STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN RE: GULF POWER COMPANY ) (LANSING SMITH UNIT 3) )

POWER PLANT SITING )

APPLICATION NO. PA99-40 )

)

Petitioner, )

)

vs. ) Case No. 99-2641EPP

) DEPARTMENT OF ENVIRONMENTAL ) PROTECTION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly-designated Administrative Law Judge, P. Michael Ruff, conducted a formal certification hearing in this proceeding on April 3, 2000 in Lynn Haven, Florida.

APPEARANCES

For Gulf Power Company:

Douglas S. Roberts, Esquire William D. Preston, Esquire Angela R. Morrison, Esquire Hopping Green Sams & Smith Post Office Box 6526 Tallahassee, Florida 32314

For Florida Department of Environmental Protection:

Scott A. Goorland, Esquire

Department of Environmental Protection Douglas Building

Mail Station 35

3900 Commonwealth Boulevard.

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue to be resolved in this proceeding concerns whether the Governor and Cabinet, sitting as the Siting Board, should issue certification to Gulf Power Company (Gulf or Gulf Power) to construct and operate a 574 megawatts (MW) combined cycle electrical generating unit to be located at Gulf's existing Lansing Smith Plant in Bay County, Florida, in accordance with the provisions of Section 403.501, et seq., Florida Statutes.

PRELIMINARY STATEMENT

This proceeding was conducted pursuant to the Florida Electrical Power Plant Siting Act (PPSA), Chapter 403, Part II, Florida Statutes, and Chapter 62-17, Florida Administrative Code, to consider Gulf Power's Site Certification Application for the proposed Lansing Smith Plant Unit 3 (Smith Unit 3 or Project).

On June 7, 1999, Gulf Power filed its application for site certification for the Smith Unit 3. The application was filed with the Florida Department of Environmental Protection (Department or FDEP).

On August 2, 1999, the Florida Public Service Commission issued its order determining the need for Smith Unit 3, pursuant to Section 403.519, Florida Statutes.

As required by Sections 403.508(1) and (2), Florida Statutes, a land use hearing was held near the Project site on November 1, 1999. By Final Order, dated March 14, 2000, the Siting Board adopted the Recommended Land Use Order, holding that

the site of the proposed Smith Unit 3 is consistent and in compliance with the existing land use plans and zoning ordinances of Bay County, Florida.

On February 14, 2000, the Department issued its written analysis concerning the Project, as required by Section 403.507(4), Florida Statutes, which contained reports from other agencies, along with a compiled set of proposed conditions of certification for Smith Unit 3 proposed by FDEP and various agencies. On April 3, 2000, during the certification hearing, FDEP submitted its revised written analysis as an exhibit (FDEP Ex. 4), to update and correct various matters in the earlier version of its analysis. After proper notice by both the Applicant and by FDEP, a certification hearing was held in Lynn Haven, Florida, on April 3, 2000, as required by the PPSA. The general purpose of this certification hearing was to receive oral, written, and documentary evidence concerning whether, through available and reasonable methods, the location and operation of the proposed Smith Unit 3 would produce minimal adverse effects on human health, the environment, the ecology of the land and its wildlife, and the ecology of State waters and their aquatic life, in an effort to fully balance the increasing demands for an electrical power plant location and operation with the broad interests of the public. See Section 403.502, Florida Statutes.

At this hearing, Gulf Power presented the oral testimony of seven witnesses and had Gulf Power Exhibits numbered 1 to 24 and

26 to 46 admitted into evidence. These exhibits included the prefiled written testimony of two additional witnesses. FDEP presented the testimony of Hamilton S. Oven, the administrator of FDEP’s Siting Coordination Office, and had FDEP Exhibits 1 to 4 admitted into evidence. The Florida Department of Community Affairs, the Florida Fish and Wildlife Conservation Commission, the West Florida Regional Planning Council, the Northwest Florida Water Management District, and the Florida Department of Transportation, all of which were parties to this proceeding, did not enter appearances at the certification hearing. However, these agencies entered into settlement stipulations with Gulf Power prior to the hearing, resolving any outstanding issues. These stipulations were entered into evidence at the hearing.

The other statutory agency party to this proceeding, Bay County, did not appear at the certification hearing. However, Bay County Commissioner Carol Atkinson, testified at the hearing, stating the County Commission supported the proposed Project. No other members of the general public testified at the certification hearing.

Subsequent to the certification hearing, Gulf Power, upon proper authorization granted at hearing, submitted its late-filed Exhibit 47, representing the Stipulation between Gulf Power and the Florida Fish and Wildlife Conservation Commission.

Following the conclusion of the April 3, 2000 hearing, a Transcript of the hearing was filed on April 21, 2000. The joint proposed recommended order of Gulf Power and FDEP was timely submitted and has been adopted in the rendition of this Recommended Order.

FINDINGS OF FACT

1. Gulf Power is an investor-owned electric utility that supplies electric service in northwest Florida. Gulf currently serves approximately 350,000 customers in its service area, which extends westward from the Apalachicola River to the western border of Florida. Gulf Power has been supplying electricity within this area since 1926. Gulf is a subsidiary of the Southern Company. Gulf Power currently operates power plants at three locations in the Florida Panhandle, with a combined generating capacity of 2,284 MW.

2. Gulf Power's Lansing Smith power plant (Smith Plant) is located in the central portion of Bay County, Florida, approximately 2.5 miles west of the unincorporated community of Southport, Florida, and 2.5 miles northwest of the City of Lynn Haven, Florida. The City of Panama City lies due south, across the open waters of North Bay. The Smith Plant is in the unincorporated area of the County. Access is via County Road 2300 which connects to State Road 77.

3. Within the approximate 1,384 acres, which comprise, the Smith Plant, are two existing coal-fired electrical generating

   units along with their supporting facilities, including a coal unloading and storage facility, wastewater treatment and disposal facilities, intake and discharge canals which handle cooling water, and electrical substations and transmission lines. Smith Unit 1 has a generating capacity of 162 MW and Smith Unit 2 has

   192 MW of generating capacity. The two existing units have been in operation since 1965 and 1967 respectively. An existing 31.6 MW oil-fired simple cycle combustion turbine is also located at Smith Plant.

4. The balance of Smith Plant is largely undeveloped, and is comprised mainly of planted pines, forested areas and wetlands. Immediately adjacent off-site lands are used for silviculture (planted pines) or are otherwise undeveloped. The nearest residence is more than two miles away, located to the northeast of Smith Plant.

   Project Description

   
   

5. The proposed Smith Unit 3 consists of a natural gas- fired combined cycle plant capable of generating up to 574 MW of electricity. The new unit will more than double the generating capacity at Smith Plant. Smith Unit 3 will be located upon a 50.1-acre site (Project site) within the existing boundaries of Smith Plant.

6. Smith Unit 3 will utilize state-of-the-art combined cycle design concepts and equipment to achieve a high level of efficiency in electrical power production. The Project will

   employ two General Electric combustion turbine units which have a proven operating record around the world. Each combustion turbine will generate approximately 170 MW of electricity. The hot exhaust gases from the two combustion turbines will be captured in two heat recovery steam generators (HRSGs) which will produce additional steam-generated electricity of 200 MW. Hot exhaust gases from the combustion turbine/HRSGs will then be vented to the atmosphere by the main stack. In addition, the HRSGs will contain duct burners which will fire additional fuel in the boilers, adding additional generating capacity to the HRSG portion of the Project. Smith Unit 3 will also employ power augmentation in which a portion of the steam in the HRSGs is routed back to the combustion turbine to increase the mass flow through the combustion turbine, increasing its ability to generate electricity.

7. After the energy is removed from the steam in the steam turbine, the steam is condensed back into water in the condenser. Cooling for the Project will feature a creative and environmentally sound combination, utilizing the existing cooling water discharge from Smith Units 1 and 2 within a new cooling tower for Smith Unit 3. This means the Project will actually use hot water from the existing cooling system for Units 1 and 2 and then discharge cooler water from Unit 3 back into the existing discharge canal.

8. Smith Unit 3 will use the existing Smith Plant access road, also the existing electrical switch yard will provide the interconnection for Smith Unit 3, and electrical power from the Project will be transmitted via the existing transmission lines to existing off-site electrical substations.

9. Three of these existing electrical transmission lines, which run south and east into the Panama City area, will be reconductored. Reconductoring involves replacement of the existing conductors or wires with higher capacity conductors. This reconductoring is necessary to maintain the reliability of the Gulf Power transmission system. The reconductoring will involve removal of the existing wires, installation of new wires, and possible repair and maintenance of the existing structures. However, no new electrical transmission structures will be required as part of the reconductoring. No other expansions or other alterations to the Gulf Power transmission system are required as part of this project.

10. A new 28 mile gas pipeline will be constructed to provide natural gas fuel for Smith Unit 3. This gas pipeline lateral will connect to an existing Florida Gas Transmission pipeline running through Washington County. The new gas lateral to serve the Project will be permitted, constructed, owned and operated solely by Florida Gas Transmission Company. The new lateral will interconnect with the existing gas pipeline and then follow a southerly route paralleling State Road 77 and an

    existing Gulf Power transmission right-of-way before entering the Smith Plant. A new gas metering station will be constructed within the Project site.

11. Existing groundwater wells at the Smith Plant site will supply the groundwater needs for Smith Unit 3, as well as continue to supply the existing units.

12. New facilities to be constructed within the approximate 50-acre Project site will include the two combustion turbines, the two HRSGs, steam turbines, three electrical generators, a cooling tower, an administration building, and other ancillary facilities. A new electrical switchyard will also be built within the Project site, which will then be interconnected to the existing main electrical switchyard at the Smith Plant.

    Need for Smith Unit 3

    
    

13. The Florida Public Service Commission (Commission) issued an affirmative need determination for Smith Unit 3 on August 2, 1999. The Commission concluded that Smith Unit 3 was necessary to ensure the future reliability and integrity of Gulf Power’s electrical system. The Commission found that there existed a generation/load imbalance in the Panama City area due to growth and electrical demand on Gulf Power’s existing system. In finding that no cost-effective energy conservation measures existed that could offset the need for electricity from the Gulf Power Smith Unit 3, the Commission concluded that Smith Unit 3 is necessary to provide adequate electricity at a reasonable cost to

    Gulf Power’s customers, as contemplated under Section 403.519, Florida Statutes. The Commission, therefore, found that the Project is the "most cost effective alternative available to Gulf to meet its needs for adequate electricity at a reasonable price."

14. Gulf Power needs to add new generating capacity by the year 2002 to maintain an appropriate level of generating reserves on its system. Gulf Power has been able to obtain short-term purchases of electricity that meet its capacity needs until 2002. In evaluating its need for additional power, Gulf Power evaluated both a self-build option and conducted a request for proposal (RFP) process to consider outside offers to supply electricity. In the RFP process, Gulf Power evaluated nine different offers from outside interests, which were compared to the Gulf Power Smith Unit 3 option. After evaluating all of the options and their associated costs, Gulf Power concluded that Smith Unit 3 was clearly the most cost-effective choice.

    Project Schedule and Construction

    
    

15. Construction of Smith Unit 3 is scheduled to begin in August 2000, or as soon as the final approvals are obtained. In addition to the site certification, Gulf Power is required to obtain a Prevention of Significant Deterioration (PSD) permit, a modified National Pollutant Discharge Elimination (NPDES) Permit issued by FDEP, and a dredge and fill permit from the U.S. Army Corps of Engineers.

16. The new unit is projected to be in service in June 2002. Construction will require approximately 250 employees, with a peak of 325 employees. Construction activities will involve clearing of a portion of the Project site, removal of muck and placement of backfill, setting of pilings and foundations, followed by assembly of equipment. Installation of boilers and metal buildings will then follow, with the gas turbines and steam turbines being put into place last. These construction activities will require approximately 32.7 acres of the approximate 50-acre Project site. This includes the power block, construction laydown area, ancillary facilities, and stormwater ponds. The remainder of the Project site will remain principally as planted pine.

17. During construction, heavy equipment will be delivered by barge, while small and medium sized items will be delivered by truck over County Road 2300. Road wetting and project maintenance will be used to control dust during construction.

    The site is relatively flat and is not expected to create any significant runoff during Project construction. Erosion during construction will be managed with an erosion control plan. This will include planting of exposed areas, collection of runoff and use of detention ponds to collect sediments in runoff.

18. Project construction will have little impact on open waters. The only construction activity in open waters will be the placement of the cooling tower intake and discharge pipes

    within the existing Smith Plant cooling water discharge housing.

    
    

    This will cause minor turbidity during construction with approved construction techniques taken to minimize these impacts with no long term effect.

    Surface Water Management System

    
    

19. The existing Project site is currently undeveloped although the upland areas have been modified by silviculture practices. The site currently drains to existing natural wetland systems.

20. During construction, a portion of the Project site will be filled and graded to provide a finished surface for various Project components. Stormwater basins will also be installed during construction and grading will provide drainage for building and working areas through gravity flow. Runoff will be conveyed to two on-site wet detention stormwater ponds to be located within the east and west portions of the Project site. These stormwater ponds will ultimately discharge to adjacent wetland systems, following natural drainage patterns.

21. The stormwater management system, including the stormwater ponds, will be constructed to comply with the requirements of local, state and federal regulations. Project Water Use

22. The major water uses during operation of Smith Unit 3 will involve cooling tower blowdown and cooling tower evaporation, representing approximately 7.4 million gallons per

    day (mgd). The cooling water system has the greatest water need of all of the systems for the Project. Other water uses will involve blowdown from the HRSGs to maintain water quality in that system, and water losses due to gas turbine evaporative cooling and wash water.

23. The Smith Unit 3 cooling system will utilize a closed- loop cooling circuit. This circulates cooled water from the mechanical draft cooling tower to the Unit 3 heat exchangers. Heated water resulting from the steam cycle of the plant is returned to the cooling tower where it is cooled by an evaporative cooling process. During this process, a certain amount of water is lost through evaporation and drift. In addition, it is necessary to "blow down" or remove a portion of the water from the cooling tower periodically to control suspended and dissolved solids in the cooling water. Without this blowdown, sedimentation and deposits in the tower will reduce the heat transfer there and damage the cooling equipment.

    The water loss in the cooling tower must be replaced with water from an outside source. The source of cooling water makeup for the Smith Unit 3 cooling tower will be from the existing thermal discharge flow from Smith Plant. The existing Units 1 and 2 use a once-through cooling system in which water withdrawn from North Bay passes directly through a condenser and discharges into the existing discharge canal. The makeup water from Smith

    Unit 3 will be taken from this hot water exiting Smith Plant Units 1 and 2.

24. The cooling tower blowdown from Smith Unit 3 will be discharged back into the discharge canal from the cool water side of its cooling tower. As a result, the Project will actually act to reduce the amount of heat currently discharged from Smith Plant into the cooling water discharge canal and then into West Bay.

25. The calculated quantity of water needed for cooling tower makeup is 7.4 mgd. This represents approximately 2.5 percent of the current daily water flow through Smith Plant Units

    1 and 2. On a daily basis, approximately 3.7 mgd will be discharged back into the cooling water discharge canal as blowdown from the Unit 3 cooling tower. The other 3.7 mgd will be lost through evaporation in the cooling tower.

26. Smith Unit 3 process water needs include water used to cool and wash the gas turbines and other facilities, to make up HRSG blowdown, and to satisfy other water uses. These process water needs will be supplied from groundwater taken from the existing Smith Plant well system. The raw water will be treated in both a filtered water production system and a demineralized water system. This water will then be used for the various processes identified.

27. During hot months of the year, evaporative coolers will be provided for the combustion turbines, providing denser intake

    air for combustion and improving the electrical output of the combustion turbines. In addition, the gas turbines must be washed periodically, both during plant operation and when the unit is offline. During operation, wash water is lost through evaporation in the combustion turbine exhaust. When Smith Unit 3 is offline, wastewater from this process is collected in an on- site tank and trucked off-site for appropriate disposal. During the power augmentation mode of operation, steam is introduced into the combustion turbine, again to increase mass flow through the combustion turbine. This steam is produced in the HRSG, using high quality demineralized water.

28. These water treatment and water uses in Smith Unit 3 will generate various process wastewaters. Wastewaters resulting from process water treatment will be routed to an existing Smith Plant on-site collection sump. HRSG blowdown will also be routed to this on-site sump. The process wastewaters then will be routed to an existing Smith Plant on-site ash pond, which has adequate, permitted capacity to accommodate these additional wastewater flows. There will be no direct discharge of these Project-related process waters to area surface waters of the State.

    Impacts to Groundwater

    
    

29. In September 1998, a site investigation was undertaken to sample and characterize the subsurface system at Smith Plant. The groundwater regime and its subsurface system underlying Smith

    Plant consists of a surficial aquifer system, overlying an intermediate aquifer system that in turn overlays the Floridan aquifer which is found throughout this area. The existing Project site lies at an elevation of approximately 7 to 8 feet above mean sea level. Subsurface sediments in the area are primarily marine and estuarine and represent ancient coastal environments or marine terraces. After these marine terraces were deposited, they were mixed with underlying sediments, consisting of a permeable sand, clay, silt and shell mixture.

    The underlying intermediate aquifer system consists of sandy clay and is approximately 80 feet thick. The Floridan aquifer is found at a depth of approximately 100 feet below land surface, typically consists of limestone with macrofossils, and is approximately 300 feet thick in the area of the Project site.

30. Impacts to groundwater from the Project would occur principally from the withdrawal of groundwater for Smith Unit 3 use and from dewatering activities, if necessary, during construction. The existing Smith Plant is presently served by four groundwater wells that are permitted under a Consumptive Use Permit issued in September 1999 by the Northwest Florida Water Management District. That permit authorizes a maximum groundwater use of 1.2 million gallons per day (mgd) for the entire Smith Plant, which would include Units 1 and 2, as well as the proposed Smith Unit 3. These wells are sufficient to satisfy the groundwater withdrawal needs for Smith Unit 3, which amounts

    to an average of 209,000 gallons per day (gpd). By comparison, the existing Units 1 and 2 average a combined groundwater withdrawal rate of 647,000 gpd.

31. During the recent renewal of the Consumptive Use Permit, Gulf Power conducted groundwater modeling to determine if any significant impacts to water resources or water users would occur as a result of the projected water use increase due to Smith Unit 3 operations. That modeling indicated that no adverse or irreversible impacts will occur to the Floridan aquifer system, or to its users in the vicinity of the Smith Plant site. The use of groundwater for process water is a reasonable and beneficial use of that resource. In addition, Gulf Power evaluated other potential sources of water. The factors of reliability and distance to the source were the primary factors considered by Gulf Power in the selection of groundwater use for Smith Unit 3. The Northwest Florida Water Management District agreed with this conclusion and issued the renewed Consumptive Use Permit for Smith Plant, including the proposed addition of Smith Unit 3. In fact, groundwater use for Smith Unit 3 represents less than 3 percent of the total 7.6 mgd Project water need.

32. Project construction may require dewatering during construction activities, including placement of pilings at the Project site. If dewatering occurs, any impact will be very localized, and limited to a small area immediately adjacent to

    the dewatering activities. Dewatering effluent would be routed to the drainage system and then to the new detention basins.

    This effluent will then be allowed to infiltrate back into the surficial aquifer, and thereby offset the dewatering volumes.

33. Wastewaters from Smith Unit 3 will be routed to the existing ash pond at Smith Plant. That ash pond operates under an existing NPDES permit and discharges infrequently, during extreme rainfall events, to a ditch which connects to the existing discharge canal only during extreme rainfall events. Any such pond discharge is sampled and reported to the Department. Any wastewaters that do not evaporate instead percolate into the underlying groundwater. The pond is subject to an FDEP-approved groundwater monitoring program, which has been in operation since the early 1980s. Seven compliance monitor wells are periodically sampled and analyzed for 21 separate parameters to ensure compliance with applicable state groundwater quality standards. This ash pond operates in compliance with the approved requirements of the groundwater

    monitoring plan and monitoring data indicate that Smith Plant has been and continues to be in compliance with all applicable Florida groundwater standards and criteria.

    Impacts to Surface Water

    
    

34. Gulf’s Smith Plant is located on the northern end of a peninsula between the North and West Bays of St. Andrews Bay in Panama City, Florida. Thus, surface water runoff at this

    location generally flows from the northeast to the southwest and discharges to the existing cooling water canal. Four adjacent

    
    

    existing Smith Plant Units 1 and 2 intake water from Alligator Bayou, which is connected to North Bay, and the discharge canal

    
    

    Andrews Bay.

    
    

35. Alligator Bayou is a Class III marine water, while

    
    

    waterbodies. The Class III designation is primarily to protect recreation and maintain a healthy propagation in population of

    waterbody standards provide additional protections for shellfish propagation and harvesting

    
    

36. Operation of the cooling system for the existing generating units at Smith Plant may have impacts on area surface

    entrainment and impingement from cooling water intake structures and thermal stresses from cooling water

    Entrainment is an impact to organisms that are entrapped in the cooling water and drawn through plant water

    
    

    crabs, which may be trapped on water intake screens. Thermal impacts are heat-related stresses that result if excess

    
    

    Warren Bayou.

37. These potential impacts have been studied extensively at the Smith Plant for the past 25 years. Studies in 1977 concluded that impacts of the cooling water intake system were acceptable and that Smith Plant was using the best available technology for that system. The thermal plume in West Bay from the existing units was also studied over the past 25 years. These studies delineated the extent of the thermal plume from

    Smith Plant in the open waters, and included specific sampling of biological communities to determine any adverse thermal plume impact. These studies were used to set the present thermal discharge limits for Smith Plant, and further demonstrated there would be no unacceptable impacts from its operation. Recent ongoing studies, including findings and conclusions contained in a 1998 report, confirmed that there are minimal thermal impacts in West Bay from the existing Smith Plant’s cooling water discharge.

38. As discussed above, cooling water for Smith Unit 3 will be taken from the warm water discharge from the existing two Smith Plant units; cooling water blowdown will be discharged from the cool side of the new cooling tower. Thus, the temperature of the Smith Unit 3 discharge will actually be less than the temperature of the water withdrawn from the cooling canal. Further, since half the water withdrawn for Smith Unit 3 will be lost through evaporation in the cooling tower, approximately one- half of the heat that is removed from the existing canal will not

    be returned to the canal. Thus, there will be a slight reduction in the total heat contribution to area surface waters from Smith Plant as it presently exists. This will reduce the overall heat rejection from the Smith Plant by 1.4 percent. The existing thermal plume will therefore be reduced slightly and the water temperature in the discharge canal will not increase over existing conditions as a result of the addition of Smith Unit 3. This will not cause any exceedance in the existing permitted thermal limits for Smith Plant.

39. Since Smith Unit 3 will withdraw cooling water from the existing discharge canal, there will be no change in entrainment or impingement impacts from the once-through cooling system because no additional water will be withdrawn from North Bay for this Project.

40. The Smith Unit 3 cooling tower will operate under two cycles, meaning that one-half the water withdrawn will be evaporated in the cooling tower. The remaining constituents within the water in the cooling tower will be concentrated two- fold prior to discharge as blowdown, due solely to water being evaporated. However, this blowdown of approximately 2,600 gallons per minute will be immediately mixed in the discharge canal with the 185,000 gallons per minute of water discharged from Smith Plant Units 1 and 2. Therefore, the discharge from the Smith Unit 3 cooling tower will be diluted at a ratio of 71:1. Constituent concentrations within the discharge from Smith

    Plant will only increase approximately 1.4 percent over existing values. The existing discharge is in compliance with both Class II and Class III water quality standards, and it is not anticipated that the slight increase in concentrations due to the Project will cause any violations of applicable FDEP water quality standards.

41. Two constituents will be added to the cooling water to facilitate its use in the cooling tower. Biofouling or the growth of unwanted organisms, such as algae and bacteria, within the cooling tower will be treated with chlorination. However, the discharge valve will be closed during this process and the chlorine will be allowed to dissipate prior to any release. Chemicals will also be added to the cooling tower water to prevent scaling. These chemicals will be nontoxic in nature when discharged and will be approved for use by FDEP under the existing NPDES permit.

42. The Project also will have no measurable effect on adjacent aquatic communities from atmospheric deposition of air emissions from Smith Unit 3. The two primary emissions of concern are nitrogen oxides, which could reach the surrounding water as nitrogen and stimulate growth of algae, and sulfur dioxide, which could contribute to acid rain. With the addition of Smith Unit 3, there will be no increase in nitrogen oxide emissions over existing conditions and, therefore, no additional impact from nitrogen deposition in area waters. Further, sulfur

constitute 1/1000th of the current Smith Plant sulfur dioxide emission levels. Therefore, sulfur dioxide emissions from the

its aquatic community.

Wetlands, Impacts and Mitigation Plan

wetlands. These wetlands are composed of 15.4 acres of wet pine plantation, 10.2 acres of cypress-

and 0.4 acres of ditch habitats. The remaining upland areas are mostly planted pines. Construction of Smith Unit 3 will impact

1. Gulf Power has prepared a Mitigation Plan (Plan) to provide compensation for the loss of these wetlands. This Plan

   
   

   within a larger neighboring 232 acre parcel of land. This parcel is located approximately one mile north of the Project site. The

   
   

   The Plan will involve removing the existing planted pines and replanting native hardwood and cypress trees. The trees will be

   
   

   trees per acre. Tree species to be planted include Bald Cypress, Red Maple,

   naturally in hardwood and cypress swamps in the vicinity. The Plan is based upon a ratio of 12 wetland acres of enhancements

   for each acre impacted of the 6.4 acres of cypress-titi swamp and a 6:1 ratio of wetland enhancement to wetland loss for impacts to the wet pine plantation on the Project site. Thus, the overall mitigation ratio represents an average of 9:1 enhancement, which means for every acre of wetland impact at the Project site, there will be 9 acres of high quality wetlands produced in the mitigation/enhancement area. This Plan is more than adequate to compensate for the wetland impacts on the Project site.

2. The Plan also provides that after planting of the wetland tree species, there will be an ongoing monitoring and maintenance program to determine the overall success of the wetland mitigation efforts. Survival of planted trees and hydrological data will be collected for up to five years, or until the goals of the Plan are otherwise achieved. The mitigation parcel will also be placed under a Conservation Easement, which will preserve the property in perpetuity.

3. Plant and wildlife species surveys of the Project site identified the presence of four protected plant species. Two of these are relatively common ferns, which are protected from commercial exploitation. One threatened species, Chapman’s Crownbeard, is found in a transmission corridor that will not be disturbed by Project construction. The fourth plant, the Panhandle Spiderlily, is a rare species in the region and is considered endangered. Gulf Power will relocate these plants out of the construction area to nearby wetlands that will not be

   disturbed by construction. No listed animal wildlife species were found on the Project site, although the Bald Eagle and Brown

   
   

   the Project will not impact either of these two species of birds. Air Quality

   
   

4. The Prevention of Significant Deterioration (PSD) air construction permit program applies to new major facilities and

   
   

   attaining the federal and state ambient air quality standards. When a new electrical generating unit is added at an existing

   
   

   the addition of the unit results in a significant net emissions increase above recent past actual emission levels for certain

   
   

5. Neither Bay County nor any area in Florida is currently designated as "

Protection Agency (EPA) or FDEP for any federal or Florida ambient air quality standard.

facility for PSD applicability purposes. Smith Unit 3 will add two new combustion turbines and two new duct burners, which will

pollutants: carbon monoxide (CO), nitrogen oxides (NOX), particulate matter (PM), particulate matter of ten microns or

less (PM10), sulfur dioxide (SO2), sulfuric acid mist, and volatile organic compounds (VOCs), and will also add one new cooling tower, which will have the potential to emit PM/PM10

1. The recent actual NOX emissions from Smith Plant’s existing Units 1 and 2 were 6,666 tons per year. As part of this Project, a facility-wide cap on NOX emissions will apply to existing Units 1 and 2, Smith Unit 3, and the existing gas turbine to ensure that the addition of Unit 3 will not result in an increase above these recent actual annual NOX emissions. PSD review was therefore not required for NOX emissions from the Project.

2. Because there were no creditable contemporaneous increases or decreases (within the last five years) in any pollutant emissions other than for NOX, the future potential emissions from Smith Unit 3 were compared to the PSD applicability thresholds for all emissions except NOX. Based on these thresholds and conservative estimates of the future potential emissions from the new Smith Unit 3 combustion turbines, duct burners, and cooling tower, PSD review was required for CO, PM/PM10, SO2, sulfuric acid mist, and VOCs. Operation in the steam power augmentation mode is limited to 1,000 hours per year of operation.

3. For those pollutants triggering PSD review, the PSD program requires a demonstration that the Project’s emissions will not cause or contribute to any violation of state or federal

further requires an analysis for these pollutants to demonstrate

as well as impacts induced by residential, commercial, and

that Best Available Control Technology (BACT) be applied to

Emission Impacts

contribute to a violation of federal or state ambient air quality

classified as a Class II area for PSD. The nearest Class I area

Bradwell Bay National Wilderness Area,

1. An air quality analysis, undertaken in accordance with

   
   

   Smith Unit 3 would not cause or contribute to an

   
   

   state and federal ambient air quality standards for CO, PM , or

   
   

   2 10 2

   
   

2. Smith Unit 3 is also not expected to cause an increase

   
   

   not increase and VOC emissions will increase only negligibly. In

   
   

   new combustion turbines and duct burners.

3. The projected impacts of the sulfuric acid mist emissions from Smith Unit 3 combustion turbines and duct burners were compared to the draft Florida Ambient Reference Concentrations (FARCs). The modeling analysis demonstrated that projected impacts of sulfuric acid mist from Smith Unit 3 will be well below the corresponding draft FARCs and will not impose a health risk.

4. Further, the Project's air emissions are not expected to cause any adverse impacts on visibility and vegetation in the Smith Plant vicinity or in the Bradwell Bay National Wilderness Area, the nearest PSD Class I area.

5. Only temporary and very small residential and no significant industrial or commercial growth is expected from the construction phase of Smith Unit 3. Any resulting air emissions will be very small, well-distributed, and have no measurable impact on ambient air quality.

6. The operation of Smith Unit 3 will not cause odor impacts and will have no significant effect on acid rain because NOX emissions are not being increased and sulfur dioxide emissions are being increased by only a small amount.

7. Consequently, taking into account all of the above factors and considerations, no significant air emission impacts are expected to result from the construction and operation of Smith Unit 3.

   BACT and Emission Rates

   
   

8. A BACT analysis determines the most stringent, allowable emissions rule for each emissions unit and pollutant subject to PSD review on a case-by-case basis, considering available and technically feasible control technologies, methods, systems, and technologies, as well as economic, energy, and environmental impacts and other costs.

9. A BACT review for the Smith Unit 3 combustion turbines and duct burners was required for CO, PM and PM10, SO2, sulfuric acid mist, and VOCs. For the new cooling tower, BACT was required for PM and PM10 emissions.

10. For the Project’s combustion turbines and duct burners, FDEP determined that BACT for PM and PM10 emissions is the fuel quality of natural gas, good combustion practices and a ten percent opacity limitation. For the new cooling tower, BACT was established by FDEP for PM and PM10 emissions to be the use of high-efficiency drift eliminators.

11. For the Smith Unit 3 combustion turbines and duct burners, FDEP’s BACT determination for CO and VOC emissions consists of good combustion practices. The cost per ton of controlling CO emissions through the use of an add-on emission control device known as an oxidation catalyst was found to be excessive. Further, in FDEP’s BACT analysis, the use of an oxidation catalyst would provide no air quality benefits or serve

    an environmental purpose. BACT for CO and VOCs was, therefore, determined by FDEP to be good operating practices.

12. For the Project’s combustion turbines and duct burners, BACT for SO2 and sulfuric acid mist was determined by FDEP to be the use of low-sulfur natural gas.

13. For the Smith Unit 3 combustion turbines and duct burners, BACT for NOX emissions was not required since Gulf Power will use dry low-NOX burners on Unit 3 to control NOX emissions, and short-term NOX emissions limits will apply on a 30-day rolling average basis. A separate NOX limit of 0.1 pounds per million British thermal units applies to the duct burners, which is more stringent than the applicable federal New Source Performance Standard (NSPS) limit.

14. Furthermore, Smith Unit 3 combustion turbines and duct burners will have emission limits well below the applicable NSPS requirements, and no NSPS requirements apply to cooling towers. No National Emissions Standards for Hazardous Air Pollutants (NESHAPs) apply to Smith Unit 3, and a case-by-case determination of Maximum Achievable Control Technology (MACT) for hazardous air pollutants was not required.

    Compliance

    
    

15. The Smith Plant air emission units and activities, both new and existing, will comply with all applicable federal, state, and local air quality standards, including the conditions

conditions of certification for Smith Unit 3.

for NOX as well as the unit-specific emission limiting standards

certification and the proposed PSD permit. Compliance with the

emissions monitoring and fuel use data for existing Smith Plant

emission factors for the existing gas turbine.

70. The adjacent land use to Smith Plant is

The Bay County Land Use Code defines the maximum noise level for

dBA). The Code dBA during

dBA at night.

of Smith Unit 3 will be 63

lower than the applicable noise standard for the adjacent

where noise levels from construction would not be excessive.

steam and air blowing, which should occur infrequently during the

will notify the nearby residents prior to commencement of the

72. During normal operation of Smith Plant following the

3, the highest predicted continuous dBA at the property

adjacent property. Thus, the operation of Smith Plant will

Socioeconomic Impacts and Benefits

beneficial economic and social effects. The main regional

reliable energy source. Also, during construction, employment

with a peak of 325 workers for approximately six months.

$23.7 million. It is expected that most of the construction

subcontractors and vendors will be used to provide labor and

include concrete, lumber, and other construction materials.

construction costs will result in indirect benefits to the local

74. The operation of Smith Unit 3 will result in employment

day schedule. It is expected that these new employees will be

million. These new employees are expected to pay taxes and

the local economy. Using accepted economic multipliers, the

over $1.8 million. Gulf Power also expects to make annual

equipment related to Smith Unit 3 operations.

short term traffic impacts due to construction. These impacts

traffic flow should conditions warrant. Residential areas are

from the site and screening by existing forested vegetation.

76. Impacts from Smith Unit 3 operations are expected to be

recreational areas, parks or scenic

aesthetic quality of the vicinity will be negligible. Smith Unit

services or facilities. The Smith Plant is equipped with its own

guards. The number of new employees are not expected to

roadways.

Project site from agricultural to industrial uses is appropriate

600-acre portion of Smith Plant site used for electrical

an economic loss as a result of Smith Unit 3 construction.

County Comprehensive Plan, the State Comprehensive Plan, and the

Planning Council.

1. The FDEP, the Florida Department of Community Affairs,

   
   

   Wildlife Conservation Commission, the Northwest Florida Water

   
   

   Council each prepared written reports on the Project. Each of

   
   

   otherwise, did not object to certification of the proposed power

   
   

   for the Project, incorporating the recommendations of the various

   
   

   and comply with these Conditions of Certification in the

   construction and operation of Smith Unit 3. In its report, the Florida Department of Community Affairs determined that, if certified, the Project would be consistent with the State Comprehensive Plan, as contained in Chapter 187, Florida Statutes. The West Florida Regional Planning Council stated in its agency report that the Project would not conflict with the strategic Regional Policy Plan for West Florida. No state, regional, or local agency has recommended denial of certification of the Project or has otherwise objected to certification of the Project.

   CONCLUSIONS OF LAW

   
   

2. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. This proceeding has been conducted in accordance with the Florida Electrical Power Plant Siting Act, Chapter 403, Part II, Florida Statutes, and Chapter 62-17, Part I, Florida Administrative Code, which sets out the procedures for power plant siting reviews.

3. In accordance with Chapters 120 and 403, Florida Statutes, and Chapter 62-17, Florida Administrative Code, proper notice was accorded to all persons, entities, and parties entitled to such notice, and appropriate notice was provided to the general public by both the Department and Gulf Power. All necessary and required governmental agencies participated or otherwise had the opportunity to fully participate in the

   certification process. Reports and studies were issued by FDEP, the Department of Community Affairs, the Florida Department of Transportation, the Fish and Wildlife Conservation Commission, the Northwest Florida Water Management District and the West Florida Regional Planning Council, in accordance with their various statutory duties under the PPSA.

4. The Florida Public Service Commission has issued its affirmative determination that a need exists for the electrical generating facility and the electricity it will produce, in accord with Sections 403.519, Florida Statutes.

5. Competent, substantial evidence and testimony produced by Gulf Power at the certification hearing demonstrates that Gulf Power has met its burden of proof that Smith Unit 3 meets the criteria for certification under the PPSA. Unrebutted testimony produced at the hearing demonstrates that the safeguards for construction and operation of Smith Unit 3 are technically sufficient to protect the public welfare of the citizens of Florida and are otherwise reasonable and available methods to achieve that protection of the public. Smith Unit 3 will result in minimal adverse effects on human health, the environment, the ecology of the land and its wildlife, and the ecology of state waters and their aquatic life. In addition, the Project will not conflict with the goals established by the local comprehensive plan for Bay County, Florida. If operated and maintained in accordance with this Recommended Order and the FDEP’s proposed

Conditions of Certification, Smith Unit 3 will comply with the applicable nonprocedural requirements of all agencies. Further, certification of the Project will fully balance the demand for electrical power plant location and operation in this state with the broad interests of the public that are protected by the PPSA.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Siting Board grant full and final certification to Gulf Power Company, under Section 403, Part II, Florida Statutes, for the location, construction, and operation of Smith Unit 3, representing a 575 MW combined cycle unit, as described in the Site Certification Application and the evidence presented at the certification hearing, and subject to the Conditions of Certification contained in FDEP Exhibit 4.

DONE AND ENTERED this 19th day of June, 2000, in Tallahassee, Leon County, Florida.

P. MICHAEL RUFF Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-68847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 19th day June, 2000

COPIES FURNISHED:

Douglas S. Roberts, Esquire William D. Preston, Esquire Hoping, Green, Sams & Smith Post Office Box 6526

Tallahassee, Florida 32314-6526

Scott A. Goorland, Esquire

Department of Environmental Protection Douglas Building, Mail Station 35 Tallahassee, Florida 32399-3000

James V. Antista, Esquire

Fish and Wildlife Conservation Commission 620 Meridian Street

Tallahassee, Florida 32399-1600

Andrew S. Grayson, Esquire Department of Community Affairs 2555 Shumard Oak Boulevard Tallahassee, Florida 32399-2100

Sheauching Yu, Esquire Department of Transportation Mail Station 35

Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32399-0450

Robert V. Elias, Esquire

Florida Public Service Commission Gerald Gunter Building

2540 Shumard Oak Boulevard Tallahassee, Florida 32399-0850

Daniel F. Kurmel, Executive Director West Florida Regional Planning Council Post Office Box 486

Pensacola, Florida 32593-0486

Douglas Barr, Executive Director Douglas L. Stowell, Esquire Northwest Florida Water

Management District

81 Water Management Drive Havana, Florida 32333

Johnathan Mantay, County Manager Bay County

Post Office Box 1818

Panama City, Florida 32402-1818

Teri Donaldson, General Counsel Department of Environmental Protection Douglas Building, Mail Station 35 Tallahassee, Florida 32399-3000

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 99-002641EPP

Orders for Case No: 99-002641EPP