Memorandum reviewing elements of ventilation operating costs. ERG. May 28, 2014

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		MEMORANDUM


To:	Robert Burt, Robert Stone, Bob Blicksilver, OSHA	 
From:	John Eyraud and Chet Fenton, ERG
Date:	May 28, 2014
Subject:	Review of operating costs for ventilation systems 
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ERG reviewed its estimates of the operating costs of ventilation systems that will be needed to achieve compliance with the proposed regulation. ERG had previously developed several sets of ventilation operating costs to reflect the principal scenarios relevant for the affected firms. ERG considered 24-hour operation and operation for 60 hours per week. ERG also considered scenarios with and without recirculation of air. For facilities that are not recirculating air, ERG previously included the costs for both heating and cooling. The average cost per cfm was estimated at $2.22. With capital costs ($12.83 per cfm), and maintenance costs at 10 percent of capital ($1.28 per cfm), the operating and maintenance total was $3.51 per cfm. Adding the annualized capital cost ($1.83) brought the total to $5.34 per cfm. 
Industry criticized these estimates although no detailed alternative estimates were given. Some industry commenters, and particularly the American Foundry Society, noted that their operating experience suggested much higher operating costs, exceeding $25 per cfm. A firm commenting to the docket for the American Chemistry Council, URS, used an estimate of ventilation operating and maintenance costs of $5.50 per cfm in 2009 dollars (URS, 2014). 
Based on the literature search we have conducted, there are no broadly applicable or definitive estimates of average overall ventilation operating costs in industry that were identified. We have noted some statements in the literature that suggest fairly modest operating costs are often applicable, but these estimates do not appear to be based on any surveys of operating experience. For example, a 2004 discussion of ventilation systems referred to an estimate of $2 per cfm for ventilation operating costs for general industrial applications (Burgess, Ellenbecker, Trietman, 2004).
The previous estimates used the prevailing electricity and natural gas prices prevailing in 2009. ERG has retrieved the most recently published prices for these energy inputs. These are derived from Department of Energy monthly reports (EIA, 2014a and EIA, 2014b).
Based partly on testimony during the public hearings and further analysis by ERG staff, ERG suggests several revisions to the previous estimates. First, ERG would update the energy input prices to the current levels. Because there has not been any inflation in the input prices, however, the updating of prices is likely to have a small effect on the difference between the industry and ERG estimates. 
ERG had previously estimated that overall, a major share of establishments in industries with silica exposures would recirculate air. Because this is a low cost option, this estimate reduced the overall operating cost average. While there is some recirculation of air in industry, including in foundries, ERG now believes that perhaps a significantly smaller share of industrial facilities are recirculating air than previously estimated. In a series of case studies of foundry ventilation approaches, 1 of 4 case studies describes the recirculation of air (Scholz, 2007). In a conversation with a consulting mechanical engineer, however, the engineer noted that recirculation of air is not common in industrial settings (Creed, 2014). 
ERG's previous estimates included the costs for cooling buildings. Although providing cooling for industrial facilities is becoming more common, the public hearings testimony indicated that most industrial facilities are not cooled. Our consulting engineer concurred that cooling is generally not provided in industrial buildings. Thus, the removal of cooling costs would appear to be warranted (Creed, 2014). The consultant, however, could not estimate an average range for ventilation operating costs.
ERG did not previously include the cost of tempering the makeup air that must be added to offset the air ventilated to the dust collector and eventually outside. This change will improve the accuracy of the estimate of the recirculating air costs. 


References
Burgess, William A, Michael J Ellenbecker, Richard D Treitman. 2004. Ventilation for Control of the Work Environment. Second Edition. 

Creed, Bill. 2014. Telephone discussion between William Creed, Engineered Systems, Inc., and John Eyraud and Karen Capwell of ERG. May 23. 

Scholz, Robert C. 2007. Control of Silica Exposure in Foundries. American Foundry Society. AFS Safety and Health Committee. 

US. Energy Information Administration. February, 2014a. Electricity Prices. Electricity Monthly.  Release date April 22, 2014. http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_es1a

U.S. Energy Information Administration. 2014b. Natural Gas Prices. Release date April 30, 2014. 
http://www.eia.gov/dnav/ng/ng_sum_lsum_dcu_nus_a.htm

URS, 2014. Silica PEL Operating Cost Model. Excel. OSHA Silica Docket. 




