TO:
316(
b)
Phase
II
Docket.

FROM:
Timothy
Connor
SUBJECT:
Discussion
of
Capacity
Utilization
Rate
Threshold
DATE:
11/
29/
04
The
final
rule
includes
a
provision
that
allows
facilities
that
have
either
a
historic
capacity
utilization
rate
of
less
than
15
percent
or
those
agreeing
to
limit
their
future
utilization
rate
to
less
than
15
percent
to
comply
with
impingement
reduction
requirements
only.
The
Agency
has
analyzed
this
capacity
utilization
rate
threshold
in
the
context
of
the
facility
information
it
has
in
its
possession
and
presents
that
analysis
herein.

The
Agency
analyzed
the
historic
capacity
utilization
rates
(
averaged
over
1995
to
1999)
of
the
steam
capacity
of
those
facilities
expected
to
install
technologies
as
a
result
of
the
rule.
The
Agency
examined
both
the
detailed
questionnaire
facilities
alone
and
all
facilities
expected
to
install
technologies.
The
Agency
utilized
the
final
database
of
design
and
actual
cooling
water
intake
flows,
as
collected
and
verified
from
the
316(
b)
survey.
The
general
results
of
the
analysis
are
summarized
below.

For
Detailed
Questionnaire
facilities
expected
to
upgrade
technologies
as
a
result
of
the
rule,
the
Agency
determined
that
1.0
percent
of
the
total
actual
annual
intake
of
these
facilities
would
be
associated
with
those
facilities
falling
below
the
15
percent
capacity
utilization
threshold.
Furthermore,
0.7
percent
of
the
total
actual
annual
intake
of
the
Detailed
Questionnaire
facilities
expected
to
upgrade
technologies
could
be
attributed
to
those
receiving
relief
from
entrainment
requirements
due
to
the
threshold.
For
this
small
number
of
facilities
and
negligible
percentage
of
affected
intake
flow,
the
Agency
concludes
that
the
capacity
utilization
threshold
will
have
no
measurable
national
effect
on
the
entrainment
reduction
of
the
final
rule.

The
Agency
has
examined
the
electricity
generation
implications
of
the
capacity
utilization
rate
threshold.
Commenters
to
the
proposal
and
NODA
assert
that
there
is
potential
for
facilities
to
choose
to
operate
at
a
lower
capacity
utilization
rate
in
order
to
avoid
entrainment
requirements,
forego
electricity
production
as
a
result,
and
thereby
have
an
impact
on
local
or
regional
energy
markets.
The
Agency
examined
those
facilities
that
are
within
close
range
of
the
capacity
utilization
rate
(
ie,
those
between
15
and
20
%
historic
capacity
utilization)
to
determine
if
the
facilities
would
economically
benefit
from
reduced
entrainment
requirements.
The
Agency
conducted
a
break­
even
analysis
of
the
net
revenue
from
electricity
production
foregone
compared
against
the
savings
of
removing
entrainment
requirements
for
those
facilities
between
15
and
20
%
historic
capacity
utilization
rates.
Table
1
presents
the
results
of
the
break­
even
analysis.
The
median
and
average
break­
even
capacity
utilization
rates
are
less
than
15.1
%.
The
Agency
found
one
facility
in
its
database
of
Phase
II
facilities
that
might
fall
between
15
and
15.1
%
capacity
utilization.
The
amount
of
electricity
production
foregone
as
a
result
of
this
facility's
change
to
avoid
entrainment
controls
would
be
on
the
order
of
3,000
MWh
per
year.
This
is
a
negligible
amount
of
electricity
generation
in
any
local
or
regional
market.

The
Agency
analyzed
all
facilities
projected
under
the
threshold
and
examined
the
likely
operating
periods
for
these
facilities.
Of
the
42
facilities
projected
to
fall
under
the
threshold
17
of
these
facilities
would
be
subject
to
impingement
only
requirements
regardless
of
the
existence
of
the
utilization
2
threshold.
Further,
of
the
25
facilities
(
5
percent
of
Phase
II
facilities)
that
would
receive
reduced
entrainment
requirements
under
the
capacity
threshold,
the
total
median
operation
period
per
year
would
be
28
days.
Considering
that
this
operational
period
is
broken
about
in
two
likely
periods
in
winter
and
summer,
the
approximate
2­
week
period
in
each
season
would
likely
overlap
only
a
small
portion
of
potential
spawning
periods.
The
operational
flow
of
the
facilities
receiving
reduced
entrainment
requirements
over
the
typical
28
days
per
year
would
be
1
%
of
the
total
annual
intake
of
facilities
within
the
scope
of
the
rule
that
are
subject
to
entrainment
reduction
requirements.
Therefore,
the
capacity
utilization
rate
threshold
will
not
appreciably
decrease
the
entrainment
efficacy
of
the
final
rule.

The
Agency
analyzed
the
cost
to
revenue
ratios
of
facilities
above
and
below
the
capacity
utilization
threshold.
In
addition,
the
Agency
analyzed
cost
to
revenue
ratios
for
facilities
in
absence
of
the
capacity
utilization
threshold
relief.
The
Agency
determined
that
facilities
falling
below
the
capacity
utilization
rate
threshold
of
15
percent
would
experience
average
cost
to
revenue
ratios
of
4.4
%
(
median
of
1.2
%)
with
the
threshold
relief
from
entrainment
and
approximately
6
%
(
median
of
2.4
%)
without
the
presence
of
the
utilization
threshold.
The
Agency
determined
that
facilities
above
the
threshold
would
experience
far
lower
average
cost
to
revenue
ratios
of
1.2
%
(
median
of
0.4
%).

As
can
be
seen
from
the
results
of
the
cost
to
revenue,
operating
period,
and
flow
analysis
in
Table
2,
the
Agency's
capacity
utilization
rate
of
15
percent
for
the
final
rule
balances
the
competing
factors
of
providing
needed
compliance
relief
while
providing
environmental
protection.
The
Agency
notes
that
the
possible
environmental
improvement
in
the
average
operating
periods
in
the
10
percent
compared
to
the
15
percent
capacity
utilization
rate
is
very
small
(
one
week
per
year).
Further,
the
difference
in
the
amount
of
flow
subject
to
entrainment
requirements
between
the
10
and
15
percent
rates
is
also
very
small.
Therefore,
the
Agency
concludes
that
the
improvement
in
average
cost
to
revenue
relief
between
the
lower
thresholds
is
sufficient
to
warrant
the
15
percent
rate.
On
the
higher
side,
the
Agency
notes
that
both
the
operating
periods
and
the
percentage
of
flow
receiving
entrainment
relief
under
the
20
and
30
%
rates
are
considerably
higher
than
for
15
percent.
In
addition,
the
improvement
in
cost
to
revenue
relief
is
not
as
great
between
15
and
30
percent
(
and
20
percent,
for
that
matter)
as
the
difference
improvement
between
10
and
15
percent.
The
Agency
concludes
that
its
selection
of
the
15
%
rate
is
the
most
reasonable
balance
for
all
factors
of
the
four
analyzed
in
Table
2.

Table
1.
Break­
Even
Analysis
for
Facilities
that
Might
Reduce
Capacity
Utilization
Rates
To
Avoid
Entrainment
Controls
Average
Capacity
Utilization
Rate
(
1995­
1999)
Average
Annual
Generation
(
MWh)
Annual
Costs
of
Entrainment
Reduction
Annual
Costs
of
Impingement
Only
Reduction
Annual
Cost
Diff.
Between
Entrainment
and
Impingment
Reduction
Annual
Generation
Loss
(
MWh
/
year)
to
Meet
15
%
Capacity
Utilization
Cost
of
Annual
Generation
Foregone
($
/
year)
to
meet
15
%
Capacity
Utilization
Break­
even
Solver
Value
15.8%
2,478,619
$
2,434,420
$
78,065
$
2,356,355
829,440
$
25,712,628
15.0693%

16.4%
128,032
$
510,945
$
62,589
$
448,356
72,620
$
2,251,210
15.2586%

16.6%
1,202,511
$
358,071
$
100,591
$
257,480
770,455
$
23,884,099
15.0061%

16.7%
200,024
$
704,805
$
59,781
$
645,025
134,919
$
4,182,475
15.2378%

17.1%
620,453
$
684,882
$
33,398
$
651,484
502,939
$
15,591,113
15.0766%

18.4%
574,367
$
1,073,438
$
149,075
$
924,364
708,362
$
21,959,212
15.1177%

19.2%
2,319,433
$
1,636,977
$
69,723
$
1,567,254
3,413,875
$
105,830,123
15.0492%

19.4%
6,406,991
$
94,825
$
81,322
$
13,503
9,712,022
$
301,072,695
15.0002%

19.7%
708,553
$
610,068
$
47,283
$
562,785
1,129,631
$
35,018,568
15.0579%
3
Table
2.
Threshold
Comparison
Analysis
Threshold
average
CTR
below
threshold
w/
entrainment
relief
average
CTR
below
threshold
if
no
entrainment
relief
average
CTR
of
all
facilities
average
operating
days
per
year
of
facilities
w/
entrainment
relief
Percent
of
total
flow
subject
to
entrainment
requirements
receiving
relief
10
percent
5.7%
7.3%
1.5%
21
0.3%

15
percent
4.4%
6.0%
1.5%
28
1.0%
20
percent
3.8%
4.7%
1.5%
40
2.6%

30
percent
3.4%
3.3%
1.5%
62
7.8%

CTR
=
Cost­
to­
revenue
ratio.

Historic
(
1995­
1999)
Steam
Capacity
Utilization
v
s
Percentage
of
Design
Intake
Usage
­­
DQ
Facilities
Only
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%

0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%

Actual
intake
Flow
/
Design
Intake
Flow
(%)
Capacity
Utilization
(
1995
­
1999)
