PUC Docket No. 40443 EXHIBIT CTB-14
Turk Plant February 2007 Cost Estimate Summary
Category Land Acquisition Intemal Labor & Expenses Engineering & Professional Services Engineered Equipment Materials Construction Labor & Services Start-up Fuel and Sorbents Capital Spare E ui ment Other (Tax, Ins., & Esc.) AEP Allocations Activiated Carbon Injection (Mercury Control System) Contingency Total Project
Total Project (Millions) $13.00 $48.00 $57.60 $318.70 $204.80 $518.80 Note 1 Note 2 $73.70 $34.20 $3.40 $75.00 $1,347.20
Note 1: Start-up fuels and sorbents required prior to commissioning are not included. Note 2: Capital Spares are not included.
537
PUC Docket No. 40443 EXHIBIT CTB-15
This Exhibit is HIGHLY SENSITIVE under the terms of the Protective Order. The information is 'available for review at the Austin offices of American Electric Power Company (AEP), 400 West 15th Street, Suite 1520, Austin, Texas, (512) 481-4562, during normal business hours.
538
PUC Docket No. 40443 EXHIBIT CTB-16 Page 1 of 6
PROJECT CHANGE REQUEST LOG Status
PCR No.= Year.Month.Number.Revision-Department
Draft E-Engineering Routing M-Management Rou ' > 14d C-Cost O-Operations L-Construction Approved iNot A roved : D-Delay
Status Approved:
PCR No. 06.08.01.00
Subject E Steam Turbine-Generator & BFPT Cost Variance
Approved Approved •>'
06.10.03.00 06.09.01.01
C Alstom Letter of Credit & Euro Hedging C Capital Cost Recovery
,-Approved Approved , Approved Approved Approved Approved Approved Approved Approved roved Approved
06.09.02.00 06.10.01.00 06.10.01.01 06.10.02.00 06.10.04.00 06.12.01.00 07.02.01.00 07.02.02.00 07.02.03.00 07.04.01.00 07.04.02.00
E E E C E C E C C E M
Aproved
07.04.02.01
Boiler & AQCS Cost Variance Powdered Activated Carbon (PAC) Injection System for Mercury Control ACI System for Mercury Control - Revision B&W Letter of Credit Start-up Boiler Feed Pump B&W Tube Mad Escalation Relocation of the Bottom Ash Conveyor Additional Air Modeling Work (TRC) Additional Archaeological surve URS EPC Contract Negotiation EPC Contract
complete 08/09/06
11/07/06 11/03/06 09/14/06 12/14/06 08/27/08 12/11/06 11/07/06 12118/06 02/23/07 03/28/07 03/28/07 08/20/07 08/24/07
M EPC Contract-Reconcile
Approved Approved Approved Approved Not oired Approved NotApproved proved^ Approved Approved Approved Approved Approved e Approved Approved Nat. Approved Approved Approved Approved . Approved Approved 'Approved Not - roved ,Approved Approved Approved Approved Approved Approved Approved. Approved Approved . ° Approved Approved ,
07.04.02.02 07.04.03.00 07.04.03.01 07.04.03.02 07.06.01.00 07.06.01.01 07.06.02.00 07.06.02.01 07.06.02.02 07.07.01.00 07.07.02.00 07.07.03.00 07.07.03.01 07.07.03.02 07.07.04.00 07.07.04.01 07.07.04.02 07.07.04.03 07.07.04.04 07.08.01.00 07.09.01.00 07.09.01.01 07.09.02.00 07.09.02.00 07.09.03.00 07.09.03.01 07.09.03.02 07.10.01.00 07.10.02.00 07.10.02.01 07.10.02.02 07.10.03.00 07.10.03.01 07.10.03.02
04/22/08
M E C C E E E E C L M E E E C C C C C E E E E E E E C E E E E E E E
12/15/10 04/26/07 03/31/08 03/31/08 07/01/07 08/20/07 07/01/07 08/20/07 01/12/11 07/12/07 09/07/07 07/17/07 12/11/08 07/02/09 08/27/07 04/01/08 05/23/08 12/01/10
Approved--
07.10.04.00
-E Positive Cocking Condenser Isolation Valves
EPC Contract Ad'ustment for CHAT Installation B&W Damper Elimination Turbine Bypass Scope Transfer Transfer Dry FGD Work scope from Install to OEM Contract 2nd Lowering Well 2nd Coal Handling Lowerin Well Rivenroater Intake Rivennrater Intake Rivenwater Intake Revision Construction Elevator 2nd Cab Service Building LEED Certification AQCS Lime Gravimetric Feeder AQCS Lime Gravimetric Feeder - LABOR AQCS Lime Gravimetric Feeder - LABOR Revision Spare Parts-Boiler Feed Pump Balance of Capital Spares Balance of Capital Spares Capital Spares Update Capital Spares Update Conventional DCS I/O for B&W & Alstom scope Second Manway for Deaerator Second Manway for Deaerator Delay BFPT ex-works. Eliminate TAL valve. Delay BFPT ex-works Additional 5-ton hook on bridge crane Additional 5-ton hook on bridge crane Additional 5-ton hook on bridge crane ID Fan CT for Protective relaying capability FGD & Lime dust controls Material Handling DRB Meeting - LABOR Material Handling DRB Meeting - LABOR Revision AQCS Pulse Jet Fabric filter Air Compressor AQCS Pulse Jet Fabric filter Air Compressor - LABOR AQCS Pulse Jet Fabric filter Air Compressor- LABOR Revision
08/29/07 09/07/07 10/08/07 10/01/07 10/22/07 10/02/07 10/11/07 02/01/08 10/09/07 10/09/07 12/11/08 07/02/09 10/16/07 12/11/08 07/02/09
10/24/07
539
PUC Docket No. 40443 EXHIBIT CTB-16 Page 2 of 6
Status
PCR No.
Subject
Complete
Approved . Proved ..
07.10.05.00 07.10.05.01
D Shaw Stop Work & Delay Full Notice Claim D RECONCILE-Shaw Stop Work & Delay Full Notice Claim
10/15/07 05/29/08
Approved, Approved . Approved ,Approved Approved-
07.10.06.00 07.10.06.01 07.10.06.02 07.11.01.00 07.11.02.00
E E E E C
Approved Approved -.'
07.11.02.01 07.11.02.02
12/03/07 12/11/08 07/02/09 12/03/07 12/03/07
C Credit for Assigned Contracts C Credit for Assigned Contracts-RECONCILE
01/29/08 05/29/08
Approved Approved,
07.12.01.00 07.12.02.00
E Contract Amendment 4 (Weld Overlay & Copes Vulcan Valves) E FD Fan Rainhood Removal
01/28/08 04/08/08
roved.
AQCS Structural Design Enhancements AQCS Structural Design Enhancements - LABOR AQCS Structural Design Enhancements - LABOR Revision Addition of Speed Probes & Elimination of Skid Mounting Bolts Credit for Assigned Contracts
07.12.02.01
C FD Fan Rainhood Removal Reconcile
08/04/08
Approved Approved
07.12.03.00 07.12.03.01
E Boiler Penthouse Handrail E Boiler Penthouse Handrail Labor Adjustment
01/28/08 04/09/08
-Approved
07.12.03.02
E Boiler Penthouse Handrail Labor Adjustment - Reconcile
12/11/08
07.12.03.03 07.12.04.00 08.01.01.00 08.01.02.00 08.01.02.01 08.02.01.00 08.02.02.00 08.02.02.01 08.03.01.00 08.03.01.01 08.03.01.02 08.03.01.03 08.03.02.00 08.03.02.01 08.03.03.00 08.03.04.00
07/02/09 04/21/08 02/28/08 02/25/08 09/23/08 04/21/08 02/26/08 01/12/11 08/08/08 02/09/09 02/09/09 10/01/10 04/14/08 09/12/08 05/01/08 06/27/08
04/22I08 05/02/08 05/15/08 05/15/08 08/01/08 03/23/09 05/08/08 05/01/08 07/01/08 06/16/08 09/08/08
ApPrWed .. Approved Approved Approved Approved Approved Approved • Approved Approved Approved"rbved.r Not Approved proved Approved Not oveft-A-roved Approved
08.03.05.00
Approved Approved Approved Approved Not"Et uired Approved Approved Not Approved Not A roved Approved Not- .' 6rovelf
08.04.01.00 08.04.02.00 08.04.03.00 08.05.01.00 08.05.01.01 08.05.01.02 08.05.02.00 08.05.03.00 08.05.04.00 08.05.05.00 08.06.01.00
E Boiler Penthouse Handrail Labor Ad'u'stmenf- Reconcile Revision Control Logic Diagrams Milestone Change E Disturbance Fault Recorder (CR 0010) E Topcoat aint for Interior Steel E Topcoat paint for Interior Steel - Revision/Reconcile E Sloped Cooling Tower Basin C Additional Land and Associated Cost C Additional Land and Associated Cost Revision C AEPSC Budget Increase D AEPSC Delay C AEPSC Budget Increase C AEPSC Oct 2010 Revised Budget E Axle Fan Emergency Lube Oil System Change C Axle Fan Emergency Lube Oil System Change-Reconcile E Upgrade Aux Boller E Economizer Inlet Terminal Point Location Fly Ash/Bottom Ash Removal System Design Changes in Exchange for Coal E Handlin Enclosures and FARS Upgrades C B&W Erection Cost C B&W Pipe Material Escalation Alstom Generator Protection Cubicle Design Revision M Independent Monitor M Independent Monitor- Revision M Independent Monitor Budget Transfer M Independent Cost Review E Hydrostatic Test Pump E Redundant CEMS D DELAY-Temp North Access Road Improvement M Larger Service Building
04/08/08
Approved
08.06.02.00
D DELAY-B&W Equipment Unloading
06/13/08
Approved Approved Approved Approved Approved = Approved Approved Approved ApprovedAved Approved Approved
08.06.02.01 08.06.02.02 08.06.02.03 08.06.03.00 08.06.04.00 08.06.04.01 08.06.05.00 08.06.05.01 08.06.05.02 08.07.01.00 08.07.01.01 08.07.02.00
D D D D M C E E E D C E
12/01/08 07/02/09 07/31/09 06/23/08 06/11/08 09/16/08 08/06/08 10/19/09 12104109 07/31/08 02/10/11 08/07/08
DELAY-B&W Site Delay Costs DELAY-BWCC Equipment Unloading and pre FNTP Costs-Reconcile DELAY-BWCC Post FNTP Maintenance & Rehandle DELAY-Additional Storage Areas Altemative Site Investigation Alternative Site Investigation-RECONCILE Low Voltage Arc Resistance Switch ear Low Voltage Arc Resistance Switch ear REVISION Low Voltage Arc Resistance Switch ear CONTRACT REVISION Property Tax Increase Property Tax Increase Revision Transfer SDA HV & Atomizer Pit Cooling Design from Shaw to B&W
Approved
08.07.03.00
E AQCS 30% Operability & Maintainability
08/08/08
Approved ' Approved ,Approved
08.07.04.00 08.08.01.00 08.08.01.01
E Slur Agitator Monorails & Trolleys, PJFF Hopper nuclear level controls E Low Voltage Motor Control Centers E Low Volta e Motor Control Centers Revision
08/07/08 01/07/09 01/04/10
Approved
08.08.02.00
E Removal of Coal Sampling System
09/02/08
540
PUC Docket No. 40443 EXHIBIT CTB-16 Page 3 of 6
Status
_
PCR No.
"
Subject
Com olete
,Approved, ••
08.08.03.00
E Mercury Monitoring
04/06/09
Approved Approved
08.08.03.01 08.08.04.00
C Mercury Monitorin - Contract Reconcile E Redundant CEMS
roved,. Approved,
04/06/09
08.09.01.00 08.09.01.01
M Realized B&W FX Costs M Realized B&W FX Costs 2
09/12/08 11/11/08
Approved Approved
08.09.01.02 08.09.01.03
M Realized B&W FX Costs (3) M Realized B&W FX Costs (4)
02/27/09 12/04/09
08.09.01.04 08.09.01.05 08.09.02.00 08.09.03.00
M M L L
Realized B&W FX Costs (5) Realized B&W FX Costs (6) QA/QC Budget Rig in Guidelines
07/09/10 01/07/11 09/25/08 10/01/08
Approved . Approved Approved " ved `-Approved Approved
08.10.01.00 08.10.01.01 08.10.01.02 08.10.01.03 08.10.02.00 08.10.02.01
D D D D D D
DELAY-Alstom & Off Site Warehouse DELAY-Alstom & Off Site Warehouse-Transportation DELAY-Alstom & Off Site Warehouse-Transportation Revision DELAY-Alstom Equipment Transportation RECONCILE DELAY-Added Security/Fence DELAY - Added Security Fence Reconcile
12101/08 05/18/09 01/06/10 06/10/10 12/01/08 02/09/09
roved A5proved A roved•. --
08.10.03.00 08.10.04.00 08.11.01.00
E Rec cle Ash Silo Roof Modification L Third Party Crane Inspection E ASME B31.1 Code
10/23/08 11/19/08 11/11/08
Approved
08.11.02.00 08.11.03.00 08.11.03.01 08.11.04.00 08.11.04.01 08.12.01.00 08.12.01.01 08.12.01.02 08.12.02.00 08.12.02.01 08.12.02.02 08.12.03.00 08.12.03.01
M D D D D E E E D D D L L
11/25/08 12/01/08 01/05/09 12/01/08 01/05/09 06/01/09 08/20/09 12/21/09 12/17/08 03/30/09 09/28/09 01/16/09 02/27/09
' A roved Approved Approved Not: veeF
Approved Approved, Approved Approved . Not Approved -'Approved A-roved .-• Approved Approved Approved ' Approved Approved -
Builders Risk DELAY-12kV Temp. Power DELAY-12kV Temp. Power-RECONCILE DELAY-Tem Warehouse Shelving DELAY-Temp Warehouse Shelving - RECONCILE Lower Furnace Cable Openings Lower Furnace Cable Openings Lower Furnace Cable Openings Fixed/Markup Revision DELAY-B&W Warran Extensions DELAY-B&W Warranty Extensions DELAY-B&W Warran Extensions BWCC Crane Mats BWCC Crane Mats-Sales Tax
Approved
08.12.03.02
L BWCC Crane Mats Pile Protection
06/25/10
Approved •
08.12.03.03
C BWCC Crane Mats Pile Protection Reconcile
07/08/11
Approved
08.12.04.00
D DELAY-South Storm Water Detention Pond & Access Road Remediation
01/16/09
Approved Approved
09.01.01.00 09.01.01.01
C Shaw Steel Escalation C Shaw Steel Escalation Revision
01/16/09 09/20/10
Approved Approved Approved Approved Approved Not A raNedAS Not Approved At iyot A roved .,Approved, `
09.01.02.00 09.01.03.00 09.01.03.01 09.01.04.00 09.01.04.01 09.01.05.00 09.01.06.00 09.01.07.00 09.01.05.01
D D D D D C C C C
01/16/09 01/16/09 07/02/09 01/27/09 02/22/11 02/01/09 02/01/09 02/01/09 02/27/09
Approved
09.01.05.02
C Exhibit X Scope Transfer & Reconciliation
03/16/10
09.01.05.03 09.01.05.04 09.01.06.01 09.01.07.01 09.03.01.00 09.04.01.00 09.04.01.01 09.04.02.00 09.04.02.01 09.04.03.00 09.04.03.01 09.04.04.00 09.04.04.01
C C C C E D D L L D D E E
01/12/11 03/16/11 02/27/09 02/27/09 03131/09, 04/06/09 11/09/10 04/06/09 01/04/11 04/06/09 03/16/11 04/07/09 07/02/09
A roved Approved. _ Approved .. Approved • Approved ., Approved Approved A 7ovetl Approved A roved A roved Approved . "Approve'
DELAY-Shaw Extend Overhead & FNM DELAY-Air Permit Appeal Stay of Construction DELAY-Air Permit Appeal Stay of Construction-Reconcile DELAY-Upgrade Bridle Creek existing bridge DELAY-Upgrade Bridge Creek existing bridge RECONCILE Exhibit X Reconciliation Cl Budget Increases Cl Version 3 Escalation, Contingency Adjustment and Delay Budget Exhibit X Reconciliation Exhibit X #9PAC Reconciliation Exhibit X #9, PAC Reconciliation Revision Cl Budget Increases Cl Version 3 Escalation, Contingency Adjustment and Delay Budget Vibration Monitoring Wetland Delineation Delay Wetland Delineation Delay Revision Environmental Support of Off Site RR Work Environmental Support of Off Site RR Work Reconcile Delay Temp Warehouse Heating Delay Tem p Warehouse Heating Revision P92 Flux Core Arc Welding Toughness Testing P91 & P92 Materials Confirmatory Testing
541
PUC Docket No. 40443 EXHIBIT CTB-16 Page 4 of 6
Status Approved.
PCR No. 09.04.04.02
Subject E P91 & P92 Materials Confirmatory Testing Reconcile
Complete 02/25/11
Approved
09.04.05.00
M ADEQ Annual Emissions Fee
04/08/09
Not -' Cisred Approved_
09.05.01.00 09.05.02.00
O High Fidelity Simulator M B&W Transportation Escalation
07/01/09 06/01/09
Approved
09.05.02.01
M B&W Transportation Escalation (2)
12/21/09
A roved 'Approved Approved
09.05.02.02 09.05.02.03 09.05.02.04
M B&W Transportation Escalation ( 3) M B&W Transportation Escalation (4) M B&W Transportation Escalation (5)
08/26/10 02/01/11
- Approved
09.06.01.00
E
tVot.'/•1 roved
09.06.02.00
B&W l&C Change PJ air compressor & Lime Handling E-Stops for Compatibility w/ Shaw I&C E Ammonia Bulk Storage Tank Access
-Approved -
09.06.03.00
E Relocation of B&W 382 Valve
Approved
09.06.03.01
M Shaw 382 offset w/ Engineering
11/05/09
09.07.01.00
D B&W OEM Delay
08/01/09
i+1otA
-^':'
07/22/09 06/30/09 07/22/09
Approved
09.07.01.01
D B&W OEM Delay Revision
09/23/09
Aved Approved Approved Approved Approved Aroved
09.07.01.02 09.07.02.00 09.07.02.01 09.07.03.00 09.07.03.01 09.07.04.00
D D D E E L
12/21/09 08/13109 12/21/09 07/22/09 02/25/11 07/29/09.
Approved
09.07.04.01
L BWCC Windbox Hanging Revision
12/21/09
Approved A roved Not A- r4ved Approved Approved Approved
09.07.05.00 09.07.05.01 09.08.01.00 09.08.01.01 09.08.02.00 09.08.02.01 09.08.03.00
E Auxiliary Boiler FGR Upgrade Auxiliary Boiler FGR Upgrade Contract Revision D Delay-Shaw SubconVactor D Dela -Shaw Subcontractor Revision M Reroute Railroad Layout M Reroute Railroad Layout Reconcile D Delay-Shaw FNM & Site Indirect Escalation
08/12/09 09/09/10 10/27/09 04/29/10 08/05/09 11/01/10 08/13/09
04/29/10
Not Approved A roved
B&W OEM Delay RECONCILE BWCC Delay BWCC Delay RECONCILE Welded Radiograph Plugs in Lieu of Threaded Welded Radiograph Plugs in Lieu of Threaded Reconcile BWCC Windbox Hanin
09.08.03.01
D Delay-Shaw FNM & Site Indirect Escalation Revision
Approved' 'Approved Approved Approved Approved Approved Approved Approved Approved Approved Approved A roved • Approved
09.08.03.02 09.08.04.00 09.08.05.00 09.08.06.00 09.08.06.01 09.08.07.00 09.09.01.00 09.10.01.00 09.10.01.01 09.11.01.00 09.11.01.01 09.11.01.02 09.11.02.00
D D D E E D M E E C C C E
Approved
09.11.02.01
C Topcoat of Large Bore Boiler & AQCS Piping Supplied by B&W Reconcile
roved Approved A roved Approved Approved Approved Approved Approved
09.11.03.00 09.11.03.01 09.11:04.00 09.11.04.01 09.11.05.00 09.11.05.01 09.11.05.02 10.01.01.00
D D E C L L L E
Approved
10.01.02.00
E Radiography of BWCC Boiler Pressure Part Field Welds
02/15/10
Approved Approved Approved Approved Approved Approved Approved Approved .
10.01.03.00 10.01.03.01 10.01.04.00 10.01.04.01 10.01.04.02 10.01.05.00 10.01.05.01 10.02.01.00
E M E E E E M D
Fire Protection Cross Tie Off Set Soot Blower Steam Cross Tie with FP Cross Tie DCS Alarm Rationalization DCS Alarm Rationalization Revision DCS Alarm Rationalization Revision Additional CT's on CHAT Additional CT's on CHAT Reconcile Delay - SWPPP Cost
01/25/10 01/29/10 03/01/10 04/19/10 09/07/10 02/15/10 06/16/10 02/10/10
Delay-Shaw FNM & Site Indirect Escalation Settlement Delay-Site Security Delay-Shaw Extended Warranty B&W Auma Drives Upgrades B&W Auma Drives Upgrades Labor Revision Delay-Shaw TFA's AEPSC-Proect Management Addition of 138kV Circuit Breaker Addition of 138kV Circuit Breaker Revision AEP Legal Budget Increase AEP Legal Budget Increase Revision AEP Legal Budget Increase Revision Topcoat of Large Bore Boiler & AQCS Piping Supplied b y B&W
Off Site RR Wetland Delineation Delay Off Site RR Wetland Delineation Delay Reconcile Transformer Storage Pad [Transformer Storage Pad Reconcile Additional Office Trailer Additional Office Trailer - Safety Staff Additional Office Trailer - New Safety Staff Soot Blower Steam Cross Tie
10/21/10 08/18/09 09/14/09 09/21/09 09/22/09 09/15/09 09/22/09 11/23/09 01/12/11 12/17I09 10/27/10 05/19/11 01/05/10 07/08/11 11/23/09 11/01/10 02/15/10 07/08/11 12/09/09 02/10/10 03/23/10 01/26/10
542
PUC Docket No. 40443 EXHIBIT CTB-16 Page 5 of 6
Subiect
Complete
Status
PCR No.
Approved -
10.02.02.00
L Switchyard Alternate Entrance
02/10/10
Approved
10.02.03.00
D DELAY - Shaw Double Handling
03124/10
Approved Approved
10.02.04.00 10.02.04.01
M Utili - Gas Line Relocation Support M Utility - Gas Line Relocation Support Reconcile
02110/10 05/31/11
Approved Aproved
10.02.05.00 10.02.05.01
M Shaw Wiring of AEP Construction Office M Shaw Wiring of AEP Construction Office Reconcile
02/10/10 01/04/11
Approved Approved Approved
10.02.06.00 10.02.06.01 10.02.07.00
M Dff Site RR - Mulch Utility Corridor M Off Site RR - Mulch Utility Corridor Reconcile D DELAY-34.5Kv Underground Feeder
02110/10 07/18/11 02/10/10
Aroved
10.02.07.01
D DELAY-34.5Kv Underground Feeder Revision
03/16/11
Approved Approved Approved Approved .
10.02.08.00 10.02.08.01 10.02.09.00 10.02.09.01
L L L L
A' roved..
10.02.10.00
D Alstom Mana ement Delay
02/15/10
Approved ° .,A roved
10.02.10.01 10.02.11.00
D Alstom Management Delay Reconcile E Normalize & Temper of CSEF Weldolet & Swee let Connections
06/10/10 02/24/10
Approved
10.02.11.01
E Normalize & Temper of CSEF Weldolet & Sweepolet Connections Revision
02/25/11
Plant Personnel Trailer Plant Personnel Trailer Revision BWCC Tower Crane Pad BWCC Tower Crane Pad Reconcile
03/12/10 09/07/10 02/17/10 06/10/10
loved
10.03.01.00
L River Water Intake Area Wash Out
03/29/10
-A --roved•
10.03.01.01
L River Water Intake Area Wash Out Reconcile
03/16/11
Approved
10.03.02.00
C Shaw LD/BWCC Acceleration
04/12/10
wroved
10.03.03.00
C Inspection of Alstom Stator
04/06/10
Approved
10.03.03.01
M Inspection of Alstom Stator Reconcile
01/04/11
A-roved
10.04.01.00
D Delay-Shaw Extended Home Office Staffing Impacts
04/29/10
Approved Approved
10.04.01.01 10.05.01.00
D Delay-Shaw Extended Home Office Staffing Impacts Settlement M BWCC Constructive Acceleration
10/21/10 06/17/10
Approved
10.05.01.01
M BWCC Constructive Acceleration Revision
07/23/10
roved . roved 'Approved Approved
10.05.01.02 10.06.01.00 10.06.01.01 10.06.02.00
M L L E
BWCC Constructive Acceleration Revision Alslom Bearing Pedestal Alstom Bearing Pedestal Reconcile Pulverizer Start Warning System Addition
04/18/11 06/18/10 06/01/11 08/26/10
Approved,
10.06.02.01
E Pulverizer Start Warning System Addition Revision
09/26/11
Approved Approved
10.06.03.00 10.06.03.01
E B&W AQCS Tank Inspection Changes E B&W AQCS Tank Inspection Changes Revision
08/04/10 08/26/10
Npt A_oved',
10.08.01.00
E Aux Boiler NOx CEMS Equipment Addition
08/31/11
Approved NotA ued Approved ' Approved-
10.08.02.00 10.08.03.00 10.08.04.00 10.08.05.00
CO Detection AEP Designer at Site For Start Up Commissioning L Lube Oil System for Howden Fans E AQCS Mix Slurry Tanks Exhausts Reroute
12/01/10 08/09/10 08/10/10
Approved
10.08.05.01
E AQCS Mix Slur Tanks Exhausts Reroute Revision
12/01/10
Aproved
10.08.05.02
M AQCS Mix Slurry Tanks Exhausts Reroute Reconcile
01/04/11
B&W Grating Penetrations
10/25/10
Nuclear Instrument Sources Shipment Delay Nuclear Instrument Sources Shi ment Delay Reconcile Low Fidelity Simulator Deletion Wetland Mapping Wetland Mapping Reconcile Landfill Redesign and Permit Delay Landfill Redesign and Permit Delay Revision B&W Insulation & Lagging Revision Corps 404 Permit Suspension O&M Bud t Increase O&M Budget Increase Revision O&M Budget Increase Revision AEP Construction Management Equipment Fuel and Maintenance
10/01/10 01/04/11 09/13/10 12/10/10 05/31/11 11/08/10 09/07/11 11/05/10 11/09/10 02/10/11 03/09/11 04/28/11 01/24/11
Approved .
10.09.01.00
Approved Approved Approved A roved Approved Approved Approved Approved A roved Not FS ' " ed ` Approved : Approved, Approved
10.09.02.00 10.09.02.01 10.09.03.00 10.10.01.00 10.10.01.01 10.11.01.00 10.11.01.01 10.11.02.00 10.11.03.00 11.01.01.00 11.01.01.01 11.01.01.02 11.01.02.00
D D E C C M M M M M M M L
Approved
11.01.03.00
L Landfill Synthetic Liner Addition
A rovedApproved Approved Approved Approved
11.01.03.01 11.02.01.00 11.02.02.00 11.02.03.00 11.03.01.00
L M M E E
Landfill Synthetic Liner Addition Revision Raw Water Alternate Source Sales & Use Tax Coal Yard Protective Layer Sodium Bi-Sulfate Injection
01/31/11 09/07/11 02/15/11 02/10/11 06/23/11 04/01/11
543
PUC Docket No. 40443 EXHIBIT CTB-16
Page 6 of 6
Subject
Complete
Status Approved proved
PCR No. 11.03.01.01 11.04.01.00
E Sodium Bi-Sulfate Injection M Auxiliary Boiler Change
04/06/11
Approved
11.04.02.00
C B&W TFA Budget Increase
04/06/11
Approved . Approved Approved roved Approved -
11.04.03.00 11.04.04.00 11.04.04.01 11.05.01.00 11.05.02.00
E C C E C
Approved. Approved
11.05.03.00 11.05.04.00
C Shaw Exhibit T E PFOO
05/31/11 05/27/11
roved Approved
11.05.05.00 11.06.01.00
06/01/11 06/09/11
Approved
11.06.01.01
M- roved
11.06.02.00
L Contractor Resource Sharing C CI Version 4 Escalation, Contingency Adjustment and Delay Bud et CI Version 4 Escalation, Contingency Adjustment and Delay Budget C Reconcile C Start U Fuel & Sorbents
Approved
11.07.01.00
L Field Paintin OEM Equipment
07/18/11
Approved'
11.07.02.00
L Rota
Approved
11.07.03.00
E Active Coal Pile Waiting System
Awroved' Approved Approved Approved . Approved Approved Approved Approved 'Approved A roved Approved, Approved Approved 'Approved Approved Approved Approved Approved A.roved Approved. Approved Approved Approved
11.07.04.00 11.07.05.00 11.07.06.00 11.07.07.00 11.07.08.00 11.08.01.00 11.08.02.00 11.08.03.00 11.08.04.00 11.08.05.00 11.09.01.00 11.09.02.00 11.09.03.00 11.09.04.00 11.09.05.00 11.11.01.00 11.12.01.00 12.01.01.00 12.01.02.00 12.01.03.00 12.02.01.00 12.03.01.00 12.03.02.00
C E E E E E E E M L L E
Approved
12.03.03.00
C Exhibit T-Fuel Escalation
04/04/12
Approved ^^ roved
12.03.04.00 12.03.05.00
M Productivity Stud M Shaw Acceleration
04/04/12 05/10/12
E C E 0 E M E L 0
Dust Emission Modification Alstom TFA Support Alstom TFA Support Revision Alstom Generator Synch open loop control in the TCS US Custom Tariff
Car Unloader Change Condition
Backchar e Hydraulic Cabinet pads*, Howdan TFA Delay Modifications to Coal Pile Run-off Pond Radio Equipment Building Installation Admin Bldg Alternate Feed Revision to B&W Instrument Installation Drawings Natural Gas Emergency Shut Off Coal Yard Survey Control Monuments & Reference Points L ic.Chan e Requests Settlement Leachate Pond Differing Site Conditons Structural Steel Rework for Material Staging Ba house Bag Leak Detection System Addition Mercury Stud Plant PI Historian B&W Target Price Stator Cooler Make-up River Temperature Monitoring Buoys NH4 PHA Resolution Boiler Hydrostatic Testing Environmental Permit Settlement II Control Logic for NPDES Pond Management Hope Warehouse Concrete Repair Entrainment Testing
06/01/11 05/06/11 10/28/11 05/31/11 05/31/11
08/02111 07/11/11 07/18/11
07118/11 07/18/11 08/19/11 08/09/11 08/16/11 08/02/11 09/27/11 08/19/11 08/30/11 09/26/11 09/02/11 09/22/11 10103/11 10/14/11 10/03/11 11/17/11 12/16/11 12716/11 02109/12 02/08/12 02115/12 02108/12 04/04/12 04/04/12
544
PUC Docket No. 40443 EXHIBIT CTB-17 Page 1 of 2
The original Turk cost estimate was developed in four phases: Project Design Basis, Conceptual Estimate, Scope and Estimate Refinement, and Final Proposal development. The first three phases ran somewhat concurrently because the deliverables, scope of work and estimate were further refined and detailed as the process progressed. Project Design Basis-The first step of the Project Design Basis phase was the hiring of an architect-engineering firm, Sargent & Lundy, having substantial and recent experience in the design and construction of a pulverized coal facility. AEP Engineering and Sargent & Lundy together defined a Design Basis using the December 2005 Request for Proposals that SWEPCO had issued to obtain power resources, as SWEPCO witness Brice discusses in his testimony. This Design Basis was the start of developing the scope of work. The scope of work included initial design documents - general arrangements, flow diagrams and one-line diagrams, and draft engineered equipment specifications. Conceptual Estimate-The second phase, Conceptual Estimate, utilized the information from the project Design Basis phase, and AEP's and Sargent & Lundy's
experiences on prior projects. A Work Breakdown Structure was established to ensure all • the scope of work was accounted for and then estimated. The conceptual estimate was a detailed estimate in that it was built system by system "bottom up" based on commodity quantities and unit prices, labor productivity and hourly crew wage rates, and an equipment list. During this phase, vendors were solicited for a"furnish and erect" price for the major pieces of equipment and work.
This solicitation process resulted in
obtaining firm prices for the supply and erection ' of the steam generator, turbine, and AQCS.
545
PUC Docket No. 40443 EXHIBIT CTB-17 Page 2 of 2
Scope .and Estimate Refinement-The third phase, Scope and Estimate Refinement, was the evaluation, refinement, and check of the scope of work and estimate. This involved introducing a third-party General Work Contractor (GWC) with international experience in constructing similar projects to confirm that the aggregate was reasonable for the project. The GWC, who also involved specialty contractors, reviewed the scope of work and estimate and compared it to recent similar projects it had been involved with. During this process, AEP and Sargent & Lundy discussed and reconciled the differences to ensure the scope of work was complete and all costs were accounted for. Final Proposal-The final phase in developing the proposal estimate was escalating the costs and performing a risk analysis of the proposal to calculate a cost at commercial operation for the proposed power plant. The estimate input was based on 2005 costs with escalation factors applied to the monthly cost projections that Sargent & Lundy developed based on past similar projects. The contingency was developed through probability analyses of 45 major risk areas within the estimate. A group of experienced personnel reviewed the results of the analysis to gauge the confidence level of the estimated cost for the area. Then a composite analysis was performed to determine the figure that was used.
546
PUC Docket'No. 40443 EXHIBIT CTB-18
%ili,lLrRItA^41^ FiftT^^iC P^D11lt'E^t ,
^n8;t'^r ^1^Ciitp t^aY7cr:• •;s^e xs,
.
1.ti't,em
,
t4plk ^ t^C^1f1t&;ti^p -
June^ ^:5, 2p1,9
^es%+tath^c^
Mr. Carl Monroe, Executive Vice President and Chief Operating Officer
Southwest Power Pool, Inc. 415 North McKinley, tf 140 Plaza West Little Rock, AR 72205-3020
Mr. Michael Heycck Sr. Vice President, Transmission American Electric Power Service Corporation 700 Morrison Road Gahanna, OH 43230 Re:
J. Limar Stall Generating Facility Notice of Commercial Operation Date
Messrs. Monroe and Heyeck: On June 15, 2010, Southwestern Electric Power Company has completed the Trial Operation of the J. Lamar Stall Unit 6A, 6B, and 6S at Arsenal Hill Power Station covered by the Intcrconnection Agreement (SPP Service Agreement #. 1898) dated December 30, 2009. This letter will provide notice consistent with Appendix E of said Agreement, that Southwestern Electric Power Company commenced commercial operation of J. Lamar Stall Unit 6A, 63, and 6S at the Arsenal. Hill Power Station, effective as of June 16.20 10.
Thank you"i, Sincerely,
Mark C. McCullough Sr. Vice President, Fossil & Hydro Generation American Electric Power Service Corporation 155 West Nationwide Boulevard
Columbus, 01-1 43215
547
PUC Docket No. 40443 0 6fi)CH % CTB-19 gelof6
AM ERICANS
^^^WRIC
P-OWEN Date:
October 6, 2008
Subject:
SWEPCO John W. Turk Jr. Power Plant Project Change Request-for additional provision of all Low Voltage Motor'Control Centers (MCCs) to' have remote racking capability.
From:
M. D. Fry
To:
(}^J^ I c,l ^ ^p^ 1. J. L. Hettingerv A
z. D. A. Bauer
IC7 [^`^1 Ub/ 16 1.241 &, uvr
4. NUd 5. J. G. DeRuntz 6. J. A. Kobyra -4osc /1Z^S^vvB 7. M. Jasper jr►^V'^ . 6 t G^8 8,: M. J. Finissi ' , 9. W. L. Sigmon Jr.:^ 10'. D. A. Bauer/M. D. Fry ^ 11.A. W. Rentzsch
y--?hi^ t,a1 ov /Z ^/ / ^,1^ ^ w, ^JL ^1R ^y[o^i f^ wo,b.=-i 15 5^xl^vrv^ra^ C.a^v 2^+^O 'F^ V^ ^3.DMuelman ppP^N•at
r.*k At ^(^Goarr^k^+^/^^f f,s^,,.L t i/7 J01
A Project Change Request (PCR) is attached describing the basis for the additional requirement for all of the Low Voltage (LV) MCCS to include remote racking capability for removing starter buckets. The AEP Safety and Health Generation Department will issue a new corporate policy, in the near future, that will require that a MCC be de-energized in order to. remove a MCC bucket. This policy is being impierriented as a means to mitigate potential hazards to personnel in terms of electrical arc-flash events by not allowing personnel to withdraw a MCC bucket from the main bus while energized. This policy is placing safety at the forefront. However, removing a MCC from service, in most instances, will mean that the unit will experience a curtailment or perhaps even an outage. A new product line has recently come into production, from an approved supplier of MCCs, that provides remote racking capability. This would allow removal of a MCC bucket while energized. without requiring personnel to be inside the flash boundary. By specifying the remote racking capability In the MCCs for Turk Plant we can improve safety and unit availability, simultaneously. For existing plants ESEE has been installing arc-flash safety switches on the feeder breaker for each MCC. This temporarily changes the breaker settings to incorporate instantaneous protection in order to limit the incident energy at the respective MCC. This is done, however, at the expense of protection coordination and therefore carries. some risk to the unit. 11
548
PUC Docket No. 40443 EXHIBIT CTB-19 Page 2 of 6
And, while providing protection to personnel by lowering the Incident energy, they, are still in harms way in the fact that personnel is required to be in front of the MCC to remove the bucket. The cost for the installation of the arc-flash safety switches has been approximately $1;000,000 per plant, Standard Operating Procedure, SOP-730.12, "Standard Operating Procedure Personnel Safety Design Configuration Requirements"' discusses the goal and objective for the engineering and design of new facilities to, minimize the routine use of Personal Protective Equipment (PPE) of all kinds. The use of MCCs with remote racking capability is in line with this objective.
^ The LV MCCs have not yet been specified for the Turk Project, so; this request istimely. NGDE is requesting a change in the project work scope and the tcan'sfer of funds from contingency in the amount of $1,200,000. A Project Change Request (PCR) is attached to describe the basis for the addition of remote racking capability, for all LV MCCs.
{
If you are in agreement. with this request, please sign. the attached PCR and forward it as indicated. Regards,
Monte Fry NGDE
^
549
PUC Docket No. 40443 EXHIBIT CTB-19 Page 3 of 6
PROJECT CHANGE REQUEST (PCR)
PCR NO. 08-08-01
PROJECT NO.
1.137$
PLANT
John W.. Turk, Jr. Power Plant
PROJECT TITLE
Turk PC Unit 1
PCR SUBJECT
for LV MCCs
DATE. 10-06-08
Remote racking capability
0
REVISION NO.
1. DESCRIPTION OF CHANGE AND BACKGROUND INFORMATION The AER Safety, and Health Generation Department will issue a new corporate policy, in the near future, that will require that a MCC be de-energized in order to remove a MCC bucket. This policy is being implemented as a means to mitigate potential hazards to personnel in terms of electrica.J, arc-flash events by not allowing, personnel to withdraw a MCC bucket from the bus while energized. This policy places safety at the forefront. However; removing a MCC from service, in most instances, will mean a unit curtailment o'r,pe"rhaps even an outage. A new product line. has recently, come into production, from an approved supplier of MCCs, that provides remote racking capability. This would allow removal :of a MCC bucket while energized and provide a means for personnel to be outside.of the flash boundary. By specifying remote racking capability for the MCCs'at Turk we can improve safety and unit availability, simultaneously. SOURCE OF CHANGE
2.I DESIGNATED CHANGE X1 Scope of Wo.rk
Vendor Related Modification
Scope of Services (by others)
1. . _. 3.
X
Schedule
Construction Related Modification
Other
Qther
SUMMARYESTIMATES Material Cost Change $
ui pment Cost Changes$ •Eq_ Description of Schedule Impact
rt M Work. Hours (all Disciplines) 1r
_
Labor Cost Change $_
ti^ 1
Work Hours (all Disciplines)
^y
^
Total Cost Chan ge $ 1,200OOO
1,200,000
^"L9'°$
No anticipated schedule impact.--
- ...._____
4.
Engineering/Design Related Modification
..._....^
^.^..^_.
...
..^... „ .
_
...._._ ._.^... ..
DESCRIPTION OF ACTIONS REQUIRED & DOCUMENTS AFFECTED
The scope change for LV arc-resistant switchgear inciudes: 1: LV MCCs with remote racking capability for all MCCs. This document contains information confidential and proprietary to AEPSC. It shall not be reproduced in whole or in part or released to any third party without the expressed written consent of AEPSC..
Page 1 of-4
550
PUC Docket No. 40443 EXHIBIT CTB-19 Page 4 of 6
PROJECT CHANGE REQUEST (PCR)
i
r
This document contains information confidential and proprietary to AEPSC. It shall not be reproduced in whole or in part or released to any third party without the expressed written consent of AEPSC.
Page 2 of 4
551
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552
PUC Docket No. 40443 EXHIBIT CTB-19
Page 6 of 6
PROJECT CHANGE REQUEST-(PCR) ._.^.. . . _ ..__^,^.... ..__ , .
.... _,.
^,. .,. -^_. ...._._
. _ ,. ._
-,
'(PREPARE SEPARATE ESTIMATE SHEET IF SPACE BELOW INSUFFICIENT) ENGINEERING & SERVICES COST CHANGE: LIST DOCUMENTS IMPACTED ON SEPARATE SHEET DESCRIPTION
WORK HOURS
AREA
DEPT./CONTRACT NO.
COST
SERVICES _
{
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ORIGINATOR
-- -. . ...
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i^.. .. _.....^._ 3.
,
,
DATE
Monte D. F^
TOTAL
EXPENSES ..
-
.
._. . .__ _ ^
October 6, 2008
APPROVALS PROJECT MANAGER
._
NEW GENERATION DESIGN MANAGER
.
PROJECT ENGINEER
r,.
_
DATE ^_^.. .__.^ ..^--_
.. .. _.
DATE
.._ . _
.
.
DATE
PROJECT DIRECTOR
DATE
SENIOR VP ENG. P&FS
,.
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- .- ._ ,
DATE
SITE MANAGER
VP NEW.GENERATIO
^.
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DATE ATE
. /
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._. _.._^_^.
This documerit contains inf.ormatlon confidential and proprietary to.AEPSC. It shall not be reproduced in whole or in part or released to any third party without the expressed written consent of AEPSC.
. . .
Page 4 of 4
553
EXECUTIVE SUMMARY OF JOHN C. HENDRICKS John C. Hendricks is the Director - Air Quality Services in the Environmental Services Division of American Electric Power Service Corporation.
Mr. Hendricks's responsibilities
include overseeing all air permitting and compliance activities for the American Electric Power generation fleet. In addition, he provides guidance to other AEP business units on upcoming and current air regulatory initiatives.
Mr. Hendricks's testimony: describes the acquisition of the environmental permits for the Turk Plant; discusses the environmental regulations that will result in Southwestern Electric Power Company being required to procure air emission allowances to support the operation of its generating units; describes the Environmental, Safety and Health areas of the Environmental, Safety, Health, and Facilities organization of AEPSC and the necessary services they provide to SWEPCO; and demonstrates the reasonableness and benefit of the affiliate costs charged to SWEPCO for these services.
Mr. Hendricks confirms that SWEPCO has received the environmental permits and licenses needed to construct the Turk Plant. He notes that one operational permit - an industrial storm water discharge permit from the Arkansas Department of Environmental Quality (ADEQ) - needs to be received prior to the commercial operation of Turk. The application for this permit is anticipated to be submitted in the third quarter of 2012. Mr. Hendricks also details the history and current status of SWEPCO's Air Permit application with the ADEQ.
He explains that unexpected permitting issues with the Air Permit
impacted Turk's construction schedule.
He concludes that while the permitting issues were not
reasonably foreseeable, SWEPCO proactively and prudently planned and managed the permit and appeal process to minimize impacts to both the schedule and costs by working with the appropriate agencies and using in-house and external expertise to remediate the permitting issues as quickly as
1
554
possible. Mr. Hendricks also states that SWEPCO prudently planned and managed the Corps of Engineers permitting process, despite a delay that arose during the processing of the COE Section 10/404 Permit. Mr. Hendricks also describes the Clean Air Interstate Rule, Cross State Air Pollution Rule, and Mercury and Air Toxics Standards Rule, which are the primary environmental drivers that will result in the need for SWEPCO to procure air emission allowances and the increased use of consumables associated with the operations of air pollution control devices in the future. Mr. Hendricks notes that SWEPCO is requesting that the costs and revenues from these allowances be considered eligible fuel costs on a prospective basis.
In addition, Mr. Hendricks describes the' services provided to SWEPCO by groups in the Environmental, Safety and Health organization of AEPSC. He provides descriptions of each group's responsibilities, including specific services provided to SWEPCO during the test year by the
Environmental Services and Safety & Health groups. During the test year, SWEPCO was charged $3,931,513 for services performed by AEPSC's Environmental, Safety and Health organization.
To support the reasonableness of these charges,
Mr. Hendricks presents evidence detailing historical cost trends; process improvements aimed at achieving efficiency; staffing trends; outsourcing activities; proof of benefits to SWEPCO; and non-duplication of services between SWEPCO and the AEPSC Environmental, Safety and Health organization. Taken as a whole, Mr. Hendricks's testimony demonstrates the reasonableness and necessity of the Environmental, Safety and Health affiliate charges.
2
555
PUC DOCKET NO. 40443 PUBLIC UTILITY COMMISSION OF TEXAS
APPLICATION OF SOUTHWESTERN ELECTRIC POWER COMPANY FOR AUTHORITY TO CHANGE RATES AND. RECONCILE FUEL COSTS
DIRECT TESTIMONY OF JOHN C. HENDRICKS FOR SOUTHWESTERN ELECTRIC POWER COMPANY
JULY 27, 2012
PUC DOCKET NO. 40443
DIRECT TESTIMONY JOHN C. HENDRICKS
556
TESTIMONY INDEX SUBJECT
PAGE
I.
INTRODUCTION ...................................................................................................... 3
II.
PURPOSE OF TESTIMONY .................................................................................... 5
III. IV.
OVERVIEW OF ENVIRONMENTAL PERMITS AND LICENSES FOR TURK . ................................................................:.......................... 6 ADEQ AIR PERMIT ................................................................................................. 6
V.
TURK AIR PERMIT AND AUXILIARY BOILER ............................................... 14
VI.
CORPS OF ENGINEERS STREAMS AND WETLANDS (SECTION 10/404) PERMIT ... ...............:...............................................................15
VII.
ENVIRONMENTAL REGULATIONS AND EMISSION ALLOWANCES/CONSUMABLES ....................:..................................................19
VIII.
ENVIRONMENTAL, SAFETY AND HEALTH AFFILIATE CHARGES .......... 23 A. Organization Of Environmental, Safety, Health and Facilities ......................... 23 B. Environmental, Safety, Health and Facilities Services ...................................... 29 C. Reasonableness of SWEPCO Affiliate Charges ................................................ 33
IX.
SUMMARY AND CONCLUSION ........................................................................ 41
EXHIBITS EXHIBIT
DESCRIPTION
EXHIBIT JCH-1
Components of Turk Air Permit
PUC DOCKET NO. 40443
2
DIRECT TESTIMONY JOHN C. HENDRICKS
557
1 2
I. INTRODUCTION Q.
3 4
PLEASE STATE YOUR NAME, BUSINESS ADDRESS AND POSITION IN THE COMPANY.
A.
My name is John C. Hendricks. I am Director - Air Quality Services in the
5
Environmental Services Division of American Electric Power Service Corporation
6
(AEPSC), whose address is 1 Riverside Plaza, Columbus, Ohio. AEPSC provides
7
engineering, financing, accounting, and similar planning and advisory services to the
8
subsidiaries of the American Electric Power System- (AEP), one of which is
9
Southwestern Electric Power Company (SWEPCO).
10
Q.
11 12
PLEASE PROVIDE A REVIEW OF YOUR EDUCATIONAL AND PROFESSIONAL BACKGROUND.
A.
I received a Bachelor of Science degree in 1975 in Chemistry and a Master of Science
13
degree in 1978 in Water Resources Management from the University of Wisconsin.
14
My professional experience includes 31 years with AEP. I began my career as a
15
laboratory chemist in •1979 with responsibilities for designing and performing
16
environmental studies to address issues related to wastewater discharge, solid and
17
hazardous waste management, and polychlorinated biphenyls (PCB) remediation. I
18
then held various staff positions within AEPSC's Environmental Services Division
19
with responsibilities for wastewater permitting, solid and hazardous
20
management,
21
development.
22
Environmental Manager with responsibilities for AEPSC's two natural,gas pipeline
23
companies, its river transportation company and its two coal companies. I became
PUC DOCKET NO. 40443
waste
PCB and PCB remediation projects, and federal regulatory Subsequently in 2002, I was promoted to the position of
3
DIRECT TESTIMONY JOHN C. HENDRICKS
558
1
Manager of the New Generation Environmental Licensing section in 2004. I was
2
appointed to my current position in 2010.
3
Q.
WHAT ARE YOUR RESPONSIBILITIES IN YOUR CURRENT JOB POSITION?
4
A.
My current responsibilities include overseeing all air permitting and compliance
5
activities for the AEP generation fleet.
6
include providing guidance to other AEP business units on upcoming and current air
7,
regulatory initiatives.
8
Q.
9
HAVE YOU PREVIOUSLY SUBMITTED TESTIMONY BEFORE THE PUBLIC UTILITY COMMISSION OF. TEXAS (PUC OR COMMISSION) OR ANY
10 11
Additionally, I have responsibilities that
REGULATORY COMMISSION? A.
Yes. I have testified on behalf of SWEPCO before the PUC in Docket No. 33891,
12
which was the Turk Power Plant (Turk) certificate of convenience and necessity
13
(CCN) case, and the Arkansas Public Service Commission (APSC) in Docket
14
No. 06-154-U, the case in which SWEPCO received a certificate of environmental
15
compatibility and public need for Turk. I have also submitted testimony before the
16
PUC in Docket No. 37364, the case in which SWEPCO most recently requested an
17
adjustment to its base rates in Texas and in Docket No. 39708 in which SWEPCO
18
requested construction work in progress for Turk.
PUC DOCKET NO. 40443
4
DIRECT TESTIMONY JOHN C. HENDRICKS
559
I
II. PURPOSE OF TESTIMONY
2
Q.
WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING?
3
A.'
The purpose of my testimony is to describe the acquisition of the environmental
4
permits for the Turk Plant, and how SWEPCO prudently planned and managed the
5
Turk permitting process.
6
I also discuss the environmental regulations that will result in SWEPCO being
7
required to procure air emission allowances to support the operation of its generating
8
units, to support the Company's request that allowances to be considered as eligible
9
fuel expenses prospectively.
10
I will also describe the Environmental, Safety and -Health areas of the
11
Environmental, Safety, Health, and Facilities organization of AEPSC and the
12
necessary services they provide to SWEPCO.
13
reasonableness and benefit of the test year amount of affiliate charges to SWEPCO
14
for these services through discussion of the historical cost trends for providing these
15
services to SWEPCO, process improvements aimed at efficiency, staffing trends, use
16
of outsourcing, and a description of how the services Environmental, Safety and
17
Health provides are not duplicative of any that SWEPCO currently provides for itself.
18
Q.
19 20
I will also demonstrate the
ARE YOU SUPPORTING THE COSTS FOR THE,ENTIRE ENVIRONMENTAL, SAFETY, HEALTH, AND FACILITIES ORGANIZATION?
A.
No. SWEPCO witness Jeffrey Parlet is supporting the Real Estate and Workplace
21
Services , group.
22
Services groups.
PUC DOCKET NO. 40443
My testimony only covers the Environmental, Safety & Health
5
DIRECT TESTIMONY JOHN C. HENDRICKS
560
1
Q.
2 3
WHAT WAS YOUR INVOLVEMENT IN THE TURK PERMITTING ACTIVITIES?
A.
-
Prior to my current position, I was manager of the New Generation Environmental
4
Licensing section. In that role, I was responsible for obtaining all the necessary
5
environmental permits and licenses for the Turk facility.
6 7. 8
111. OVERVIEW OF ENVIRONMENTAL PERMITS AND LICENSES FOR TURK Q.
9 10
TURK? A.
11
12
Yes, SWEPCO has received the environmental permits and licenses needed to construct Turk.
Q.
13 14
HAS SWEPCO RECEIVED ALL PERMITS TO CONSTRUCT AND COMPLETE
ARE THERE OTHER ENVIRONMENTAL PERMITS OR LICENSES NECESSARY TO OPERATE TURK?
A.
Only one operational permit needs to be received prior to the commercial operation of
15
Turk. An industrial storm water discharge permit from the Arkansas Department of
16
Environmental Quality (ADEQ) is required. The application for this permit is
17
anticipated to be submitted in the third quarter of 2012.
18 19
IV. ADEO AIR PERMIT •
20
Q.
21 22 23
Q .
PLEASE BRIEFLY DESCRIBE THE NATURE AND SCOPE OF THE AIR PERMIT.
A.
State agencies such as the ADEQ are charged with implementing federal and state air quality laws and regulations through their own environmental permitting procedures.
PUC DOCKET NO. 40443
6
DIRECT TESTIMONY JOHN C. HENDRICKS
561
1
Four basic air permits pertain to the Turk Plant: a state construction permit (Permit-
2
to-Install or PTI); a Prevention of Significant Deterioration (PSD) or PSD permit; a
3
Clean Air Act Title V Operating permit; and an Acid Rain Program permit. Each of
4
these permits is described in EXHIBIT JCH-1. The ADEQ has authority to issue all
5
four of these permits and combine them into one overall permit, which I refer to as
6
the Air Permit.
7
Construction of the emission units at Turk was not allowed to start until the
8
Air Permit had been received from the ADEQ.
9
allowable emission rates, applicable emission controls, - and any operational
10
constraints necessary to protect the ambient air quality for each significant plant
11
emission point. Detailed air modeling was performed and included in the Air Permit
12
application to demonstrate that the proposed plant's emissions would not exceed any
13
applicable air quality standard.
14
Q.
15
The ADEQ permit specified
WHEN DID SWEPCO FIRST FILE ITS AIR PERMIT APPLICATION AT THE ADEQ?
16
A.
SWEPCO filed its Air Permit application on August 9, 2006.
17
Q.
WHAT IS THE STATUS OF THE AIR PERMIT TODAY?
'18
A.
The ADEQ issued the Air Permit on November 5, 2008. The Air Permit was
19
'contested both administratively and in court by several parties, but the last of these
20
appeals was withdrawn after a settlement was reached in December 2011 as
21
SWEPCO witness Venita McCellon-Allen discusses in more detail in her testimony.
22
The Air Permit is final and in effect.
PUC DOCKET NO. 40443
7
DIRECT TESTIMONY JOHN C. HENDRICKS
562
1
Q.
2 3
HOW MUCH TIME DID SWEPCO INCORPORATE INTO THE INITIAL PROJECT SCHEDULE FOR PROCESSING THE AIR PERMIT APPLICATION?
A.
SWEPCO's initial schedule allowed slightly more than one year for processing this
4
permit application. This date was reasonable for planning purposes because
5
SWEPCO had been in frequent contact with the ADEQ management concerning the
6
timeline for issuance of the final Air Permit both before and after submittal of the
7
permit application to the agency.
8
issued well within one year from when the permit application was submitted. This
9
information was the basis of my February 2007 direct testimony submitted in the
10
Turk Certificate of Convenience and Necessity case in' PUC Docket No. 33891 or
11
when SWEPCO anticipated receiving the permit.
12
Q.
13 14
The ADEQ had indicated the permit would be
PLEASE. DESCRIBE SWEPCO'S TEAM THAT PREPARED THE AIR PERMIT APPLICATION.
A.
SWEPCO used two national consulting firms and internal resources from AEPSC's
15
Environmental Services Division to prepare the permit application.
16
Consultants (Trinity), a national consulting firm with offices in Little Rock, Arkansas,
17
and prior permitting experience with the ADEQ, was hired to prepare the permit
18
application and perform air quality modeling to confirm that the plant's emissions
19
would not exceed the national ambient air quality standards. The Trinity permitting
20
team had extensive experience in permitting for coal-fired plants in several states.
Trinity
21
In addition, TRC Companies, Inc. (TRC), another national consulting firm,
22
was used to perform the Class I visibility modeling to support the permit application.
23
Class I areas are those areas designated by the federal government as having high
PUC DOCKET NO. 40443
8
DIRECT TESTIMONY JOHN C. HENDRICKS
563
I
scenic value and are accorded specific protection from impacts to visibility and other
2
air quality-related values. The team from TRC for this project also had extensive
3
experience in performing Class I modeling for coal-fired power plants.
4
Experienced management and staff from AEP's Environmental Services
5
Division provided technical information, including descriptions of equipment and
6
emission controls, and comparative information from other coal plant permits, and
7
overall coordination of the permitting processes.
8
Q.
WHY WAS THE TURK AIR PERMIT DELAYED?
9
A.
Issuance of the Turk Air Permit was delayed due to a combination of several
10
developments, all of which occurred after the issuance of the draft permit. These
11
developments included the issuance of a judicial decision and resulting changes in the
12
applicable regulations, requests by Environmental Protection Agency (EPA) and the
13
Federal land manager (FLM) for additional visibility modeling, and negotiation of
14
mitigation measures in response to the FLM's comments on the draft permit. These
15
circumstances are discussed in more detail below. Company witness Christian T.
16
Beam discusses the construction and monetary impact from this delay.
17 18
EPA changed the approved model for Class I visibility modeling late in the permit process for Turk:
19 20 21 22 23 24 25 26 27 28
In June 2007, almost a year after SWEPCO had filed its application, the EPA approved an updated version of the model (CALPUFF) it requires applicants to use to assess Class I visibility impacts. Applicants who seek an Air Permit for a large source (such as the Turk Plant) must demonstrate that emissions from this source will not result in a significant impact to visibility and air quality-related values in nearby Class I areas. SWEPCO demonstrated this in January 2007 using the model that was considered acceptable at that time (by the EPA and state environmental agencies, including the ADEQ). When the EPA approved a modified version of this model in June 2007,
PUC DOCKET NO. 40443
9
DIRECT TESTIMONY JOHN C. HENDRICKS
564
I 2 3 4 5
SWEPCO was required to rerun the Class I modeling using the updated model version. The modeling was redone expeditiously by SWEPCO's consultant, TRC, over a reasonable time frame of several months. A report was prepared and submitted to ADEQ in September 2007 for review and approval.
6 7 8
ADEQ reversed its position and required SWEPCO to address concerns raised by the FLM regarding Class I visibility impacts late in the permitting process:
9 10 11 12 13 14 15 16 17 18 19 20 21
In the draft Turk Air Permit, issued in May 2007, the ADEQ determined that modeled impacts to the closest Class I area (Caney Creek Wilderness Area in western Arkansas) from emissions from the^ Turk Plant were insignificant and therefore acceptable. However, in January 2008, ADEQ required SWEPCO to address the concerns raised in comments submi'tted by the Caney Creek FLM on this issue. SWEPCO engaged in negotiations with the FLM to develop mitigation measures that could be included in the Turk Air Permit. Additional modeling and other information had to be submitted to support the proposed mitigation measures. Without this mitigation, the FLM would have objected to the final Air Permit, and the ADEQ would not proceed with permit issuance. The delay associated with this issue was 6 to 7 months.
22 23 24
EPA's Clean Air Mercury Rule was overturned in court, requiring an additional, lengthy permitting process late in the overall permit process:
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
In February 2008, the D.C. Circuit Court of Appeals vacated the EPA's Clean Air Mercury Rule (CAMR). This rule, among other things, required that new major sources such as the Turk Plant meet stringent emission standards for mercury.. The draft Air Permit issued by ADEQ in May 2007 regulated mercury based on the requirements contained in the CAMR. As a result of the CAMR's vacatur, ADEQ required SWEPCO to prepare and submit an application for development of case-by-case ' Maximum Achievable Control Technology (MACT) emission limits for mercury and several other hazardous air pollutants to the agency for review and approval: Preparation of the MACT application and supporting information, review and preparation of a draft MACT determination by the ADEQ, and subsequent public notice of the MACT determination and preparation of responses to comments by ADEQ took approximately eight to nine months.
PUC DOCKET NO. 40443 '
10
DIRECT TESTIMONY JOHN C. HENDRICKS
565
1 2
US EPA Region 6 required additional modeling analysis late in the permitting process and well after the comment period had ended:
3 4 5 6 7 8 9 10 11 12 13 14
In February 2008, EPA Region 6 objected to the inventory of sources approved by the ADEQ for the multisource Class I modeling. (When performing a Class I modeling analysis, other sources in the vicinity of the proposed source must also be modeled. The sources modeled along with their locations and emissions are included in the inventory of sources that must be approved by the permitting authority.) Although ADEQ had approved the inventory of sources modeled for the Turk Plant's Class I modeling and EPA's objections came approximately six months after the comment period had closed for the draft Air Permit, ADEQ required resolution of these objections prior to completion and issuance of the final permit. ' The resolution of this issue took approximately five months.
•
15
SWEPCO and its team worked diligently to address each development as it
16
occurred. In the end, these developments did not alter the design of the Turk Plant or
17
its planned emission controls.
18
delayed by 14 months.
19
Q.
20 21
However, the issuance of the final Air Permit was
WERE THESE ISSUES RESPONSIBLE FOR THE DELAY IN ISSUING THE AIR PERMIT REASONABLY FORESEEABLE?
A.
No.
SWEPCO took - all reasonable steps to avoid any delays by engaging in
22
continuing discussions with the ADEQ prior to and following the submission of the
23
permit application. The timing and substance of the judicial decision on CAMR and
24
. EPA's issuance of new modeling guidance were wholly outside of SWEPCO's .
25
control and not reasonably predictable. The FLM's concerns were not justified based
26
on the initial visibility modeling results, and are inconsistent with the most recent
27
federal guidance.
28
additional sources in the, visibility modeling inventories was contrary to ADEQ's
29
prior approval of SWEPCO's modeling protocol, and did not materially alter the
PUC DOCKET NO. 40443
EPA's insistence on including different emission estimates and
11
DIRECT TESTIMONY JOHN C. HENDRICKS
^7^^
1
results. Thus SWEPCO had no reasonable basis to expect the issuance of the Air
2
Permit to be delayed.
3
Q.
DID SWEPCO PRUDENTLY MANAGE THESE PERMITTING ISSUES ONCE
4
THEY AROSE IN LIGHT OF THE INFORMATION AND ALTERNATIVES
5
AVAILABLE AT THE TIMES IN QUESTION?
6
A.
7
Yes, it did. As each issue arose, SWEPCO took immediate and appropriate action to minimize, as much as possible, their impact to the permit schedule.
8
Q.'
WHAT SPECIFIC STEPS DID SWEPCO TAKE TO MANAGE THESE ISSUES?
9'
A.
SWEPCO immediately'contacted the appropriate regulatory authority to discuss the
10
necessary actions to address the issue raised.
11
throughout the process to address each of the issues.
12
immediately commissioned its consultants to perform the necessary work to address
13
these issues. For example, SWEPCO undertook the following actions:
These contacts were maintained In addition, SWEPCO
14 15
Concerning the issue of ADEQ deferral to the FLM on Class I impacts:
16 17 18 19 20 21 22 23 24
SWEPCO immediately met with local FLM management and staff to identify their concerns and the path to resolution of this issue. SWEPCO also met with Department of Interior representatives (who oversee this FLM branch) to clarify the issue and necessary resolution steps. SWEPCO's Class I modeling consultant TRC was immediately directed to perform the necessary modeling to demonstrate an acceptable solution. Finally, SWEPCO arranged meetings with all agencies involved (ADEQ, FLM, and EPA) to articulate our proposed solution and to get concurrence on it from each agency.
25
Concerning the vacatur of the Clean Air Mercury Rule:
26 27 28 29
_
SWEPCO met with ADEQ immediately after the D. C. Circuit Court of Appeals vacated CAMR to determine the next steps to address this development. The US EPA was also consulted concerning the -appropriate path forward and the scope of work necessary to satisfy
DIRECT TESTIMONY PUC DOCKET NO. 40443
12
JOHN C. HENDRICKS
567
1 2 3 4 5 6 7 8 9 10
the regulatory requirements. SWEPCO then began preparing the necessary information to develop the application required by ADEQ to fully address this issue. SWEPCO stayed in frequent contact with ADEQ permitting staff as the application was reviewed, and promptly supplemented the information until a draft case-by-case MACT determination was proposed for public comment by ADEQ. SWEPCO also prepared detailed responses to comments received on the proposed MACT determination to assure that all relevant information in support of ADEQ's determination was reflected in the adniinistrative record.
11 12
Concerning the issues involving the ADEQ and US EPA Region 6 (change in apprQved model and modeling inventory issue):
13 14 15 16 17 18 19 20 21 22 23 24
SWEPCO in each case immediately arranged meetings with senior management of both agencies to determine exactly what the issues were, what had to be done to address them, who within the agencies was responsible for working with the Company to address the issue, and to establish a timeline to resolve the issues as expeditiously as possible. SWEPCO also contacted US EPA headquarters to receive guidance on how best to address the issues. SWEPCO immediately directed its modeling consultant (TRC) to perform the additional modeling and analysis to address each of the issues. Finally, SWEPCO remained in frequent contact with the EPA Region .6 and ADEQ during this process to make sure the work being done would meet the agencies' needs and that it would be reviewed promptly.
25
Q.
26 27
YOU MENTIONED THAT THE AIR PERMIT WAS APPEALED. WHAT STEPS DID SWEPCO TAKE TO MANAGE THE SITUATION?
A:
SWEPCO sought to ensure that construction could continue without delay while the
28
appeals proceeded.
29
process, and was upheld at each stage without change.
30
stakeholders and settled all litigation in December of 2011.
31
demonstrate that SWEPCO proactively and prudently planned and managed the
32
permitting appeal process.
PUC DOCKET NO. 40443
The Air Permit has remained in effect throughout the appeals
13
SWEPCO engaged the These measures
DIRECT TESTIMONY JOHN C. HENDRICKS
568
1 2
V. TURK AIR PERMIT AND AUXILIARY BOILER Q.
DID THE DESIGN FOR THE TURK PLANT AUXILIARY BOILER CHANGE
3
FROM WHAT WAS INCLUDED IN THE ORIGINAL AIR PERMIT
4
APPLICATION?
5
A.
As SWEPCO witness Mr. Beam discusses, as the detailed design phase progressed,
6 7
the auxiliary boiler was modified. Q.
WHY WASN'T THE AIR PERMIT APPLICATION CHANGED TO REFLECT
8
THE MODIFIED AUXILIARY BOILER PRIOR TO ISSUANCE OF THE FINAL
9
AIR PERMIT?
10
A.
An accurate profile of projected emissions from the modified boiler was not
11
developed until after the final permit was issued. Therefore the permit application
12 13
. Q.
14 15
could not have been modified prior to final permit issuance. WHY WASN'T THE FINAL AIR PERMIT MODIFIED TO INCLUDE THE MODIFIED AUXILIARY BOILER DESIGN?
A.
Discussions were held with the ADEQ on the process for modifying'the final Turk air
16
permit to include the modified auxiliary boiler. Although the change to the auxiliary .
17
boiler would have resulted in lower emissions, the ADEQ determined that this change
18
was significant enough to warrant a minor permit modification.. A minor permit
19
modification requires at least a 30-day public comment period, and ADEQ would
20
have to respond to all comments received prior to issuance of a final permit. The
21
modified permit would have been subject to additional appeals, with the prospect of a
22
stay on construction of the auxiliary boiler pending resolution of any appeals. Based
23
on SWEPCO's experience with the initial Air Permit appeals, the risk of further
PUC DOCKET NO. 40443
14
DIRECT TESTIMONY JOHN C. HENDRICKS
569
1
delays associated with this process was determined to be significant enough that the
2
permit modification for a modified auxiliary boiler was not pursued.
3 4 5
VI. CORPS OF ENGINEERS STREAMS AND WETLANDS (SECTION 10/404) PERMIT
6
Q.
WHAT IS A CORPS OF ENGINEERS (COE) SECTION 10/404 PERMIT?
7
A.
A Section 10/404 permit regulates both the placement of structures in navigable
8
waters under Section 10 of the Rivers and Harbors Act, as well as the discharge of fill
9
material into waters of the United States, including wetlands, per Section 404 of the
10
Clean Water Act (CWA). The Section 10/404 permit was required before certain
11
construction activities could commence so that impacts associated with the filling of
12
approximately eight acres of wetlands and streams (out of the almost 3,000 acre Turk
13
site) could be assessed and appropriate mitigation measures developed. The
14
construction associated with this permit includes roads, pipelines, a rail spur, the
15
water intake structure, and transmission line river crossings for the Turk -site.
16
Q.
WHAT DELAYS AROSE DURING THE PROCESSING OF THIS PERMIT?
17
A.
Due to mapping errors by one of SWEPCO's consultants, approximately 2.5 acres of
18
jurisdictional areas were impacted on the Turk site prior to the COE Section 10/404
19
permit becoming final. As a result, certain construction activities were restricted, and
20
the issuance of the final permit was delayed.
21
Q.
PLEASE EXPLAIN.
22
A.
On March 9, 2009, the same day that SWEPCO received the permit documents from
23
the COE, it was confirmed that jurisdictional areas on the Turk site were incorrectly
DIRECT TESTIMONY PUC DOCKET NO. 40443
15
JOHN C. HENDRICKS
570
1
mapped by SWEPCO's wetland consultant, FTN Associates (FTN). This mapping
2
was used to locate the jurisdictional areas in the field, which were then marked with
3
high visibility fencing to ensure that no activities would commence in these areas
4
prior to the COE's permit becoming final.
5
mapped, the marked areas in the field were incorrectly located. The errors in location
6
ranged from approximately 180 to 500 feet. Although the marked-off areas were not
7
disturbed, approximately 2.5 acres of jurisdictional areas, which should have been
8
marked-off but were not because of the erroneous maps, were unintentionally
9
impacted. The actual impacts to the jurisdictional areas occurred in late 2008 and
10
early 2009. SWEPCO self-reported this error and the accidental impact to unmarked
11
jurisdictional areas to the COE instead of completing the signature/countersignature
12
process that would have finalized the permit.
13
Q.
14 15
Because .the areas were incorrectly
WHY DID SWEPCO•NOT SIGN AND RETURN THE PERMIT IT RECEIVED ON MARCH 9, 2009?
A.
SWEPCO is required by law to immediately report any violations of the C.WA, and
16
the COE cannot issue a permit for an activity for which there is an associated
17
unresolved violation of the CWA. Therefore, had SWEPCO signed and returned the
18
permit, the COE could not have countersigned it until the violation that resulted from
19
the mapping issue was resolved. The COE's procedures require that it first resolve
20
the enforcement matter associated with the violation before issuing any required
21
permits.
22
resolution.
23
July 7, 2009.
In this case the COE referred the enforcement matter to the EPA for
The enforcement matter was expeditiously resolved with the EPA on
PUC DOCKET NO. 40443
16
DIRECT TESTIMONY JOHN C. HENDRICKS
571
1
Q.
HOW WAS THIS MAPPING ERROR DISCOVERED?
2
A.
An FTN employee was performing field verification of the location of jurisdictional
3
areas as a final check prior to on-site development activities adjacent to the wetlands
4
nearby and noted discrepancies between his field notes and the marked locations of
5
two jurisdictional areas. This discrepancy was then reported to SWEPCO.
6
Q.
WHAT DID SWEPCO DO IN RESPONSE?
7
A.
All work was stopped within 500 feet of all jurisdictional areas and SWEPCO began
8
an investigation to determine if violations of the CWA had occurred.
9
violations were confirmed, SWEPCO immediately self-reported the impacts to the
When the
10
COE.
11
contracted to correctly locate and mark the wetland coordinates in the field.
12
jurisdictional areas near any current or planned construction activities were flagged
13
with high visibility roping with a minimum buffer of 25 feet incorporated in the
14
flagging as an extra precaution. This remapping action successfully prevented any
15
further intrusion into the jurisdictional areas.
16
this situation, as well as the costs resulting from them. Q.
19 20
All
SWEPCO witness Mr. Beam describes the other actions taken in response to
17 18
A second consulting company, MTG Engineers & Surveyors (MTG), was
DID SWEPCO PRUDENTLY PLAN AND MANAGE THE COE PERMITTING PROCESS?
A.
Yes, it did.
SWEPCO retained FTN, a well-respected and experienced firm, to
21
perform the wetlands delineation and mapping work. FTN, which was founded in
22
1980 and has offices in both Little Rock. and Fayetteville, Arkansas, brought specific
23
local consulting expertise. In fact, the COE (Vicksburg District) has contracted with
PUC DOCKET NO. 40443
17
DIRECT TESTIMONY JOHN C. HENDRICKS
572
1
FTN in the past for various services, including development of protocols for the
2
Corps' Wetland, Delineation Manual and guidance for COE field personnel in wetland
3
creation, restoration, and enhancement projects. In addition, SWEPCO used high
4
visibility fencing to demarcate the jurisdictional areas so that on-site activities would
5
not impact these locations.
6
SWEPCO, on several instances, asked FTN to reconfirm the locations of these
7
jurisdictional areas at the site prior to initiating development work in the vicinity of
8
these areas. SWEPCO reasonably relied on FTN's expertise and had every reason to
9
believe that the mapping was in qualified hands and had been done correctly.
Finally, as a further precaution against any impacts,
10
However, inadvertent errors by FTN's mapping department were used to mark
11
the jurisdictional areas in the field, and these errors lead to the accidental
12
jurisdictional impacts.
13
Q.
14 15
CAN YOU PROVIDE SOME PERSPECTIVE ON THE IMPACT TO THE JURISDICTIONAL AREAS?
A.
Yes. While not justifying the error, it should be noted that the impacted wetlands
16
were unexceptional and appeared virtually identical to the surrounding non-
17
jurisdictional areas.
18
ultimately authorized by the final permit and did not require restoration.
19
remaining impacts occurred in an area that was extremely difficult to properly
20
classify. The COE conducted some initial soil analysis in this area, and then required
21
SWEPCO to do additional analysis in order to better define the wetland boundaries.
22
Although there is no question that SWEPCO should not have disturbed these
23
jurisdictional areas while the permit application was pending, upon receipt of the
PUC DOCKET NO. 40443
A portion of the impacts occurred in a manner that was
18
The
'DIRECT TESTIMONY JOHN C. HENDRICKS
573
1
final, signed COE permit, SWEPCO was authorized to disturb these areas in exactly
2
the manner that it did, and has undertaken the required restoration activities.
3
Q.
WHAT IS THE CURRENT STATUS OF THE SECTION 10/404 PERMIT?
4
A.
SWEPCO received the final permit from the COE in December 2009. The permit
5
was challenged in federal court and a settlement by the litigating parties was reached
6
in December 2011 resolving the legal challenges surrounding the pen-nit, as
7
SWEPCO witness Ms. McCellon-Allen discusses in her testimony.
8 9 10
VII. ENVIRONMENTAL REGULATIONS AND EMISSION ALLOWANCES/CONSUMABLES
11
Q.
WHAT IS THE PURPOSE OF THIS SECTION OF YOUR TESTIMONY?
12
A.
In this section of my testimony, I briefly describe the primary environmental
13
rulemaking that will drive the need to procure air emission allowances and the
14
increased use of consumables associated with the operations of air pollution control
15
devices in the future. SWEPCO witness Paul W. Franklin discusses the allowances
16
and consumables and their relationship to the burning of fuel. SWEPCO is requesting
17
that the costs and revenues from these allowances be considered eligible fuel costs on
18
a prospective basis, as SWEPCO witness Randall Hamlett.discusses in his testimony.
19
Q.
20 21
PLEASE DESCRIBE THE RELEVANT -ENVIRONMENTAL REGULATIONS DRIVING THE NEED TO OBTAIN AIR EMISSION ALLOWANCES.
A.
The Clean Air Interstate Rule and the Cross State Air Pollution Rule are the primary
22
environmental drivers that would result in the need to procure additional air emission
23
allowances. These are described further below:
PUC DOCKET NO. 40443
19
DIRECT TESTIMONY JOHN C. HENDRICKS
574
1
Clean Air Interstate Rule (CAIR) - was finalized by EPA iii 2005, and established a
2
cap and.trade program to reduce emissions of NO,, and SO2 in covered states. Phase
3
1 caps for NO,, and SO2 were effective in 2009 and 2010, respectively, with further
4
reductions required by a Phase II cap starting in 2015. Under CAIR, SWEPCO must
5
comply with annual' SO2 and NO,, programs in Texas and Louisiana, and seasonal
6
NOX programs in Arkansas and Louisiana *
7
allowances is allowed under CAIR. CAIR was appealed to the courts and remanded
8
to EPA by the D. C. Circuit Court of Appeals in July 2008.
9
Cross State Air Pollution Rule - The Cross State Air Pollution Rule (CSAPR) was
10
published in the Federal Register on August 8, 2011; and serves as the replacement
11
for CAIR.
12'
Louisiana), and mid-western states, as well as the District of Columbia. The final
13
rule defines state obligations to reduce emissions of NOX and SO2 that, according to
14
EPA, significantly contribute to another state's fine particulate and ozone
15
nonattainment and maintenance areas.
Unrestricted interstate trading of
CSAPR affects 28 eastern, southern (including Texas; Arkansas and
16
Along with other requirements, the final CSAPR establishes state-specific
17
annual emission "budgets" fdr S02 and NOx. The EPA's approach for obtaining
18
these emission reductions requires each state to limit its emissions to a prescribed cap.
19
Based on this cap, each emitting unit within the affected states has been allocated a
20
specified budget of NO,, and SO2 allowances for the applicable compliance period.
21
An annual cap for S02 and NO,, and an ozone season cap for NOX emissions apply in
22
Texas. .
SWEPCO's other service territories, Arkansas and Louisiana, must
.
PUC DOCKET NO. 40443
'
.
20
.
DIRECT TESTIMONY JOHN C. HENDRICKS
575
1
implement programs only for NO,, during the ozone season, from May through
2
September each year.
3
NOX allowance trading is allowed between all covered states. SO2 allowance
4
trading, however, is restricted to states within the same group. Texas is a Group 2
5
state and limited to trading with the seven other Group 2 states. In addition, during
6
Phase 2 of CSAPR (beginning in 2014), restrictions are imposed on the amount of
7
interstate trading allowed.
8
exceed its annual allocation by 18% or more, those units within the state that have
9
also emitted 18% or more above their allocations will be subject to an allowance
10
penalty. In Arkansas, Louisiana, and Texas, seasonal NOX emissions cannot exceed
11
the state budget by more than 21%, or the sources whose emission exceed that
12
threshold are subject to an allowance penalty. Sources whose emissions exceed their
13
allocations by less than these thresholds (called the "assurance level") are not subject
14
to penalties as long as they hold sufficient allowances to cover their actual emissions.
In Texas, if the state's annual NOX or S02 emissions
15
CSAPR was set to be effective beginning on January 1, 2012, but the D.C.
16
Circuit Court of Appeals issued an order to stay the rule on December 30, 2011.
17
While the appeal of CSAPR is pending and until further order of the Court, CAIR
18
will remain in effect.
19
Q.
20 21
PLEASE DESCRIBE THE RELEVANT- ENVIRONMENTAL REGULATIONS DRIVING THE NEED TO USE MORE CONSUMABLES.
A.
The environmental regulation that will drive an increase in the use of consumables is
22
the Mercury and Air Toxics Standards Rule (MATS). This rule replaced the former
23
Clean Air Mercury Rule (CAMR) that was vacated in 2008 by the D.C. Circuit Court
PUC DOCKET NO. 40443
21
DIRECT TESTIMONY JOHN C. HENDRICKS
576
1
of Appeals. The final MATS Rule became effective on April 16, 2012, with
2
compliance required within three years of this date. This rule regulates emissions of
3
hazardous air pollutants (HAPs) from coal and oil-fired electric generating units.
4
HAPs regulated by this rule are: 1) mercury; 2) several non-mercury metals such as
5
arsenic, lead, cadmium and selenium; 3) various acid gases including hydrochloric
6
acid;.and 4) many organic HAPs. The MATS rule includes stringent emission rate
7
limits for several individual HAPs, including mercury. In addition; this rule contains
8
stringent emission rate limits for "surrogates" representing two classes of HAPs, acid
9
gases and non-mercury particulate metal HAPs.
The surrogate for non-mercury
10
particulate metal HAPs is filterable particulate matter, while hydrogen chloride (HCl)
11
and/or SO2 (for units equipped with a scrubber) are the surrogates for acid gases.
12
Q.
WILL CSPAR AND MATS RESULT IN THE PURCHASE OF MORE
13
ALLOWANCES AND/OR THE USE MORE CONSUMABLES BY SWEPCO IN
14
THE FUTURE FOR COMPLIANCE?
15
A.
Yes.
For example, under CSAPR, the SWEPCO power plants in Texas will be
16
required to hold SO2 allowances to cover emissions on an annual basis, as well as
17
NO, on an annual basis (Annual NOX) and NOX on a seasonal basis (Seasonal NOX).
18
SWEPCO is allocated an amount of allowances during each year under these
19
regulations, but it is not forecasted that these allocations, which are allocated at zero
20
cost, will be sufficient to cover SWEPCO's emissions. SWEPCO, therefore, will
21
need to purchase allowances from the market, at whatever cost the market supports.
22
These market purchases will be a necessary cost for SWEPCO to comply with
PUC DOCKET NO. 40443
22
DIRECT TESTIMONY JOHN C. HENDRICKS
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I
CSAPR. SWEPCO witness Mr. Franklin describes the increased use of consumables
2
associated with MATS compliance in more detail in his testimony.
3
Q.
YOU MENTION ABOVE CAIR IS IN PLACE WHILE CSAPR IS 'STAYED.
4
DOES THIS CHANGE THE POSITION, ON AN ENVIRONMENTAL BASIS,
5
THAT EMISSION ALLOWANCES BE CONSIDERED FUEL COSTS?
6
A.
No. Under the most likely paradigm, CSAPR will be implemented in some form with
7
targeted state reductions for SO2 and NO, - Even while the rule is stayed, CAIR
8
remains in place and is also an allowance trading program.
9
emission allowance program is in place and will result in the need of the consumption
10
or procurement of allowances in the future.
11
^
12 13
VIII. ENVIRONMENTAL. SAFETY AND HEALTH AFFILIATE CHARGES
14
A. Organization Of Environmental.
15
Safety. Health and Facilities
16
Q.
17 18 19
In either scenario, an
PLEASE. DESCRIBE HOW THE AEP ENVIRONMENTAL, SAFETY, HEALTH AND FACILITIES ORGANIZATION IS STRUCTURED.
A.
The reporting. structure of the Environmental, Safety, Health, and Facilities organization is shown in Figure 1 below.
PUC DOCKET NO. 40443
23
DIRECT TESTIMONY JOHN C. HENDRICKS
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1
Figure 1
2
Q.
WHAT ARE THE MAJOR FUNCTIONS OF EACH OF THESE GROUPS?'
3
A.
The major functions of Environmental, Safety and Health are outlined below, except
4
for Real Estate and Workplace Services, which falls under the Facilities portion of the
5
organization and will be discussed in the testimony of SWEPCO witness Jeff Parlet.
6
Environmental Services
7
The primary role of Environmental Services is to provide permitting and compliance
8
support, guidance, procedures, recommendations and training for AEP's operating
9
companies in order to maintain and improve their. -environmental programs and
10.
enhance compliance with environmental laws, regulations, and policies.
11
this effort, Environmental Services is also involved in the development process for
12
environmental regulations, coordinating with other groups within the Environmental,
13
Safety and Health as well as with operating company staffs. Environmental Services
PUC DOCKET NO. 40443
24
As part of
DIRECT TESTIMONY JOHN C. HENDRICKS
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1
supports AEP's corporate strategies and values concerning the environment, safety,
2
and health.
3
Environmental Services includes the four following sections: Air Quality
4
Services,
5
Remediation Services, and Analytical Chemistry Services. In addition, there are a
6
small number of employees involved with strategy and compliance planning.
Water and Ecological Resource Services, Land Environment and
7
Air Quality Services, Water and Ecological Resource Services, and Land
8
Environment and Remediation Services are responsible for preparing and submitting
9
applications to obtain environmental permits for AEP operations, providing guidance
10
and training for operations staff regarding compliance with permits and overall
11
,
regulations, submittal of compliance reports to state and federal agencies, reporting
12
and cleanup of spills, conducting site inspections, and arranging for disposal of solid
13
wastes.
14
distribution operations; and transmission, as well as general support on broader
15
environmental issues and regulatory programs that have impacts on SWEPCO
16
operations. Finally, the Analytical Chemistry Services section provides customized
17
analytical services to help resolve problems of a chemical or physical nature that
18
occur at operations facilities. This support covers generating plants and distribution
19
and transmission operations.
This effort includes direct support for SWEPCO's generation plants,
20
Environmental Services staff is located primarily in Columbus, OH and
21
surrounding areas, Shreveport, LA, and Dallas, TX, including a chemistry laboratory
22
in Shreveport. In addition, Environmental Services staff with primary responsibility
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DIRECT TESTIMONY JOHN C. HENDRICKS
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1
for compliance support for distribution and transmission are located throughout the
2
AEP service territory, including employees in Shreveport, LA and Longview, TX.
3
Safety & Health
4
The Safety & Health organization at AEP provides support in all areas of
5
occupational safety and health, public and contractor safety, industrial hygiene,
6
ergonomics, health and wellness, and training. Its staff consists of safety and health
7
generalists and specialists who hold professional degrees and certifications in many
8
areas, including nursing, occupational health, industrial hygiene, and public safety.
9
Safety & Health is generally organized according to the function being supported, for
10
example generation, or program area, such as industrial hygiene.
11
groups ensure that the Safety & Health policies and procedures within AEP's
12
operating companies, such as SWEPCO, are aligned with AEP's corporate Safety &
13
Health policies and procedures as well as federal standards from agencies such as the
14
Occupational Safety and Health Administration.
These support
15
Safety & Health is comprised of six primary groups covering safety and health
16
for generation, transmission, and distribution operations, safety and health training,
17
industrial hygiene, and public safety.
18
generation, transmission, and distribution operations, and develop initiatives and
19
programs to foster a: safety and health culture in these organizations. The Zero Harm
20
initiative was introduced at the corporate level to challenge employees to not be
21
satisfied until zero harm is achieved - i.e., every employee goes home safe and
22
healthy at the end of his/her workday. A spin-off of this initiative, Target Zero, was
23
introduced to generation to promote the same ideals of a zero harm culture.
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26
The Safety & Health groups support AEP's
DIRECT TESTIMONY JOHN C. HENDRICKS
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Safety & Health support staff for AEP's transmission organization have
2
facilitated Safety Stand Downs and periodic visits to communicate corporate policies
3
on vehicle safety, fire retardant clothing, hazard assessments, and recognition for
4
employee safety efforts.
5
The transmission, generation, and distribution organizations have been
6
utilizing Safety & Health's Human Performance Initiative as an error reduction
7
system for employees and have also partnered with AEP distribution to update the
8
Contractor Safety Oversight Programs for each organization. AEP distribution is
9
assisted by Safety & Health in the area of strategic communication with safety alerts
10 11
and safety bulletins for communication of significant issues. -
Another key
communication tool is the Serious Event conference call, which ensures that critical
12
issues and events are communicated quickly across the organization with an emphasis
13
on immediate corrective actions.
14
The Safety & Health Training Team is involved with communicating AEP
15
safety and-health programs to AEP's operating companies, ensuring that a consistent
16
message is conveyed system-wide. Program and initiative-specific training is also
17
facilitated by this group through Safety & Health Summits. For example, the Safety
18
and Health Industrial Hygiene (IH) group conducted a welding fume study to better
19
characterize exposure potential, implemented sharing of air sample analysis across
20
the AEP system through the IH database, and coordinated a radio frequency (RF)
21
safety workshop that led to the updating of the RF Safety Manual. The IH group also
22
determined a simple statistical process for negative exposure assessment to ensure
23
that sampling is representative of actual industrial exposure hazards.
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DIRECT TESTIMONY JOHN C. HENDRICKS
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1
The Safety & Health Public Safety group facilitates AEP's outreach plan for
2
elimination of preventable electrical contacts and public fatalities by producing, in
3
conjunction with AEPSC Corporate Communications, safety videos, multiple Internet
4
website communications, television safety advertising, and publishing articles in
5
Consumer Circuit, AEP's customer publication. The Safety & Health Public Safety
6
group also provides safety content for employee communications about public safety.
7
Other Environmental, Safety and Health Groups
8
In addition .to Environmental Services and Safety & Health, which I discussed above,
9
the Environmental, Safety and Health
organization includes staff that support
10
programs in environmental public policy, external environmental affairs, strategic
11
policy analysis, sustainability programs, and environmental and safety management
12
systems.
.
13
The Governmental & Environmental Affairs and Environmental Public Policy
14
groups assist with development of corporate positions on environmental public
15
policies, coordinating this
16
SWEPCO's. The Governmental & Environmental Affairs group does not engage in
17
legislative advocacy.
18
effort
with
operating company staffs, including
Strategic Policy Analysis provides timely, accurate, and proactive analysis for
19
corporate decision-making on environmental investments in AEP's system-wide-
20
least-cost environmental compliance plan (e.g., air emission and CO2 cost analyses).
21
The Environment and Safety - Strategy and Design team supports the design and
22
execution of strategic plans within the Environmental, Safety and Health organization
23
and coordinates with AEP's operating companies and business units to ensure that
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DIRECT TESTIMONY JOHN C. HENDRICKS -
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1
corporate Environmental, Safety and Health strategic plans integrate and align with
2
their needs. This group also oversees AEP's sustainability performance reporting.
3
The Environmental, Safety & Health Management Systems Team oversees the
4
implementation of a program at AEP generating plants to emulate international
5
standards for environmental, safety, and health management systems.
6
reports to Environmental, Safety & Health leadership through the Managing Director
7
of Governmental & Environmental Affairs.
8 9
B. Environmental, Safety, Health and Facilities Services Q.
10 11
This team
WHAT SERVICES WERE PROVIDED TO SWEPCO BY ENVIRONMENTAL,
SAFETY AND HEALTH DURING THE TEST YEAR? A.
Environmental, Safety and Health provided a multitude of services to SWEPCO
12
during the test year, which are described below, organized by group and section.
13
While all groups within Environmental, Safety & Health provided services, the
14
following summary is limited to the two largest organizations - Environmental
15
Services and Safety & Health - as these groups provided the bulk of support to
16 '
SWEPCO.
17
Services Provided by Environmental Services
18
Environmental Services provided support for permitting and associated compliance
19
activities necessary to meet the requirements of federal and state regulatory programs.
20
protecting air, water, and land resources.
21
supported
22
inventories, preparing the annual Title V compliance certification as well as
23
semiannual and quarterly deviation reports, providing corrective action responses to
Specifically, the Air Quality section
SWEPCO's generating facilities by reviewing annual emissions
PUC DOCKET NO. 40443
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DIRECT TESTIMONY JOHN C. HENDRICKS
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1
notice of violations, completing required Energy Information Agency reporting, and
2
preparing Title V permit renewal applications as needed.
3
Similarly, the Water and Ecological Resources section provided support for
4
National Pollutant Discharge Elimination System (NPDES) permits for wastewater
5
and storm water discharges by scheduling biomonitoring -testing, including preparing
6
and submitting required reports; facilitating NPDES permit renewals by performing
7
discharge sampling, preparing the application, and meeting with agency officials to
8
negotiate final terms and conditions; preparing stormwater construction permit
9
-
documents such as notices of intent and termination and stormwater pollution
10
prevention plans; and providing ongoing assistance to plants through evaluations and
11
inspections of wastewater treatment facilities.
12
Land Environment and Remediation Services coordinated sampling of
13
groundwater monitoring wells, including preparation of sampling and analysis plans
14
and submission of reports to the appropriate agency; provided training for -Plant
15
Environmental Coordinators on waste-related recordkeeping, reporting, and preparing
16
shipments of waste for disposal, as well as the standards of the Emergency Planning
17
and Community Right-to-Know and Toxic Substances Control Act requirements,
18
such as assisting with collecting samples for Polychlorinated Biphenyls (PCB)
19
analysis.
20
obtaining the environmental permits needed for Turk.
All of the' above groups in Environmental Services also assisted 'with
21
The section's Regional Environmental Coordinators are responsible for
22
providing waste-related compliance ' services to SWEPCO's Transmission and
PUC DOCKET NO. 40443
DIRECT TESTIMONY 30
-
JOHN C. HENDRICKS
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1
Distribution groups through conducting site visits to T&D facilities and coordinating
2
clean-up and reporting of oil and chemical spills.
3
Finally, the Analytical Chemistry Services group supported SWEPCO by
4
performing analysis of samples collected at its facilities as required for permitting and
5
compliance activities. Services Provided by Safety and Health
6 7
Safety & Health groups supporting the generation, transmission, and
8
distribution operations of SWEPCO provided services including site inspections of
9
SWEPCO-owned facilities to conduct safety/health assessments, maintaining Safety
10
& Health corporate-wide databases to facilitate knowledge sharing, creating safety
11
bulletins, issuing guidance on safety footwear and implementation of fall protection
12
while climbing wood poles, and conducting business unit-specific safety conferences.
13
In addition, Safety & Health provided expertise and interpretation of the rules,
14
regulations and policies that govern our business with respect to safety and health,
15
and, where applicable, changed or modified those policies and procedures to meet or
16
exceed the associated federal and/or state standard. The Industrial Hygiene group of
17
Safety & Health conducted assessments at SWEPCO service centers to monitor
18
exposure to chemicals, provided mandated training for asbestos compliance with
19
federal and state regulations, and served as a technical resource to plant Industrial
20
Hygiene'coordinators. The Safety & Health team provided leadership and guidance as
21
well as identification and correction of weaknesses in the Safety and Health
22
Management System. Safety
23
recommendations to prevent unwanted incidents, injuries, and illnesses. Safety &
PUC DOCKET NO. 40443
& Health provided proactive solutions and
31
DIRECT TESTIMONY JOHN C. HENDRICKS
586
