September 15, 2009

MEMORANDUM

SUBJECT:	Economic Impact Analysis for New Source Performance Standards: 
Coal Preparation Plants

FROM:	Tom Walton

Economist

ABCG (C439-02)

TO:		Mary Johnson

                        Engineer

                        ESG  (D243-01)

This document addresses   SEQ CHAPTER \h \r 1 the economic impacts of
the final rule amendments to the New Source Performance Standards for
Coal Preparation and Processing Plants.  The economic impact analysis
focuses on changes in market prices and output levels.  If changes in
market prices and output levels in the primary markets are significant
enough, impacts on other markets are also examined.

Both the magnitude of control costs needed to comply with the rule and
the distribution of these costs among affected facilities can have a
role in determining how the market will change in response to the rule. 
Total annualized costs for the rule are estimated to be $7,920,000. 
Twenty-two new facilities are projected to incur control costs because
of the final rule.  Attachment 1 summarizes annual sales and price
information for each type of  plant projected to incur costs.  

The costs on a facility basis are all projected to be less than one per
cent of sales.  See the table below.  Since they are all facilities
projected to be built in the future, it is not clear how many, if any,
of the twenty-two would be small businesses.  Even if they were all
small, the impact of less than one per cent of sales is not expected to
be significant.  Therefore, there is no significant impact on a
substantial number of small entities.

Source	Number	Total Cost per plant	cost/sales

Bituminous Coal Mine	2	660,000	0.2%

Subbituminous Coal Mine	2	814,000	0.5%

Electric Utility	6	350,000	0.2%

Coke Plant	1	424,000	0.3%

Cement Plant	10	223,000	0.3%

Industrial Facility	1	219,000	0.1%



These small costs are not expected to result in a significant market
impact whether they are passed on to the purchaser or absorbed. 

Attachment 1

Model Plant	Annualized Costs ($)	Annual Sales physical units	Price	cost
/ sales

 	 	 	 	 

Bituminous Coal Mine	1,320,402	17,440,000 tons coal	$39/ton	0.19%

Subbituminous Coal Mine	1,627,120	34,800,000 tons coal	$10/ton	0.47%

Electric Utility	2,102,058	16.560.000.000 KWh	$0.06/KWh	0.21%

Coke Plant	424,416	1,100,000 tons coke	$140/ton	0.28%

Cement Plant	2,226,320	10,000,000 tons cement	$85/ton	0.26%

Industrial Facility	219,476	1,400,000,000 lb steam	$4/1,000 lb steam
0.08%

Total	7,919,792	 	 	 



Note:  Price for industrial facility based on cost of coal of 0.004
times the ratio of cost of value of shipments for NAICS-based code for
31-33 divided by Purchased Fuel and Electricity from 2006 Census

(http://factfinder.census.gov/serviet/IBQTable?_bm=y&ds_name=AM0631GS101
)

