Indiana Power Plant Mercury Indiana Power Plant Mercury Rulemaking RecommendationRulemaking Recommendation

Thomas W. Easterly, CommissionerThomas W. Easterly, Commissioner

Indiana Department of Environmental Indiana Department of Environmental ManagementManagement

Utility Mercury Regulation OptionsUtility Mercury Regulation Options

Hoosier Environmental Council Petition Hoosier Environmental Council Petition requesting a 90% reduction in uncontrolled requesting a 90% reduction in uncontrolled mercury emissions from all Coal Fired mercury emissions from all Coal Fired EGUs with no tradingEGUs with no tradingAdopt Federal Clean Air Mercury Rule Adopt Federal Clean Air Mercury Rule (CAMR)(CAMR)Some combination?Some combination?The workgroup process did not reach The workgroup process did not reach consensusconsensus

Where are we in the Rulemaking Where are we in the Rulemaking Process?Process?

We have published the first noticeWe have published the first notice We did not publish the second notice We did not publish the second notice which includes the proposed rule language which includes the proposed rule language because of the lack of consensus on because of the lack of consensus on which option to select.which option to select.IN will not have a final regulation by EPA’s IN will not have a final regulation by EPA’s 11/06 deadline11/06 deadlineWe need to chose a direction and move We need to chose a direction and move aheadahead

Other IN Mercury InitiativesOther IN Mercury InitiativesWe are implementing the program with We are implementing the program with bounties to remove mercury switches from bounties to remove mercury switches from end of life (motor) vehicles (ELVs)end of life (motor) vehicles (ELVs)

We are also pursuing Regulations to We are also pursuing Regulations to implement the programimplement the program

Utility mercury emissions estimated at Utility mercury emissions estimated at 4,500 lbs—mercury in scrapped autos 4,500 lbs—mercury in scrapped autos initially estimated at 2,400 lbs, but may be initially estimated at 2,400 lbs, but may be much lessmuch less

What is Known About MercuryWhat is Known About Mercury

Mercury is a potent neurotoxinMercury is a potent neurotoxinStudies have shown that high levels of Studies have shown that high levels of mercury result in reduced IQs in newbornsmercury result in reduced IQs in newbornsSome studies have shown that high levels Some studies have shown that high levels of mercury in adult males are associated of mercury in adult males are associated with higher rates of heart attacks and with higher rates of heart attacks and death (but studies also show that eating death (but studies also show that eating fish generally reduces the risk of heart fish generally reduces the risk of heart attacks)attacks)

What is Known About MercuryWhat is Known About Mercury

In the US, most mercury exposure is In the US, most mercury exposure is through fish consumptionthrough fish consumption

In Indiana, there are many fish In Indiana, there are many fish consumption advisories for mercuryconsumption advisories for mercury

As shown on the next slide, using As shown on the next slide, using Indiana’s fish consumption advisory Indiana’s fish consumption advisory standard, we would warn against standard, we would warn against consumption of common commercial fish consumption of common commercial fish available in the supermarket available in the supermarket

IN Commercial Fish AdvisoriesIN Commercial Fish AdvisoriesFresh or canned salmon; shellfish like shrimp, crab, and oysters; Fresh or canned salmon; shellfish like shrimp, crab, and oysters;

tilapia; herring; canned “light” tuna; scallops; sardines; pollock; tilapia; herring; canned “light” tuna; scallops; sardines; pollock; cod; and catfish—Unlimited for all adultscod; and catfish—Unlimited for all adultsOne meal per weekOne meal per week ** **

Canned albacore “white” tuna (6 oz.), tuna steak, halibut, and Canned albacore “white” tuna (6 oz.), tuna steak, halibut, and lobster—1 meal per week for adultslobster—1 meal per week for adultsOne meal per monthOne meal per month****

Shark, swordfish, tile fish, king mackerel—1 meal per month for Shark, swordfish, tile fish, king mackerel—1 meal per month for adult males and femalesadult males and femalesDo not eatDo not eat****

References: References: – USDHHS and US EPA - 2004 EPA & FDA: Advice for Women Who USDHHS and US EPA - 2004 EPA & FDA: Advice for Women Who

Might Become Pregnant Might Become Pregnant – Choose Wisely 2004, Wisconsin DNR Choose Wisely 2004, Wisconsin DNR – An Expectant Mother's Guide to Eating Minnesota Fish, 2004 An Expectant Mother's Guide to Eating Minnesota Fish, 2004

**Consumption guidelines for the at-risk population: women of **Consumption guidelines for the at-risk population: women of childbearing years, nursing mothers, and all children under the childbearing years, nursing mothers, and all children under the age of 15 years.age of 15 years.

Mercury QuestionsMercury Questions

Are US Power Plant mercury emissions Are US Power Plant mercury emissions deposited near the power plants or spread deposited near the power plants or spread around the world?around the world?– If spread around the world, elimination of US mercury If spread around the world, elimination of US mercury

emissions will reduce mercury in fish by about 1%emissions will reduce mercury in fish by about 1%– If emissions are locally deposited, reductions may If emissions are locally deposited, reductions may

result in significant reductions in local fish mercury result in significant reductions in local fish mercury concentrationsconcentrations

Will a reduction in mercury deposition result in a Will a reduction in mercury deposition result in a corresponding reduction in fish mercury levels?corresponding reduction in fish mercury levels?

Is There a Safe Level of Mercury?Is There a Safe Level of Mercury?USEPA has established a “Reference Dose” of USEPA has established a “Reference Dose” of 0.1 micrograms/kg body weight/day. This 0.1 micrograms/kg body weight/day. This calculation is based upon limiting the mercury calculation is based upon limiting the mercury in the fetus of a pregnant woman to the no in the fetus of a pregnant woman to the no observed affects level and a safety factor of 10.observed affects level and a safety factor of 10.

88.4% of the Midwest population that 88.4% of the Midwest population that consumes non-commercial fish is believed to consumes non-commercial fish is believed to be below the reference dose. Full be below the reference dose. Full implementation of CAMR will increase that implementation of CAMR will increase that value to 90.6%.value to 90.6%.

Value of Health BenefitsValue of Health BenefitsBased upon published studies, the Hoosier Based upon published studies, the Hoosier Environmental Council has estimated the Environmental Council has estimated the following health costs:following health costs:– Loss of IQ due to US power plant mercury Loss of IQ due to US power plant mercury

emissions—$1.5 Billion for the US, $30 Million for emissions—$1.5 Billion for the US, $30 Million for Indiana and $78 Million for Indiana Power Plant Indiana and $78 Million for Indiana Power Plant EmissionsEmissions

– Cardiovascular--$3.9 Billion for the US, $78 Million Cardiovascular--$3.9 Billion for the US, $78 Million for Indiana and $203 Million in the US from Indiana for Indiana and $203 Million in the US from Indiana Power Plant EmissionsPower Plant Emissions

– Increased mental retardation--$289 Million for the Increased mental retardation--$289 Million for the US, $6 Million for Indiana and $15 Million in the US US, $6 Million for Indiana and $15 Million in the US from Indiana Power Plant Emissionsfrom Indiana Power Plant Emissions

Value of Health BenefitsValue of Health BenefitsBased upon published studies, the North East Based upon published studies, the North East States Consortium of Air Unit Managers has States Consortium of Air Unit Managers has estimated the following benefits from full estimated the following benefits from full implementation of CAMR:implementation of CAMR:– Improvement in IQ due to US power plant mercury Improvement in IQ due to US power plant mercury

emissions—$119 Million for the US, $2.5 Million for emissions—$119 Million for the US, $2.5 Million for Indiana and $6 Million for Indiana Power Plant Indiana and $6 Million for Indiana Power Plant EmissionsEmissions

– Cardiovascular—Between $48 Million and $4.9 Cardiovascular—Between $48 Million and $4.9 Billion for the US, (Between $1 Million and $98 Billion for the US, (Between $1 Million and $98 Million for Indiana and between $2.5 Million and Million for Indiana and between $2.5 Million and $255 Million in the US from Indiana Power Plant $255 Million in the US from Indiana Power Plant EmissionsEmissions

Health Benefit UncertaintiesHealth Benefit Uncertainties

Value of avoiding a fatal heart attack is valued Value of avoiding a fatal heart attack is valued at $6,000,000 while average lifetime earnings at $6,000,000 while average lifetime earnings are about $1,000,000—while people may be are about $1,000,000—while people may be willing to pay $6,000,000 to avoid a heart willing to pay $6,000,000 to avoid a heart attack, they cannot afford to pay that much.attack, they cannot afford to pay that much.

The value of IQ loss is based on a 0.6 IQ point The value of IQ loss is based on a 0.6 IQ point reduction in IQ due to mercury causing a reduction in IQ due to mercury causing a $16,900 reduction in lifetime earnings times $16,900 reduction in lifetime earnings times total birthstotal births

Health Benefit OverstatementHealth Benefit Overstatement

Assumption that health benefits are Assumption that health benefits are linearly related to reductions in US power linearly related to reductions in US power plant emissions when:plant emissions when:– USEPA expects that a 69% reduction in US USEPA expects that a 69% reduction in US

power plant emissions will reduce the power plant emissions will reduce the deposition of mercury in the US by about 10%deposition of mercury in the US by about 10%

– Reductions in US power plant mercury Reductions in US power plant mercury emissions have a very small impact on emissions have a very small impact on migratory ocean species such as tunamigratory ocean species such as tuna

Health Cost per Pound of EmissionsHealth Cost per Pound of Emissions

Using the HEC Health Costs and the 1999 Using the HEC Health Costs and the 1999 Indiana Power Plant mercury emissions of Indiana Power Plant mercury emissions of 4,884 pounds, we can calculate a health 4,884 pounds, we can calculate a health cost per pound of mercury emissionscost per pound of mercury emissions– IQ loss = $78,000,000/4,884 = $15,970/lbIQ loss = $78,000,000/4,884 = $15,970/lb– Cardiovascular = $41,464/lbCardiovascular = $41,464/lb– Mental Retardation = $3,071/lbMental Retardation = $3,071/lb

TOTAL = $60,500 per poundTOTAL = $60,500 per pound

What are the Emission Reductions?What are the Emission Reductions?

The HEC Petition requires 90% Reduction from The HEC Petition requires 90% Reduction from uncontrolled emissions or 0.6 lbs Hg/Trillion uncontrolled emissions or 0.6 lbs Hg/Trillion BTU—meeting this limit is estimated to result in BTU—meeting this limit is estimated to result in between 1,095 and 1,260 lbs of mercury between 1,095 and 1,260 lbs of mercury emissions per year in Indiana starting in 2010emissions per year in Indiana starting in 2010

EPA’s CAMR Phase 2 emission limits will cap EPA’s CAMR Phase 2 emission limits will cap IN power plant emissions at 1,656 lbs, but due IN power plant emissions at 1,656 lbs, but due to banking and trading, actual emissions are to banking and trading, actual emissions are estimated at 2,001 lbs by EPA and 1,492 by the estimated at 2,001 lbs by EPA and 1,492 by the Indiana Utility GroupIndiana Utility Group

IN Power Plant Mercury Emissions IN Power Plant Mercury Emissions (Lbs)(Lbs)

0

5 0 0

1 0 0 01 5 0 0

2 0 0 02 5 0 0

3 0 0 03 5 0 0

4 0 0 04 5 0 0

5 0 0 0

1 9 9 9 2 0 1 0H E C

2 0 1 0H E C

2 0 1 0E P A

2 0 1 0C A P

2 0 1 0IU G

2 0 1 8E P A

2 0 1 8C A P

2 0 1 8IU G

Mercury Control IssueMercury Control Issue

Is it physically possible to meet the 90% Is it physically possible to meet the 90% reduction target at every power plant?reduction target at every power plant?– Many people assume that the control device Many people assume that the control device

combination of ESP, SCR and scrubber will result in combination of ESP, SCR and scrubber will result in a 90% reduction in mercury emissions—tests on a 90% reduction in mercury emissions—tests on production units show removals of 40 to 90%production units show removals of 40 to 90%

– Reported tests indicate that mercury emission Reported tests indicate that mercury emission reductions of 90 to 94% can be achieved on plants reductions of 90 to 94% can be achieved on plants fueled with PRB (western) coals using brominated fueled with PRB (western) coals using brominated activated carbon, but that on bituminous coals activated carbon, but that on bituminous coals reductions range from 50 to 86%reductions range from 50 to 86%

Costs of Mercury Control OptionsCosts of Mercury Control Options

HEC Petition (90% Removal)HEC Petition (90% Removal)– $234,230,000 per year Initial Estimate$234,230,000 per year Initial Estimate– $207,000,000 per year IDEM/EPA Model Run$207,000,000 per year IDEM/EPA Model Run– $373,137,000 per year IUG Model Run$373,137,000 per year IUG Model Run

(Note, IDEM assumes that ESP, SCR and Scrubber (Note, IDEM assumes that ESP, SCR and Scrubber will meet 90%, IUG assumes that activated carbon will meet 90%, IUG assumes that activated carbon injection will be required)injection will be required)

CAMR Phase IICAMR Phase II– $64,195,000 per year IDEM/EPA Model Run$64,195,000 per year IDEM/EPA Model Run– $67,647,000 per year IUG Model Run$67,647,000 per year IUG Model Run

HEC Petition vs CAMRHEC Petition vs CAMR

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

HEC Petition vs 1999 BaselineHEC Petition vs 1999 Baseline

1999 emissions = 4,884 pounds per year1999 emissions = 4,884 pounds per year

HEC emissions = 1,095 pounds per yearHEC emissions = 1,095 pounds per year

Emissions reduction = 3,789Emissions reduction = 3,789

Value of reductions = 3,789 * $60,505 = Value of reductions = 3,789 * $60,505 = $229,253,445$229,253,445

Initial HEC Cost Estimate is $234,230,000 Initial HEC Cost Estimate is $234,230,000 per yearper year

Benefit/Cost Ratio = 0.98Benefit/Cost Ratio = 0.98

HEC vs CAMR BenefitHEC vs CAMR Benefit

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

HEC vs EPA/IDEM CAMR Benefit HEC vs EPA/IDEM CAMR Benefit

The IDEM/EPA model indicates that The IDEM/EPA model indicates that CAMR will result in 2,001 pounds of CAMR will result in 2,001 pounds of mercury emissions per year at an annual mercury emissions per year at an annual control cost of $64,195,000.control cost of $64,195,000.

The HEC petition would reduce the The HEC petition would reduce the emissions by 906 pounds per year (value emissions by 906 pounds per year (value = $54,817,530) at a net cost of = $54,817,530) at a net cost of $207,485,000-$64,195,000 = $207,485,000-$64,195,000 = $143,290,000 per year$143,290,000 per year– Benefit/cost ratio = 0.38Benefit/cost ratio = 0.38

HEC vs CAMR IUG BenefitHEC vs CAMR IUG Benefit

The IUG model indicates that CAMR will The IUG model indicates that CAMR will result in 1,492 pounds of mercury per year result in 1,492 pounds of mercury per year at an annual cost of $67,674,000.at an annual cost of $67,674,000.

The HEC petition would reduce the The HEC petition would reduce the emissions by 397 pounds per year (value emissions by 397 pounds per year (value = $24,020,485) at a net cost of = $24,020,485) at a net cost of $373,137,000-$67,674,000 = $373,137,000-$67,674,000 = $305,463,000 per year$305,463,000 per year– Benefit/cost ratio = 0.08Benefit/cost ratio = 0.08

Total Monthly Electric CostsTotal Monthly Electric CostsA very simple calculation is that the IDEM/EPA A very simple calculation is that the IDEM/EPA annual CAMR cost of $64,195,000 divided by 6.3 annual CAMR cost of $64,195,000 divided by 6.3 million Hoosiers yields an annual increase of $10.20 million Hoosiers yields an annual increase of $10.20 per year per Hoosier or $2.54 per household per per year per Hoosier or $2.54 per household per month.month.

For the HEC petition similar values are $234,230,000 For the HEC petition similar values are $234,230,000 annual cost $37.18 per Hoosier or $9.29 per annual cost $37.18 per Hoosier or $9.29 per household per monthhousehold per month

This calculation includes the assumption that the This calculation includes the assumption that the increases in Commercial and Industrial rates are increases in Commercial and Industrial rates are passed on to the individual consumerspassed on to the individual consumers

RecommendationRecommendation

Due to uncertainties over:Due to uncertainties over:– Achievability of 90% controlAchievability of 90% control– Reductions in actual mercury exposure levelsReductions in actual mercury exposure levels– Cardiovascular health benefitCardiovascular health benefit– Thresholds for IQ reduction based upon Thresholds for IQ reduction based upon

EPA’s Reference DoseEPA’s Reference DoseAND the fact that the calculated marginal AND the fact that the calculated marginal

benefits of the HEC petition appear to exceed benefits of the HEC petition appear to exceed the lowest estimated costs of implementing the lowest estimated costs of implementing the petition, I recommend that IDEM proceed the petition, I recommend that IDEM proceed with rulemaking based on CAMRwith rulemaking based on CAMR