Jump to main content.

Project XL Logo

Pennsylvania Electric Company (Pennelec)

Frequently Asked Questions Regarding
Pennelec's XL Proposal

Q: What did Pennsylvania Electric Company (Pennelec), GPU Generation Corporation, and New York State Electric & Gas Corporation propose to do for their XL project?
A: The final proposal presented to the Environmental Protection Agency (EPA) involved "bubbling". Sulfur dioxide (SO2) emissions would be averaged and capped over three units at the companies' facility located in Homer City, PA. Two of the three units were not subject to the New Source Performance Standards (NSPS) while one of the units was an NSPS unit.

The average actual emission rate for the three units is 2.00 lbs SO2/mmBTUs. The proposal involved the reduction of this average emission rate to 1.95 lbs SO2/mmBTUs, a 2.5 percent reduction in the emission rate. If the facility exceeded this rate, no penalties would be imposed so long as the companies retired sulfur dioxide allowances Emitters of SO2 must possess one allowance for every ton of SO2 they emit. There is a limited number of allowances available. Therefore, retiring an allowance would remove that allowance from the market and prevent it from being used at some point to authorize emissions of SO2. Because allowances may be carried over from one year to the next, the retirement of an allowance today could result in reductions in SO2 emissions in the future if all other available allowances have been used. However, there are excess allowances currently available such that the retirement of allowances would not have an immediate impact on the amount of SO2 emissions. at a rate of three allowances for every ton emitted over the new rate.

Q: How would the proposal benefit the companies?
A: Units subject to NSPS requirements must generally maintain lower emission rates than units that are not subject to NSPS. By averaging emission rates among the non-NSPS and NSPS units, the facility would be able to use local coal for all of its units, not just the non-NSPS units. This would save the companies, by their own estimates, up to $5.4 million annually because they would be able to purchase cheaper local coal and reduce transportation costs.

Q: The area where the facility is located receives a significant amount of acid deposition. Wouldn't the reduction promised by the proposal be helpful in reducing environmental impacts on the area?
A: The promised reduction is not guaranteed. If the facility exceeded the promised rate, it could retire allowances rather than reduce emissions (the companies hold about half a million unused SO2 allowances). As a result, the proposal does not ensure that the area where the facility is located would be better off.

Q: How does the State feel about EPA's actions with regard to the proposal?
A: The State has informed us that, while it believes that the idea described in the proposal has some merit, it no longer believes that Project XL is the appropriate venue for the proposed project.

Q: Does EPA have any similar projects that it can compare this proposal to?
A: Yes. In a previous instance, EPA allowed a facility to average compliance across units subject to NSPS. All of the units were already subject to the high level of control required by NSPS, yet EPA required that project to yield much larger reductions in actual emission rates than the reductions promised by this proposal (5 to 10 percent versus 2.5 percent for the Homer City proposal). While that project effort is not directly comparable to the proposal, and is not precedential in nature, it does demonstrate that higher performance levels can be achieved. As such, EPA determined that the companies' proposal did not meet the Project XL requirement for superior environmental performance.

Q: Why do the companies believe that the project is beneficial to the environment?
A: The average allowable emission rate for the facility is 2.37 lbs SO2/mmBTUs. The facility has been operating at an average rate of 2.00 lbs SO2/mmBTUs. Without this project, the facility is free to increase its average emission rate up to the allowable rate. As a result, the companies believe that the project is of benefit to the region because, according to their estimates, the 1.95 lbs SO2/mmBTUs target would result in a 19.3 percent reduction in actual emissions from the facility during 1997-98. In addition, the companies have informed us that without the project they intend to increase their emissions so that they are closer to the allowable rate.

Q: Why isn't EPA willing to use the facility's allowable emission rate as the baseline against which the project is measured? Doesn't this penalize the facility for being a good environmental performer?
A: From the start, Project XL has been designed to provide future environmental benefits by encouraging superior environmental performance, not just to reward past behavior. Thus, in judging XL proposals, EPA assumes that voluntary controls already in place will remain in place regardless of whether an XL project is implemented. In addition, had the facility been emitting the maximum amount permitted by law, EPA would almost certainly have required greater reductions in the emission rate than the amount it requested in this instance. Further, if EPA were to give the companies credit based on their statement that, in the absence of Project XL, the facility would begin operating at the applicable allowable rate, it would be providing better treatment to companies inclined to eliminate preexisting voluntary controls than to companies that intend to continue practicing good environmental stewardship.

Q: Were there any other reasons that EPA decided not to accept the proposal?
A: Yes. EPA has already attempted to bubble NSPS units, with promising results. As such, EPA is already inclined to advance bubbling approaches where possible and where those approaches yield environmental benefits. However, EPA lost a lawsuit challenging the bubbling of NSPS units. The proposal under review offers the same, if not greater, legal difficulties as the bubbling of NSPS units and provides little in the way of new information. Thus, based on the minimal environmental benefits of the project, the legal difficulties involved in implementation, and the lack of new information to be learned through the project, EPA decided that, on the whole, the project does not meet the requirements of Project XL.

Q: How long has this proposal been in the evaluation stage at EPA?
A: The companies originally submitted a proposal to EPA on September 18, 1995, and a supplement to the proposal on February 5, 1996. In response to questions from EPA, the companies submitted additional information on March 15, 1996. After subsequent conversations, the companies provided further documentation on June 18, 1996. In a letter dated July 12, 1996, EPA stated that it would be unable to accept the proposal unless the companies provided, among other things, a twenty percent reduction in the average actual emission rate of the facility. On August 27, 1996, the companies submitted further information on the proposal, but failed to provide additional emission reductions. After further discussions involving EPA, the companies, and the Commonwealth of Pennsylvania, the companies met with representatives from EPA and Pennsylvania on February 7, 1997, to discuss their proposal. At this meeting, the companies were informed that EPA planned to issue a letter to the companies explaining that their proposal did not meet the criteria for inclusion in Project XL.

Q: In summary, what are EPA's reasons for refusing to accept this proposal in Project XL?
A: First, the proposal provides, at most, a 2.5 percent reduction in the actual emission rate of the facility, and in a previous experiment -- with units that were already subject to a greater degree of control -- EPA required a 5 to 10 percent reduction in the actual emission rate. Second, the promised reduction is not guaranteed because the companies can retire allowances if the facility exceeds the target emission rate. Third, the proposal offers little to EPA in the way of new information regarding the bubbling concept. Finally, implementation of the proposal would require overcoming serious legal obstacles. As a result of all of these reasons, EPA decided that, on the whole, the proposal does not meet the requirements of Project XL.

Local Navigation

Jump to main content.