for reduced fuel use), fear of triggering New Source Review, and uncertainty about GHG
regulations (which could lead to very short payback periods for improvements)
If power plant efficiency is an option EPA proposes for state consideration, the question then may
be asked how a fleet-wide improvement program could be achieved in United States. One
possible approach might be to follow NETL’s suggestion of using the top decile of CFPP
efficiency as a benchmark for U.S. fleet efficiency, used with an efficiency frontier Using
statistical methods, benchmarks could be used to improve efficiency of the CFPP fleet. NETL
observes that while some improvements could be “relatively inexpensive” (for example,
improved O&M, more frequent or pro-active maintenance), other improvements could be “very
expensive” (for example, improvements bundled with a new SO2 scrubber, or turbine overhauls
or heat exchanger replacement). But NETL notes that “if each plant achieved their maximum
efficiency each year, 5% reduction in CFPP carbon dioxide emissions” could result.
According to NETL’s analysis, retirements of lower efficiency units combined with increased
generation from higher efficiency refurbished units, and advanced refurbishments with improved
operation and maintenance, would be the key to increasing average fleet efficiency.
Efficiency improvements could be incentivized using an efficiency frontier. The selection of
appropriate incentives would then encourage CFPP owners to undertake improvements or retire
lower efficiency units. Such incentives could include possible tax rate reductions for CFPP
owners matched in some manner to the cost of the improvements, or accelerated book
depreciation63 rates for cost recovery. Penalties could perhaps be used to encourage prompt
retirement of the lowest efficiency units.
The incentives could be in place over a defined period of years, with incentives reduced during
the period to encourage action sooner rather than later. The effective period of incentives would
have to be sufficiently long enough to allow equipment orders to be satisfied, and simultaneous
work to progress at multiple CFPP sites across the country which might seek to make