5.

ENGINEERING AND COST METHODOLOGY

1.0 OVERVIEW
This chapter presents the step-by-step approach used to determine the feasibility, configuration
and cost associated with retrofitting an existing facilitys once-through cooling system with a
closed-cycle, wet cooling tower system.

A retrofit of this kind is a significant undertaking with many engineering, logistical, and
economic considerations that can limit the overall feasibility of converting to closed-cycle
technologies. The wet cooling tower design selected for each facility accounts for numerous site-
specific factors that influence the type of tower and the overall configuration and represents best
professional judgment based on the available data.

These factors include the following:

General assumptions: these address elements that cannot be definitively captured within this
study (e.g., future capacity utilization, makeup water source).
Logistics: an assessment of what regulatory and physical constraints may exist that limit the
design of the tower, or preclude its use altogether (e.g., available area, noise/building height
restrictions).
Site-specific data: facility-specific information describing system operations and limitations
that define minimum design requirements for a wet cooling system (e.g., thermal
performance, ambient climate data).
Using the conceptual design of the cooling tower, the cost evaluation includes the following
components:

Direct costs: budgetary estimates for all capital projects related to cooling tower installation
(e.g., including construction, equipment, materials, engineering, and labor).
Indirect costs: allowance for smaller project costs that are not specifically itemized (e.g.,
permitting, startup costs).
Contingency: allowance to ensure the satisfactory completion of the project by estimating
project unknowns that cannot be evaluated in detail (e.g., interference from unidentified
infrastructure, accidents).
Energy penalty: monetizes the increase in parasitic usage as well as the change in thermal
efficiency resulting from the operation of the towers.
Shutdown loss: for some facilities, some disruption to operation will occur as a result of
connecting the new system to the condenser, requiring one or more units to be offline.

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2.0 ASSUMPTIONS
2.1 GENERATING CAPACITY
A particular generating units annual capacity utilization rate is based on numerous factors, such
as market demand and contractual obligations, as well as the age and overall efficiency of the
unit. Many units in this study are older (3040 years or more), have lower efficiencies, and are
generally provide electricity to the grid intermittently during peak demand periods or when other
units are offline. These periods tend to coincide with climate highs and lows, with hot summer
months often the only time they will be operational during the entire year.

While these units may operate well below their maximum generating rate on an annual basis, they
are likely to operate at or near their full capacity for several weeks or months at a time during
peak demand periods, and thus require sufficient cooling capacity to generate the desired amount
of electricity. Given that output during this period will likely comprise the majority of revenue the
facility will generate during the year, minimizing the loss in efficiency that comes with
conversion to a closed-cycle cooling system is a reasonable goal. This requires a larger tower and
increases the initial capital cost of the tower, but allows the unit to operate under conditions that
more closely approximate the existing once-through system.

On the other hand, because the facility does not generate electricity consistently throughout the
year, a cooling tower designed for the peak demand conditions alone would sit idle or be
underutilized during much of the year, with a disproportionately higher initial capital cost. A
possible trade-off would be to design a smaller cooling tower with lower initial capital costs, but
with greater operating costs and efficiency losses.

For this study, it was assumed that the facility would prefer to maximize its output during peak
demand periods to maximize its profit without unreasonable losses in efficiency. Accordingly, the
cooling towers were designed to provide the desired level of cooling based on the maximum
thermal load of the unit(s) served by the tower without triggering capacity limitations.

2.2 FUTURE USAGE

The decision to repower a unit or undertake major upgrades is largely driven by market factors,
corporate strategies and contractual obligations that are unknown to this study. Unless specific
information is available, it is impossible to predict the future operation of a particular unit or
facility. Thus, the wet cooling towers were designed and configured to reflect the current
operating conditions and do not consider any potential repowering or replacement projects.
Repowering projects, and its possible role with respect to impingement and entrainment
reductions, are discussed further in Chapter 1 and Chapter 6.

2.3 CONDENSER SPECIFICATIONS

Heat rejection from wet cooling towers to the surrounding environment is generally more
efficient at higher circulating water temperatures. An optimally-designed wet cooling system
would account for this by configuring the condenser in such a way to remove more heat from the
system on each circuit to and from the tower. At existing once-through facilities, condensers and

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turbines are generally designed for optimal operation at lower circulating water temperatures. An
optimal retrofit would also reconfigure the condenser from a single-pass to a multiple-pass
configuration and install new tube bundles. Because more heat is rejected per volume of water
using this configuration, the generating unit would be able to operate with a smaller cooling tower
that has a lower initial capital cost and lower operating costs over the life of the tower.

For an existing facility, the cost to reconfigure the condenser for service with a cooling tower is
likely to be expensive and may require significant construction downtime in addition to material
costs. The facilitys existing configuration may also complicate this approach if condensers are
located below grade or not easily accessible. Re-optimizing a condenser is a more practical
alternative at a facility with a long remaining lifespan, during which the facility can recoup initial
expenditures through the accrued cost savings from lower operating costs. Aging units with short
remaining life are unlikely to realize any overall economic benefit from re-optimization.

In lieu of re-optimization, this study includes a cost allowance to modify the existing condensers
for service with wet cooling towers. These modifications are generally limited to water box and
tube sheet reinforcements that will likely be necessary for many facilities to withstand the higher
the higher circulating water pressures required to elevate water to the top of the cooling tower
risers. An allowance for this cost is discussed in Section 6.5. Examples of condenser water box
pressure increases are shown in Table 5-1.

Table 5-1. Condenser Pressure Changes

Condenser
Condenser water Approximate
Estimated back pressure
Condenser box design cooling water
Facility pressure delta
description pressure inlet pressure to
(psig) (clean tubes)
(psig) condenser (psig)
(psig)
Units 1 & 2, Yuba 25 20 5 25
Haynes Units 5 & 6, 20 20 6 26

Unit 8, Holtec 50 20 10 30
Units 6 & 7, Ingersoll-
Moss 25 20 5.7 26
Rand
Landing
Units 1 & 2, Holtec 80 16 9.8 26

Units 1 & 2, 25 25 4 29
Scattergood
Unit 3, Hitachi 25 25 8.8 34
Units 1 & 2, Ingersoll-
20 25 9.5 35
Rand

Alamitos Units 3 & 4, Ingersoll-

20 25 8.2 33
Rand
Units 5 & 6, Ingersoll-
25 25 Not provided 25+
Rand
Unit 3, Westinghouse 30 25 6.2 31
El Segundo
Unit 4, Ingersoll-Rand 30 25 6.3 31
Ormond Units 1 & 2, Sweco
25 20 6 26
Beach Inc.

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2.4 WATER USAGE

As discussed Chapter 1, the target reductions of impingement and entrainment impacts were
based on the California Ocean Protection Council (OPC) resolution benchmark of 9095 percent
below their current levels. For most facilities, this is accomplished by adopting a closed-cycle
cooling system that continues to use the existing marine source water for makeup purposes.

The California State Water Resources Control Board (SWRCB), in 1975, issued a policy
statement requiring the consideration of alternative cooling methods in new power plants,
including the use of reclaimed water, over the use of freshwater (SWRCB 1975). There is no
similar policy regarding the use of marine waters, but the clear preference of state agencies is to
encourage alternative cooling methods, including the use of reclaimed water, wherever possible.
Water obtained from municipal treatment plants and treated to meet regulatory standards is used
for irrigation practices and groundwater recharge projects, and can be used for industrial purposes
such as condenser cooling. Some new facilities in California have already adopted this approach,
such as the Tesla Power Plant, which uses reclaimed water from the City of Tracy Wastewater
Treatment Plant.

The decision to use reclaimed water and further reduce IM&E impacts beyond what can be
achieved with a salt water cooling tower is a question of cost-effectiveness; that is, what are the
additional benefits that are accrued by eliminating surface water withdrawals altogether and at
what cost. These costs may be substantial if, as in many cases in California, long stretches of
underground piping must be installed through highly urbanized areas. Onsite treatment systems
may also be necessary to ensure the water chemistry and quality is consistent with regulatory
requirements and will not adversely impact the performance of the towers and condensers.
Contingency measures might also be required to ensure access to a cooling water source in the
event of a disruption or reduction of the reclaimed water flow. This may require maintaining a
portion of the existing once-through cooling system as a backup.

Competition for reclaimed water sources is likely to increase in the coming years as potential uses
expand and municipalities look to alternatives to supplement limited potable water supplies.
Orange County, for example, recently completed the first phase of its Groundwater
Replenishment System, which will redirect approximately 65 mgd of treated effluent from the
Fountain Valley facility for additional treatment. Approximately 50 percent of the produced water
will be injected into the seawater intrusion barrier with the remaining portion mixed with other
surface waters and allowed to percolate into the groundwater. Current plans call for the system to
be expanded in the near future (OCWD 2008).

The use of reclaimed or alternative water sources could potentially eliminate all surface water
withdrawals by a particular facility. Doing so would completely eliminate impingement and
entrainment concerns, and might enable the facility to avoid possible effluent quality and permit
compliance issues, depending on the quality of reclaimed water available for use. Use of
reclaimed water, with its lower total dissolved solids (TDS) concentration, allows for the a
smaller tower with lower total fan and pump capacity requirements, thus reducing some initial
capital and operating costs. The overall cost savings, however, may be negligible if a substantial
initial investment must be made to secure a sufficient and consistent reclaimed water source and
ensure the necessary level of treatment for use in a cooling tower.

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Reclaimed water as a makeup water source may also enable a facility to avoid conflicts with
PM10 emission restrictions or waste water effluent limitations.

In order to be a practical alternative, reclaimed water must, at a minimum, meet the following
criteria:

Treatment to tertiary standards or ability to provide treatment onsite

Minimum available flow equal to the design makeup demand
Relative proximity to the facility
Consistency of delivery

Information regarding potential sources of reclaimed water is included in each facilitys

discussion chapter, although all comprehensive cost estimates are developed based on the
assumption that the existing marine source water will continue to provide makeup water to the
retrofitted system.

More information on the use of saltwater cooling towers is provided in Chapter 4 and the CECs
2007 report Cost, Performance, and Environmental Effects of Salt Water Cooling Towers.

3.0 LOGISTICS
3.1 LOCAL USE CONSTRAINTS
Many Californias coastal power plants are located in highly urbanized settings, with residential
and commercial areas in close proximity to the site. As the need for balance between competing
uses grows, the guidelines for new development projects, such as wet cooling towers, may
become more restrictive. The noise and visual impacts associated with a large wet cooling tower
can, in some cases, preclude its installation at a particular location. Local planning and zoning
requirements typically address aesthetic and public safety or health concerns, such as noise and
visual impacts, associated with a large industrial project.

For each facility, the local regulatory environment was assessed to determine what zoning
restrictions and ordinances would have to be met. These requirements are usually found in
general development plans or local use plans and obtained from Internet resources. For each
facility, the local planning and zoning authority that would have jurisdiction over any large
project was contacted in order to verify standards for building height, noise, and visual impacts.
In some cases, specific limits were not identified but instead subject to a conditional use
designation, which evaluates project criteria on a case-by-case basis through a reiterative process
between the facility and the regulating agency. In these cases, best professional judgment was
used to conservatively estimate the minimum design requirements.

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3.2 VISUAL PLUME

Visual plumes, in most cases, do not cause any significant environmental impact to the
surrounding area since the plume is no different from a cloud or fog. Concerns arise, however,
when the plume creates or exacerbates a public nuisance or safety hazard. An atmospheric
inversion may result in thick, persistent fog that reduces visibility on nearby freeways or bridges.
A dense plume that remains aloft may interfere with airport operations and flight pathways. On an
aesthetic level, the visual impact of a tall plume may be undesirable if located near commercial or
residential areas, or areas designated for public recreational use.

Plume-abated (hybrid) cooling towers are subject to more restrictive siting criteria than are
conventional wet towers. The addition of the dry cooled component will add to the total structural
height structure, sometimes by as much as 15 to 30 feet. This may conflict with local zoning
ordinances relating to building height and visual impact from structures. Hybrid towers are more
susceptible to the effects of exhaust recirculation and must be located at sufficient distances from
each other while individual cells cannot be configured in a back-to-back arrangement, thus
requiring a larger total siting area.

The final decision to use a hybrid wet cooling tower design requires a detailed investigation into
the plumes scale, duration and frequency in relation to public hazards and visual impacts to the
surrounding area. While threats to public safety from a visible plume may be more readily
quantifiable, any evaluation of visual impact will involve a certain degree of subjectivity due to
varying understandings of aesthetic value at different locations and the potential tradeoffs
between impacts and benefits.

Guidelines furnished by the California Energy Commission (CEC) identify criteria for
determining the degree of visual impact a visible plume may have. When the plumes frequency
is predicted to occur less than 20 percent of the time during critical period hours (defined as
daytime hours November through April with no rain or fog), the plume is considered to have a
less-than-significant impact. When the plume is predicted to occur above this threshold, however,
a more comprehensive assessment is made of the extent of the visual change imparted by the
plume on the local setting, including whether the plume will block prominent landscape features
or scenic coastal areas (Knight, 2007).
In lieu of specific criteria, such as zoning restrictions, that would require plume-abated towers,
the conceptual design for a particular site included hybrid towers based on best professional
judgment and input from cooling tower vendors. In general, hybrid towers were considered only
at those facilities where a persistent plume, whether at ground level or aloft, could reasonably be
considered a threat to public safety by its interference with major infrastructure, such as airports
or freeways.
The preliminary assessment of Californias coastal power plants identified El Segundo,
Scattergood, Ormond Beach, and San Onofre as the most likely to require plumeabated towers
based on their proximity to freeways, airports, or military installations. It is possible that,
following a more detailed analysis and local input, other coastal facilities would also be required
to adopt the same technology.

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3.3 SITE CONSTRAINTS

In order to provide sufficient cooling capacity for a large steam electric power plant, wet cooling
towers require a large, contiguous, and open area that will enable their placement away from
sensitive equipment and structures. At existing facilities, many of which are located in built-out
industrial areas, available land may be at a premium. The cumulative footprint of wet cooling
towers and their associated support structures (pumps, piping, etc.) may range from a few acres to
several hundred thousand square feet or more, depending on the cooling capacity and type of
system required. Available land may not be located in the most desirable area and may present
additional challenges, such as an unacceptable proximity to residential or public areas (beaches)
or topography unsuitable for major construction.

Wet cooling towers function most efficiently when they are placed longitudinallyor parallel
tothe prevailing wind direction at the site. This arrangement decreases the potential for the
warm, moist air exiting the tower at the top from being drawn back in through the tower
sidewalls. This recirculation will raise the entering wet bulb temperature and decrease the overall
cooling efficiency, thereby requiring a larger cooling tower to achieve the same cooling capacity.

This study evaluated the available space for each facility using aerial photos, site development
plans, interviews with facility personnel, and/or existing knowledge of the site. If sufficient space
could be identified for placement of properly sized wet cooling towers, whether immediately
available or through the removal or relocation of existing minor structures, a full engineering and
cost evaluation was developed for the particular facility.

In some cases, sufficient space may be available only through the purchase or procurement of
adjoining properties. If these locations are unoccupied and do not have any obvious restrictions to
their use, the engineering analysis proceeded under the assumption that they could be used for
cooling tower siting, although associated costs were not included in the cost analysis. Potential
obstacles regarding land acquisition are noted for each facility, where applicable.

4.0 CONCEPTUAL DESIGN

For each facility, cooling towers are sized according to the ambient wet bulb temperature and the
desired approach temperature. In most cases, wet bulb temperature data were obtained from the
American Society of Heating, Refrigerating, and Air-conditioning Engineers (ASHRAE) design
criteria for various areas in California. In designing for peak conditions, the 1 percent wet bulb
temperature is used, i.e., the wet bulb temperature that is likely to be exceeded less than 1 percent
of the time and is generally representative of the most demanding conditions a facility is likely to
experience during the year. Ambient conditions that exceed the 1 percent temperatures may
restrict a facilitys ability to generate its maximum output.

The approach temperature used for most facilities in this study is based, in part, on the ambient
wet bulb temperature and the operating conditions discussed in Section 2.1. Cooling towers can
be designed to achieve approach temperatures of 5 to 8 F, but become substantially larger and
more costly at progressively lower approach temperatures. To allow a facility to generate its

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maximum load while keeping initial capital costs reasonable, this study selected a design
approach temperature of 12 F in most cases. A 10 F approach was used for Haynes based on
initial input from a different cooling tower vendor. A 17 F approach was used for Diablo
Canyon based on specific input from that facility.

The final design for each facilitys wet cooling tower system is based on best professional
judgment and standard best engineering practices. To the degree possible, the design incorporates
facility-specific information detailing the performance of the existing cooling system and
addresses the various constraints identified for each site. This design serves as the basis for
evaluating all secondary effects, such as changes in thermal efficiency, water use, and air
emissions and the cost analysis.

5.0 THERMAL EFFICIENCY

A wet cooling system will invariably increase the condenser inlet water temperature compared to
a once-through system. This increase in temperature affects the condensers ability to reject waste
heat from the system and raises the backpressure at the turbine exhaust point. Adjustments to the
turbine backpressure are a function of the change in steam condensate pressure, which is directly
related to the increased circulating water temperature. To obtain the steam condensate pressure,
the temperature of the saturated steam condensate must first be calculated using the following
equation:

Q = (U o Fw Fm Fc ) A (Ts Ti ) (Ts To )
(Ts Ti )
ln
(T T
s o )
where:

Q = condenser thermal load, in BTU/hr

Uo = base heat transfer coefficient, in BTU/hrft2F
Fw = temperature correction factor
Fm = tube material factor
Fc = cleanliness factor
A = surface area of condenser, in ft2
Ts = steam condensate (saturated) temperature, in F
Ti = condenser inlet temperature, in F
To = condenser outlet temperature, in F

The effect the change in backpressure has on overall performance is reflected in changes to the
units operating heat rate. Heat rate adjustments were calculated by comparing the theoretical
change in available energy that occurs at different turbine exhaust backpressures, assuming the
thermal load and turbine inlet pressure remain constant, i.e., at the maximum load rating. The
relative change at different backpressures was compared to the value calculated for the design

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conditions (i.e., at design turbine inlet and exhaust backpressures) and plotted as a percentage of
the maximum operating heat rate to develop estimated correction curves. A comparison was then
made between the relative heat rates of the once-through and wet cooling systems for a given
month. The difference between these two values represents the net increase in heat rate that
would be expected in a converted system.

The heat rate adjustments calculated using the theoretical approach generally agreed with heat
rate correction curves provided by some facilities. An example of a heat rate correction curve is
shown in Appendix A.

6.0 COST ANALYSIS

6.1 COOLING TOWERS
A principal cost associated with the converting a once-through system to wet cooling towers is
the cost of the towers themselves. Large capital projects of this sort are often evaluated as
design-and-build projects, with vendors providing comprehensive cost estimates that account
for nearly all tower construction materials, engineering and design costs, as well as the labor
required for construction.

Design parameters were first calculated based on facility-specific information, where available,
followed by a conceptual design that incorporated the system requirements and any size,
placement, or environmental restrictions that might affect overall cost and feasibility. These
elements were then submitted to cooling tower vendors (SPX/Marley and GEA Power Cooling)
to develop cost individual cost estimates for each facility.

All design-and-build estimates for wet cooling towers, customized for each facility, include the
following:

Structural materials Freight and onsite storage

Fill material (splash or film) Engineering and design
Drift eliminators (0.0005 percent) Installation labor (union), including
Tower water distribution system (pipes, supervision
nozzles, laterals) Fans (including gearboxes, supports, drive
Dry pipe fire suppression system shafts, motors, switches)
Start-up services

6.2 CIVIL/STRUCTURAL/MECHANICAL/ELECTRICAL COSTS

Various support structures must be built as part of a wet cooling tower retrofit to integrate the
new cooling system into the facility. The total cost may be substantial, depending on the size of
the tower elements and such factors as distance to the condensers and siting constraints.

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Civil and structural costs for each facility include the following:

Concrete cooling tower basin Pump house

Cooling tower riser piping Transformers
Supply and return piping (including freight Cables
and storage) Motor control centers
Excavation and site preparation Lighting
Sheet piling and dewatering Lightning protection
Circulating water pumps Labor (union) and supervision

Estimates for prestressed concrete cylinder pipe (PCCP), including freight and storage, were
provided by Price Brothers Co. Reinforced Plastics, Inc. provided estimates for fiber reinforced
plastic (FRP) piping. Electrical costs are based on the battery limit from the main feeder breakers,
using recent historical pricing for similar projects evaluated by Hatch, Ltd.

Construction man hours for general labor, mechanical installation, and pipe installation are based
on Hatch, Ltd., proprietary databases and estimator expertise. Adjustments for productivity are
based on the assumption of substantial similarity to productivity in North Americas northeast
corridor. Labor rates are based on RS Means (2007) published data and adjusted for the specific
region in California where construction will take place. Labor rates are inclusive of the following:

Organization Tools
Burden Protective clothing
Construction equipment Overhead
Site facilities Profit
Consumables

6.3 FACILITY-SPECIFIC COSTS

Cost components discussed above are not intended to be inclusive for each facility. Additional
civil or structural costs may be incurred if site conditions warrant. These may include noise
mitigation measures (barrier walls), rock excavation, demolition activities, and relocation of
existing structures. These costs are discussed on a case-by-case basis for each facility.

6.4 INDIRECT COSTS

A variety of other smaller costs can be expected in conjunction with the installation of wet
cooling towers. Individually, no cost element in this category is significant, but the aggregate cost
can add 25 percent or more to the project. Costs are generally considered proportional to the
overall project cost. Some of these components include, but are not limited to, the following:

Start-up and commissioning Specialized engineering services (e.g.,

Engineering, Procurement, and surveying)
Construction Management (EPCM) Owner cost
Site costs (EPCM consultant) Permitting
Acceptance testing

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An indirect cost is included for each facility equal to 25 percent of all direct costs. 1 This value is
based on previous cost evaluations of similar projects and is considered typical of large capital
projects such as a wet cooling tower installation.

6.5 CONDENSER MODIFICATION

As noted above, the incorporation of wet cooling towers will likely require modifications to the
existing condenser, in the form of water box reinforcements and tube sheet bracing. Each
condenser may require reinforcement of the tube sheet bracing with 6-inch x 1-inch steel, and
water box reinforcement/replacement with 5/8-inch carbon steel. A conservative estimate of 5
percent of all direct costs is included to account for possible condenser modifications.

6.6 CONTINGENCY
Cost contingency is an allowance, above and beyond the base costs, that will ensure the
successful completion of the project. Contingencies address omissions, accidents, cost overruns,
and unexpected obstacles that may arise, and allow for the development of a conservative cost
estimate. At existing facilities, interference with underground infrastructure or other facility
operations is likely to be a major component of contingency costs. A contingency cost value
equal to 25 percent of the sum of all direct and indirect costs is included for this study. 2 This
value is based on previous cost evaluations of similar projects and is considered typical of large
capital projects such as a wet cooling tower installation.

6.7 OPERATIONS AND MAINTENANCE (NON-ENERGY)

Wet cooling towers require constant maintenance and management to ensure optimal
performance, especially in a seawater application (e.g., fouling/clogging of fill materials,
corrosive effects of salt water). Routine costs include management and labor, chemical treatment
for fouling and corrosion control, and spare parts and replacement costs. Vendors did not provide
annual operations and maintenance (O&M) estimates for each project due to the variability of
final installation at each site and other project unknowns. O&M estimates were based on data
used for previous evaluations, such as the Phase I and II rules (USEPA 2001; 2002a).
Adjustments were made to reflect a seawater application based on cooling tower vendor input.

This study used a Year 1 base cost of $4.00 per gallon per minute (gpm) of circulating water flow
in the tower. The base cost for Year 12 is increased to $5.80/gpm to reflect replacement costs for
major system components that are expected to occur at this point in the project life span. A year-
over-year escalator of 2 percent is included as an adjustment for inflation. Detailed O&M costs
are presented in Table 5-2.

1
30 percent for Diablo Canyon and SONGS.
2
30 percent for Diablo Canyon and SONGS.

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Table 5-2. Base O&M Costs

Base cost Base cost
Cost element years 111 years 1220
($/gpm) ($/gpm)
Management 1.00 1.45

Service and spare parts 1.60 2.32

Fouling / corrosion control 1.40 2.03

O&M total 4.00 5.80

In most analyses of O&M costs, energy usage is a major component. For this study, increases in
energy use associated with wet cooling tower operation are addressed as part of the energy
penalty discussion in Section 6.9.

6.8 SHUTDOWN DUE TO CONSTRUCTION AND INTEGRATION

Facilities may experience temporary interruptions of their normal operations during a wet cooling
towers construction and its integration with each generating unit. Tie-in to the existing
condenser(s) will require each unit to be offline for some duration, but overall shutdown times are
highly sitespecific and reflect such things as the existing configuration and annual capacity
utilization. Most of Californias coastal facilities would not incur any direct economic loss
associated with a construction tie-in because they generally operate infrequently and have long
periods of inactivity with which the necessary construction could be coordinated. Contractual
requirements, such as hot standby, may not be accurately reflected in reported generating output
figures.

Downtime estimates were based on previous retrofit projects and engineering estimates prepared
for other facilities. Actual connection downtimes for fossil fuel facilities were relatively short,
ranging from 83 hours at Jefferies Station (SC) to 30 days for each unit at Canadys Station (SC).
Other estimates developed for proposed retrofit projects have reached similar conclusions of
approximately one month per unit (Bowline Point (NY) and Roseton Station (NY) (USEPA
2002b). This study conservatively assumed a construction-related shutdown of six weeks for most
of the fossil fuel facilities. Of these only Haynes (Unit 8) and Moss Landing (Units 1 & 2) are
expected to incur a direct financial loss from construction downtime.

Nuclear plants are considerably more complex than an average fossil facility and would be
expected to incur a longer construction shutdown, especially in light of enhanced security
measures enacted since 2001 and the necessary involvement of the Nuclear Regulatory
Commission in the oversight and approval process. Estimates prepared for Indian Point (NY) and
Salem (NJ) ranged from four to seven months per unit in addition to any planned refueling outage
(lasting an estimated 40 days). An engineering assessment prepared for PG&E in 1982 estimated
an outage time of four months per unit at Diablo Canyon (Tera Corp 1982) while other estimates
range as high as 12 months or more (BES 2003). This study estimated a construction-related
shutdown of eight months for Diablo Canyon and six months for San Onofre, with the difference
largely reflecting different facility configurations and the more compact nature of the Diablo
Canyon facility.

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The importance of Diablo Canyon and San Onofre to statewide grid reliability (providing
approximately 12 percent of Californias electrical supply) would suggest the need to stagger
retrofits on a unit-by-unit basis to minimize the construction-related downtime at each facility.
This approach appears reasonable for San Onofre given the relative locations of Units 1 and 2 to
their respective cooling towers and the fact that each unit operates its own distinct cooling water
system. Diablo Canyons configuration does not easily lend itself to a staggered retrofit
approach. Because both generating units share a common intake structure and the cooling towers
would be located in the same general area, any disruptions to circulating water pumps and
transmission pipelines would affect the operation of both units and require both units to be taken
offline at the same time.

6.8.1 MERCHANT GENERATORS

Merchant, or third-party, facilities generate electricity for sale to another entity for distribution to
retail customers. These generators can enter into short or long-term contracts or sell electricity on
the spot market to provide load-following or peaking capacity to the grid. Costs and revenues are
driven by the wholesale prices for fuel and electricity, although terms of individual contracts may
contain revenue provisions or other obligations not captured in this study. Because facility-
specific financial information was not available, construction-related revenue loss estimates are
based on wholesale pricing data obtained from public sources.

For merchant generators, lost revenue estimates from shutdown were calculated by first
estimating the length of downtime required to complete the installation and comparing this
estimate with expected monthly utilization (based on the 2006 output profile). The net loss is
calculated using wholesale electricity rates for the appropriate months less the estimated fuel
savings from the same period. This calculation is expressed by the following equation:

HR F
Rd = (Pw MWh) MWh
n 1000
where:

Rd = revenue loss from construction downtime, in $

Pw = wholesale electricity price for month n, in $/MWh 3
MWh = net generating output for month n, in MWh
HR = average unit heat rate, in BTU/kWh
F = fuel cost for month n, in $/MMBTU 4

3
Weighted average monthly wholesale price, 2006, Intercontinental Exchange for SP15 trading hub (ICE
2006a)
4
Weighted average monthly wholesale price, 2006, Intercontinental Exchange for Citygate trading hub
(ICE 2006b).

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6.8.2 INVESTOR- AND PUBLICLY-OWNED UTILITIES

Utility facilities generate electricity and, through their parent companies, sell directly to retail
customers. Gross revenues are generally higher, on a per-MWh basis, than merchant generators
because they account for transmission and distribution in addition to the cost of generation.
Revenue losses resulting from construction downtime are calculated differently because the
utility must procure electricity for its customers from other sources at rates higher than its own
cost of generation. The two investor-owned utilities in this study, Diablo Canyon and San Onofre,
are nuclear-fueled and can recoup some production-related costs during a shutdown. The Los
Angeles Department of Water and Power operates three facilities in this studyHarbor, Haynes,
and Scattergoodfueled by natural gas and can recoup fuel costs similar to merchant generators.

For San Onofre and Diablo Canyon, lost revenue estimates were calculated by first estimating the
length of downtime required to complete the installation and then determining the lowest
generating period corresponding to the downtime estimate (based on 2006 net output). The net
loss is calculated using the average replacement power cost less the estimated fuel savings that
would be recouped during the same period. This calculation is expressed by the following
equation:

Rd = (Pr MWh) [(Cr F ) MWh]

where:

Rd = revenue loss from construction downtime, in $

Pr = annual average retail electricity price, in $/MWh 5
MWh = net generating output for entire downtime period, in MWh
Cr = annual average replacement power cost, in $/MWh 6
F = fuel cost, in $/MWh 7

Specific replacement fuel costs were not available for LADWP. Downtime estimates are
calculated using wholesale natural gas prices.

6.9 ENERGY PENALTY

The energy penalty is divided into two components: increased parasitic use resulting from the
additional electrical demand of cooling tower fans and pumps; and the decrease in thermal
efficiency resulting from elevated turbine backpressure values. Monetizing the energy penalty
requires some assumption as to how the facility will choose to alter its operations to compensate
for these changes, if at all. One option would be to accept the reduced amount of revenue-
generating electricity available and absorb the economic loss (production loss option). A
second option would be to increase the firing rate to the turbine (i.e., consume more fuel to
generate additional heat) and produce the same amount of revenue-generating electricity as had

5
Utility-specific rates, 2006, US Energy Information Agency database (EIA 2006).
6
Average annual replacement power cost, 2006, PG&E 2006 Annual Report (PG&E 2006)
7
US average nuclear fuel cost, 2006, Nuclear Energy Institute (NEI 2006).

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been obtained with the once-through cooling system (increased fuel option). A more likely
option, however, is some combination of the two.

For Diablo Canyon and SONGS, the energy penalty is based on a production loss assumption
only. The design and complexity of a pressurized water reactor system make it unlikely that the
thermal input to the turbine can be increased within operating guidelines. Thermal input increases
may also be limited for combined-cycle units, for which steam generation is an indirect process.

Ultimately, the decision to alter operations to address efficiency changes is driven by

considerations unknown to this study (e.g., corporate strategy, contractual obligations, and turbine
pressure tolerances). For simplicity, the monetized value of the energy penalty assumes the
facility will increase the firing rate to the turbine to compensate for reduced efficiency and
generate the amount of electricity equivalent to the once-through system. In general, the increased
fuel option is less costly, in nominal dollars, than the production loss option, but may not reflect
long-term costs, such as increased maintenance, that may result from the continued high firing of
the turbine.

6.9.1 INCREASED PARASITIC USE (FANS)

Depending on ambient conditions or the operating load at a given time, a facility may be able to
take one or more cooling tower cells offline and still obtain the required level of cooling. This
would also reduce the cumulative electrical demand from the fans. For the purposes of this study,
however, operations are evaluated at the design conditions, i.e., maximum load; no allowance is
made for seasonal changes.

The fan penalty is expressed as a percentage of the total generating capacity and is calculated
using the following equation:

Fhp 0.0007457 MW
hp
Fp = 100
G

where:

Fp = energy penalty from fan power demand, in %

Fhp = motor power, in hp
G = generating capacity, in MW

6.9.2 INCREASED PARASITIC USE (PUMPS)

Wet cooling towers require substantial pumping capacity to circulate the large volumes of water
through the towers and condensers. The wet cooling system will demand more electrical power
than the once-through system it replaces because the configuration and demands are somewhat
different. For example, static head values will likely increase due to the height required to reach
the top of the tower risers (50 feet or more for many facilities), while friction head loss may

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increase if the cooling towers must be located far from the condensers they serve, thereby
requiring long stretches of supply and return piping.

In most cases, the change in operating demand will require new pumps with different design
specifications. Where feasible, some of the existing once-through circulating water pumps will be
retained to provide makeup water to the towers. The net pump penalty estimates the power
demand of the new configuration versus the existing demand relative to the facilitys overall
generating capacity.

The pump penalty is expressed as a percentage of the total generating capacity and is calculated
using the following equation:

(P1 P2 + P3 ) 0 . 0007457 MW
hp
Pp = 100
G

where:

Pp = energy penalty from net pump power demand

P1 = total motor power for cooling tower pumps, in hp
P2 = total motor power for existing circulating water pumps, in hp
P3 = total motor power retained from existing circulating water pumps, in hp
G = generating capacity, in MW

6.9.3 EFFICIENCY LOSSNATURAL GAS FACILITIES

Adjustments to the heat rate were calculated based on the ambient conditions for each month and
reflect the estimated difference between operations with once-through and wet cooling tower
systems. Using the increased fuel option, the cumulative value of the energy penalty is obtained
by first calculating the relative costs of generation ($/MWh) for the once-through and wet cooling
systems The cost of generation is based on the relative changes in heat rates and the average
monthly wholesale natural gas cost ($/MMBTU) (ICE 2006b). The difference between these two
values represents the increased cost, per MWh, that results from a wet cooling tower retrofit. The
difference in cost, per month, is applied to the net MWh generated for the particular month, and
summed to determine an annual estimate, using the following equation:

12
HRcc F HRot F
R = MWh
n =1 1000 1000
where:

R = annual revenue loss, in $

HRcc = heat rate with closed-cycle cooling for month n, in BTU/kWh
HRot = heat rate with once-through cooling for month n, in BTU/kWh
F = fuel cost for month n, in $/MMBTU
MWh = net generating output for month n, in MWh

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6.9.4 EFFICIENCY LOSSNUCLEAR FACILITIES

Nuclear facilities do not have the option of increasing the thermal input to the turbine to increase
the net output as compensation for decreased efficiency. As investor-owned utilities, PG&E and
SCE must purchase electricity from other sources to make up for this shortfall, generally at a
higher cost than its normal cost of generation. Efficiency losses were calculated based on the
ambient conditions for each month and reflect the estimated difference between operations with
once-through and wet cooling tower systems. For each month, the increase in heat rate is
translated to a net shortfall, in MWh, that must be purchased from other sources.
The shortfall amount, per month, is summed, and multiplied by the average annual procurement
cost to determine an annual estimate calculated using the following equation:

HRcc HRot
12

R = MWh C r
n =1 HRot
where:

R = annual revenue loss, in $

HRcc = heat rate with closed-cycle cooling for month n, in BTU/kWh
HRot = heat rate with once-through cooling for month n, in BTU/kWh
MWh = net generating output for month n, in MWh
Cr = annual average replacement power cost, in $/MWh

6.10 NET PRESENT VALUE/NET PRESENT COST

The net present value (NPV) is an economic valuation tool to estimate the potential for profit or
loss associated with a large capital investment over a certain time period. The NPV takes into
account all expected annual cash flows, both positive and negative, over the life of the project,
applies a discount rate, and sums them to a single value presented in current dollars. It does not
represent a cash outlay at the beginning of the project. Ordinarily, the NPV is used to measure the
potential for profit, i.e., if the NPV is positive, the investment will earn money over the long term.
For this study, it is assumed there is no potential to realize any discernible profit from the
investment, so all cash flows will be negative.

Because all cash flows associated with a retrofit are negative and the NPV represents the 20-year
cost of the project, in current dollars, this study refers to this valuation as Net Present Cost, or
NPC, instead of the more common NPV. This term more clearly conveys the idea that wet
cooling tower retrofit costs, as described in this study, are expenditures and is calculated in the
same manner as the NPV.

The discount rate used in this study (7 percent) is based on federal government guidelines used in
developing economic analyses of proposed regulations and is a conservative estimate of the
average pre-tax rate of return for private investment (OMB 2007). EPA used the same rate in
developing its cost analysis for the Phase II rule (USEPA 2002 EBA). Higher or lower discount
rates may be more appropriate for individual facilities but sufficient economic data were not
available to conduct the appropriate sensitivity analysis.

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This study selected a 20-year amortization period for net present cost and annualized cost
calculations based on the expectation that a 20-year lifespan for saltwater cooling towers is a
reasonable period before degradation of the original structure becomes significant and incurs
higher replacement and repair costs. The 20-year period is not based on a particular units
projected or anticipated life span. It is noted that many aging facilities may not exist in their
current form at the end of this time period.

The NPC is calculated using the following equation:

20
Ct
NPC20 =
t =0 (1 + r )t
where:

NPC20 = net present value of all costs incurred over project life span (20 years)
t = project year beginning at t = 0
Ct = cost incurred in year t
r = discount rate (7.00 %)

6.11 ANNUAL COST

An annualized cost estimates the constant annual value of financial expenditures and revenue
losses due to a particular project over time; this can also be considered a facilitys annual cost of
compliance. It presents the annual economic impact a facility can expect to sustain due to
amortized capital costs, O&M, and the energy penalty.

Annualized capital costs (Ca) are developed according to the following equation:

r (1 + r )n
C a = Ct + Rep + OM a

(1 + r )n
1
where:

Ca = annualized cost
Ct = total capital cost (direct, indirect, contingency)
r = discount rate (7.00 %)
n = amortization period (20 years)
Rep = annual revenue loss from energy penalty (parasitic load, efficiency loss)
OMa = annual operations and maintenance cost

Assumptions made for discount rate and amortization period are the same as for the NPC
calculation. Shutdown losses are added to the annual cost for Year 0 only.

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6.12 COST-TOGROSS REVENUE COMPARISON

An annualized cost-to-gross revenue comparison further illuminates the financial impact that a
cooling system retrofit will have on a particular facility. Ideally, facility-level economic data are
used to accurately account for company finances, contractual obligations, and generating costs.
These data were not available for this study. Instead, a gross annual revenue estimate is
developed based on 2006 net generating output (CEC 2006). For investor-owned utilities, gross
revenue estimates are then calculated by applying the average annual retail rate obtained from
EIA databases (EIA 2006). For merchant generators, the gross revenue estimate is based on the
weighted average monthly wholesale price for the SP 15 trading hub (ICE 2006).

This estimate represents the proportional annual cost to gross, not net, revenues. It does not
account for contractual obligations, revenues received from other activities, fixed revenue
requirements, operational costs, or any tax savings.

For utility generators, the ratio is calculated by the following equation:

Ca
GRR =
(Pr MWh )
where:

GRR = gross revenue ratio

Ca = annualized cost
Pr = annual average retail electricity price, in $/MWh
MWh = 2006 net generating output, in MWh

For merchant generators, the ratio is calculated by the following equation:

Ca
GRR =
12
(Pw MWh)
n=1
where:

GRR = gross revenue ratio

Ca = annualized cost
Pw = wholesale electricity price for month n, in $/MWh
MWh = net generating output for month n, in MWh

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7.0 REFERENCES
BES (Burns Engineering Services, Inc.). 2003. Feasibility of Retrofitting Cooling Towers at
Diablo Canyon Units 1 and 2. Burns Engineering Services, Inc., Topsfield, MA.

CEC (California Energy Commission). 2006. Quarterly Fuel and Energy Report (QFER).
California Energy Commission, Sacramento, CA.

EIA (U.S. Energy Information Agency). 2006. Wholesale Electricity Data.

<http://www.eia.doe.gov/cneaf/electricity/wholesale/wholesalelinks.html>. Accessed
August 2, 2007.

PG&E. 2006. 2006 Annual Report.

<http://www.pgecorp.com/investors/pdfs/2006AnnualReport.pdf>. Accessed January 20,
2008.

NEI (Nuclear Energy Institute). 2006. 2006 Average Nuclear Fuel Costs.
<http://www.nei.org/resourcesandstats/nuclear_statistics/>. Accessed January 20, 2008.

OWCD (Orange County Water District). 2008. Groundwater Replenishment System. <
http://www.gwrsystem.com/>. Accessed January 20, 2008.

2006b. Wholesale Electricity PricesSP 15 Trading Hub.

<https://www.theice.com/marketdata/naPower/naPowerHistory.jsp>. Accessed July 14,
2007.

ICE (Intercontinental Exchange). 2006a. Wholesale Electricity PricesSP 15 Trading Hub.

<https://www.theice.com/marketdata/naPower/naPowerHistory.jsp>. Accessed July 14,
2007.

. 2006b. Wholesale Natural Gas PricesCitygate Trading Hub.

<https://www.theice.com/marketdata/naNaturalGas/naNatGasHistory.jsp>. Accessed
June 3, 2007.

OMB (U.S. Office of Management and Budget). 2007. Guidelines and Discount Rates for
Benefit-Cost Analysis of Federal Programs. Circular No. A-94, Revised January 2006.
U.S. Office Of Management and Budget, Washington, DC.

USEPA (U.S. Environmental Protection Agency). 1977. Guidance for Evaluating the Adverse
Impact of Cooling Water Intake Structures on the Aquatic Environment: Section 316(b).
PL 9-500. U.S. Environmental Protection Agency, Washington, DC.

. 2001. Technical Development Document for the Final Regulations Addressing Cooling Water
Intake Structures for New Facilities. EPA-821-R-01-036. U.S. Environmental Protection
Agency, Washington, DC.

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. 2002a. Economic and Benefits Analysis for the Proposed Section 316(b) Phase II Existing
Facilities Rule. EPA-821-R-02-001. U.S. Environmental Protection Agency, Washington,
DC.

. 2002b. Technical Development Document for the Proposed Section 316(b) Phase II Existing
Facilities Rule. EPA-R-02-003. U.S. Environmental Protection Agency, Washington, DC.

. 1982. Tera Corporation. Assessment of Alternatives to the Existing Cooling Water System
(DCPP). Prepared for Pacific Gas and Electric, San Francisco, CA.

SWRCB (California State Water Resources Control Board). 1975. Water Quality Control Policy
on the Use and Disposal of Inland Waters Used for Power Plant Cooling. Resolution 75-
58. California State Water Resources Control Board, Sacramento, CA.

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Appendix A. Example Heat Rate Correction Curve

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