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. ,. [ ! I L [ " In Re: STATE OF SOUTH CAROLINA BEFORE THE PUBLIC SERVICE COMMISSION Docket No. 2001-507-E Application of Palmetto Energy Center for ) a Certificate of Environmental Compatibility) and Public Convenience and Necessity to ) Construct a Major Utility Facility ) ) L" I DIRECT TESTIMONY OF DR. GEORGE C. HOWROYD, III ( Tab 1) and JOHN E. NILAND ( Tab 2) FOR PALMETTO ENERGY CENTER, LLC ( see separate bound document for Direct Testimony and Exhibits of Art Holland for Palmetto Energy Center, LLC ) STATE OF SOUTH CAROLINA BEFORE THE PUBLIC SERVICE COMMISSION Docket No. 2001-507-E t lip I o, op In Re: Application of Palmetto Energy Center for ) a Certificate of Environmental Compatibility) and Public Convenience and Necessity to ) Construct a Major Utility Facility ) ) DIRECT TESTIMONY OF DR. GEORGE C. HOWROYD, III ( Tab I ) and JOHN E. NILAND ( Tab 2 ) FOR PALMETTO ENERGY CENTER, LLC ( see separate bound document for Direct Testimony and Exhibits of Art Holland for Palmetto Energy Center, LLC )

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In Re:

STATE OF SOUTH CAROLINA

BEFORE THE PUBLIC SERVICE COMMISSION

Docket No. 2001-507-E

Application of Palmetto Energy Center for )

a Certificate of Environmental Compatibility)

and Public Convenience and Necessity to )

Construct a Major Utility Facility )

)

L" I

DIRECT TESTIMONY

OF

DR. GEORGE C. HOWROYD, III ( Tab 1 )

and

JOHN E. NILAND ( Tab 2 )

FOR

PALMETTO ENERGY CENTER, LLC

( see separate bound document for Direct Testimony and Exhibits

of Art Holland for Palmetto Energy Center, LLC )

STATE OF SOUTH CAROLINA

BEFORE THE PUBLIC SERVICE COMMISSION

Docket No. 2001-507-Et

lip I o, op

In Re: Application of Palmetto Energy Center for )a Certificate of Environmental Compatibility)and Public Convenience and Necessity to )Construct a Major Utility Facility )

)

DIRECT TESTIMONY

OF

DR. GEORGE C. HOWROYD, III ( Tab I )

and

JOHN E. NILAND ( Tab 2 )

FOR

PALMETTO ENERGY CENTER, LLC

( see separate bound document for Direct Testimony and Exhibits

of Art Holland for Palmetto Energy Center, LLC )

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STATEOFSOUTHCAROLINA

BEFORETHE PUBLIC SERVICECOMMISSION

DocketNo. 2001-507-E

In Re: Applicationof PalmettoEnergy )Center,LLC for Certificateof )EnvironmentalCompatibilityand )PublicConvenienceandNecessity )to ConstructaMajor Utility Facility )

)

DIRECT TESTIMONY

OF

DR. GEORGE C. HOWROYD, III

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PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.

My name is George Clarion Howroyd, III. My business address is 115 Perimeter

Center Place, N.E., Suite 700, Atlanta, Georgia, 30346.

BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY?

I am employed as a Principal Engineer by CH2M HILL, a Denver-based engineering

consulting firm. CH2M HILL is an international engineering and environmental

consulting company with approximately 12,000 employees in more than 120 offices

worldwide. Our annual business volume is more than $2 billion. CH2M HILL is

engaged in the business of providing environmental, engineering, and design services

for new and existing industrial facilities, including the power generating industry.

PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND

PROFESSIONAL EXPERIENCE.

I received a Ph.D. in Mechanical Engineering from the University of Waterloo in

Ontario, Canada in 1979. I also have a M.Sc. (1975) and a B.Sc. (1973) _or_ the ....

............

STATE OF SOUTH CAROLINA

BEFORE THE PUBLIC SERVICE COMMISSION

Docket No. 2001-507-E

In Re: Application of Palmetto Energy )Center, LLC for Certificate of )Environmental Compatibility snd )Public Convenience and Necessity )to Construct a Major Utility Facility )

)

DIRECT TESTIMONYOF

DR. GEORGE C. HOWROYD, IH

I Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.

2 A. My name is George Clarion Howroyd, III. My business address is 115 Perimeter

3 Center Place, N.E., Suite 700, Atlanta, Georgia, 30346.

4 Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY?

5 A. I am employed as a Principal Engineer by CH2M HILL, a Denver-based engineering

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consulting firm. CH2M HILL is an international engineering and environmental

consulting company with approximately 12,000 employees in more than 120 offices

worldwide. Our annual business volume is more than $2 billion. CH2M HILL is

engaged in the business of providing environmental, engineering, and design services

for new and existing industrial facilities, including the power generating industry.

11 Q. PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND

12 PROFESSIONAL EXPERIENCE.

13 A. I received a Ph.D. in Mechanical Engineering from the University of Waterloo in

14 Ontario, Canada in 1979. I also have a M.Sc. (1975) and a B.Sc. (1973) afro the

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same university. I have more than 20 years of experience in environmental

engineering and consulting. Prior to my employment at CH2M HILL (in 1995), I was

employed by Dames & Moore, a Los Angeles based engineering consulting firm, from

1977 through 1995. When I left Dames & Moore, my position was Division Manager,

Air Quality Services. While working for both firms, I have been actively involved in

conducting environmental assessments, environmental permitting, domestic and

international environmental audits and compliance assessments, emission inventory

development, toxic air pollutant evaluations and assessments, dispersion modeling,

control technology assessments and evaluations, regulatory analysis and interpretation,

air quality and meteorological monitoring, and preparing and sponsoring expert

testimony in the same areas. I have assisted domestic and worldwide international

clients in the general manufacturing, energy and power, pulp and paper, automotive,

petrochemical, petroleum, steel, utility, and food products sectors.

ON WHOSE BEHALF ARE YOU APPEARING IN THIS PROCEEDING?

I am appearing on behalf of Palmetto Energy Center, LLC ("Palmetto Energy"), a

subsidiary of Calpine Corporation ("Calpine").

WHAT ARE YOUR RESPONSIBILITIES WITH REGARD TO THE

PALMETTO ENERGY PROJECT?

CH2M HILL is responsible for the environmental permitting of the proposed facility.

This area of responsibility includes the preparation of the permit applications and

supporting documentation for all environmental and related permits that will be

required for the construction and operation of the facility. As the Principal Engineer

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same university. I have more than 20 years of experience in environmental

engineering and consulting. Prior to my employment at CH2M HILL (in 1995), I was

employed by Dames &. Moore, a Los Angeles based engineering consulting firm, I'rom

1977 through 1995. When I left Dames & Moore, my position was Division Manager,

Air Quality Services. While working for both firms, I have been actively involved in

conducting environmental assessments, environmental permitting, domestic and

international environinental audits and compliance assessments, emission inventory

development, toxic air pollutant evaluations and assessments, dispersion modeling,

control technology assessments and evaluations, regulatory analysis and interpretation,

air quality and meteorological monitoring, and preparing and sponsoring expert

testimony in the same areas. I have assisted domestic and worldwide international

clients in the general manufacturing, energy and power, pulp and paper, automotive,

petrochemical, petroleum, steel, utility, and food products sectors.

14 Q. ON WHOSE BEHALF ARE YOU APPEARING IN THIS PROCEEDING?

15 A. I am appearing on behalf of Palmetto Energy Center, LLC ("Palmetto Energy"), a

16 subsidiary of Calpine Corporation ("Calpine").

17 Q. WHAT ARE YOUR RESPONSIBILITIES WITH REGARD TO THE

18 PALMETTO ENERGY PROJECT?

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CH2M HILL is responsible for the environmental permitting of the proposed facility.

This area of responsibility includes the preparation of the permit applications and

supporting documentation for all environmental and related permits that will be

required for the construction and operation of the facility. As the Principal Engineer

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on the project, I am responsible for directing and overseeing CH2M HILL's efforts in

this regard, and I am the primary interface between CH2M HILL and Calpine

Corporation. I also have responsibility for assisting Calpine with discussions and

negotiations with the appropriate State and Federal permitting agencies.

ARE YOU FAMILIAR WITH THE FACTS AND INFORMATION SET

FORTH IN PALMETTO ENERGY'S APPLICATION?

Yes. I was actively involved in the preparation of the Application. The Application

and the supporting documentation contained in the Application, accurately reflects the

work done by CH2M HILL, including our conclusions and recommendations.

WHAT IS THE PURPOSE OF YOUR TESTIMONY?

The purpose of my testimony is to support Palmetto Energy's Application for a

Certificate of Environmental Compatibility and Public Convenience and Necessity to

construct and operate a generating plant for the production of electric power and

energy in York County, near Fort Mill, South Carolina ("Palmetto Energy Facility")

and to answer any questions regarding environmental issues related to the facility. In

my testimony, I will present evidence regarding the potential impacts on water quality,

air quality and natural resources from the construction and operation of the Palmetto

Energy Facility, and demonstrate why these potential impacts will be minimal and not

adverse.

WHAT ARE YOUR CONCLUSIONS REGARDING THE PROPOSED

PALMETTO ENERGY FACILITY?

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on the project, 1 am responsible for directing and overseeing CH2M HILL's efforts in

this regard, and I am the primary interface between CH2M HILL and Calpine

Corporation. I also have responsibility for assisting Calpine with discussions and

negotiations with the appropriate State and Federal permitting agencies.

5 Q. ARE YOU FAMILIAR WITH THE FACTS AND INFORMATION SET

6 FORTH IN PALMETTO ENERGY'S APPLICATION?

7 A. Yes. I was actively involved in the preparation of the Application. The Application

and the supporting documentation contained in the Application, accurately reflects the

work done by CH2M HILL, including our conclusions and recommendations.

10 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY?

11 A. The purpose of my testimony is to support Palmetto Energy's Application for a

12 Certificate of Environmental Compatibility and Public Convenience and Necessity to

13 construct and operate a generating plant for the production of electric power and

14 energy in York County, near Fort Mill, South Carolina ("Palmetto Energy Facility")

15 and to answer any questions regarding environmental issues related to the facility. In

16 my testimony, I will present evidence regarding the potential impacts on water quality,

17 air quality and natural resources from the construction and operation of the Palmetto

18 Energy Facility, and demonstrate why these potential impacts will be minimal and not

19 adverse.

20 Q. WHAT ARE YOUR CONCLUSIONS REGARDING THE PROPOSED

21 PALMETTO ENERGY FACILITY?

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1 A. I haveconcludedthat:

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From an environmentalstandpoint,the proposedPalmettoEnergyFacility will be

a state-of-the-artcombined-cyclecombustionturbinefacility;

Q the Palmetto Energy Facility will utilize clean-burning natural gas, which has

significantly lower emissions of carbon-based pollutants, as well as pollutants such

as sulfur dioxide, nitrogen oxides and other pollutants, than coal- or oil-fired

generation; the Palmetto Energy Facility also produces less pollutants per

megawatt-hour than other existing gas-fired facilities presently installed in South

Carolina due to the use of current technology and relative efficiencY of the

Palmetto Energy Facility - if the Palmetto Energy Facility displaces any existing

energy generation of a traditional nature (i.e., coal- or oil-fired generation), the

result will be less emissions;

the Palmetto Energy Facility's efficient use of river water in the plant cooling

system will not have any significant or adverse impact on the Catawba River -

Palmetto Energy will utilize advanced technology design practices to ensure that

aquatic species in the fiver will not be impacted by the water intake and discharge

systems;

the Palmetto Energy Facility's water withdrawal from the river will not have a

significant or adverse impact on the flow of water downstream of the Palmetto

Energy site;

1 A. I have concluded that:

~ From an environmental standpoint, the proposed Palmetto Energy Facility will be

a state-of-the-art combined-cycle combustion turbine facility;

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~ the Palmetto Energy Facility will utilize clean-burning natural gas, which has

significantly lower emissions of carbon-based pollutants, as well as pollutants such

as sulfur dioxide, nitrogen oxides and other pollutants, than coal- or oil-fired

generation; the Palmetto Energy Facility also produces less pollutants per

megawatt-hour than other existing gas-fired facilities presently installed in South

Carolina due to the use of current technology and relative efficiency of the

Palmetto Energy Facility — if the Palmetto Energy Facility displaces any existing

energy generation of a traditional nature (i.e., coal- or oil-fired generation), the

result will be less emissions;

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~ the Palmetto Energy Facility's efficient use of river water in the plant cooling

system will not have any significant or adverse impact on the Catawba River—

Palmetto Energy will utilize advanced technology design practices to ensure that

aquatic species in the river will not be impacted by the water intake and discharge

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~ the Palmetto Energy Facility's water withdrawal from the river will not have a

significant or adverse impact on the flow of water downstream of the Palmetto

Energy site;

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the designof the PalmettoEnergy Facility from an environmentalstandpointis

consistentwith the bestdesignpracticeandthe PalmettoEnergyFacility utilizes

what is acknowledgedby the South Carolina Department of Health and

EnvironmentalControl ("DHEC") andtheU.S. EnvironmentalProtectionAgency

("EPA") to bethebestachievablecontroltechnology("BACT") to ensureminimal

environmentalimpact;

anyenvironmentalimpactof thePalmettoEnergyFacility is justified considering

the availabletechnology,thenatureandeconomicsof otheralternativesandother

relevantissues- theproposedfacility is amongthe leastenvironmentally-intrusive

alternativesavailableto generatepower.;

the approval,constructionandoperationof the PalmettoEnergyFacility will not

significantly affect South Carolina's ability to site (from an environmental

standpoint)any additionalnew generatingfacilities that may be neededto meet

futurepowerneeds;

the Palmetto Energy Facility can be expected

environmentalpermitsto constructandoperate;

to receive the necessary

the PalmettoEnergyFacility will comply with all applicableenvironmentalrules

andregulations,andno environmentalstandardwill be compromised,threatened,

or exceededasaresultof its operation;

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~ the design of the Palmetto Energy Facility from an environmental standpoint is

consistent with the best design practice and the Palmetto Energy Facility utilizes

what is acknowledged by the South Carolina Department of Health and

Enviromnental Control ("DHEC") and the U.S. Environmental Protection Agency

("EPA") to be the best achievable control technology ("BACT**) to ensure minimal

environmental impact;

~ any environmental impact of the Palmetto Energy Facility is justified considering

the available technology, the nature and economics of other alternatives and other

relevant issues — the proposed facility is among the least environmentally-intrusive

alternatives available to generate power.;

~ the approval, construction and operation of the Palmetto Energy Facility will not

significantly affect South Carolina's ability to site (from an environmental

standpoint) any additional new generating facilities that may be needed to meet

future power needs;

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~ the Palmetto Energy Facility can be expected to receive the necessary

environmental permits to construct and operate;

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~ the Palmetto Energy Facility will comply with all applicable environmental rules

and regulations, and no environmental standard will be compromised, threatened,

or exceeded as a result of its operation;

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Palmetto Energy has, or is in the process of conducting the necessary

environmental studies to assess the impact of the Palmetto Energy Facility on the

environment; and

based on its operating track record, the environmental studies, and the design

efforts in this case, Calpine Corporation can be expected to design, construct and

operate the Palmetto Energy Facility while adequately protecting and minimizing

any effect on the environment.

Based on my knowledge of the project, review of the Application and testimony of

other witnesses, as well as my findings above, I have concluded that, in my opinion,

this Honorable Commission should grant Palmetto Energy's Application.

WHAT ARE YOUR RECOMMENDATIONS REGARDING THE PROPOSED

PALMETTO ENERGY FACILITY?

I recommend that this Honorable Commission grant Palmetto Energy a Certificate of

Environmental Compatibility and Public Convenience and Necessity to construct and

operate an electric generating plant in York County, South Carolina.

PLEASE DESCRIBE CALPINE'S ENVIRONMENTAL RECORD.

Calpine is committed to a long-term presence in York County for the entire period of

the facility's projected 30-year life. It is recognized that being a responsible corporate

citizen with a vision of protecting the environment is

welcomed into the community in which they will operate.

of developing and operating state-of-the-art power generating facilities that are among

absolutely vital to being

Calpine is in the business

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~ Palmetto Energy has, or is in the process of conducting the necessary

environmental studies to assess the impact of the Palmetto Energy Facility on the

environment; and

~ based on its operating track record, the environmental studies, and the design

efforts in this case, Calpine Corporation can be expected to design, construct and

operate the Palmetto Energy Facility while adequately protecting and minimizing

any effect on the environment.

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Based on my knowledge of the project, review of the Application and testimony of

other witnesses, as well as my findings above, I have concluded that, in my opinion,

this Honorable Commission should grant Palmetto Energy's Application.

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WHAT ARE YOUR RECOMMENDATIONS REGARDING THE PROPOSED

PALMETTO ENERGY FACILITY?

1 recommend that this Honorable Commission grant Palmetto Energy a Certificate of

Environmental Compatibility and Public Convenience and Necessity to construct and

operate an electric generating plant in York County, South Carolina.

16 Q. PLEASE DESCRIBE CALPINE'S ENVIRONMENTAL RECORD.

17 A. Calpine is committed to a long-term presence in York County for the entire period of

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the facility*s projected 30-year life. It is recognized that being a responsible corporate

citizen with a vision of protecting the environment is absolutely vital to being

welcomed into the community in which they will operate. Calpine is in the business

of developing and operating state-of-the-art power generating facilities that are among

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the cleanest in the nation. On a per kilowatt basis, the Palmetto Energy Facility will

emit less than 10 percent of what would be emitted fi'om a traditional coal- or oil-fired

generating facility. Calpine has and will continue to develop and operate its power

generating facilities in a manner that is environmentally sustainable on a long-term

basis.

PLEASE GENERALLY DESCRIBE THE PROPOSED PALMETTO ENERGY

FACILITY AND ITS LOCATION.

The proposed Palmetto Energy Facility is a combined-cycle, natural gas-fired

combustion turbine generating plant. The design of the Palmetto Energy Facility is

based on three natural gas-fired combustion turbine generators, a waste heat recovery

system, and a steam turbine generator that will generate up to 970 megawatts (MW) of

electric power. The Palmetto Energy Facility is to be located on an approximate 65-

acre tract of land in the Bradley Industrial Park, near Fort Mill, South Carolina in York

County.

ENVIRONMENTAL PROJECT DESIGN

PLEASE DESCRIBE WHAT STEPS HAVE BEEN TAKEN BY PALMETTO

ENERGY TO PROTECT THE ENVIRONMENT.

Palmetto Energy has gone to great lengths to design a highly efficient state-of-the-art

facility that will minimize its impact on the environment. As it has been designed, the

Palmetto Energy Facility will comply with all applicable state and federal

environmental regulations and statutes.

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the cleanest in the nation. On a per kilowatt basis, the Palmetto Energy Facility will

emit less than 10 percent of what would be emitted Irom a traditional coal- or oil-fired

generating facility. Calpine has and will continue to develop and operate its power

generating facilities in a manner that is environmentally sustainable on a long-term

basis.

6 Q. PLEASE GENERALLY DESCRIBE THE PROPOSED PALMETTO ENERGY

7 FACILITY AND ITS LOCATION.

8 A. The proposed Palmetto Energy Facility is a combined-cycle, natural gas-fired

9 combustion turbine generating plant. The design of the Palmetto Energy Facility is

10 based on three natural gas-fired combustion turbine generators, a waste heat recovery

11 system, and a steam turbine generator that will generate up to 970 megawatts (MW) of

12 electric power. The Palmetto Energy Facility is to be located on an approximate 65-

13 acre tract of land in the Bradley Industrial Park, near Fort Mill, South Carolina in York

14 County.

15 ENVIRONMENTAL PROJECT DESIGN

16 Q. PLEASE DESCRIBE WHAT STEPS HAVE BEEN TAKEN BY PALMETTO

17 ENERGY TO PROTECT THE ENVIRONMENT.

18 A. Palmetto Energy has gone to great lengths to design a highly efficient state-of-the-art

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facility that will minimize its impact on the environment. As it has been designed, the

Palmetto Energy Facility will comply with all applicable state and federal

environmental regulations and statutes.

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WILL THE PALMETTO ENERGY FACILITY COMPLY WITH ALL

APPLICABLE ENVIRONMENTAL RULES AND REGULATIONS?

The Palmetto Energy Center is being designed to comply with all applicable local,

State, and Federal environmental rules and regulations so that no environmental

standard will be compromised, threatened, or exceeded as a result of its operation.

Palmetto Energy has gone to great lengths to design a highly efficient state-of-the-art

facility that will minimize its impact on the environment through the use of advanced

technology and clean-burning natural gas. Palmetto Energy's Air Permit Application,

which was submitted in February of 2002, demonstrated through dispersion modeling

that the facility will have an insignificant impact on ambient air quality at all locations

and for all pollutants. Palmetto Energy's NPDES water and wastewater permit

application (submitted in February of 2002) demonstrates that the facility will not

have an adverse impact on the Catawba River as a result of water withdrawal or

wastewater discharge to the river during operation. Stormwater runoff during both

construction and operation will be controlled in accordance with all applicable

requirements. With respect to wetlands, threatened and endangered species, and

archaeological resources, Palmetto Energy has conducted extensive studies to identify

those areas or specific resources so that they can be avoided or otherwise mitigated in

accordance with the requirements of the appropriate agencies.

PLEASE DESCRIBE HOW PALMETTO ENERGY WILL CONTROL AIR

EMISSIONS FROM THE FACILITY.

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m. Palmetto Energy will use BACT to control emissions in accordance with state and

federal standards and requirements. Only clean burning pipeline natural gas will be

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1 Q. WILL THE PALMETTO ENERGY FACILITY COMPLY WITH ALL

2 APPLICABLE ENVIRONMENTAL RULES AND REGULATIONS?

3 A. The Palmetto Energy Center is being designed to comply with all applicable local,

4 State, and Federal environmental rules and regulations so that no environmental

5 standard will be compromised, threatened, or exceeded as a result of its operation.

6 Palmetto Energy has gone to great lengths to design a highly efficient state-of-the-art

7 facility that will minimize its impact on the environment through the use of advanced

8 technology and clean-burning natural gas. Palmetto Energy's Air Permit Application,

9 which was submitted in February of 2002, demonstrated through dispersion modeling

10 that the facility will have an insignificant impact on ambient air quality at all locations

11 and for all pollutants. Palmetto Energy's NPDES water and wastewater permit

12 application (submitted in February of 2002) demonstrates that the facility will not

13 have an adverse impact on the Catawba River as a result of water withdrawal or

14 wastewater discharge to the river during operation. Stormwater runoff during both

15 construction and operation will be controlled in accordance with all applicable

16 requirements. With respect to wetlands, threatened and endangered species, and

17 archaeological resources, Palmetto Energy has conducted extensive studies to identify

18 those areas or specific resources so that they can be avoided or otherwise mitigated in

19 accordance with the requirements of the appropriate agencies.

20 Q. PLEASE DESCRIBE HOW PALMETTO ENERGY WILL CONTROL AIR

21 EMISSIONS FROM THE FACILITY.

22 A. Palmetto Energy will use BACT to control emissions in accordance with state and

23 federal standards and requirements. Only clean burning pipeline natural gas will be

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burned in the combustion turbines. When compared to traditional oil- or coal-based

systems, the combustion turbines that will be used by Palmetto Energy are extremely

efficient in terms of their ability to generate large amounts of power with relatively

low emissions to the atmosphere. To reduce emissions even further, Palmetto Energy

will also install an advanced technology Selective Catalytic Reduction (SCR) emission

control system that will result in an additional 85 percent reduction in nitrogen oxide

(NOx) emissions from the facility. A continuous emission monitoring system will be

employed on the combustion turbines to continuously monitor NOx emissions and to

ensure compliance with the regulations. The primary source of emissions from this

facility will be three General Electric Model 7FB combustion turbines, each of which

will be equipped with a natural gas-fired heat recovery steam generator ("HRSG")

designed to efficiently recover waste heat for the purpose of generating additional

power. The emissions will be released from three 160-foot exhaust stacks, each of

which will serve an individual turbine and HRSG combination. Emissions from these

three stacks will include NOx (controlled by using state-of-the-art Dry Low-NOx

combustors in the turbines and an add-on SCR emission control device), SO2

(controlled by burning only natural gas, which is virtually free of sulfur), CO and

VOC (both will be minimized through the use of a highly efficient state-of-the-art

combustion turbine), and PM-10 (limited by using only clean-burning natural gas).

An additional source of emissions will be a small auxiliary boiler used to generate

steam during periods of startup and shutdown. This small boiler will generate less

than five percent of the emissions that will be generated by the combustion turbines

and HRSG's.

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burned in the combustion turbines. When compared to traditional oil- or coal-based

systems, the combustion turbines that will be used by Palmetto Energy are extremely

efficient in terms of their ability to generate large amounts of power with relatively

low emissions to the atmosphere. To reduce emissions even further, Palmetto Energy

will also install an advanced technology Selective Catalytic Reduction (SCR) emission

control system that will result in an additional 85 percent reduction in nitrogen oxide

(NOx) emissions from the facility. A continuous emission monitoring system will be

employed on the combustion turbines to continuously monitor NOx emissions and to

ensure compliance with the regulations. The primary source of emissions from this

facility will be three General Electric Model 7FB combustion turbines, each of which

will be equipped with a natural gas-fired heat recovery steam generator ("HRSG")

designed to efficiently recover waste heat for the purpose of generating additional

power. The emissions will be released from three 160-foot exhaust stacks, each of

which will serve an individual turbine and HRSG combination. Emissions from these

three stacks will include NOx (controlled by using state-of-the-art Dry Low-NOx

combustors in the turbines and an add-on SCR emission control device), SO&

(controlled by burning only natural gas, which is virtually free of sulfur), CO and

VOC (both will be minimized through the use of a highly efficient state-of-the-art

combustion turbine), and PM-10 (limited by using only clean-burning natural gas).

An additional source of emissions will be a small auxiliary boiler used to generate

steam during periods of startup and shutdown. This small boiler will generate less

than five percent of the emissions that will be generated by the combustion turbines

and HRSG's.

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HOW DOES THE AIR EMISSIONS CONTROL EQUIPMENT BEING

INSTALLED BY PALMETTO ENERGY COMPARE TO THE EQUIPMENT

BEING INSTALLED AT OTHER NEW GENERATING PLANTS IN THE

AREA?

The emission control equipment and methods of operation that will be utilized by

Palmetto Energy at the proposed facility will be consistent with or better than the

equipment and methods that are being used by other facilities throughout the country,

including several facilities that are presently being planned in South Carolina. The

emissions control equipment that will be used at the facility, as well as the inherent

design of the plant, will result in one of the lowest emitting power generating facilities

in the country.

WHAT IMPACT IS THE PALMETTO ENERGY FACILITY LIKELY TO

HAVE ON THE AIR QUALITY INTHE SURROUNDING AREA?

The proposed Palmetto Energy Facility is located in an area that is designated by

DHEC and EPA as being in attainment of all ambient air quality standards, including

ozone. The Palmetto Energy Facility has demonstrated in its Application for a Permit

to Construct and Operate Air Emissions Equipment that its predicted impacts on air

quality will be insignificant at all locations and for all pollutants. As such, there

should not be either a real or perceived threat to any ambient air quality standard, nor

should there be any adverse effects on health or welfare as a result of the operation of

the Palmetto Energy Facility. As a result of the insignificant nature of the projected

impacts, the permitting of this facility will not have any significant or adverse effect

-10-

1 Q. HOW DOES THE AIR EMISSIONS CONTROL EQUIPMENT BEING

2 INSTALLED BY PALMETTO ENERGY COMPARE TO THE EQUIPMENT

3 BEING INSTALLED AT OTHER NEW GENERATING PLANTS IN THE

4 AREA?

5 A. The emission control equipment and methods of operation that will be utilized by

6 Palmetto Energy at the proposed facility will be consistent with or better than the

7 equipment and methods that are being used by other facilities throughout the country,

8 including several facilities that are presently being planned in South Carolina. The

9 emissions control equipment that will be used at the facility, as well as the inherent

10 design of the plant, will result in one of the lowest emitting power generating facilities

11 in the country.

12 Q. WHAT IMPACT IS THE PALMETTO ENERGY FACILITY LIKELY TO

13 HAVE ON THE AIR QUALITY IN THE SURROUNDING AREA?

14 A. The proposed Palmetto Energy Facility is located in an area that is designated by

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DHEC and EPA as being in attainment of all ambient air quality standards, including

ozone. The Palmetto Energy Facility has demonstrated in its Application for a Permit

to Construct and Operate Air Emissions Equipment that its predicted impacts on air

quality will be insignificant at all locations and for all pollutants. As such, there

should not be either a real or perceived threat to any ambient air quality standard, nor

should there be any adverse effects on health or welfare as a result of the operation of

the Palmetto Energy Facility. As a result of the insignificant nature of the projected

impacts, the permitting of this facility will not have any significant or adverse effect

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on the ability of others to construct industrial facilities in the region surrounding the

Palmetto Energy Facility.

WHAT STEPS HAS PALMETTO ENERGY TAKEN TO ENSURE THAT

WATER USE AND WASTEWATER DISCHARGES WILL COMPLY WITH

STATE AND FEDERAL REGULATIONS?

An integral part of Palmetto Energy Center's proposed facility is a mechanical draft

closed-cycle wet cooling system. Cooling water for the plant will be taken from the

Catawba River through a new intake structure, which will utilize a submerged wire

screen designed to comply with the cooling water intake standards under Section

316(b) of the Clean Water Act. The intake will use passive screen technology to

reduce both impingement and entrainment of aquatic species. The proposed intake

location is in a deep zone of the river to avoid shallow waters that could be potential

habitat for juvenile aquatic species. Prior to use in the cooling system, all incoming

river water will be passed through an onsite clarifier and filter to reduce the amount of

particulate matter present in the river water. Palmetto Energy Center's National

Pollutant Discharge Elimination System (NPDES) permit application provides

information on the water in the vicinity of the intake, a description of the selected

intake technology, data on the baseline biological condition of the source water, and

details on water treatment (i.e., clarification and filtration).. Variables that will

determine the amount of water use on a given day include ambient temperature,

relative humidity, plant load, and the number of times the cooling water can be

recycled before being discharged to the river. Based on the analysis of water samples

obtained from the Catawba River and the expected amount of recycling in the cooling

-11 -

on the ability of others to construct industrial facilities in the region surrounding the

Palmetto Energy Facility.

3 Q. WHAT STEPS HAS PALMETTO ENERGY TAKEN TO ENSURE THAT

WATER USE AND WASTEWATER DISCHARGES WILL COMPLY WITH

STATE AND FEDERAL REGULATIONS?

6 A. An integral part of Palmetto Energy Center's proposed facility is a mechanical draft

7 closed-cycle wet cooling system. Cooling water for the plant will be taken from the

8 Catawba River through a new intake structure, which will utilize a submerged wire

9 screen designed to comply with the cooling water intake standards under Section

10 316(b) of the Clean Water Act. The intake will use passive screen technology to

11 reduce both impingement and entrainment of aquatic species. The proposed intake

12 location is in a deep zone of the river to avoid shallow waters that could be potential

13 habitat for juvenile aquatic species. Prior to use in the cooling system, all incoming

14 river water will be passed through an onsite clarifier and filter to reduce the amount of

15 particulate matter present in the river water. Palmetto Energy Center's National

16 Pollutant Discharge Elimination System (NPDES) permit application provides

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information on the water in the vicinity of the intake, a description of the selected

intake technology, data on the baseline biological condition of the source water, and

details on water treatment (i.e., clarification and filtration).. Variables that will

determine the amount of water use on a given day include ambient temperature,

relative humidity, plant load, and the number of times the cooling water can be

recycled before being discharged to the river. Based on the analysis of water samples

obtained from the Catawba River and the expected amount of recycling in the cooling

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water system, the plant is expected to have a daily average water use requirement of

approximately 4.6 million gallons per day (MGD) during normal operation, and up to

9 MGD during conditions when maximum cooling is required and incoming water

conditions limit the amount of recycling in the system. Approximately 80 percent

of the cooling water will be evaporated to the atmosphere during the cooling process.

The remaining 20 percent (1 to 2 MGD) will be returned to the Catawba River.

Recycling of the water in the cooling system will result in an increase in the

concentration of naturally occurring metals and solids in Palmetto Energy Center's

wastewater discharge, This increase will be partially offset by Palmetto Energy's use

of clarification and filtration to remove particles from the incoming water prior to use

in the cooling system. This increase in concentration will be attributable to solely to

the evaporation of water during the cooling process and no additional treatment (other

than clarification and filtration of the incoming fiver water) will be performed before

being returned to the Catawba River. A submerged effluent diffuser will be used to

rapidly mix the discharge with the receiving stream.

WHAT HAS PALMETTO ENERGY DONE TO PROTECT WETLANDS AND

THREATENED & ENDANGERED SPECIES?

A comprehensive survey of the proposed Palmetto Energy Facility site has been

conducted by CH2M HILL biologists and endangered species specialists and they

have determined that there are no wetlands on the 65-acre project site where the plant

will be built. There are, however, some small wetland areas that may be traversed by

right of ways (ROWs) for water, wastewater, and electric transmission lines (electric

transmission line ROW to be provided by Duke Power). If any of these wetland areas

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water system, the plant is expected to have a daily average water use requirement of

approximately 4.6 million gallons per day (MGD) during normal operation, and up to

9 MGD during conditions when maximum cooling is required and incoming water

conditions limit the amount of recycling in the system. Approximately 80 percent

of the cooling water will be evaporated to the atmosphere during the cooling process.

The remaining 20 percent (I to 2 MGD) will be returned to the Catawba River.

Recycling of the water in the cooling system will result in an increase in the

concentration of naturally occurring metals and solids in Palmetto Energy Center's

wastewater discharge, This increase will be partially offset by Palmetto Energy's use

of clarification and filtration to remove particles from the incoming water prior to use

in the cooling system. This increase in concentration will be attributable to solely to

the evaporation of water during the cooling process and no additional treatment (other

than clarification and filtration of the incoming river water) will be performed before

being returned to the Catawba River. A submerged effluent diffuser will be used to

rapidly mix the discharge with the receiving stream.

16 Q. WHAT HAS PALMETTO ENERGY DONE TO PROTECT WETLANDS AND

17 THREATENED & ENDANGERED SPECIES?

18 A. A comprehensive survey of the proposed Palmetto Energy Facility site has been

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conducted by CH2M HILL biologists and endangered species specialists and they

have determined that there are no wetlands on the 65-acre project site where the plant

will be built. There are, however, some small wetland areas that may be traversed by

right of ways (ROWs) for water, wastewater, and electric transmission lines (electric

transmission line ROW to be provided by Duke Power). If any of these wetland areas

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will be impacted as a result of ROW construction, all such activity will be in

accordance with the requirements of the US Army Corps of Engineers and SC DHEC.

The threatened or endangered species evaluation of the area has indicated that there

are no threatened or endangered species within the project boundaries and that

construction of the facility is not likely to result in an adverse impact on areas of

potential habitat.

WHAT HAS PALMETTO ENERGY DONE TO PROTECT

ARCHAEOLOGICAL AND CULTURAL RESOURCES?

Palmetto Energy has completed a Phase I Archaeological and Cultural Resources

survey of the project site and the proposed ROWs and is currently in the process of

completing Phase II investigations of these areas. The purpose of these assessments is

to identify those resources that have the potential to be impacted by the development

or operation of the proposed facility. Once all resources are identified, appropriate

consideration can be given to all identified cultural and archaeological resources so

that they can be either avoided or their impact mitigated. Calpine is currently in

discussions with representatives of the Catawba Indian Nation and the South Carolina

State Historic Preservation Office (SHPO) to identify specific issues and resources of

concern.

WHAT HAS PALMETTO ENERGY DONE TO COMPLY WITH

REGULATIONS RELATED TO STORMWATER RUNOFF?

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A. The Palmetto Energy Center is being designed to control stormwater runoff in

accordance with all applicable State, Local, and Federal requirements. Stormwater

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will be impacted as a result of ROW construction, all such activity will be in

accordance with the requirements of the US Army Corps of Engineers and SC DHEC.

The threatened or endangered species evaluation of the area has indicated that there

are no threatened or endangered species within the project boundaries and that

construction of the facility is not likely to result in an adverse impact on areas of

potential habitat.

7 Q. WHAT HAS PALMETTO ENERGY DONE TO PROTECT

8 ARCHAEOLOGICAL AND CULTURAL RESOURCES?

9 A. Palmetto Energy has completed a Phase I Archaeological and Cultural Resources

10 survey of the project site and the proposed ROWs and is currently in the process of

11 completing Phase II investigations of these areas. The purpose of these assessments is

12 to identify those resources that have the potential to be impacted by the development

13 or operation of the proposed facility. Once all resources are identified, appropriate

14 consideration can be given to all identified cultural and archaeological resources so

15 that they can be either avoided or their impact mitigated. Calpine is currently in

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discussions with representatives of the Catawba Indian Nation and the South Carolina

State Historic Preservation Office (SHPO) to identify specific issues and resources of

18 concern.

19 Q.

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WHAT HAS PALMETTO ENERGY DONE TO COMPLY WITH

REGULATIONS RELATED TO STORMWATER RUNOFF?

21 A. The Palmetto Energy Center is being designed to control stormwater runoff in

22 accordance with all applicable State, Local, and Federal requirements. Stormwater

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permit applications and stormwater pollution prevention plans are currently being

prepared for both construction and operation of the facility. These plans demonstrate

that the facility is incorporating the appropriate stormwater detention basins and

oil/water separators to ensure that contaminated stormwater will not leave the site.

WHAT HAS PALMETTO ENERGY DONE TO REDUCE THE IMPACT ON

SOIL AND VEGETATION DURING CONSTRUCTION AND OPERATION

OF THE FACILITY?

The impact of the Palmetto Energy Facility during the construction phase will be

consistent with the impacts of similarly sized projects, and Palmetto Energy will

mitigate said impacts to the extent possible using all reasonable means available. This

will include the use of stormwater runoff controls and the minimization of fugitive

dust during dry conditions. During the construction phase, there will be areas where

vegetation and soil will be disturbed, including primary construction zones, material

laydown areas, and road access. The remainder of the site will remain in a reasonably

natural state. Best management practices will be implemented to control stormwater

runoff during construction. During operation, the impacts of the Palmetto Energy

Facility are not expected to be significant and, as such, there are not expected to be

any measurable impacts on soil or vegetation at any location surrounding the Palmetto

Energy Facility. All oil-containing equipment and tanks will have secondary

containment and facility personnel will be trained in accordance with the facility's

Spill Prevention Plan. It should be noted that, since the facility will utilize only

natural gas as its fuel, Palmetto Energy will not store or use a significant amount of

oil- or petroleum-based products on the site.

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permit applications and stormwater pollution prevention plans are currently being

prepared for both construction and operation of the facility. These plans demonstrate

that the facility is incorporating the appropriate stormwater detention basins and

oil/water separators to ensure that contaminated stormwater will not leave the site.

5 Q. WHAT HAS PALMETTO ENERGY DONE TO REDUCE THE IMPACT ON

SOIL AND VEGETATION DURING CONSTRUCTION AND OPERATION

OF THE FACILITY?

8 A. The impact of the Palmetto Energy Facility during the construction phase will be

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consistent with the impacts of similarly sized projects, and Palmetto Energy will

mitigate said impacts to the extent possible using all reasonable means available. This

will include the use of stormwater runoff controls and the minimization of fugitive

dust during dry conditions. During the construction phase, there will be areas where

vegetation and soil will be disturbed, including primary construction zones, material

laydown areas, and road access. The remainder of the site will remain in a reasonably

natural state. Best management practices will be implemented to control stormwater

runoff during construction. During operation, the impacts of the Palmetto Energy

Facility are not expected to be significant and, as such, there are not expected to be

any measurable impacts on soil or vegetation at any location surrounding the Palmetto

Energy Facility. All oil-containing equipment and tanks will have secondary

containment and facility personnel will be trained in accordance with the facility's

Spill Prevention Plan. It should be noted that, since the facility will utilize only

natural gas as its fuel, Palmetto Energy will not store or use a significant amount of

oil- or petroleum-based products on the site.

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WHAT WILL PALMETTO ENERGY DO TO PROTECT THE AESTHETICS

OF THE SURROUNDING AREA?

Palmetto Energy will comply with all pertinent Fort Mill and York County buffer and

landscape requirements. The Palmetto Energy Facility is being designed to preserve

the forested areas along the Catawba River (which borders the site to the south) so as

to limit line of site visibility of the fiver and from locations across the river.

ENVIRONMENTAL PERMITTING

WHAT TYPES OF ENVIRONMENTAL PERMITS ARE NORMALLY

REQUIRED FOR FACILITIES OF THIS TYPE?

Environmental permits for a generating facility of the type being proposed by

Palmetto Energy are normally required for air emissions, water use or withdrawal,

wastewater discharges, stormwater runoff, wetlands, and threatened and endangered

species, and several minor permits and approvals.

WHAT IS THE STATUS OF PALMETTO ENERGY'S AIR EMISSIONS

PERMIT?

Palmetto Energy has applied for a Permit to Construct and Operate Air Emissions

Equipment. This application was submitted in February of 2002 to DHEC. The

application will be undergoing internal agency review and DHEC is expected to issue

a final permit by the third quarter of 2002.

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1 Q. WHAT WILL PALMETTO ENERGY DO TO PROTECT THE AESTHETICS

2 OF THE SURROUNDING AREA?

3 A. Palmetto Energy will comply with all pertinent Fort Mill and York County buffer and

landscape requirements. The Palmetto Energy Facility is being designed to preserve

the forested areas along the Catawba River (which borders the site to the south) so as

to limit line of site visibility of the river and from locations across the river.

ENVIRONMENTAL PERMITTING

8 Q. WHAT TYPES OF ENVIRONMENTAL PERMITS ARE NORMALLY

9 REQUIRED FOR FACILITIES OF THIS TYPE?

10 A. Environmental permits for a generating facility of the type being proposed by

11 Palmetto Energy are normally required for air emissions, water use or withdrawal,

12 wastewater discharges, stormwater runoff, wetlands, and threatened and endangered

13 species, and several minor permits and approvals.

14 Q. WHAT IS THE STATUS OF PALMETTO ENERGY'S AIR EMISSIONS

15 PERMIT?

16 A. Palmetto Energy has applied for a Permit to Construct and Operate Air Emissions

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Equipment. This application was submitted in February of 2002 to DHEC. The

application will be undergoing internal agency review and DHEC is expected to issue

a final permit by the third quarter of 2002.

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IS PALMETTO ENERGY REQUIRED TO OBTAIN WATER SUPPLY

PERMITS?

Palmetto Energy will obtain authorization for the water intake structure as part of the

facility's NPDES permit, which was submitted in February of 2002 to DHEC.. The

cooling water intake system that will be used by Palmetto Energy will be considered a

cooling water intake structure and will be permitted under 40 CFR 125, Subpart I -

Requirements Applicable to Cooling Water Intake Structures for New Facilities under

Section 316(b) of the Clean Water Act. Certification that the proposed activities do

not violate the State water quality standards will be obtained during the permitting of

the water intake through the State's Section 401 Water Quality Certification process.

PLEASE DESCRIBE THE PROCESS UNDERTAKEN TO OBTAIN

APPROVAL FOR PALMETTO ENERGY'S WASTEWATER DISCHARGE

PLAN.

SC DHEC Bureau of Water staff were consulted to discuss the Palmetto Energy

Facility's discharge to the Catawba River. The principal wastewater stream will be

cooling tower blowdown. Other waste streams may be mixed with this discharge and

include demineralization regeneration wastes, steam cycle blowdown, and equipment

drains. HRSG discharge (boiler blowdown) will be routed to the cooling tower as a

source of make-up water. Process wastewater streams containing oil will be

segregated and routed to an on-site oil/water separator. Recycling of the cooling water

in the cooling system will result in an increase in the concentration of naturally

occurring metals and solids in Palmetto Energy Center's wastewater discharge. This

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I Q. IS PALMETTO ENERGY REQUIRED TO OBTAIN WATER SUPPLY

2 PERMITS?

3 A. Palmetto Energy will obtain authorization for the water intake structure as part of the

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facility's NPDES permit, which was submitted in February of 2002 to DHEC.. The

cooling water intake system that will be used by Palmetto Energy will be considered a

cooling water intake structure and will be permitted under 40 CFR 125, Subpart I—

Requirements Applicable to Cooling Water Intake Structures for New Facilities under

Section 316(b) of the Clean Water Act. Certification that the proposed activities do

not violate the State water quality standards will be obtained during the permitting of

the water intake through the State's Section 401 Water Quality Certification process.

11 Q. PLEASE DESCRIBE THE PROCESS UNDERTAKEN TO OBTAIN

12 APPROVAL FOR PALMETTO ENERGY'S WASTEWATER DISCHARGE

13 PLAN.

14 A. SC DHEC Bureau of Water staff were consulted to discuss the Palmetto Energy

15 Facility's discharge to the Catawba River. The principal wastewater stream will be

16 cooling tower blowdown. Other waste streams may be mixed with this discharge and

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include demineralization regeneration wastes, steam cycle blowdown, and equipment

drains. HRSG discharge (boiler blowdown) will be routed to the cooling tower as a

source of make-up water. Process wastewater streams containing oil will be

segregated and routed to an on-site oil/water separator. Recycling of the cooling water

in the cooling system will result in an increase in the concentration of naturally

occurring metals and solids in Palmetto Energy Center's wastewater discharge. This

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increase in concentration will be attributable solely to the evaporation of water during

the cooling process and no significant additional treatment of either the incoming river

water or the cooling water discharge will be required before being returned to the

Catawba River. A submerged effluent diffuser will be used to rapidly mix the

discharge with the receiving stream. A preliminary engineering report and NPDES

permit application have been prepared that includes an anti-degradation assessment,

mixing zone evaluation, and cooling water intake structure information. A

submerged, single port diffuser design was selected based on the use of EPA's

CORMIX model to provide effluent mixing in the river and to facilitate rapid mixing

of the discharge in the river. Modeling results show that the temperature difference

between the cooling water discharge and the fiver will be less than 2 ° F within 15 feet

of the diffuser for summer and winter conditions. The CORMIX model also predicts a

20- to 40-fold dilution of concentration for all constituents in the discharge within 100

feet of the diffuser.

PLEASE DESCRIBE THE STATUS OF THE STORMWATER

CONSTRUCTION AND OPERATING PERMITS.

Prior to the construction of the facility, Palmetto Energy will obtain an NPDES

Stormwater Construction Permit. This permit will be obtained at least 1 to 2 months

prior to commencement of construction. Prior to operation of the facility, Palmetto

Energy will also obtain an NPDES Stormwater Operating Permit. This permit will be

obtained at least 1 to 2 months prior to the commencement of "Commercial

Operation." Both of these permits will be issued by the DHEC.

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increase in concentration will be attributable solely to the evaporation of water during

the cooling process and no significant additional treatment of either the incoming river

water or the cooling water discharge will be required before being returned to the

Catawba River. A submerged effluent diffuser will be used to rapidly mix the

discharge with the receiving stream. A preliminary engineering report and NPDES

permit application have been prepared that includes an anti-degradation assessment,

mixing zone evaluation, and cooling water intake structure information. A

submerged, single port diffuser design was selected based on the use of EPA's

CORMIX model to provide effluent mixing in the river and to facilitate rapid mixing

of the discharge in the river. Modeling results show that the temperature difference

between the cooling water discharge and the river will be less than 2' within 15 feet

of the diffuser for summer and winter conditions. The CORMIX model also predicts a

20- to 40-fold dilution of concentration for all constituents in the discharge within 100

feet of the diffuser.

15 Q. PLEASE DESCRIBE THE STATUS OF THE STORMWATER

16 CONSTRUCTION AND OPERATING PERMITS.

17 A. Prior to the construction of the facility, Palmetto Energy will obtain an NPDES

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Stormwater Construction Permit. This permit will be obtained at least I to 2 months

prior to commencement of construction. Prior to operation of the facility, Palmetto

Energy will also obtain an NPDES Stormwater Operating Permit. This permit will be

obtained at least I to 2 months prior to the commencement of "Commercial

Operation.*'oth of these permits will be issued by the DHEC.

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WHAT OTHER PERMITS AND APPROVALS MAY BE REQUIRED OF

PALMETTO ENERGY?

Palmetto Energy may be required to obtain various additional minor permits and/or

approvals prior to the construction and/or operation of the plant. Some of these

permits and approvals are being deferred until such time as additional design

information is available. However, the application for and issuance of these permits or

approvals is routine and typical for facilities of the type being proposed by Palmetto

Energy. Examples of these minor permits include a Spill Prevention, Control, and

Countermeasure (SPCC) Plan (to be prepared prior to operation, approval not

required), Title V Operating Permit for air emissions (to be applied for within one year

following operation), Emergency Response and Risk Management Plan (to be

prepared prior to operation, approval not required), storage tank registration, water and

sewer connection approvals, FAA Stack Height Notification, and an erosion and

sedimentation control permit. Although not required by any permit or authorization,

Palmetto Energy will also obtain clearance letters from the U.S. Fish and Wildlife

Service and the South Carolina Heritage Trust regarding Endangered Species on or

near the site. A similar clearance letter from the South Carolina Historic Preservation

Office regarding the historic structures or artifacts on or near the site will also be

obtained.

ENVIRONMENTAL STUDIES

PLEASE DISCUSS THE ENVIRONMENTAL STUDIES THAT WERE

CONDUCTED.

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1 Q. WHAT OTHER PERMITS AND APPROVALS MAY BE REQUIRED OF

2 PALMETTO ENERGY?

3 A. Palmetto Energy may be required to obtain various additional minor permits and/or

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approvals prior to the construction and/or operation of the plant. Some of these

permits and approvals are being deferred until such time as additional design

information is available. However, the application for and issuance of these permits or

approvals is routine and typical for facilities of the type being proposed by Palmetto

Energy. Examples of these minor permits include a Spill Prevention, Control, and

Countermeasure (SPCC) Plan (to be prepared prior to operation, approval not

required), Title V Operating Permit for air emissions (to be applied for within one year

following operation), Emergency Response and Risk Management Plan (to be

prepared prior to operation, approval not required), storage tank registration, water and

sewer connection approvals, FAA Stack Height Notification, and an erosion and

sedimentation control permit. Although not required by any permit or authorization,

Palmetto Energy will also obtain clearance letters from the U.S. Fish and Wildlife

Service and the South Carolina Heritage Trust regarding Endangered Species on or

near the site. A similar clearance letter from the South Carolina Historic Preservation

Office regarding the historic structures or artifacts on or near the site will also be

obtained.

20 ENVIRONMENTAL STUDIES

21 Q. PLEASE DISCUSS THE ENVIRONMENTAL STUDIES THAT WERE

22 CONDUCTED.

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An integral component of the design and permitting of the Palmetto Energy Facility

has been extensive environmental studies and analyses that have focused on evaluating

the current environmental condition of the site, and assessing the impact of the facility

on the environment during construction and operation. The studies that have been

performed are described below.

PLEASE DESCRIBE THE PHASE I ENVIRONMENTAL SITE ASSESSMENT

THAT WAS CONDUCTED.

Calpine conducted a "Phase I Environmental Site Assessment" of the proposed facility

site in June of 2001 to determine if there were any pre-existing environmental

conditions that could adversely affect the development of the site for its intended

purpose. The results of this assessment indicate that the site itself is free of any known

environmental contamination or prior industrial usage that might have otherwise

impaired the property.

PLEASE DESCRIBE THE AMBIENT AIR QUALITY IMPACT ANALYSIS

THAT WAS PERFORMED.

A comprehensive air quality impact analysis was performed to support Palmetto

Energy's application for a permit to construct and operate air emissions equipment.

This impact analysis was based on the use of DHEC and EPA approved computer

models that simulate the dispersion of air pollutants in the atmosphere. The analysis

included an assessment of criteria pollutants (i.e., nitrogen oxides, sulfur dioxide,

particulate matter, carbon monoxide, and volatile organic compounds), as well as toxic

air pollutants such as ammonia, formaldehyde, and heavy metals. The dispersion

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1 A. An integral component of the design and permitting of the Palmetto Energy Facility

has been extensive environmental studies and analyses that have focused on evaluating

the current environmental condition of the site, and assessing the impact of the facility

on the environment during construction and operation. The studies that have been

performed are described below.

6 Q. PLEASE DESCRIBE THE PHASE I ENVIRONMENTAL SITE ASSESSMENT

7 THAT WAS CONDUCTED.

8 A. Calpine conducted a "Phase I Environmental Site Assessment" of the proposed facility

9 site in June of 2001 to determine if there were any pre-existing enviromnental

10 conditions that could adversely affect the development of the site for its intended

11 purpose. The results of this assessment indicate that the site itself is free of any known

12 environmental contamination or prior industrial usage that might have otherwise

13 impaired the property.

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Q. PLEASE DESCRIBE THE AMBIENT AIR QUALITY IMPACT ANALYSIS

THAT WAS PERFORMED.

A. A comprehensive air quality impact analysis was performed to support Palmetto

Energy's application for a permit to construct and operate air emissions equipment.

This impact analysis was based on the use of DHEC and EPA approved computer

models that simulate the dispersion of air pollutants in the atmosphere. The analysis

included an assessment of criteria pollutants (i.e., nitrogen oxides, sulfur dioxide,

particulate matter, carbon monoxide, and volatile organic compounds), as well as toxic

air pollutants such as ammonia, formaldehyde, and heavy metals. The dispersion

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modeling analysis resulted in the conclusion that the emissions from the facility will

not cause or contribute to a significant impact on ambient air quality at any location.

The analysis also showed that no ambient air quality standard or health-based

guideline would be threatened or exceeded as a result of the operation of the Palmetto

Energy Facility.

PLEASE DESCRIBE THE WATER USE AND WASTEWATER DISCHARGE

STUDY THAT WAS CONDUCTED.

Hourly flow records from the Catawba River at Highway 21 (approximately 6,000 feet

upstream of the intake site) were reviewed for the period October 1991 through

September 2001 to evaluate river flow pattems in the vicinity of the Palmetto Energy

site. Palmetto Energy's proposed maximum daily withdrawal rate is less than 0.4

percent of the annual average river flow, and less than 3.5 percent of the FERC

mandated minimum flow from Lake Wylie.

A biological baseline study was completed as part of the NPDES permit application to

identify aquatic species and life stages in the vicinity of the cooling water intake that

may be susceptible to impingement or entrainment in the water intake. The baseline

study indicated that there are no known occurrences of protected species of fish or

aquatic invertebrates in York County. There have been some observations of some

state and federally protected species of mussels in the Catawba River Basin, but none

have been observed in the Catawba River between Wylie Dam and Fishing Creek

Reservoir. There are other aquatic species of concern in the general area, but none are

listed as threatened or endangered. These include a snail (Gravel Elimia) and a fish

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modeling analysis resulted in the conclusion that the emissions trom the facility will

not cause or contribute to a significant impact on ambient air quality at any location.

The analysis also showed that no ambient air quality standard or health-based

guideline would be threatened or exceeded as a result of the operation of the Palmetto

Energy Facility.

Q. PLEASE DESCRIBE THE WATER USE AND WASTEWATER DISCHARGE

STUDY THAT WAS CONDUCTED.

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Hourly flow records from the Catawba River at Highway 21 (approximately 6,000 feet

upstream of the intake site) were reviewed for the period October 1991 through

September 2001 to evaluate river flow patterns in the vicinity of the Palmetto Energy

site. Palmetto Energy's proposed maximum daily withdrawal rate is less than 0.4

percent of the annual average river flow, and less than 3.5 percent of the FERC

mandated minimum flow from Lake Wylie.

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A biological baseline study was completed as part of the NPDES permit application to

identify aquatic species and life stages in the vicinity of the cooling water intake that

may be susceptible to impingement or entrainment in the water intake. The baseline

study indicated that there are no known occurrences of protected species of fish or

aquatic invertebrates in York County. There have been some observations of some

state and federally protected species of mussels in the Catawba River Basin, but none

have been observed in the Catawba River between Wylie Dam and Fishing Creek

Reservoir. There are other aquatic species of concern in the general area, but none are

listed as threatened or endangered. These include a snail (Gravel Elimia) and a fish

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(CarolinaDarter), but neitherhavebeen found in the main channelof the Catawba

River and their habitats are not likely to be found in deep pools such as where

PalmettoEnergy's intake structurewill be located. There is also an aquaticplant

speciesof concern(i.e., it is not threatenedor endangered),namelythe ShoalsSpider

Lily. However, the lily primarily exists in shallow rocky shoals some10 miles

downstreamof the project site. The ShoalsSpiderLily doesnot occur in deeppool

habitats.

An anti-degradationassessmentthat includeda dischargealternativesanalysisand a

demonstrationthatthe dischargewill accommodateeconomicandsocialdevelopment

is included in the NPDES permit application for the Palmetto Energy Center.

Alternativesreviewed included an NPDES permitted discharge,reuseand recycle,

relocationof theproposeddischargelocation,connectionto areawastewatertreatment

plants,landapplication,andprocessdesignalternatives.A closed-cyclesystemwith a

high degreeof recycle dischargingthrough an engineereddiffuser in the Catawba

River wasdeterminedto be the most technicallyandeconomicallyviablealternative.

The EPA CORMIX model was used to design a submergeddischargediffuser to

provide rapid mixing of the dischargein the river. Modeling resultsshow that the

temperaturedifferencebetweenthe cooling waterdischargeandthefiver will be less

than 2° F within 15 feet of the diffuser for summer and winter conditions. The

CORMIX model also predicts a 20- to 40-fold dilution of concentration for all

constituents in the discharge within 100 feet of the diffuser.

Q. PLEASE DESCRIBE PALMETTO ENERGY'S WETLANDS SURVEY.

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(Carolina Darter), but neither have been found in the main channel of the Catawba

River and their habitats are not likely to be found in deep pools such as where

Palmetto Energy's intake structure will be located. There is also an aquatic plant

species of concern (i.e., it is not threatened or endangered), namely the Shoals Spider

Lily. However, the lily primarily exists in shallow rocky shoals some 10 miles

downstream of the project site. The Shoals Spider Lily does not occur in deep pool

habitats.

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An anti-degradation assessment that included a discharge alternatives analysis and a

demonstration that the discharge will accommodate economic and social development

is included in the NPDES permit application for the Palmetto Energy Center.

Alternatives reviewed included an NPDES permitted discharge, reuse and recycle,

relocation of the proposed discharge location, connection to area wastewater treatment

plants, land application, and process design alternatives. A closed-cycle system with a

high degree of recycle discharging through an engineered diffuser in the Catawba

River was determined to be the most technically and economically viable alternative.

The EPA CORMIX model was used to design a submerged discharge diffuser to

provide rapid mixing of the discharge in the river. Modeling results show that the

temperature difference between the cooling water discharge and the river will be less

than 2' within 15 feet of the diffuser for summer and winter conditions. The

CORMIX model also predicts a 20- to 40-fold dilution of concentration for all

constituents in the discharge within 100 feet of the diffuser.

22 Q. PLEASE DESCRIBE PALMETTO ENERGY'S WETLANDS SURVEY.

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A comprehensiveonsite wetlandsinvestigationof the property was conductedby

experiencedwetlandsbiologiststo determineif thereareanywetlandsor watersof the

Unites Stateson the project site, or on areasthat will be usedasROWs for water,

wastewater,or electrictransmissionlines. Theresultsof this investigationconcluded

that the main 65-acreplant sitehad noneof the threecharacteristicsof jurisdictional

wetlands:hydric soils, positive indicatorsof wetland hydrology, predominanceof

hydrophyticvegetation. Therefore,nojurisdictional wetlandsarepresenton themain

65-acresite. Two creeksmeetingthedefinition of"other watersof theUnited States"

wereidentified on the site. An intermittent streamwas identifiedon the easternedge

of the sitethat is approximately10-20feetin width with waterpresentonly within the

lowestportions of the drainage.An intermittentstreamwasobservedon the western

edgeof the site thatis approximately5-10feetin width, highly incised,with no water

presentattime of survey.

Somewetlandshavebeenidentified on proposedROWs that will be usedfor water

and wastewaterpipelines. The identified wetlandsare not extensiveand Palmetto

Energywill takethenecessarystepsto avoidor minimize impactsto wetlands. Any

wetland impactsassociatedwith the water and wastewaterpipeline ROWs will be

mitigatedin accordancewith therequirementsof theCOEandSCDHEC. Theelectric

transmissionline ROWs between the project site and the Duke Power 500 kV

transmissionlines to the north of the project site will be constructed,owned,and

operatedby Duke Power. However, wetland surveysconductedon the ROW

proposedby DukePowerindicatethatonly limited wetlandsarepresentandthesecan

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1 A. A comprehensive onsite wetlands investigation of the property was conducted by

2 experienced wetlands biologists to determine if there are any wetlands or waters of the

3 Unites States on the project site, or on areas that will be used as ROWs for water,

4 wastewater, or electric transmission lines. The results of this investigation concluded

5 that the main 65-acre plant site had none of the three characteristics of jurisdictional

6 wetlands: hydric soils, positive indicators of wetland hydrology, predominance of

7 hydrophytic vegetation. Therefore, no jurisdictional wetlands are present on the main

8 65-acre site. Two creeks meeting the definition of "other waters of the United States"

9 were identified on the site. An intermittent stream was identified on the eastern edge

10 of the site that is approximately 10-20 feet in width with water present only within the

11 lowest portions of the drainage. An intermittent stream was observed on the western

12 edge of the site that is approximately 5-10 feet in width, highly incised, with no water

13 present at time of survey.

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Some wetlands have been identified on proposed ROWs that will be used for water

and wastewater pipelines. The identified wetlands are not extensive and Palmetto

Energy will take the necessary steps to avoid or minimize impacts to wetlands, Any

wetland impacts associated with the water and wastewater pipeline ROWs will be

mitigated in accordance with the requirements of the COE and SC DHEC. The electric

transmission line ROWs between the project site and the Duke Power 500 kV

transmission lines to the north of the project site will be constructed, owned„and

operated by Duke Power. However, wetland surveys conducted on the ROW

proposed by Duke Power indicate that only limited wetlands are present and these can

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either be avoided

requirements.

or easily mitigated in accordance with COE and DHEC

PLEASE DESCRIBE THE THREATENED AND ENDANGERED SPECIES

SURVEY CONDUCTED ON THE SITE.

The threatened and endangered species evaluation of the project site included a

literature search and an onsite survey. The literature search included a review of the

U.S. Fish and Wildlife Service (USFWS) and the South Carolina Heritage Trust

(SCHT) databases for potential and known locations of protected species and their

habitats. The USFWS and SCHT databases reported occurrences of some rare,

threatened, and endangered (RTE) species in the general vicinity of the project site.

An on-site survey of the project site and associated ROWs was conducted in the fall of

2001 and the winter of 2002 by experienced biologists to determine if there was any

evidence of these RTE species or their habitat. The results of the onsite survey did not

indicate the presence of any protected species within the proposed site boundaries and

additional surveys will be conducted during the upcoming growing season. Although

potential habitat for some of the identified species could potentially exist within the

project boundaries, the onsite survey indicated that the project site is only marginally

to poorly suited as habitat for these species. Therefore, it is unlikely that there will be

any adverse impacts to any of these species as a result of the development of the

Palmetto Energy Center facility. If any rare, threatened, or endangered species are

observed to be present on the site, they will either be avoided or their impacts will be

mitigated in accordance with the requirements of the COE, USFWS, and SCHT.

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either be avoided or easily mitigated in accordance with COE and DHEC

requirements.

3 Q. PLEASE DESCRIBE THE THREATENED AND ENDANGERED SPECIES

4 SURVEY CONDUCTED ON THE SITE.

5 A. The threatened and endangered species evaluation of the project site included a

6 literature search and an onsite survey. The literature search included a review of the

7 U.S. Fish and Wildlife Service (USFWS) and the South Carolina Heritage Trust

8 (SCHT) databases for potential and known locations of protected species and their

9 habitats. The USFWS and SCHT databases reported occurrences of some rare,

10 threatened, and endangered (RTE) species in the general vicinity of the project site.

11 An on-site survey of the project site and associated ROWs was conducted in the fall of

12 2001 and the winter of 2002 by experienced biologists to determine if there was any

13 evidence of these RTE species or their habitat. The results of the onsite survey did not

14 indicate the presence of any protected species within the proposed site boundaries and

15 additional surveys will be conducted during the upcoming growing season. Although

16 potential habitat for some of the identified species could potentially exist within the

17 project boundaries, the onsite survey indicated that the project site is only marginally

18 to poorly suited as habitat for these species. Therefore, it is unlikely that there will be

19 any adverse impacts to any of these species as a result of the development of the

20 Palmetto Energy Center facility. If any rare, threatened, or endangered species are

21 observed to be present on the site, they will either be avoided or their impacts will be

22 mitigated in accordance with the requirements of the COE, USFWS, and SCHT.

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PLEASE DESCRIBE THE ARCHAEOLOGICAL AND CULTURAL

RESOURCES ASSESSMENT THAT WAS PERFORMED.

A Phase I archaeological and cultural resource database survey of the proposed 65-

acre Palmetto Energy project site and surrounding area was performed in December of

2001. The background research indicated that there were no previously recorded

archaeological sites on the 65-acre project site, although a number of previously

recorded sites, including several that are eligible for the National Historic Register, are

present within a 1-mile radius of the project site. Some of these sites are associated

with former settlements that were occupied or used by Catawba Nation Indians over

two centuries ago. Given that the project will require the use of additional land for

ROWs for the conveyance of water, wastewater, and electricity to and from the project

site, these additional sites are presently being evaluated (including Phase II

archaeological testing) to ascertain if they will be impacted. The results of the Phase II

archaeological testing has identified one new potential archaeological site on the

southern boundary of the 65-acre project site, and confirmed the presence of a former

Catawba Nation Indian village in the vicinity of proposed ROW for water and

wastewater pipelines. The development of the proposed Palmetto Energy Facility will

include appropriate consideration of all identified cultural and archaeological

resources so that they can either be avoided or their impact appropriately mitigated.

Calpine is currently in discussions with representatives of the Catawba Indian Nation

and SC SHPO to identify and confirm the locations of any resources of concern, and

to determine any specific issues, concerns, or requirements that those organizations

may have with regard to the mitigation of impacts in these areas.

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1 Q. PLEASE DESCRIBE THE ARCHAEOLOGICAL AND CULTURAL

2 RESOURCES ASSESSMENT THAT WAS PERFORMED.

3 A. A Phase I archaeological and cultural resource database survey of the proposed 65-

4 acre Palmetto Energy project site and surrounding area was performed in December of

5 2001. The background research indicated that there were no previously recorded

6 archaeological sites on the 65-acre project site, although a number of previously

7 recorded sites, including several that are eligible for the National Historic Register, are

8 present within a I-mile radius of the project site. Some of these sites are associated

9 with former settlements that were occupied or used by Catawba Nation Indians over

10 two centuries ago. Given that the project will require the use of additional land for

11 ROWs for the conveyance of water, wastewater, and electricity to and from the project

12 site, these additional sites are presently being evaluated (including Phase II

13 archaeological testing) to ascertain if they will be impacted. The results of the Phase II

14 archaeological testing has identified one new potential archaeological site on the

15 southern boundary of the 65-acre project site, and confirmed the presence of a former

16 Catawba Nation Indian village in the vicinity of proposed ROW for water and

17 wastewater pipelines. The development of the proposed Palmetto Energy Facility will

18 include appropriate consideration of all identified cultural and archaeological

19 resources so that they can either be avoided or their impact appropriately mitigated.

20 Calpine is currently in discussions with representatives of the Catawba Indian Nation

21 and SC SHPO to identify and confirm the locations of any resources of concern, and

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to determine any specific issues, concern, or requirements that those organizations

may have with regard to the mitigation of impacts in these areas.

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Q.

HAS PALMETTO ENERGY CONDUCTED AN ASSESSMENT OF THE

IMPACT OF PLANT OPERATION ON REGIONAL VISIBILITY?

Palmetto Energy has, in accordance with the requirements set forth by EPA and

DHEC, conducted an assessment of the impact on regional visibility, most notably in

the Class I areas in North Carolina. The purpose of this assessment was to

demonstrate that the operation of the Palmetto Energy Facility would not cause or

contribute to the degradation of visibility in these pristine protected areas. The

analyses conducted have demonstrated that no such degradation will occur. In the

area immediately surrounding the plant, local visibility is not expected to be an issue

since the facility will burn only clean natural gas, which will result in a virtually

invisible exhaust from the combustion turbines and the auxiliary boiler proposed by

Palmetto Energy. The cooling towers that will be used by Palmetto Energy can be

expected to generate, during certain times of the year, visible plumes of water vapor.

These water vapor plumes are most likely to occur during relatively cold, moist

conditions when the condensation of water vapor is most favorable.

ELECTRICAL TRANSMISSION LINES

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Q. PLEASE DESCRIBE THE ELECTRICAL INTERCONNECTION BETWEEN

THE PALMETTO ENERGY FACILITY AND THE DUKE POWER

19 TRANSMISSION SYSTEM.

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A° Duke Power will provide all electrical transmissions lines between Duke's 500 kV

transmission lines and a substation that will be located on Palmetto Energy's 65-acre

project site. Duke Power will construct, own, and operate the transmission lines and

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1 Q. HAS PALMETTO ENERGY CONDUCTED AN ASSESSMENT OF THE

2 IMPACT OF PLANT OPERATION ON REGIONAL VISIBILITY?

3 A. Palmetto Energy has, in accordance with the requirements set forth by EPA and

4 DHEC, conducted an assessment of the impact on regional visibility, most notably in

5 the Class I areas in North Carolina. The purpose of this assessment was to

6 demonstrate that the operation of the Palmetto Energy Facility would not cause or

7 contribute to the degradation of visibility in these pristine protected areas. The

8 analyses conducted have demonstrated that no such degradation will occur. In the

9 area immediately surrounding the plant, local visibility is not expected to be an issue

10 since the facility will burn only clean natural gas, which will result in a virtually

ll invisible exhaust from the combustion turbines and the auxiliary boiler proposed by

12 Palmetto Energy. The cooling towers that will be used by Palmetto Energy can be

13 expected to generate, during certain times of the year, visible plumes of water vapor.

14 These water vapor plumes are most likely to occur during relatively cold, moist

15 conditions when the condensation of water vapor is most favorable.

16 ELECTRICAL TRANSMISSION LINES

17 Q. PLEASE DESCRIBE THE ELECTRICAL INTERCONNECTION BETWEEN

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THE PALMETTO ENERGY FACILITY AND THE DUKE POWER

TRANSMISSION SYSTEM.

20 A. Duke Power will provide all electrical transmissions lines between Duke's 500 kV

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transmission lines and a substation that will be located on Palmetto Energy's 65-acre

project site. Duke Power will construct, own, and operate the transmission lines and

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will be responsible for the acquisition and management of the necessary ROW on

which these lines will be built. The lines are expected to traverse Banks Street at the

north end of the 65-acre project site, run parallel to the west side of Banks Street up to

the 500 kV lines, approximately 4000 ft to the north.

IS THE PROPOSED FACILITY'S PROBABLE IMPACT ON THE

ENVIRONMENT JUSTIFIED?

Yes. The proposed Palmetto Energy Facility will be constructed using the best

available technology to protect the environment, and will provide significant

environmental advantages over other generating resource options.

DOES THIS CONCLUDE YOUR TESTIMONY?

A. Yes.

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will be responsible for the acquisition and management of the necessary ROW on

which these lines will be built. The lines are expected to traverse Banks Street at the

north end of the 65-acre project site„run parallel to the west side of Banks Street up to

the 500 kV lines, approximately 4000 tt to the north.

5 Q. IS THE PROPOSED FACILITY'S PROBABLE IMPACT ON THE

6 ENVIRONMENT JUSTIFIED?

7 A. Yes. The proposed Palmetto Energy Facility will be constructed using the best

available technology to protect the environment, and will provide significant

environmental advantages over other generating resource options.

10 Q. DOES THIS CONCLUDE YOUR TESTIMONY?

11 A. Yes.

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STATEOF SOUTHCAROLhNA

BEFORETHE PUBLIC SERVICECOMMISSION

DocketNo. 2001-507-E

In Re: Applicationof Palmetto Energy )

Center, LLC for Certificate of )

Environmental Compatibility and )

Public Convenience and Necessity )

to Construct a Major Utility Facility )

)

DIRECT TESTIMONY

OF

JOHN E. NILAND

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PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.

My name is John E. Niland. My business address is Calpine Corporation The Pilot

House 2 nd Floor, Boston, Massachusetts, 02011.

BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY?

I am employed by Calpine Corporation, as a Director of Project Development and I

am the Project Manager for Palmetto Energy Center, LLC ("Palmetto Energy").

PLEASE DESCRIBE YOUR

PROFESSIONAL EXPERIENCE.

EDUCATIONAL BACKGROUND AND

I earned a Bachelor of Science

University in 1981.

generation industry.

in Mechanical Engineering from Northeastern

I have over twenty-two years of experience in the power

I am a licensed Professional Engineer in the states of Rhode

Island and Maine. At Calpine, I am Director of Project Development and have

responsibility for engineering, permitting and project development activities

associated with the sitting, construction and operation of power generation facilities

STATE OF SOUTH CAROLINA

BEFORE THE PUBLIC SERVICE COMMISSION

Docket No. 2001-507-E

In Re: Application of Palmetto Energy )Center, LLC for Certificate of )Environmental Compatibility and )Public Convenience and Necessity )to Construct a Major Utility Facility )

)

DIRECT TESTIMONYOF

JOHN E. NILAND

1 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.

2 A. My name is John E. Niland. My business address is Calpine Corporation The Pilot

House 2" Floor, Boston, Massachusetts, 02011.

4 Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY?

5 A. I am employed by Calpine Corporation, as a Director of Project Development and I

6 am the Project Manager for Palmetto Energy Center, LLC ("Palmetto Energy").

7 Q. PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND

8 PROFESSIONAL EXPERIENCE.

9 A. I earned a Bachelor of Science in Mechanical Engineering from Northeastern

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University in 1981. I have over twenty-two years of experience in the power

generation industry. I am a licensed Professional Engineer in the states of Rhode

Island and Maine. At Calpine, I am Director of Project Development and have

responsibility for engineering, permitting and project development activities

associated with the sitting, construction and operation of power generation facilities

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in the eastem United States. Prior to joining Calpine two and a half years ago, I

worked as a project engineer and as manager/director for a large engineering and

construction company responsible for the construction of a variety power generation

facilities. I also worked in business development and marketing for the power

industry.

ON WHOSE BEHALF ARE YOU APPEARING IN THIS PROCEEDING?

I am appearing on behalf of Calpine Corporation and Palmetto Energy.

PLEASE DESCRIBE CALPINE'S EXPIERENCE IN SOUTH CAROLINA?

Calpine Corporation currently owns two other power facilities in the State of South

Carolina, the Broad River Energy Center in Gaffney and the Columbia Energy Center

located in Calhoun County, South Carolina. The Broad River facility is a peaking

facility with electrical interconnect with Duke Power and its output under contract

with Carolina Power and Light Company. Columbia Energy (currently under

construction) is a combined cycle plant with cogeneration capabilities that will sell

steam to Carolina Eastman at its manufacturing plant in Calhoun County and have the

ability to sell electrical power on the wholesale market. Palmetto Energy represents

the third power plant proposed to be owned and operated by Calpine Corporation in

the State of South Carolina. The combination of these three plants represents a direct

investment of over $1.2 billion dollars in South Carolina.

WHAT ARE YOUR RESPONSIBILITIES WITH REGARD TO THE

PALMETTO ENERGY PROJECT?

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in the eastern United States. Prior to joining Calpine two and a half years ago, I

worked as a project engineer and as manager(director for a large engineering and

construction company responsible for the construction of a variety power generation

facilities. I also worked in business development and marketing for the power

industry.

6 Q. ON WHOSE BEHALF ARE YOU APPEARING IN THIS PROCEEDING?

7 A. I am appearing on behalf of Calpine Corporation and Palmetto Energy .

8 Q. PLEASE DESCRIBE CALPINE'S EXPIERENCE IN SOUTH CAROLINA?

9 A. Calpine Corporation currently owns two other power facilities in the State of South

10 Carolina, the Broad River Energy Center in Gaffney and the Columbia Energy Center

11 located in Calhoun County, South Carolina. The Broad River facility is a peaking

12 facility with electrical interconnect with Duke Power and its output under contract

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13 with Carolina Power and Light Company. Columbia Energy (currently under

14 construction) is a combined cycle plant with cogeneration capabilities that will sell

(

steam to Carolina Eastman at its manufacturing plant in Calhoun County and have the

16 ability to sell electrical power on the wholesale market. Palmetto Energy represents

17 the third power plant proposed to be owned and operated by Calpine Corporation in

18 the State of South Carolina. The combination of these three plants represents a direct

19 investment of over $ 1.2 billion dollars in South Carolina.

20 Q. WHAT ARE YOUR RESPONSIBILITIES WITH REGARD TO THE

21 PALMETTO ENERGY PROJECT?

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As the Director of Project Development, I am responsible for managing all aspects

associated with the development of the Palmetto Energy project. My responsibilities

include, among others, overall project schedule for permitting, design and

construction, plant design and configuration, land acquisition, coordination of all

permitting activities, local tax agreements, electrical interconnection, natural gas

interconnection and transportation agreements, and project financing.

ARE YOU FAMILIAR WITH THE FACTS AND INFORMATION SET

FORTH IN PALMETTO ENERGY CENTER'S APPLICATION?

Yes. I was actively involved in the preparation of the Application.

WHAT IS THE PURPOSE OF YOUR TESTIMONY?

The purpose of my testimony is to support Palmetto Energy's Application for a

Certificate of Environmental Compatibility and Public Convenience and Necessity to

construct and operate a generating plant for the production of electric power and

energy in York County, South Carolina and to answer any questions regarding the

facility. In my testimony, I will summarize Palmetto Energy's Application, describe

the team of professionals involved in our project and generally describe the design,

construction and operation of the PEC generating facility (the "Facility").

WHAT ARE YOUR CONCLUSIONS REGARDING THE PROPOSED

PALMETTO ENERGY ?

Based upon my review of the Application and the direct testimony of our team of

experts, as well as my own knowledge of the project, I have concluded that:

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1 A. As the Director of Project Development, I am responsible for managing all aspects

associated with the development of the Palmetto Energy project. My responsibilities

include, among others, overall project schedule for permitting, design and

construction, plant design and configuration, land acquisition, coordination of all

permitting activities, local tax agreements, electrical interconnection, natural gas

interconnection and transportation agreements, and project financing.

7 Q. ARE YOU FAMILIAR WITH THE FACTS AND INFORMATION SET

8 FORTH IN PALMETTO ENERGY CENTER'S APPLICATION?

9 A. Yes. I was actively involved in the preparation of the Application.

10 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY?

11 A. The purpose of my testimony is to support Palmetto Energy's Application for a

12 Certificate of Environmental Compatibility and Public Convenience and Necessity to

13 construct and operate a generating plant for the production of electric power and

14 energy in York County, South Carolina and to answer any questions regarding the

15 facility. In my testimony, I will summarize Palmetto Energy 's Application, describe

16 the team of professionals involved in our project and generally describe the design,

17 construction and operation of the PEC generating facility (the "Facility").

18 Q. WHAT ARE YOUR CONCLUSIONS REGARDING THE PROPOSED

19 PALMETTO ENERGY?

20 A. Based upon my review of the Application and the direct testimony of our team of

21 experts, as well as my own knowledge of the project, I have concluded that:

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Calpine and its team of professionals has the capability and expertise to

properly design, construct and operate the proposed PEC as a merchant plant

in York County, South Carolina;

Palmetto Energy is a state-of-the-art facility that has been designed to

generate electrical energy in a highly efficient manner, while maintaining the

reliability and integrity of the regional electrical transmission system and

enhancing and serving the interests of system economy and reliability.

Combined cycle technology is the most efficient means by which to generate

electricity using natural gas. The Facility will employ the Best Available

Control Technology (BACT) to reduce its air emission to the lowest feasible

levels;

environmental impacts created by Palmetto Energy (such as water, air quality

and natural resources) will be minimal and not adverse and comply with all

environmental rules and regulations; environmental impacts were fully

evaluated, considering the state of available technology and the nature and

economics of various alternatives.

the PEC site is located in an industrial park for which siting a power plant is a

permitted use. The local community has been informed of the plans for the

plant and community leaders have openly accepted and support the project;

there is a need for new combined-cycle merchant facilities to meet anticipated

electrical demands in South Carolina and the region, to increase regional

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+ Calpine and its team of professionals has the capability and expertise to

properly design, construct and operate the proposed PEC as a merchant plant

in York County, South Carolina;

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+ Palmetto Energy is a state-of-the-art facility that has been designed to

generate electrical energy in a highly efficient manner, while maintaining the

reliability and integrity of the regional electrical transmission system and

enhancing and serving the interests of system economy and reliability.

Combined cycle technology is the most efficient means by which to generate

electricity using natural gas. The Facility will employ the Best Available

Control Technology (BACT) to reduce its air emission to the lowest feasible

levels;

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environmental impacts created by Palmetto Energy (such as water, air quality

and natural resources) will be minimal and not adverse and comply with all

environmental rules and regulations; environmental impacts were fully

evaluated, considering the state of available technology and the nature and

economics ofvarious alternatives.

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+ the PEC site is located in an industrial park for which siting a power plant is a

permitted use. The local community has been informed of the plans for the

plant and community leaders have openly accepted and support the project;

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+ there is a need for new combined-cycle merchant facilities to meet anticipated

electrical demands in South Carolina and the region, to increase regional

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reserve margins, to provide for more power supply diversity, and to create a

more vigorous and competitive wholesale market for power and energy ;

all of the business risk and costs associated with Palmetto Energy will be

bome by Calpine's investors, and not by South Carolina or its residents;

Palmetto Energy will provide significant non-energy-related

benefits to the State of South Carolina and to York County;

economic

there will be no negative impacts to South Carolina residents arising from

Palmetto Energy's use of the electric transmission system or natural gas

pipeline system;

the site was carefully selected following consideration of other alternative

locations;

Calpine has received no adverse comments from any governmental agency

responsible for environmental protection, land use planning, or other

regulation of the proposed site or Palmetto Energy ;

There is reasonable assurance that Palmetto Energy will conform to all

applicable State and local laws and regulations issued thereunder, including

any allowable variance provisions; and

the State of South Carolina and its residents will benefit overall from the

existence of Palmetto Energy.

-5-

reserve margins, to provide for more power supply diversity, and to create a

more vigorous and competitive wholesale market for power and energy;

+ all of the business risk and costs associated with Palmetto Energy will be

home by Calpine's investors, and not by South Carolina or its residents;

+ Palmetto Energy will provide significant non-energy-related economic

benefits to the State of South Carolina and to York County;

+ there will be no negative impacts to South Carolina residents arising from

Palmetto Energy 's use of the electric transmission system or natural gas

pipeline system;

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+ the site was carefully selected following consideration of other alternative

locations;

+ Calpine has received no adverse comments from any governmental agency

responsible for environmental protection, land use planning, or other

regulation of the proposed site or Palmetto Energy;

+ There is reasonable assurance that Palmetto Energy will conform to all

applicable State and local laws and regulations issued thereunder, including

any allowable variance provisions; and

+ the State of South Carolina and its residents will benefit overall from the

existence of Palmetto Energy .

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I believe that the construction and operation of Palmetto Energy are in the public

interest and is justified by the public convenience and necessity.

WHAT ARE YOUR RECOMMENDATIONS REGARDING THE PROPOSED

CALPINE FACILITY?

I recommend that the Commission grant Palmetto Energy a Certificate of

Environmental Compatibility and Public Convenience and Necessity to construct and

operate an electric generating plant in York County, South Carolina.

CALPINE BACKGROUND AND COMMITMENTS

PLEASE DESCRIBE PALMETTO ENERGY CENTER, LLC.

Palmetto Energy Center, LLC is a limited liability company organized under the laws

of the State of Delaware. Palmetto Energy's principal place of business is in York

County, South Carolina. Palmetto Energy is an affiliate of Calpine Corporation.

PLEASE DESCRIBE CALPINE.

Calpine Corporation is a publicly traded company that develops, owns and operates

wholesale electrical generating facilities in the United States. Based in San Jose,

Califomia, Calpine Corporation is an independent power company that is dedicated to

providing customers with clean, efficient, natural gas-fired power generation. Calpine

has facilities in operation or under construction 27 states in the United States, three

provinces in Canada and in the United Kingdom. Calpine also is the world's largest

producer of renewable geothermal energy, and it owns and markets 1.3 trillion cubic

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I believe that the construction and operation of Palmetto Energy are in the public

interest and is justified by the public convenience and necessity.

3 Q. WHAT ARE YOUR RECOMMENDATIONS REGARDING THE PROPOSED

4 CALPINE FACILITY?

5 A. I recommend that the Commission grant Palmetto Energy a Certificate of

Environmental Compatibility and Public Convenience and Necessity to construct and

operate an electric generating plant in York County, South Carolina.

CALPINE BACKGROUND AND COMMITMENTS

9 Q. PLEASE DESCRIBE PALMETTO ENERGY CENTER, LLC.

10 A. Palmetto Energy Center, LLC is a limited liability company organized under the laws

11 of the State of Delaware. Palmetto Energy's principal place of business is in York

12 County, South Carolina. Palmetto Energy is an affiliate of Calpine Corporation.

13 Q. PLEASE DESCRIBE CALPINE.

14 A. Calpine Corporation is a publicly traded company that develops, owns and operates

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wholesale electrical generating facilities in the United States. Based in San Jose,

California, Calpine Corporation is an independent power company that is dedicated to

providing customers with clean, efficient, natural gas-fired power generation. Calpine

has facilities in operation or under construction 27 states in the United States, three

provinces in Canada and in the United Kingdom. Calpine also is the world's largest

producer of renewable geothermal energy, and it owns and markets 1.3 trillion cubic

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feet of proved natural gas reserves in Canada and the United States. The company

was founded in 1984 and is publicly traded on the New York Stock Exchange under

the symbol CPN.

WHAT IS THE RELATIONSHIP BETWEEN CALPINE AND PALMETTO

ENERGY ?

Palmetto Energy is a wholly-owned subsidiary of Calpine Corporation.

IS PALMETTO ENERGY CENTER, LLC AUTHORIZED TO TRANSACT

BUSINESS IN SOUTH CAROLINA?

Yes.

PLEASE GENERALLY DESCRIBE CALPINE'S POWER PLANT

DEVELOPMENT ACTIVITIES IN THE UNITED STATES AND IN SOUTH

CAROLINA.

As a leading national independent power producer, Calpine is committed to

developing state of the art gas fired efficient power generating facilities in areas

throughout the United States were there is sufficient need for such facilities. Calpine

presently has facilities under construction or in operation in all major National Energy

Reliability Council (NERC) regions in the United States. As detailed in Mr.

Holland's testimony, Calpine has carefully considered the need for power and the

substantial benefits to South Carolina (and the region) from the development of the

Palmetto Energy Facility. In addition to its proposed Palmetto Energy Facility,

Calpine presently operates the Broad River Energy Center, in Cherokee County

-7-

feet of proved natural gas reserves in Canada and the United States. The company

was founded in 1984 and is publicly traded on the New York Stock Exchange under

the symbol CPN.

4 Q. WHAT IS THE RELATIONSHIP BETWEEN CALPINE AND PALMETTO

5 ENERGY?

6 A. Palmetto Energy is a wholly-owned subsidiary of Calpine Corporation.

7 Q. IS PALMETTO ENERGY CENTER, LLC AUTHORIZED TO TRANSACT

8 BUSINESS IN SOUTH CAROLINA?

9 A. Yes.

10 Q. PLEASE GENERALLY DESCRIBE CALPINE'S POWER PLANT(.

11 DEVELOPMENT ACTIVITIES IN THE UNITED STATES AND IN SOUTH

12 CAROLINA.

13 A. As a leading national independent power producer, Calpine is committed to[

14 developing state of the art gas fired efficient power generating facilities in areas

15 throughout the United States were there is sufficient need for such facilities. Calpine

16 presently has facilities under construction or in operation in all major National Energy

17 Reliability Council (NERC) regions in the United States. As detailed in Mr.

18 Holland's testimony, Calpine has carefully considered the need for power and the

19 substantial benefits to South Carolina (and the region) f'rom the development of the

20 Palmetto Energy Facility. In addition to its proposed Palmetto Energy Facility,

21 Calpine presently operates the Broad River Energy Center, in Cherokee County

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which supplies peaking power to CP&L, and is constructing the Columbia Energy

Center, in Calhoun County. The Columbia facility will produce steam for use by

Carolina Eastman and as well as electrical power for sale in the electrical wholesale

power market.

PLEASE DESCRIBE CALPINE'S COMMITMENT TO THE COMMUNITY,

ITS EMPLOYEES, SAFETY, AND THE ENVIRONMENT.

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Calpine is committed to being a good corporate citizen. As I said, Calpine has a

significant presence in and commitment to South Carolina. We have a proven track

record of working closely with community officials, residents, and environmental

agencies to ensure that our facilities fully comply with all environmental

requirements and are constructed and operated safely. Since the commencement of

this project, Calpine has worked closely with residents, environmental activists, local

"businesses and elected officials in Fort Mill, South Carolina, and York County to

develop the best facility for the area, and to protect the natural resources of the area.

This commitment will not end with the commencement of construction or the

commercial operation of the Palmetto Energy Facility, but will continue over the

many years this facility will be in operation.

CAN CALPINE OFFER REASONABLE ASSURANCES THAT THE

FACILITY WILL CONFORM TO ALL APPLICABLE STATE AND LOCAL

LAWS AND REGULATIONS, INCLUDING ANY ALLOWABLE VARIANCE

PROVISIONS?

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which supplies peaking power to CP&L, and is constructing the Columbia Energy

Center, in Calhoun County. The Columbia facility will produce steam for use by

Carolina Eastman and as well as electrical power for sale in the electrical wholesale

power market.

5 Q. PLEASE DESCRIBE CALPINE'S COMMITMENT TO THE COMMUNITY,

6 ITS EMPLOYEES, SAFETY, AND THE ENVIRONMENT.

7 A. Calpine is committed to being a good corporate citizen. As I said, Calpine has a

8 significant presence in and commitment to South Carolina. We have a proven track

9 record of working closely with community officials, residents, and environmental

10 agencies to ensure that our facilities fully comply with all environmental

11 requirements and are constructed and operated safely. Since the commencement of

12 this project, Calpine has worked closely with residents, environmental activists, local

13 'businesses and elected officials in Fort Mill, South Carolina, and York County to

14 develop the best facility for the area, and to protect the natural resources of the area.

15 This commitment will not end with the commencement of construction or the

16 commercial operation of the Palmetto Energy Facility, but will continue over the

17 many years this facility will be in operation.

18 Q. CAN CALPINE OFFER REASONABLE ASSURANCES THAT THE

19 FACILITY WILL CONFORM TO ALL APPLICABLE STATE AND LOCAL

20 LAWS AND REGULATIONS, INCLUDING ANY ALLOWABLE VARIANCE

21 PROVISIONS?

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Yes. As noted above, Calpine is committed to being a good corporate citizen. As Mr.

Howroyd's testimony indicates, the Palmetto Energy Facility, as a state-of-the-art gas

fired combined cycle facility, is designed to conform to all applicable state and local

laws and regulations. Calpine will do what it takes to satisfy all applicable laws and

regulations.

PLEASE DESCRIBE CALPINE'S ENVIRONMENTAL GOALS.

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Calpine is committed to protecting the environment and ensuring that it is a valued

and trusted member of the communities in which its facilities are located. This

commitment stems from our background as the nation's largest geothermal power

producer and our desire to build, own and operate the nation's largest, most advanced

fleet of modern clean burning natural gas fired combined cycle power plants in the

nation. Calpine utilizes BACT to control plant emissions. We work closely with

federal, state and local authorities to ensure that we comply with all applicable

environmental statutes, standards and regulations. Ultimately, we recognize that the

long-term success of our company and our projects will depend in large part on our

ability to protect the environment and be good neighbors. This is evidenced by the

fact that one of our projects in California has been endorsed by the local Chapter of

the Sierra Club, and the local chapter of the American Lung Association.

THE CALPINE TEAM

PLEASE DESCRIBE THE CALPINE TEAM APPROACH.

Calpine has retained a group of highly qualified firms and individual professionals to

assist it in designing and developing the Palmetto Energy Facility. These firms and

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1 A. Yes. As noted above, Calpine is committed to being a good corporate citizen. As Mr.

Howroyd's testimony indicates, the Palmetto Energy Facility, as a state-of-the-art gas

fired combined cycle facility, is designed to conform to all applicable state and local

laws and regulations. Calpine will do what it takes to satisfy all applicable laws and

regulations.

6 Q. PLEASE DESCRIBE CALPINE'S ENVIRONMENTAL GOALS.

7 A. Calpine is committed to protecting the environment and ensuring that it is a valued

8 and trusted member of the communities in which its facilities are located. This

9 commitment stems from our background as the nation's largest geothermal power

10 producer and our desire to build, own and operate the nation's largest, most advanced

11 fleet of modem clean burning natural gas fired combined cycle power plants in the

12 nation. Calpine utilizes BACT to control plant emissions. We work closely with

13 federal, state and local authorities to ensure that we comply with all applicable

14 environmental statutes, standards and regulations. Ultimately, we recognize that the

15 long-term success of our company and our projects will depend in large part on our

16 ability to protect the environment and be good neighbors. This is evidenced by the

17 fact that one of our projects in California has been endorsed by the local Chapter of

18 the Sierra Club, and the local chapter of the American Lung Association.

19 THE CALPINE TEAM

20 Q. PLEASE DESCRIBE THE CALPINE TEAM APPROACH.

21 A. Calpine has retained a group of highly qualified firms and individual professionals to

22 assist it in designing and developing the Palmetto Energy Facility. These firms and

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individuals utilize proven Calpine standard plant designs and specifications to prepare

the required initial design documents needed to support our permit applications. This

approach insures the final plant design will conform to our permit applications and

result in a highly efficient, combined cycle power plant that has the some of the

lowest emissions of any power plant in South Carolina. Once we have achieved all of

the necessary permits needed for construction of the PEC and obtained the project

financing, Calpine will retain the necessary employees, professionals and firms to

safely construct and operate the Palmetto Energy Facility.

PLEASE IDENTIFY THE MEMBERS OF CALPINE'S TEAM THAT WILL

BE TESTIFYING IN THIS CASE IN SUPPORT OF CALPINE'S

APPLICATION.

In addition to my testimony, Calpine will present testimony by the following

professionals:

Dr. George C. Howroyd - Dr. Howroyd is a Principal Engineer with CH2M

HILL, and will testify as to the potential environmental impacts of Palmetto

Energy and the manner in which those impacts are being mitigated;

Mr. Art Holland - Mr. Holland is an Account Manager with Pace Global

Energy Services, and will testify to the need for Palmetto Energy and the

impact Palmetto Energy will have on system economy and reliability.

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individuals utilize proven Calpine standard plant designs and specifications to prepare

the required initial design documents needed to support our permit applications. This

approach insures the final plant design will conform to our permit applications and

result in a highly efficient, combined cycle power plant that has the some of the

lowest emissions of any power plant in South Carolina. Once we have achieved all of

the necessary permits needed for construction of the PEC and obtained the project

financing, Calpine will retain the necessary employees, professionals and firms to

safely construct and operate the Palmetto Energy Facility.

9 Q. PLEASE IDENTIFY THE MEMBERS OF CALPINE'S TEAM THAT WILL

10 BE TESTIFYING IN THIS CASE IN SUPPORT OF CALPINE'S

APPLICATION.

12 A. In addition to my testimony, Calpine will present testimony by the following

13 professionals:

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~ Dr. George C. Howroyd — Dr. Howroyd is a Principal Engineer with CH2M

HILL, and will testify as to the potential environmental impacts of Palmetto

Energy and the manner in which those impacts are being mitigated;

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~ Mr. Art Holland — Mr. Holland is an Account Manager with Pace Global

Energy Services, and will testify to the need for Palmetto Energy and the

impact Palmetto Energy will have on system economy and reliability.

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THE PALMETTO ENERGY CENTER FACILITY

PLEASE GENERALLY DESCRIBE THE PROPOSED PALMETTO ENERGY

CENTER FACILITY AND ITS LOCATION.

The proposed Palmetto Energy is a combined-cycle, natural gas-fired combustion

turbine generating plant. The design of the PEC incorporates three General Electric

model 7FB natural gas-fired combustion turbine generators. Each turbine will exhaust

to a Heat Recovery Steam generator (HRSG) that provides steam to be used in a

condensing steam turbine generator (STG). The HRSGs will also include provisions

for supplemental firing utilizing natural gas fired duct burners. Natural gas will serve

as the sole fuel source for the turbines and duct burners with no backup fuel proposed.

Palmetto Energy is to be located on an approximately 86-acre tract of land located in

the Bradley Industrial Park in Fort Mill, York County, South Carolina.

PLEASE DESCRIBE THE MAJOR COMPONENTS AND SYSTEMS OF THE

PROPOSED PALMETTO ENERGY.

Palmetto Energy will be capable of generating approximately 970 MW of electricity

using three General Electric Model 7FB combustion turbines. The combustion

turbines will be manufactured in General Electric's manufacturing plant in Greenville

South Carolina. Each combustion turbine will exhaust to a HRSG that will provide

steam to a single STG operating in combined cycle mode. The equipment will be

arranged in a "3 x 1" configuration for operational flexibility. The hourly electrical

production rate is dependent on operating and ambient conditions such as CTG

operating load (percent of maximum load) and ambient temperature.

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THE PALMETTO ENERGY CENTER FACILITY

2 Q. PLEASE GENERALLY DESCRIBE THE PROPOSED PALMETTO ENERGY

3 CENTER FACILITY AND ITS LOCATION.

4 A. The proposed Palmetto Energy is a combined-cycle, natural gas-fired combustion

5 turbine generating plant. The design of the PEC incorporates three General Electric

6 model 7FB natural gas-fired combustion turbine generators. Each turbine will exhaust

7 to a Heat Recovery Steam generator (HRSG) that provides steam to be used in a

S condensing steam turbine generator (STG). The HRSGs will also include provisions

9 for supplemental firing utilizing natural gas fired duct burners. Natural gas will serve

10 as the sole fuel source for the turbines and duct burners with no backup I'uel proposed.

11 Palmetto Energy is to be located on an approximately 86-acre tract of land located in

12 the Bradley Industrial Park in Fort Mill, York County, South Carolina.

13 Q. PLEASE DESCRIBE THE MAJOR COMPONENTS AND SYSTEMS OF THE

14 PROPOSED PALMETTO ENERGY .

15 A. Palmetto Energy will be capable of generating approximately 970 MW of electricity

16 using three General Electric Model 7FB combustion turbines. The combustion

17 turbines will be manufactured in General Electric's manufacturing plant in Greenville

18 South Carolina. Each combustion turbine will exhaust to a HRSG that will provide

19 steam to a single STG operating in combined cycle mode. The equipment will be

20 arranged in a "3 x I" configuration for operational flexibility. The hourly electrical

21 production rate is dependent on operating and ambient conditions such as CTG

22 operating load (percent of maximum load) and ambient temperature.

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The HRSG's will also include provisions for supplemental duct firing using natural

gas fired duct burners. Supplemental firing of the HRSG's will generate additional

steam over that produced by the gas turbine exhaust alone. This additional steam will

be used for increased electrical output. In addition, the combustion turbine output

will be increased during periods of peak electricity demand through steam injection

for power augmented generation (PAG). When operating in PAG mode, steam from

the HRSG is injected into the combustion turbine to increase mass flow and

accordingly power output.

The Facility will be designed to incorporate the following major components:

• All-weather enclosures that will contain the proposed new combustion turbine

generators;

HRSG structures that will be approximately 80 feet in height and will be equipped

with natural gas-fired duct burners;

Three 160-foot exhaust stacks, one for each combustion turbine generator set,

which will exhaust the products of combustion from each CTG/HRSG train;

Condensing steam turbine generator structure that will house the steam turbine;

Multi-cell, mechanical draft, wet closed-cycle cooling tower, fitted with drift

eliminators to reduce drift to 0.005% of circulating water flow;

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The HRSG's will also include provisions for supplemental duct firing using natural

gas fired duct burners. Supplemental firing of the HRSG's will generate additional

steam over that produced by the gas turbine exhaust alone. This additional steam will

be used for increased electrical output. In addition, the combustion turbine output

will be increased during periods of peak electricity demand through steam injection

for power augmented generation (PAG). When operating in PAG mode, steam from

the HRSG is injected into the combustion turbine to increase mass flow and

accordingly power output.

The Facility will be designed to incorporate the following major components:

10 ~ All-weather enclosures that will contain the proposed new combustion turbine

generators;

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~ HRSG structures that will be approximately 80 feet in height and will be equipped

with natural gas-fired duct burners;

~ Three 160-foot exhaust stacks, one for each combustion turbine generator set,

which will exhaust the products of combustion from each CTG /HRSG train;

16 ~ Condensing steam turbine generator structure that will house the steam turbine;

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~ Multi-cell, mechanical drafl, wet closed-cycle cooling tower, fitted with drift

eliminators to reduce drift to 0.005% of circulating water flow;

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One gas-fired auxiliary boiler rated at 99 mmBtu/hr that will be used to provide

steam to the steam turbine during periods of startup (emissions will be routed to a

dedicated 100 ft. exhaust stack);

A single story building to house the Facility control room, administrative offices,

laboratory, machine shop, and other miscellaneous service buildings;

Outdoor electrical switchyard, including station step-up transformers, switches,

and power metering equipment;

• Water supply and wastewater service;

• Tanks for raw water and demineralized water storage, etc;

• Paved/gravel/crushed stone roads and parking areas; and

• Diesel-fired emergency generator and diesel fire pump (emergency use only).

Palmetto Energy will be operated as a fully dispatchable generating facility, and can

therefore be expected to operate up to a maximum of 24 hours per day, 365 days per

year. As fully described in Mr. Howroyd's testimony, the state-of-the-art BACT

design will limit nitrogen oxide (NOX) emissions from the proposed CTG/HRSG

exhaust to a level of 3.5 parts per million.

The combustion turbine operates by using combustion air that is filtered and

compressed in a multiple-stage axial flow compressor. Compressed air and natural

gas are mixed and combusted in the turbine combustion chamber. Lean pre-mix dry-

lowNOx (DLN) combustors are used to minimize NOx formation during combustion.

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~ One gas-fired auxiliary boiler rated at 99 mmBtu/hr that will be used to provide

steam to the steam turbine during periods of startup (emissions will be routed to a

dedicated 100 ft. exhaust stack);

~ A single story building to house the Facility control room, administrative offices,

laboratory, machine shop, and other miscellaneous service buildings;

~ Outdoor electrical switchyard, including station step-up transformers, switches,

and power metering equipment;

~ Water supply and wastewater service;

~ Tanks for raw water and demineralized water storage, etc;

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~ Paved/gravel/crushed stone roads and parking areas; and

~ Diesel-fired emergency generator and diesel fire pump (emergency use only).

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Palmetto Energy will be operated as a fully dispatchable generating facility, and can

therefore be expected to operate up to a maximum of 24 hours per day, 365 days per

year. As fully described in Mr. Howroyd's testimony, the state-of —the-art BACT

design will limit nitrogen oxide (NOX) emissions from the proposed CTG/HRSG

exhaust to a level of 3.5 parts per million.

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The combustion turbine operates by using combustion air that is filtered and

compressed in a multiple-stage axial flow compressor. Compressed air and natural

gas are mixed and combusted in the turbine combustion chamber. Lean pre-mix dry-

lowNOx (DLN) combustors are used to minimize NOx formation during combustion.

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Exhaustgas from the combustionchamberis expandedthrougha multi-stagepower

turbinethat drivesboththeair compressorandelectricpowergeneratorprior to being

exhaustedto theHRSG.

EachGE 7FB combustionturbinegeneratorsetwill includeacompressorsection,gas

combustionsystem(utilizing advancedDLN combustors),power turbine,anda 60-

hertz(Hz), 18kilovolt (kV) generator.TheGE 7FB combustionturbinesaredesigned

to operatein the DLN modeat operatingloadsfrom 50 percentup to baseloadrating

and will be taken out of service for scheduledmaintenance,or as dictated by

economicor electricaldemandconditions.

Exhaustgasexiting thecombustionturbine at approximately1,100°Fwill beducted

directly to an HRSG wherehigh-pressuresteamis producedto generateadditional

electricity in the STG. OneHRSGwill beprovidedfor eachcombustionturbineto

recoverthewasteheatin theexhaustfor thepurposeof generatingsteamto drive the

STG. Exhaustgasenteringthe HRSG will be cooled to approximately170°Fto

200°Fby the time it leavestheHRSG. Steamproductionin theHRSGscanalsobe

increasedusing natural gas fired duct burnerslocatedin eachHRSG, resulting in

additional peak power production.The high-pressureportion of the STG receives

high-pressuresuperheatedsteamfrom oneor moreof theHRSGs,andexhauststo the

reheatsection of the HRSGs.The steamfrom the reheatsectionof the HRSGsis

suppliedto the intermediatepressuresectionof theturbine,which expandsto thelow-

pressuresection. The low-pressureportion of the STG also receiveslow-pressure

steamfrom theHRSGsandexhauststo thesurfacecondenser.

-14-

Exhaust gas from the combustion chamber is expanded through a multi-stage power

turbine that drives both the air compressor and electric power generator prior to being

exhausted to the HRSG.

Each GE 7FB combustion turbine generator set will include a compressor section, gas

combustion system (utilizing advanced DLN combustors), power turbine, and a 60-

hertz (Hz), 18 kilovolt (kV) generator. The GE 7FB combustion turbines are designed

to operate in the DLN mode at operating loads from 50 percent up to baseload rating

and will be taken out of service for scheduled maintenance, or as dictated by

economic or electrical demand conditions.

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Exhaust gas exiting the combustion turbine at approximately 1,100'F will be ducted

directly to an HRSG where high-pressure steam is produced to generate additional

electricity in the STG. One HRSG will be provided for each combustion turbine to

recover the waste heat in the exhaust for the purpose of generating steam to drive the

STG. Exhaust gas entering the HRSG will be cooled to approximately 170'F to

200'F by the time it leaves the HRSG. Steam production in the HRSGs can also be

increased using natural gas fired duct burners located in each HRSG, resulting in

additional peak power production. The high-pressure portion of the STG receives

high-pressure superheated steam from one or more of the HRSGs, and exhausts to the

reheat section of the HRSGs. The steam from the reheat section of the HRSGs is

supplied to the intermediate pressure section of the turbine, which expands to the low-

pressure section. The low-pressure portion of the STG also receives low-pressure

steam from the HRSGs and exhausts to the surface condenser.

-14-

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An advanced technology Selective Catalytic Reduction (SCR) emission control

device will be installed in each HRSG to reduce emissions of NOx from both the

combustion turbines and the duct burners. Each HRSG will be exhausted through its

own stack.

A multi-cell mechanical draft closed-cycle wet cooling tower will be integral to

operation of the Facility. The majority of the cooling water will be used in the

surface condenser to absorb the heat rejected from the STG. Water from the cooling

tower is commonly referred to as circulating water. The circulating water system will

conserve water by increasing the number of times the water can cycle through the

cooling tower, thereby reducing the requirements for water make-up. A dedicated set

of circulating water pumps will be provided for this service. Circulating water will

also be used for direct cooling of plant auxiliaries. The cooling tower itself is a device

designed to reject heat from the STG by evaporating clean water. The cooling tower

will be fitted with drift eliminators to reduce the amount of drift to 0.005 percent of

the circulating water flow rate.

A 99 million British thermal units per hour (MMBtu/hr) natural gas-fired auxiliary

steam boiler will be used for heating steam to accommodate plant start-up and to

optimize keep-warm conditions. The auxiliary steam boiler will use low-NOx

combustors and fire natural gas exclusively. The operation of the auxiliary boiler will

be limited to a maximum of 2,500 hours/year.

Natural gas will be delivered to the plant boundary at a pressure sufficient for use in

the combustion turbines without additional fuel compression. Once on-site, the

-15-

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An advanced technology Selective Catalytic Reduction (SCR) emission control

device will be installed in each HRSG to reduce emissions of NOx from both the

combustion turbines and the duct burners. Each HRSG will be exhausted through its

own stack.

A multi-cell mechanical draft closed-cycle wet cooling tower will be integral to

operation of the Facility. The majority of the cooling water will be used in the

surface condenser to absorb the heat rejected from the STG. Water from the cooling

tower is commonly referred to as circulating water. The circulating water system will

conserve water by increasing the number of times the water can cycle through the

cooling tower, thereby reducing the requirements for water make-up. A dedicated set

of circulating water pumps will be provided for this service. Circulating water will

also be used for direct cooling of plant auxiliaries. The cooling tower itself is a device

designed to reject heat from the STG by evaporating clean water. The cooling tower

will be fitted with driit eliminators to reduce the amount of drill to 0.005 percent of

the circulating water flow rate.

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A 99 million British thermal units per hour (MMBtu/hr) natural gas-fired auxiliary

steam boiler will be used for heating steam to accommodate plant start-up and to

optimize keep-warm conditions. The auxiliary steam boiler will use low-NOx

combustors and fire natural gas exclusively. The operation of the auxiliary boiler will

be limited to a maximum of 2,500 hours/year.

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Natural gas will be delivered to the plant boundary at a pressure sufficient for use in

the combustion turbines without additional fuel compression. Once on-site, the

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natural gas will first be sent through a knockout drum and filtered for removal of any

liquid that may have been carried through the pipeline and delivered to the CTGs,

duct burners, auxiliary boilers and space heaters. The natural gas to the CTGs will

then be heated using a small natural gas-fired dew point heater during start-up and a

performance heater during operation. Due to the critical nature of supplying heated

fuel to the CTGs, one dew point heater and one performance heater will be installed

in each CTG gas line. After heating, the natural gas will be sent through a

filter/separator to remove particulate matter and entrained liquid. Finally, the treated

natural gas is delivered to the combustion turbines.

An emergency generator engine (1,200 kW) will be located on-site. The generator

will provide power to essential services necessary to protect the equipment during an

emergency shutdown resulting from a loss of power. The emergency generator engine

will only be used in the event of a disruption Of power delivery and during routine

readiness testing. A small diesel engine (350 BHP) will be installed to power a fire

pump located on-site. The fire pump engine will be operated in the event of a plant

fire and during routine readiness testing.

The multi-cell mechanical draft closed-cycle wet cooling tower was selected for use

at the PEC as the most effective economic cooling option from a water conservation

standpoint. The adjacent Catawba River represents the most practicable supply of raw

water. In addition to having adequate water volume to meet project needs, the

Catawba River also has sufficient capacity to accept treated process wastewater from

PEC.

-16-

natural gas will first be sent through a knockout drum and filtered for removal of any

liquid that may have been carried through the pipeline and delivered to the CTGs,

duct burners, auxiliary boilers and space heaters. The natural gas to the CTGs will

then be heated using a small natural gas-fired dew point heater during start-up and a

performance heater during operation. Due to the critical nature of supplying heated

fuel to the CTGs, one dew point heater and one performance heater will be installed

in each CTG gas line. After heating, the natural gas will be sent through a

filter/separator to remove particulate matter and entrained liquid. Finally, the treated

natural gas is delivered to the combustion turbines.

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An emergency generator engine (1,200 kW) will be located on-site. The generator

will provide power to essential services necessary to protect the equipment during an

emergency shutdown resulting from a loss of power. The emergency generator engine

will only be used in the event of a disruption of power delivery and during routine

readiness testing. A small diesel engine (350 BHP) will be installed to power a fire

pump located on-site. The fire pump engine will be operated in the event of a plant

fire and during routine readiness testing.

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The multi-cell mechanical draft closed-cycle wet cooling tower was selected for use

at the PEC as the most effective economic cooling option from a water conservation

standpoint. The adjacent Catawba River represents the most practicable supply of raw

water. In addition to having adequate water volume to meet project needs, the

Catawba River also has sufficient capacity to accept treated process wastewater from

PEC.

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Discharge of treated cooling water will occur via a new discharge line to the Catawba

River, downstream of the water intake structure. The majority of discharged water

will be derived from cooling tower blowdown. Other waste streams may be mixed

with this discharge and include demineralization regeneration wastes, steam cycle

blowdown, and floor and equipment drains.

Palmetto Energy will include all civil works required to support a complete and

operable generating facility. These will include, but not be limited to, the following:

• Drainage facilities for controlling and capturing storm water runoff;

• Fencing and security systems for safety protection; and

• Plant roadways and access lighting.

11 Q. WHAT BUILDINGS WILL BE LOCATED ON THE SITE?

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A° There will be several buildings for the Facility. The administrative building will be

single story and will house the administration offices, operating personnel offices,

control room, locker room, sanitary facilities, maintenance and storage areas, and

training areas.

A separate auxiliary building will house the plant water treatment system. A third

building will be in the electrical switchyard area and contain electrical protective

relays. Each gas turbine and the steam turbine will be housed in a sound-attenuating,

all-weather enclosure (which gives the appearance of a building).

-17-

Discharge of treated cooling water will occur via a new discharge line to the Catawba

River, downstream of the water intake structure. The majority of discharged water

will be derived from cooling tower blowdown. Other waste streams may be mixed

with this discharge and include demineralization regeneration wastes, steam cycle

blowdown, and floor and equipment drains.

Palmetto Energy will include all civil works required to support a complete and

operable generating facility. These will include, but not be limited to, the following:

~ Drainage facilities for controlling and capturing storm water runoff;

~ Fencing and security systems for safety protection; and

10 ~ Plant roadways and access lighting.

11 Q. WHAT BUILDINGS WILL BE LOCATED ON THE SITEY

12 A. There will be several buildings for the Facility. The administrative building will be

13 single story and will house the administration offices, operating personnel offices,

14 control room, locker room, sanitary facilities, maintenance and storage areas, and

15 training areas.

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A separate auxiliary building will house the plant water treatment system. A third

building will be in the electrical switchyard area and contain electrical protective

relays. Each gas turbine and the steam turbine will be housed in a sound-attenuating,

all-weather enclosure (which gives the appearance of a building).

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- 17

1 Q. HOW WILL THE FACILITY BE CONSTRUCTED?

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The construction period will last approximately 24 months from "Notice to Proceed"

to "Commercial Operation." Initial construction activity will involve the leveling of

the site to a grade elevation, followed by the pouring of equipment foundations and

the construction of the main building. The major pieces of equipment will be shipped

via rail to the closest rail siding (which is within the industrial park) capable of

handling the weight of the equipment. Special heavy-haul equipment will be used to

convey the equipment from the rail siding to the site. At the site, the equipment will

be set on the foundations with heavy lift cranes. As soon as all equipment is set in

place, piping and electrical installation will commence. Once erection is complete,

comprehensive testing will take place and adjustments will be made before

Commercial Operation commences to ensure that the plant is in compliance with the

performance and environmental requirements.

WHAT IS THE ESTIMATED COST OF PALMETTO ENERGY ?

Palmetto Energy will cost in excess of $400 million.

WHAT SOURCE OF FINANCING DOES CALPINE PLAN TO USE TO

CONSTRUCT PALMETTO ENERGY?

Calpine currently has two non-recourse credit facilities, Calpine Construction Finance

Company and Calpine Construction Finance Company II (CCFC and CCFCII), which

provide Calpine with a total borrowing capacity of $3.5 billion. These non-recourse

credit facilities are one of the principal vehicles utilized to finance the construction of

-18-

1 Q. HOW WILL THE FACILITY BE CONSTRUCTED?

2 A. The construction period will last approximately 24 months from "Notice to Proceed"

3 to "Commercial Operation." Initial construction activity will involve the leveling of

4 the site to a grade elevation, followed by the pouring of equipment foundations and

5 the construction of the main building. The major pieces of equipment will be shipped

6 via rail to the closest rail siding (which is within the industrial park) capable of

7 handling the weight of the equipment. Special heavy-haul equipment will be used to

8 convey the equipment from the rail siding to the site. At the site, the equipment will

9 be set on the foundations with heavy lift cranes. As soon as all equipment is set in

10 place, piping and electrical installation will commence. Once erection is complete,

11 comprehensive testing will take place and adjustments will be made before

12 Commercial Operation commences to ensure that the plant is in compliance with the

13 performance and environmental requirements.

14 Q. WHAT IS THE ESTIMATED COST OF PALMETTO ENERGY?

15 A. Palmetto Energy will cost in excess of $400 million.

16 Q. WHAT SOURCE OF FINANCING DOES CALPINE PLAN TO USE TO

17 CONSTRUCT PALMETTO ENERGY?

18 A. Calpine currently has two non-recourse credit facilities, Calpine Construction Finance

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Company and Calpine Construction Finance Company II (CCFC and CCFCII), which

provide Calpine with a total borrowing capacity of $3.5 billion. These non-recourse

credit facilities are one of the principal vehicles utilized to finance the construction of

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Calpine's diversified portfolio of gas-fired power plants. Calpine has not finalized its

specific plans for the funding of Palmetto Energy. As construction of the facility

nears, Calpine expects that Palmetto Energy would be funded through credit capacity

then available under one of the CCFC facilities, most likely CCFCII given its larger

size, $2.5 billion, and its longer maturity date. However, Calpine may elect to fund

the construction of Palmetto Energy from the proceeds of corporate capital market

transactions or from the arranging of a stand-alone project finance transaction. While

Calpine currently expects to fund the construction of Palmetto Energy through one of

the CCFC facilities, Calpine has demonstrated the ability to raise substantial capital

from various sources to fund the construction of its new facilities. Recently

completed financing transactions clearly demonstrate that Calpine has competitive

and timely access to the capital markets, providing sufficient liquidity to meet current

and future capital requirements.

WHEN DOES CALPINE EXPECT PALMETTO ENERGY TO BE IN

COMMERCIAL OPERATION?

Calpine expects Palmetto Energy to be in commercial operation by the summer of

2005.

WHO BEARS THE RISK IF PALMETTO ENERGY IS NOT SUCCESSFUL?

Calpine's equity and debt investors will bear all of the risk of the success of Palmetto

Energy, and neither the State of South Carolina nor any of the residents of the State

will be responsible for any of the costs of the project.

-19-

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Calpine's diversified portfolio of gas-fired power plants. Calpine has not finalized its

specific plans for the funding of Palmetto Energy. As construction of the facility

nears, Calpine expects that Palmetto Energy would be funded through credit capacity

then available under one of the CCFC facilities, most likely CCFCII given its larger

size, $2.5 billion, and its longer maturity date. However, Calpine may elect to fund

the construction of Palmetto Energy trom the proceeds of corporate capital market

transactions or from the arranging of a stand-alone project finance transaction. While

Calpine currently expects to fund the construction of Palmetto Energy through one of

the CCFC facilities, Calpine has demonstrated the ability to raise substantial capital

from various sources to fund the construction of its new facilities. Recently

completed financing transactions clearly demonstrate that Calpine has competitive

and timely access to the capital markets, providing sufficient liquidity to meet current

and future capital requirements.

1415 Q. WHEN DOES CALPINE EXPECT PALMETTO ENERGY TO BE IN

16 COMMERCIAL OPERATION?

17 A. Calpine expects Palmetto Energy to be in commercial operation by the summer of

18 2005.

19 Q. WHO BEARS THE RISK IF PALMETTO ENERGY IS NOT SUCCESSFUL?

20 A. Calpine*s equity and debt investors will bear all of the risk of the success of Palmetto

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Energy, and neither the State of South Carolina nor any of the residents of the State

will be responsible for any of the costs of the project.

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PLEASE GENERALLY DESCRIBE CALPINE'S PLAN FOR DEVELOPING

AND OPERATING THE FACILITY.

Construction of Palmetto Energy will commence in the second quarter of 2003 and is

expected to last approximately 24 months. Calpine will follow our "Calpine

Construct" approach which has been successfully employed on facilities across the

country. This approach entails the use of an experienced Calpine project management

team who will oversee a qualified Architect/Engineer to prepare design information,

following Calpine standard designs and specifications, and an experienced contractor

to construct the project. Testing will be performed by a Calpine team experienced in

the design and start up requirements of the facility and will commence approximately

six months prior to commercial operation. Approximately 27 full-time employees

will be hired to operate the facility.

SITE SELECTION

PLEASE DESCRIBE HOW YOU DECIDED TO PLACE A NEW FACILITY

IN SOUTH CAROLINA AND HOW CALPINE SELECTED THE SITE FOR

PALMETTO ENERGY?

As discussed earlier, Calpine operates the Broad River facility and is constructing the

Columbia Energy Center. Accordingly, Calpine is very familiar with South Carolina,

its growth, associated power needs, electrical infrastructure and natural gas

infrastructure. In addition, as set forth in Mr. Holland's testimony, Calpine has

evaluated the impact of adding a third plant to the regional market. This evaluation

led us to the conclusion that a new plant was economically justified.

- 20 -

1 Q. PLEASE GENERALLY DESCRIBE CALPINE'S PLAN FOR DEVELOPING

2 AND OPERATING THE FACILITY.

3 A. Construction of Palmetto Energy will commence in the second quarter of 2003 and is

4 expected to last approximately 24 months. Calpine will follow our "Calpine

5 Construct" approach which has been successfully employed on facilities across the

6 country. This approach entails the use of an experienced Calpine project management

team who will oversee a qualified Architect/Engineer to prepare design information,

following Calpine standard designs and specifications, and an experienced contractor

9 to construct the project. Testing will be performed by a Calpine team experienced in

10 the design and start up requirements of the facility and will commence approximately

11 six months prior to commercial operation. Approximately 27 full-time employees

12 will be hired to operate the facility.

SITE SELECTION

14 Q. PLEASE DESCRIBE HOW YOU DECIDED TO PLACE A NEW FACILITY

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IN SOUTH CAROLINA AND HOW CALPINE SELECTED THE SITE FOR

PALMETTO ENERGY?

17 A. As discussed earlier, Calpine operates the Broad River facility and is constructing the

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Columbia Energy Center. Accordingly, Calpine is very familiar with South Carolina,

its growth, associated power needs, electrical intrasttucture and natural gas

inlrastructure. In addition, as set forth in Mr. Holland's testimony, Calpine has

evaluated the impact of adding a third plant to the regional market. This evaluation

led us to the conclusion that a new plant was economically justified.

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Oncethedecisionhadbeenmadeto develop anew plant, Calpineevaluated

list of potential sites using the following criteria: (1) the proximity of adequate

electric transmission, (2) the availability of adequateand economic natural gas

transportationfacilities, (3) the availability of a sufficient water supply and water

dischargefacilities, (4) the existenceof sites locatedin areasthat are zonedin a

mannerthat a power plant would be a permitteduse,(5) the absenceof significant

environmentalissues and (6) willingness of the community to support a power

generatingfacility.

Calpine utilized thesecriteria to selectand evaluatespecific sites. Calpine first

evaluatedelectrictransmission,industriallyzonedpropertiesandwateravailability in

the region. In addition,Calpinecontactedlocal economicdevelopmentofficials in

theregion to assessspecificproperties We consideredall of the factorsidentified

above,andidentified anumberof suitablesitesfor ageneratingfacility.

Thesesiteswere thenvisited by a teamof Calpineprofessionalssothat a first hand

evaluation of their suitability could be performed. This review also included

consultation with local officials in order to determine community receptiveness. The

Fort Mill site was selected above the other sites under consideration because it was

accessible to electric and gas interconnection points, had sufficient water and

wastewater facilities, was appropriately zoned with limited potential environmental

impacts and it was supported by community officials In addition, Calpine shared the

philosophy of the owner of the Bradley Industrial Park (The Springs Company) and

recognized the importance of environmental stewardship and community

commitment. Calpine had several meetings with the Springs Company and the Close

-21 -

Once the decision had been made to develop a new plant, Calpine evaluated

list of potential sites using the following criteria: (I) the proximity of adequate

electric transmission, (2) the availability of adequate and economic natural gas

transportation facilities, (3) the availability of a sufficient water supply and water

discharge facilities, (4) the existence of sites located in areas that are zoned in a

manner that a power plant would be a permitted use, (5) the absence of significant

environmental issues and (6) willingness of the community to support a power

generating facility.

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Calpine utilized these criteria to select and evaluate specific sites. Calpine first

evaluated electric transmission, industrially zoned properties and water availability in

the region. In addition, Calpine contacted local economic development officials in

the region to assess specific properties We considered all of the factors identified

above, and identified a number of suitable sites for a generating facility.

These sites were then visited by a team of Calpine professionals so that a first hand

evaluation of their suitability could be performed. This review also included

consultation with local officials in order to determine community receptiveness. The

Fort Mill site was selected above the other sites under consideration because it was

accessible to electric and gas interconnection points, had sufficient water and

wastewater facilities, was appropriately zoned with limited potential environmental

impacts and it was supported by community officials In addition, Calpine shared the

philosophy of the owner of the Bradley Industrial Park (The Springs Company) and

recognized the importance of environmental stewardship and community

commitment. Calpine had several meetings with the Springs Company and the Close

-21-

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family members, (owners of the Springs Company) that included two tours of a

Calpine facility with similar features to the Palmetto Energy Facility.

ELECTRIC TRANSMISSION ARRANGEMENTS

PLEASE DESCRIBE HOW PALMETTO ENERGY WILL

INTERCONNECTED WITH THE ELECTRIC TRANSMISSION GRID.

BE

Palmetto Energy will be connected to the existing Duke 525 kV Richmond Line

(Newport Tie to CP&L's Richmond station). The transmission voltage will be 525

kV, and power will be delivered to the transmission line by looping the transmission

line through the plant substation which will be owned and operated by Duke. The

switchyard will be designed to ensure adequate transmission capability and protection

to ensure no negative impacts on Duke Power's system and its customers.

HAS DUKE POWER CONDUCTED A STUDY OF TRANSMISSION

INTERCONNECTION WITH PALMETTO ENERGY ?

Yes. Duke Power has performed a thermal impact study of the proposed addition of

Palmetto Energy. Duke is also in the process of completing a Facilities Study which

identifies all of the upgrades that may be required and their associated costs. Duke's

study will also include the stability and short circuit analyses.

WILL THE PALMETTO ENERGY FACILITY NEGATIVELY IMPACT TO

THE DUKE POWER TRANSMISSION SYSTEM?

- 22 -

family members, (owners of the Springs Company) that included two tours of a

Calpine facility with similar features to the Palmetto Energy Facility.

ELECTRIC TRANSMISSION ARRANGEMENTS

4 Q. PLEASE DESCRIBE HOW PALMETTO ENERGY WILL BE

5 INTERCONNECTED WITH THE ELECTRIC TRANSMISSION GRID.

6 A. Palmetto Energy will be connected to the existing Duke 525 kV Richmond Line

7 (Newport Tie to CP&L's Richmond station). The transmission voltage will be 525

8 kV, and power will be delivered to the transmission line by looping the transmission

9 line through the plant substation which will be owned and operated by Duke. The

10 switchyard will be designed to ensure adequate transmission capability and protection

11 to ensure no negative impacts on Duke Power's system and its customers.

12 Q. HAS DUKE POWER CONDUCTED A STUDY OF T1VdVSMISSION

13 INTERCONNECTION WITH PALMETTO ENERGY?

14 A. Yes. Duke Power has performed a thermal impact study of the proposed addition of

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Palmetto Energy. Duke is also in the process of completing a Facilities Study which

identifies all of the upgrades that may be required and their associated costs. Duke'

study will also include the stability and short circuit analyses.

18 Q. WILL THK PALMETTO ENERGY FACILITY NEGATIVELY IMPACT TO

19 THE DUKE POWER TRANSMISSION SYSTEM?

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No. Duke Power has both the obligation and the capability to evaluate the impacts of

Palmetto Energy on its transmission system and protect against any negative impact.

Any required upgrades will be paid for by Palmetto Energy and will result in a more

robust transmission system. Significantly, as a general proposition, all else being

equal, the addition of new generation serves to strengthen the local transmission grid

and enhances local reliability.

WHAT IMPROVEMENTS TO DUKE POWER'S SYSTEM WILL BE

NECESSARY TO INTERCONNECT WITH THE PALMETTO ENERGY

FACILITY?

Other improvements on the transmission system notwithstanding, Palmetto Energy

will interconnect to the 525 kV transmission line by creating a new loop in the

existing line to bring it to through a substation at the Facility. The interconnect, short

i-un (approximately 4000 feet) of double circuit 525 kV transmission lines and the

new substation at the plant site will be constructed by Duke and paid for by Calpine.

All of the proposed improvements, rights-of-way and new substation are contained

within the confines of the Bradley Industrial Park.

WHAT WILL THE IMPROVEMENTS AND ADDITIONAL FACILITIES

COST, AND WILL PALMETTO ENERGY BE RESPONSIBLE FOR THOSE

COSTS?

Calpine will be responsible for all interconnection costs. Duke Power has yet to

estimate the electrical interconnection cost. For planning purposes, Calpine has

prepared an internal estimate of the interconnection costs, that assumes all potential

- 23 -

1 A. No. Duke Power has both the obligation and the capability to evaluate the impacts of

Palmetto Energy on its transmission system and protect against any negative impact.

Any required upgrades will be paid for by Palmetto Energy and will result in a more

robust transmission system. Significantly, as a general proposition, all else being

equal, the addition of new generation serves to strengthen the local transmission grid

and enhances local reliability.

7 Q. WHAT IMPROVEMENTS TO DUKE POWER'S SYSTEM WILL BE

NECESSARY TO INTERCONNECT WITH THE PALMETTO ENERGY

FACILITY?

10 A. Other improvements on the transmission system notwithstanding, Palmetto Energy

11 will interconnect to the 525 kV transmission line by creating a new loop in the

12 existing line to bring it to through a substation at the Facility. The interconnect, short

13 run (approximately 4000 feet) of double circuit 525 kV transmission lines and the

14 new substation at the plant site will be constructed by Duke and paid for by Calpine.

15 All of the proposed improvements, rights-of-way and new substation are contained

16 within the confines of the Bradley Industrial Park.

17 Q. WHAT WILL THE IMPROVEMENTS AND ADDITIONAL FACILITIES

18 COST, AND WILL PALMETTO ENERGY BE RESPONSIBLE FOR THOSE

COSTS?

20 A. Calpine will be responsible for all interconnection costs. Duke Power has yet to

21

22

estimate the electrical interconnection cost. For planning purposes, Calpine has

prepared an internal estimate of the interconnection costs, that assumes all potential

-23-

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upgrades are required to be performed and has set aside sufficient funds to cover

these costs.

NATURAL GAS SUPPLY

PLEASE DESCRIBE HOW PALMETTO ENERGY WILL BE SUPPLIED

WITH NATURAL GAS.

Palmetto Energy will receive its natural gas requirements by means of an

interconnection with the Transcontinental Gas Pipeline Company ("Transco") natural

gas pipeline through the development and construction of new gas transportation

infrastructure to the area surrounding York County, South Carolina. The new

infrastructure is expected to consist of a wide-diameter pipeline (in the neighborhood

of 24 inches) that will span approximately 37 miles from an intercounection with

Transcontinental Pipe Line (Transco) to the Fort Mill area near Rock Hill, South

Carolina. The pipeline would be constructed by one of three suppliers competing for

the option to build the pipeline lateral required to supply gas to the PEC, Palmetto

Energy will continue to pursue these negotiations and work to procure the most

economical and reliable gas supply.

HOW WILL PALMETTO ENERGY ACQUIRE SUFFICIENT GAS SUPPLY

TO MEET ITS EXPECTED REQUIREMENTS?

The new pipeline will accommodate 100% of the gas requirements of the facility

from the Transco interconnect. The gas supply will comprised of a Calpine portfolio

of gas supply and transportation agreements, including long-term and short term gas

- 24 -

upgrades are required to be performed and has set aside sufficient funds to cover

these costs.

NATURAL GAS SUPPLY

4 Q. PLEASE DESCRIBE HOW PALMETTO ENERGY WILL BE SUPPLIED

5 WITH NATURAL GAS.

6 A. Palmetto Energy will receive its natural gas requirements by means of an

7 interconnection with the Transcontinental Gas Pipeline Company ("Transco") natural

8 gas pipeline through the development and construction of new gas transportation

9 infrastructure to the area surrounding York County, South Carolina. The new

10 inf'rastructure is expected to consist of a wide-diameter pipeline (in the neighborhood

11 of 24 inches) that will span approximately 37 miles from an interconnection with

12 Transcontinental Pipe Line (Transco) to the Fort Mill area near Rock Hill, South

13 Carolina. The pipeline would be constructed by one of three suppliers competing for

14 the option to build the pipeline lateral required to supply gas to the PEC, Palmetto

15 Energy will continue to pursue these negotiations and work to procure the most

16 economical and reliable gas supply.

17 Q. HOW WILL PALMETTO ENERGY ACQUIRE SUFFICIENT GAS SUPPLY

18 TO MEET ITS EXPECTED REQUIREMENTS2

19 A. The new pipeline will accommodate 100% of the gas requirements of the facility

20 from the Transco interconnect. The gas supply will comprised of a Calpine portfolio

21 of gas supply and transportation agreements, including long-term and short term gas

- 24-

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supply contracts. Transportation arrangements will include firm transportation and

capacity purchased from secondary markets, including released firm, and interruptible

contracts. This structure is intended to provide the flexibility to transport gas from

multiple sources including U.S. Gulf Coast, the Appalachian Basin, and gas derived

from expanded LNG facilities on the East Coast.

WHAT WILL BE THE EFFECT OF THE INTERCONNECTION OF

PALMETTO ENERGY WITH TRANSCO'S SYSTEM?

Palmetto's utilization of the Transco system will increase throughput and efficient

utilization of the system. We are aware of no negative effects of our interconnection.

WHAT IMPROVEMENTS, IF ANY, TO TRANSCO'S SYSTEM WILL BE

NECESSARY TO INTERCONNECT WITH PALMETTO ENERGY ?

A tap and metering station will need to be installed on the Transco mainline to

provide for delivery of natural gas.

WILL PALMETTO ENERGY BE RESPONSIBLE FOR THE COST OF

THOSE IMPROVEMENTS?

Yes. Palmetto Energy will be responsible

interconnection with the Transco pipeline.

for the costs associated with the

WILL THERE BE AN ADEQUATE SUPPLY OF GAS FOR THE FACILITY?

Yes. Gas is readily available in the market from numerous suppliers. As stated

- 25 -

supply contracts. Transportation arrangements will include firm transportation and

capacity purchased from secondary markets, including released firm, and interruptible

contracts. This structure is intended to provide the flexibility to transport gas from

multiple sources including U.S. Gulf Coast, the Appalachian Basin, and gas derived

from expanded LNG facilities on the East Coast.

6 Q. WHAT WILL BE THE EFFECT OF THE INTERCONNECTION OF

7 PALMETTO ENERGY WITH TRANSCO'S SYSTEM?

8 A. Palmetto's utilization of the Transco system will increase throughput and efficient

9 utilization of the system. We are aware ofno negative effects of our interconnection.

10 Q. WHAT IMPROVEMENTS, IF ANY, TO TRANSCO'S SYSTEM WILL BE

11 NECESSARY TO INTERCONNECT WITH PALMETTO ENERGY?

12 A. A tap and metering station will need to be installed on the Transco mainline to

13 provide for delivery of natural gas.

14 Q. WILL PALMETTO ENERGY BE RESPONSIBLE FOR THE COST OF

15 THOSE IMPROVEMENTS?

16 A. Yes. Palmetto Energy will be responsible for the costs associated with the

17 interconnection with the Transco pipeline.

18 Q. WILL THERE BE AN ADEQUATE SUPPLY OF GAS FOR THE FACILITY?

19 A. Yes. Gas is readily available in the market from numerous suppliers. As stated20

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above, the contemplated gas infrastructure will have the capability of transporting gas

from numerous Gulf Coast and Appalachian gas producing Basins, as well as from

the newly expanded LNG facilities at Cove Point MD.

NON-ENERGY-RELATED STATE AND LOCAL BENEFITS

WHAT NON-ENERGY-RELATED

PALMETTO ENERGY CREATE?

ECONOMIC BENEFITS WILL

Palmetto Energy will create substantial non-energy related economic benefits for

York County and South Carolina. These benefits include:

Substantial contributions to the tax base while requiring only minimal

expenditures on infrastructure by the local government. State tax revenue, in

terms of both higher income and sales taxes, is expected to rise due to

increased economic activity as a result of the construction and operation of the

Facility. This increase in revenue, along with the sales and property taxes

directly paid by Calpine, will increase state and county tax revenue during the

construction period and during the first twenty years of operation;

Enhanced employment opportunities in the area: highly skilled employees to

operate the plant, approximately 400 construction workers during the two-year

construction period will result in substantial direct and indirect impacts of

Calpine's investment in the facility for the state. ; and

Besides the plant being located in Fort Mill, a major component of the plant,

the gas turbines, will be produced in Greenville, South Carolina;

- 26 -

above, the contemplated gas infrastructure will have the capability of transporting gas

from numerous Gulf Coast and Appalachian gas producing Basins, as well as from

the newly expanded LNG facilities at Cove Point MD.

NON-ENERGY-RELATED STATE AND LOCAL BENEFITS

5 Q. WHAT NON-ENERGY-RELATED ECONOMIC BENEFITS WILL

6 PALMETTO ENERGY CREATE?

7 A. Palmetto Energy will create substantial non-energy related economic benefits for

8 York County and South Carolina. These benefits include:

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Substantial contributions to the tax base while requiring only minimal

expenditures on infrastructure by the local government. State tax revenue, in

terms of both higher income and sales taxes, is expected to rise due to

increased economic activity as a result of the construction and operation of the

Facility. This increase in revenue, along with the sales and property taxes

directly paid by Calpine, will increase state and county tax revenue during the

construction period and during the first twenty years of operation;

16

17

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Enhanced employment opportunities in the area: highly skilled employees to

operate the plant, approximately 400 construction workers during the two-year

construction period will result in substantial direct and indirect impacts of

Calpine's investment in the facility for the state.; and

20

21

Besides the plant being located in Fort Mill, a major component of the plant,

the gas turbines, will be produced in Greenville, South Carolina;

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HAS YORK COUNTY INDICATED ITS SUPPORT FOR THE

CONSTRUCTION OF PALMETTO ENERGY ?

Yes. Local civic and governmental leaders have actively supported the project.

Recently, Calpine is aware that business, community and local governmental leaders

have offered letters of support for the project to the PSC.

DOES THIS CONCLUDE YOUR TESTIMONY?

Yes.

- 27 -

I Q. HAS YORK COUNTY INDICATED ITS SUPPORT FOR THE

2 CONSTRUCTION OF PALMETTO ENERGY?

3 A. Yes. Local civic and governmental leaders have actively supported the project.

Recently, Calpine is aware that business, community and local governmental leaders

have offered letters of support for the project to the PSC.

6 Q. DOES THIS CONCLUDE YOUR TESTIMONY?

7 A. Yes.

27-