July 16, 2003 Ms. Jean Vernet Office of Electrical Transmission and Generation Department of Energy Forrestal Building 1000 Independence Avenue, SW Washington, DC 20585 Re: EPA Docket No. OAR 2002 0058 Potential Impact of EPA Proposed MACT Rule on the City of Escanaba, MI Dear Ms. Vernet:

As described in my previous letter of May 16, 2003 to you, the City of Escanaba has a 25 megawatt coal fired power plant and a 16 megawatt oil fired combustion turbine that provides all the power, except for occasional off peak economic energy purchases, used by the City. We have obtained estimates of the cost to add equipment to the coal fired power plant to meet the requirements of the proposed EPA MACT Rule. The cost estimate is in the range of $ 11,000,000 to $ 14,500,00 for initial capital improvements. An additional $ 450,000/ year operating costs, not including the energy required to operate the equipment, would be added to that. The 3 megawatt station power requirement to operate the equipment would create additional costs and a greater capacity shortage than Escanaba currently has. The result would be a rate increase to the City's electric customers of approximately 25%  30%.

Due to the age and capacity of the City's power plant, the cost of the modifications would justify closing the plant in our opinion. However, because of the transmission constraints described in my earlier letter and Mr. William Pyle's letter of May 12, 2003 to you, we do not have the option of closing the plant unless it is replaced by a new power plant. Obviously, it would take a significant amount of time to build a new power plant.

An example of the critical nature of the power supply situation in the Upper Peninsular ( U. P.) was seen recently when the Silver Lake Dam was breached. The flood from the Silver Lake Dam failure damaged the Presque Isle Power Plant, the U. P.' s largest power plant. Escanaba's 16 megawatt combustion turbine, an older unit meant for short term emergencies and peaking requirements, which had just been installed and had not completed the final checkout phase, was pressed into service to provide power for other U. P. utilities. The total output of our combustion turbine and all the power from our coalfired plant in excess of the City's needs was provided to other utilities for at least two weeks while repairs were being made to the Presque Isle Power Plant. We have since learned that the transmission system operator, American Transmission Company ( ATC), had declared a TLR5, which they say was the longest one in history. Without extraordinary cooperation and coordination with all U. P. utilities and ATC, a blackout would have occurred in the U. P.

The example I just sited also makes it clear that the U. P. is vulnerable to terrorist's activities because of transmission constraints and a weak power supply system. One event, the Silver Lake Dam failure, caused a major disruption to the U. P. economy. Ore mines, a significant part of the U. P. economy, had to suspend operations and the power that kept businesses and homes with lights was costly.

I believe it is obvious that a 25% 30% increase in electric rates could have a devastating economic impact on Escanaba. We can only speculate what local industries and businesses might do in response to such an increase.

Escanaba supports the efforts of the Michigan Municipal Electric Association and AMPOhio lead group of utilities with power plants affected by the EPA proposed MACT Rule. We believe that the proposals this group has made are a reasonable alternative to the EPA proposal. In addition, Escanaba and Marquette are in a unique position due to transmission constraints that we believe would afford us an exemption from the final rule adopted by EPA.

Thank you in advance for your efforts on behalf of the citizens of Escanaba.

Sincerely,

__________________________ Mrs. Judith Schwalbach Mayor, City of Escanaba __________________________ Mr. Doug Terry City Manager, City of Escanaba __________________________ Mr. Robert Headden Superintendent, Escanaba Electric