1. Assessment of Mercury Rules for Electric Generators in North Carolina September 9, 2015 Presented to the Environmental Management Commission – Air Quality Committee D EPARTMENT OF E NVIRONMENT A ND N ATURAL R ESOURCES D IVISION OF A IR Q UALITY S TEVE S CHLIESSER

2. Presentation Summary Purpose: Address 2 state-only mercury rule provisions - 15A NCAC 02D. 2511(b) and (c), Mercury Control Plans North Carolina and EPA mercury rules summary Findings of mercury emissions, controls, and deposition Discussion and DAQ recommendation whether to approve or disapprove the Mercury Control Plans 2

3. Acronyms EGU = Electrical generating unit CSA = NC Clean Smokestacks Act CAA = Clean Air Act CAMR = EPA Clean Air Mercury Rule MATS = EPA Mercury and Air Toxics Standards MACT = Maximum Achievable Control Technology SO 2 = Sulfur dioxide FGD = Flue gas desulfurization, SO 2 / mercury control NO x = Nitrogen oxides SCR = Selective catalytic reduction, NO x / mercury control SNCR = Selective non-catalytic reduction, NO x / mercury control PM = Particulate matter ESP = Electrostatic precipitator, PM control 3

4. North Carolina and EPA Mercury Rules 2002, CSA set EGU SO 2 /NO x emission caps, not mercury -- 2003-2005, DAQ reports on mercury to EMC and ERC 2005, EPA EGU CAMR under CAA Section 111 with trading 2006, EMC adopted CAMR with state-only provisions 2008, CAMR vacated by D.C. Circuit Court, toxic pollutants like mercury regulated under Section 112 4

5. NC and EPA Mercury Rules – cont’d 2012, EPA replaced CAMR with MATS under Section 112 - Based on maximum achievable control technology - 90% mercury control without trading - April 2015 compliance date 2014, D.C. Circuit Court upheld several MATS points, but disagreed on EPA’s failure to consider cost June 2015, Supreme Court remanded MATS to D.C. Circuit Court, for EPA ignoring cost, with mixed signals on whether to: - Include co-benefits with benefits, - Stay, remand or vacate MATS rule stays in place until decided otherwise 5

6. Mercury Emission Control Early 2000s, 2/3 NC mercury emissions from coal-EGUs 2012 DAQ Mercury Report Highlights 2002-2010, 70% reduction in NC EGU mercury emissions Modeling evaluated NC’s deposition from NC sources - In 2005, 16% of NC deposition from NC sources - In 2016, 3% of NC deposition from NC sources with CSA controls meeting MATS 2015 Update 2002-2013, 89% reduction in NC EGU mercury emissions 6

7. NC EGU Mercury Emission Trend from CY 2002 - 2013 7

8. Assess 02D.2511(b), Mercury Control Plans Requirement Duke and Progress submit Control Plans by Jan. 1, 2013 Controls for NO x (SCR / SNCR) and SO 2 (wet FGD) also considered “mercury controls” Identify controls, operation schedule at earliest date, and un- controlled units to be shut down by Dec. 31, 2017 Response Each submitted plans in Dec. 2012 identifying controls / schedule, 8 facilities shut down 3 years before deadline Recommendation: EMC finds that the 02D.2511(b) requirements are met 8

9. Assess 02D.2511(c), Mercury Control Plans Requirement DAQ Director review plans and recommend to EMC EMC only approve if control plan achieves maximum emission reduction feasible without mercury allowances (i.e., emission trading) Response To point of maximum control, EPA EGU MACT sets limits with 90% mercury control on continuous basis with NC EGU MATS compliance tests in fall 2015 To point of no allowances, EPA rule prohibits trading Recommendation: EMC approve the mercury control plans 9

10. Questions? Steve Schliesser NC DAQ Environmental Engineer 919-707-8701 Steve.Schliesser@ncdenr.gov http://www.ncair.orgSteve.Schliesser@ncdenr.gov http://www.ncair.org DAQ Clean Smokestack Act website: http://daq.state.nc.us/news/leg/http://daq.state.nc.us/news/leg/ EPA EGU MATS website: http://www.epa.gov/airquality/powerplanttoxics/index.html Duke Energy’s Coal Plant Decommissioning Program: https://www.duke-energy.com/about-us/decommissioning-program.asp

11. 02D.2511(b), Mercury control plans Duke Energy and Progress Energy shall each submit a mercury control plan to the Director by January 1, 2013. The plan shall identify the technology proposed for use at each unit owned or operated by the utility; the schedule for installation and operation of mercury controls at each unit; and shall identify any units that will be shut down. For purposes of this Rule, controls for nitrogen oxide and sulfur dioxide installed in compliance with G.S. 143-215.107D are considered to be mercury controls. The plan shall provide for installation and operation of mercury controls on all units at the earliest date that is technically and economically feasible. Any unit that has not installed controls as specified in an approved mercury control plan by December 31, 2017 shall shut down unless the Commission has approved additional mercury reductions at a facility that has achieved initial mercury reductions under G.S. 143-215.107D in lieu of installing controls at the unit under the criteria set out in Paragraph (c) of this Rule. 11

12. 02D.2511(c), Review and approval of plans The Director shall review the mercury control plans submitted pursuant to Paragraph (b) of this Rule and shall recommend that the Commission approve the plans, disapprove the plans or conditionally approve the plans. The Commission shall only approve a mercury control plan if it finds that the plan achieves the maximum level of reductions in mercury emissions at each unit that is technically and economically feasible without reliance on mercury allowances obtained through the allowance trading system under Rule.2510. Reductions in mercury are technically feasible if control technology exists that can reduce mercury emissions beyond the level achieved by an electrostatic precipitator for that particular unit. Economic feasibility is determined by considering environmental and health impacts; capital cost of compliance; annual incremental compliance cost; and impacts on local, regional and state economy. The Commission may approve additional mercury reductions at a unit that has achieved initial mercury reductions under G.S. 143-215.107D in lieu of installing mercury controls at a unit that has no mercury controls if the Commission finds that: (1) installation of controls at the unit is not economically and technically feasible; and (2) continued operation of the unit without mercury controls will not cause or contribute to mercury related health problems. 12