that on bituminous coals reductions range from 50 to 86%

33. Costs of Mercury Control Options HEC Petition (90% Removal) –$234,230,000 per year Initial Estimate –$207,000,000 per year IDEM/EPA Model Run –$373,137,000 per year IUG Model Run (Note, IDEM assumes that ESP, SCR and Scrubber will meet 90%, IUG assumes that activated carbon injection will be required) CAMR Phase II –$64,195,000 per year IDEM/EPA Model Run –$67,647,000 per year IUG Model Run

34. HEC Petition vs CAMR Using the $60,505 health cost per pound of mercury emissions, the estimated annual costs of complying with the HEC petition, and the pounds of mercury emissions avoided by the HEC petition vs CAMR, we can estimate the cost or benefit of the HEC petition versus CAMR

35. HEC Petition vs 1999 Baseline 1999 emissions = 4,884 pounds per year HEC emissions = 1,095 pounds per year Emissions reduction = 3,789 Value of reductions = 3,789 * $60,505 = $229,253,445 Initial HEC Cost Estimate is $234,230,000 per year Benefit/Cost Ratio = 0.98

36. HEC vs CAMR Benefit We must do CAMR, so the appropriate calculation is the marginal benefit of the HEC petition vs CAMR. This benefit can be compared with the marginal cost. The data that we have supports two calculations—those based upon the IDEM/EPA Cost and Emissions Model and those based upon the IUG Cost and Emissions Model

37. HEC vs EPA/IDEM CAMR Benefit The IDEM/EPA model indicates that CAMR will result in 2,001 pounds of mercury emissions per year at an annual control cost of $64,195,000. The HEC petition would reduce the emissions by 906 pounds per year (value = $54,817,530) at a net cost of $207,485,000-$64,195,000 = $143,290,000 per year –Benefit/cost ratio = 0.38

38. HEC vs CAMR IUG Benefit The IUG model indicates that CAMR will result in 1,492 pounds of mercury per year at an annual cost of $67,674,000. The HEC petition would reduce the emissions by 397 pounds per year (value = $24,020,485) at a net cost of $373,137,000-$67,674,000 = $305,463,000 per year –Benefit/cost ratio = 0.08

39. Total Monthly Electric Costs Total Monthly Electric Costs A very simple calculation is that the IDEM/EPA annual CAMR cost of $64,195,000 divided by 6.3 million Hoosiers yields an annual increase of $10.20 per year per Hoosier or $2.54 per household per month. For the HEC petition similar values are $234,230,000 annual cost $37.18 per Hoosier or $9.29 per household per month This calculation includes the assumption that the increases in Commercial and Industrial rates are passed on to the individual consumers

40. Recommendation Due to uncertainties over: –Achievability of 90% control –Reductions in actual mercury exposure levels –Cardiovascular health benefit –Thresholds for IQ reduction based upon EPA’s Reference Dose AND the fact that the calculated marginal benefits of the HEC petition appear to exceed the lowest estimated costs of implementing the petition, I recommend that IDEM proceed with rulemaking based on CAMR