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Louisiana ........****** Maine Maryland Massachusetts Michigan Minnesota ... Mississippi Missouri Montana ....... ...-----Nebraska ... Nevada New Hampshire ... New Jersey .......................................... New Mexico New York ........ North Carolina .... North Dakota Ohio Oklahoma Oregon ............. Pennsylvania ................................................ Rhode Island South Carolina ....... South Dakota Tennessee Texas ........ Utah ....... Vermont ...... Virginia Washington ....... West Virginia Wisconsin Wyoming

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8503.38 Permanent exemption for cer

tain fuel mixtures containing natu

ral gas or petroleum. (a) Eligibility. Section 212(d) of the Act provides for a permanent exemption for certain fuel mixtures. To qualify a petitioner must certify that:

(1) The petitioner proposes to use a mixture of natural gas or petroleum and an alternate fuel as a primary energy source;

(2) The amount of petroleum or natural gas proposed to be used in the mixture will not exceed the minimum percentage of the total annual Btu heat input of the primary energy sources needed to maintain operational reliability of the unit consistent with maintaining a reasonable level of fuel efficiency; and

(3) No alternate power supply exists, as required under $503.8 of these regulations.

(b) Evidence required in support of a petition. The petition must include the following evidence in order to make the demonstration required by this section:

(1) Duly executed certifications required under paragraph (a) of this section;

(2) Exhibits containing the basis for the certifications required under paragraph (a) of this section (including those factual and analytical materials deemed by the petitioner to be sufficient to support the granting of this exemption);

(3) A description of the fuel mixture, including component fuels and the percentage of each such fuel to be used; and

(4) Environmental impact analysis as required under $503.13 of these regulations.

(c) Solar mixtures. OFE will grant a permanent mixtures exemption for the use of a mixture of solar energy (including wind, tide, and other intermittent sources) and petroleum or natural gas, where:

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(1) Solar energy will account for at least 20 percent of the total annual Btu heat input, of the primary energy sources of the unit; and

(2) Petitioner meets the eligibility and evidentiary requirements of paragraphs (a) and (c) of this section. (46 FR 59903, Dec. 7, 1981, as amended at 54 FR 52896, Dec. 22, 1989)

$8503.39503.44 [Reserved)

(b) Sections 504.6 and 504.7, set forth the prohibitions that OFP may impose upon certain electing powerplants, pursuant to former section 301 (b) and (c) of FUA, where OFP can make the findings as to the unit's technical capability and financial feasibility to use coal or another alternate fuel as a primary energy source. The prohibitions may be made to apply to electing powerplants unless an exemption is granted by OFP under the provisions of the Final Rule for Existing Facilities (10 CFR parts 500, 501 and 504) published at 45 FR 53682, Aug. 12, 1980 and 46 FR 59872, Dec. 7, 1981. Any person who owns, controls, rents or leases an existing electing powerplant may be subject to the prohibitions imposed by and the sanctions provided for in the Act or these regulations, if OFP can make the findings required by former section 301 (b) and (c) of FUA.

PART 504-EXISTING POWERPLANTS

504.2 Purpose and scope. 504.3—504.4 [Reserved] 504.5 Prohibitions by order (certifying pow

erplants under section 301 of FUA, as

amended). 504.6 Prohibitions by order (case-by-case). 504.7 Prohibition against excessive use of

petroleum or natural gas in mixtures

electing powerplants. 504.8 Prohibitions against excessive use of

petroleum or natural gas in mixtures

certifying powerplants. 504.9 Environmental requirements for cer

tifying powerplants. APPENDIX I-PROCEDURES FOR THE COMPUTA

TION OF THE REAL COST OF CAPITAL APPENDIX II-FUEL PRICE COMPUTATION

AUTHORITY: Department of Energy Organic zation Act, Pub. L. 95–91, 91 Stat. 565 (42 U.S.C. $7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, Pub. L. 95-620, 92 Stat. 3289 (42 U.S.C. 8301 et seq.); Energy Security Act, Pub. L. 96–294, 94 Stat. 611 (42 U.S.C. 8701 et seq.); E.O. 1209, 42 FR 46267, September 15, 1977.

SOURCE: 45 FR 53692, Aug. 12, 1980, unless otherwise noted. (Approved by the Office of Management and Budget under control number 1903-0075. See 46 FR 63209, Dec. 31, 1981.)

EDITORIAL NOTE: Nomenclature changes to this part appear at 54 FR 52896, Dec. 22, 1989.

(Department of Energy Organization Act, Pub. L. 95-91, 91 Stat. 565 (42 U.S.C. 7101 et seq.); Powerplant and Industrial Fuel Use Act of 1978, Pub. L. 95-620, 92 Stat. 3269 (42 U.S.C. 8301 et seq.); Omnibus Budget Reconciliation Act of 1981, Pub. L. 97–35; E.O. 12009, 42 FR 46267, Sept. 15, 1977) (47 FR 50849, Nov. 10, 1982)

$8504.3—504.4 [Reserved) 8504.5 Prohibitions by order (certify

ing powerplants under section 301

of FUA, as amended). (a) In the case of existing powerplants, OFP may prohibit, in accordance with section 301 of the Act, as amended, the use of petroleum or natural gas as a primary energy source where the owner or operator of the powerplant presents a complete certification concurred in by OFP. The certification, which may be presented at any time, pertains to the unit's technical capability and financial feasibility to use coal or another alternate fuel as a primary energy source in the unit. The informational requirements necessary to support a certification are contained in $ 504.6 of these regulations. A prohibition compliance schedule which meets the requirements of 8504.5(d) shall also be submitted.

(b) If OFP concurs with the certification, a prohibition order on the powerplant's use of petroleum or natural

8504.2 Purpose and scope.

(a) Sections 504.5, 504.6, and 504.8, set forth the prohibitions that OFP, pursuant to section 301 of the Act, as amended, may impose upon existing powerplants after a review of the certification and prohibition order compliance schedule submitted by the owner or operator of a powerplant. Sections 504.5 and 504.8 are explanatory sections, and 8504.6 provides the informational requirements necessary to support the certification.

gas will be issued following the procedure outlined in 8501.52 of these regula tions.

(c) The petitioner may amend its certification at any time prior to the effective date of the prohibitions contained in the final prohibition order in order to take into account changes in relevant facts and circumstances by following the procedure contained in $ 501.52(d).

(d) Prohibition order compliance schedule. The certification described above, which forms the basis for the issuance of a prohibition order to a powerplant, shall include a prohibition order compliance schedule. The compliance schedule should contain the following:

(1) A schedule of progressive events involved in the conversion project, including construction of any facilities for the production of fuel or fuel handling equipment, and contracts for the purchase of alternate fuels, and estimated date of compliance with the applicable prohibitions of the Act; and

(2) A schedule indicating estimated dates for obtaining necessary federal, state, and local permits and approvals. Any prohibition order issued under the certification provisions of 88 504.5, 504.6, and 504.8 will be subject to appropriate conditions subsequent so as to delay the effectiveness of the prohibitions contained in the final prohibition order until the above events or permits have occurred or been obtained. (Approved by the Office of Management and Budget under control number 1903-0077) (Department of Energy Organization Act, Pub. L. 95-91 (42 U.S.C. 7101 et seq.); Energy Supply and Environmental Coordination Act of 1974, Pub. L. 93 319, as amended by Pub. L. 94-163, Pub. L. 95–70, and Pub. L. 95-620 (15 U.S.C. 719 et seq.); Powerplant and Industrial Fuel Use Act of 1978, Pub. L. 95-620, as amended by Pub. L. 97-35 (42 U.S.C. 8301 et seq.); Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35) (47 FR 17044, Apr. 21, 1982)

dence to support the certification, required by $504.6 (c), (d), (e), and (1). In the case of electing powerplants, OFP must make the following findings required by $504.6 (c), (d), (e), and (f), in order to issue a prohibition order to the unit, pursuant to former section 301 (b) or (c):

(1) The unit currently has, or previously had, the technical capability to use an alternate fuel as a primary energy source;

(2) The unit has this technical capability now, or it could have the technical capability without:

(i) A substantial physical modification of the unit; or

(ii) A substantial reduction in the rated capacity of the unit; and

(3) It is financially feasible for the unit to use an alternate fuel as its primary energy source.

(b) In the case of electing powerplants, OFP must make a proposed finding regarding the technical capability of a unit to use alternate fuel as identified in paragraph (a) (1) of this section prior to the date of publication of the notice of the proposed prohibition. OFP will publish this finding in the FEDERAL REGISTER along with the notice of the proposed prohibition.

(c) Technical capability. (1) In the case of electing and certifying powerplants, OFP will consider “technical capability” on a case-by-case basis in order to make the required finding. In the case of a certifying powerplant, the powerplant should present information to support the certification relevant to the considerations set forth below. OFP will consider the ability of the unit, from the point of fuel intake to physically sustain combustion of a given fuel and to maintain heat transfer.2

3604.6 Prohibitions by order (case-by

case). (a) OFP may prohibit, by order, the use of natural gas or petroleum as a primary energy source in existing powerplants under certain circumstances. In the case of certifying powerplants under section 301 of the Act, as amended, the petitioner must present evi

2OFP will not ordinarily consider the nature or absence of appurtenances outside the unit. For example, OFP will examine the furnace configuration and ash removal capability but will not normally consider the need to install pollution control equipment as a measure of technical capability. Furthermore, OFP will not normally conclude that the absence of fuel handling equipment, such as conveyor belts, pulverizers, or unloading facilities, bears on the issue of a unit's "technical capability" to burn an alternate fuel.

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(2) OFP considers that a unit "had” the technical capability to use an alternate fuel if the unit was once able to burn that fuel (regardless of whether the unit was expressly designed to burn that fuel or whether it ever actually did burn it), but is no longer able to do so at the present due to temporary or permanent alterations to the unit itself.3

(3) A unit "has" the technical capability to use an alternate fuel if it can burn an alternate fuel, notwithstanding the fact that adjustments must be made to the unit beforehand or that pollution control equipment may be required to meet air quality requirements.4

(d) Substantial physical modification. In the case of electing and certifying powerplants, OFP will make its determination on whether a physical modification to a unit is “substantial" on a case-by-case basis. In the case of certifying powerplants, OFP will consider the factors set forth below for the purpose of concurrence in the certification. OFP will consider physical modifications made to the unit as substantial" where warranted by the magnitude and complexity of the engineering task or where the modification would impact severely upon operations at the site.5 OFP will not, however, as

sess physical modification on the basis of cost.

(e) Substantial reduction in rated capacity. In the case of electing and certifying powerplants, OFP will make this determination on the basis of the following factors. A certifying powerplant should present information to support its certification regarding these factors in order for OFP to make its review for concurrence.

(1) OFP regards a unit's derating of 25 percent or more, as a result of converting a unit from oil or gas to an alternate fuel, as substantial.

(2) OFP will presume that a derating of less than 10 percent, as a result of converting a unit from oil or gas to an alternate fuel, is not substantial unless convincing evidence to the contrary is submitted in rebuttal.6

(3) OFP will assess units for which a derating is claimed of 10 percent or more, but less than 25 percent, on a case-by-case.

(4) In assessing whether a unit's derating is not substantial, OFP will consider the impact of a reduction in rated capacity of the unit taking into consideration all necessary appurtenances such as air pollution control equipment required to burn an alternate fuel in compliance with environmental requirements expected to be applicable at the date the prohibitions contained in the final prohibition order become effective. However, the potential order recipient may raise in rebuttal the impact of derating on the site at which the unit is located and on the system as well as on the unit itself, if under

3 For example, a unit which at one time burned solid coal but which could no longer do so because its coal firing ports and sluicing channels had been cemented over, would be classified as having "had” the technical capability to use coal. (The question of whether it again "could have" such capability without "substantial physical modification" is a separate and additional question.)

4A unit designed to burn natural gas shall be presumed to have the technical capability to burn a synthetic fuel such as medium Btu gas from coal (assuming such gas is available unless convincing evidence to the contrary is submitted in rebuttal). Also a unit designed to burn oil may, depending upon the chemical characteristics, be a unit that "has" the technical capability to burn liquefied coal. The fact that certain adjustments may be necessary does not render this a "hypothetical" as opposed to a "real" capability. Even an oil fired unit converting from the use of #2 distillate to #6 residual oil may be required to adjust or replace burner nozzles and add soot blowers.

5 Generally, modification of a unit to burn coal or an alternate fuel will be considered

insubstantial if significant alterations to the boiler, such as a change to the furnace configuration or a complete respacing of the tubes, are not required. Minor alterations such as replacement of burners or additions of soot blowers, and additions or alterations outside the boiler, shall not cause the modification to be substantial.

6 For example, units that are the subject of a prohibition order will not have installed any operating air pollution control equip ment sufficient to burn coal in compliance with applicable environmental equipments. The installation and use of air pollution control equipment alone can, in many cases, produce a derating. Moreover, the shift to coal itself will, because of differences in energy density and fuel flow characteristics, typically involve some derating.

paragraph (e)(2), or case-by-case, if from continued operation using petrounder paragraph (e)(3) of this section. leum or natural gas.

(1) Financial feasibility. In the case of (Approved by the Office of Management and certifying and electing powerplants,

Budget under control number 1903-0077) OFP will make this finding based on

(Energy Supply and Environmental Coordithe following considerations. A certify nation Act of 1974, Pub. L. 93-319, as amended ing powerplant should present informa- by Pub. L. 94-163, Pub. L. 95–70, and 15 U.S.C. tion to support its certification rel- 719 et seq.; Department of Energy Organizaevant to these considerations in order tion Act, Pub. L. 95-91, 91 Stat. 565 (42 U.S.C. for OFP to make its review for concur

7101 et seq.); Powerplant and Industrial Fuel

Use Act of 1978, Pub. L. 95-620, 92 Stat. 3269 rence. Conversion of a unit to burn coal

(42 U.S.C. 8301 et seq.); Omnibus Budget Recor an alternate fuel shall be deemed fi

onciliation Act of 1981 (Pub. L. 97–35); E.O. nancially feasible if the firm has the 12009, 42 FR 46267, Sept. 15, 1977) actual ability to obtain sufficient cap (45 FR 53692, Aug. 12, 1980, as amended at 47 ital'to finance the conversion, includ- FR 17044, Apr. 21, 1982; 47 FR 50849, Nov. 10, ing all necessary land, coal and ash 1982) handling equipment, pollution control equipment, and all other necessary ex

8504.7 Prohibition against excessive

use of petroleum or natural gas in penditures, without violating legal re

mixtures electing powerplants. strictions on its ability to raise debt or equity capital, unreasonably diluting

(a) In the case of electing powershareholder equity, or unreasonably

plants, if OFP finds that it is techadversely affecting its credit rating.

nically and financially feasible for a OFP will consider any economic or fi

unit to use a mixture of petroleum or nancial factors presented by the pro

natural gas and an alternate fuel as its

primary energy source, OFP may proposed order recipient in determining the firm's ability or inability to fi

hibit, by order, the use in that unit of

petroleum or natural gas, or both, in nance the conversion including, but

amounts exceeding the minimum not limited to, the following:

amount necessary to maintain reliabil(1) The required coverage ratios on

ity of operation consistent with mainthe firm's debt and preferred stock;

taining reasonable fuel efficiency of (2) The firm's investment program; the mixture. and

(b) In making the technical feasibil(3) The financial impact of the con- ity finding required by former section version, including other conversions 301 (b) and (c) of the Act and paragraph which are or may be undertaken volun- (a) of this section, OFP may weigh tarily by the proposed order recipient “physical modification" or "derating or imposed upon the recipient's system of the unit,” but these considerations, by the Act, and including pending or by themselves, will not control the planned construction or reconstruction technical feasibility finding. A techof alternate-fuel-fired plants and nical feasibility finding might be made plants exempt from FUA prohibitions.? notwithstanding the need for substanWhere helpful in clarifying the long- tial physical modification. The ecoterm financial feasibility of a conver- nomic consequences of a substantial sion, DOE may analyze the economic physical modification are taken into benefits anticipated from operation of account in determining financial feathe converted unit or units using coal sibility. or other alternate fuel relative to those

(Energy Supply and Environmental Coordi

nation Act of 1974, Pub. L. 93-319, as amended TOFP will not require the proposed order

by Pub. L. 94–163, Pub. L. 95–70, and 15 U.S.C. recipient to cancel or defer construction or

719 et seq.; Department of Energy Organizareconstruction of any alternate-fuel-fired fa

tion Act, Pub. L. 95–91, 91 Stat. 565 (42 U.S.C. cility, or any facility exempt from the prohi

7101 et seq.); Powerplant and Industrial Fuel bitions of the Act, for which a decision to fl

Use Act of 1978, Pub. L. 95-620, 92 Stat. 3269 Dance such facility has been made by the ap

(42 U.S.C. 8301 et seq.); Omnibus Budget Recpropriate company official before the publi- onciliation Act of 1981 (Pub. L. 97-35); E.O. cation of the prohibition order. The proposed 12009, 42 FR 46267, Sept. 15, 1977) order recipient may choose to cancel or defer (47 FR 17045, Apr. 21, 1982, and 47 FR 50850, any such facility.

Nov. 10, 1982)

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