ML20073G311

Testimony of Wj Wagers on Commission Question 6 Re Energy, Environ & Economic Impact of Shutdown of Units 2 &/Or 3. Related Correspondence

ML20073G311
Person / Time
Site:	Indian Point
Issue date:	04/12/1983
From:	Wagers W CONSOLIDATED EDISON CO. OF NEW YORK, INC., POWER AUTHORITY OF THE STATE OF NEW YORK (NEW YORK
To:
Shared Package
ML20073G302	List: ML20073G301 ML20073G311 ML20073G341 ML20073G363 ML20073G375 ML20073G396
References
ISSUANCES-SP, NUDOCS 8304180248
Download: ML20073G311 (15)

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v.> h, R u UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION 03 [PR h pg,,g ATOMIC SAFETY AND LICENSING BOARD-Before Administrative Judges:

James P. Gleason, Chairman l Frederick J. Shon Dr. Oscar H. Paris

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In the Matter of )

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CONSOLIDATED EDISON COMPANY OF ) Docket Nos.

NEW YORK, INC. ) 50-247 SP (Indian Point, Unit No. 2) ) 50-286 SP

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POWER AUTHORITY OF THE STATE OF ) April 12, 1983 NEW YORK )

(Indian Point, Unit No. 3) ) '

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LICENSEES' TESTIMONY OF WILLIAM J. WAGERS ON COMMISSION QUESTION 6 ATTORNEYS FILING THIS DOCUMENT:

Brent L. Brandenburg Charles M. Pratt CONSOLIDATED EDISON COMPANY POWER AUTHORITY OF THE STATE OF NEW YORK, INC. OF NEW YORK 4 Irving Place 10 Columbus Circle New York, New York 10003 New York, New York 10019 (212) 460-4600 (212) 397-6200 8304180248 830412 PDR ADOCK 0500G247

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TSSTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES .

y' O. Please state your name, business address, educational background, work experience and present position.

2 A. My name is William J. Wagers. My business address is 3

. 4 Irving Place, New York, New York.

4 I graduated from The City College of New York in 3 ,

1970 with a Bachelor's Degree in Mechanical Engineering.

6 I received a Master's Degree in Business Administration 7

from Adelphi University in 1977. In 1970, I joined Con 8

9 Edison's System Planning Department and have held positions f increased responsibility since that date. In 1982, I 10_

11 assumed my current responsibility as Manager, Small Power 12 Facilities Planning.

13 O. What are your responsibilities as Manager, Small Power 14 Planning Facilities Planning?

15 A. In my p' resent position I am responsible for developing 16 policies and plans for all forms of small power facilities, 17 including cogeneration, in the Company's service area.

18 The policies and plans must be developed considering the 19 economic impacts on the small power producer, the Company 20 and the Company's ratepayers, environmental impacts, tax 21 impacts and national and local concerns regarding scarce 22 energy resources.

23 Q. What is the purpose of your testimony?

24 A. The purpose of my testimony is to explain the Company's i

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TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES p position that contrary to contentions made by others in this proceeding, natural gas fired cogeneration 2

_ facilities cannot be counted on to replace a large part 3

of the capacity lost if the Indian Point plant is shutdown. -

0 Please explain what you mean by natural gas-fired cogenera-6 tion facilities.

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A. My testimony covers two types of natural gas-fired cogeneration - natural gas diesel cogeneration and an 9

10 experimental small scale facility called TOTEM.

31 Q. Please explain why you feel that these facilities cannot 12 be counted on to replace Indian Point. ,

A. There are three reasons which make natural gas fired 13 14 diesel cogeneration an unlikely replacement for Indian 15 Point. 'First, estimates of diesel cogeneration potential in Con Edison's service area indicate that considerably 16 17 smaller amounts of load reduction from cogeneration are 18 economical than would be needed to replace Indian Point.

19 Second, the potential will be limited by physical con-20 straints, such as air pollution problems and natural gas 21 supply problems which would occur if large numbers of 22 customers convert to cogeneration. The air pollution 23 Problems are covered in the testimony of Con Edison 24 witness Freudenthal and the gas supply problems are

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TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF

- LICENSEES covered in the testimony of witness Stewart. Third, p

there is uncertainty about when the estimated potential lev ls uld be achieved since actual installations of 3

cogeneration facilities have been well below the estimated 4

g levels.

With regard to TOTEM plants, these plants have not 6

had widespread use and it is not clear what market, if 7

any, these plants could economically serve.

8 Q. Please describe a natural gas-fired diesel cogeneration 9

10 P l ant.

A. Diesel cogeneration utilizes a diesel engine (similar to 11 a truck engine) modified to burn natural gas , that drives 12 an electric generator. Waste heat from the engine 13 14 captured through the use of heat exchangers on the diesel exhaust, jacket water, and oil lubrication system can be 15 used to provide heat and hot water requirements.

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( 17 Q. Please describe a TOTEM plant.

A. TOTEM (Total Energy Module) is a small (0.9 liter) internal 18 combustion engine more commonly known as the Fiat 127 19 20 engine coupled to an asynchronous electric motor which also i

serves as a generator. Waste heat is recovered through 21 22 heat exchangers integrated into the primary cooling system.

i 1 23 Q. Has Con Edison previously submitted testimony before any 1

24 regulatory body on the likely levels of natural gas fired i

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.. e TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES y

diesel cogeneration facilities which might be economical 2 g to build in its service area?

A. No. However, testimony was submitted to the New York State 3

Public Service Commission on two occasions in conjunction 4

with Case 27574 in which estimates of the economical 5

Potential for oil fired cogeneration were made. The 6

economic potential for conversions to natural gas fired 7-diesel cogeneration will likely be close to the estimate 8

fr il fired cogeneration since both fuels currently 9

have about the sa.ne cost and although a natural gas engine 10 11 will have a slightly lower capital cost, it also has a 12 somewhat lower efficiency.

0 Please describe that testimony.

13 14 ,

A. Testimony was first submitted in November, 1979 which 15 presented the details of studies conducted by the Company 16 to estimate the number of Con Edison customers that have l

17 the economic potential to convert to cogeneration.

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18 Additional testimony was submitted in November, 1980 to 19 update the original studies.

20 0 What was the economic potential for conversion to cogenera-21 tion found to be in these submittals?

22 A. The initial testimony submitte:! in 1979 estimated that 23 395 customers could have the economic potential to convert 24 to cogeneration with an equivalent of 1086 Mw of coincident

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1 e o TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES 7

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peak load loss. The updated analysis, conducted approxi-2 mately one year later, estimated an economic potential of 159 customers with 562 Mw of coincident peak load.

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0 Did any other parties in that case develop estimates of 5

the potential for on-site generation. ,

6 A. Yes, the staff of the New York State Department of Public 7

Service submitted testimony at the same time Con Edison 8

submitted its updated testimony. In that submittal it 9

concluded:

10 "p tential exposure to a loss of custo,r,ars 11 to on-site generation is low; less than 25 12 customers having a coincident peak load of 13 less than 100 Mw."

14 Q. Has the Company conducted any recent studies of the 15 economic potential to convert to diesel cogeneration?

16 A. The Company updates such estimates periodically. The 17 most recent analysis conducted in July, 1982 indicated an 18 economic potential of 72 customers with 296 Mw of coincident r 19 peak load. It should be noted that even though the 296 20 Mw of potential is considered to be significant to 21 the Company, it only represents a small portion of the 22 Indian Point capacity. ,

23 0 Please explain the changes in the economic potential.

24 A. The original study was based on estimated capital, fuel

.s e TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES 1 and operating costs which prevailed in 1979. The updated 2 analysis presented to the Public Service Commission in 3 November, 1980 reflected 1981 cost estimates and included .

4 a number of revised assumptions, some of which were 5 suggested by the PSC Staff. Two,of these revisions are 6 worth noting. The first was to increase the capital cost 7 of a cogeneration facility to reflect the difficulty in 8 retrofitting a cogeneration plant into buildings with 9 space limitations and tall flue requirements which could 10 be required in some New York City office buildings. The 11 second was to reflect the fact that earlier estimates of 12 the potential assumed that New York City would not assess 13 additional property taxes on these facilities. The 14 updated estimate included higher estimates of assessed 15 property taxes based upon statements made by New York 16 City Taxation officials that they would 17 " develop valuations for generc. ting equipment at 18 a level consistent with comparable installa-19 tions owned by public utilities."

20 The most recent estimates also reflect updated assumptions, 21 primarily with regard to the price of capital costs and 22 operating expenses.

23 Q. Are you aware of any other recent studies where estimates.

' 24 were made of the economic potential for cogeneration in

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4 TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES g the New York City area.

A. Yes. A draft report dated January, 1983 and entitled "On-2 Site Generation in New York City" has recently been prepared 3

by Entek Research, Inc. for the New York City Energ/

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• 5 "The Moderate potential includes approximately 6

366 Mw of cogeneration capacity while the High 7

Potential includes approximately 1514 Mw."

8 I should also note that the New York City Energy Office 9

requested that Con Edison review this report, and Con 10 11 Edison suggested that several corrections to assumptions be made which would lower both the Moderate and High 12 13 p tential estimates.

14 , Q. Are you aware of any other estimates of the potential for 15 on-site' generation?

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16 A. Yes. The State Energy Office in its State Energy Master I 17 Plan issued March 1982 estimated the potential for cogenera-18 tion facilities in the New York City area to be 380 Mw.

19 The Plan notes, however, that because of capital 20 availability and fuel use problems, only 200 Mw is assumed 21 to come on line through the 1996 time period.

22 Q. Have any estimates been made of the additional potential 23 for conversions to cogeneration which could occur as a r

24 result of the shutdown of Indian Point?

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.. a TESTIMONY OF NILLIAM J. WAGERS ON BEHALF OF LICENSEES A. No such estimates have been made. ~ All estimates of 1

potential have been developed assuming Indian Point remains in service. Any cogeneration which is assumed to replace Indian Point must only be that which occurs in addition to the existing cogeneration estimates which will' occur independently.of the proposed shutdown of Indian Point. Since existing levels of cogeneration are est'imated to be on the order of several hundred Mw, it 8

9 S n eY a aS S an a Po d on of W InM an Point capacity could be replaced by additional cogenera-tion.

g It should be noted that both the proposed shutdown g

f Indian P int and conversions to cogeneration will 3

cause rates to remaining consumers to increase. In case y ,

15 27574 this increase was estimated to be 1-% for each 140 Mw of load lost to cogeneration. This concept was also contained in the draft cogeneration report prepared by 17 ENTEK for the New York City Energy Office which stated:

18 19 "The comparisons indicate that in all of the cases examined ratepayers will pay a higher rate for electricity as a 20 21 conseq"ence of tLe load losses brought about by other customers shifting to on-site generation."

22 Q. Aside from economics are there any other factors which ,

23 will effect the potential for conversions?

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.. 2 TESTIr10NY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES l' A. Yes. Air pollution problems could severely limit the num er f conversions to cogeneration as discussed in 2

the testimony of Con Edison witness Dr. Freudenthal.

3 Also gas supply constraints discussed in Mr. Stewart's 4 E S

testimony could limit the potential for conversions.

In addition, other constraints such as lack of space, 6

7 unavailability of capital, noise problems, or an un-8 willingness to assume the risk of operatir.g and owning 9 a cogeneration plant would also tend to limit the potential 10 for conversions.

11 O. What has been the Company's actual experience with 12 conversions to cogeneration? .

13 _A. Actual levels of cogeneration conversions have been 14 much lower than estimated levels.

15 O. Do you have an exhibit which shows the actual conversions 16 that have taken place?

17 A. Yes. Exhibit (WJW-1), entitled Actual Cogeneration 18 Conversions, shows the actual number of conversions and 19 Ma load loss that have occurred in each year over the 20 last ten years.

21 Q. Please describe Exhibit (WJW-1).

22 A. Exhibit (WJW-1) shows the actual conversions to 23 cogeneration which have taken place for each year from 24 1974.through 1983 based upon Company records. The exhibit

4 TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES p shows the number of customers who converted in each year and the total peak load reduction in each year.

2 O. What n lusi ns have you reached based on the actual 3

conversions?

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A. Actual levels of converisons are far below the level hf estimated economic potential. In 1979 for example the 6

estimated potential was 395 custo.ners with a peak load' of 7

1086' Mw. The actual conversions in that year were four-8 customers with a total peak load of 5.5 Mw. In 1982 the 9

estimated potential was 72 customers with 296 Mw of load, 10 11 while the actual experience was one customer with 0.1 Mw f 1 ad. This demonstrates that other factors may be 12 inv lved such as uncertainty over future rates, and the 13 14 other constraints previously mentioned, which make the 15 task of estimating the time frame over which the conver-16 sions will occur difficult.

17 Q. What is the current application of TOTEM's within the 1g United States?

19 A. Fiat of Italy manufactures three TOTEM Models i.e.,

20 btandard, Independent and Standby. The Independent and 21 Standby models are not available in the United States at 22 this time. Brooklyn Union Gas (BUG) markets the Standard 23 TOTEM and three are currently in operation on an experi-24 mental basis within BUG's service territory. Con Edison TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES p has been receiving data from BUG on these systems.

Other states on the East Coast have reported some use of TOTEMS for application at dairy farms.

O. Please describe the TOTEM system in greater detail.

A. AG Currently marketed the engine itself lacks a throttling valve; therefore, fuel consumption and engine speed (6000 6

RPM) must be kept constant. The engine has a nominal 7

life f about 10,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> of operation before a major 8

i 9 verhaul is required. Minor maintenance is required 10 every 1500 hours0.0174 days <br />0.417 hours <br />0.00248 weeks <br />5.7075e-4 months <br />, 11 The motor-generator is an asynchronous machine which 12 requires excitation from a magnetic field obtained through 13 a parallel interconnection with a utility or other

14 alternators of which one must be synchronized (of common

! 15 frequency). Such a machine has a number of drawbacks 16 such as the inability to be completely isolated from the l

17 utility, a lack of voltage support and uncontrollable 1g frequency.

l 19 Each TOTEM unit is capable of producing a maximum of 20 15 Kw of electricity and thermal energy of 134,000 Btu per 21 hour.

22 0 What is the installed cost of a TOTEM unit?

23 A. The installed cost is approximately $10,000 in 1983 24 dollars. An additional cost of $10,000 will oe needed if

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TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES backup TOTEMS are required to operate when the primary unit is out of service.

2 0 In your opinion, what applications are best suited for installation of TOTEM?

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A. As with most applications of cogeneration systems, key 5

fa tors are higher plant load factors that improve the 6

potential for an economic application, and a high 7

incidence of electrical and thermal requirements. For 8

these reasons TOTEM would be most applicable to the

-9 industrial and agricultural sectors when energy is needed 10 yy day and night and in both the summer and winter.

Because of the Company's limited experience with 12 13 TOTEM plants it is difficult to predict what market, if 14 any, these plants will ultimately serve in the Company's

15 service

• area,. Until more data has been obtained on TOTEM 16 plants and they have demcastrated their practicality, l

17 estimates of their market potential must be viewed with 18 skepticism.

19 O. What are your conclusions about the potential for natural 20 gas-fired cogeneration to replace Indian Point?

21 A. Current estimates of the economic potential for cogenera-22 tion conversions are low, indicating that it is unlikely 23 that Indian Point or a substantial portion of its capacity 24 would be replaced by cogeneration.

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TESTIMONY OF WILLIAM J. WAGERS ON BEHALF OF LICENSEES With regard to the TOTEM plant, that plant should not y

be considered a proven technology, and until it demonstrates its applicability it should also not be relied upon as a 3

replacement for Indian Point.

Q. Does that conclude your testimony?

A. Yes.

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Exhibit (WJW 1)

CONSOLIDATED EDISON CO:1?ANY OF NEW YORK INCORPORATED .

ACTUAL COGENERATION CONVERSIONS Year Number of Conversions Peak Load-Mw 1974 2 0.4 1975 0 0.0 1976 1 9.3 1977 4 5.4 1978 1 1.6 1979 4 5.5 1980 3 5.1 1981 1 0.3 1982 1 0.1 1983 0 0.0