THE EFFECT OF NOX REGULATIONS ON EMISSIONS DISPATCH - A PROBABILISTICPRODUCTION COSTING ANALYSIS

The effect of NOx emission restrictions on the cost of generation is,s hown using the Bloom-Gallant model for production costing simulation. For this case study, it is found that tonnage caps provide a more cost -effective way to meet emission goals than lb/MBtu rate limiting polic ies. The inefficiency of rate limits is due to its encouragement of fu el use (''Btu dilution''), and to a reduction of cost-effective energy transactions. Emissions dispatch is confirmed as an economical techni que for NO, compliance. However, the cost-effective range of emissions dispatch is significantly reduced under lb/MBtu regulation, especiall y whin the system has large opportunities for trading power.