1. Natural Gas Fuel Switching Consequences for Public Power Utilities 2012-2017 Theresa Pugh April 14, 2010 APPA CEO Climate Change Task Force

2. Retrofit existing fired power plant with Hazardous Air Pollutant Controls (Minimum of Scrubbers or Baghouses Activated Carbon & ESP) and CCS meeting roughly natural gas standard for CO 2 Fuel Switch to Natural Gas (and deal with hedging, build new infrastructure & price volatility issues) Door #1 Door #2 Door #3 Use Clean Air Act’s NSPS for reasonable, available and cost effective energy efficiency (DSM) and renewables [heavy lift]

3. 3 Possible Timeline for Environmental Regulatory Requirements for the Utility Industry Ozone '08'09'10 '11'12'13 '14 '15 '16 '17 Beginning CAIR Phase I Seasonal NOx Cap HAPs MACT proposed rule Beginning CAIR Phase II Seasonal NOx Cap Revised Ozone NAAQS Begin CAIR Phase I Annual SO 2 Cap -- adapted from Wegman (EPA 2003) Updated 2.15.10 Beginning CAIR Phase II Annual SO 2 & NOx Caps Next PM- 2.5 NAAQS Revision Next Ozone NAAQS Revision SO 2 Primary NAAQS SO 2 /NO 2 Secondary NAAQS NO 2 Primary NAAQS SO 2 /NO 2 New PM-2.5 NAAQS Designations CAMR & Delisting Rule vacated Hg/HAPS Final EPA Nonattainment Designations PM-2.5 SIPs due (‘06) Proposed CAIR Replacement Rule Expected HAPS MACT final rule expected CAIR Vacated HAPS MACT Compliance 3 yrs after final rule CAIR Remanded CAIR Begin CAIR Phase I Annual NOx Cap PM-2.5 SIPs due (‘97) 316(b) proposed rule expected 316(b) final rule expected 316(b) Compliance 3-4 yrs after final rule Effluent Guidelines proposed rule expected Water Effluent Guidelines Final rule expected Effluent Guidelines Compliance 3-5 yrs after final rule Begin Compliance Requirements under Final CCB Rule (ground water monitoring, double monitors, closure, dry ash conversion) Ash Proposed Rule for CCBs Management Final Rule for CCBs Mgmt Final CAIR Replacement Rule Expected Compliance with CAIR Replacement Rule CO 2 CO 2 Regulation Reconsidered Ozone NAAQS PM 2.5

4. Retrofit Decisions Driven by HAPs & CAIR Regulations Before CO 2 CURRENT CAPITAL COST AND COST- EFFECTIVENESS OF POWER PLANT EMISSIONS CONTROL TECHNOLOGIES Prepared by J. Edward Cichanowicz Prepared for Utility Air Regulatory Group January 2010 “The capital cost of retrofitting either wet FGD or SCR increased over the recent 4-year period, from about 2005 through 2009, and specifically for a 500 MW plant, by approximately $50- 65/kW. This same rate of cost escalation is anticipated to continue for the next 4-6 years, elevating the cost of equipment installed in 2014 and 2015 for a CAIR Phase 2 mandate and the anticipated HAPs MACT rule.”

5. Update screen shot

7. Current Natural Gas Pipeline

8. Current U. S. Natural Gas Storage Maps (no differentiation for storage capacity)

9. Table 6: Gas Burn by State if Existing Coal-Fired MW Converted to Natural Gas State2008 Gas Use Additional Use If Coal Converted Coal Use As % of Current Gas Use Alabama0.4040.533132% Alaska0.3420.0051% Arizona0.40.24662% Arkansas0.2350.16671% California2.450.0181% Colorado0.5050.22344% Connecticut0.1670.02615% Delaware0.0480.04594% Florida0.9430.47951% Georgia0.4250.614144% Hawaii0.0030.009316% Idaho0.0890.0011% Illinois1.0010.73974% Indiana0.5510.906164% Iowa0.320.27485% Kansas0.2830.2381% Kentucky0.2250.694308% Louisiana1.2390.15813% Maine0.0610.0047% Maryland0.1960.22112% Massachusetts0.3740.07520% Michigan0.7790.54270% Minnesota0.4010.23859%

10. Additional Use IfCoal Use As % of State2008 Gas UseCoal ConvertedCurrent Gas Use Mississippi0.3550.11332% Missouri0.2960.497168% Montana0.0760.107140% Nebraska0.1680.13480% Nevada0.2650.11644% New Hampshire0.0710.02636% New Jersey0.6150.09415% New Mexico0.2470.18475% New York1.180.1815% North Carolina0.2430.558230% North Dakota0.0630.179283% Ohio0.7921.002126% Oklahoma0.670.24136% Oregon0.2680.0259% Pennsylvania0.750.861115% Rhode Island0.08900% South Carolina0.170.272160% South Dakota0.0640.0231% Tennessee0.230.433188% Texas3.5460.89325% Utah0.2240.21495% Vermont0.00900% Virginia0.2990.26187% Washington0.2980.06121% West Virginia0.1110.646580% Wisconsin0.4090.29973% Wyoming0.1430.259182%

11. Switching from Coal to Natural Gas: Understanding the Environmental and Operational Impacts At APPA National Conference, June 19-23, 2010, Orlando, FL Cost to Members: $375; Cost to Non-Members: $750 Sunday, June 20, 2010 - Full day 8:30 a.m. – 4:30 p.m. The U. S. Environmental Protection Agency’s “perfect storm” of new environmental regulations (air, climate, water and waste) may lead many utilities to switch from coal to natural gas for base load energy production to reduce carbon dioxide, sulfur dioxide and fine particulate matter. While natural gas may be an easier environmental choice, the utility’s operational issues may grow far more complex when producing electricity with natural gas. Operational issues range from anticipating how much gas to use in lieu of coal, the purchasing (“nomination”) process, natural gas transportation issues, and local storage when the gas is not used within 24 hours. The speaker will address all aspects of natural gas use, from nomination, to setting up procurement operations, to re-sale of natural gas in the market if storage is not available. Instructors: Ted Chapman, Director, Standard & Poor's, Dallas, Texas; Catherine Elder, Senior Associate, Aspen Environmental Group, Sacramento, Calif.; Doug Hunter, General Manager, Utah Associated Municipal Power Systems, Salt Lake City, Utah; and Joanie Teofilo, Vice President, Risk Control & CRO, The Energy Authority, Jacksonville, Fla. http://www.appanet.org/events/annualeventdetail.cfm?ItemNumber=26074&sn.ItemNumber=0

12. APPA Contacts 12 CO 2, EPA liaison, CAA, & new generation (including renewables) Theresa Pugh Director, Environmental Services 202-467-2943 TPugh@APPAnet.org GHG Reporting, 316(b), biomass and effluent guidelines J.P. Blackford Environmental Services Engineer 202-467-2956 JPBlackford@APPAnet.org