Environmental and Permitting Issues For a New Coal Unit

1. Environmental and Permitting Issues For a New Coal Unit Presented to APPA New Coal Unit Symposium San Antonio February 17, 2005

3. CPS Coal Units Are Not Grandfathered • JK Spruce Plant (one unit, 595 MW burning Powder River Basin Coal) was granted construction and PSD permit in September 1987 • Subject to top-down BACT Review • Subject to Subpart Da of the NSPS Subpart Da Requires 2003 Actuals SO2 1.2 Lb/MMBTU/70% 0.15 Lb/MMBTU NOx 0.5 Lb/MMBTU 0.17 Lb/MMBTU PM 0.03 Lb/MMBTU 0.02 Lb/MMBTU

4. Figure 9 U.S. Coal Unit Performance Data There were 1,072 reporting coal units in the 2002 EPA Database. U.S. Average NOx Rate = 0.41 lb/MMBTU CPS Coal Units Ranking JK Spruce - 1,004 JT Deely 1 - 1,005 JT Deely 2 - 1,006 Source: EPA EDR data

5. Figure 10 U.S. Coal Unit Performance Data There were 1,072 reporting coal units in the 2002 EPA database. U.S. Average SO2 Rate = 0.98 lb/MMBTU CPS Coal Units Ranking JK Spruce - 1,003 JT Deely 1 - 695 JT Deely 2 - 694 { Source: EPA EDR data

6. Figure 11 U.S. Coal Unit Performance Data Combined SO & NOx Rate 2 7.0 There were 1,072 reporting coal units in the 2002 EPA database. 6.0 CPS Coal Units Ranking JK Spruce - 1,054 JT Deely 1 - 854 JT Deely 2 - 853 5.0 { 4.0 Combined Emission Rate SO2 + NOx - Lb/MMBTU 3.0 2.0 1.0 0.0 1 55 109 163 217 271 325 379 433 487 541 595 649 703 757 811 865 919 973 1027 Source: EPA EDR data

7. Figure 12 25 Best Coal Units in the US - 2002 Based upon Combined SO2 + NOx Emission Rates Lowest Emitting 25 units out of 1,072 Nationwide in 2002 Aggregate Emissions Rate for SO2 + NOX - Lb/MMBTU 0.5 J.K. Spruce 0.4 0.3 0.2 0.1 0 Polk 1 Clover Clover Navajo Navajo Navajo Bonanza Centralia Holcomb Shiras 3 Muscatine W A Parish 8 Northside 2A Cope Station Reid Gardner Hawthorn 5A J K Spruce 1 Laramie River Sam Seymour Neil Simpson II 1 Stanton Energy 2 Mt. Carmel Cogen Rawhide Energy Station Altavista Power Station Altavista Power Station

11. CPS Seeks Public Input • Established Southeast Quadrant Community Advisory Group (SEQCAG) in October 2002. • SEQCAG issued report and list of issues in April 2003, continues to meet on a quarterly basis. • CPS Board of Trustees endorsed management’s commitments to SEQCAG, added more requirements and approved going forward with project in June, 2003.

12. CPS’ Key Environmental Commitments to the Community • Use BACT on new unit at a minimum • Enhance coal yard environmental controls • Reduce existing emissions so there will be no net increase in aggregate emissions as a result of new unit going on-line • 10% renewables commitment by 2015 • Increase spending on conservation programs • Enhanced air quality monitoring program around plant • Community environmental health awareness program • New Unit will be brought under Ch. 117 NOx cap • Additional emissions reductions from existing units so there will be a substantial net decrease in aggregate emissions after new unit goes on-line

13. CPS Plans to Add a New Coal Unit • Type : Pulverized Coal, Hybrid Pressure (2520 psi, 1050 oF, 1050 oF) • Location: Calaveras Lake • Fuel: Powder River Basin Coal • Size: 750 MW • Heat Rate: 9,800 BTU/KWH • Proposed Permit Levels (annual averages) • SO2 - 0.06 Lb/MMBTU (wet limestone scrubber) • NOx - 0.05 Lb/MMBTU (SCR) • PM - 0.022 Lb/MMBTU (fabric filter) (collectibles + condensables)

14. Environmental Enhancements at Existing CPS Coal Units Total Cost - $333 million Item Date Cost System NOx Reductions 1999 - 2004 $55 million Enhanced Monitoring 2003 - 2009 $3 million Program Coal Yard Dust Controls 2003 - 2004 $4.0 million Gas Startup at JTD 2006 - 2007 $5.5 million Baghouse Retrofit at JTD 2006 - 2007 $90 million Additional Coal NOx 2005 - 2007 $15 million Controls Enhance Existing Scrubber 2008 - 2009 $10 million Scrubber Retrofits at JTD 2012 - 2013 $150 million Green – completed Orange – In Progress Red - Budgeted

15. CPS Air Emissions from Coal Past, Present and Future Air Emissions -Thousand Tons per Year 60 Sulfur Dioxide Nitrogen Oxides Particulate Matter 1997 - 1450 MW 50 52% Increase in Power 2003 - 1450 MW 40 69% Reduction 30 in Emissions! 20 2012 - 2200 MW 10 0 Past Present Future

16. Calaveras Lake Plants Actual and Projected Emissions Thousand Tons per Year 120 100 80 PM 60 NOx SO2 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Permits Actuals Projected (Based upon highest historical heat inputs) New Unit On-line 2009

17. 25 Best Coal Units in the US - 2002 Based upon Combined SO2 + NOx Emission Rates Lowest Emitting 25 units out of 1,072 Nationwide in 2002 Aggregate Emissions Rate for SO2 + NOX - Lb/MMBTU 0.5 0.4 0.3 After Upgrades { 0.2 0.1 0 Clover Clover Navajo Navajo Navajo Polk 1 Bonanza New Unit JT Deely JK Spruce Muscatine Shiras 3 Holcomb Centralia W A Parish 8 J K Spruce 1 Northside 2A Cope Station Reid Gardner Hawthorn 5A Laramie River Sam Seymour Neil Simpson II 1 Stanton Energy 2 Mt. Carmel Cogen Rawhide Energy Station Altavista Power Station Altavista Power Station

19. CPS Plans to Add a New Coal Unit • Type : Pulverized Coal, Hybrid Pressure (2520 psi, 1050 oF, 1050 oF) • Location: Calaveras Lake • Fuel: Powder River Basin Coal • Size: 750 MW • Heat Rate: 9,800 BTU/KWH • Proposed Permit Levels (annual averages) • SO2 - 0.06 Lb/MMBTU (wet limestone scrubber) • NOx - 0.05 Lb/MMBTU (SCR) • PM - 0.022 Lb/MMBTU (fabric filter) (collectibles + condensables)

20. The problem: • Dry windy days

21. What we built: