vvEPA
United State*
Environmental Protection
Agency
Office of
Policy Analysis
Washington, DC 20460
EPA-230-04-82-003
Water
Analysis
of Final Effluent
Limitations Guidelines
Mew Source
Performance Standards,
and Pretreatments Standards
for the Iron and
Steel Manufacturing
Source Category
QUANTITY
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An Economic Analysis of
Final Effluent Limitations Guidelines,
New Source Performance Standards,
and Pretreatment Standards
for the Iron and Steel
Manufacturing Point Source Category
ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF POLICY ANALYSIS
MAY 1982
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CONTENTS
List of Exhibits iii
Acknowledgments ix
EXECUTIVE SUMMARY E-l
Scope of the Study E-2
Methodology and Major Assumptions E-3
Condition of the Steel Industry Without
Additional Water Pollution Control Costs E—7
Effects of Additional Water Pollution
Control Costs E—lO
Sensitivity Analyses E—13
Effects of Water Pollution Controls on
the Merchant Coke Industry E— 14
Effects of Water Pollution Controls on
the Merchant Pig Iron Industry E—15
EXHIBITS TO EXECUTIVE S JMMARY
1. INTRODUCTION I—i
Background 1-2
Scope of the Study 1-6
II. BASELINE CONDITION 1 1-1
Future Steel Shipments 11—2
Future Operations and Maintenance Expenses 11—4
Steel Industry Profitability and Capital
Expenditures 11—5
Capacity Retirements 11—7
Capacity Additions 11—8
Reinvestment in Existing Facilities 11—10
Future Costs for Baseline Pollution
Control Equipment I l—il
Sensitivity Analysis: DRI Inflation Series 11—18
Sensitivity Analysis: Air Stretchout 11—18
1.
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CONTENTS
(continued)
III. COST IMPACT OF THE CLEAN WATER ACT 11 1-1
Cost Impact Methodology 1 1 1—1
Cost Impact of the Guidelines 111—2
Comparison of PBS and NtIS/Rice Water
Cost Estimates 111—8
IV. FINANCIAL EFFECTS IV-l
Baseline Revenue and External Financing
Requirements and Financial Condition IV-3
Financial Effects of Future Water Pollution
Control Expenditures IV—5
Sensitivity Analyses IV—9
S/. ECONOMIC IMPACTS OF ENVIRONMENTAL REGULATIONS V-i
Scenario 1 v—i
Scenario 2 V-4
Effects of Water Pollution Controls on the
Merchant Coke Industry - V-7
Effects of Water Pollution Controls on the
Merchant Pig Iron Industry V-9
EXEIB TS TO MAIN REPORT
APPENDIX: METHODOLOGY AND. SUPPORTING EXHIBITS
ii
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LIST OF EXHIBITS
Executive Sunary
E—]. Summary of Economic Impacts of Final Water
Pollution Control Regulations
E—2A Steel Industry Effluent Regulation Costs,
Scenario 1
E-2B Steel Industry Effluent Regulation Costs,
Scenario 2
E-3 Short—Run Financial Impact of Environmental
Regulations, Scenario 1 Shipments Projec-
tions, 1980—1985
E-4 Maximum Short-Run Economic Impact of
Environmental Regulations, Scenario 1
Shipments Projections, 1985
E—5 Long—Run Financial Impact of Envirohmental
Regulations, Scenario 1 Shipments Projec-
tions, 1980—1990
Long—Run Economic Impact of Environmental
Regulations, Scenario I Shipments Projec-
tions, 1990
E-7 Short-Run Financial Impact of Environmental
Regulations, Scenario 2 Shipments Projec-
tions, 1980—1985
E-8 Maximum Short—Run Financial Impact of
Environmental Regulations, Scen rio 2
Shipments Projections, 1985
E-9 Long—Run Financial Impact of Environmental
Regulations, Scenario 2 Shipments Projec-
tions, 1980—1990
E-lO Long—Run Economic Impact of Environmental
Regulations, Scenario 2 Shipments Projec-
tions, 1990
iii
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LIST OF EXEIBITS (continued)
Executive Sununary
(continued)
E—l1 Sensitivity Analysis on Scenario 1 Short-
Run Financial Impact of Environmental Regu-
lations, 1980—1985
E—l2 Sensitivity Analysis on Scenario 1 Short—
Run Economic Impact of Environmental Regu-
lations, 1985
E—13 Sensitivity Analysis on Scenario 1 Long—Run
Financial Impact of Environmental Regula-
tions, 1980—1990
E—14 Sensitivity Analysis on Scenario 1 Long—Run
Economic Impact of Environmental Regula-
tions, 1990
Main Report
1 Domestic Shipments of Finished Steel
Products
2 Projected Domestic Shipments of Finished
Steel Products
3 Steel Production Processes
4 Production Operations and Maintenance
Expenses by Cost Category, 1976—1990
5 Return on Equity, 1.970—1980
6 Capacity Retirements, 1976—1990
7 Capacity Additions, 1976—1990
8 Capital Expenditures for Capacity Addi-
tions, 1976—1990
9 Baseline Reinvestment in Existing
Facilities -
10 Air Pollution Control Compliance Schedule,
1976—1990
iv
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LIST OP E IBITS (continued)
Main Report
(continued)
11 Capital Expenditures for Air Pollution
Control Equipment by Production Process and
Time Period
12 Capital Expenditures for Air Pollution
Control Equipment by Production Process and
Type of Emission
13 Capital Expenditures for Air Pollution
Control Equipment by Year and Type of
Emi s s ion
14 Operations and Maintenance Expenses for Air
Pollution Control Equipment by Production
Process, 1980, 1985, and 1990
15 Operations and Maintenance Expenses for Air
Pollution Control Equipment by Year and
Type of Emission
16 Capital Expenditures and Operations and
Maintenance Expenses for Miscellaneous
Pollution Controls
17 Sensitivity Analysis——Air Stretchotit:
Capital Expenditures and Operations and
Maintenance Expenses for Air Pollution
Control Equipment
18 Capital Expenditures for Water-Pollution
- Control Equipment by Year and Effluent
Guideline
19 Capital Expenditures for Water Pollution
Control Equipment by Subcateqory and
Effluent Guideline
20 Operations and Maintenance Expenses for
Water Pollution Control Equipment by Year
and Effluent Guideline
21 Operations and Maintenance Expenses for
Water Pollution Control Equipment by
Subcategory and Effluent Guideline, 1985
and 1990
V
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LIST OF EXHIBITS (continued)
Main Report
(continued)
22 PTm(Steel) Financial Module
23 Baseline Revenue Requirements, 1981-1990
24 Economic Module
25 Steel Industry Employment with No Pro-
duction Declines Related to Capital
Constraints
26 Steel Energy Consumption with Mo Production
Declines Related to Capital Constraints
Appendix -
A—i Yields by Process, Maximum Sustainable
Utilization, Capital Cost of Roundout
Capacity Additions, and Reinvestment Rate
for Modernization by Process
A—2 Resource Requirements for Steelmaking, 1976
A—3 1976 Process Inventory-—Number of Units
A—4 Plant Size Breakdown by Process, 1976
A—S Technology Changes, 1976—1990
A—6 1976 Costs of Resources
A—7 Projections of Steel Shipments by Product,
1976—1990
A—8 Model Plant Cost Data for Air Pollution
Controls
A—9 Cost and Coverage Data for Miscellaneous
Air Pollution Controls
A—10 Model Plant Cost Data for Water Pollution
Controls (to be provided in the Development
Document)
vi
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LIST OF E IBITS (centinued)
Appendix
(continued)
A—il Coverage Data for Water Pollution Controls
A— 12 Subcategory/Production Process Conversion
Data
A—13 Major Financial Assumptions
A—14 Interest Rates and Cost Escalation Factors
for 1976 Prices
A—iS Sensitivity Analysis-—Higher Inflation
Rates: Interest Rates and Cost Escalation
Factors for 1976 Prices
A—16 Major Economic Assumptions
vii
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ACZNOWLEDGM NTS
EPA ’s Office of Policy Analysis provided direction
throughout the duration of the project. Temple, Barker &
Sloane received valuable assistance from G. Amendola and
especially from R. Greene.
While pleased to acknowledge the assistance it has re-
ceived during this study, TBS of course takes full responsi-
bility for the study’s analysis and conclusions.
This project was funded by Contract No. 68—01-4341 and
Contract No. 68—01—5845 through the Environmental Protection
Agency.
ix
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EXECUTIVE SUMMARY
This report examines the economic effects of the final
water pollution control regulation on the iron and steel in-
dustry. It focuses on the regulation’s potential impacts on
the steel industry’s prices, financial condition, and produc-
tion capacity. The study effort was sponsored by the Office
of Policy Analysis of the U.S. Environmental Protection Agency
(EPA) as part of the EPA’S overall review of the water pollu-
tion control regulation for the iron and steel industry.
The report presents the results of a 36-month study con-
ducted by Temple, Barker & Sloane, Inc. (TBS). To analyze the
production, pollution control, and financial characteristics
of the iron and steel industry, TES employed its policy-test-
ing model of the steel industry, PTifl(Steel). PTxn(Steel) com-
bines a methodology for calculating economic effects with the
production cost impact methodology employed by the American
Iron and Steel Institute (AISI) in its investigation of pollu-
tion control costs. This combination permits an integrated
analysis of the costs and economic effects of environmental
regulations.
TBS’s analysis focused on the impact of pollution control
costs on the steel industry in light of the capital con-
straints the industry is Likely to face during the next dec-
ade. TES assumed that the current government policies toward
the industry would continue throughout the 1980s. These in-
clude the current provisions of the Economic Recovery Tax Act
of 1981 concerning corporate income tax rates, depreciation
schedules, and investment tax credits; the relaxation of for-
mal and informal steel price controls; and the effective en-
forcement of steel trade laws, such as the trigger price
mechanism.
In terms of approach, the analysis focused on two time
periods——1980 to 1985 and 1980 to 1990——and was developed
using two scenarios for the future demand for domestically
produce4 steel products. A fairly profitable scenario with
rapid growth in shipments (Scenario 1) was based on an AISI
projection of steel shipments of 108 million tons in 1985 and
116 million tons in 1990, which would result in capacity con-
straints throughout most of the ].980s. A less profitable,
less expansionary scenario (Scenario 2) was based on an econo-
metric model of future industrial production, which projected
shipments of 103.2 million tons in 1985 and 108.3 million tons
in 1990. The second scenario would result in underutilized
capacity for most of the 1980s.
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Our findings were considerably different for Scenario 1
and Scenario 2. In Scenario 1, high capacity utilization in
the industry would lead to higher profitability than that
experienced by the industry during the 1970s. These profits
would ultimately allow the steel industry to attract adequate
capital to finance expenditures for both added production
capacity and pollution control equipment. Consequently, in
Scenario 1 the required pollution control expenditures would
have an effect on production in the short term, when capital
spent on pollution control would otherwise be needed for ex-
pansion. This effect would be virtually eliminated in the
long term. However, the impact on price, although not sig-
nificant, would be more pronounced in the long term.
In Scenario 2——where continued low profits and con-
straints on capital would persist throughout the 1980s——the
costs of pollution control would result in more persistent
production impacts. Initially, these impacts would be similar
in magnitude to the short-term impacts in Scenario 1. How-
ever, by the early 1990s, an improved cash flow position would
allow the industry to recover from the impacts of pollution
control costs. Thus, under each scenario, the impacts of
pollution control would have an insignificant long—run effect.
Additional pollution controls would not have an impact on
production and would cause only a 0.6 percent increase in
prices. Exhibit E—l provides a summary of these results.
The remainder of this summary elaborates on these find-
ings. The scope, methodology, and major assumptions of the
TES analysis are described in the next two sections. Subse-
quent sections review TBS’s analysis of the steel industry’s
future financial and economic condition in the absence of the
final water pollution control regulation and then examine how
the water regulation would affect the industry. The sensitiv-
ity analyses that were performed to examine several major
assumptions used in the study are then discussed. The final
sections summarize the impacts of the water pollution control
regulation on the inerct ant coke and the merchant pig iron
industries.
SCOPE OF THE STUDY
For the purpose of this study, the steel industry was
defined as those production process units normally associated
with steel production and finishing. Thus, on—site facilities
ranging from raw material storage yards for coke ovens and
blast furnaces to finishing mills were considered part of the
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E-3
steel industry. Also included in the industry definition were
facilities used by the steel industry to produce pig iron for
foundries and other uses. Facilities for the mining, benefi-
ciation, and transportation of raw materials, fabrication
facilities, and all nonsteel operations performed by steel
firms were excluded from the analysis. In order to utilize
the detailed operating data compiled by A.tSI members, TBS
limited its analysis to steel industry operations that ac-
counted for approximately 87 percent of u.S. raw steel produc-
tion capability in 1980. Separate analyses of the merchant
coke and merchant pig iron industries were also performed, as
described later in this Summary.
The environmental regulations considered in this report
were those promulgated, proposed, or anticipated by the EPA as
of August 1980 for air pollution controls and as of December
1981 for water pollution controls. In addition, those costs
related to the Resource Conservation and Recovery Act (RCRA)
that are associated with the water pollution control regula-
tion were included.
The engineering cost estimates and compliance schedules
associated with environmental control efforts were based on
compliance by the steel firms at the plant sites. Summaries
of these costs are provided in Exhibits E-2A and E-2B. The
costs do not include control efforts by municipal wastewater
treatment facilities associated with the effluent from in-
directly discharging steel producers.
The analysis of the financial and economic conditions of
each scenario focused on two time periods: a short-term
period-—from 1980 to 1985——and a long—term period——from 1980
to 1990. The year 1980 was chosen to begin each of the
periods because the financial impacts of added pollution con-
trol equipment (to be installed in 1982 and thereafter) would
begin two years prior to installation of the pollution control
equipment. The year 1985 was chosen to end the short-term
period because maximum declines in capacity and market share
were observed in that year. The year 1990 was chosen to end
the long-term period because the long-term financial and
economic impacts would be apparent by that time.
METliODOLOGY AND
MAJOR ASSUMPTIONS
In order to determine the economic effects of effluent
guidelines on the iron and steel industry, it was necessary to
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E—4
establish two scenarios that would reflect the major uncer-
tainty currently facing the industry——the demand for steel
products during the next decade. Annual shipment levels for
the two scenarios are presented in Table E-l. Although the
difference in 1990 in the steel shtpment levels of the two
scenarios appears slight——116 million eons in Scenario 1 and
108.3 million tons in Scenario 2——it is sufficient to distin-
guish between a fully utilized, reasonably profitable, expan-
sionary steel industry, and a capital-constrained, marginally
profitable steel industry. T3S believes that both scenarios
should be considered with equal weight given the narrowness of
the range between them, the resulting difference in the indus-
try’s financial condition, and the major uncertainties in the
nation’s future economic condition.
92.0
98 • 0
105.0
‘06.0
108 • 0
109.0
111.0
112.0
114.0
116.0
92.0
96.5
99 • 3
103.9
103.2
99.8
96.2
101.5
108.9
108.3
Ai.though Scenarios 1 and 2 were designed to capture what
TBS considered the most important future uncertainty facing
the steel industry in the 1980s, certain other assumptions
required further analysis. These included water pollution
control cost estimates, the relationship between future cost
savings and industry profits, and the impact of higher infla-
tion rates on the industry’s financial condition. tn addi-
tion, the financial impacts of the air compliance stretchout
(the extension of air pollution control costs recently per-
mitted by Congress) were examined. Each issue was addressed
in a sensitivity analysis.
Table E—1
SCENARIOS FOR Dct4ESTIC SHI 4E’1TS OF
FINISHW STEEL PROOLCTS
Cm ’ II Ions of 1 ons
per year)
Scenario I
Scenario 2
1981
1982
1983
1984
1985
1986
I 987
1988
7989
I 990
Source: POL
and 18$ projec?fons.
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E—5
The shipment levels in Scenario 1 were based on forecasts
presented in the Arthur D. Little, Inc. (ADL) report to the
AISI, Environmental Policy for the 1980s: Imoact on the
American Steel Industry (1980). To develop Scenario 2 ship-
merit estimates, TBS used production indices obtained from Data
Resources, Inc. (DRI) and adjusted them to reflect the effects
of automobile downsizing (a reduction in steel demand of about
6 million tons by 1985). The shipment estimate was also
smoothed to reduce the importance of the timing of business
cycles in the DRI forecast.
With the exception of projected shipments, the major
assumptions in Scenarios 1 and 2 were the same. These in-
cluded assumptions concerning the nature of the industry’s
future profitability, the industry t s ability to raise debt and
equity capital, the impact of reduced investment in plant and
equipment on production capability, and improvements in indus-
try cost structure that would result from future plant
closures.
TBS assumed that industry profitability would be based on
the utilization of raw steelmaking capacity. In the period
1970 to 1980 (except for the boom years 1973 and 1974), raw
steel utilization averaged 82 percent, and the industry rate
of return on equity averaged the rate of inflation. In 1973
and 1974, utilization averaged 97 percent, arid return on
equity approximated the return for nonfinancial corporations.
On the basis of this evidence, TBS assumed an industry return
on equity equal to the rate of inflation when the utilization
of raw steelxnaking capacity was less than or equal to 85 per-
cent. When utilization was 100 percent, T8S assumed an indus-
try return on equity equal to the average rate of return for
nonfinancial corporations. When it was greater than 85 per-
cent, the rate of return was calculated by interpolating
between the two points.
Profitability affects the steel industry’s future in
at least three important ways. First, profits provide returns
to its stockholders as well as much of the cash the industry
uses to finance investments needed for the maintenance arid
expansion of its capital stock. Second, current high profits
provide assurance to potential purchasers of steel industry
common stock that they will receive a return on their invest-
ment. Thus, high profits ensure that market prices for common
stock will be high, allowing companies to issue additional
common stock without dilution of present shareholders’ inter-
ests. Third, poor profits diminish the industry’s credit
rating and therefore limit its ability to raise capital
through the issuance of debt.
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E-6
In the 1970s, low profitability, coupled with large capi-
ta]. expenditures for production facilities and pollution con-
trol equipment, essentially eliminated the steel industry’s
access to equity capital and stretched its ability to issue
additional debt. As a result, the credit quality of steel
industry debt declined.
Additional issues of debt would tend to degrade key rneas-
ures of credit quality such as the cash—flow—to—long-term—debt
ratio, the interest coverage ratio, and, most important, the
debt-to—capitalization ratio. The bulk of the industry is
given a credit rating of A by Standard & Poor’s and Moody’s.
Issues of debt that would further degrade the industry’s
credit quality would reduce the industry’s rating to the
lowest investment grade (Standard & Poor’s 339 and Moody’s
Baa) or, worse yet, below investment grade. Under normal
credit market conditions, a BBB/Baa—rated company is rela-
tively assured of having access to debt capital on reasonable
terms. Rowever, during tight credit market conditions, these
companies may not be able to raise their capital requirements
on reasonable terms. Consequently, the additional costs and
potential financing difficulties associated with a 339/Baa
rating (or lower) are likely to lead steel industry manage-
ments to constrain their capital expenditur s and debt financ-
ing to levels consistent with the preservation of an A bond
quality rating.
The TES analysis reflects the foregoing financial consid-
erations in two important ways. First, it was assumed that
common stock financing would not be undertaken by the steel
industry unless it could demonstrate a long-term profit poten-
tial for several years. This assumption is reasonable in
light of the current low market-to—book value——near 50 per-
cent——of steel industry common stock. Before common stock
could be issued, the industry would have to achieve returns on
equity approaching that of the average for U.S. manufacturing
firms. Second, the industry’s debt—to—capitalization ratio
was limited to approximately 35 percent in order to preserve
the industry’s .current credit rating. Any further decline
could restrict its access to debt capital in the future. This
limit on debt financing in turn implied limits on the capital
expenditures that the industry would likely undertake. It was
assumed that the industry would probably reduce capital ex-
penditures invested in its existing facilities to levels below
those considered desirable by knowledgeable industry sources.
This is a conservative assumption because other sources of
funds, such as the sale of nonsteel businesses or coal re-
serves, may be available. Rowever, the assumption is rea—
sonable because the expenditure of outside funds on the
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E-7
steel industry is unlikely since the resulting return on
investment would be poor. Reductions in expenditures for
existing equipment would maJ e it more difficult for the indus-
try to maintain its current levels of improvement in produc-
tivity, quality, energy conservation, and cost reduction.
Moreover, the industry would be less able to meet U.S. steel
requirements during future periods of high demand and would
thus lose a part of its share of the U.S. steel market.
The degree to which capacity would shrink would depend on
the reduction in capital investment relative to the replace-
ment value of the industry’s capital stock. Based on industry
information recently updated by TBS, the replacement value of
the capital stock of the U.S. steel industry is approximately
$81.1 billion in 1980 dollars. Of this, approximately
2.2 percent, or $1.8 billion, must be spent each year on
existing equipment to maintain efficiency and competitiveness
and to adjust for changes in technology and product mix.
Reductions in investment in capital stock from this level
would cause the value of the capital stock to decrease by an
equal amount. For example, a $1.0 billion reduction would
result in a 1.2 percent decline in shipment capability, or
about 1.2 million tons annually. If reduced capability were
to coincide with a period of high demand for steel products,
then production, employment, and market share declines would
be more pronounced.
A final major assumption in the TBS analysis relates to
the operating cost savings resulting from the closing of
inefficient plants. On the basis of data provided in ADL’s
report to the AISI, TES assumed a cost savings of $80 of
annual savings per ton for the first 3 million tons of capac-
ity closed. For closures beyond 3 million tons, a cost
savings of $30 per ton was used.
CONDITION OF TBE STEEL
INDUSTRY WITHOUT ADDITIONAL
WATER POLLUTION CONTROL COSTS
The financial and economic impacts of additional water
pollution control costs on the steel industry were evaluated
by first establishing a baseline condition (reference point)
for each of the two scenarios. These baselines included the
cost to the industry of production, in—place and projected air
pollution control equipment, and in—place water pollution
control equipment.
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E—8
The following sections describe the baseline financial
and economic conditions for the two scenarios. Financial
condition is depicted in terms of five key factors: capital
expenditures for new equipment, capita]. expenditures for
existing equipment, external financing needs, operations and
maintenance (O&M) costs, and revenue requirements. Economic
condition is defined in terms of the average price of steel,
declines in capacity resulting from constraints on capital,
production levels, market share, and employment.
The modeling performed in PTm(Steel) projects steel in-
dustry production costs and revenues based on the industry’s
shipping 84.5 percent of the steel demanded by the domestic
market (Table E-2). In the following sections (and throughout
the report), production costs, prices, and revenues are re-
ported on this basis. However, capacity constraints in the
1980s will prevent the industry from attaining a full
84.5 percent market share. Production and employment pro-
jections are reported based on this reduced market share.
Scenario 1
The Scenario 1 baseline condition of the steel i idustry
for the years 1985 and 1990 is illustrated in Table E—2 and
detailed in Exhibits E—3 through E—6. To maintain its current
bond rating, the industry would need to reduce its capital
expenditures on existing equipment by about $813.3 million per
year through 1985. This sustained reduction would lead to a
decline in production capability of about 6.9 million tons of
finished steel products. Consequently., at a utilization rate
of 90 percent for raw steelmaking processes, only 98.8 million
tons could actually be shipped, compared with a projected
demand of 108 million tons. If the excess demand were sup-
plied by imports, then market share in 1985 would decline
7.2 percentage points to 77.3 percent.
By 1987, continuing capacity constraints and the accom-
panying high profitability would allow the steel industry to
issue large amounts of common stock. This, along with in-
creased profitability and the tax reductions associated with
the Economic Recovery-Tax Act, would provide the funds needed
to reduce the backlog of delayed expenditures on existing
equipment and to expand capacity to regain the industry’s
current market share of about 84.5 percent by 1990.
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E—9
Table E—2
SINMARY OF THE SASELINE CONDITIONS
Scenario I ScenarIo 2
Short Term Long Ter& Short Term Long Term
( 1980—1985) ( 1980—1990) ( 1980—1985) ( 1980—1990)
Capital Exoenditures (millions
of 1980 dollars)
New Production Equi nent S 8,640.5 $12,873.4 S 8,602.8 S10,357.1
Pollution Controls 2,316.5 2,494.6 2,291.1 2,348.2
Existing Production Equi nent 6,531.6 18,566,5 7,251.2 17,643.8
Total $17,488.6 $33,934.5 $18,145.1 $30,349.1
Annual 0&M Expenses (millions
of 1980 dollars) 2 1 3 1 5
Production $41,408.7 $47,589.0 $39,863.4 $44,332.3
Pollution Controls 1,016.1 1,114.1 965.2 1,040.6
Total $42,424.8 $48,703.1 $40,828.6 $45,372.9
Revenue Recuirements
(millions of 1980 dollars) 2 1 5 $50,564.9 $56,962.1 $48,259.3 $52,845.1
Averaqe Price (S/ton) 2 $533.86 S558.80 $533.21 $555.28
Domestic Production
(millions of tons) 2 ,
Demanded 108.0 116.0 103.2 108.3
Supplied 98.8 116.0 101.2 103.4
Shortfall 9.2 0.0 2.0 4.9
Market Share (percent) 2 , 4 77.28% 84.50% 82.87% 80.67%
Employment (thousands of employees) 2 425.78 459.11 448.67 401.86
1 tmproved financial condition would allow the industry to achieve an 84.3 percent
market share in the early 1990s.
2 End of period estimate.
3 lncludes cost savings resulting from closure of Inefficient plants.
4 Totai ij.S. projected shi nents of steel; includes producers not in financial
statistics.
5 0&M and revenue based on an 84.5 percent market share.
Source: lBS analysIs.
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E—l0
Scenario 2
In Scenario 2, the industry’s baseline condition is sub-
stantially different. Table E—2 summarizes the baseline con-
dition, and Exhibits E—7 through E—l0 provide additional in-
formation. Capital expenditures on existing equipment would
need to be reduced by an average of $693.4 million per year
below desired levels through 1985 for the steel industry to
maintain its bond ratings. This reduction would result in a
decline in production capacity of about 6.0 million tons per
year, which would contribute to a decline in the industry’s
market share from 84.5 percent to 82.9 percent.
After 1985, a combination of factors would allow the
steel industry to begin to recover slowly from declines in
production capacity. These factors include the tax reductions
associated with the Economic Recovery Tax Act and the higher
profitability stemming from higher utilization rates. In
1990, a year of cyclically high demand, market share would
fall to 80.67 percent. However, by 1990, the industry would
be able to rework and modernize much of its inefficient equip-
ment. Although the steel industry would not be able to issue
significant amounts of common stock by the early 1990s, its
financial condition would improve markedly, and it would be
left with adequate funds to regain and mathtain its competi-
tive position.
EFFECTS OF ADDITIONAL WATER
POLLUTION CONTROL COSTS
Based on EPA technical data, TBS estimated that the cap-
ital expenditures for water pollution control equipment needed
to comply with EPA’S final effluent guidelines for currently
installed steel facilities would total $309.6 million for the
1982-1984 period. 1 Water pollution controls for new steel
facilities built by 1990 would require additional capital
expenditures of $420.5 million in Scenario 1 and $273.2 mil-
lion in Scenario 2. In 1985 (when the steel industry would be
capital constrained in both Scenario 1 and Scenario 2), these
added expenditures would result in further reductions in cap-
ital expenditures for existing production equipment beyond
those described in each baseline condition. These further
1 Small differences in capital cost estimates developed by TBS
and EPA’S technical contractor are described in Chapter III.
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E—ll
reduced capital expenditures would in turn cause further de-
clines in production capacity and, when the industry was
capacity constrained, would lead to declines in production,
market share, and employment. By 1990, adequate capital would
be available to the industry so that pollution controls would
not result in measurable economic impacts. Prices would in-
crease less than 0.6 percent as a result of added water costs.
Table E—3 details the incremental impact of added water po].lu—
tiOn control costs.
Scenario 1
In Scenario 1, additional water pollution control capital
costs of $463.1 million by 1985 would necessitate reducing
capital expenditures on existing equipment by $505.4 million.
This would create a decline in production capacity of 0.6
million tons per year and would lead to a reduction in market
share of 0.48 percentage points to 76.8 percent. Although
employment in water pollution control operations would in-
crease by 520 jobs, the decline in steel production would
cause a net reduction of 2,180 employees (0.5 percent of base-
line employment). Between 1985 and 1990, an additional
$267.0 million in capital expenditures would be spent for
water pollution controls at new facilities. However, by 1990
the strong financial condition of the industry would substan-
tially reduce the negative economic impacts of pollution con-
trols, and employment would increase by 850 jobs over baseline
levels (0.2 percent of baseline employment), primarily for the
operation of added pollution control equipment.
Scenario 2
The economic effects of additional water pollution con-
trols in 1985 are very similar in Scenarios 1 and 2. In
Scenario 2, capital expenditures for added water pollution
controls would amount to $462.8 million by 1985 and would
cause capital expenditures for existing equipment to decline
by $494.4 million. As a result, annual production capacity
would decline by 0.7 million tons, market share would drop
0.6 percentage points to 82.3 percent, and employment would
decrease by 2,470 workers (0.5 percent of baseline employ-
ment). These effects would be substantially reduced by 1990,
because of the improving financial condition of the industry,
and would be virtually eliminated by the early 1990s, except
for a 0.6 percent increase in price.
-------
E-12
Table E—3
StJ4MARY OF THE EFFECTS OF ADDITIONAL
WATER POLLUTION CONTROL COSTS’
ScenarIo 1 Scenario 2
Short Term Long Term 2 Short Term Long Term
( 1980—1985) ( 1980—1990) ( 1980—1985) ( 1980—1990)
Capital Exoenditures (millions
of 1980 dollars)
New Production E4ulpment S 0.0 S 0.0 S 0.0 S 0.0
Pollution Controls 463.1 730.1 462.8 582.7
Existing Production Equipment —505.4 0.0 -494.4 —396.5
Total 5—42.3 5730.1 3—31.6 5186.2
Annual O&M Expenses (millions
of 1980 dollars)
Pollution Controls $32.5 561.4 $35.3 $46.4
Less Added Cost Savings 3 15.0 14.1 12.1 9.9
Total $17.5 S47.3 $23.2 $36.5
Revenue Requirements (millions
of 1980 dollars) $125.1 $331.8 $118.0 5137.4
Averaqe PrIce (S/ton) $1.32 $3.26 $1.31 3144 a
Domestic Production
(m lions of tons) —0.62 0.00 —0.67 -0.44
Market Share (percent) —0.48% 0.00% —0.55% —0.34%
Ernplo ment (thousands of employees) —2.18 0.85 —2.47 —1.08
1 lnformatlen in this table represents changes from the baseline resulting from added
water pollution control costs.
2 lmproved financial condition would permit the industry to achieve an 84.5 percent
market share by 1990.
3 Cost savings resulting from transfer of production from IneffIcient plants.
3 Th1s price effect would increase to about $3.30 In 1991—1993 as capital constraints
are relaxed.
Source: TBS analysIs.
-------
SENSITIVITY ANALYSES
TBS conducted four sensitivity analyses to examine sev-
eral of the assumptions in this study. The analyses involved
modifications to assumptions regarding inflation rates, water
costs, stretchout of air costs, and pass-through of cost sav-
ings. The sensitivity analyses were performed only on Sce-
nario 1. The following sections describe these analyses, and
Exhibits E-l]. through 5—14 provide details of the results.
Sensitivity 1:
Higher Inflation Rates
The inflation rates used in Scenarios 1 and 2 were based
on a DRI econometric model that was adjusted to match the
current Administration’s projections for inflation and gross
national product (GNP). The GNP price deflator implicit in
this adjusted model averaged 5.7 percent per year through
1990, compared with DRI’s unadjusted projection of 8.8 per-
cent. Sensitivity 1 was based on the interest rates of DRI’s
unadjusted projections. This sensitivity analysis indicates
that while inflation assumptions have a slight effect on the
baseline condition, they have virtually no effect on the im-
pact of added water pollution control costs.
Sensitivity 2:
Doubled Water Costs
While the water pollution control cost estimates used by
TBS were based on the most accurate estimates currently avail-
able, different estimates based on alternative assumptions
would result in different economic impacts. Sensitivity 2
examines the economic impact that would result if the capital
costs for water pollution controls were double the current
estimates. The impacts were found to be roughly in proportion
to the increased costs, and they still remained relatively
small.
Sensitivity 3:
Air Stretchout
Congress has allowed the EPA to permit steel companies to
stretch out the construction of certain air pollution control
equipment. Recent information indicates that about $200 mil-
lion of outstanding air pollution expenditures may be post-
poned. Sensitivity 3 shows that the financial and economic
-------
E—l4
benefits of this relaxation in regulation are likely to be
quite small.
Sensitivity 4: Cost Savings
Pass-Through to Profits
As the steel industry is forced by constraints on capital
to close its inefficient plants, the operating costs of the
industry will be reduced. In its methodology, TBS assumed
that these cost savings would be passed on to the purchasers
of finished steel products. TBS believes that in a cost—
driven market such as the market for steel products (where
prices increase at about the rate of inflation), small in-
dustrywide decreases in operating cost are quickly translated
into small decreases in the rate of price increases. To test
the sensitivity of this assumption, TBS increased industry
operating profits by the amount of the cost savings. As a
result, the baseline condition of the industry improved some-
what. However,, the incremental economic impacts of water
pollution controls remained roughly the same regardless of the
pass—through assumption.
EFFECTS OF WATER POLLUTION CONTROLS
ON THE MERCHANT COKE INDUSTRY
Impacts on the merchant coke industry were obtained by
examining the effects of the regulation on three key param-
eters: the annual costs as a percentage of total cash flow,
the debt—to—capitalization ratio, and capital costs as a per-
centage of replacement value. Model plant costs for BPT, BAT,
and PSES treatments, supplied by EPA’S technical contractor,
NTJS/Rice, were scaled to appropriate plant capacities and then
summed. As shown in Table E-4, the industry’s annual costs
for all treatments at full capacity utilization are about
$5.0 million in 1980 dollars. This is approximately 20 per-
cent of current total cash flow. Based on a 1980 price of
$135 per ton and 9.5 million tons of production, the added
annual costs passed on to consumers will cause prices to in-
crease by 0.4 percent. Assuming that the $18.8 million cap-
ital investment required to install treatment is funded en-
tirely by debt, the merchant coke industry debt—to—capitali—
zation ratio is projected to move from 39.1 percent to about
39.7 percent.
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E—15
Table E—4
MERCHANT COKE INDUSTRY
I ICREMENTAL EFFLUENT REGULATION COSTS
(millions of 1980 dollars)
Caoltal Cost Annual Cost ’
BPT $ 3.0 50.8
BAT - 5.5 1.6
PSES 10.3 2.6
Total 518.8 $5.0
‘Based on a capital recovery ctor of 3.99
percent.
Source: lBS analysis.
Based on a current annual capacity of 9.5 million tons
per year, the replacement value of the merchant coke industry
at $220 per ton would be $2.1 billion. Total capital costs
for compliance are projected to be $18.8 million, or 0.9 per-
cent of the replacement value. If these expenditures for
pollution controls were diverted from capital expenditures
that otherwise would be made to maintain production equipment,
then a loss of productive capability of about 0.9 percent
could be expected. As a result, in future periods of capacity
constraints, about 0.9 percent of production, or about
85,500 tons, would be lost to foreign producers. The per-
centage. impact on employment is expected to be similar in
magnitude.
Impacts on individual firms in the merchant coke industry
are not disproportionately out of -line with these small
industrywide impacts. Because of this, the water regulation
is unlikely to force the closure of any merchant coke
facilities.
EFFECTS OF WATER POLLUTION CONTROLS ON
THE MERCHANT PIG IRON INDUSTRY
The merchant pig iron industry consists of two firms that
produce pig iron for casting. This industry is currently
facing extensive competition from imports. A total of
-------
E—16
$1.91 million in added capital expenditures will be needed to
meet the requirements of ‘BPT effluent guidelines 1 and about
$0.73 million will be needed to meet BAT guidelines. Annual
costs for these requirements of about $0.5 million per year
are likely to increase prices by 0.2 percent. These require—
ntents represent 2.4 percent of the industry’s replacement
value (based on an industry capacity of 1.2 million tons per
year and a replacement cost of $92 per ton). In periods of
future capacity constraints, which at present appear unlikely,
reductions in production of as much as 2.4 percent could be
attributed to added water pollution controls. During such
periods, employment would be impacted by a similar percentage.
An analysis of the financial impacts of the water regulation
is not ‘presented because financial data were provided to EPA
by the industry on a confidential basis. The results of the
analysis indicated that any future scrapping of pig iron
furnaces would most likely result from declining industry
profitability and market share rather than from the costs of
added water pollution controls.
-------
(slilbIl I—I
sl,.wIY op c .ic siiAcls a, FINAL WAInI iOuuriOH ct iilim. iflliLAll(WIS
P.-Ic. Produci Ion
(1980 dollars NIllions 01 Ions Itarkot 9ier. .plo .Ont
per ton) per (Oar) iparceni) (thousands 0) ouployana)
984 985 1990 (984 1985 I 90 964 1985 1990 1984 1985 1990
Scenario I
Baseline U 19. 53 $833.86 $550.80 $00.71 91.11 116.00 80.26% 17.281 64.501 441.66 425.78 459.11
Added Wet .. Costs •0.18 1.32 3.26 -0.61 -0.62 0.00 -0.48 -0.48 0.00 -2.18 -2.16 0.65
Baseline end Added Waler Cost, $520.11 $538.16 $562.06 100.10 86.18 116.00 79.60% 76.801 84.561 439.46 423.60 459.96
ScenarIo 2
Baseline $819.45 $551.21 $535.28 102.71 101.21 01.39 85.531 82.81% 60.61% 462.54 440.61 401.86
Added Waler Costs 0.13 1.31 1.44 —0.65 —0.61 -0.44 -0.82 -0.5S —0.34 —2.89 -2.41 -(.08
Baseline end Added Waler Coils $520.18 $384.52 $556.72 101.06 100.54 102.95 65.011 82.32% 60.3)1 460.18 416.20 400.78
Ssniltlvlty (——01(1 Inflation
Baseline $513.11 1822.9) $531.04 101.15 99.14 116.00 80.63% 18.041 84.501 443.60 429.97 459.11
Added Water Cuets 0.12 1.21 2.92 —0.60 -0.60 0.00 0.48 -0.41 0.00 -2.16 -2.10 0.05
Baseline end Added Water Coils $513.83 $524.14 (533.96 100.55 99.14 116.00 80.15% 71.57% 81.801 441.44 421.87 459.96
SensilIv lip 2--0otd l. Water
Cot I i
Baseline $520.65 $538.04 $559.29 100.69 96.86 116.00 60.27% 71.551 84.561 441.59 426.19 459.11
Added Water Costs 1.12 2.13 SolO —1.21 —(.23 0.00 —0.91 -0.96 0.00 -4.81 -4.64 0.65
ftaaallne end Added Waler Costi $521.71 $557.11 $564.59 99.48 91.63 116.00 79.50% 76.39% 84.50% 436.76 421.35 489.96
Sesmlllvlty 3——Air Stretchoul
Baseline $511.16 $532.05 1559.06 101.11 98.89 116.00 80.60% 77.371 61.501 442.82 426.31 489.11
Added Water Coils 0.13 1.24 2.96 -0.62 —0.62 0.00 —0.49 -0.48 0.00 -2.21 -2.21 0.85
Deselin. ned Added Water (bile $510.49 $534.09 $562.02 100.49 98.21 116.00 60.111 16.891 84.50% 440.61 424.10 459.96
SensitivIty 4--Cu’t Sevln9s
Baseline $528.42 (MS_SO $565.25 101.52 98.9) 116.00 80.9(1 78.19% 84.501 445.23 430.00 139.11
Added Waler Costs 1.18 1.71 3.19 -0.59 -0.39 0.00 0.47 0.46 0.00 2.13 2.0l 0.05
Bud In. end Added Waler Cosli (829.60 1541.01 1566.42 100.93 99.54 116.00 80.491 11.11% 84.50% 445.10 426.73 489.96
Sow Ce iu e.ialpels.
-------
Exhibit E—2A
STEEL I USTRY
EFFLUENT REGULATION COSTS
SCENARIO I
Ciai 111cn$ of 1980 del lars)
Capital Costs 1
Facilities
Facilities Required
in Place 2 1981—1990 Total
T
BAT
PSES
NSPS
PSNS
Total
$1,771.6
26.4
118.8
0
N/A
$1,914.8
$213.2
70.1
26.3
420.5
N/A
5730,1
51,984.8
96.5
143.1
420.5
N/A
$2,644.9
Annual Costs 3
Increnental
Total 4
1984
1990
1964
1990
T
BAT
PSES
NSPS
PSNS
Total
$27.0
15.8
4.9
24.9
N/A
$72.6
$29.4
16.3
5.2
76.2
N/A
$127.1
$297.3
21.2
22.4
24.9
N/A
5365.8
$313.2
21.9
23.8
76.2
N/A
5435.1
N/A — bt applicable. All new sources are ass a,ed to be direct
d Ischergers.
t Ooes not include the costs of water pollution controls installed
by the Industry but not required by the final regulations.
2 Facilities in—place as of 6/30/81.
3 lncludes operation and maintenance costs and capital costs based
on a 8.99 percent capital rGcovery Pacl or.
retal annual costs include annual costs on pollution control
facilities In place as of 6/30/81.
-------
Exhibit E—28
STEEL lI OUSTRY
EFFLUENT REGULATION COSTS
SCENARIO 2
(millions of 1980 dollars)
Capital Costs 1
Facilities
Facilities Required
In Place 2 1981—1990 Total
1
BAT
PSES
NSPS
PSNS
Total
$1,771.6
26.4
116.8
0
N/A
$1,914.8
$213.2
70,1
26.3
273.2
N/A
$582.8
$1,984.8
96.5
143.1
273.2
N/
$2,497.6
Annual Costs 3
incrmaental
Total 4
1984
1990
1984
T990
BPT
BAT
PSES
NSPS
PSNS
Total
$28.7
15.5
4.9
27.4
N/A
$76.5
$27.2
15.9
4.9
51.0
N/A
$99.0
$305.4
20.7
22.7
27.4
N/A
$375.2
$298.1
21.2
22.9
51.0
s i/A
$393.2
N/A • Not applicable. All new sources are assumed to be dire f
d I schargers.
net lnclu4e the costs of water pollution controls In-
stalled by the Industry but not required by the final
regulations.
2 Facil ities in—place as of 6/30/81.
3 lncludes operation and maintenance costs and capital costs based
on a 8.99 percent capital recovery factor.
4 TotaI annual costs include annual costs on po 1 lutlon control
facilities in place as of 6/30/81.
-------
E.chlbit 6—)
SIIX 1I-IOJN F lNA* lAL IW CT Of £NVIRON€NIAL I4LGU 1AI 1OIIS 1
SCINARIO I $llllICNI S FIIOJFCIIONS
1900- $901
(1980 dollars in millions)
Pollution Control
1981
and Non Prod.atlon
(qulpiant
Eiqand l lur.s
Eiç.nditur.s Os
1eiatin
Fquipusat 2
( eternal
Financiny Nssds 3
4i.ratIi) Ii
and MaInt.na$c.
£,p.nsas
191)5 ltaveaus
Roqulr nts
Perc a nla9. Percentage Percan iag. P.rcant.g. Pe(cantage
A.aunt of Oes.iine of Baseline of liessi in. Mount of bes.lia. of Baseline
Iron and 5 1..l Production 10.640. 1 $14! ).) 116.7$ 1.1.439.6 140 e81.S 96.7%
MIscellaneous Pollution
Control (4uiE ! ? 106.5 1.0 171.2 2.7 -140.5 —4.1 133.9 0.5 0.4
Air Pollution Control tquipssal 6
In-Place l 267.1 11.5 -540.1 —1.) -441.9 -13.9 101.9 1.4 I.009.9 2.0
AdditIons 651.6 5.8 —125.6 —11.1 30.1 I.) 111.9 0.1 254.2 0.5
Waler P cI ! utioa Control (gui n 1 6
Pollution Controlt Ii ’lsce I
Not Ruqulr.d 11.2 0.) 12.4 0.? 0.0 0.0 9.) 0.0 52.2 0.0
i11 in-Place 730.9 2.1 110.6 4.0 0.5 0.5 114.1 0.5 195.5 0.4
BAY In-Piece 7.5 0.1 6.3 0.1 —0.2 0.0 1.4 0.0 11.3 0.0
P3(1 In-Place 61.) 0.6 -24.7 -0.4 —3.0 -0.1 8.1 0.0 6.0 0.0
lotal Besel In. Conditions $10,952.0 100.0% 16.5)1.6 00.0% 13.4)0.0 00.0% $42421.0 100.0$ 1)0.564.9 00.0%
Water Pollution Conluol Additions
‘f AddItion . 213.2 1.9 —205.1 —3.) ZL7 0.7 0.4 0.0 53.0 0.1
Oat Addlllons 70.) 0.6 -73.7 —I. ? -1.1 0.0 6.0 0.0 25.0 0.1
PIES AddItions 26.5 0.2 -21.6 —0.4 3.2 0.1 2.0 0.0 1.1 0.0
NIPS Addli Ions 153.5 1.1 -200.4 —5.1 7.1 0.2 0.) 0.0 30.2 0.1
Told Waler Pollution Control
Equip...it Addlilons $ 463.t I.j $ —505.4 —1.0 $ 3l.e 0.9% 1 $1.1 _ I 125.1 .Q $
Grand otal 1)1.420.1 101.1% $6,026.2 92.2% $1,169.0 100.9% 142442.5 100.0% 150,690.0 100.3$
As use 5 lull pass-lfu-oq h of annual vatur pollutIon onIrol Cosli.
kospsrad ml tti a dasirel level of .ep.uidlIeros (In mill lunt) 01 111,411.6. lIed mat In capi al oupendt 1. 105 on a .clitInij .quii unl r.sul I from cunilr .lnl
no indostry CaplIal availability.
ln son. CaSes, the uslarnel llnanclaq needs are euro Itian ulisel by cash flaw Iron pollution control aqulp.ent lnvett ants made In prier pars.
4 incl .aies coit savla9s sa uitlny from closing inalliclant planl .
5 locludes the cost of air pollution coaluls fur industrial bollurt at steal pla ,ils.
6 indiudat in—pled. uqulpiust Installed In 1900-1901. P.1cc to 1900, II .. loliomla j equllauil was In place millIons of dollars):
Air poi iutloa cOuul. d C 13.117.?
Waler pollution cant, ems not ruqulrud 101.5
WI 1,540.7
OAF 19.1
P IES
‘knr.u (I II aneiyslt.
-------
Lehlbll 1-4
MAX 11411 ShI)lti-IW II ECONOMIC lM C1 Of tNVlliOfltNiAt REQJLAI 1ONS
SCENARIO I SlilIttIliS PROJECtIONS
1961
Capacity Decline £epio .ent
Price 1900- 1905 ProductIon 2
- Menial —-—-—————— —
Percentage Million, Percentage Mililonc Percentage Slier. fl.oussnd s Percentage
S/ion of Beiellna ol tone of Baseline oltun. c i Baseline Iparcenti of 1.9loye.e ol Baeeiina
Iron end Steel Production $516.13 96.7% 4.44 64.2% 101.12 102.6$ 421.60 100.1$
NIsc.lieoeoue Pollution
Control Equipment 3 1.96 0.4 0.20 2.9 -0.22 -0.2 -0.16 0.71 0.2
Air Pollution Control Equipment 4
in-Piece 10.66 2.0 1.50 21.7 -1.56 —1.6 -1.21 -2.14 -0.1
Additions 2.69 0.5 0.0) 12.0 -0.65 -0.0 —0.65 -2.62 -0.6
Water Pollution Control Igui nt 4
Pollution Controls in -Place t
1131 ilaqulred 0.15 0.0 -0.01 -0.1 0.01 0.0 0.01 0.16 0.0
B’T le .Place 3.06 0.4 -0.14 —2.0 0.14 0.1 0.11 2.11 0.1
OAT ia-Place 0.12 0.0 0.00 0.0 0.00 0.0 0.00 0.02 0.0
PSES la-Place 0.09 0.0 0.09 1.1 -0.09 -0.1 -0.07 0.12 -0.1
Total Oasel ma Condltione $531.06 100.01 6.91 100.0% 96.71 100.0% 77.26% 425.79 100.01
Waler Pollution Control Addition .
LPT AdditIons 0.56 0.1 0.27 4.0 -0.27 —0.1 -0.21 -0.90 -0.2
BAt Additions 0.21 0.1 0.10 1.4 -0.10 0.1 -0.06 -0.31 -0.1
PSES Addltioni 0.06 0.0 0.05 0.4 -0.03 0.0 -0.02 -0.12 0.0
IIWS AdditIon. 0.11 0.1 0.22 3.2 -0.22 0. -0.1) -0.61 -0.2
Total Water Pollution Control
Fqutpoeet AddItions 1 1.12 0.3% 0.62 9.0% —0. Q_ 0.40 , — 2.10
Grand Total $131.10 100.3$ 1.5) 109.0% 90.11 99.41 76.60% 421.60 99.11
ASsumes full pees—lhrough 01 annual eater pollution control costa.
2 1n millions of tone of llnlihed stenl productS.
t incl.pJas Ill, cost ot air pollution controla for Industrial holiere at deal plante.
4 lnclu.lel in—place equIpment ln teltad Ia 1980-191)1. PrIor to 191)0. the folioulog equipment was In place (millions ol dolleraI
Air pollution controls $3111.2
Water pollutIon controls nut required 101.5
1540.1
hAl 19.1
Psu
Suiece IllS analysis.
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(ahlbit (-5
1040-lOiN FI.4AI6 IAL iWM I OF EIlVIi*OIItNIAL R (ClliAi IONS 1
SUNARIO I SIllIOtNIS IlIOJECI IONS
1900-1990
(1900 dollars in •lIIion.)
PoI lot Ion Control
*990 9aratlons
and Naw Production
(iqandltifo$ On
Internal
and Maint.nance
1990 flavanue
£quIpo.n
Ispandl turns_—
Osist lng
Fi vI p.unb 2
tinenc I nO Needs 5
0 .çansss
Raqulr s .ant a
Percentage Percentage P.rcant e9 e Percanlagl Parcenlags
A.ounI of Basal Ins Aaount of (lanai in. Muisil of llasei In. Moss.? of Basal In. Mount of Basal ins
Iron end Steal ProductIon 03.0$ $19,227.4 $11,006.2 115.1$ 147.6*2.4 91.7$ $33,390.9
NIsc.llenaous Pollution
Control Igu 5 *06.5 0.1 —i56.0 —0.0 -109.0 —1.9 153.1 0.5 *97.2 0.5
Air Pollution Control Iiiulp .ent 6
liiac. 1,261.1 0.2 —*39.5 -0.9 -9*3.6 -9.4 606.0 I.) 197.1 1.6
AddItions 009.1 5.3 —109.1 —3.0 -49.3 —0.9 75.) 0.1 330.2 0.6
Wat.r Pollution Control
Poll I1on Coatrols la-Plac. But
Not RequIred 11.2 0.1 ii. ) 0.1 -5.0 -0.1 9.6 0.0 9.0 0.0
l ln-Piac. 250.9 1.1 366.0 2.0 -*21.5 —I.) 129.9 0.3 *35.9 0.2
BAT in-Piece 7.0 0.0 5.6 0.0 -6.6 -0.1 3.1 0.0 4.3 0.0
PUS in-Place 61.) 0.4 -21.4 -0.1 22.1 0.2 10.9 0.0 -u. S 0.0
Total Bassi ins Conditions 1*5.365.0 100.0$ 1*0.566.5 *00.06 1 9,136.0 100.0$ $41,705.1 00.0$ *56.962.1 100.0$
Waler Pollution Control Additions
J A4dltlons 215.2 1.1 0.0 0.0 64.5 0.7 2.6 0.0 111.0 0.2
OAT Adsiltio.ia 70.1 0.5 0.0 0.0 30.0 0.3 0.0 0.0 40.2 0.1
PSIS Additions 26.3 0.2 0.0 0.0 *6.0 0.2 2.6 0.0 9.1 0.0
NSPS Additions 420.5 2.7 0.0 0.0 290.7 2.9 15.9 0.1 164.9 0.3
Total Water PollutIon Conirol
(quigs..nt AdditIons $ 730. ) 4. 1 0.0 Q Q $ 402.0 1 47.5 $ 331.0 J $
Grand Total $ 16.098.i 104.0$ li O.566.5 tOO.0$ $iO. 136.0 i04.i$ 140.1)0.4 100.1$ $51,295.0 00.6$
iAIsts.as full p.s -tiiroujh ol annual water pollutIon cunirol costs.
2 1)eclines in capital aopa.sdlturas on ewisting equiponnl result Iron constraints on Indusiry capital availability.
3m son. cases. ii .. •ete .iial financing nnads are sos-a lisan offset by cash lion Iron poiiuIlon control .quipoent l v.ttisunh5 made in prier years.
4 lnciules cost saviusga rasuliing iron cio lng inalilcient plants.
5 lecIudas II.. cost of air pollution controls for Industrial boils. s at steal plants.
6 includet In—place squliamnl instalind i 1900-1901. Prior lo 1900. the folica.ing equipnuint was in piaca millIons 01 dollars).
Air pa1 Sullen conlrois *5.111.7
Wets. puliut ion controls not requIred 101.5
11 ’I 1540.1
OAT 19.1
PUS 55.5
Source. IllS en iy ls.
-------
nhlblt t-6
tt t -luiN EQ lmIIC wAd 01 VII 9 N1AI ll(GtIIAIIOIlS
SCEIIARIO I tlIuittNIS If1OJICIIOIS
1990
Copacily D.cSln.
PrIc. 1990-1990 Pi-uduct C lO II,
—_______ —— — Nnrii.t
Perc.nlag. HIiIIaai P.rc.ntag. Hililona Percanla . Thai-. Jhcua .nds .1 P.rcanlog.
3/Von oi Oaa.ilni of Tons ol il .n.ltn. of bus ol 0...iin. (p.rcnutl £ loy.an of Oaa.lln.
Iron .nd St..l Production $543.39 92.3% 0.0 0.0% 116.0 100.0% 04.5% 449.59 97.9%
Nisc.ll.n.ous Pollution
Control E iulp.ont 3 1.94 0.3 0.0 0.0 0.0 0.0 0.0 1.11 0.1
Air Pollution Control Vguip..nt 4
ln-Pi ac• 0.00 1.6 0.0 0.0 0.0 0.0 0.0 4.60 1.0
MdIllons 3.31 0.6 0.0 0.0 0.0 0.0 0.0 .32 0.3
Walor Pollution Control Igul n 1
P 1IutIcn Controls In-Plac.
lIst RaquIred 0.10 0.0 0.0 0.0 0.0 0.0 0.0 0.12 0.0
IPI Io-PInc. 1.33 0.2 0.0 0.0 0.0 0.0 0.0 1.65 0.4
OAT In-PluG. 0.05 0.0 0.0 0.0 0.0 0.0 0.0 0.02 0.0
PUS In-Place -0.12 0.0 0.0 0.0 0.0 0.0 0.0 0.10 0.0
total Onnailna Conditions $558.00 100.0% 0.0 0.0% 116.0 00.0% 04.5% 459.11 100.0%
Water Pollution Control Additions
IPT Addition, 1.16 0.2 0.0 0.0 0.0 0.0 0.0 0.26 0.1
OAt Addlilons 0. )9 0.1 0.0 0.0 0.0 0.0 0.0 0.06 0.0
PSIS Mdillone 0.10 0.0 0.0 0.0 0.0 0.0 0.0 0.03 0.0
N S AddItions 1.61 0.) 0.0 0.0 0.0 0.0 0.0 0.50 0.1
Total lInt. . Pollution Control
(quipuont Additions $ 3.26 0.6% 0.0 0.0 0.0 0.0 0.0! 0.2%
Ga and loins $567.06 100.6% 0.0 0.0% 116.0 - 00.01 04.5% 459.96 100.2%
Assua.us lull pass-llsrou!ib ol annual uut.r pot loSing. conirol CO 5t .
In .llllona of ttsnl U I 11.1usd steel pro.bacts.
‘lnciud.i lb. coul uS air poilullon coniroil for lüdostrlal boiler, at steel plants.
4 lncludes In-pIece aqulpuent Inilallad In 1900-1901. Prior to 1980. lb. loilnulny oqulpuont ne , in place l.lillonu of dollars).
Air poliullol, controls $ 3 .1 1 ).?
Waled pollullon controls not r.quir.d 101.5
I n 1.5 10.)
hAl 39. 1
P &S
Sonic. Iii) analy ls.
-------
(ahibIt 1- 1
0011 -f6iN Fl IIA ICI*L l*ACI OF INVIIWNIENIAL I$(GHLAI IONS’
SCEPIAHIO 2 OIIIICNIS fttO CIlONS
1980-985
11900 dollars In .llllo.iiI
PollutIon Coalrol
1965
and lieu Production
E andltur.s On
sad Malniannacs
1903
EquI .nt
tupendi turns
(wilting
EquIpssnl 2
FinancIng tts.ds 3
(ig..n.as
Nuquli
Pel-conteqa Psrcsnt.g. P.rc.ntsga P.rcsntsga Percel.ta9a
A.ount ol Danaiina of Baseline Ai.au l 01 IlasslIn. Amount 01 Oas.lln. 01 Oas.lln.
iron end St..I Production 79.0$ 16. 149.0 112.5$ 118.7$ 1)9.920.0 91.0% 346.6)0.6
Miscaliannous Pollution
ControIii n 61.1 0.7 —141.7 4.4 125.9 0.3 160.3 0.3
Air PoIlutio Control I ulpmsaI 6
in -Place l.267.6 11.6 —5.2 —503.0 —15.6 541.9 1.5 956.0 2.0
Addl l lon s 651.6 9.0 -9.4 29.1 0.9 lOS.) 0.) 242.2 0.5
Natal Pollution Cunlroi (gui 16
Is-Place I
bI RequIred II. ) 0.1 14.0 0.2 I.? 0.0 0.1 0.0 12.9 0.0
1i1 Sn-Place 230.9 2.1 306.0 4.2 8.4 0.3 115.2 0.5 201.1 0.4
BAt Is-Place 7.2 0.1 1.6 0.0 -0.2 0.0 2.1 0.0 4.1 0.0
PSES in-Plac. 61.1 0.6 —11.7 —0.2 3.9 0.1 3.) 0.0 21.1 0.0
Total Oaialln. Conditions 110.69 .3.9 100.0$ 37.2)1.2 100.0$ 15.227.) 100.0$ $10.826.6 100.0$ 140.2)9.) 100.0$
W.ler Pollution Control Additions
iA iiion s 2 13. 2.0 -221.4 —5.1 $1.2 0.) 3.) 0.0 46.) 0.1
11*1 AddItions 10.1 0.6 -13.7 -1.0 0.0 0.0 6.0 0.0 23.0 0.0
P3(5 Additions 26.) 0.2 -26.4 -0.4 2.0 0.1 1.9 0.0 7.1 0.0
liSPS Additions IS ).) 1.4 • —170.9 —2.4 • 6.4 0.2 11.2 0.1 41.6 0.1
EaSel Water Pollullue ConIrol
Equlgs.anl AddItions $ 462.9 4.2 5 -494.4 121.7 0. $ $ 23.2 •Q j$ $ 116.0 Q.a$
Grand total 311.3)6.0 104.2$ 56.7.36.6 93.1$ 3.3.246.1 100.6$ 140.0)1.0 100.1$ 146.571.) 100.2$
‘AaSusas lull pal s—tl,roojli ol annual waler poilullun conlioi cosli.
2 Caaparsd with a dasli.d laneS ol aspandihaas (in millions) of 111.411.6. Uuclln.s in caplial enpanullisiss on anlstlng equlpsant rasul I Iron couitiralnls
on indosily capital anallablilty.
5 ln son. cesas, lb. enlernal financing sands era sore than of (set by cash flow Iron pollution conlrul aquipsent Investments cede In prior years.
4 lncIudat cost savIngs resulting from cloSing inaiflclani pleats.
5 lnclud.S lii. COIl ol air pollution conisois Ia. Industrial boIlers .1 steel plauuts.
6 lncludat ia-piau.. equlpount li,stnlled In 1960-1981. PrIor to 1980. lb. lolitming oquljunnt was in placs (millIons 01 dollarslu
Air pa1 lut Ion controls 1)111.2
Water pollution controls not requIted 101.3
lii 1,340.1
0*1 19.1
I9tS ‘a ).)
Source Ills projoclious.
-------
Eshlbit E-0
MAXIHLN ilOR1-4uN FitW1 lAi. i14ACI OF LNVI( 10 144(NIAL lUGULArIONS 1
SCEIIIRIO 2 5lilft* 1S Ii(QJECTIC?IS
it o,
Capacity D.clln.
Price 19(10 -1905 Production 2 £. pio .eat
- - —— Market - - -—
Percente js Millions Percenta j. Millions Percenlay. 9 .r. thousands Percenloy.
1/ion of Besellno 01 Ions of Baselin, of ions of Baseline (perc..il) of £itpioyees of Baseline
iron and Steel Production $315.14 96.0% 59.41 103.20 102.01 64.50% 445.46 100.01
MIscellaneous Pollution
Control lqulp.ent 3 1.06 0.3 0.15 2.5 0.00 0.0 0.00 1.60 0.4
Air Pollution Control l ulp..ont 4
In-PIece 10.39 2.0 1.50 25.1 -1.13 -1.1 -0.93 -0.42 -0.1
Additions 2.66 0.3 0.61 13.6 —0.91 -0.9 -0.14 -3.05 -0.1
Voici Pollution Control Egulpnt
Pol iuti Ifli Iaca Out
lb t flequired 0.14 0.0 0.00 0.0 0.01 0.0 0.01 0.11 0.0
( PT in-PIac. 2.22 0.4 -0.14 —2.3 0.14 0.1 0.12 2.25 0.3
hAt inlace 0.05 0.0 0.01 0.2 0.00 0.0 -0.01 -0.01 0.0
P5 (3 In-Place 0.23 • 0.0 6.09 1.5 -0.!0 -0.1 -0.06 -0.33 -0.1
Total Uasellno ConditIons 1553.21 100.0% 5.91 100.0$ 101.21 100.01 02.61% 440.61 100.0%
Waler Pollution Control Additions
(Pt Additions 0.52 0.1 0.26 4.7 -0.51 -0.5 -0.25 —1.11 —0.2
BAT Additions 0.23 0.0 0.09 1.3 0.10 0.1 0.09 0.40
PSES AdditIons 0.06 0.0 0.04 0.1 -0.01 0.0 -0.05 0.14 0.0
il 5 AddItions 0.46 0.1 0.20 5.4 0.22 0.2 -0.16 -0.02 -0.2
blat Water Pollution Control
(qu ipou.nt Additions 1 1.31 j! _jQ $ 0.61 Q — 2.41
Grand lotal 1334.32 100.2% 6.56 1 10.3% lO0 . 4 99.4% 62.32% 446.20 99.5%
Assua... 5 fail pass-tiwouyti of annual eater pollution control CoSts.
2 1n aililons of tons of finlsh.d steal products.
5 inciudes the cost of air pollution controls fos in 9jstrlal bullets of steel planis.
4 lnciudos in-pie e equipsent installed In 19(10-1901. PrIor lo l900 the follouin equipount sas In piece l.illlons .1 dollars):
Air pollution conlrois 15.1112
Welet pollution controls not required 101.5
i .540.7
OAt 19.1
I .S SS 55.5
Soice lOS projuclIosta.
-------
Eslilbit E—9
LOIlI-ISiN F liM1t lAI. ii4W T OF I NVIROt9 IlI U 11(121* Al S o ilS 1
SCENARIO 2 SiSlli*illS IitogClIoNS
1980-1990
11980 dollars in .iiliun,)
Pollution Control
1990 Ions
end lIen Production
Lig.ndlhwes On
Ist.rnel
end Nal.t.,ianca
1990 Rova,,us
Iquipo.nt
F endltur.s
(slating
Equl 1 n.et 2
Financing l I e..ds 3
Ei i.n ee e 4
Roqu lrnenntl
Parc.ntay. Parcantag. P.rc.ntsga Perc.nteg. Percentage
01 B.aniIAa Mouni ol Oas .lIno Mount ol lSas.lln . ol Bes.i In. Mount ol flasalIn.
Iron end Steel Production 110.5)7.1 61.5$ 157,206.) 97.6% 85,026.6 509.21 1(4.572.8 91.91 $31543.9 97.2$
Hiec.lianeous PoiluIlo
Control £gul 61.1 0.6 76.4 -0.4 -126.9 -2.4 142.0 0.3 179.0 0.3
AIr Pollution Control (guip.ent 6
InP lace 1,267.6 10.0 4 )6.6 2.4 -391.0 —1.9 595.7 S.) 060.4 I. )
AdditIons 660.7 5.4 —476.6 —2.7 07.6 1.6 131.5 0.) 259.2 0.5
Water Pollution Contiol F iii itt 6
1Iutlon Controls In ace u
lIet Required II. ) 0.5 22.3 0.1 —3.1 4.1 0.9 0.0 14.1 0.0
(Pt Ia-Place 230.9 1.6 516.2 2.9 -12.9 -0.2 112.6 0.2 551.2 0.3
OAT laPlace 7.2 0.1 4.0 0.0 0.4 0.0 2.9 0.0 3.9 0.0
P5(5 In-Place 65.4 0.5 10.0 0.1 9.5 0.2 5.6 0.0 59.4 0.0
lotal Baseline ConditIons $12,703.3 100.01 551,643.0 100.0$ $5,506.0 500.01 143,312.9 100.0$ 852.8(3.5 100.0$
Waler Pollution Cantiol Additions
t1’IAddiiln a 255.2 5.7 -125.9 -0.7 29.9 0.6 3.1 0.0 51.6 0.1
OAt Addlllons 10.1 0.6 -44.2 -0.3 6.9 0.1 7.1 0.0 20.3 0.0
PSESA8dIt 1o.is 26.5 0.2 -11.0 -0.5 4.0 0.1 2.1 0.0 2.6 0.0
lISPS AddItions 215.2 2.2 -200.6 -1.2 25.1 0.3 23.2 0.1 76.7 0.1
Total Water Poliulion Conirol
(qoli..enI Additions 1 502.8 j % 1 -596.3 1 fl 3 65.9 J. 1 36.5 _Q % I 1)1.4 j
Grand Total 113,210.1 104.1$ 111,241.5 97.71 15453.9 101.5$ 143409.4 100.1$ $52,982.5 100.2$
1 As unos lull pass-Ilirouijh ol annual aster pollution control costs.
1 iJ ecl Inns In capItal .apandliures on eulttlny equlyonnt tesull Iron coiisl,alnts on lnduittry cepilal acallabllity.
3 1n son. cases. lb. ularnai financIng need, ar. .,w. than ollitet by cash lion tru, pollution contiul •qul unt lnusst ,ents •nde in prior years.
4 lnciuius coIl sewing. resulting Iron closing Inelitclent planis.
5 iscIudns the cost ol aIr pot lullon controls low Indust, 1.1 boilers at sleel plants.
6 lnctudes In-place equlp.uit Installed In 1980-1901. PrIor to 1980, tim lolloulmig equipennt ens in place (.llilons 01 dollnrs)
Air pollution conlrols 8). 111.2
Water pollution controls nol requIred 101.5
iii l•)40. 1
hAl 19.1
i ’ s 55.3
Sou.ce. IllS p(OJ imclluii i t.
-------
Inhibit I-lU
LO.IG-451N EcOH04IC I*ACI Of INYIRONOJIIAL R(OUIAIICNS 1
SCINAJIIO SilliPtUlS i’ltOIECIIOIIS
Cap.cltp Danilan
Price 1960- 1990 ProductIon 7 I Io nt
— lbrli.t —
Psrc.nta . 11111 Ions Percastage MIII Ion. Percentage 9i.r. Thnusaad s of P.scantog.
I/ton of D...llaa of Ions of lanolIn. of lone of Basalk. Iporcont) (aglopeas of Boe.Ilna
Iron and St..l ProductIon 1339.30 94.1$ 103.60 100.1$ 394.0) 96.2%
Niscal laneous Pollution
Control Cgulp.ent 3 5.68 0.3 0.04 -0.03 0.0 -0.04 0.)
Air Pollution Control Igui eont 4 -
In-Place 9.34 1.7 0.14 4.1 -0.16 -0.2 -0.I 3.66 0.9
Additions 2.72 0.3 0.42 14.1 -0.46 —0.4 -0.56 -0.72 -0.2
Wolor Pollution ConIroIjq9j it
Pollution Control, tn-Place
Slot Itaqulrud 0.19 0.0 -0.02 -0.7 0.02 0.0 0.02 0.20 0.0
! in-PIece 1.44 0.3 -044 —14.6 0.49 0.3 0.36 3.41 0.8
UAI In-Plac. 0.04 0.0 0.01 0.) -0.01 0.0 -0.01 -0.01 0.0
PSES In-Place 0.21 0.0 0.03 1.0 -0.04 0.0 0.03 0.06 0.0
Total Baseline Conditions 1535.28 100.0$ 2.91 100.0$ 103.59 100.0$ 60.61$ 401.66 100.0$
W.lar Pollution Control AddItIons
O I AddItions 0.39 0.1 0.10 3.4 -0.11 -0.1 -0.09 -0.19 0.0
OA f AddItIon. 0.72 0.0 0.04 (3 -0.04 0.0 -0.03 -0.11 0.0
P565 Addilions 0.02 0.0 0.02 0.1 -0.02 0.0 0_os o.o, 0.0
NSPS Additions 0.61 0.1 0.23 6.4 -0.27 0.3 0.25 0.73 0.2
Total Water PollutIon Control
Iqulpeoni AddItions $ 1.44 0.2% 0.41 0.44 -0.4$ 0.34$ - 1.08
Grand Jotal $536.12 100.2$ 5.38 113.8$ 102.95 99.6% 80.33% 400.78 99.8%
1 Asau.o s tull paes-lhruu9fl of annual wnte( puliulion ctu troi costs.
le •illions of lose of fInished sisal psoducte.
3 lnciudas th. cost of sir pot lutlon controls iw• indusirial holier. •i sled plants.
4 lnclude . tn-piacu .quipoent Installed In 1980-1901. PrIor to 1960. lb. toiiosin equipoent was In place (alliSon. of dollars);
Air potlulion controls
Wats( poilul ion controls not required 101.5
1340.7
OAf 19.1
PSIS 33.3
Sowca ; lBS psojecilone.
-------
Exhibit I-Il
srgsniviri ANJILYS1S ON SCLIIAI4IO I
SilOilt-IWN PINAI4 IAL iif ’AC7 Of ENVIRU.IIENIAL RECItATIONS
1980- 1983
11980 dollars in millions)
Pollution Conlrui and
He.. Production Equip- Ci ,pendl hi -es on Ei iteresl 1963 q.ratioes 1985 Revenue
•oot Exp.nditwss ExIsting Equlpeent fin nncing t end Neint.nancs 2 Requirenenis
Pe.c.ntngs P.rc.ntegs P e .csnlege Percentage Percentage
Amount of IIeesl ion of Basal to. ?.mount of Basal in. Amount of Basei In. ximt of Beset In.
Scenario I
Basal in. $10,951.0 00.0$ $6,351.6 100.0$ $3,430.0 100.0$ $42,424.6 100.0$ $50564.9 100.0$
Water Ibilutlue Control AdditIons 465.1 4.2 503.4 7.1 31.1 0.9 11.3 0.0 123.1 0.2
Oai.ilna silt, Waler Pollution —-— —-——— — .---— —•--—- — - ——
Control Additions 11,420.1 104.2$ 6,026.2 92.3$ 3409.0 100.9$ 42442.3 100.0$ 50,690.0 100.2$
Sensitivity I - DI II intleilon
Bes.iin. l0 .954.5 100.0$ 6,119.6 103.5$ 3,712.1 109.1$ 40,652.0 93.8$ 49,530.2 90.0$
Waler Pol iul Ion O.inlroi Additions 462.7 4.2 —533.1 —6.2 23.5 0.7 20.5 0.0 14.5 0.2
Itasel in. with Water Pollution —-- ——-- — — ———— — ________ —
Control Additions 11,411.2 104.2$ 6,246.5 93.6$ i )95.6 110.4$ 40,615.3 95.6$ 49644.7 96.2$
Sensitivity 2 — Doubie Waler Costs
Bas.iina 11,267.9 102.0$ 6,009.5 3,462.4 100.7$ 42,425.4 100.0$ 30,676.6 100.2$
Water Pollution Control AdditIons 926.1 8.5 -1,030.4 45.1 1.3 5.7 0.0 201.9 0.4
Oas.iin. mliii Watar Pollution —— —— —— ________ -_______
Control Additions 12,194.0 111.5$ 5,059.1 3,501.5 102.0$ 42,431.1 100.0$ 50,010.3 100.6$
Sensihivily S — Air Sir.tciiou l
Basal In. 10,640.6 99.0$ 6504.0 99.6$ 3,424.0 99.6$ 42,425.2 100.0$ 50,469.5 99.6$
Waler Pollution Control Addillons 463.1 4.2 —517.1 -7.9 24.3 0.1 19.2 0.0 111.0 0.2
flas.lln. will, Water PollutIon ——-— —— ——- ——-—— —--— ——————— —
Control Addihions 11,311.7 105.2$ 5,907.7 9i.7$ 3.446. ) 100.3$ 42,444.4 100.0$ 50,306.5 100.0$
Sen ItIvlty 4 - 00$ Cost Sev i
!± s —hhrou&t
Baseline 10,951.0 100.0$ 1,015.5 120.6$ 3,901.0 113.5$ 42445.6 100.0$ 51,649.0 102.1$
Water Pollution Control Additions 465.1 4.2 -464.4 —1.1 41.3 1.4 22.) 0.1 iá l.5 0.3
Baseline will, Wale. Pollution —-——- ——--- —-—- ———- —--.——- -—-- —-—--- —
Cont,oi AddItions ll ,4 0.l 104.2$ 7,411.1 113.5$ 3,946.3 114.9$ 42,461.9 100.1$ 5i .6 16J 102.4$
si cases lii. exiarnei financing needs are more then oII sl by cesi, floe Iron p01 lul 10,, control equip0.nl lnveitw,,hs ends In prior years.
2 includes coil savings r.sulling Iron closing inslIicianI planls.
5 .verce. 983 analysis.
-------
shlbli 9—i l
StIISIIIVIIT AIIAIVSIS flu SCIIIMIIO I
SIKItI-RUN ICOIOIIC II4A1 I or (V• 1 10049 1 11AL REGLAI IONS
1900
Price Capacity Docile. Production tat .lopaeut
-—_________ — — i t .rk.t —
P.rc.ntaye oI HIlilons Psic.ola.je ol Nillions Pa.canlage ol Slier. Thousands Parcenlag. 01
1/Ton Baseline ol Ions lMs.llns ol Toni flss.iln. Iporcenti of l.play.o S Baselln.
Scenario I
Baseline 1533.06 100.0$ 6.91 100.0$ 90.11 100.0$ fl.201 425.70 100.0$
Water Pollution Control AddItIons 1.32 0.2 .62 9.0 -0.62 -0.6 —0.46 -2.16 -0.9
Baseline aith Valor Pollution ——— — — —- — —
Control Additions 531.10 100.2$ 1.93 109.0$ 96.19 99.41 76.60% 429.60 99.51
Sesiltivily -
Baseline 1922.93 94.0$ 5.99 06.1$ 99.14 101.0$ 70.041 429.91 101.0$
Viler Pollution Cosirol Additions 1.21 0.2 0.59 0.5 —0.60 —0.6 —0.41 -2.10 —0.9
Baseline with Waler Pollution —— — — —— — — —— ______ ——
Control Adjilluns 524.14 90.2% 6.94 94.6$ 99.14 100.4$ 71.91$ 421.01 100.9$
S.nslllvlty 2 — Duubl. Valor
Costs
flaisile. $113.04 00.2$ 6.02 96.71 90.06 100.1$ 1 1.391 426.19 100.1$
Water Pollution Control AddItions 2.13 0.4 1.24 11.9 —1.23 —1.2 —0.96 4.04 —1.1
Baseline wilh Vita. POllutIon — — —— - —— — — _____ ——
Control AddItions 937.17 100.6$ 0.06 116.6$ 97.63 96.0% 76.991 421.55 99.0%
Sansltlvliy S — Atr Streiclsut
BaselIne 9532.65 99.01 6.19 91.31 90.09 100.1$ 11.37% 426.31 100.1$
Waler Pollution Control AddItions 1.24 0.2 0.62 9.0 —0.62 —0.6 —0.40 4.21
Basal lee with Waler Puilulios ._ - —— — — — — —
Control Additions 534:09 100.0$ 1.41 101.3$ 96.27 99.51 16.09$ 424.10 99.5%
SensItivity 4 — 1151% Cost
Pass-Throuqh
Baseline $343.S I 102.1$ 5.17 63.91 99.93 101.2$ 70.19$ 430.00 101.21
Waler Poilulten Control Additions 1.7) 0.5 0.57 0.2 -0.39 —0.6 -0.46 -2.07 -0.5
Ba elina lth Water Pollution — — ——- ——- — ——
Cuut,ot Addilions 541.01 102.4$ 6.34 9 1.0% 99.54 100.6$ 71.131 420.73 100.7$
Source. TII analysis.
-------
£shlbii 11—i )
SttlSiIlVlfl AN7LYSIS Ott SCENAIIIO I
10t83 -RIJll F INAICIAL IMPACt Of EtlVIliO.IItNFAL MEGIA Al SOIlS
1900-1990
41900 dollars In alliSon ,)
Pollution Control
and N. Production
Equip.ant Eupanditisen
tupandilures
on Eutstin
Equlpoant
tuieroil
Fin ancliwj 1
1990 (% . r.tIons and
Mal at.nanc. 2
1990 Bavanua
Raquirsenis
P orc.nt a . Parcentig. Percentage P.rcenta .ja P.rcunle .ja
1 Baseline wit of OssalIn. of llas.IIn. uat of Uas.lio. A.ount of ilasalin.
Scanarlo I
Basal in. $i5 360.0 100.01 $I0.5065 100.01 1 9.7 )6.0 100.0$ 140.103.l 500.0% 6962.S 100.0%
Waler Pollution Control Addition, 730.1 4.0 0.0 0.0 402.0 4.1 47.3 0.1 3iI.0 0.6
Basal In. with Waler Pot lot ton ——-— —-— — — - ——
Control Additions $t6.090.l 104.0% $l0 .316.3 100.01 $l O .IS0.0 101.11 $40.750.4 100.11 157.29 )9 100.61
Sensitivity I—-OAf isliation
B as.Iln. 1I5.430.i 100.51 *16.702.1 100.6% $11549.6 116.6% 145)20.1 93.11 134.1319 93.0
Waler Pollution Coalrol Additions 133.0 4.6 0.0 0.0 496.6 5.1 50.6 0.1 296.7 0.5
Basal In. wIlt. Wetor Pollution —— ——— ——— ——- — ——— —— — ——
Conlrol Additions 116.1)1.9 105.5$ $iO.702.l 500.6% $lS.646.2 121.7% 143.3)0.7 95.21 154.426.6 95.51
SensItivity 2—Oout .la Water Cost ,
BaselIne 115.6)0.9 1112.0% $19000.? 102.2% $ 9 55l.7 98.1% 148.703.3 00.0% 151.0113 100.1%
Waler Pollution Control Additions l .460.0 9.5 0.0 0.0 075.9 9.0 59.0 0.1 539.9 0.9
Baselin, wilt. Waler Pollution _____— .-—-—- _____ ——- —.— ———— —— —-- ______—
Control Additions 117.1)0.9 111.5% 119.000.? 102.2% $tD.421.6 107.1% 146.143.) 100.11 151.555.2 101.0%
Seosl tie ! it 3-—Air Str.tchoiit
Baseline $iS.259.6 99.3% $l6.SiLO 99.61 $ 9.652.9 99.11 140.691.) 100.01 1)6.987.1 100.0%
Water Pollution Control Additions 130.1 4.6 0.0 0.0 446.2 4.6 51.2 0.1 302.4 0.5
Ilesellno ndlh Wal.r Polluilon -— -——— ______ ——----- —- —— -—— --——- ——
Control AddItIons 813.9119.7 104.1% $i6.5l7.9 99.6% 1l0 099.I 103.7% 140.1403 100.11 5)1.290.5 100.5 1
Scenario 4--iOO Percent Cost
Savings Pass Through
B.t..i In. 115.3611.0 100.0% 8 )0.295.1 109.21 $ 9002.4 91.3% $40,719.9 00.01 557.6I1.0 101.11
Waler Pollution Control Additions 150.1 1.0 0.0 0.0 562.) 1.1 55.2 0.1 324.6 0.6
Baseline with Waler Pollution _ ____ -
Control Addlilons 116.1190.1 104.01 120295.1 109.2% $ 9,445.5 93.0% 146.7)5.1 100.1% 157.941.0 101.71
1 5n 5 cases tue aeleri,ai tinancing needs are a than oliset bp c .sh flow Iron pollution control aquipeont lnva,iannts and. In oilier 7oars.
2 inciudes cost savtnys reselling true closing inalilcianI plants.
Source. l O S analysIs.
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£ hlblt t—i4
SENSIIIVITY ANALYSIS ON SIrNARIO I
LONS-lulti ECONOIIC it( AC1 or (IIYIROUIEHIAL REGIJATIONS
1990
Cop.clI D.clln.
PrIc. 1900-1990 Ptodawtlon
_______ —- — l rk.t —
P.c.nI. j. Nillioni P.rc.nt.g. Million, P.ic .ntsg. Sior. Ihonisnd$ Perconla..j .
5/Ion of 0mi.Iln. of lou, ol lanolin. of Ton, of Ilawoilno lp.rcanl) of Eatulot... of 0ai.lln
Sc.narlo I
l a ,.iln . 558.00 100.0% 0.0 116.00 100.0% 84.501 499.11 00.0t
Watar Pollution Control Addition, 1.26 0.6 0.0 0.00 0.0 0.0 0.89 0.2
0 .n .IIuuo with Pollution — — ——
Control Addliiosii 562.06 100.6% 0.0 100.0 100.0$ 04.501 499.96 100.21
Sanillivify 1——hIll inflation
lanolin. i.04 99.0% 0.0 116.00 100.01 459.11 100.01
Walor Pollution Control Addltlonw 2.92 0.9 0.0 0.00 0.0 0.89 0.2
Basoilno with WaI.r Pollution — . —— ——
Control Additiona 9)1.96 95.3% 0.0 116.00 100.0$ 499.96 100.21
Sannitivily 2——Doidila Walar Costs
8 s ail.o 559.29 100.1$ 0.0 116.00 100.0% 84.501 459.11 100.0$
Wat.r PollutIon Control Millions 5.50 0.9 0.0 0.00 0.0 0.00 0.55 0.2
lanolin, will i.r Pollution —— —— —
Conlrol AdditIons 564.59 101.0$ 0.0 116.00 100.0$ 84.501 4)9.96 100.2$
Sauualtlvity 3——Air Str.lcI ut
lanelin. 559.06 100.0$ 0.0 116.00 100.0$ 14.50$ 459.11 100.0%
W.t.r Pollution Control AdditIons 2.96 0.5 0.0 0.00 0.0 0.00 0.89 0.2
Ba..lln. iil, Wsl.r PollutIon —— —-—— — ——
CouuIroi AddItions 562.02 100.5$ 0.0 116.00 100.0$ 64.501 459.96 100.2$
SensitIvIty 4—- 100 P.rcant
Coil Savings
lt a nalIn. 565.2) 101.1$ 0.0 116.00 100.01 04.50% 459.11 100.01
Vatlul Pollution Control AddItions 1.19 0.6 0.0 0.00 0.0 0.00 0.85 0.2
lanolin, with Water Pollution .____ ——
Control Millions 568.42 101.7$ 0.0 116.00 100.0$ 84.50% 459.96 100.21
Source. illS anaI .ls.
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I. INTRODUCTION
This report presents the results of a 36—month study con-
ducted by Temple, Barker & Sloane, Inc. (TES) to evaluate the
economic effects of the final effluent guidelines on the iron
and steel industry. The study effort was sponsored by the
Office of Policy Analysis of the U.S. Environmental Protection
Agency (EPA) as part of the EPA ’S overall review of the water
pollution control regulation for the iron and steel industry.
In December 1980, TBS prepared a preliminary report en-
titled An Economic Analysis of Proposed Effluent Limitations
Guidelines in support of the proposed water pollution control
regulation to be required for this industry. The current
study, which uses the same analytical approach that was used
in the previous study to examine the final regulation, con-
tains an improved evaluation of steel industry pollution con-
trol and financial characteristics. The study is intended to
provide an in—depth evaluation of the total economic impact of
the final effluent guidelines and other EPA regulations within
the context of future uncertainties facing the steel industry.
The TBS analysis focused on the impact of the final ef-
fluent guidelines in light of the capital constraints the
steel industry is likely to face during the next decade. TBS
assumed that the current government policies toward the indus-
try would continue throughout the l980s. These policies in-
clude the current provisions of the Economic Recovery Tax Act
of 1981 concerning corporate income tax rates, depreciation
schedules, and investment tax credits; the relaxation of
formal and informal steel price controls; and the effective
enforcement of steel trade laws such as the trigger price
mechanism.
In terms of approach, the analysis focused on two time
periods——1980 to 1985 and 1980 to 1990——and was developed
using two scenarios for the future demand for domestically
produced steel products. A fairly profitable scenario with
rapid growth in production (Scenario 1) was based on an
American Iron and Steel Institute (AISI) projection of steel
shipments of 108 million tons in 1985 and 116 million tons in
1990. This scenario would result in capacity constraints
throughout most of the 1980s. A less profitable, less expan-
sionary scenario (Scenario 2) was based on an econometric
model of future industrial production, which projected ship-
ments of 103.2 million tons in 1985 and 108.3 million tons in
1990. The second scenario would result in underutilized
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1—2
capacity for most of the 1980s. In addition, TBS performed
sensitivity analyses to examine several of the major assump-
tions used in the study.
The following section describes the steel industry’s
performance during the last decade and thus provides a per-
spective for the economic analyses. The final section out-
lines the types of steel-related production and pollution
control operations included in the analysis.
BACKGROUND
The domestic steel industry is now experiencing greater
profitability and higher shipment levels than it did in 1980,
despite the continued economic recession. Domestic shipments
in 1981 were estimated to be about 92.0 million tons, 1 an
increase of 9.6 percent over the depressed level of 83.9 mil-
lion tons in 1980, when the high interest rates that curbed
demand in major steel—consuming sectors, as well as the rela-
tive cost advantage of foreign steel, kept shipments at low
levels. Currently, however, the benefits of modernization and
cost cutting throughout the steel industry are resulting in a
more effective utilization of assets and a more profitable
industry. Despite continued economic uncertainty and import
competition, the industry has recently announced expanded
programs for modernization and replacement of production
capacity.
A discussion of the industry’s economic and financial
condition from the boom year 1974 to the present provides the
context upon which the industry’s current optimism is based.
An important consideration within this context is the impact
that government regulation has had on the steel industry’s
financial performance.
In 1974, the steel industry achieved record profits. The
relaxation of steel price controls during 1974 was a major
factor in the industry’s record performance. Perhaps just as
important was the anticipation of shortages in basic raw mate-
rials, which led to a significant increase in the product
inventories of steel customers and to a similar increase in
domestic shipments. By the end of 1974, the steel industry
1 Forecast as of August 1981; since that date an economic re—
cession has reduced this estimate to about 87.0 million tons.
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1—3
was looking forward to continued strong performance over the
next few years. On the basis of this optimistic outlook,
steel companies planned substantial capital spending programs
for modernization, replacement, and expansion of their produc-
tion capacity.
The economic recession of 1975, however, had a devastat-
ing effect on the steel industry. Shipments declined by more
than 25 percent during that year. Moreover, the year was
marked by direct confrontation over prices between the Council
on Wage and Price Stability and the steel industry. Yet by
year-end, the industry was once again Looking ahead optimis-
tically, though this optimism was tempered by the economic
realities of an uncertain economy, foreign competition, arid
continued government regulation.
During 1976, steel shipments increased 11.9 percent as
the steel product inventories built up in 1974 became de-
pleted. Despite this increase in shipments, the steel indus-
try’s profitability continued to erode, with net income as a
percentage of sales falling from 6.6 percent i.n 1974 to
3.7 percent in 1976. Return on equity during the same period
decreased from 17.1 percent to 7.8 percent. The decline in
the industry’s profitability in large part reflected a de-
crease in its pricing flexibility. Steel industry prices rose
by only 6.4 percent in 1976, while total industry production
costs increased by a significantly higher percentage.
The steel indus.try’s performance continued to deterIorate
in 1977. Shipments increased by only 1.9 percent, and profits
were minimal. Price increases were held to 9.6 percent on a
list basis by domestic producers, with significant discounting
relative to published prevailing prices. In spite of this
pricing restraint, domestic producers experienced a tharket
share decline as the import share of apparent steel supply
rose from 14.1 percent in 1976 to 17.8 percent in 1977. Faced
with a weak financial condition and strong import penetration
in the domestic market, steel producers began to seriously
curtail their capital spending programs for production capac-
ity and to shut down unprofitable facilIties.
The steel industry’s profitability recovered somewhat in
1978. Net income as a percentage of sales was 2.6 percent,
and return on equity reached 7.3 percent. This improved per-
formance reflected a 7.5 percent increase in shipments and a
10.7 percent rise in steel prices. However, even with this
improvement over the poor performance of 1977, the steel
industry’s earnings remained weak.
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1—4
The partial recovery experienced by the steel industry in
1978 occurred within the context of two new government poli-
cies: the trigger price mechanism and the “Anti-Inflation
Program.” Trigger prices, instituted in February 1978 by the
Carter Administration, were designed to preclude foreign steel
products from being sold in the domestic market at price
levels below the cost of steel produced by the Japanese, who
were considered the most efficient steel producers. The trig-
ger price mechanism was intended to replace a more cumbersome
system of trade laws administered by the government and the
filing of complaints by indIv’idua]. firms. Trigger prices
helped minimize further import penetration during 1978. The
import share of apparent steel supply for the year rose only
slightly from the 1977 level of 17.8 percent to 18.1 percent.
The second new government policy was a set of anti-inflation
guidelines, instituted during the last quarter of 1978, which
suggested. that steel price increases be restricted to the
average of steel company price increases during the two years
preceding October 1978 (approximately 10.1 percent per year)
The two new government policies continued to affect the
steel industry in 1979. In this year, the industry experi-
enced a decrease in the import share of apparent steel supply,
in part because of increases in trigger prices of 9.1 percent
during the latter part of 1978 and 7.0 percent during the
first quarter of 1979. The 1979 import share of 15.2 percent
represented a 2.9 percentage point decrease from the 1978
level. A more significant factor in the decline in imports,
however, was the deterioration in total demand for steel
products during 1979.
The decline in total steel demand in 1979 occurred
despite strong demand conditions during t e first part of the
year, which led to a 2.4 percent increase in domestic ship-
ments for the year as a whole. The strong demand during the
first part of the year also created significaht pricing lever-
age for the industry, which resulted in steel prices’ increas-
ing by about 10.2 percent for the year as a whole. The in-
crease in prices reflected the approximate 10.1 percent ceil-
ing imposed by the Anti—Inflation Program. Eowever, this
price increase, together with the 2.4 percent rise in the
volume of shipments, was not sufficient to overcome the even
larger cost increases during 1979. As a result, steel indus-
try profitability Levels in 1979 were slightly lower than the
1978 earnings figures. Net income as a percentage of sales
was 2.1 percent in 1979 versus 2.6 percent in 1978, and return
on equity was 6.8 percent compared with 7.3 percent in 1978.
These fairly weak levels of profitability exacerbated the
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1—5
industry’s capital format-ion problems and caused it to main-
tain a reserved position in its capital spending projections
for the next few years. 2
The economic recession further entrenched the industry’s
pessimistic outlook in ].980, with both shipments and profita-
bility exhibiting marked declines. The year 1980 also wit-
nessed a change in government programs affecting the steel
industry. On March 21, the Carter Administration suspended
the trigger price mechanism. The suspension was the Adminis-
tration’s response to the filing of a complaint by the U.S.
Steel Corporation that imports from Europe were being priced
at below “fair value.” The suspension resulted in uncertainty
regarding the government’s future plans in the area of steel
import policy.
The economic recession continued to affect the steel
industry into 1981. aowever, the Reagan Administration’s tax
cut improved hopes for a higher demand for steel products in
the future and provided urgently needed cash flow to the in-
dustry. In October 1981, the Administration, promising strict
enforcement of U.S. trade laws, reinstituted the trigger price
mechanism and convinced U.S. Steel to drop its 1980 complaint.
Since that time, the import share of domestic steel consump-
tion has risen to above 20 percent, driven in part by a short-
age in domestic capacity for tubular steel products. Current-
ly, several steel companies are readying cases for future
import complaints. -
Despite the apparent constraints, steel companies, many
of which are led by new management teams, appear to see a
brighter future. The highly publicized diversification of
steel companies into nonsteel areas has taken attention away
from recent announcements of the largest capital expenditure
programs since the early 1970s. Most of these expenditures
will be allocated for mills to produce new steel products and
for continuous casters to improve the cost and productivity of
steel production. The breakeven utilization rate of steel
facilities is reported to have decreased well below the his-
torical 85 percent. This decrease indicates that the positive
effects of rationalization of facilities——modernization of
existing capacity and closure of ou-tdated capacity——were felt
in 1981.
2 American tron and Steel Institute, Steel at the Crossroads:
The American Steel Industry in the l980s , January 1980,
pp. 39—40.
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1—6
The industry itself and many of its analysts are expect-
ing capacity constraints to begin in the steel industry in the
middle to late 1980s. The degree of severity of these con-
straints and the uncertain time frame in which they will occur
are the primary factors affecting the analysis described in
this report.
SCOPE OF THE STUDY
In this study, the steel industry was defined as those
production process units normally associated with steel pro-
duction and finishing——the on—site production facilities, from
raw materials storage yards for coke ovens and blast furnaces
to finishing mills. 3 Thus, both facilities for the mining,
beneficiation, and transportation of raw materials to the site
of coking and ironmaking and fabrication facilities were
excluded from the definition of the steel industry. However,
facilities used by the steel industry to produce pig iron for
foundries and other uses were included. All other nonsteel
operations performed by steel firms were excluded from the
impact analysis reviewed in this report.
The American Iron and Steel Institute (AISI) provided TBS
with detailed operating data on 100 steel plants. The data
had been developed for a cost impact study conducted for the
AISI by Arthur D. Little (ADL). 4 In order to utilize the data
most effectively, TBS limited its analysis to the steelmakirig
and firi.ishing facilities that produced approximateLy 87.7 per-
cent of domestic steel shipments. While extrapolations to
total steel operations could be made, extension of the analy-
sis to include iron ore and coal mining, beneficiation, trans-
portation, fabrication, and other nonsteel operations per-
formed by steel companies would not be appropriate.
3 utilizing data provided by the American Iron and Steel
Institute, TBS estimated that steel operations so defined
represented about 68 percent of the net fixed assets of the
major integrated steel companies during the 1972-1978 period.
If iron ore, metallurgical coal, and scrap had been trans-
ferred at market values, sales revenues from steel operations
would have approximated 79 percent of the total revenues of
these firms during this period.
4 A.rthur D. Little, Steel and the Environment: A Cost Impact
Analysis , American Iron and Steel Institute, 1978.
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1—7
The four chapters that follow outline the methodology,
results, and conclusions developed in T3S’s analysis. Chap-
ter II describes the baseline condition of the industry. The
cost, financial, and economic impacts of the final water regu—
lation are delineated in Chapters III, IV, and V. Finally,
the research methodology is discussed in an Appendix.
-------
II. BASELINE CONDITION
In order to evaluate the economic impact of the final
water pollution control regulation on the iron and steel
industry, it was first necessary to establish a reference
point, or baseline condition, that described the industry’s
future operating and financial characteristics without the
costs of the final regulation. This baseline condition was
established by determining the capital and expenses needed to
produce a projected volume of finished steel products under
the current pollution control regulations through the aid
of PTm(Steel), TES’s policy—testing model for the steel
industry.
To estimate future conditions in the iron and steel -
industry, PBS collected information from a number of industry,
government, academic, and financial sources. These sources,
specifically noted in the sections that follow, include the
EPA and it technical consultants in the iron and steel indus-
try area, PEDC0 Environmental, Inc. (PEDC0) and the NT iS Cor-
poration, Cyrus Wm. Rice Division (NTiS/Rice), and the A.tSI and
its consultant, Arthur D. Little, Inc. (ADL).
The following specific tasks were performed to establish
the baseline description of the iron and steel industry:
• Future steel shipments were projected.
• Future operations and maintenance (O&M) ex-
penses for iron and steel production were
determined using PTm(Steel).
• Future profitability and future capital con-
straints were projected, and their influences
on the funds available for capital expenditures
were evaluated.
• Future capacity retirements were projected.
• Future capital outlays for new production
capacity were estimated, taking into account
projected capacity constraints.
• Future capital expenditures on existing equip-
merits were estimated, taking into account
financial constraints and past requirements
for such expenditures.
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11—2
• Future capital expenditures and O&M expenses
for currently installed air and water pollution
control equipment were estimated using tech-
nical data provided by the EPA in conjunction
with PTm(Steel). The impact of in—place pol-
lution controls on capital expenditures for
existing equipment, which resulted from the
financial constraints, was also considered.
The sections that follow describe each of these tasks.
FUTURE STEEL SHIPMENTS
Future domestic steel shipments, an important considera-
tion in the steel industry’s future, are a v ital element in
the evaluations in PTm(Steel). The shipments estimate deter-
mines the required level of production for each production
process in the model, thereby establishing process O&M ex-
penses, capacity utilization rates, and capacity addition
needs.
For a number of reasons, estimates of future domestic
steel shipments are subject to uncertainty. Variations in the
business cycle can cause wide fluctuations in the short-term
consumption of steel, often masking the underlying level of
demand. This is especially true considering today’s reces-
sionary economy. For example, high interest rates have re-
duced the demand for the products of steel consumers (such as
automobile manufacturers, construction firms, and equipment
manufacturers) while limited capacity has not allowed the
steel industry to meet the current booming demand in the
energy sector. There is also uncertainty with respect to the
long-term demand for steel. The post-World War II growth rate
in domestic shipments obtained from a time—series regression
analysis has been about 1.2 percent per year. However, the
long—term effects of high oil prices on steel consumption,
combined with the reduction of steel content in automobiles,
shifts in sectoral demand, continued economic fitictuations,
and foreign competition, make projecting future shipment
levels difficult.
Because of the major uncertainty surrounding steel ship-
ments, TBS prepared two likely scenarios for the future demand
for steel. In preparing the shipments forecasts, TBS assumed
a base domestic apparent consumption of steel products of
approximately 109 million tons in 1981 in both scenarios. The
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11—3
share of imports was assumed to be 15.5 percent, which re-
sulted in domestic steel shipments of 92 million tons 1 in
1981.
The shipments in Scenario 1 were based on forecasts
presented in the ADL report to the AISI: Environmental Policy
for the 1980s: Imoact on the American Steel Industry (1980).
To develop Scenario 2 shipment estimates, TBS used production
indices obtained from Data Resources, Inc. (DRI) and adjusted
them to reflect the effects of automobile downsizing (a reduc-
tion in steel demand of about 6 million tons by 1985.) The
shipment estimate was also smoothed to reduce the importance
of timing business cycles in the DRI forecast.
Annual shipment levels for these two scenarios are pre-
sented in Exhibits 1 and 2. In Scenario 1, the industry
recovers from the current recession by 1982 and grows at an
average annual rate of 2 percent through 1990. In Scenario 2,
the industry growth is slower-—only about 1.3 percent from
1982 to 1990. AJ.though the difference in the steel shipment
levels of the two scenarios appears slight——116 million tons
(Scenario 1) versus 108.3 million tons (Scenario 2) in 1990
-—it is sufficient to distinguish between a fully utilized,
reasonably profitable, expansionary steel industry, and a
capital—constrained, marginally profitable, but only moderate-
ly expanding steel industry. 2 Throughout the remainder of the
report, future operating and financial characteristics of the
steel industry will be discussed concurrently for both sce—
ciarios. In cases where TBS has performed sensitivity analyses
on underlying assumptions, these analyses will be discussed
with respect to Scenario 1 only.
1 Forecast in A ugust 1981; since that date an economic reces-
sion has reduced this estimate to about 87.0 million tons.
2 These projections assume that steel industry production will
not be ..constrained by available supply or production capac-
ity. tater in the report, it is shown that for Scenarios 1
and 2 in certain years during the latter part of the 1980s,
restrictions on available production capacity are likely to
limit steel production to levels below those shown in
Exhibits 1 and 2. These restrictions would result from the
rapid expansion of the industry in Scenario 1 and the years
of cyclically high demand in Scenario 2. By the early l990s,
restrictions on production capacity would be overcome.
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11—4
FUTURE OPERATIONS AND
MAINTENANCE EXPENSES
PTm(Steel) calculates O&M expenses by first determining
levels of production for each production process that are
consistent with the baseline steel shipments forecast. TES
has segmented the iron and steel industry into 28 production
processes (Exhibit 3), which have been grouped into five
stages of steel production: on—site raw materials prepara-
tion, ironmaking, raw steelmaking, casting and forming, and
finishing. 3 When these production levels were combined with
the resources utilized per unit of production in each process
and the prices of those resources, the baseline O&M expenses
shown in Table 11-1 were obtained. 4 A more detailed breakdown
of these O&M expenses can be found in Exhibit 4.
Table Il—i
OPERATIONS AND MAINTENANCE (PENSES
FOR IRON AND STEEL PROCL TION
(mill Ions of 1980 dollars)
ScenarIo 1 Scenario 2
1990 1985 1990
3asic Raw terials $12,088.8 $14,401.0 $11,519.5 $13,502.6
Direct Labor
and Overhead 16,962.2 13,822.8 16,700.5 17,231.1
Other 0&M Costs 12,673.5 14,620.9 11,946.8 1,3,344.4
Total $41,724.5 S47,644.7 $40,166.8 $44,578.1
Source: PTiii($teel). -
3 The 28 processes have also been grouped into two phases: the
processes preceding and including ingot and continuous cast-
ing constitute Phase I, and the remaining processes make up
Phase II. Processes ancillary to steel production, such as
on—site generation of steam and electricity, have been
grouped into a 29th process.
4 A description of the resources utilized per unit of produc-
tion in each process was obtained from ADL through the AISI.
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11—5
O&M expenses, which form the largest component of steel
industry costs, are dominated by basic raw materials costs and
labor-related costs. The remaining O&M expenses include the
costs of other raw materials (e.g., fluxes and alloying ele-
ments), energy costs, and the costs of miscellaneous supplies
and utilities.
Basic raw materials, which include irdn ore, inetallur—
gical coal, and steel scrap, form a major component of O&M
expenses——29.2 percent in 198]. and 30.1 percent in 1990 in
Scenario 1. Scenario 2 would have a similar breakdown of
components. To project coal prices, TBS has used the ORI
OPTIMLONG data forecast of coal price increases. In the fu-
ture, the rate of change in iron ore prices is expected to be
close to the rate of change in coal prices. However, since
productivity in ore mines is expected to rise 0.5 percent
faster per year than productivity in coal mines, the inflation
rate for the price of coal is set 0.5 percent above the price
of iron ore. Steel scrap prices depend on many factors, but
over the long term tend to be closely related to inflation.
Therefore, TBS has used the GNP deflator to forecast scrap
prices.
TES has assumed that the other principal component of O&M
expenses, direct labor and labor-related overhead charges,
will escalate in proportion to the per capita GNP. The labor
cost share of O&M expenses will decline slightly during the
next decade (from 40.8 percent in 1981 to 39.3 percent in 1990
in Scenario 1) primarily because raw materials and energy
prices are likely to increase at a somewhat faster rate.
STEEL INDUSTRY PROFITABILITY
AND CAPITAL EXPENDITURES
The future capital expenditures program to be undertaken
by the steel industry will be influenced both by historically
low levels of profitability and by projections of future prof-
itability. TES has assumed that industry profitability in the
years 1981 to 1990 will be based on the utilization of raw
steelinaking capacity.
In the period 1970 to 1980 (except for the boom years
1973 and 1974), raw steel utilization averaged 82 percent, and
the industry rate of return on equity equalled the average
rate of inflation. In 1973 and 1974, utilization averaged
97 percent, and return on equity approximated the return for
nonfinancial corporations. On the basis of this evidence, TBS
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11—6
assumed an industry return on equity equal to the rate of
inflation when the utilization of raw steeltnaking capacity was
less than or equal to 85 percent. When utilization was
100 percent, TBS assumed an industry return on equity equal to
the average rate of return for nonfinancial corporations.
When it was greater than 85 percent, the rate of return was
calculated by interpolating between the two points. Exhibit 5
details the return on equity for the 1970—1980 period.
Profitability affects the steel industry’s future in at
least three important ways. First, profits provide returns to
its stockholders as well as much of the cash the industry uses
to finance investments needed for the maintenance and expan-
sion of its capital stock. Second, the current high profits
provide assurance to potential purchasers of steel industry
common stock that they will receive a return on their invest-
ment. Thus, high profits ensure that market prices for common
stock will be high, allowing companies to issue additional
common stock without dilution of present shareholders’ inter-
ests. Third, poor profits diminish the industry’s credit
rating and therefore its ability to raise capital through the
issuance of debt.
In the 1970s, Low profitability, coupled with large capi—
tai. expenditures for production facilities and pollution con-
trol equipment, virtually eliminated the steel industry’s
sources of equity capital and stretched its ability to issue
additional debt. As a result, the credit quality of steel
industry debt declined.
Additional issues of debt would tend to degrade such key
measures of credit quality as the cash—flow—to-long-term—debt
ratio, the interest coverage ratio, and, most important, the
debt-to-capitalization ratio. Although the bulk of the indus-
try is given a credit rating of A by Standard & Poor’s and
Moody’s, if issues of debt further degrade the industry’s
credit quality, the industry’s ra ting could be reduced to the
lowest investment grade (Standard & Poor s BBS and Moody’s
Baa) or, worse yet, below investment grade. Under normal.
credit market conditions, a BBS/Baa-rated company is rela-
tively assured of having access to debt capital on reasonable
terms. owever, during tight credit market conditions, a
BBS/Baa-rated company may not be able to raise its capital
requirements on reasonable terms, Consequently, the addition-
al costs and potential financing difficulties associated with
a BBS/Baa rating (or lower) are likely to lead steel industry
managements to constrain their capital expenditures and debt
financing to levels consistent with the preservation of an A
bond quality rating.
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11—7
The TBS analysis reflects the foregoing financial con-
siderations in two important ways. First, it was assumed that
coimnon stock financing would not be undertaken by the steel
industry unless it could demonstrate a long-term profit poten-
tial for several years. Second, the steel industry’s debt—to—
capitalization ratio was limited to approximately 35 percent
in order to preserve its current credit rating. This limit on
debt financing in turn implied limits on the capital expendi-
tures that the industry would be likely to undertake. It was
assumed that the industry would probably reduce the capital
expenditures invested in its existing facilities to levels
below those considered desirable by knowledgeable industry
sources. Such reductions would make it more difficult for the
industry to maintain its current level of improvement in pro-
ductivity, quality, energy conservation, and cost reduction.
Moreover, the industry would be less able to meet U .S. steel
r quireinents during future periods of high demand and would
thus lose a part of its share of the U.S. steel market.
The future capacity of the U.S. steel industry depends on
capacity retirements, capacity additions, and the level of
reinvestment in existing facilities. In the following sec-
tions, each of these activities will be examined in light of
the financial constraints discussed above.
CAPACITY RETIREMENTS
The industry is likely to undertake production capacity
retirements in response to several economic factors. First,
the obsolescence of many facilities has reduced their competi-
tiveness and potential for future productivity gains. Second,
low profitability in the industry has sent a clear signal to
the steel companies that a significant reduction in the number
of facilities is in order. Finally, pollution control regula-
tions have hastened retirements of some facilities so that
capital expenditures for pollution control •equipment can be
avoided.
Estimates of facility retirements through the year 1984
were obtained from the Air Enforcement Division of EPA. Most
of these facility retirements have been- formalized as court
orders and consent decrees stemming from EPA enforcement
actions. These estimates of retirements were augmented with
announced capacity shutdown figures from various articles and
studies on the steel industry. Beyond 1984, a retirement rate
of 5 percent per year of the capacity associated with Phase I
facilities that are extensively underutilized and that are
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11—8
between 20 and 40 years old was assumed. This assumption
translates into significant retirements of sinter strands,
coke ovens, blast furnaces, open hearth furnaces, and ingot
casting and primary breaking facilities. Exhibit 6 indicates
past and projected facility retirements, by process, from 1976
to 1990 for Scenarios 1 and 2.
TBS assumed in its analysis that closing inefficient
plants would result in a cost savings to the industry. On the
basis of data provided in ADL’s report to the AISI, TSS as—
suined a cost savings of $80 of annual savings per ton for the
first 3 million tons of capacity closed. For closures beyond
3 million tons, a cost savings of $30 per ton was used. These
cost savings were included in the baseline for Scenarios 1
and 2.
CAPACITY ADDITIONS
Low historical levels of profitability have reduced the
number of attractive investments in production capacity avail-
able to the steel industry. As a result, expenditures f or new
capacity in the past have not been adequate to maintain the
industry at the peak level of efficiency necessary to compete
effectively with foreign producers.
Estimates of capital expenditures for new capacity during
the 1976-1984 period were obtained by combining capacity addi-
tion announcements published in the steel industry press with
construction cost data developed by the AISI.
From 1985 to 1990, the level of capital expenditures for
new capacity reflects the limit on. the steel industry’s in-
vestment program for production equipment imposed by its weak
financial condition and its desire to maintain current finan-
cial ratings. Most outlays will be directed toward a edtic—
tion of production bottlenecks. Since these additions facili-
tate the balanced flow of materials throughout the various
stages of steel production, they offer particularly high
returns on investment.
In Scenario 1, reducing production bottlenecks would
require the addition of 6.70 million tons of blast furnace
capacity between 1980 and 1990. Becaqse modern blast furnaces
have greatly improved coking rates, only small additions to
coke oven capacity would be necessary. Reductions in produc-
tion bottlenecks would also require 8.48 million tons of raw
steelxnaking capacity between 1980 and 1984 and an additional
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11—9
7.60 million tons by 1990. These requirements reflect sizable
shutdowns of open hearth steelmaking furnaces during the 1976—
1990 period. Additions of electric arc furnaces (which are
associated with or in competition with highly profitable mini—
mills) would exceed additions of basic oxygen furnaces. Con-
tinuing a trend toward higher yields in the casting and form-
ing stage, the steel industry would install approximately
56.59 million tons of continuous casting capacity between 1980
and 1990.
In Scenario 2, lower shipment requirements in the 1984-
1990 period would require fewer capacity additions to elim-
inate bottlenecks than were required in the first scenario.
Exhibit 7 summarizes the capacity additions by process and
- time period for Scenario 1 and Scenario 2.
The capacity additions in Scenario 1 would require
$10,556.6 million 5 to be spent in the 1981—1990 period. Of
this amount, $170.0 million would be allocated to new blast
furnaces, $704.3 million to new steelmaking furnaces, and
$4,958.1 million to new casting processes.
In Scenario 2, $8,040.5 xnj.llion would be spent on new
capacity in the 1981—1990 period. Unlike the case in Sce-
nario 1, in which expenditures are directed toward alleviating
steelmaking capacity constraints, in Scenario 2 a greater
proportion of these expenditures would be allocated to new
casting processes in order to improve profitability. Ex-
hibit 8 details the allocation of baseline capital expendi-
tures for capacity additions by process and time period, for
Scenario 1 and Scenario 2.
Capital expenditures include all cash outlays necessary
to bring new production capacity into service. New capacity
additions normally require several years to construct, with
cash outlays associated with the construction process occur-
ring in each of the years. PTm(Steel) keeps track of funds
spent in the past through a construction-work-in-progress
(CWIP) account. In the 1981—1990 period, CWIP would average
$3,680.6 rni-llion in Scenario 1 and $2,842.5 million in Sce-
nario 2. Because CWIP is a sizable application of funds, it
influences external financing requirements and interest
expenses.
5 Unless otherwise indicated, cost and value estimates are
reported in 1980 dollars.
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11—10
REINVESTMENT IN EXISTING FACILITIES
Steel production facilities periodically require overhaul
or replacement of worn—out equipment and modification to meet
demands for new products, to improve productivity and product
quality, and to adapt to new production technologies. The
major components of these expenditures in the steel industry
include the relining of ironmaking and steelmaking furnaces,
the overhaul of ovens within a coke battery, the replacement
of rolls and stools in the finishing processes, and the re-
placement of the various types of mobile equipment. Reinvest-
ment in existing facilities can be deferred for brief periods,
but a sustained reduction in these expenditures leads to a
corresponding decline in production capacity.
The degree to which capacity is reduced depends on the
reduction in capital investment relative to the replacement
value of the industry’s capital stock. Based on industry
information recently updated by TBS, the replacement value of
the capital stock of the U.S. steel industry is approximately
$81.1 billion (i& 1980 dollars). Of this, approximately
2.2 percent, or $1.8 billion, must be spent each year on
existing equipment to maintain efficiency and competitiveness
and to adjust for changes in technology and product mix.
Reductions in the investment in capital stock from this level
would cause the value of the capital stock to decrease by an
equal amount. For example, a $1.0 billion reduction would
result in a 1.2 percent dec3,ine in shipment capability, or
about 1.2 million tons annually. If reduced capability were
to coincide with a period of high demand for steel products,
then the impacts on production, employment, and market share
would be more pronounced.
In Scenario 1, the industry would need to reduce its
capital expenditures on existing equipment by about
$813.3 million per year through 1985 in order to maintain its
currexit bond rating. This sustained reduction, therefore,
would lead to a decline in production capability of about
6.9 million tons of finished steel products. At a utilization
rate of 90 percent for raw steelmaking processes, only
98.8 million tons could actually be shipped. This is only
92 percent of the projected demand for domestic steel of
108 million tons. If the excess demand were supplied by
imports-, then market share in 1985 would decline 7.2 percent-
age points to 77.3 percent.
By 1987, continuing capacity constraints and the accom-
panying high profitability wbuld allow the steel industry to
issue large amounts of common stock. Issuing additional com-
mon stock would provide the funds needed to reduce the backlog
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‘I—il
of delayed expenditures on existing equipment, which would
expand capacity so that the industry could regain its current
market share of about 84.5 percent by 1990.
In Scenario 2, capital expenditures on existing equipment
would need to be reduced by an average of $693.4 million per
year below desired levels through 1985 in order to maintain
the industry’s bond rating. This reduction would result in a
decline in production capacity of about 6.0 million tons per
year, which would contribute to the industry’s decline in
market share from 84.5 percent to 82.9 percent.
After 1985, a combination of factors would allow the
steel industry to begin to recover slowly from declines in
market share. These factors include the tax reductions asso-
ciated with the Economic Recovery Tax Act and the higher prof-
itability stemming from higher utilization rates. In 1990, a
year of cyclically high demand,, market share would fall to
80.67 percent. However, by 1990, the industry would be able
to rework and modernize much of its inefficient equipment.
Although the steel industry would not be able to issue signif-
icant amounts of common stock by the early 1990s, its finan-
cial condition would improve markedly, and it would be left
with adequate funds to regain and maintain its competitive
position. Exhibit 9 details the baseline reinvestment in
existing facilities, by year, for Scenario 1 and Scenario 2.
FUTURE COSTS FOR BASELINE
POLLUTION CONTROL EQUIPMENT
In addition to costs related to iron and steel produc-
tion, the baselines for Scenarios 1 and 2 include certain
costs for water and air pollution control. Including these
costs in the baselines influences the evaluation of the
effects of proposed regulations th three important ways.
First, if more equipment associated with a given regulation is
in place, then future capital expenditures necessary to reach
compliance with the regulation are reduced. Second, capital
expenditures made in the past have increased depreciation
charges, which are a source of funds for future expenditures.
Third, equipment installed in the past must be supported by
O&M expenses and debt and interest payments. The capital and
operating costs of water and air pollution control equipment
that are included in the baseline descriptions are summarized
below.
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11—12
Air Pollution Control Costs
The steel industry has developed a program for compliance
with the Clean Air Act Amendments of 1970 and 1977 (herein
referred to as the Air Act). The large capital expenditures
associated with air pollution control equipment in place or
committed to be installed to bring the industry into full
compliance by 1984 are included in the baselines for Sce-
narios 1 and 2. This equipment is necessary to meet the air
emission standards that cover the steel production processes
as well as the on—site boilers used in generating elec-
tricity •6
Costing Methodology
The procedure for deriving total air pollution control
costs involves the estimation of three basic parameters:
• Unit treatment costs
• The number of facilities in existence as of a
particular date
• The percentage of facilities in compliance with
the applicable State Implementation Plans
(SIPs)
In addition, the methodology accommodates differences in SIPs,
production processes, emission categories (stack, fugitive, or
new sources), facility sizes, utilization rates, and icnplemen—
tation schedules.
Determination of unit treatment costs is complicated by
the fact that neither federal law nor EPA regulation specifies
which treatment facilities can satisfy the Air Act’s require—
ments. Individual steel firms must make their own judgments
based on SIP requirements (which vary by state), costs, and
availability. Even in the area of Mew Source Performance
Standards CNSPS), where a uniform federal regulation does
exist, states may supersede EPA standards with more stringent
emission limitations. Cost estimates from the 1979 report by
6 A1X pollution control equipment associated with ancillary
facilities or on—site boilers is described herein as miscel-
laneous pollution control equipment.
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11—13
PEDC0 entitled The Impact of New Source Review Policy on
Capacity Expansion in the Integrated Iron and Steel Industry
(EPA Contract Number 68—01—5135 PN 3417), as well as addi-
tional updated cost estimates from PEOC0, have been used by
TBS as the basis for projecting air—related cost impacts.
PEDC0 formulated control technologies to treat the fol-
lowing pollutants: particulate matter, sulfur and nitrous
oxides, and hydrocarbons. The uncontrolled emission levels
associated with each source were based on published emission
factors, engineering judgments, and information gathered by
EPA. The emission levels after the application of various
control technologies were defined as specified percentages of
the uncontrolled emissions. PEDCo related these emission
rates to the emission limitations associated with each general
technology requirement (i.e., RACT, BACT, and LAER). Input to
this process was also obtained from EPA’S Division of Station-
ary Source Enforcement (DSSE). The result of this analysis
was a specification of the control technologies that would
on average satisfy SIPs in the major steel-producing regions
of the country.
Legal delays and perini•t interpretation have caused delays
in the deadlines for the installation of these control tech-
nologies. Therefore, a schedule of compliance (Exhibit 10)
with the Air Act’s requirements for each steelmaking process
was generated by TES in conjunction with DSSE. This compli-
an e schedule, along with the unit treatment costs discussed
earlier, were combined with PTm(Steel) capacity forecasts to
determine total air pollution control costs associated with
the Air Act. These costs have been analyzed within the con-
text of the previously described steel industry baseline con-
ditions to determine their economic effects. Data pertaining
to air pollution control costs for steel production processes
are provided in Exhibits 11 through 15.
Capital Expenditures for Air
Pollution Control Equipment
TBS estimated that under Scenario 1, $5,194.7 million in
capital expenditures would be required for air pollution con-
trol equipment, with the funds to be allocated as shown in
Table 11—2.
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11—14
Table 11—2
CftPITAL (PE ITURES FOR
AIR POLLUTiON CONTROL EQUIP4ENT
(millions of 1980 dollars)
Scenario 1 Scenario 2
Prior to 1962— 1986— Prior to 1982— 1986—
1982 1985 1990 Total 1982 1985 1990 Total
Stack Emissions $3,527.1 $176.8 S 0.0 $3,703.9 $3,527.1 $176.8 S 0.0 $3,703.9
Fugitive Emissions 597.3 301.6 0.0 898.9 597.3 301.6 0.0 898.9
NSPS 260.5 153.2 178.2 591.9 260.5 153.2 57.1 470.8
Total $4,384.9 S631.6 $178.2 $5,194.7 $4,384.9 $631.5 $57.1 $5,073.6
Source: PTm(Steel).
These capital expenditures are detailed for each produc-
tion process by time period and type of emission in Exhib-
its 11 and 12, respectively. The majority of funds, about
60 percent, would be spent to control emissions from coke
ovens and blast furnaces. Over 97 percent of all air pollu-
tion control costs would be associated with the Phase I raw
materials preparation, ironmaking and steelmaking, and cast-
ing; few emissions and the corresponding control costs would
result from the forming and finishing operations.
The industry is expected to have spent nearly 85 percent
of the estimated $5,194.7 million in total air-related expend-
itures prior to 1982. A major portion of the remaining capi-
tal expenditures for the 1982—1985 period is expected to be
devoted to coking compliance efforts (about 33 percent).
By 1985 nearly 97 percent of total capital expenditures
for air pollution control would have been spent; these expend-
itures represent .the capital outlays necessary to achieve
100 percent compliance across existing facilities. During the
1986—1990 period, an additional $178.1 million would be spent
solely on NSPS sources.
The Air Act requires control of both stack— and fugitive—
related emissions. In Scenario 1, nearly three quarters of
all capital expenditures ($3,703.9 million) would be devoted
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11—15
to stack emission controls. Previous compliance efforts have
resulted in 95 percent ($3,527.1 million) of the funds for
stack emission controls being spent prior to 1982. Fugitive
control costs ($898.9 million) represent approximately one
sixth of total capital expenditures; two thirds of these
expenditures were incurred prior to 1982. These expenditures
generally occur after expenditures for stack controls, re-
flecting the more expeditious compliance schedule associated
with stack controls. However, the distinction between stack
and fugitive control costs is somewhat vague and therefore
open to alternative interpretations.
The final category of capital outlay, NSPS expenditures,
is associated with capacity additions after 1979. Any new
source after that date must install the most stringent control
technology (LAIR). In Scenario 1, these expenditures would
amount to $591.9 million. The SPS expenditures, although
they account for less than 12 percent of total capital outlay,
represent the highest per-unit treatment cost. Exhibit 13
provides a yearly breakdown of expenditures by type of eznis-
sion (stack, fugitive, and new sources).
In Scenario 2, $5,073.6 million in capital expenditures
would be required for air pollution control equipment. As
shown in Table 11—2, the funds to be allocated for this equip-
ment prior to 1986 are equal to the expenditures in Scenar-
io 1. During the 1986-1990 period, the 1SPS expenditures
associated with capacity additions are less than those of Sce-
nario 1, only $470.6 million. This figure reflects the
smaller level of capacity additions in this period for
Scenario 2 relative to Scenario 1.
Operations and Maintenance Expenses
For Air Pollution Control Equipment
The O&M expenses required to operate air pollution con-
trol equipment through 1990 are summarized in Table 11-3.
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11—16
Table 11—3
OPERATIONS AND MAINTENANCE CPENSES FOR
AIR POLLUTION CONTROL EQUIP ENT
(millions of 1980 dollars)
Scenario I Scenario 2
1985 1990 1985 1990
Stack Emissions $476.8 S478.t $447.4 $472.8
FugItIve EmissIons 180.1 183.5 169.0 176.2
NSPS 90.8 151.4 87.0 115.5
Total $747.7 $813.0 $703.3 $764.4
Source: PTm(Steel).
Total O&M expenses are tabulated for each production
process in Exhibit 14. This exhibit includes O&M expenses fQr
all air pollution control equipment in operation during the
1980-1990 period. A yearly schedule of O&M charges (Exhib-
it 15) shows the 1980 cost level for Scenario 1 as $412.9 mil-
lion. A 75 percent increase in these charges occurs by 1984,
when the industry is to achieve full compliance.
By 1990, O&M expenses in Scenario 1 would total $813.0
million. Of this total, 59 percent would be associated with
stack equipment, 22 percent with fugitive equipment, and
19 percent with NSPS equipment. In Scenario 2, this percent-
age breakdown would be similar, except that less emphasis-—
15 percent-—would be placed on NSPS equipment.
The individual processes requiring the greatest level of
capital expenditures——colce ovens and blast furnaces——would
also necessitate a major portion of O&M charges, 36 percent
and 12 percent, respectively. The steelmaking processes would
require nearly 40 percent of total O&M expenses during 1990.
The amount of air-related O&1’l charges in the steelmaking area
would reflect the increased capacity of basic oxygen and
electric arc furnaces. This additional steelmaking capacity,
which requires the most stringent control technologies, is in
part a result of replacing significant amounts of open hearth
capacity.
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11—17
Capital Expenditures and Operations
and Maintenance Expenses for Miscel-
laneous Pollution Controls
The costs associated with the control of air pollution
from ancillary boiler facilities wete determined by PTm(Steel)
using PEDC0 unit cost data in conjunction with boiler capacity
projections. Separate calculations for existing and NSPS
facilities were made to reflect their different control costs.
Costs were estimated on a per-boiler basis, with only the
coal—fired units requiring emission control equipment.
TBS estimates that $431.2 million in cumulative capital
expenditures and $155.8 million in O&Z4 expenses would be re-
quired in Scenario 1 for air pollution control equipment asso-
ciated with ancillary boilers in 1990. The funds would be
allocated as detailed in Exhibit 16.
The pattern of capital expenditures reflects the compli-
ance schedule associated with ancillary boiler facilities. In
1976, only 40 percent of all boiler units were in compliance
with existing air standards. 3y the end of 1980, however, all
boiler facilities should have apidly achieved full compli-
ance. Subsequent to 1980, a total of $72.0 million was spent
on LAER control equipment to bring new boiler capacity into
full compliance. After the addition of new boiler capacity,
the increased utilization rates offset any need for further
capacity expansion. The increased rates of utilization are
reflected in the greater air-related O&M expenses during the
latter portion of the study period.
Water Pollution Control Costs
The costs associated with water pollution control equip-
ment in place as of June 1981 are included in the baseline
descriptions of Scenarios 1 and 2. These costs have been
incorporated .into the baseline because they are not part of
the incremental cost of the regulation. Details on the cap-
ital expenditures and O&M costs associated with in—place water
pollution control equipment are provided in Chapter III. In
addition, Chapter III discusses the anticipated costs asso-
ciated with the final effluent guidelines. The implications
of these costs relative to the baseline condition are reviewed
in Chapters IV and V.
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11—18
SENSITIVITY ANALYSIS:
DRI INFLATION SERIES
As noted above, the future capital and O&M expenses in
the baseline descriptions of Scenaxios 1 and 2 are projected
from the DRI OPTIMLONG forecasts of GNP for major components
such as labor and raw materials. These forecasts assume the
Administration’s target inflation projections. Because of
future economic uncertainty, TBS developed an alternative
forecast of inflation to measure the sensitivity of the re—
suits of the analysis to slower economic recovery and more
rapidly rising costs through the period. The inflation rates
used by TBS are based on the DRI CYCLELONG series for Summer
1981.
SENSITIVITY ANALYSIS:
AIR STR TCHOUT
As noted in preceding sections, the air costs discussed
previously are based on a projected schedule of compliance
with the Air Act by 1984. To measure the sensitivity of the
results of the analysis to these projections, TBS developed an
alternative schedule that measures the impacts of stretching
out full compliance until 1985. The sensitivity analysis for
air stretchout was performed using the baseline description of
ScenariO 1.
Exhibit 17 presents capital expenditures for air pollu-
tion controls for each of the compliance schedules. Note that
total capital expenditures in the figure differ minimally
after full compliance has been reached. This is a result of
the interaction of capacity and compliance projections and the
changing cost of constructing air pollution control equipment
each year.
Late compliance with the Air Act regulations would imply
lower capital expenditures during the short—term 1981-1984
period and decreased O&M expenditures.
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III. COST IMPACT OF THE CLEAN WATER ACT
This chapter presents the cost to the steel industry of
compliance with the final water effluent guidelines. The
first section provides background information concerning TBS’s
cost calculation methodology. The next section presents a
description of the cost impact of the guidelines in terms of
capital expenditures for water pollution control equipment and
O&M expenses. Finally, estimates of the capital cost of water
pollution controls developed by TBS are compared with those
prepared by EPA’S technical contractor, NtIS/Rice. The finan-
cial and economic implications of these water pollution con-
trol costs are discussed in Chapters IV and V.
The water pollution control costs described in this chap-
ter are broken down into four categories corresponding to four
separate categories of water pollution control requirements.
The performance attainable through best practicable technolo-
gies (BPT) and best available technologies (BAT) is required
for effluents discharged directly into na rigable waters by
1984. Current indirect dischargers are required to meet pre-
treatment standards for existing sources (PSES) by 1984.
Finally, newly constructed facilities discharging directly
into navigable waters must meet new source performance stand-
ards (NSPS). A fifth category, pretreatment standards for new
sources (PSNS), was not used since, for the purposes of this
evaluation, all new sources were assumed to directly discharge
into navigable waters.
COST IMPACT METHODOLOGY
TBS determined water pollution control costs by using
PTm( tee1) in conjunction with model plant engineering cost
estimates from NTJS/Rice. 1 NI.IS/Rice’s effluent control costs
are used by PTm(Steel) in conjunction with projected capacity
and production levels to calculate the total costs of compli-
ance. The incidence of these costs is then determined by
coverage schedules containing the percentage of steel facili-
ties in each industry subcategory complying with each water
1 Development Document for Final Effluent Limitations Guide-
lines and Standards for the Iron and Steel Manufacturing
Point Source Category (to be published concurrently with
this report).
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111—2
regulation in each year. Capital expenditures vary with the
number of incremental facilities achieving compliance in any
year, and O&M charges depend on the total number of facilities
in compliance and the utilization rates of facilities in each
production process.
In analyzing costs calculated in this fashion, TSS
divided the aggregate cost impact of water pollution control
into components defined by both effluent guideline and time
period.
As described in Chapter II, the point of departure for
the entire analysis is a baseline description for each
scenario that includes water pollution control equipment in-
stalled as of July 1981. For purposes of analysis, additional
installations of equipment to meet EPT, BAT, PSES, and NSPS
requirements are considered incremental to the baseline
description.
COST IMPACT OF THE GUIDELINES
The following sections describe the estimated costs for
water pollution controls included in the baseline description
and for each increment of additional control in Scenarios 1.
and 2. Inherent in these costs are compliance schedule pro-
jections that assume compliance with EPT, BAT, and PSES by
1984 and with NSPS upon completion of all new facilities.
Capital Expenditures
By 1981, cumulative baseline capital expenditures for
water pollution control had resulted in the installation of
89 percent of required BPT equipment, 27 percent of required
BAT equipment, and 82 percent of required PSES equipment. The
greatest part of the baseline impact was linked to capital
expenditures for BPT compliance. These capital expenditures
totaled $1,771.6 million in the years 1981 and before, or
93 percent of all baseline water—related capital expenditures
for that period. Table 111—1 presents the pattern of baseline
capital expenditures for water pollution controls. The re-
maining capital expenditures for BPT compliance will occur in
the years 1982 to 1984. These expenditures represent an addi-
tional 2l3.2 million in aggregate capital requirements, which
raises the level of total capital expenditures associated with
BPT effluent guidelines to $1,984.8 million. Approximately
one half of this expenditure and one half of all capital
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111—3
expenditures for incremental BPT control are associated with
compliance in the forming and finishing processes.
Table Ill—I
BASELINE
CWITAL cPENornJRES FOR
WATER POLLUTION CONTROL
EQU IP4ENT
(millions of 1980 dollars)
S1,771.6
BAT 26.4
PSES 116.8
NSPS 0.0
Total S1,914.8
Since most plants have not yet installed a level of
treatment consistent with the BAT requirements, most of the
capital expenditures for BAT control will be incremental to
the baseline. Incremental capital expenditures required to
bring the industry into full compliance with BAT regulations
by 1984 are projected to be $70.1 million. This amount repre-
sents 73 percent of total BAT expenditures of $96.5 million. 2
Additional PSES requirements of $26.3 million will occur in
1982 to 1984. Table 111—2 presents a schedule of capital
expenditures for BPT, BAT, and PSES compliance through 1990.
After 1984, all capital expenditures for water pollution
control are associated with NSPS requirements. Since the
capacity additions in the years 1982 to 1990 differ under
Scenarios 1 and 2, to reflect alternative future steel produc-
tion levels, NSPS requirements will also differ. In Sce-
nario 1, NSPS capital costs total $420.5 million. This figure
represents about 4.0 percent of the costs associated with new
capacity during the period. In Scenario 2, these costs equal
$273.2 million, about 3.4 percent of the costs associated with
installation of new capacity.
2 This figure does not include water pollution control capital
expenditures for facilities in place but not required by this
regulation.
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111—4
Table 111—2
I ICREMENTAL
CAPITAL EXP NOITURES FOR WATER
POLLUTION CONTROL tjIP’lENT
1982—1990
(millIons of dollars)
Scenario 1 ScenarIo 2
SPT $213.2 $213.2
BAT 70.1 70.1
PSES 26.3 26.3
NSPS 420.5 273.2
Total $730.1 $ 82.8
A more detailed schedule of industry capital expendi-
tures, by year, for each of these effluent guidelines during
the 1982—1990 period for Scenarios 1 and 2 can be found in
Exhibit 18. The schedule of total capital expenditures, in-
cluding baseline and incremental BPT, BAT, PSES, and NSPS
compliance efforts, by subcategory, for Scenarios 1 and 2 is
shown in Exhibit 19.
Operations and Maintenance Expenses
O&M expenses for water pollution control equipment depend
on annual capital expenditures for new and existing equipment,
on retirements of production capacity, and on capacity utili
zation rates. Because TES has developed two scenarios that
vary by production level in each year, the O&M expenditures
for these scenarios differ. This section describes the O&M
costs separately for each scenario.
The O&M expenses projected for the short term for
Scenario 1 are shown in Table 111-3.
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111—5
Table 111—3
SHORT-TERM OPERAT IONS AND MAI NTENANCE
PENSES FOR WATER POLLUTION
CONTROL EQUIPMENT
SCENARIO I
985
(millions of 1980 dollars)
BaselIne Incremental Total
$116.9 S 7.4 $124.3
BAT 3.0 10.1 13.1
PSES 7.2 2.8 10.0
NSPS 0.0 13.5 13.5
Total $127.1 $33.8 $160.9
Source: PTin(Steel) and Rice/PA engineering coSt
est Iemtes.
The baseline O&N figures include charges associated with
equipment in service prior to 1976. In 1985, 94 percent of
the O&M expenses for BPT and 72 percent of the O&M expenses
for PSES are associated with pollution control equipment in-
stalled prior to 1981 and are included in the baseline condi-
tion of the industry. Seventy-seven percent of BAT expenses
are associated with incremental equipment. As discussed
earlier, 100 percent of NSPS expenditures are related to new
capacity additions and are incremental to the baseline. Of
the $160.9 million O&M charges for 1985, 74 percent, or
$127.1 million, are associated with po11 ition control equip-
ment required by the final regulation already in place by
1981.
Additional O&M expenditures in the long term are primari—
ly the result of capital expenditures for NSPS controls for
new capacity. In 1990, SPS costs account for 63 percent of
total incremental costs. However, MSPS costs constitute only
20 percent of total O&M expenses in 1990. Variations in the
baseline O&M expenses between 1985 and 1990 are caused by
differences in sectoral inflation rates and changes in capac-
ity utilization rates. Table 111-4 shows the long—term O&M
expenses by control Level.
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111—6
Table 111—4
LONG—TERM OPERATIONS AMD MAINTENANCE (PENSES
FOR WATER POLLUTION CONTROL EQUI ENT
SCENARIO 1
1990
(millIons of 1980 dollars)
BaselIne IncrsiienThl lolal
BPT $131.9 $10.2 $142.1
BAT 3.1 10.6 13.7
PSES 8.5 2.8 11.3
NSPS 0.0 40.7 40.7
Tolal $143.5 $64.3 $207.8
Source: PTm(Sfeel) and R ice/EPA engineerIng cosl
estImates.
The O&M expenses projected for the short term for Sce-
nario 2 are shown in Table 111-5. As in Scenario 1, BPT and
PSES costs account for almost all the baseline O&M expenses.
Of the total O&Z4 expenses for pollution control in 1985,
78 percent are associated with pollution control equipment in
place in 1981.
Table 111—6 provides the O&M expenses for Scenario 2 in
1990. Again, as in Scenario 1, additional O&M expenditures in
the long term are largely a result of additional NSPS require-
ments. A more detailed tabulation of the O&Z4 expenses by year
for each of the effluent guidelines for Scenarios 1 and 2 is
provided in Exhibit 20. These expenses are further delineated
by subcategory for 1985 and 1990 in Exhibit 21.
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111—7
Table 111—5
SNDRT-TERM OPERATIONS AND MAINTENANDE (PENSES
FOR WATER POLLUTION CONTROL EQUIR !ENT
SCENARIO 2
1985
(millions of 1980 dollars)
Basel me lncr8nental Total
BPT $120.6 $ 8.8 S129.4
BAT 2.8 9.6 12.4
PSES 1.6 2.5 10.1
NSPS 0.0 15.7 5.7
Total $131.0 $36.6 $167.6
Source: PTm(Steel) and Rice/EPA engineerIng cost
estImates.
Table 111—6
LONG—TERM OPERATIONS AND MA I NTENANCE
DCPENSES FOR WATER POLLUTION CONTROL EQul ENT
SCENARIO 2
1990
(ml II Ions of 1980 dollars)
BaselIne Increnental Total
$119.0 $ 7.9 $126.9
BAT 3.0 10.0 13.0
PSES 7.8 2.6 10.4
1SPS 0.0 27.8 27.8
Total ‘$129.8 $48.3 $178.1
Source: PTm(Steel) and RIce/EPA engIneerIng cost
estimates.
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111—8
COMPARISON OF TBS AND NtIS/RICE
WATER COST ESTIMATES
Industrywide capital cost estimates for water pollution
controls developed by EPA’s technical contractor NtIS/Rice were
riot used directly in either PTnt(Steel) or PBS’s economic
analysis. Instead, PBS’s cost estimates were based on model
plant cost data prepared by NtIS/Rice. Consequently, small
differences resulted in the incremental capital costs of BPT,
BAT, and PSES 3 requirements, as noted in Table 111—7.
Table 111 —7
COPARISON OF lBS AIC NUS/RICE EQUlRED
CAPITAL COSTS FOR WATER POLLUTION CONTROL
(millions of dollars)
lBS PIUS/Rice
( 1980 S) ( 1978 5 )
$213.2 $206.5
8AT 70.1 73.6
PSES 26.3 40.3
Total $309.6 $320.4
The differences in the TBS and NtIS/Rice capital costs are
due to a variety of factors, including the following:
• NtIS/Rice attempted to include all iromnaking
and steelmaking facilities in its cost esti-
mates. TES included only those facilities
associated with integrated tnil .s. As an exam-
ple, NtIS/Rice included $2.8 million in addi-
tional BPT costs, $5.2 million in additional BAT
costs, and $9.7 million in additio nal PSES
costs (all in 1978 dollars) for the merchant
coke industry. PBS analyzed separately.the
cost and impacts of the regulation on the mer-
chant coke industry because the economic and
3 lndustrywide NSPS costs were riot estimated by NtIS/Rice arid
were not considered in this comparison. NtIS/Rice did esti-
mate the model plant NSPS costs that were incorporated into
the economic analysis.
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1 11—9
financial structure of this industry is sub-
stantially different from that of the inte-
grated iron and steel industry.
• NtIS/Rice costs are expressed in 1978 dollars
and were based on the costs of labor, mate-
rials, and other resources as they were priced
in 1978. The TBS costs were calculated in a
two—step process. First, NtIS/Rice 1978 costs
of.facilities were escalated to dollars of the
1982—1984 period, the period in which construc-
tion would be completed. Second, cost esti-
mates were inflation—adjusted to 1980 dollars
to allow cost comparisons on a constant-dollar
basis . 4
• In estimating industrywide capital costs,
NtIS/Rice made economy-of-scale adjustments to
account for the deviations from the model plant
size of each facility in its database. In
order to co f arm with the steel industry eco-
nomic model developed by the AISI, TBS made
economy-of-scale adjustments to account for the
deviations from the same model plant sizeof
the average—sized facility in each industry
subcategory.
• In general, TBS assumed that water pollution
controls had riot been installed in facilities
that were to be retired in the next few years.
In its plant—by—plant surveys, NtIS/Rice found
several instances in which pollution controls
had been installed at plants that were expected
to retire. In order to adjust for these dif-
ferences, TSS assumed that to achieve full
compliance, pollution controls would have to be
installed at more than 100 percent of the
facilities existing in 1984——that is, at all
facilities existing in 1984 and at some facil-
ities that would be retired.
aowever, because of variations in methodology, a complete
resolution of the differences indicated in Table 111-7 is not
possible even after adjustments have been made for the factors
4 For example, construction activity costing $1.00 in 1978
would escalate to $1.34 in 1983. This $1.34 in 1983, when
adjusted for inflation, is worth only $1.06 in 1980 dollars.
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111—10
discussed above. When corrected for the first two of the
above factors, the MUS/Rice estimate becomes $320.9 mU.lion——
3.6 percent higher than the TBS estimate of $309.6 milliøri.
The third and fourth factors have been incorporated into the
TBS estimates as indicated. These estimates are reasonably
close, and TBS considers the remaining differences to be
insignificant in terms of economic impact.
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IV. FINANCIAL EFFECTS -
This chapter describes the revenue requirements and
external financing requirements of the capital expenditures
and O&M expenses associated with the baseline condition
described in Chapter II and the additional water pollution
controls described in Chapter III.
The steel industry’s revenue requirements, which result
from the effects of the capital expenditures and O&M expenses
associated with steel production and pollution control, are
determined by PTm(Steel). Revenue requirements are defined as
those revenues that recover all costs, including a return on
common equity. These costs include operating expenses, depre-
ciation expenses, sales and property taxes, interest income
and expenses, federal and state income taxes, and net income
requirements. Computation of revenue requirements is compli-
cated by the tax effects of the numerous forms of capital
investment considered in PTm(Steel). These effects include
investment tax credits and tax deferrals caused by timing
differences in tax and book depreciation expenses.
The determination of revenues facilitates the calculation
of the sources of funds from income, depreciation, deferred
taxes, arid external financing, and the calculation of the
application of funds to capital expenditures. Changes in•
- these flows of funds, along with the associated changes in the
industrywide balance sheet, allow an examination of the im-
portant financial constraints facing the industry as it is
affected by environmental regulations.
A schematic diagram of the financial module of
PTm(Steel), which develops revenue requirements as well as
industrywide annual financial statements, is provided in
Exhibit 22.
The steel industry’s need for external sources of capital
stems primarily from its investments in new facilities, in the
modernization and reworking of existing facilities, and in
pollution control equipment. Steel industry managers deter—
mine the levels of these capital expenditures on the basis of
their expectations of future profitability and future access
to capital markets. In turn, the terms on which capital is
available to a steel company depend chiefly on investor per-
ceptions of the steel company’s future profitability and the
relative risks associated with other investment opportunities.
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IV-2
As discussed in Chapter II, the investment, program that
will be undertaken by the steel industry——even before consid-
eration of additional water pollution control costs-—is likely
to be constrained by financing considerations.
Steel companies are unlikely to issue common stock as a
source of external capital unless the industry can demonstrate
a long—term profit potential for several years. In the near
term, issuing new common stock is Likely to be an unattractive
alternative because it would result in a severe dilution of
the book value of existing shareholders’ stock. The market
prices for steel companies’ stock are currently at about
50 percent of their book values and will probably remain at
this level for the next few years. The current low value that
investors place on most steel company common stocks reflects
both a history of low profitability and, perhaps more impor-
tant, the expectation of low profitability in the future.
Issuing debt in the amounts necessary to meet the steel
industry’s potential external financing requirements is also
likely to be unattractive to industry management. The amount
of debt steel companies decide to employ depends to a great
extent on their bond rating objectives. With current bond
ratings for most major steel companies at a single A (several
companies have recently been downgraded from an AA), most
steel company managements are likely to be unwilling to take
actions that would result in further bond rating declines. 1
Steel companies can attempt to prevent further bond rating
declines by Limiting the proportion of debt in their capital
structures.
TES’s baseline projection reflects limits on the steel
industry’s investment program that are consistent with the
preservation of current bond ratings. An unwillingness to
take actions that would jeopardize bond ratings means, in
effect, that the industry would have a fixed pool of capital
available to allocate among new capacity, existing capacity,
and pollution controls. Thus, additional outlays for water
pollution controls would necessitate cutting back other in-
vestments rather than significantly altering baseline external
financing requirements or financial conditions.
The next section presents the steel industry’s baseline
revenue and external financing requirements and its financial
condition under Scenarios 1 and 2. The following section
1 See Chapter II for a discussion of the implications of low
investment grade bond ratings.
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IV-3
discusses the effects of future pollution control requirements
on the industry’s financial condition. The chapter conc].udes
with analyses of the sensitivity of the financial results to
several of the assumptions used to develop the baseline in-
vestment program, air-related compliance schedules, and the
underlying economic projections.
BASELINE REVENUE AND EXTERNAL FINANCING
REQUIREMENTS AND FINANCIAL CONDITION
The steel industry will experience financial constraints
throughout most of the 1980s whether or not it meets the re-
quirements •of the final water pollution control regulation.
In this section, the revenue and the external financing re-
quired by the inthistry without added water costs are de-
scribed. This description forms the baseline from which the
incremental financial effects can be compared.
Scenario 1
The baseline revenue requirements under the more profit-
able Scenario 1, which exclude additional water costs, would
total $50,564.9 million in 1985 and $56,962.1 million in 1990.
Projected baseline revenue requirements for the 1981—1990
period are shown in Table IV—1. Exhibit 23 provides a year-
by—year breakdown of these requirements.
Table 1V—1
REVENUE REQUIREMENTS FOR THE SASELINE C0l OITl0N
W CER SCENARIO I
(millions of 1980 dollars)
1985 1990
Sales Tax S 2,007.4 S 2,261.4
Operallons and lntenance Expenses 42,424.8 48,703.1
Capltal—Relaled Charges 6,132.7 5,997.6
Total S50,564.9 556,962.1
Source: PTm(SPeeI).
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IV-4
In 1985, more than 83.9 percent of the required revenues
for the baseline condition (which excludes consideration of
costs for additional water pollution control equipment) would
represent operating costs, about 12.1 percent would represent
capital-related charges, and the remainder would be associated
with sales taxes. By 1990, operating costs would account for
85.5 percent of revenue requirements, and capital—related
charges for 10.5 percent.
Baseline external financing requirements in Scenario I
would total $9,736.8 million over the 1980—1990 period. It is
estimated that $7,332.2 million would be met by issuing new
debt and that $2,404.6 million would be met by issuing common
stock. The projected net external financing requirements
would be significantly lower than the leve].s that have pre-
vailed over the past decade because of the assumed constraint
on capital outlays. In order to maintain the industry’s cur-
rent financial condition, the industry would need to reduce
its capital expenditures on existing equipment by about
$813.3 million per year through 1985-—below levels considered
necessary to maintain peak production efficiency.
By 1987, high levels of capacity utilization would have
resulted in sustained profitability for a few years, thereby
allowing the steel industry to issue large amounts of common
stock. This would provide the funds needed to reduce the
backlog of delayed expenditures on existing equipment and to
expand capacity while maintaining current bond ratings.
Scenario 2
In Scenario 2, projected baseline revenue requirements,
excluding consideration of costs for additional water pollu-
tion control equipment, would total $48,259.3 million in 1985
and $52,845.1 million in 1990. Table IV—2 shows these pro-
jected revenue requirements, and Exhibit 23 provides a year-
by-year brreakdown of these requirements.
The financial condition of th steel industry projected
in the baseline under this scenario represents a continuation
of recent financial performance levels throughout the decade.
As a result, companies would be unlikely to issue common
stock, and issues of debt would be constrained by the 35 per-
cent debt-to—capitalization ratio through 1990. The inaustry
would reduce capital expenditures by an average of $693.4
million per year on existing facilities through 1985. Al-
though the industry would not be able to issue common stock
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tv-s
prior to 1990, tnuch of the inefficient equipment would be
converted or closed down. By the early l990s, the industry’s
financial condition would improve markedly.
Table IV—2
REVENUE REQUIREMENTS FOR THE BASELINE COI OhTION
UP ER SCENARIO 2
(mill tons of 1980 dot lars)
1985 1990
Sales Tax S 1,915.8 $ 2,098.0
Operations and i Intenance Expenses 40,828.6 45,372.9
CapItal—Related Ct arges 5,514.9 5,374.2
Total 548,259.3 S52,845.t
Source: P1cC Steel).
FINANCIAL EFFECTS OF FUTURE WATER -
POLLUTION CONTROL EXPENDITURES
The financial effects of future expenditures for water
pollution control equipment depend to a great extent on the
magnitude of capital outlays required, the manner in which
such outlays are financed, and the timing of these outlays.
This section discusses the capital requirements, the revenue
requirements, and-the associated external financing needed to
comply with the final pollution control regulation over the
1980-1990 period under Scenarios 1 and 2.
Three major assumptions influenced the results of this
part of the analysis. First, the anajysis assumed full pass—
through of water pollution costs to the consumer. Under full
pass-through, the i-ndustry would be able to raise prices to
increase revenue (to recover fully all the operating and capi-
tal costs associated with pollution control equipment) and to
maintain baseline profitability. The steel industry’s prices
are strongly driven by its costs, as evidenced by the fact
that in each of the last 10 years (except the boom year 1974
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IV-6
and the period of extensive plant write—offs in 1977), the
industry’s return on sales has been between 2.1 and 4.8 per-
cent. During this period, prices-—and costs——have each in-
creased 144 percent. TBS believes that in a cost—driven mar-
ket, such as the market for steel products, small industrywide
increases in operating costs, such as the costs of added water
pollution control, are quickly translated into price in-
creases.
Second, the analysis assumed that expenditures for pollu-
tion control equipment would be offset by a decline in base-
line capital expenditures-—more specifically, expenditures for
existing equipment. This assumption is based on the likeli-
hood that funds generated from other sources-—specifically,
from the industry’s rionsteel operations and from the sale of
coal reserves-—would not be made available for pollution con-
trols because industry managers could achieve a higher return
on investments made outside the steel industry. As a result,
capital expenditures for pollution control would not signif i-
cantly change the net funds flowing out of the industry and
would not affect its baseline financial condition. This
assumption is conservative in its effect on the economic
analysis because it focuses the entire impact of pollution
controls on steel industry operations.
Finally, it was assumed that the closing of inefficient
plants by the industry would result in a savings in operations
and maintenance expenses. This assumption is reasonable and
is consistent with the assumptions for cost savings proposed
by Arthur D. Little in its 1981 report to the AISI, Environ-
mental Policy for the 1980s: Impact on the American Steel
Industry . As discussed above, it is ]. .kely that these cost
savings would be passed through to the conswner in both
scenarios. The final section of this chapter describes the
sensitivity analysis that was performed on this assumption to
determine the effects of passing through these cost savings to
profits rather than to consumers.
The amount that reinvestment in existing equipmer t would
need to be reduced to maintain current bond ratings in either
scenario is a complex issue because bond ratings depend on
many factors. A good approximation can be obtained, however,
by reducing expenditures for existing equipment by an amount
that would maintain the debt—to—capitalization ratio at its
current level-—approximately 35 percent. Other indicators of
financial condition, such as the interest coverage ratio and
the cash—flow-to—long-term debt ratio, would vary somewhat
even if baseline debt-to—capitalization ratios were main-
tained. However, changes in the industry’s overall credit
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IV-7
quality resulting from a variation in other parameters would
be minimal. External financing requirements would also depart
somewhat from baseline levels if pollution control expendi-
tures were substituted for expenditures for existing equipment
because of differences in such factors as the timing of ex-
penditures as well as book and tax depreciation effects.
Following a strategy of reducing expenditures for exist-
ing equipment to maintain the current financial condition
means that the key effect of additional water pollution con-
trol requirements will be reduction in the capacity of older,
less efficient facilities. The associated effects of such
capacity reductions on steel industry prices, production,
employment, and market share are discussed in Chapter V.
Scenario 1
During the 1980—1985 period, 2 capital expenditures for
additional water pollution control would total $463.1 mi].-
lion. Afterwards, through 1990, additional expenditures of
$267.0 million, or 37 percent of the 1980—1990 total, would be
allocated for NSPS requirements on new equipment. As dis-
cussed above, these added expenditures would require further
reductions in capital expeiditures for existing production
equipment beyond those described in the baseline condition
during the years the industry is capital constrained. By
1987, higher profitability levels would allow the industry to
issue common stock to provide the funds for reducing the back-
log of needed capital expenditures.
The incremental revenue requirements in Scenario 1 that
are related to the costs associated with BPT, BAT, PSES, and
NSPS water effluent guidelines are shown in Table IV—3. The
annual revenues required to fully recover the cost of water
pollution control equipment would be $125.1 million by 1985
and $331.8 million by 1990. These increases wouldamount to
0.3 percent of the baseline revenues in 1985 and 0.6 percent
in 1990.
2 Capital expenditures for additional water pollution control
equipment would begin in 1982. However, the financial ef-
fects associated with commitments for equipment and other
construction preparations would begin as early as 1980.
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IV-8
Table IV—3
INCREMENTAL REVENUE REQUIREMENTS
FOR WATER POLLUTION CONTROL EQUI 4ENT
SCENARIO 1
(millions of 1980 dollars)
1985 1990
SPT Add itfons S 53.0 5117.0
BAT AdditIons 25.8 40.2
PSES Additions 7.1 9.7
PISPS AdditIons 39.2 164.9
Total $125.1 $331.8
Source: PTm( Steel).
Since it has been assumed that the steel industry could
raise prices so that baseline profitability would be main-
tained, increased revenues would pay for most of the addi-
tional expenditures for water pollution control costs. Ex-
ternal financing requirements ove the 1980—1985 period would
increase by only $31.8 million. A profitable industry in the
last half of the decade would result in the issuing of common
stock to facilitate both capital expenditures for pollution
control and for capacity expansion. To meet these needs, net
external financing would be expanded by $370.2 million in
1986—1990.
Scenario 2
During the 1980—1985 period, capital expenditures for
added water pollution control would total $462.9 million.
Additional expenditures of $119.9 million during the 1986—1990.
period would be allocated for NSPS requirements on new equip-
inent. As discussed above, under Scenario 2, slower recovery
in the demand for finished steel products would lead to a
continuation of low profitability levels throughout the dec-
ade. Although performance would improve by the second half of
the decade, the industry would remain capital constrained, and
the backlog of capital expenditures on existing equipment
would still be present. By 1990 production capacity would
have begun to increase, although cyclically high demand in
that year, together with constraints on capacity, would keep
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IV-9
the industry from meeting the demand. By the early 1990s, it
is likely that the financial constraints would still be pres-
ent, although the industry’s production capability would be
sufficient to satisfy the demand for domestically produced
steel products.
The incremental revenue requirements related to the costs
associated with BPT, BAT, PSES, and NSPS water effluent guide-
Lines are shown in Table IV—4. The total revenue requirements
associated with water pollution control additions would be
$118.0 million in 1985 and $137.4 million in 1990.
Table IV—4
IFCREMENTAL REVENUE REQUIREMENTS
FOR WATER POLLUTION CONTROL EQUIP4ENT
SCEMARIO 2
(millions of 1980 dollars)
195 1990
SPT Additions S 46.3 5 37.8
BAT Additions 23.0 20.3
PSES AdditIons 7.1 2.5
NSPS Additions 41.6 76.7
Total $118.0 $137.4
Source: PTm( Steel).
s in Scenario 1, the additional expenditures for water
pollution control would be met in part through increasing
external financing requirements. Over the 1980—1985 period,
external financing would increase $21.2 million. External
financing over the 1986-1990 period would be $44.7 million.
Much of the increase would occur because expenditures on
existing equipment would have been made possible by the
improved financial condition of the industry.
SENSITIVITY ANALYSES
TBS conducted four sensitivity analyses to examine sev-
eral of the assumptions in this study. In Chapter II, the
sensitivities regarding underlying inflation rates and air
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‘v—b
pollution compliance schedules were discussed. In addition to
performing these sensitivity analyses, TBS modified the as-
sumptioris concerning the costs of water pollution control
requirements and the pass—through to the consumer of cost
savings from closing inefficient plants. Each of these sensi-
tivities is discussed in the remaining sections of this chap-
ter. The results of these sensitivity analyses are detailed
in Exhibits E—ll to E—14 of the Executive Sununary.
Higher Inflation Rates
As discussed in Chapter II, TES performed an analysis to
test the sensitivity of the impacts of pollution control re-
quirements on the steel industry to uncertain economic assump-
tions. This analysis assumed that costs would rise faster
than they did in Scenario 1. Using an unadjusted DRI series,
the underlying GNP price deflater averaged 8.8 percent per
year, compared with an average adjusted 5.7 percent per year
in Scenario 1.
Exhibits E—li. through E—14 indicate that while inflation
assumptions have a slight effect on the baseline financial and
economic condition of the steel industry, they have virtually
no effect on the impact of added water pollution control
costs. If the industry tried to maintain its current finan-
cial condition both with and without the added water costs,
the relatively small changes in revenue and external financing
requirements resulting from changes in the inflation rate
assumptions would imply that the magnitude of productive
capital expenditure cutbacks would be about the same as it
would be in Scenario 1.
Doubl•e Water Costs
The water pollution control cost estimates used by lBS in
Scenario 1 were based on the most accurate cost estimates cur-
rently available. In order to examine the sensitivity of the
economic and financial impacts of water pollution control
regulations for more costly alternatives, TBS performed an
analysis using capital costs that were twice the magnitude of
current estimates. This sensitivity assumed the same compli-
ance schedule that was implicit in the results of the main
scenario.
Doubling the capital costs of pollution control would
result in roughly proportional impacts on revenue require-
ments. In order to maintain the same f .nancial condition of
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‘v—il
the industry as in the baseline, short—term expenditures on
existing equipment would be reduced in proportion to the in-
creased capital costs. As in the long term, under Scenario 1,
high profitability and continued capacity constraints would
allow the industry to issue enough common stock to reduce the
additional backlog of expenditures on existing capacity.
Air Stretchout
As discussed in Chapter II, TBS examined the sensitivity
of the results of the impact analysis to the projected sched-
ule of compliance with air pollution control regulations
included in the baseline. The alternative schedule that TBS
developed measures the impacts of postponing full compliance
until 1985. Based on recent information that about $200 mu-
lion (in 1978 dollars) of outstanding air pollution expend-
itures will probably be postponed, TBS assumed this amount in
its sensitivity analysis.
Late compliance with the Air Act regulations would imply
Lower short-term capital and O&M expenditures. Exhibits E-ll
through E—l4 show that the financial benefits of relaxing
compliance schedules are likely to be quite small.
Cost Savings Pass-Throug h to Profits
The financial effects of future water pollution control
expenditures under Scenarios 1 and 2 were based on the assump-
tion that cost savings resulting from the closing of ineffi-
cient plants are passed through to the consumer in the form of
a reduced rate for price increases. To test the sensitivity
of this assumption, T5 5 performed an analysis assuming zero
cost savings pass—through to consumers in Scenario 1. This
analysis, therefore, increased industry operating profits by
the amount of the cost savings.
The results of this sensitivity analysis in terms of
incremental revenue and external financing requirements are
shown in Exhibits E-ll and E—l3. In both the short term and
the long term, cost savings passed through to profits would
result in a significant increase in expenditures on existing
equipment and a small increase in revenue requirements in the
baseline. I owever, additional water pollution control expend-
itures would have roughly the same incremental financial
impacts regardless of the pass-through assumption.
-------
V. ECONOMIC IMPACTS OP ENVIRONMENTAL REGULATIONS
This chapter discusses the economic impacts -that the
final water effluent guideline will have on the steel indus-
try’s baseline condition. These effects include changes in
the Level of steel industry production, changes in the level
of employment, and changes in the share of apparent consump-
tion supplied by domestic producers. Minor effects on the
price of steel and energy requirements are also expected. The
economic impacts are derived from the financial analysis de-
scribed in Chapter IV. These impacts stem from reduced ex-
penditures for existing equipment as these reductions affect
production capacity. Reductions in production capacity trans-
late into economic impacts on employment and market share
during periods of capacity constraints. As described in Chap-
ter IV, this impact mechanism is reasonable, given the current
financial condition of the industry, and conservative, in that
it focuses the full impact of water pollution controls on the
steel industry financial structure. Exhibit 24 indicates the
factors considered in the economic module of PTm(Steel) and
its relationships with the financial module.
As discussed in Chapter IV, when steel companies are
faced with water pollution control requirements, they are
likely to attempt to preserve their financial condition by
cutting investment in existing productive assets. Therefore,
the primary effects on the steel industry of the pending ef-
fluent guideline rela te to the consequences of reduced
investment.
In the following sections, the effects of pollution con-
trol regulations on price, production capacity, market share,
employment, and energy requirements are discussed for Sce-
narios 1 and 2. In the final. sections of this chapter, the
effects of pollution control requirements on the merchant coke
and the merchant pig iron industries are described. The re-
sults of the sensitivity analyses, described in detail in
previous chapters, are presented in Exhibits E—ll to E—14 of
the Executive Summary.
SCENARIO 1
As discussed in Chapter II, in Scenario 1, in the first
half of the 1980s, the industry is likely to cut its modest
baseline program for reinvestment in existing facilities
-------
V- 2
(which already reflects significant reductions from levels
considered desirable by knowledgeable industry sources) in
response to water pollution control requirements to the extent
necessary to maintain its credit quality at an A bond rating.
By 1987, capacity constraints in the industry would improve
profitability to the extent that new issues of common stock
would be possible. By 1990, this influx of new capital would
permit the industry to rework its old capacity and add new
capacity. This would allow the industry to remove its capac-
ity constraints, including the incremental constraints of
added water costs. A detailed description of the economic
impacts of pollution controls in Scenario 1 can be seen in
Exhibits E—4 and E—6.
Price Effects
The impact of additional water pollution controls on
steel prices was derived from the revenue impacts described in
Chapter IV. As indicated in Exhibits E—4 and E—6, the price
impact of added water costs in Scenario ]. would increase from
$1.32 per ton in 1985 (0.3 percent of the baseline price) to
$3.26 per ton in 1990 (0.6 percent of the baseline price).
This increase between 1985 and 1990 would occur partly because
of NSPS controls installed after 1985 and partly because of
depreciation and other capital charges associated with an in-
creased investment in existing equipment.
Production Capacity Effects
In Scenario 1, the potential declines of reinvestment in
production capacity in the baseline would average $813.3 tnil—
lion below desirable levels from 1980 to 1985. Added water
pollution control costs would increase this amount by approxi-
mately $84.2 million per year, which would lead to a decline
in production capability of about 0.62 million tons of domes-
tic finished steel products (0.6 percent of production
capability).
By 1990, adequate capital would be available to the in-
dustry so that added pollution controls would not result in
measurable impacts on product!on capacity. In fact, the in-
dustry would have the resources to add new capacity and to
complete the investment in existing facilities postponed in
previous years. At a 90 percent utilization rate, that annual
production capacity would increase from about 98.15 million
tons in 1985 to 116.00 million tons in 1990.
-------
V-3
Market Share Effects
In the baseline, capacity constraints would cause the
domestic steel industry’s share of total apparent steel con-
sumption to decline from the current nominal level of
84.50 percent to 77.28 percent by 1985. Additional water
pollution controls would cause a further decline of 0.48 per-
centage points in market share.
As discussed in the previous section and in previous
chapters of this report, the financial condition of the in-
dustry would improve substantially by 1990. At this time, the
industry would have expanded capacity to meet demand for do-
mestic finished steel products. The industry would be able to
maintain a baseline market share of 84.5 percent even with the
addition of water pollution controls.
Employment Effects
The gross employment effects in Scenario 1 associated
with the operation of pollution control facilities in conjunc-
tion with production equipment are illustrated in Exhibit 25.
Capacity additions and expenditures on existing equipment
that were delayed in the early part of the decade would con-
tribute to higher employment in the long run. Rowever, de-
clines in capacity and the resulting declines in production
would reduce employment in the short run.
It is anticipated that 10,370 steel industry jobs, or
2.3 percent of baseline employment, would be required by 1990
to operate all pollution control equipment. Compliance with
air pollution control regulations, incorporated into the in-
dustry’s baseline condition, would require 7,630 steel in-
dustry employees. Total water pollution control efforts would
create 2,740 steel industry jobs. About 1,890 of these jobs
would be linked to the operation of water pollution control
equipment currently in place. Additional BPT compliance ef-
forts after 1981 would account for about 260 new employees.
BAT and PSES additions would provide about 60 and 30 jobs,
respectively. The promulgation of New Source Performance
Standards would provide 500 new employees, bringing the total
level of employment resulting from all additional water pollu-
tion control requirements to 850 jobs.
In the short term, jobs created by the operation of pol-
lution control equipment would be more than offset by the re-
duction in production labor that would result from additional
-------
V- 4
water pollution control costs. In the baseline, the industry
would incur a net loss in employment of 39,800 jobs (9.3 per-
cent of baseline employment) in 1985 below Levels required to
attain a full 84.5 percent market share. The additional water
costs would result in a further net reduction of 2,180 addi-
tiona]. jobs in 1985 (0.5 percent of baseline employment). By
1990, capacity-re].ated job losses would be recovered, and the
additional water controls would account for an increase in
employment of 850 jobs.
Energy Impacts
Nearly 9 percent of the net energy consumed in domestic
industry is accounted for in the manufacture of iron and steel
products. More than 40 percent of this amount is consumed in
coke ovens and blast furnaces. In Scenario 1, pollution con-
trols would consume only about 2.7 percent of the steel indus-
try’s net energy needs. Added water pollution controls would
consume even less--0.l percent——equivalent to about 1,100 bar-
rels of oil a day. Exhibit 26 provides additional detail.
SCENARIO 2
In the first half of the 1980s, the economic condition of
the steel industry in Scenario 2 would be somewhat better than
it was in Scenario 1. A weak domestic demand for steel would
limit the extent of market share impacts and would reduce the
need for capital to finance capacity additions. In the mid—
l980s, continued weak demand and low pr ofitabi1ity would pre-
vent the industry from achieving full economic recovery.
However, by 1990 stronger demand and higher profits would have
initiated a gradual recovery. By the early 1990s the steel
industry would be stronger economically than it currently is.
Price Effects
Price increases in Scenario 2 resulting from added water
costs would be similar in 1985 to those in Scenario 1. How-
ever, because of continued financial constraints, smaller NSPS
requirements, and smaller investment in existing equipment,
the additional price increase of $3.26 per ton indicated for
Scenario 1 would not have occurred in Scenario 2 by 1990. A
price impact of added water costs of $1.31 per ton in 1985
(0.2 percent of the baseline price) is expected to increase to
-------
V-5
only $1.44 per ton in 1990 (0.2 percent of the baseline
price). As the industry’s financial recovery continues into
the early l990s, the price impact should increase to about
$3.30 per tori to pay for increased capital charges for exist-
ing equipment. Exhibits £—8 and E—l0 provide more detail on
the impacts on steel prices.
Production Capacity Effects
In order to maintain current bond ratings under Scenar-
io 2, the steel industry would need to reduce capital expend-
itures on existing equipment by an average of $693.4 million
per year below desired levels. This reduction would result in
a decline in production capacity of about 5.97 million tons
per year, or about 1 million tons less than in Scenario 1.
The effect of additional water pollution controls would be a
reduction in annual production capacity of an additional
0.61 million tons by 1985.
However, after 1985, Lower demand for shipments of
finished steel products would result in lower profitability
than in the same period in Scenario 1. Although the industry
would be able to close down or convert much of its inefficient
equipment and its financial condition would begin to improve
markedly, the industry would be unable to issue large amounts
of common stock. As a result of these improvements, the
extent of the baseline capacity decline would be reduced to
about 2.97 million tons by 1990. Over the long term, added
pollution controls would continue to result in declines in
production capacity. By 1990, capacity declines of 0.41 mil-
lion tons would result from additional water pollution con-
trols. By the early l990s, the industry would be able to
clear the backlog of capital expenditures required to bring
its equipment to full productive capacity. Exhibits E-8 and
E-lO detail the short—run and long—run impacts of pollution
control equipment on production capacity.
Market Share Effects
In Scenario 2, the industry’s baseline market share in
the short run would be 82.87 percent, a reduction of 1.63 per-
centage points from the current nominal 84.5 percent market
share. As in Scenario 1, market share would decline slightly,
by 0.55 percentage points, as a result of declines in produc-
tion capacity resulting from additional pollution controls.
-------
V-6
By 1990, market share would decline further to 80.67 per-
cent in the baseline because of stronger cyclical demand for
finished steel products and continued capacity constraints.
Howe rer, as shown in Exhibit E—lO, the effect of added pollu-
tion controls on market share would be reduced to 0.34 per-
centage points. In the early l990s, faced with somewhat
reduced demand but with higher capacity, the industry would be
able to supply its current nominal 84.5 percent share of the
domestic steel market.
tployment Effects
The gross employment effects associated with the opera-
tion of pollution control facilities in conjunction with pro-
duction equipment in Scenario 2 are illustrated in Exhibit 25.
The net effects, which include the impact of water costs on
production capacity declines, are provided in Exhibits E-8 and
E—l0.
By 1990, 8,610 jobs, or 2.1 percent of baseline employ-
ment, would be necessary to operate pollution control equip-
ment. Of this number, 6,100 jobs would be associated with air
pollution controls, and 1,830 jobs would be associated with
currently installed water pollution controls. The operation
of additional pollution control equipment would require 680
jobs-—260 to meet BPT requirements, 60 to meet BAT require-
ments, 20 to meet PSES requirements, and 340 to meet NSPS
requirements.
Capacity declines related to constraints on capital would
reduce employment in 1985 by 8,810 jobs (2.0 percent of base-
line employment) below the levels required for the steel in-
dustry to attain a full 84.5 percent market share. Additional
water pollution controls, while creating the 680 jobs men-
tioned above, would create production declines that would cost
3,150 jobs——a net loss of 2,470 jobs (0.6 percent of baseline
employment). By 1990, the improved financial condition of the
steel industry would diminish this job loss due to added water
costs to a net reduction of 1,080 jobs (0.3 percent of base-
line employment). In the early 1990s, employment declines
resulting from water pollution controls would be eliminated as
the industry begins to supply its full share of finished prod-
ucts to the domestic market.
Energy ImDacts
Scenario 2 energy impacts are similar to those in Sce-
nario 1. Exhibit. 26 provides added detail.
-------
V-7
EFFECTS OF WATER POLLUTION CONTROLS
ON THE MERCHANT COKE INDUSTRY
The merchant coke arid merchant pig iron industries use
the same types of production facilities——coke ovens and blast
furnaces——that are used in the steel industry. As a result,
they are covered by the steel industry water regulation.
However, the financial and economic structure of these indus-
tries is unlike that of the integrated steel industry. They
are smaller in size, more diverse in terms of ownership pat-
terns, and substantially different in terms of foreign trade
protection. Because of these differences, economic analyses
of these industries were performed separately, as described in
this and the following sections.
The impacts on the merchant coke industry were obtained
by examining the effects of the regulation on three param-
eters: annual costs as a percentage of total cash flow, debt-
to—capitalization ratio, and capital costs as a percentage of
replacement value. Annual costs as a percentage of total cash
flow provide an indication of the impact of water pollution
controls on the cash flow requirements for capita.]. expend-
itures and other financial needs of the industry. This as-
sumes that a substantial portion of the additional costs can-
not be passed through to customers. The debt-to-capitaliza-
tion ratio allows an examination of the impacts on the capital
structure of the industry if the industry were able to issue
additional debt to finance water pollution control expend-
itures. Capital costs as a percentage of replacement value
provide an indication of the impact on a capital- and
capacity-constrained industry. This concept is discussed in
detail in Chapter II.
While these three parameters provide a basis for impact
analysis under certain conditions, TBS does not believe that
any of these conditions currently exist in the industry. As a
result, current impacts are miiiimal, and these impact measures
apply only to future periods when the conditions will be met.
The most likely condition in the next decade is the develop-
ment of capacity constraints that may occur as a result of
increased demand, plant closures, or decreased import competi-
tion. Thus, TES believes that capital cost as a percentage of
replacement value is the best measure of impact.
Required capital and annual costs in 1978 dollars were
obtained from EPA’s technical contractor, NTiS/Rice. These
figures were broken out at the individual plant level for BPT,
BAT, and PSES treatment requirements. TBS converted these
required compliance levels to 1980 dollars by first expressing
them in 1983 dollars (1983 is the average expected year of
-------
V-8
compliance). Capital costs and the various components of
O&M costs were separately inflated to 1983 dollars to reflect
differing historical and projected sectoral inflation rates.
The costs in 1983 dollars were deflated to 1980 dollars .ising
the estimated GNP deflator series.
The resulting compliance cost estimates are shown in
Table V—i. As indicated, the industry’s annual costs for all
treatments total $5.0 million in 1980 dollars. Based on
available data from firms within the merchant coke industry,
and extrapolating to encompass the rest of the industry, TBS
estimated that cash flow in 1980 was about $26 million. Given
this cash flow, the required annual cost (including refunding
of debt) of $5.0 million is about 20 percent of the cash flow.
Based on a 1980 price of $135 per ton and 9.5 million tons of
production, the added annual costs passed on to consumers will
cause prices to increase by 0.4 percent. -
Table V—i
MERCHANT COKZ I USTRY
IICREMENTAL EFFLUENT REGULATiON COSTS
(millions of 1980 dollars)
Capital Cost Annual Cost 1
$ 3.0 $0.8
3M 5.5 1.6
PSES 10.3 2.6
Total $18.8 $5.0
ased on a capital recovery factor of 8.99
percent.
Source: TBS a ialysis.
The table also shows that the required capital costs for
compliance with the water pollution control regulation (exclu-
sive of in—place treatments) are about $18.8 million, in 1980
dollars. It is estimated that in 1980 the industry had a
debt-to—capitalization ratio of 39.1 percent. To compute a
future debt ratio that includes all, future compliance costs,
TBS assumed continued additions to retained earnings (in 1980
dollars), in order to estimate future net worth. Assuming the
entire $18.8 million in required capital would be financed by
-------
V- 9
debt, TBS then added this amount to current debt. The result-
ing new debt ratio increased from 39.1 percent to 39.6 per-
cent, a minimal change.
Finally, capital costs were compared with the replacement
value of capacity in the industry. Based on a current annual
capacity of 9.5 million tons per year, the replacement value
of the merchant coke industry at $220 per ton would be
$2.1 billion. Total capital costs ($18.8 million) would be
0.9 percent of this replacement value. If these expenditures
for pollution controls were diverted from capital expenditures
that would otherwise have been made to maintain production
equipment, then a loss of productive capability of about
0.9 percent could be expected. As a result, in future periods
of capacity constraints, about 0.9 percent of production, or
about 85,500 tons, would be Lost to foreign producers because
of compliance with added water pollution control requirements.
The percentage impact on market share and employment is
expected to be similar in magnitude.
when repeated at the individual firm level, this analysis
yields ratios of compliance cost to replacement value ranging
from 0.1 percent to 2.6 percent. The highest ratios occur for
those plants having to install equipment required to comply
with PSES. This is a result of the typical PSES plant’s being
smaller than average, with higher unit costs. Because of the
relatively small impacts individual firms will experience, the
water regulation is unlikely to force the closure of any mer-
chant coke facilities.
EFFECTS OF WATER POLLUTION CONTROLS ON
TEE MERCHANT PIG IRON INDUSTRY
The merchant pig iron industry consists of two firms that
produce pig iron for casting. This industry is currently
facing extensive competition from imports. A total of
$1.91 million in added -capital expenditures will be needed to
meet the requirements of BPT effluent guidelines, and about
$0.73 million will be needed to meet BAT guidelines. Annual
costs for these requirements of about $0.5. million per year
are likely to increase prices by 0.2 percent. These require-
ments represent 2.4 percent of the industry’s replacement
value (based on an industry capacity of 1.2 million tons per
year and a replacement cost of $92 per ton). In periods of
future capacity constraints, which at present appear unlikely,
reductions in production of as much as 2.4 percent could be
attributed to added water pollution controls. During such
-------
v-i 0
periods, employment would be impacted by a similar percentage.
An analysis of the financial impacts of the water regulation
is not presented because financial data were provided to EPA
by the industry on a confidential basis. The results of the
analysis indicate that any future scrapping of pig iron
furnaces c ould most likely result from declining industry
profitability and market share rather than from the costs of
added water pollution controls.
-------
Exhibit 1
DOMESTIC SHIPMENTS
OF FINISHED STEEL PRODUCTS
(millions of tons)
PROJECTION
Scanaiio 1.
120
100
80
60
40
20
0
I
HISTORICAL
&en&Io 2
I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I _,
1960 1965 1970 1975 1900 1985 1990
Soiaicu AISI Annus’ $IIsI4 I ,cdI Ita1uIuI i, tJ AOL and ms pr 4 i.iiiii
-------
ExhIbIl 2
PR0JECT DOMESTIC SI4IPME’ITS OF
FINISHW STEEL PRODUCTS
(millions of lonS)
Veer
Scenario 1
ScenarIo 2
1981
92.0
92.0
1982
98.0
96.5
1983
105.0
99.3
1984
106.0
103.9
1985
108.0
103.2
1986
109.0
99.8
1987
111.0
96.2
1988
112.0
101.5
1989
114.0
108.9
iggo
116.0
108.3
Source: AOL and T8S projecl ions.
-------
•1
Exhibit 3
- - - ---- -
OIfl C15HIPU N1g
Iiaus& INflul
Suiuciiui&i
Cald Funidued 8ati
S.aud.us Pipe
•Isâwy
Stiuctu,aI.
a. Aelu
lbs Rolled
Sl.eus a.
5lnp
Welded Pipe
STEEL PRODUCTION PROCESSES
IRON-
MAK—
RAW MATERIALS c fr, i ING c :i STEELMAKING r ( i CASTING AND FORMING L < FINISHING MILLS
PhASE I
1 — PHASF II
Iui and Ouhe.
l1dlePioduc s
- F
lion. Oue PcIl.Ii
Colul AoUed
Sheet a.
Stiup
Saiiic. TOS.
-------
ExhIbit 4
PROOUCTI ON OPERATIONS AND MA I NIENANCE EXPENSES BY COST CATEGORY
1976—1990
(mill ions of 1980 del lars)
SCENARIO I
R w
Year
Labor
Overhead
Materials
Power
Fuel
Water
Other
Total
1976
55,717.9
S 6,992.8
$ 9,795,7
51,141.8
S 108.5
S346.4
S7,357.7
$31,461.1
1977
5,995.0
7,326.9
9,453.8
1,279.9
168.2
347.8
7,447.7
32,019.3
1978
6,429.1
7,865.3
10,557.7
1,431.3
218.5
369.6
7,843.6
34,715.1
1979
6,510.1
7,987.2
11,171.6
1,488,5
295.0
373.0
7,916.6
35,741.9
1960
5,691.7
6,988.9
8,872.6
1,404.2
385.8
306.3
6,575.2
30,224.7
1981
5,982.7
7,365.5
9,574.2
1,530.5
497,3
334•5
7,356.0
32,740.7
1982
5,504.1
8,037.0
10,178.5
1,822.7
601.9
353.8
7,962.9
35,460.9
1983
7,096.2
8,706.8
11,108.8
1,958.2
653.2
382.5
8,621.3
38,527.0
1984
7,286.8
9,005.5
11,558.8
2,087.4
880.2
379,1
8,772.9
39,970.7
1985
7,574.2
9,388.0
12,088.8
2,182.3
1,061.0
384.1
9,046.1
41,724.5
986
7,710.8
9,616.9
12,532.5
2,308.5
1,235.4
382.0
9,138.5
42,924.6
1987
7,879.7
9,939.0
13,034.4
2,480.7
1,485.2
382.0
9,393.9
44,594•9
1988
7,945.9
10,078.6
13,528.6
2,506.6
1,538.9
386.5
9,391,7
45,570.8
1989
8,097.1
10,356.4
13,969,0
2,544,7
1,601.4
392.0
9,712.8
46,673.5
1990
8,239.4
10,583.4
14,401.0
2,603.6
1,694.8
398.4
9,924.1
47,344,7
SCENARIO 2
Raw
Year
Labor
Overhead
Materials
Power
Fuel
Water
Other
Total
1976
55,717.9
56,992.8
S 9,795,7
$1,141.8
S 108.8
$345•4
57,357,7
531,461.1
1977
5,995.0
7,326.9
9,453.8
1,279.9
168.2
347.8
7,447.7
32,019.3
1978
6,429.1
7,865.3
10,557.7
1,431.3
218.5
369.6
7,843.6
34,715,1
1979
6,510.1
7,987.2
11,171.6
1,488.5
295.0
373.0
7,916.6
35,741.9
1980
5,691.7
6,988.9
8,872.6
1,404,2
385.8
305.3
6,575.2
30,224.7
1981
6,023.3
7,485.1
9,565.3
1,624.9
494,9
333.3
7,294.9
32,821.7
1982
6,463.8
8,078.6
10,013.5
1,788.0
592.3
347 1
7,768.7
35,052.0
1983
6,797.2
8,451.4
10,497.5
1,846.0
625.8
360.5
8,082.6
36,661.0
1984
7,263.9
9,168.5
11,297.7
2,030.2
854.8
368.8
8,438.4
39,422.4
1985
7,371.3
9,329.2
11,519.3
2,070.8
1,012.4
364.6
8,499.0
40,166.8
1986
7,176.6
9,085.4
11,457.5
2,105.9
1,143.1
348’ 6
8,292.1
39,509.3
1987
6,901.0
8,804.5
11,273.5
2,140.8
1,277.8
329.8
8,064.3
38,791.7
1988
7,218.5
9,168.8
12,260.3
2,271.6
1,394.7
350.3
8,692.5
41,356.6
1989
7,677.7
9,712.9
13,384.2
2,443.2
1,544.9
376.2
9,389.2
44,528.4
1990
7,608.3
9,622.8
13,502.6
2,447.5
1,604.5
374,3
9,418.0
44,579,1
Note: Costs may not add to totals due to roundIng.
Source: PTm(Steel) and Arthur 0. LIttle engineering cost estImates.
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Exhibit 5
RETURN ON EQUITY
1970—1980
(percent)
Veer
Return on Equ(1y
1970 4.1%
1971 4•3
1972 5.8
1973 9.3
1974 17.1
1973 9.8
1975 7.8
1977 0.1
1978 7•3
1979 6.7
1980 9.0
Average5
1970— 1980 7.4
1973—1974 13.2
Source: AISI Annual Statistical
Reporra .
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Exhibit 6
CAPACITY RET IRE HTS
1916-1990
(millions ol tons)
Process
1976
Capacity
1976—
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
Total
Ore Yard
171.84
—
—
—
—
—
—
—
—
—
—
—
Coai Yard
88.22
—
—
—
—
—
—
—
—
—
—
—
—
Scrap Yard
73.61
—
—
—
—
—
—
—
—
—
—
—
—
Sluterlng
46.19
9.59
—
—
—
—
3.16
4.30
4.30
4.10
—
Coke Oven
60.17
2.45
2.37
4.48
6.60
—
2.24
—
2.85
—
—
—
Direct Reduction
—
—
—
—
—
—
—
—
—
—
—
—
—
Blast Furnace
106.51
11.93
0.94
5.69
0.06
1.41
6.45
6.45
6.45
40.18
Open Hearth
21.96
12.67
3.36
12.52
28.51
Basic Oxygen Furnace
86.57
—
3.26
—
—
—
2.95
—
—
—
—
—
6.21
Electric Furnace
24•33
—
0.01
—
—
—
—
2.90
2.90
2.60
2.60
—
11.01
Ingot Castlnfl
121.93
-
-
-
-
—
—
8.40
8.50
—
3.10
5.90
25.90
Continuous Casting——BIllets
5.75
5.21
0.03
—
5.24
—
Continuous Casting——Slabs
11.25
—
—
Primary Breakdown——Blooms
27.02
1.25
—
5.52
—
—
11.07
—
—
—
—
—
?I.84
Primary Breakdown——BIllets
25.98
4.99
—
9.41
—
—
—
—
—
8.73
—
—
23.19
Primary Breakdown——Slabs
74.92
2.51
1.21
—
—
4.16
—
—
—
—
8.00
heavy Structurais
14.91
3.80
—
—
—
—
14.10
—
18.50
Bar M III
26.76
0.87
0.01
4.04
4.92
Wire MIII
3.81
Cold FInished Bars
1.41
—
—
—
—
—
Seamless PIpe
3.69
Hot Strip MIll
73.15
3.83
2.81
—
6.70
PIckling
59.29
1.30
-
—
—
—
—
—
—
—
—
—
1.30
Welded Pipe
5.01
—
-
—
—
—
—
—
-
—
—
—
Cold ReductIon
48.08
2.08
-
—
1.86
-
-
-
9.94
GalvanIzing
8.01
—
—
—
Tin Plating
9.61
—
—
—
-
—
—
—
—
—
-
Plate Hill
13.25
7.44
—
—
—
—
—
—
—
—
—
—
7.44
Ancillary Facilities
—
—
—
—
—
—
—
—
Vacuum t)egasslng
—
—
—
—
-
—
-
—
—
-
Source: lBS projections.
Retirements
-------
ExhibIt 1
CAPACITY AOO 1TIOtIS
1976-1990
(InhIIiOAS m l tOn5
Sc NARI0 I
Process
1976
Capacity
1916—
$980
1981
$982
$983
$984
$985
$986
$901
1988
1989
$990
Total
Ore Yard
111.04
9.59
—
—
—
—
9.59
Cü l Yard
88.22
—
—
—
—
—
—
—
—
—
—
—
—
Scrap Yard
13.6$
-
1.00
1.00
1.00
6.00
-
2.00
3.00
—
-
-
14.00
Slaterlng
46.19
—
—
—
—
—
—
—
—
—
—
—
-
Coke Oven
60.11
6.63
0.50
1.60
2.70
-
-
-
—
—
-
—
11.43
Direct Reduction
Blast Furnace
106.51
$4.04
—
2.00
$6.04
Open Hearth
27.96
—
Basic Oxygen Furnace
86.57
3.69
0.60
—
—
—
—
-
—
—
—
—
4.29
Electric Furnace
24.53
17.70
2.50
3.10
008
3.00
4.60
31.06
ln jot Casting
121.93
Continuous C stlng-—0Iilets
5.75
2.15
0.86
—
2.07
-
1.00
3.60
2.90
4.50
6.50
2.50
26.80
Continuous Casting——Slabs
11.25
6.52
1.00
2.25
0.38
6.81
—
—
2.30
—
9.55
5.52
34.31
PrImary Uroakdown—-Biooms
27.02
0 10
—
—
—
—
—
-
—
—
—
-
0.70
Primary Oreokduwn——Biliets
25.98
—
—
—
—
—
—
—
—
—
—
—
—
Primary Oraekdown—-Siabs
74.92
—
—
—
—
—
—
—
—
—
—
-
—
iIe vy Structurais
$4.91
—
0.40
—
0.70
0.70
—
—
—
—
—
—
1.80
Bar MIII
26.76
1.34
—
0.40
0.40
—
—
—
—
—
—
—
2q22
Wire M lii
5.87
0.08
—
—
-
-
-
-
-
—
-
-
0.0 1 1
Cold Finished Oars
Seamless PIpe
1.41
3.69
—
0.80
0.50
0.60
0.90
0.60
—
0.64
—
0.55
—
-
—
-
—
—
—
—
—
-
—
-
1.40
3.27
hot Strip MIII
PicKling
13.15
59.29
—
0.50
—
—
0•50
—
1.00
Wuided Pipe
5.07
0 Ii1
—
0.04
0.15
—
—
—
-
—
—
—
1.06
Cold ReductIon
Galvanizing
48.00
8.0$
0.12
—
0.35
0.50
1.00
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
-
-
141
o .so
Tin Plating
9.6$
Piato MII I
Ancillary Facilitle
I3.2
—
0.90
—
—
—
—
—
—
—
—
—
—
—
—
-
-
0•90
Vacuum Degassing
-
—
Additions
Page I ml 2
(coni Inuod)
-------
lExhibit 7 (continued)
ScENAfiIO 2
Additions
Page 2 ol 2
Process
1916
Capacity
1916-
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
Total
Ore Yard
171.84
9.59
Coal Yard
88.22
Scrap Yard
73.61
—
1.00
1.00
1.00
—
1.00
1.00
1.00
1.00
1.00
8.00
Sinter lng
46.19
—
—
—
—
—
—
—
—
—
—
—
—
Coke Oven
60.11
6.65
0.50
1.60
2.10
11.43
Direct Reduction
Blast Furnace
106.51
14.04
—
—
—
—
—
—
—
—
2.00
—
16.04
Open Hearth
27.96
—
—
—
—
—
—
—
—
—
—
—
—
Basic Oxygen Furnace
86.57
3.69
0.60
—
—
—
-
—
—
—
—
—
4.29
Electric Furnace
24.33
17.78
2.50
3.10
0.08
—
—
—
—
—
—
—
23.46
Ingot Casting
121.93
—
—
—
—
—
—
—
—
—
—
—
—
Continuous Casting—-BIllets
5.75
2.15
0.86
—
0.67
2.20
1.00
—
2.90
4.50
6.50
2.50
23.28
Continuous Casting——Slabs
11.25
6.52
1.00
2.23
0.38
6.81
—
—
—
—
—
—
16.94
Primary Breakdown——Blocias
27.02
010
—
—
—
—
—
Primary Breakdown-—Billets
25.90
Primary flrookdowii-—Slebs
14.92
Ileavy Structurais
14.97
0.40
0.70
0.70
—
—
—
—
-
—
1.80
Bar Miii
26.16
1.34
—
0.48
0.40
—
—
—
—
—
—
—
2 22
Wire Miii
3.81
0.08
0.08
Coid Finished Bars
141
—
0 50
0.90
—
—
—
—
-
—
—
—
1.40
Seamless PIpe
3.69
0.80
0.60
0.60
0.64
0.55
-
—
-
—
—
—
3.27
hot Strip Miii
73.15
—
—
0.50
—
0.50
—
—
—
—
—
—
1.00
PtLkIing
59.29
Welded Pipe
5.01
0.87
—
0.04
0.15
-
—
—
—
i.06
Coid Reduction
48.08
0.12
0.55
1.00
—
—
—
—
—
—
-
—
i i7
GalvanIzing
8.01
—
0.50
-
—
-
—
—
—
—
-
—
0.30
liii Plating
9.61
Plate Miii
13.25
0.90
—
0.90
Ancillary Faculties
—
—
—
—
—
—
—
—
—
—
—
—
—
Vacuum Degesslng
—
—
—
—
—
-
—
—
—
—
-
—
—
I
Source; TBS projections.
-------
EMhIblt 8
CPPITAL EXPEII)ITURES FOR CAPACITY N)OITIONS
1976-1990
ImIIlIotbs of 1980 dollars)
SCENARIO I
1976—
Process
1980
1981
1982
1983
1984
*985
1986
1987
1988
1909
1990
Total
Ore Yard
$ 125.3
—
—
—
—
—
—
—
—
—
—
$ 125.3
Coal Yard
—
—
-
—
—
—
—
—
—
—
—
—
Scrap Yard
—
S
7.7
S
7.5
S 7.4
S 43.9
—
S 16.8
525.0
—
—
—
108.3
Sinter lng
—
—
—
—
—
—
—
—
—
—
—
—
Coke Oven
I 32l.4
94.8
296.3
491.1
—
—
—
—
—
—
—
2 203.6
Direct Reduction
—
—
-
Blast Furnace
1 l72.8
—
—
—
—
—
—
—
—
$i70.0
—
l 342.8
Open hearth
—
—
—
—
—
—
—
BasIc Oxygen Furnace
169.4
25.8
—
—
—
—
—
—
—
—
—
195.2
Electric Furnace
936.0
122.5
140.4
3.0
—
—
160.3
243.5
—
—
—
1 ,614.5
ingot Casting
—
—
—
—
—
—
—
—
—
—
—
—
Continuous Casting——Billets
198.0
75.8
242.0
$97.1
346.1
216.2
$426.5
613.8
$254.4
2,5*0.1
Continuous CastIng—-Slabs
640.4
92.6
201.7
33.3
597.7
230.0
947.0
543.1
3,285.8
Primary Breakdown--Blooms
79.8
-
79.8
Primary Breakdown—-Billets
—
—
—
—
Primary Iirenkdown—-Slabs
—
—
—
Heavy Structurais
—
211.7
—
355.3
351.1
—
—
—
—
—
—
918.1
Bar MIII
201.3
—
95.6
70.3
—
-
—
—
—
—
—
455.2
Wire MIII
52.3
—
—
—
—
—
—
—
—
—
—
52.3
Cold Finished lIars
—
139.1
244.5
—
—
—
—
—
—
—
—
303.6
So nIess Pipe
616.6
406.8
397.3
416.2
353.4
—
—
—
—
2, 192.5
hot Strip Mill
—
-
60.8
—
59.0
—
—
—
—
119.8
Pickling
—
—
—
—
—
—
—
—
—
—
—
—
Welded Pipe
295.4
—
*2.4
45.5
—
—
—
351.5
Cold Reduction
37.0
102.6
286.4
—
—
—
—
—
—
—
—
426.0
Galvanizing
111.7
—
—
—
ill.?
Tin Plating
Plat et4iii
197.4
—
—
—
—
—
—
—
—
—
—
197.4
Ancillary FacIlities
—
—
Vacuisu Degassing
Total
$6,121.1
$1,397.1
$1,750.9
$2,042.1
$1,405.1
$97.1
$523.2
$174.1
$426.5
$1,130.8
$771.5
$16,611.1
(ront I nuod)
Page I of 2
-------
Exhibit 8 (continued)
SCENARIO 2
Page 2 ol 2
Process
1916—
1980
1981
1982
1983
1984
1985
1986
1981
1988
1989
1990
Total
Ore Yard 5 123.3 — — — — — — — — — — 5 123.3
Coal Yard — — — — — — — — -
Scrap Yard — S 1.1 S 7.5 S 7.4 — S 8.5 56.4 S 8.3 S 8.3 S 8.3 — 64.4
Slnterlng — — — — — — — — —
Coke Oven 1,321.4 94.8 296.3 491.1 — — — — — — — 2,203.6
Direct Reduction — — — — — — — — — — —
Blast Furnace 1,172.8 — — — — — — — — $70.0 — 1,342.8
Open Hearth — — — — — — — — — — —
Basic Oxygen Furnace 169,4 25.8 — — — — — — — — — 195.2
Electric Furnace 936.0 122.5 148.4 3.8 — — — — — — — 1,210.1
Ingot Casting — — — — — — — — — — — —
Continuous Casting——Billets 198.0 15.8 — 56.7 S 185.9 97.1 — 216.2 426.5 613.8 $234.4 2,162.4
Continuous CostIng——Slabs 640.4 92.6 201.1 33.3 597.7 — — — — — — 1,565.7
Primary Breakdown——Blooms 79.8 — — — — — — — — — — 79.8
Primary Breakdown-—Billets — — — — — — — — — — — —
Primary Breakdown——Slabs — — — — — — — — — — — —
Heavy Structurals — 211.1 — 355.3 351.1 — — — — — — 918.1
Bar Mill 281.3 — 95.6 78.3 — — — — — — — 455.2
Wire Mill 52.3 — — — — — — — — — — 52.3
Cold Finished Bars — 139.1 244. — — — — — — — — 383.6
Seamless Pipe 618.6 406.8 391.3 416.2 353.4 — — — — — — 2,192.3
Hot Strip Mill — - 60.8 — 59.0 — — — — — — 119.8
Pickling — — — — — — — — — — — —
Welded PIpe 293.4 — 12.4 45.5 — — — — — — — 351.3
Cold Reduction 31.0 102.6 286.4 — — — — - — — — 426.0
Galvanizing — 1 17.1 — — — — — — — — — 117.1
Tin Plating — — — — — — — — — — — —
PiateMlil $91.4 — — — — — — — — — — $97.4
AncIllary Faculties — — — — — — — — — — — —
Vacuisi Degassing — — — — — — — — — — —
Total 16,121.1 $1,391.1 $1,150.9 $1,481.6 $1,545.1 $105.6 $8.4 $284.5 $434.8 $192.1 $234.4 $14,161.6
Source: TBS projections.
-------
ExhibIt 9
8ASELINE REINVESTMENT IN
EXISTING FACILITIES
(mill Ions of 1980 dollars)
Year
Scenario I
ScenarIo 2
1982
S
449.0
S
499.7
1983
1,470.7
1,553.7
1984
1,579.3
2,056.2
1985
1,949.8
1,974.0
1986
1,472.8
1,980.3
1987
2,674.1
2,029.4
1988
2,632.6
2,156.5
1989
2,619.4
2,188.8
1990
2,636.0
1,831.0
Source: lBS projections.
-------
( iI94? ‘0
* 4 9Uu.gtIOs IT10I. l . I 0a la.L
7 9.I9 9 0
1971 1977 1975 1919 1910 91? 992 19131 19 14 I I I ? 999 II I? 1911 915
I. .•
91 399 391 399 999 999 1009 1034 SQ l 001 1001 7001 00% 1Q01 009
19I n. 2 35 35 30 99 00 ‘90 100 00 100 00 lOG 100 100 100
2. 1:401 YOrl
9 30 50 73 90 99 ‘00 100 00 700 00 l aO ‘90 100 100
‘vqI l.u 0 30 50 1? 90 99 700 700 I SO lOG 190 193 700 100 ‘00
3. S uo wo
0 0 0 0 0 9 0 0 3 0 0 0 0 9 9
0 0 0 0 0 0 0 9 0 0 0 3 3 3 0
4. SlI ’? l.q
20 27 40 60 50 90 95 ‘00 100 ‘00 100 100 100 100 100
20 27 40 50 60 70 63 93 130 103 100 700 100 ‘90 700
5. .a3.. .
91 39 69 5! 70 II 95 100 ‘00 100 tOO TOO 700 100 00
5 10 39 90 95 39 95 100 tO O 700 tOO 799 700 199 ‘30
a. 0Ir ’ 9 40i40 1 40
ftu 0 0 0 0 0 0 0 9 0 0 0 0 3 0 0
943 1P 1 0 0 0 0 0 0 0 0 0 0 0 0 9 0 0 3 3
1. liii? l.rII .
91 93 99 9 5 93 130 tOO 00 100 700 tOO tOO 100 100 700
‘491 lIrl 0 0 0 5 tO 20 50 99 09 100 00 100 100 100 133
I . 26 ‘ ll uPI90C•
2 ? 39 50 50 79 I SO ISO lO S 00 103 lOS 709 t 3 3 100 100
1 4 5 1 1 4 . 3 3 0 0 25 50 79 00 00 100 l aO 700 00 100 100
9. bob G 14940
90 57 91 73 55 99 93 703 700 tOO 190 00 190 100 00
949 1 1190 0 0 20 39 44 70 90 99 tOO 100 700 100 lOG tOO 130
TO. 4I.c IC lur014
30 43 93 10 39 90 99 TOO 700 tOO 100 ‘00 703 O0 190
l jq l?I .. 40 49 49 £1 Sb 63 39 9! 00 100 tOO lOG tOO tOO TOO
II I lIrP 1: l o? 1 75
0 0 0 0 0 0 3 0 0 0 0 0 0 3 0
‘ .4 11 1 . . 0 0 0 0 0 0 0 0 3 0 0 3 3 3 3
17 Cos hw o Caoltnq— .4 1 1 14’l
50 90 97 tOO lOG tOO tOO 00 09 100 100 tOO 00 00 100
luqI?I. . 90 30 97 100 tOO 00 tOO 700 100 tOO 00 100 100 tOO 100
13. C4I1? 10401 1$ 6s Iiiq—IIi
51.4 . 50 90 97 100 tOO tOO lOG tOO ISO 100 tOO 00 00 100 100
94911149 50 90 97 tOO 100 100 100 lOG 150 00 00 100 100 I SO tOO
I A. t0S
SPS 4 . o as 79 40 90 II 99 lOG tOO tOO tOO 130 700 700 tOO
9.417190 40 69 75 40 90 59 91 00 50 ‘00 tOG 100 ISO 100 tOO
II. P 14014 U SIII.1 .
3r. so 45 79 40 90 99 99 tOO 100 tOO tOO tOO 100 tOO 100
r ,iqI,I .. 40 65 75 10 90 99 95 100 tOO ISO tOO IS O tOO TOO ‘00
I I. lS40v Ir90400 9I 4
sri., 43 63 79 50 10 95 95 tOO TOO 700 103 700 00 ‘00 tOO
49 69 79 50 90 31 99 100 100 00 100 tOO tOO 100 tOO
17. ! c ir.l .
SO 40 40 10 SO Il 94 17 tOO tOO tOO 100 100 100 tOO
9 .5 11 1 w. SO 40 10 50 SO 17 94 97 tOO lOG 100 100 tOO tOO 100
t — u 1 11
90 50 10 50 50 (7 94 97 tOO 100 00 100 tOO tOO .00
9 4gI?Iv. 10 50 10 50 50 57 94 97 00 195 tOO 59 ‘00 tOO tOO
I I. 11 ,44 111
sri. 0 0 0 0 0 0 9 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 9 0 0 0 0 0 0 3
20. 1 14 lAliII40 S. .
0 0 0 3 0 0 0 3 0 0 0 0 0 0 0
P.1 9 1$IvS 0 0 0 0 0 3 3 9 0 0 0 0 3 0 0
21. S Ii. ‘t.
ri. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
9 iqlrIv. 0 0 0 0 0 0 0 0 0 3 0 0 3 3 3
90 WI 4111
(P . 4 . 00 50 50 50 91 51 94 91 tOO tOO tOG 700 00 100 tOO
9 4qlPIv. 10 60 50 40 40 57 94 97 100 100 I X tOO 100 tOO 100
. 11401149
60 60 60 90 00 100 tOO 100 100 tOO I SO 00 tOO tOO 100
9 . 9 1 1 190 50 40 60 90 100 tOO 00 tOO .100 100 tOO I0 00 TOO ‘00
2’. 4440 use
OP.., 0 0 0 0 0 0 0 9 3 0 0 0 3 0 0
•ii IPt . . 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0
99. Cold b.u4$lse
sri. 0 0 0 9 0 0 0 3 0 0 0 0 0 0 0
Pvql?l .. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
26. b1440 14 1 1 19
sri. 40 60 60 90 100 tOO 100 700 00 tOO 100 tOO TOO 100 100
9 1 1 31114. 60 50 60 50 laO 00 tOO tOO 00 100 100 100 100 00 ISO
27. Tl • ‘.rI. ’q
“. 4 . 0 3 0 0 3 0 0 0 0 3 3 0 0 0 0
$119141.. 0 0 0 0 0 3 3 0 0 0 0 0 0 0 3
Zt. 91.1. elil
Sri. 50 50 50 40 90 47 94 97 tOO 193 tOO 100 tOG 100 100
50 59 40 50 50 47 94 97 130 100 100 ‘00 100 100 tOO
29. tiIw’r 5l11$ 1s
0 0 0 0 0 3 0 3 0 0 0 3 0 0 0
‘.ql,I .. 0 0 0 0 3 0 0 3 0 3 0 3 0 3 3
30. Yi.bu. O49seIli.q
Sri. 9 0 0 0 9 0 0 0 0 0 3 0 0 0 0
94919149 0 0 9 0 0 9 3 0 0 0 3 0 0 0 0
9 49i II I I a i.j i.I90 .190 ‘lIe OIwI.l., O s SP .rl.. 5 4. ChII.... .......1 or
-------
Exhibit II
CAPITAL EXPENDITURES
FOR AIR POLLUTION CONTROL EQUIP4ENT
BY PRODUCTION PROCESS AND TIME PERIOD
(mill ions of 1980 del lars)
SCENARIO 1
Process
1981
and Before
1982—1985
1986—1990
Total
Ore Yard
S 18.4
S 0.0
S 0.0
S 18.4
Coal Yard
8.1
0.4
0.0
8.5
Sinterlng
230.6
38.9
0.0
269.5
Coke Oven
1,969.1
206.9
0.0
2,176.0
Blast Furnace
710.1
126.6
10.5
847.2
Open Hearth
300.5
108.5
0.0
409.0
Basic Oxygen Furnace
418.0
45.2
0.0
463.2
Electric Furnace
566.0
77.2
91.7
734•9
Continuous Casting——Billets
23.3
11.5
57.0
91.8
Continuous CastIng—Slabs
16.6
10.8
19.0
46.4
Primary Breakdown—Blooms
40.5
1.8
0.0
42.3
Primary Breakdown—Billets
20.4
0.9
0.0
21.3
Primary Breakdown—Slabs
63.3
2.9
0.0
66.2
Total
$4,384.9
$631.6
$178.1
$5,194.7
-
SCENARIO 2
1981
.
Process
and Before
1982—1985
1986—1990
Total
Ore Yard
S 18.4
S 0.0
S 0.0
S 18.4
Coal Yard
8.1
0.4
0.0
8.5
Slntering
230.6
38.9
0.0
269.5
Coke Oven
1,969.1
206.9
0.0 -
2,176.0
Blast Furnace
710.1
126.6
10.5
847.2
Open Hearth
300.5
108.5
0.0
409.0
Basic Oxygen Furnace
418.0
45.2
0.0
463.2
Electric Furnace
566.0
77.2
0.1
643.3
Continuous Casting—Billets
23.3
11.5
46.5
81.3
Continuous CastIng—Slabs
16.6
10.8
0.0
27.4
Primary Breakdown—Blooms
40.5
1.8
0.0
42.3
Primary Breakdown—-Billets
20.4
0.9
0.0
21.3
Primary Breakdown—Slabs
63.3
2.9
0.0
66.2
Total
$4,384.9
$631.6
$57.1
$5,073.5
Note: Costs may not add to totals due to rounding.
Source: PThi(Steel) and PEDCo/EPA engineerIng cost estimates.
-------
Exhibit 12
C.PITAL EXPENDIT ES
FOR AIR POLLUTION CONTROL EQUI 4ENT
BY PRODUCTION PROCESS AND TI’PE OF EMISSION
(millions ol 1980 dol tars)
SCENARIO 1
Process
Stack
Fugitive
NSPS
Totar
Ore Yard
S 0.0
$ 11.8
S 6.5
S 18.4
Coal Yard
0.0
8.5
0.0
8.5
Sinterlng
194.7
74.8
0.0
269.5
Coke Oven
1,850.6
129.2
196.2
2,176.0
Blast Furnace
609.4
169.4
68.4
847.2
Open I4earTh
176.1
232.9
0.0
409.0
Basic Oxygen Furnace
347.5
106.3
9.4
463.2
Electric Furnace
525.6
9.3
200.0
734.9
Continuous Casting—Billets
0.0
15.1
76.7
91.8
Continuous CastIng—Slabs
0.0
11.8
34.5
45.4
Primary Breakdc n——Blocms
0.0
42.3
0.0
42.3
Primary BreaKdown—Billets
0.0
21.3
0.0
21.3
Primary Breakdown——Slabs
0.0
66.2
0.0
66.2
Total
$3,703.9
$898.9
$591.9
$5,194.7
SCENARIO 2
Process
Stack
Fugitive
NSPS
Total
Ore Yard
$ 0.0
S 11.8
S 6.6
$ 18.4
Coal Yard
0.0
8.5
0.0
3.5
Sinter lng
194.7
74.8
0.0
269.5
Coke Oven
1,850.6
129.2
196.2
2,176.0
Blast Furnace
609.4
169.4
68.4
847.2
Open i4eer?ft
176.1
232.9
0.0
409.0
Basic Oxygen Furnace
347.5
106.3
9.4
463.2
Electric Furnace
525.6
9.3
108.4
643.3
Continuous CastIng—Billets
0.0
15.1
66.2
81.3
Continuous Casting—Slabs
0.0
11.8
15.5
27.4
Primary Sreakdown——Bloans
0.0
42.3
0.0
42.3
Primary Breakdown—Billets
0.0
21.3
0.0
21.3
Primary Breakdown—Slabs
0.0
66.2
0.0
66.2
.Total
$3,703.9
$898.9
$470.8
$5,073.5
Note: Costs may not add to totals due to rounding.
Source: PTm(Steoi) and PEOCo/EPA engineering cost estimates.
-------
ExhibIt 13
CAPITAL EXPEIC ITURES
FOR AIR POLLUTION CONTROL EQUIPMENT
BY YEAR A rYPE OF EMISSION
(mill ions of 1980 del lars)
SCENARIO I
Year
Stack
Fugitive
MSPS
Total
1976 and Before
$1,389.2
$103.3
S 0.0
$1,492.5
606.6
1977
545.6
61.0
0.0
550.8
1978
448.9
101.9
1979
327.2
66.
73.7
710.5
1980
456.3
117.5
136.7
1981
359.9
147.2
50.1
557.2
75.8
1982
113.0
186.7
1983
63.8
100.1
66.4
230.3
22.6
1984
0.0
14.8
7.8
1985
0.0
0.0
2.9
2.9
46.9
1986
0.0
0.0
46.9
1987
0.0
0.0
66.1
66.1
12.8
1988
0.0
0.0
12.8
1989
0.0
0.0
39.4
39.4
13.0
1990
0.0
0.0
13.0
Total
$3,703.9
$898.9
$591.9
$5,194.7
SCENARIO 2
- Year
Stack
Fugitive
NSPS
Total
1976 and Before
$1,389.2
$103.3
$ 0.0
0.0
$1,492.5
606.6
1977
545.6
61.0
1978
4 ,9
101.9
0.0
467.3
1979
327.2
66.4
73.7
710.5
1980
456.3
117.5
136.7
557.2
1981
359.9
147.2
50.1
375.9
1982
113.0
186.7
76.2
223.7
1983
63.8
100.1
59.8
29.1
1984
0.0
14.8
14.3
2.9
1985
0.0
0.0
2.9
1986
0.0
0.0
0.0
0.0
8.3
1987
0.0
0.0
8.3
1988
0.0
0.0
12.9
28.9
1989
0.0
0.0
28.9
1990
0.0
0.0
7.0
Total
$3,703.9
$898.9
$470.8
$5,073.6
Note: Costs y not add to totals due to roundIng.
Source: PTm(SPeel) and PWCo/ A engineering cost estimates.
-------
ExhibIt 14
OPERATIONS A O MAI NTENANCE EXPENSES
FOR AIR POLLUTION CONTROL EQUIPMENT
3? PROCUcTION PROCESS
1980, 1985, and 1990
(millions of 1980 dollars)
SCENARIO 1
ProcesS
1980
1985
1990
Ore Yard
S 12.6
3.9
$ 16.4
5.4
S 16.8
5.4
Coal Yard
44•9
46.9
Sintering
25.1
168.6
288.4
291.7
Coke Oven
88.4
96.2
Blast Furnace
44 3
14.2
42.4
41.8
Open Hearth
82.1
90.8
Basic Oxygen Furnace
45.9
86.5
160.1
184.1
Electric Furnace
3.7
6.8
20.6
Continuous Casting—B II lets
1.6
2.3
10.4
Continuous CastIng—Slabs
2.0
3.3
1.6
Primary Breakdown——Gleans
1.2
1.8
1.3
Primary Breakdown—B I I lets
3•3
5.4
3.4
PrImary Breakdown—Slabs
Total
$412.9
$747.7
5813.0
SCENARIO 2
Process
1980
1985
1990
Ore Yard
S 12.6
3.9
S 15.4
5.1
S 16.0
5.1
Coal Yard
42.2
46.4
Sinterlng
25.1
168.6
270.5
277.0
Coke Oven
44.3
83.0
91.3
Blast Furnace
14.2
39.8
39.6
Open Hearth
45.9
77.1
86.2
Basic Oxygen Furnace
$6.5
150.1
170.9
Electric Furnace
6.1
19.0
Continuous Casting—BIllets
1.6
5.2
5.8
Continuous Casting—SlabS
2.0
3.2
1.5
Primary Breakdown——BlOOmS
1.2
1.8
1.2
Primary Breakdown—Billets
3.3
3.8
4.4
Primary Breakdown——Slabs
Total
$412.9
S703.3
$764.4
Note: Costs may not add to totals due to rounding.
Source: PTm(Steel) and PWCo/ A engineering cost estimates.
-------
ExhIbit 15
OPERATIONS A10 MAINTENA CE EXPENSES
FOR AIR POLLUTION CONT L EQUIPMENT
BY YEAR A TYPS OF EMISSION
(millions of 1980 dollars)
SCENARIO 1
Year —
Stack
FugitIve
NSPS
Total
1976
5136.9
S 10.5
S 0.0
5147.4
227.3
1977
203.6
23.
o.0
0.0
317.0
1978
264.9
52.1
392.3
1979
307.5
71.3
13.5
412.9
1980
304.1
77.2
31.6
525.5
1981
373.1
108.1
44.3
624.3
1982
414.4
146.0
63.9
715.3
1983
458.5
174.1
82.7
728.4
1984
465.7
176.6
86.1
747.7
1985
476.8
180.1
90.8
758.8
1986
473.4
179.1
106.3
772.1
1987
466.6
175.6
129.9
783.0
1988
468.9
178.9
135.2
796.3
1989
470.5
180.1
145.7
813.0
1990
478.1
183.5
151.4
-
SCENARIO 2
Year
Stack
Fugitive
NSPS
Total
1976
S136.9
$ 10.5
S 0.0
$147.4
227.3
1977
203.6
23.7
0.0
1978
264.9
52.1
0.0
317.0
-1979
307.5
71.3
13.5
412.9
1980
304.1
77.2
31.6
521.6
1981
370.0
107.4
609.4
1982
404.1
142.5
670.1
1983
429.3
163.6
77.2
702.1
1984
447•5
169.8
84.7
703.3
1985
447.3
169.0
87.0
1986
436.1
-
163.0
87.4
90.1
560.1
1987
418.3
151.7
705.7
1988
443.2
163.1
99.4
763.5
1989
474.0
175.8
113.7
764.4
1990
472.7
176.2
115.5
Note: Costs may not add t totals due to rounding.
Source: PTm(Steel) and PWCo/EPA engIneering cost estimates.
-------
Exhibit 16
CAP I TAL (PEND I lURES AND OPERAT IONS AND MA I NTENANCE (P!NSE S
FOR MISCELLANEOUS POLLUTION CONTROLS
(millions of 1980 dollars)
Scenario 1
Scenario 2
Year
Capital
Expenditures
Op
erations and
intenance
Expenses
Capital
Expenditures
Ooeratlons and
Maintenance
Expenses
1976
51458 a
$33.2
51458 a
533.2
1977
38.9
44.1
38.9
44,1
1978
51.9
57.9
51.9
57.9
1979
88.1
82.0
88.1
82.0
1980
34.5
96.9
34.5
96.9
1981
- 5.6
96.7
4.5
96.3
1982
23.3
108.3
18.1
106.3
1983
43.1
129.0
23.9
119.1
1984
0.0
133.5
0.0
124.1
1985
0.0
138.7
0.0
129.0
1986
0.0
143.3
0.0
133.2
1987
0.0
147.2
0.0
737.0
7988
0.0
150.1
0.0
139.6
1989
0.0
153.1
0.0
742.4
7990
0.0
155.8
0.0
145.0
Total
$431.2
$405.7
a, ncludes
capital expenditures in 1975 and before.
Source: PTm(SPeei).
-------
ExhibIt 17
SENSITIVITY ANALYSIS——AIR STRETCHOIJT
CAPITAL EXPEND ITI.RE$ AND OPERATIONS AND MAINTENANCE EXPENSES
FOR AIR POLLUT ION CONTROL U I PMENT
(millions of 1980 dollars)
Year
Capital E enditures
Operations and
Maintenance E çenses
Scenario 1
SensitivIty
Scenario 1
Sensitivity
1976
14925 a
S1,492.5 5
S147.4
S147.4
1977
606.6
606.6
227.3
227.3
1978
550.8
550.8
317.0
317.0
1979
467.3
467.3
392.3
392.3
1980
710.5
710.5
412.9
412.9
1981
557.5
320.7
525.5
496.9
1982
375.8
228.9
624.3
571.2
1983
1984
1985
230.3
22.6
2.9
159.3
16.3
335.1
715.3
728.4
747.7
644.1
656.1
747.7
1986
46.8
46.8
758.8
758.8
1987
66.1
66.1
772.1
772.1
1988
12.8
12.8
783.0
783.0
1989
39.4
39.4
796.3
796.3
1990
13.0
13.0
813.0
813.0
Total
S5,194.7
S5,C66,1
N/A
N/A
Note: Costs may not add to totals due to rounding.
N/A • Not applicable.
5 Capita l expenditures include expenditures before 1976.
Source: PTm(Steei).
-------
Exhibit 18
C.PITAL EXPENOITIPES
FOR WATER POLLUTION CONTROL EQUIP4ENT
BY YEAR AND EFFLUENT GUIDELINE
(millions of 1980 dollars)
SCENARIO I
Year
T
BAT
PSES
NSPS
Total
1976 and Before
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
$1,179.6
146.4
106.6
108.1
134.5
95,4
61.8
74.8
76.6
0.0
0.0
0.0
0.0
0.0
0.0
$14.0
1.3
0.5
3.4
4.1
3,1
24.1
22.9
23.1
0.0
0.0
0.0
0.0
0.0
0.0
$20.6
3.1
1.0
30.7
32.3
29.1
8.3
8.7
9.3
0.0
0.0
0.0
0.0
0.0
0.0
$0.0
0.0
0.0
0.0
0.0
0.0
39.0
46.3
61.2
6.9
26.9
38.8
30.4
117.5
53.5
$1,214.2
150.8
108.1
142.2
170.9
128,6
133.2
152.7
170.2
6.9
26.9
38.8
30.4
117.5
53.5
Total
$1,984.8
$96.5
$143.1
$420.5
$2,644.9
SCENARIO 2
Year
T
BAT
PSES
NSPS
Total
1976 and Before
1977
1978
1979
1980
7981
1982
1983
1984
7985
1986
1987
7988
7989
1990
$1,179.6
146.4
106.5
108.1
134.5
96.4
61.8
74.8
76.6
0.0
0.0
0.0
0.0
0.0
0.0
$14.0
1.3
0.5
3.4
4.1
3.1
24.1
22.9
23.1
0.0
0.0
0.0
0.0
0.0
0.0
$20.6
3.1
1.0
30.7
32.3
29.1
8.3
8.7
9.3
0.0
0.0
0.0
0.0
0.0
0.0
$0.0
0.0
0.0
0.0
0.0
0.0
39.0
30.7
76.6
6.9
0.0
79.7
30.4
53.2
16.7
$1,214.2
150.8
108.1
142.2
170.9
128.5
133.2
137.1
185.6
6.9
0.0
19.7
30.4
53.2
16.7
Total
$1,984.8
$96.5
$143.1
$273.2
$2,497.6
Note: Costs may not add to totals due to rounding.
Source: PTm(Steel) and Rice/EPA engineering cost estimates.
-------
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56. P ,Iwp - Scanl o ns - S pscI.I ly 7.2 0.0 7.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.2 0.0 7.2
57. 9.11.. — Carlo. 943.6 20.9 161.6 0.0 0.0 0.0 55.1 2.0 IL l 0.0 0.9 9.5 I I I. ) 35.1 186.1
SO. $.clIa. . 39 0 . 1. 1 5 9 94.6 2.5 11.4 0.0 0.0 0.0 0.4 0.0 0.4 0.0 0.1 0.5 51.0 1.1 90.1
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20. (5.9 - 39 .S.II - S Ir lpISh..t 0.1 0.? 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.2 LI 0.3 10.0
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64. 011., i4.Ials - Scrabb.,. - S Ir lp/S A ..l/Nis .. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
6). 011., 1 1.1.Ii - l b. S..n.bb.v . - WI ,. P,od.I1..1l.a.ru 0.9 0.0 0.2 0.0 0.0 0.0 0.1 0.1 0.4 0.0 0.0 0.0 0.6 0.1 0.9
66. 0Ih.r 0.1.1. - Sc. . 4 .b... - WI,. P.od.IV.sl. .. .t. 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
1,1. 1 *5 715.6 $217.7 $i qa4.9 $16.4 $10.1 $96.2 $116.9 126.1 1141.1 $0.0 1711.2 $ 2 71.2 $1,911.9 $50 .9 52497.4
0.5.. Coal. eay aol 14:1 50 101.1 1 4... to teandlag.
Se. c., PladSleall ..4 Ilica/IPA ... .nI a.iI.aI.t.
-------
ExhibIt 20
OPERATIONS AND MAINTENANCE (FENSES
FOR WATER POLLUTION CONTROL EQUIP4ENT
BY YEAR AND EFF1.UENT GUIDELINE
(millions of 1980 dollars)
SCENARIO I
Year
BPT
BAT
PSES
NSPS
Total
1976
and Before
S 30.4
S 7.5
S 0.8
$ 0.0
$ 32.7
1977
44.1
1.6
1.0
0.0
46.7
7978
53.4
1.7
1.0
0.0
56.1
1979
70.8
2.1
2.9
0.0
75.8
1980
34•9
2.1
4.5
0.0
91.5
1981
706.3
2.7
6.6
0.0
115.6
7982
116.0
5.9
7.9
5.1
134 9
1983
127.0
9.8
9.2
9.8
155.8
1984
125.0
12.9
9.9
12.1
159.9
7985
124.3
73.1
10.0
73.5
160.9
1986
122.5
73.1
10.7
16.5
162.2
7987
123.3
13.0
10.1
20.5
166.9
1988
730.7
73.4
10.3
24.7
178.5
1989
137.6
73.5
10.9
35.2
197.2
1990
142.1
13.7
11.3
40.7
207.8
SCENARIO 2
Year
T
BAT
PSES
p4SPS
Total
1976
and Before
S 30.4
S 1.5
S 0.8
S 0.0
S 32.7
7977
44.1
7.6
1.0
0.0
46.7
1978
53.4
1.7
1.0
0.0
56.1
1979
70.8
2.1
2.9
0.0
75.8
1980
84.9
2.1
4.5
0.0
97.5
1981
110.0
2.7
6.8
0.0
119.5
1982
718.9
5.8
8.0
5.6
138.3
1983
126.5
9.2
9.1
9.1
153.9
1984
133.1
12.5
10.2
14.9
170.7
1985
129.4
12.4
70.1
15.7
167.6
7986
120.2
11.9
9.7
15.6
157.4
1987
114.1
11.3
9.2
17.7
151.7
1988
779.5
72.2
9.6
20.3
161.6
1989
127.5
73.1
10.3
26.0
176.9
1990
126.9
13.0
10.4
27.8
178.1
Mote: Costs may not add to totals due to rounding.
Source: PTmCSteel) and Rice/EPA engineering cost estimates.
-------
ExiilbI 2!
arIcNs MO AI 14T INCE C(PE ISES
0R sATER POU.UT;GN COPliROL QUIRdENT
BY SI.aCAT 0PY MO €FFI.UEI4T GUI OEL N E
1983 4114 990
(sililait. t 980 303 l r )
SCENARIO I
ig 4 1 I o I
1990
‘ ‘
T
BAT
SE3
MWS
Tø? I T
3.17
PSES
9
T* ?ii
A., ‘i. .r Iii s Pr a,a ? loll
322.9
14.4
13.4
13.3
134.2
124.3
1.1.7
13.6
13.8.
134.3
I. 4IlwkIn9 — Ipoi, auid SP&
2. C.* IIflq — f lIul?
0.0
0.0
0.0
0.0
0.0
0.0
0.3
3.0
0.3
0.3
3. SIuits,hlg
8.3
0.3
0.4
0.0
9.0
8.7
0.3
0.4
0.3
9.3
Ip i Ii
4. 31.1? ISI .I.C.
22.4
7.4
3.6
0.0
30.4
13.2
1.3
3.3
3.6
23.7
SPs.IuI ,SNIM
6. Ic Oluyg.d luriliOs • 5. 53—4. ,
0.6
3.3
0.0
0.0
0.8
0.6
3.0
0.3
0.0
0.5
3. Bailc ° ‘2’ P grn .c. — as?
3.4
0.1
0.7
0.0
4.2
3.6
0.1
0.7
0.0
4.4
7. 3 sslc Owg•ui Pu nI 5 • . 541irPIoe
11.3
0.3
1.1
0.1
3.3
12.1
0.6
1.2
0.1
4.0
8. . , dusrll ,r”acs — 4.?
1.9
0.1
0.3
0.0
2.1
1.3
0.3
0.0
0.3
1.3
2. SI.crlc ,rn.c. — S I — .. ’
0.1
0.0
0.0
0.3
0.2
0.3
0.0
3.0
0.3
0.2
IC. £Isc?, 1c Puruiscs — 4.?
3.3
0.!
0.7
3.6
1.3
3.3
0.1
0.7
1.4
6.7
I I. 3. .saI.ig
2.6
0.3
0.0
3.1
2.7
2.4
0.1
0.3
0.3
3.1
C4s1ll
12. 0uu1Iuwiau s CasPI.
3.9
0.1
0.5
4.9
11.4
10.3
0.1
0.3
30.0
II .?
4.?
13 •r’msry • 4. 5cirf •
•3 7
0.0
—0.1
3.3
—0.3
-1.9
0.3
—0.1
0.0
—6.3
14. Pi 1 .,uary — Sc .r4u’a — CarS.,
—32.4
0.3
.2.1
0.0
—34.4
—21.9
0.0
.1.4
0.3
.23.4
15• rImsry — ida Sc ur, — !1c 3i 11y
.0.3
0.0
0.0
0.0
—0.3
—0.4
0.0
0.3
0.3
.Q•4
6• P.Issr, . Sc.rir, • So scIally
.1.2
0.0
0.0
0.0
.1.2
—3.7
0.0
0.0
0.0
.3.7
I?. 5.crloii • ClrS
—3.0
0.3
—0.3
0.1
—3.2
.3.9
3.3
.3,4
Q•Q
.4.3
‘8. Ssc?Icn • So.CliI y
—0.3
0.0
0.0
0.0
—0.3
—0.6
3.3
0.0
0.0
—0.6
19. ‘ Ii , • Csr i , • Sri l o/ Siis.r
—4.3
0.0
.0.3
0.3
—8.6
.11.9
3.0
—0.4
0.3
.12.4
20. Fl 5 ? — SoscIauly — 3?rI /9isst
0.3
0.3
0.0
3.0
0.2
0.1
0.0
0.0
0.3
0.1
21. Ph? — Car a ,, — Ii?s
—1.8
0.3
-0.2
0.0
—1.8
-2.2
3.3
.3.2
0.3
—2.’
22. ‘Iii - So.cI. I y — P1. 1.
—0.2
0.0
0.3
3.3
4.2
—3.3
0.0
0.0
3.0
-0.3
23. ‘a. 4 — Car3oi,
1.4
0.3
0.0
0.4
2.0
1.5
0.0
0.0
0.7
2.2
24. I9 5 & lu — 1eucI.i , ,
0.!
0.0
0.0
3.3
0.3
0.!
0.0
3.0
0.!
0.3
Sal? Ba, ,, 0. .4.II
0.1
0.0
0.0
0.0
0.0
0.0
0.3
.3.0
0.!
0.!
0.1
0.1
0.3
0.3
0.3
0.0
0.0
0.3
0.!
0.!
25. 0 .4IzI .q - Baron - das?/PI .?s
26. OiuI . 1zI .q — Bs?c I , • 3IVIr 5
27. Onudlihuig — 3.I o n — ‘los 4 ?uJD S
0.1
0.0
0.3
0.3
0.!
0.1
0.3
3.0
0.3
0.1
28. 0 IdIzlng — 00111141.51$
0.1
0.3
0.3
0.3
0.2
3.!
0.0
0.3
0.0
0.2
29. sd ,daInq — 3sron
30. lsmucIng — Co n?I ’uuaus
0.0
0.0
0.0
0.0
0.3
0.0
0.0
0.0
3.3
0.0
3.0
0.0
0.0
0.0
0.3
0.0
0.3
0.0
0.0
0.0
(coirPi 411.51
-------
E uIbi? ii (con?inu.d)
—
E
2E
E
T0?a
Ailialin. C7.. liinq
3 1• Bi?cil $0.3 50.3 50.0 30.3 30.3 50.3 30.0 50.3 50.3 30.3
32. Can?ilIu l3 7.2 0.0 3.0 0.0 7.2 .4 3.3 0.0 3.0 7.4
Cold oillnq
33. SIngl . Sruied — .cirCuI.PIafl 0.7 0.0 3.3 0.0 0.2 0.7 0.3 3.0 0.3 0.2
34• .l,l—fteed — .cIraai .?loi e —0.4 3.3 0.0 0.0 —0.1 —0.9 0.0 0.3 0.0 -0.9
33. Co.olne ion .2 0.0 0.0 0.0 7.2 1.1 0.3 3.0 0.0 .7
36. SIngi. Stend — Olr.c? ADDI IcaPica 0.3 0.0 0.0 0.0 0.3 0.3 0.0 0.3 0.0 0.3
37. Mul I.3P ed • Olpec? Aeplfcc?I0 le 3.1 0.0 0.0 0.0 0.7 0.4 0.0 0.0 0.0 0.6
33. Cold Pl e 5 — Wer.r 0.3 0.0 0.0 0.0 0.3 3.3 0.3 0.0 0.0 0.3
39. Cold i s I • OIl 0.2 0.0 0.0 0.0 0.2 0.2 0.0 0.0 0.0 0.2
SulPurle Acid OI II.uq
40. 3Pri /9h..r/P!•P — Mca?rul IzapIcee 29.6 0.0 3.3 0.0 30.1 32.5 0.0 0.3 0.3 32.3
41. of4I,./Coil — W’ . elIz aPion 4.0 0.0 .6 0.3 3.5 4.4 0.0 2.3 3.0 6.4
42. S.r/0iIi.i/Blcca — M.jer elIZ avicn 4.2 0.0 0.1 0.0 4.3 4.0 0.3 0.7 0.3 4.1
45. lo I luOe IsuiPli l O Op lOll 4.0 0.3 0.4 0.3 ‘.6 4.2 0.0 0.5 0.0 4 3
£4. ftrlo/5ie..?IPIc? . — Acid svery 0.0 3.3 0.0 1.3 7.3 0.0 0.3 0.3 .5 1.6
43. oIWir Coii — Acid Oeccv.ry 0.1 0.0 0.0 0.3 0.’ 0.1 0.0 0.0 0.1 0•4
46• 3 r/8iIi.?/0lco’ — Acid .ccv.r, 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
47. ?l • I lub• • Acid .cov.ey 0.0 0.3 0.3 1.3 .3 0.0 0.0 3.3 7.4 .4
drcaliIG?IC Acid i *i lug
44. Stris/S!iec?/Piat. • I 1 u7? O I IZU PI0ll 37.7 0.0 7.5 3.3 39.2 41.6 0.0 I .? 0.0 43.3
49 ucd/wIe.#c.Il — 4 erUl Izc?Ion 0.1 0.0 0.4 0.0 0.7 0.3 0.0 0.3 3.0 1.7
30. plo. I lucs • IcarrII izuPica 0.3 0.3 0.0 0.0 0.3 0.3 0.0 0.0 0.3 3.3
$1. SIrl /Thca1/ lae. — Icid q.q.,. .erlcu, 4 3 0.3 3.0 0.3 —4.3 -4.4 0.0 3.0 3.3 4.3
Co.olnc?lcu Acid Pical lug
32. 3c?cu - ftri o/S ii si?/PlaP s — OSa?rel izePico 0.9 0.3 0.0 0.0 0.9 0.9 0.0 0.0 0.0 3.9
$3. ContI.wcui — S?ri /SO..4/°i.?s — isiprel lOaPicie 9.3 0.0 0.0 0.0 3.6 9.4 0.0 0.0 0.0 9.3
54 cd/IIrV oil — lsulrei lz a ,Iea 2.0 0.0 0.1 0.0 2.2 2.2 0.0 0.2 3.0 2.’
53. Ssr/9i I Ietf3ie c e , — 4.u r.i iza?lcn 0.3 0.0 3.3 0.0 0.4 0.4 0.0 0.3 0.3 0.7
. lo. & 7 u3 5 — 4.r uilz a rloui 1.4 0.0 0.7 0.0 1.3 1.5 0.0 0.7 0.3 1.4
37. GmI ...nioIng — I ScruOO.r, — SPri / l. .fI l.c . 7.1 0.3 0.1 0.3 .2 .3 0.0 0.7 0.0 7.4
39. Colvsuelz lug • Scr ubb 1 — 5?rf o/ ll u.., 1 14 1$c. 1.0 0.0 0.0 0.0 1.0 1.1 0.7 0.0 0.0 1.2
39. G.lvoieiglueg • Sci 0Ors • Wire Pr d.IPist.nces 0.3 0.0 0.0 0.3 0.3 0.3 0.0 0.0 0.0 0.3
60. G.lvenl:ieg — Scr e MrI — Wire Prcd./FlPce.el 0.7 0.0 0.0 0.0 0.2 3.1 0.0 3.0 0.3 0.2
SI. i r s s — 7 Scruob e — Srpi # ,caflWi 1c. 3.0 0.3 0.0 0.3 0.0 0.0 0.3 0.0 0.0 0.3
52.. T.ree• — S c,,jbDere — S?riO/ IA ..,INIsc. 0.7 0.0 0.3 0.0 0.7 0.7 0.3 0.3 0.0 0.1
63. GPii .r W.?ei* — lcreioo.r, — SPrIo/ ..? Mi e c . 0.1 0.0 0.0 0.3 0.7 0.2 0.0 0.0 0.0 0.2
3’. O’lece I.rels — Scr 6.re • 1?rI O 15 17..?/Misc. 0.0 0.3 0.0 0.0 0.0 3.0 0.0 0.0 0.3 3.3
63. 0Th.e vels - Scruco.r, — dir. cd./Fcalaneei 0.0 0.3 0.0 0.0 0.0 0.3 0.0 0.0 0.3 3.3
66. 0rll.r ?aIg • Scr i6b.s — Wire Prcd./Vut e . 0.0 0.3 0.0 0.0 3.0 0.0 0.0 0.0 0.0 0.3
$124.3 $73.1 $10.0 173.3 5760.9 3142.7 $13.7 Ill _i $40•7 $207.3
SCI’49Ri0 I
7963
39S 2 oP 4
1900
(Ccee?l Aced)
-------
dIiDlt 21 (cD4?l Iu.d)
[
T
OAT
PUS
S
Tar.I
1
SAT ] ‘
7• i .I
uv lit i
• Cili.. lnq — I ron and SPa.’ $2 1.3 $4. I $3.2 $3.3 $32. I $23.3 54.9 53.4 53.5 53!.
2. C.*a.ing — an? 0.0 0.3 0.3 0.0 0.0 0.3 3.0 30 33
3. Sla?.rlng 7.4 0.3 0.4 0.0 8.4 8.3 0.3 0.4 3.0 9.0
I rO I akIr
4. OIasf , ,rn.cs 21.0 6.9 0.6 0.0 28.6 4.4 7.1 3.3 0.5 22.9
9. al 0 vq.n irn. • Sa.I — 1 0.3 0.3 0.3 0.0 0.9 0.6 0.0 0.0 3.0 3.6
6. Saslc ‘3 ygsn Purnac. — 3.2 0.1 0.6 0.0 3.9 3.4 0.1 0.7 0.3 4.2
7. a.ac O ,g.n Ijraacs — ‘bin Cy, iiPlen 0.6 0.! 1.0 0.1 12.2 11.3 0.3 1.1 3.1 13•,3
8. Oo.i l .er’,, Purnac. • 4. ? 1.4 0.1 3.3 3.3 1.9 1.7 3.1 3.3 3.3 t 5
9. $I.crrfc Furnac. — S.uI—4. P 0.1 3.3 0.0 0.0 0.1 0.1 0.0 0.3 0.0 3.2
10. OIICTrIO Pu ’ac • 4.? 3.5 0.1 0.7 0.6 9.0 3.9 0.I 0.7 0.7 9.4
II. V.aii. 0.qasiliig 2.4 0.0 0.3 0.1 2.6 2.5 0.1 0.2 3.1 3.0
C a l? I iq
2. ConPiq ua Casllaq 9.3 0.1 0.7 7.6 11.1 3.1 3.3 14_5 3Q 7
. ? ‘O ul
3. Pp(upu, — ‘4. cir4wi — Carbon —7.0 0.0 -0.1 0.3 .7.1 —6.9 0.3 -3.1 0.0 -7.1
4. PrImary — Scars., — CarDon —24.3 0.0 —1.4 0.0 —23.9 .27.6 0.3 —1.3 3.0 .29.4
I !. Primary - ‘4. Scirsurs — So.cIalPy —0.4 0.0 0.0 0.0 -0.4 —0.5 0.0 0.0 0.0 -0.9
IS. Primary • Scars.,, — Soiclally —1.1 0.0 0.0 0.0 —I.? —0.7 3.0 3.0 3.3 —0.7
I?. Sec?Ian — CarDon .2.9 3.0 .0.3 0.1 3.2 3.5 3.0 —0.4 0.0 4•3
8. S.cPIc ,, • Sa. cIaIi. 0.3 0.0 0.0 0.3 .0.3 .0.5 0.0 3.3 ‘3.0 0.3
6. ‘Ia ? • Car son — SPr lW S tia.? .7.9 0.0 .0.3 0.0 —1.2 .11.? 0.0 Ø.4 0.3 —11.6
20. ‘I i ? — So. cIa i?y — S?rls/9a, ? 0.1 0.0 0.0 0.0 0.1 0.1 0.0 0.0 3.0 0.?
21. Flap — Car Son — Play. —I .! 0.0 —0.2 0.3 —1.7 .2.? 0.3 —0.2 0.0 —2.3
22. Flar — SO a 5IaI?’. — 0.2 0.0 0.0 0.0 .0.2 .0.3 0.3 0.0 0.3 -0.3
23. Dl 5 £ — Cai .so . 1.3 0.0 0.0 0.6 2.3 1.4 3.3 0.3 0.6 2.?
24. P 1 0 . 4 ijo. • So.cIaily 0.1 0.3 0.0 0.1 0.3 0.1 0.0 0.0 0.1 3.2
Sal? Ouy’i Ca.cat
25. OxIdIzlrq — 3arcii • 9 . .1VPl.?. 0.1 3.0 0.3 0.3 0.1 0.1 0.3 0.0 3.0 0.1
26. QxI4lzIng — ShoD — dfWIre 0.0 3.0 0.0 0.0 0.’ 0.0 0.0 0.3 0.3 0.1
27. OxidIzing — 3a ca — PIGs £ luSh 0.1 3.0 0.0 0.3 0.1 0.1 0.0 0.0 3.3 0.1
28. OxidIzing — Can1Im ui 0.? 0.0 0.0 0.0 0.1 0.1 0.3 0.3 0.3 0.2
29. Dadudlng — 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
30. R.siclng • CanPimious 0.0 0.3 0.0 0.3 0.0 0.0 0.0 3.3 3.0 0.3
SCV4APIO 2
1983
19• 3 I I
1990
IchePImi a d)
-------
ifiibI? 21 (COnYlnuid)
SCVIARIO 2
,g. I c i 4
1q81 1990
Subca?iqcry
f
SAT
SES
M 5
crui
T
SAT
.lp$
r 0 ,.i
*14 11 Ins Cls.’inq
31. 8i1th 50.2 10.0 50.0 50.3 50.3 50.0 50.0 53.3 I $0.3
32. Oonvlnuou$ .1 0.0 0.0 t.2 1.3 0.0 0.0 .3.0 1.3
Cold OoiIInq
33. Slngi. Spatid — q.c ircul.,Ion 0.1 0.3 0.0 0.0 0.2 0.1 0.0 0.3 0.0 0.2
54. ,i?l—SPand — scl r iliPi 0 n .0.3 0.0 0.0 0.0 —0.4 .0.5 0.0 0.3 0.0 .0.9
31. ounutIon 1 , 1 0.0 0.0 0.0 1.1 1.3 0.0 0.0 0.0 ‘.0
36. 51191. S?ind - Dir.cr *esllca?Ion 0.3 0.0 3.3 0.0 0.3 0.3 3.0 0.0 0.0 0.3
37, i pi_5 — OIr,c? *ooi ic .?i l 0.4 0.3 0.0 0.0 0.6 0.3 0.3 0.0 0.3 0.5
38. cold Pies S — ar.r 0.3 0.0 0.0 0.0 0.3 0.3 0.0 0.3 0.0 3.3
39. Cold & ?uc — 311 0.2 0.0 0.0 0.0 0.2 0.2 0.0 0.3 0.3 0.2
Sulfuric Acid !c4lng
40. !Pri /Shs.’/Pla?s — ‘i.jlr.l iziPion 23.3 0.0 0.3 0.0 28.7 30.3 0.0 0.3 0.0 30.6
It. d/ IrWColI — Mug?r il lfl?io i, 3.5 0.0 1.5 0.3 5.5 4,1 0.0 1,9 0.0 5.0
42. Sir/Si I I.r/1i • ‘lsj?r$l iZ Pion 4.0 0.3 0.1 0.0 4.2 3.7 0.3 0.1 0.0 3.9
IS. °I . & Tu0 — ‘4. ,?rui i a?lcn 3.4 3.3 0.6 0.0 4.4 3.9 3.0 3.6 0.3 4,3
44. S?rli/Sh..?/P iai. • A i4 sco’,.ry 0.0 0.0 0.0 1.4 .4 0.0 0.0 3.0 1 3 1,5
41. od/’dIrWCol I • Acid 3.1 0.0 0.0 0.3 0.4 0.1 0.3 0.0 0.3 0.4
44, Sir/9IIl.r/Sl — Acid v.ry 0.0 0.3 3.0 0.0 3.0 0.0 0.3 0.0 3.3 0.0
47. I • S lubs • ‘dO Rs vurp 3.0 0.0 0.0 .3 1.3 0.3 3.0 3.0 ‘.3 1.3
nvOrOcIIIorIc ¼1d • 1c4l 1 ng
45, SPri./5J ..’/Pl.’. — luutr .lIzaPIc n 36.0 0.0 1.3 0.0 37.3 38.8 0,3 .4 0.0 ‘0.4
49. od/ lr./Col I — ‘Is,,rul lzrrlen 3.4 0.0 0.4 0.3 0.7 0.3 0.3 3.3 0.3 0.6
10. Pta. S ruo. — I.,trvl iZI?l Ol, 0.3 0.3 0.0 0.3 0.3 3.3 3.0 0.0 0.3 0.3
Si. Sfrlp,’Sl,s.i/Pla?. — AcId sqsniiiPion —4.6 0.3 0.0 0.0 —4.5 —4•3 0.0 0.0 0.0 —4.3
Cc.alnutlon Acid Pic,il Inq
52. 3,rcli — SerI./Sl ,..,/Ot.i. — Ma,prsl i ?Ion 0.5 3.3 0.0 0.0 0.1 3.9 0,0 0.0 0.0 0.9
93. 3O41?iie ii3 — 5Prl /5l ..r/Pl.r. • lSj ril i4u?t t 5.1 0.3 0.3 0.0 3.2 9.3 0.3 0.3 0.0 5.4
54. lcd/’IIre#toi I • u.a,r.l Igatlen 2,0 0.0 0.1 0.0 2.l 2.I 0.0 0.2 3.0 2.3
95. Sir/SI ll.?/3Jo — •I.ulral Izilion 0.3 0.3 0.3 0.0 0.6 0.3 0.3 0.3 3.0 0.6
36. ‘las S luas — ‘ sr,rul ilallOn .4 0.0 0.1 0.0 .3 1.4 3.0 3.1 0.0 1.5
f CoiPing
37. G.lv.nlzlnq — ‘ ScruaSure — SPri / IseiiIIIsc. 1.1 0.0 0.1 3,3 .2 1.3 0.0 3.1 0.0 .3
58. G.lv.nlzing — Scrubb.vi — 5trI /Sii..?/Miic , 0.9 0.0 0.0 0.0 1.0 1.3 0.3 0.0 0.3 1.1
59. Gslv .nlalnq — Scruob.re — 4ie. Prod./!nlI...rs 0.3 0.0 0.0 0.3 0.3 0.3 0.0 0.3 0.0 0.3
so. coi .ni i 9 — Sc aSirI — lirs PPOd./Fls1.nsrs 0.1 0.0 0.0 0.0 0.2 0.1 0,0 3.0 0.0 0.2
ii , 1 II ’lIs • ‘ 5cr bun — Sfrl ,/ S I i..P/NI.c. 0.0 0.0 3.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
62. T.eu, — 5cru 5 , • SPrla/Slisel/ Ilac. 0.1 0.0 0.0 3.0 0.1 0.1 0.0 0.0 3.3 0.1
63. O1n.e P0P IIS — ‘d 3cruab s • 5rPlo/ i..imi.e 0.! 0.0 0.0 3.0 0.1 0.1 0.3 0.3 3.3 0.1
54. Qsn .e u.? 1 1, — Scrubo.rs - SPrl /S ) ,s,t IIla 0.3 0.0 0.0 0.0 0.0 0.3 3.0 0.0 0.0 0.3
55, 0Pnsr l.’si, — ‘d 3cruo5qr — lire ? 4./f.ip,n .i , 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
66. OPliur ,aIi — Scriio.ri — lire Prod./!..Pser, 3.0 0.0 0,3 0.0 0.0 0,3 0.0 0.0 0.0 0.0
$129.4 512.4 510,1 315.7 $167.4 1126.9 $13.3 $10.4 £27.8 $178.1
laPs: Co . i sep let i04 ?O P0fIia áS P0 raindliig.
Saur u ?1.(3t,.l) l Id #ics/ IIqlin lii9 cast setisetes.
-------
Exhibit 22
PTm(Steel) FINANCIAL MODULE
Source: PTm(Ste.I).
-------
(ehIbli 2.1
DASEI II ( 1EVENUI I 1IQU IIIIItNIS
1981-1990
lnIIIIo ts of 1900 80$ lore)
SC8NAAl0 I
1901 $962
$904
I S O,
1906
IsIs . Tie
.c.I loss s .d
Ilsi staninc. 1ep. . .s
CspIf.I-4 1.IsI.d Cisergel
0 .p r.clst Ins
Prop.rl taco.
Net Int.rc.I £ ‘9 5001•S
Inc 7. ...
Aclual
0.1 scrod
Net Inc Il.quIronts
SubtolsI
Tol ii
1567 $900
I 1,621.2
,I30.6
2,010.6
490.0
‘5,.,
1,093.9
00.0
1 .499.
$ 6.125.?
140,007.6
1909
I 1,719.1
15,999.0
1,992.5
460.5
945.1
0SI.e
92.0
l ,2 52.5.
$ 5,902.9
1l3 ,30 .0
$ I 06I.6
39,166.0
I • 962.0
412.1
912.9
940.4
150.3
I • SI )b.0
1 9,062.2
$46,090.9
$ 2,225.9 $ 2,261.4
11,916.6
40,650.0
1,966.0
411.0
910.7
075.1
204.0
1,276. I
$ 9,722.9
140,277.5
$ 2,007.4
42,424.0
1,999.1
450.1
920. I
1,154.6
260.0
1,100.2
$ 6,152. 1
$50,964.9
$ 2,053.6
45,65L2
1,905.3
454.5
909.7
039.3
309.0
1,191.0
$ 9,905.4
$91,215.2
$ 2,103.5
45,552.2
1,923.1
456.0
929. I
602.0
260.0
“‘59.4
$ 5,529.5
192,905.2
1 2,162.0
16,566.4
I,957.1
462.4
95’.’
972.4
207.1
1,295.0
$ 5,929.9
$54,450.2
47,497.2
2,010.0
499.7
962.7
911.2
331.4
‘.549-7
$ 6,544,7
$96,061.0
40,105.1
2,013. I
SI’-,
962.0
169.5
428.)
1,251.0
$ 5,991.6
$96,962.1
SCEIIAftIO 2
1901
$982
1901
1904
$905
1906
1967
$906
19 1 19
$990
S .l .. tee
$ 1,626.9
$ 1,699.6
$ 1,706.0
$ 1,619.1
1 1,915.0
1 1 .910,5
$ 1,015.0
$ I,9470
$ 2,124.0
$ 2,090.0
Op.ret lone end
N.Inlenenc. £span ..i
39,220.9
55,910.6
37,249.6
40,065.3
40,020,6
40,202,9
)9,42L 1
42,050.4
45,309.9
49,572.9
Cmpltsl—H.Ietsd Osergos
lkpr.c letlon
Prcpsrtt loss.
N sf Intermit Esp.noas
Incus. To,,..
ACtueI
fJ.Iwrod
2,039,1
192.3
939.6
1,092.6
02.9
1,999.0
171,5
943.0
901,5
91.3
1,966.5
471.0
954.5
155.2
64.9
1,965.2
409.1
919.0
691.5
197.3
1,972,1
461.9
901.4
022.2
217.4
1,996.)
449.1
002.1
5414
330.0
1,911.9
430.1
062.2
316.0
290.6
1,913.5
140.2
046.4
640.5
260. 1
1,930.5
441.1
045.5
1 , 1 1 14 .1
112.6
1,914.5
192.9
032.9
701.4
310.5
11.1 Inca.. Ilequ$r nte
1,495.1
1,213,4
1,113.6
1,112,1
1,011. ?
016,9
641.6
936.2
1,460,9
1,091.9
SubIo loI
$ 6,151.1
$ 5,539.4
$ 5,466.0
$ 5,108,3
1 5,514.9
$ 4,902.9
$ 4,495.2
$ 5,051.1
$ 6,067.6
1 5,9I4.2
totsl
140,900,5
$42,011.0
$44,482.5
$47,532.6
140,259,5
$41,115.9
141,190.0
149,042.1
151,901.5
152,845.1
Susrrs. PIodS, ..I ,.
-------
Exhibit 24
ECONOMIC MODULE
________________ FEEDBACK TO
FINANCIAL MODULE
_e_ —7
FINANCIAL
MODULE
i r ___
EMPLOYMENT— DEBT-EQUITY PRICE i I
NO CAPACITY RATIO _______________ I I
DECLINE _______ ________ I I
I
REINVESTMENT ___________ FINANCIAL I I
- Iii
IN EXISTING CONSTRAINTS I
CAPACITY ________________ I i
_______ _______ I I
r.
I I III
..J I I
I I
EMPLOYMENT ___________ CAPAC 1TY __________ COST I I
. jI
DECLINE SAVINGS
_ _ __ I
_________________________________ _____________________________________ _____________________________________________________________________________ I
PRODUCTION . MARKET I
SHARE I
4 1
____________________________ ________________________________ I
CAPACITY
UTILIZATION I
____________________________ ________________________________ I
_1_ ‘
RETURN ON —
-__ I
EQUITY
-------
ExhIbit 25
STEEL INDUSTRY EMPLOYMENT
WITM NO PRODUCTION DECLINES RELATED TO CAPITAL NSTRAINTS’
(thousands of jobs)
Scenario I
Scenario 2
iron and Steel Production 2
1985
199Q
MlscelIan us
Pollution Control
Eguloment
Air Pollution
Control Eguigmefit
1985
1990
in Place
Additions
Water Pollution Control EqulQment
P ll tiøn Controls in Place But
Not Required
9PT In Place
BAT In Place
PSES In Place
Total Baseline
Water Pollution Control Additions
456.01
1.72
4.86
1.02
0.14
1.71
0.02
0.10
465.58
0.29
0.06
0.03
0.14
0.52
466. 10
449 • 59
1.71
4.60
1.32
0.12
1.65
0.02
0.10
459• II
0.26
0.06
0.03
0.50
0.85
459.96
449 • 3 1
I .59
3.05
1 .65
0.’2
1 54
0.02
0.10
57.48
0.27
0.06
0.02
0.18
0.53
58.01
412.99
1.59
2 • 92
1.59
0.13
1 59
0.02
0.09
420.92
0.26
0.06
0.02
0.34
0 • 68
421.60
un I OOITIOfl5
BAT Additions
PSES Additions
NSPS Additions
Total Additions
Total Employment
‘Assumes a full 85 percent tverket share; Exhibits E—4, E—6, E—8, and E—10 In
the Executive Summary include the effects of production declines.
2 lncludes process—related direct and indirect enployees only.
-------
ExhibIt 26
STEEL ENERGY CONSLJ PTION WITH NO PRODUCTION DECLINES
REL TW TO CAPITAL CONSTRAINTS
1980—1990
(Cuadrillion Stu)
SCENARIO 1 _________ —
1980—1985 1980—1990
Iron and Steel Production
Coal 8.142 15.002
Other Fuel 4.289 8.082
Electricity 3.130 6.160
Total Consun tion 15.560 29.244
Self-Generated Process Gas 3.405 6.135
Net Consun tIon 12.155 23.109
AIr Pollution Control Equipment 0.251 0.514
In—Place Water Pollution Control Equipment 0.059 0.111
dater Pollution Control AdditIons
BPT dditions 0.003 0.009
BAT Additions 0.002 0.005
PSES Additions 0.000 0.001
NSPS AdditIons 0.003 0.011
Total Water PollutIon Control AdditIons 0.008 0.026
Total Net Energy Consun tlon 12.473 23.760
SCENARIO 2
1980—1985 1980—7990
Iron and Steel Production
Coal
Other Fuel
ElectrIcity
7.860
4.750
3.042
14.155
7.631
5.878
Total Consun tion
15.051
27.604
Self-Generated Process Gas
3.289
5.792
Net Consun tion
71.763
21.8 12
Air Pollution Control Equipment
In—Place Water Pollution Control Equl nent
Water PollutIon Control AdditIons
BPT AddItIons
BAT Additions
PSES Additions
NSPS Additions
0.242
0.059
0.003
0.002
0.000
0.003
0.478
0.108
0.008
0.006
0.000
0.010
Total Water Pollution Control AddItions
0.008
0.024
Total Net Energy Consunptlcn
12.072
22.422
Source: PTm( Steel).
-------
Appendix
METhODOLOGY AND SUPPORTING E IBITS
This Appendix further explains the methodology used in
the analysis described in this report and supplements the
final report with additional data collected for the analysis.
The majority of the research techniques are incorporated
in PTm(Steel), a policy—testing computer model of the iron and
steel industry developed by TBS. PTxn(Steel) is organized into
four major modules, which model the production costs, the
pollution control costs, the financial characteristics, and
the economic condition of the industry for the period 1.976 to
1990. The four major modules are described in the following
sections. Specific data collected for each of these modules
are included in the exhibits following this Appendix.
PRODUCTION COSTS
The first module in PTm(Steel) calculates production
costs. Production cost estimates ar based on the production
process flow diagram shown in Exhibit 3 of the main report and
a production cost model of the iron and steel industry.
developed by the AISI. This information-—which describes the
resource requirements and process yields of 28 production
processes——is combined with a linear program to translate the
annual demand for finished steel products into the production
levels and resource requirements of each production process.
Using the production process levels along with AISI’s current
inventory of steel production facilities, estimates of future
facility retirements, and the sustainable utilization rates of
production processes, PTzn(Steel) allows the capacity additions
needed to maintain production levels to be estimated. The
physical data described above are used to develop cost esti-
mates for operations and maintenance CO&M), capacity addi-
tions, and target levels for capital expenditures on existing
capacity.
The data that are used in the production cost module,
which were provided by the AISI, include process—specific
yields, sustainable utilization rates, capital costs, and
reinvestment rates for existing equipment (Exhibit A—l). The
resource requirements for steelmaking are shown in Exhib-
it A—2, the process inventory is detailed in Exhibit A—3,
-------
A-2
and the plant size breakdown appears in Exhibit A-4. The
technological changes in resource requirements expected in the
future are shown in Exhibit A—S. These projected changes
represent TBS’s best estimate of past and current trends. The
prices of resources used to develop operating costs are shown
in Exhibit A—6.
The methodology used to estimate future shipments of
steel products is described in Chapter I of the main report.
This methodology uses the mix of finished steel products shown
in Exhibit A—7. Because PTm(Steel) models only 87.7 percent
of steel production activity, the total steel shipments esti-
mated in Chapter I are reduced accordingly in PTm(Steel) cal-
culations. The cost and financial data praserited in this
report also reflect the characteristics of this segment of the
industry.
POLLUTION CONTROL COSTS
Costs for three categories of pollution controls are
estimated in the current analysis: air pollution controls for
steel production processes, air pollution controls for coal-
fired boilers operated by the steel industry, and water pollu-
tion controls. For production processes in each category,
annual capital expenditures and O&M expenses are calculated
from the costs associated with model pollution control facil-
ities developed by NtIS/Rice, from the percentage of steel
production facilities in compliance with a regulatory require-
ment as of a particular date, and from the total number of
production facilities in existence as of a particular date.
Additional details of this costing methodology are provided in
Chapters II and I I of the main report.
Facilities in existence, by process, are derived from
data in the production cost module. Cost and coverage data
for air pollution controls for steel production processes are
provided in Exhibit A—8 and Exhibit 10 of the main report,
respectively. Cost and coverage data for air pollution con—
.trols for boilers are provided in Exhibit A—9. Cost and cov-
erage data for water pollution controls are provided in Exhib-
its A—l0 and A—li. Because the industry subcategorization for
water pollution control cost data is different from the 28
AISI production processes, conversions of cost data between
the two are necessary. This cost conversion is shown in
Exhibit A-12.
-------
A-3
FINANCIAL CRARACTERISTICS
The financial modeling of the iron and steel industry is
depicted in Exhibit 22 of the main report. The financial
module traces the flow of cash, the income statement, and the
changes in the balance sheet that result from costs imposed on
the industry, including the costs of debt and equity capital.
An additional description of the operation of the financial
module is provided in Chapter IV of the main report. Exhib-
it A—l3 specifies the major assumptions incorporated into the
financial module.
The principal inputs to the financial module used in the
current analysis include the capital and operating costs of
production and pollution controls, the cost savings associated
with the transfer of production from inefficient facilities,
and the issues of and returns on common equity capital. In
addition, the investxnent for modernization of existing facil-
ities can be altered as necessary in order to respond to the
capital constraints experienced by the industry. These inputs
allow the financial module to evaluate the industry’s various
responses to increased costs in the areas of investment and
financing. The sectoral cost escalation factors used to pro-
ject costs into the future are provided in Exhibit A—14. Ex-
hibit A—15 provides these factors for the higher inflation
rate sensitivity analysis.
ECONOMIC CONDITION
The modeling of the economic condition of the steel in-
dustry incorporates a number of relationships between the cost
and financial structure of the industry and its economics.
These include the relationship between capacity utilization
and return on equity, the relationship between capital invest-
ment and production capacity, the relationship between shifts
in production away from inefficient plants and cost savings,
and the relationship between reductions in production and
declines in employment. More information on the relationships
used in the module is provided in Exhibit A—l6. The detailed
flows of the PTm(Steel) economic module are shown in
Exhibit 24 of the main report.
Because of the complex effects that operating costs,
return on equity, and capital investment in existing facil-
ities have on the financial characteristics of the steel in-
dustry, it is necessary to operate the financial and economic
-------
A-4
modules repeatedly in a feedback loop, with the output of one
module becoming an input to the other. This procedure ensures
that constraints calculated by the two modules are consistent.
-------
Exhibit A—i
YIELDS BY PROCESS, MAXIMLJ4 SUSTAINABLE UTILIZATION, C.PITAL COST OF ROUNDOUT
CAPACITY ADDITIONS, AND REINVESNENT RATE FOR . ‘CDERNIZATION BY PROCESS
PrOCeSS
Yield,
Tons Out
Per Ton In
Maximum Sust ln—
able UtIlIzatIon
(percent)
1978 Do
Ton for
Capacity
lIars per
Roundout
Additions
Percentage of
Initial Investment
Reinvested Each Year
Raw Materials Preoerat Ion
Ore Yard 1.000 90.0% S 11.0 1.0%
Coal Yard 1.000 90.0 11.0 1.0
Scrap Yard 0.980 90.0 7.0 1.0
Sinter Strand 1.000 90.0 31.0 1.0
Coke Ovens 0.599 90.0 172.0 3.0
I ronmak I ng
Blast Furnace N/A 90.0 72.0 1.3
Steelmak ing
Open HearTh Furnace N/A 90.0 N.A. 1.0
Basic Oxygen Furnace N/A 90.0 39.0 1.5
Electric Furnace N/A 90.0 40.0 1.0
Vecutmi Degasslng N/A 75.0 N.A. N.A.
Direct Reduction N/A N/A N/A N/A
Casting and Forming
Continuous Casting
Billets and Slcome 0.952 90.0 80.0 2.0
Slabs 0.943 90.0 84.0 2.0
Conventional Casting
Ingot Casting 0.980 90.0 7.0 2.0
Breaking—Blooms 0.870 85.0 96.0 3.0
Breaking——Billets 0.862 85.0 48.0 2.7
Breaking—Slabs 0.833 85.0 85.0 3.0
Finishing Mills
Heavy Strjcturals 0.833 75.0 480.0 3.0
Hot Rolled Bar and R d 0,901 75.0 185.0 5.1
Wire Product 0.952 75.0 576.0 5.0
Cold Finished Bar - 0.901 73.0 225.0 4.0
Seenless Pipe and Tube 0.833 75.0 615.0 4.0
Hot Roiled Strip 0.952 85.0 113.0 2.0
Pickling and OilIng 0.943 85.0 47.0 1.7
Welded Pipe and Tube 0.901 75.0 287.0 6.0
Cold Relied Strip 0.877 75.0 266.0 2.5
I-lot Coating—Galvanizing and Terne 0.962 75.0 356.0 2.0
Cold CoatIng——TIn and Chrene 0.962 75.0 213.0 3.0
Plate 0.794 75.0 189.0 1,0
N/A • Not applicable.
N.A. Not available.
Source Arthur D. Little Industry Survey, 1978; AiSi AdvIsory Committee.
-------
IwbiblI A- I
IIISOIJICE RIQIJIREI4NIS ION SrE(LHA(IPd
1916
PhASE I I4UX LSSES
Ptioa. I Proc.aaaa
Inputi (toni)
Or.
Coal
Scrip
Slntor
Cob.
Pot 1.1.
ILl Metal ’
Ken 5 10.12
Or. lord
5.00
-
-
-
-
-
-
Coal Yard
-
1.00
—
—
—
—
—
—
Scap Yard
SIntor limed
-
—
—
—
1.02
-
—
l.00
-
—
-
-
-
—
—
—
Coke Oven
-
1.43
-
-
—
—
Olaat furnace
0.19
-
0.02
0.43
0.34
0.66
-
—
Open ii.orIb Furu.ace
-
—
0.30
—
-
-
0.63
0.19
—
-
Oaolc Oi.y9un furnace
-
—
0.54
—
-
-
—
—
El.clrlc lumnoc.
—
—
1.01
—
-
1.02
ln9ot Ce1 1 1n9
—
—
-
—
-
—
—
-
-
1.06
Continonu. C.. 1 1n 9 —-St.ba
-
—
—
—
—
5.05
Contleuoui Co.iIiig——DtlI .ia
—
—
—
—
—
and bioowa
Labor Othar Raw
lena-hour i/ton) Overhead and Sell li ly. Meter 1.1 MeIn-
-— — -- General and Wat.r S.naac. end
Adalolatralivo Power FusS (thoulend MlScolIenocua Suep (LI
Phaa. I Proc.sa.v Swell ILdIuo Lary. (tractIon o• labor Costi) (hI( ilton) (I9Iitu/tonI gailoni/loel Coil& 3 (I/toe) (lone)
Ore Yard 0.10 0.01 0.06 0.33 3. 50 - 0.01 0.64 -
Cool lard 0.01 0.06 0.03 0.69 4.35 0.0) 0.03 1.00 -
Scrap Yard 0.33 0.19 0.56 1.13 4.65 — 0.04 5.30 -
SInher Slrand 0.51 0.50 0.26 0.13 45.16 5.31 0.56 2.91 -
Coke Oven 0.56 0.3) 0.43 0.13 21.60 (7.70) 3.35 2.41 -
Slait Furnace 0.39 0.35 0.21 0.33 24.30 (4.57) 10.93 1. 59 0.01
Open Iluarib Furnace 1.30 0.93 0.92 2.04 25.74 3.41 6.10 10.41 0.02
Mdc Oeyg.in Furnaca 0.43 0.43 0.46 1.77 30.44 0.22 2.51 54.68 0.02
Electric Furnac. 1.26 0.01 0.67 2 _ 49 b 409.48 0.24 3.50 11.39 0.01
Injot Casllng 0.19 0.06 0.02 1.99 - - - 3.02 0.02
Cuiilliu.iub Ceatlay--Siabs 1.02 - 1.01 0.64 49.00 0.19 2.00 6.65 0.04
Contlnuowi ( .ollny--Olllats 0.65 0.40 0.34 1.94 49.00 0.19 2.00 5.39 0.01
aol tllo.ies
Icunt lnuadl
Pay. I ol 2
-------
Eahlbit A—2 Icoiltlnu ed )
PIIAS6 II I I 1LCESSIS
Poijo 2 ol 2
Inputs lions)
Cold
hot ShrIp Plckl.d finished
lhaso II ProcosSos in.jot s Olliota Slabs Oar 14 )11 Hill SIsal Stool
Irboory flr.aPdue,.—-Blooas 1.13 - — - — - - -
PrImary brsakjown--OllIohs 0.50 0.66 - - — - — -
PrImary reaWoaii— -Sl .bs 1.20 - — - — — — —
IluavV Siructurals - 1.20 — - — — — -
lot Aol l.J Oar I Aod — I. I i — — — — —
WIre Prud..ct - - — - 1.09 — — —
Cold rInishad liar - — — — 1.09 - — —
Semaloas PIp. 6 feb. - - 1.20 - - - — -
Hot Rolled Strip - - — 1.05 — - — —
PIcklIng 6 0111.9 — - — - 1.06 - —
Welded PIp. I tuba - - — - — - I.,, -
Cold Iloducilon - - — — — - 1.14 -
1101 Coat iny --Oelwanuzln i) I tsr .. - — — — — - - 1.04
Cold CoatIng-—SIn - - — — — - — 1.04
Plat.HIlI - - — 1.26 — - — —
I ol .o1 Other Rae Ha-
lena-hours/ion) Ov.rliead and SoIlIng. orIole
—— Gosorel and Water ieneiics and
Adelnlsirat l v. Pamar u.l ithousand Hiicoii .nsous Scrap (k.t
Phase II Procssaas Small tiadlue tory. unctIon oh labor cults) hIW /ton) (4dItu/ton) gehlonS/lofll Coats 3 ($/toni lion.)
PrImary lWeaMown--OIouma 1.22 0.69 0.50 1.0) 42.00 2.37 1.40 9.79 0.13
Primary Ik-oai .down-— Olilols 3.13 0.12 0.42 1.01 42.00 2.99 1.40 0.29 0.13
Prl..sry Ilr .aldo . .n—-Slebs 1.25 0.31 0.25 1.94 42.00 1.3) 1.40 4.34 0.19
Ho se 5 btructurela 0.60 0.60 0.33 0.63 160.00 1.76 4.00 6.12 0.20
1101 itul led lIar £ Hod 6.34 1.65 0.02 0.06 93.20 2.90 9.20 0.66 0.09
WIra Product 3,43 1.69 3,31 Ii ) 420.00 — — 11.76 -
Cold Iiai.t.ad Oat — 6.38 1.79 110.00 3.20 . 19.00 —
Suanla t Pip. £ lid.. 10.33 2.55 1.30 1.0) 224.00 6.13 0.66 2.23 0.16
lInt Rolled StrIp 1.07 0.31 0.40 1.03 116.20 2.00 3.10 0.06 0.04
Plckiln.j I OIlIng 0.34 0.31 0.30 1.15 12.60 - 0.13 2.62 0.04
Welded PIp. & lube 6.10 1.10 1.96 0.59 90.00 6.00 5.00 15.02 0.10
Cold lioducllon 9.00 1.00 0.96 0.91 164.00 1.62 0.26 0.32 0.12
1101 Coal hng--Oaieanlilny & to, ii . 1.94 1.24 1.01 1.17 61.20 1.05 1.20 45.94 0.02
Cold Coatiny--Iln 0.93 0.18 0.69 1.72 140.40 2.20 4.70 81.04 0.02
Plato 14111 3.29 7.62 3.04 0.73 154.40 6.60 9.50 11,0 0 0.25
hh,l medal is d .Ilnad as lb. pI j ho., Iron tho blasl lurnoca.
sled I . doIlrn.d as it ... sue of aultan stool lonn.sJ.is tin uacli d l II . . sloul I. .. no.a typos. ln ludIng opan baa. lb. basIc oey.jnn lw-nec . ., and
uluclrlc lernac..
3 Inciu,Iu cost oh foOl n.l wale.,
AmUunlO oh in., slot.., and pullols cie.binud to bra slnler In a ratIo ut one tOn ol row onlorlol In oo. ion ol slnlur.
Small Iwnncu. only, ln.l ,..s hr eadien and ia..J. bureoLos ore 2.0)) and 2.20, respucIluul 1 .
S. . .. -u A, lb.. I I. 11111.. ln,lo l. y Snrvny, 19111.
-------
I ilbiS A—)
1916 IISIL&SS INV [ NIOIIY——N 1IIHEI$ (ii WillS
Sa ul Medlia
Pracan.
P,a 1949
19)0-1966
1961—1970
P,a-5949
1950-1966
196I- 1976
Pr.- 1949
1950-1966
1961-1910
( l i v Met.rlala ñ.par.tioa
SI
2
0
S
5
0
2
2
0
.Yard
C o alYard
6
4
0
4
9
0
5
2
0
Scrap Yard
1
iS
6
21
12
5
4
7
S
ShIer SSrand
2
1
2
2
9
S
5
4
S
Cob. Ov.ni
23
52
1
9
16
9
S
II
I i
Iro a n ak log
Suit Furnac.
42
4
3
4 1
$0
I
I )
2)
1
SIa.l.ak l .g
an II..rth urn.c.
4
0
0
I
1
0
3
3
0
Slab Sc Oeyg.n Furnac.
0
1
0
0
6
S
0
S
I
tl.ctrtc Furnoc.
4
10
1
6
6
1
0
6
9
Canting and FumIng
Continuous Casting
0111.1. and Olno...
0
0
S
0
0
4
0
0
6
Slab .
0
0
4
0
0
0
0
0
6
Convaut bail Coat lag
Iiigoi CustIlig
II
9
3
3
12
1
9
12
4
0r. .klng-- 0Io
5
7
0
3
9
0
5
5
0
Bra .klng——8IIl.t .
4
5
1
10
5
0
5
9
0
Or.ak lng—-Sh.b s
6
5
I
9
5
0
4
1
2
FinIshing Mliii
IIaavy Structural.
4
I
0
3
2
0
9
0
0
hot I$oSI.d Oar sad Nod
4
5
0
12
4
5
59
3
i
WiraPruduct
I
S
I
9
2
0
5
I
I
Cold Finished Oar
0
0
0
9
5
0
2
0
2
5.anloas Pip, and tuSla
5
0
2
5
S
0
3
I
0
Slut Rolled StrIp
4
6
S
9
5
5
2
6
I
Pickling and Oiling
6
1
2
3
9
2
2
5
5
Welded Pip. and lube
5
2
0
0
5
0
0
5
0
Cold Rolled StrIp
6
4
2
1
1
S
2
6
2
Slut Coat Ing--O.Ivanla leg end
1.rne
I
6
3
2
4
2
2
6
0
Cold Coating-—bin end Clwo.a
2
3
0
I
5
0
I
3
I
PIeS.
2
2
S
5
2
S
2
2
I
Source. Arihur 0. littI. lndui ry Survuy 1918.
-------
EgtIibti A—4
etMr SIZE IliLI4Cl)O I I I! l YE&SS
1976
icapaclty in chIle . .. oi tofu
SealS Hudlea
______ _______— ———— —— _______ ________ ________ _______ _______— ______——- Grand
Pr. -I949 1910-1966 1961—1976 Pre-1949 1930-1966 1967-1916 Pre—1919 1930-1966 1961-1976 Pre-1949 5930-5966 1961-1916 total
Raw Met., lali Preparation
. Yard 20.30 3.70 — 31.14 19.72 — 09.51 19.19 — $39.21 56.65 — 111.84
Coal Yard 6.1 1 4.12 — 10.20 13.16 — 91.91 22.00 — 48.94 39.20 — 00.22
Scrap Yard 1.40 2.61 1.20 27.39 17.79 9.20 1.11 20.72 2.19 50.96 96.12 6.13 1 5.6 1
Sint.r Strai.d 1.0? 3.14 1.01 2.92 13.13 4.58 5.51 11.24 1.11 PJO 10.55 8.16 46.19
Cob. Ovani 6.40 8.80 1.91 4.20 1.62 2.10 .93 12.54 14.15 12.69 29.06 $8.40 60.5?
iroi ak i.q
Oleit Furnace $1.38 .65 0.03 31.11 1.13 0.11 14.91 27.71 9.71 65.60 32.09 50.02 100.1$
Sl..l..k lng
an Hearth Furuiece 1.40 — — 1.41 1.04 — 8.20 9.91 — 11.01 56.99 — 21.96
Uaslc Ousygan Furui.c. — 9.39 — — 56.03 13.99 — $9.01 53.17 59.45 4 . )0 06.11
Electric Fur...... 0.34 $.05 0.50 2.99 2.95 1.49 — 9.62 1.41 5.29 9.60 11.44 24.55
Ceiling and Vor.iuuy
llnuoui CastIng
61 11.1. gad Ulooea — 0.90 . — 1.16 — 3.69 5.15 1.15
Slabs — 5.4) - - — 9.80 11.25 11.25
Co u.nl boat Cash lug
infJUt CaitIng 7.06 2.34 0.19 4.11 19.09 1.99 71.67 45.52 56.94 29.30 66.95 21.60 121.93
Br.akinuj-—bboeas 1.59 2.11 - 7.65 1.4) — 6.01 10.01 — 10.29 16.15 - 21.02
Bu .nklag-— Ohii ehi 0.41 0.41 0.11 6.81 5.41 — $0.05 8.12 — 51.51 8.94 0.11 25.98
fireaki ng——Slabi 2.19 2.55 0.45 $9.29 9.56 — 15.03 36.21 5.60 50.95 37.90 6.03 14.92
FInhabing Mlii i
Heavy Struclureis 1.61 0.4? — 2.39 1.36 — 9.11 — — 11.19 1.78 — 54.91
11,1 blot bad Bar and ilud 0.32 0.41 — 4.46 1.49 0.11 14.11 5.2 1 1 2.01 19.1$ 9.25 2.44 26.16
WI,. P,oö .cb 0.16 0.04 0.04 0.90 0.16 — 1.63 0.42 0.50 2.11 0.82 0.94 1.8)
Cold flnlabiad liar .— — — 0.43 0.43 — -0.2$ — 0.34 0.64 0.4) 0.34 1.41
S.aeias, Pipe and lube 0.11 - 0.01 0.91 0.19 - 2.09 0.66 — 2.11 0.05 0.01 3.69
Slut Relied Strip 2.10 3.1) 0.52 $1.69 51.63 6.90 9.01 22.5? 9.80 72.80 56.9) $3.40 13.5)
Pi tlny and Oiling 2.11 3.16 0.91 4.95 $4.04 3.29 1.03 11.89 8.69 13.11 90.09 $2.89 99.29
Welded Pip. and Tuba 0.21 0.10 - — 1.79 — — 1.51 — 0.27 4.80 — 5.0)
Cold Bailed Strip 0.69 0.16 0.75 1.18 1.10 1.03 7. )) $6.14 1.62 13.42 73.10 0.00 46.08
blot Coabing—-Gaivauuitbn.j and tern. 0.13 0.50 0.56 0.5) 1. 11 0.96 1.41 3.42 — 2.11 3.14 0.12 0.01
Geld CoatIng--tin and Cbr . 0.10 1.04 - 0.64 1.8? — 1.24 3.2) 0.01 2.31$ 6.16 0.8? 9.61
Plate 0.51 0.5$ 0.11 0.?? 5.59 0.10 9.56 3.51 5.11 4.04 3.61 7.00 ii. ? )
Source. Arltn.r 0. Little industrial Surveys $930.
-------
Ishibit A-S
1E IA00Y 0N1E 5
1916- l990
5C€N HlO I P aq . I at 2
1916 lO ll $910 1979 1960 tOOl 1962 196) 1964 1969 1986 1967 1966 I909 1990
NJI tan Sluol Produced by lur-
1mG. lyps (peccant)
Opan Iluarlim Furnace 16.) 16.0 19.6 14.0 11.7 11.0 SO.) 10.0 10.0 10.0 9.9 0.1 0.1 0.7 6.7
Oesic Ommyyan Faineca 62.5 61.6 60.9 61.1 60.4 60.2 19.5 62.0 99.0 96.0 11.0 93.3 31.0 50.0 50.4
ElectrIc Furiseca 19.2 22.2 23.9 24.9 27.9 28.0 10.0 26.0 91.0 32.0 33.5 13.0 34.1 31.1 32.9
6111.11 and Bloaan by castla 1 .l
Malimod (percent)
Cant lauous CastIng 10.6 12.5 15.2 56.9 20.3 5.1 IS.) 19.6 19.1 16.2 22.3 26.6 37.0 49.1 55.5
Convenllanel C.aetIng 69.4 01.3 04.8 03.1 19.1 04.3 04.5 04.4 04.9 63.6 11.7 7 1.4 61.0 50.1 44.5
Slabs by Casting Itathod
(psrc.nl l
Cant Inonui Casting 50.6 2.9 15.2 16.9 20.1 25.9 21.4 29.1 34.3 11.1 11.0 19.5 11.0 36.6 31.5
Convomitlanol CastIng 09.4 67.3 04.6 03.1 79.1 14.5 12.6 10.7 65.1 62.9 62.2 60.5 63.0 61.4 62.5
Malta. Slant Vacua. Dimyassed
(parc.nIl 8.9 6.9 0.9 0.9 0.9 8.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9
Pickled hot Strip (perc.lmI c i
total tiol strip oId) 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0
Eleciricily Generated (percent
of olaciricily used) 10.4 11.1 16.2 15.9 56.1 16.1 16.1 16.1 16.7 6.7 16.1 16.7 $6.7 16.7 16.1
Colic Rata (tens per ton at
p 1 g Iron) .340 .540 .915 .530 .526 .521 .926 .524 .322 .520 .517 .514 .511 .907 .503
rues Ganvrotad In OIast
Furnaces (million tHu psi ton) 4.570 4.570 4.494 4.416 4.931 4.259 4.512 4.006 1.990 5.900 3.016 3.12 1 3.624 3.523 3.42)
(cant Inumidi
-------
E .t.lbI? A-S (contiftued)
SCENARIO 2 Pa 1 1• 2 ol 2
1976 1911 *919 1979 1980 1981 1982 1983 1984 *989 1986 1981 1988 1989 1990
IbII.o Sleel Pro.0,c.d by Fur-
nec. lypo (pecent)
Open hearth furnace 18.) 16.0 15.6 14.0 $1.1 11.0 0.5 10.0 *0.0 10.0 9.5 8.1 0.7 0.1 0.1
8a.ic Oa jjen Fwnoi.o 62.5 61.8 60.9 61.1 60.4 60.2 59.9 62.0 99.0 98.0 91.0 55.9 97.0 58.0 56.4
Ii.ctrlc lurneco *9.2 22.2 235 24.9 31.9 28.8 30.0 28.0 31.0 32.0 33.5 35.0 34.3 33.5 37.9
0111.15 end OIoc. 5 by Cs tIng
Method (percent)
ContinuouS Casting *0.6 *2.5 15.2 16.9 20.) *5.1 5.9 *6.2 16.6 16.9 22.3 28.6 31.0 49.1 55.5
Connentional CastIng 09.4 81.5 84.8 05.1 19.7 04.3 64.9 83.8 05.4 05.1 11.1 11.1 63.0 50. ) 44.5
Sleba by CeslIn9 Method
(porc.ut)
Ccnlinuoes Cs 5ting 10.6 12.5 *5.2 10.9 20.5 25.9 27.4 29.3 37.7 38.6 31.0 39.5 51.0 36.6 31.5
Convenlionel CastIng 69.4 81.5 84.0 83.1 79.7 14.9 12.6 70.7 62.1 61.4 62.2 60.5 69.0 65.4 62.3
Melten Steel Vacui Daijalsed
(percent) 8.9 8.9 0.9 8.9 0.9 8.9 0.9 8.9 8.9 8.9 8.9 8.9 0.9 8.9 8.9
I’ cb.Ied lint Strip (percent
totel hot strip sold) 12.0 47.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0
Electricity Generated (percent
oF .Iai.trlclty used) *8.4 *1.7 16.2 *5.5 *6.1 16.1 16.1 *6.7 16.7 *6.1 *6.1 16.1 16.1 16.1 16.7
Coke (lets (huuti par tons ol
ptg Iron) .540 .540 .3)3 .930 .928 .527 .526 .324 .522 .320 .911 .5*4 .51* .901 .305
Fuel Generated In Died Fur-
uiecal (dillon Dlii per Ion) 4.910 4.910 4.494 4.416 4.3)? 4.235 4.112 4.086 5.998 3.900 9.816 3.171 5.624 3.525 3.423
Source TIIS enuiIy Is.
-------
Exhibit A—6
1976 COSTS OF RESOURCES
Source: Standard & Poor’s Steel—Coal Basic
Analysis; U.S. Bureau of Mines Min-
eral Commodity Summary; Peter Marcus,
World Steel Dynamics; Iron Age ; AISI
Annual Statistical Reports ; EEl Sta—
tistlcal Yearbook ; D.O.E. MonthI7
Energy Review ; Arrhur 0. LIttle
lndu try Survey, 1978.
Ore (per ton) $24.98
Coal (per ton) 47•5
Scrap (per ton) 69.46
Labor (per hour) 11.74
Electricity (per kWh) 0.0207
Fuel (per t448tu) 1.49
Water (per thousand gal ions) 0.12
-------
Exhibit A—i
PROJECTIONS OF STEEL SIIIPI4ENFS BY PRODUCT
1916—1990
(percent of total shipments)
Product
1976
1971
1918
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
Direct Shipments of Ingots,
Blooms, Billets, and Slabs
2.8
2.4
2.5
2.6
3.2
3.0
2.8
2.8
2.8
2.6
2.8
2.8
2.8
2.8
2.8
Heavy Structurais and Rails
7.0
6.9
6.8
7.6
8.3
8.6
8.7
9.0
9.1
8.9
9.4
9.3
8.8
8.7
8.9
Nails and Wire Products
2.7
2.6
2.6
2.4
2.1
2.1
2.0
1.9
1.8
1.9
2.1
1.8
1.4
1.3
1.5
Bars and LIght Structurals
16.2
11.0
17.8
18.3
11.1
17.5
17.5
17.3
17.6
11.8
17.8
17.8
11.8
18.0
18.2
Cold Finished Bars
1.8
1.9
2.1
2.2
I.
1.9
1.9
1.9
1.9
1.9
1.9
1.9
1.9
2.0
2.0
Seamless Pipe
3.0
4.1
4.3
4.1
5.2
5.4
5.2
5.6
5.6
5.8
5 7
5.5
5.4
5.4
5.4
Welded Pipe
4.0
4.1
4.3
4.1
5.7
4.9
4.5
4.7
4.6
4.5
4.4
4.3
4.2
4.2
4.3
Hot Rolled Sheet and Strip
18.2
17.2
16.9
11.0
15.3
15.8
15.8
15.4
15.4
15.1
15.0
15.5
15.8
15.5
15.5
Galvanized Products
5.8
6.2
6.6
6.3
6.2
6.3
6.3
6.3
6.3
6.3
5.8
6.0
6.2
6.2
6.2
Tin and Other Plated Products
7.4
7,3
6.6
6.7
7.1
6.8
6.8
6.8
6.6
6.5
6.3
6 4
6.8
6.6
6.8
Cold Rolled Sheet and Strip
23.1
22.0
20.1
19.6
18.3
18.7
18.1
18.2
18.3
18.5
18.3
18.5
18.6
16.6
18.6
Plate
8.0
8.3
8.8
9.0
9.6
9.0
9.8
10.1
10.0
10.2
10.5
10.2
10.3
10.5
10.0
Source: 1916—1916; AISI Annual Statistical Reports .
1919—1990: projections based on 1960—1975 product mix.
-------
Exhibil A—8
M EL PLANT COST DATA FOR
AIR POLLUTION CONTROLS
gage 1 f 6
tO C l*• C UL SS ) *l4 44444444 ! • 44•4•44444’I 41S III
20 C PEOCO DATA FtLE
30 C . * pp...... U S*4U04*U U U U4
40 C SOURCE: SPOCAIR BINARY: PDCAIRB
50 C
60 C THE FOURTEEN COLUP4NS ARE AS FOLLOWS.
70 C 1—PROCESS NUMBER
80 C 2—ENI82ION INDICATOR (1uSTACIL2 F JQITtVE 4.NSPS)
90 C 3—4.J’IITS PER P1..AP4T
100 C 4—CAPITAL. COSTS RETROFIT A
110 C 5— 3
120 C 6—CAPITAL. COSTS NEW A
130 C 7— B
140 C 9—KWH CCNS*JPIED A
130 C 9— 3
160 C 10—LABOR HOURS CONSUMED A
170 C 11— 3
180 C 12—MISCELLANEOUS COSTS A
190 C 13— 3
200 C 14—PERCENT TREATED
210 C
220 C THE ONE HUNDRED TH!RTY fOUR ROWS ARE AS FOLLOWS:
230 C
240 C 1—FILE PARAMETERS -NUMBER 0F ROWS T FOLLOW. COLUMNS.
230 C PROCESSES. TECHNOLOGIES. STACK EGTNS. • FUGITIVE EGTNS.
260 C AND P4BPS EQTNS.
270 C 2—S 1NTER WINOBOX R 69—BOF HOT METAL TR R
280 C 3— B 70— 9
290 C 4— L 71— L
300 C 5—COKE CHARO I NO R 72—BOF C)4ARG ENO. TAPP INO R
310 C 6— 3 73— 3
320 C 7— L 74— L
330 C 8—COKE OVEN PUSHING R 75—BOW SLAG POURING R
340 C 9— 8 76— B
350 C 10— L 77— L
360 C I 1—COKE QUENCHING R 79—BOW SLAG PROC R
370 C 12— 3 79— B
390 C 13— L 80— L
390 C 14—COKE OVEN STACK R 9I—EAF SLAG POURING R
400 C 15— B 82— 3
410 C 16— L 83— L
430 C 17—COKE OVEN GAS R 84—EU SLAG PROC R
430 C 18— 3 85— 3
440 C 19— L 86— L
430 C 20--S W CAST HOUSE EM R 37—CCNT CASTING 3HS R
460 C 21— B 88— 8
470 C 22— L 89— L
480 C 22—OH REFINING R 90—CONT CASTING R
490 C 24— 3 91— SLABS B -
500 C 25— L 92— L
510 C 26—BOF REFINING R 93—SCARPING BLOOMS R
520 C 27— B 94— 3
530 C 29— L 95— L
540 C 29—EAF REFINING EM R 96—SCARFING BMS R
550 C 30— B 97— 3
360 C 31— L 99— L
570 C 32—ORE YARD R 99—SCARFING SLABS R
580 C 33— B 100— B
590 C 34— L 101— L
600 C 33—COAL YARD R 102—SINTER WINOSOX P4
610 C 36— 3 . 10-COKE CHARGING N
(continued)
-------
xIiIbit A—S (continued)
Page 2 Of 6
620
630
640
630
660
670
660
690
700
71.0
720
730
740
750
760
770
780
790
800
81.0
820
830
840
830
860
870
880
890
qco
‘to
920
930
940
950
960
970
990
990
1000
1 .010
1020
1030
1040
1050
1060
1070
1080
1090
1100
11.10
1120
1130
1140
1130
1160
1170
1180
11.90
1.200
1210
1220
37—— L
38—SINTER DISCHARGE R
39— 8
40— L
41—SINTER P1 . 10 BLDG R
42— 9
43— L
44—COKE OVEN DOORS R
45— B
44—. 9”
47— L
48—COKE OVEN TOPSIDE R
49— a
50— L
51—COKE I4ANCLINO (SCR ) R
52— a
53— L
54—SF SLAG POUR INC R
55— a
56— L
57—SF SLAG PROC R
56— 3
59— L
60—OH HOT METAL. TR R
61— 8
62— L
63—OH PUG R
64— 3
63— L.
64—OPt SLAG PROC R
67— 3
66— L
•444C it .. 14e .i-I ..i.+...
1.33 14 133030700336.0
2j 4. 1. 1.00 2174.79 .5133
4. 1.1 8273 30.39
3i 4. 1. 1. 00 3944. 04 . 4794
6.17 .8271 38.02
41 4. 1. 1.00 2213.3e .5554
1. 21 . 8495 2330. 05
31 5. 1. 1.00 282307.83 .0210
0 0 84099. 99
6i 5. 1. 1.00 8478.92 3996
0 0 1001.99.96
7i 3. 1. 1.00 8479.82 .3996
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0 0 129299.91
9i 3. 1. 1. 00 385341. 17 . 1938
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iOi 5. I. 1.00 385341.17 .1939
0 0 129299. 91
lii 5. 1. 3.90 204.99 .7631
.04 9999 1.13.51
12, 5. I. 3.90 204.99 .7631
.04 .9999 1.13.51 .6002
104—COKE OVEN PUSHING N
105—COKE GUENCP4ING N
1.06—COKE OVEN STACK N
107—COKE OVEN GAS N
108—SF CAST HOUSE EM N
109—OH REFINING N
11.0—BOF REFINING N
11.1.—EAF REFINING EM N
1.1.2—ORE YARD N
1.13—COAL YARD N
1.14—SINTER DISCHARGE N
11.3—S INTER PUG SLOG N
1.16—COKE OVEN DOORS N
11 7—COKE OVEN TOPS IDE N
110—COKE HANDLING (SCR N
11.9—SF SLAG POURING N
1.20—SF SLAG PROC N
121—OH HOT METAL. TR N
122—OH PUG N
123—ON SLAG PROC N
124—SOP HOT METAL. IR N
123—BOF CHARGING. TAPPING 4
12 —SCF SLAG POURING N
127—BOF SLAG PROC N
128—EAF SL.A0 POURING N
129—EAF SLAG PROC N
130—CONT CAST 3LT N
131—CONT CAST sLAas N
132—SCARFING BLOOMS N
133—SCARFING 8 145 N
134—SCARF 1MG SLABS N
ii
2211.99 .5061>
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0 337. 92 5244
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1.85. 22 . 7632)
6002 3. 05 9763
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(continued)
-------
Exhibit A—8 (continued)
age3of 6
1230 13: 5. 1. 3. 90 265. 14 . 7587 233. 94 . 7590)
1240 04 9999 109 93 6058 3. 36 9712 1. 00
1250 14; 5. 1. 1.00 1783.39 5196 1533.47 3143)
1260 09 .9535 0 1.3193 348.52 3755 1.00
1270 15 : 5. I. 1.00 1783.39 .5196 1553.47 .5142)
1290 09 . 9535 0 1. 3193 348. 52 . 3755 0
1290 163 5. 1. 1.00 3605.9W 4919 3219.14 4760)
1300 . 09 9567 01 1. 2364 597 75 3432 0
1310 17; 5. 1. 3. 90 10914 90 4806 9423. 11 4804)
1320 . 02 . 9967 304999. 99 0 37. 01 . 6800 1 00
1330 19i 3. 1. 3.90 11296.37 .4907 9716.50 .4803)
1340 .02 .9967 304999.99 0 19 68 7494 0
1350 l9i 5. 1. 3.90 11678.23 .4908 9009.99 .4806)
1360 02 . 9967 304999. 99 0 13. 36 7903 0
1370 20. 7. I. 1.00 115443.83 .2403 34743Ø .2405)
1380 596.95 3611 30279 80 . 1219 4564. 11 2067 .67
1390 21. 7. 1. 1.00 237250.90 2189 230472.64 2033)
14C0 9669. 84 . 1990 400944. 37 0419 87196. 55 . 0794 0
1410 22; 7. 1. 1. 00 3023. 94 5409 2774. 12 5311)
1420 16. 90 . 6068 739. 39 . 4223 54. 92 . 5705 . 33
1430 23: 9. I. 1. 00 7057 83 5086 5537 89 5096)
1440 99 . 8615 34362. 76 1872 309. 18 4932 0
1450 24; 8. 1. 1. 00 7057. 85 . 5096 5537 99 5096)
1460 . 9* . 9815 34562. 76 . 1972 308. 19 . 4932 0
1470 25; 8. I. 1. 00 7057. 85 . 5086 5537. 89 3096)
1480 . 99 . 9815 34562. 76 . 1872 309. 18 4932 1. 00
1490 26. 9. 1. 1. 00 2897. 69 . 5461 2576. 99 5469>
1500 . 19 . 9079 25978. 49 . 1967 5. 37 9041 81
1510 27 . 9. 1. 1. 00 2747 91 . 5562 379 13 6502)
1320 .13 .9963 3199.02 .3092 1056.11 3962 0
1330 29; 9 1. 1 00 2747. 91 5562 378. 13 . 6502)
1340 .13 9965 re9.02 .3092 1056.11 .3662 19
1530 29; 10 1. 1.00 59.37 .8095 57 20 8000>
1360 41 . 9492 60. 80 5928 4. 53 9609 0
1370 30: 10 1. 1.00 1221.33 6474 1109.19 .6467)
1380 2. 16 . 9379 2828. 56 3441 16. 36 7791 80
1390 31 : 10 I. 1.00 12019.03 .5064 10684.84 5071)
1600 49. 33 . 7334 31793. 78 1742 144. 07 6238 21
1610 32; 1. 2. 1.00 23509981 0 209500.11 0)
1620 0 1. 0279 37200. 04 0 . 16 9599 1. 00
1630 33; 1. 2. 1. 00 519300. 64 0 432999. 89 0>
1640 0 .9464 55800.00 0 .29 9491 0
1650 34 1. 2. 1.00 32.13 .7674 25 54 .7749>
1660 - 0 1. 0000 1. 65 94.67 49 9864 0
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1710 37. 2. 2. 1.00 49.62 .7639 38.30 .7731)
1720 0 1.0222 2.66 .8447 .43 .9689 0
1730 39: 4. 2. 1.00 9893.59 3595 9410.72 .3559)
1740 95. 15 . 4443 7844. 02 . 1892 22. 41 . 3794 0
1750 39. 4. 2. 1.00 12309.2 .3579 11553.25 3349)
1760 126.09 .4500 8669.30 1911 30.51 .5676 0
1770 40. 4. 2. 1. 00 12309. 22 . 3579 11553. 25 . 3549>
1780 128. 99 . 4500 9669. 38 1911 30. 51 . 5676 1. 00
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1820 144.62 .2723 11429.83 .0909 1195.40 2103 0
1930 43. 4. 2. 1.00 18339.40 .2079 14647.22 .1999)
(continued)
S
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Exh bft A—8 (continued)
Page 4 o 6
144 62 2723 11429.83 .0909 1195.60 .2103 1.00
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1900
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1960
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1980
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2000
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2020
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Exhfblt A—8 (contfnued)
Page 5 of 6
2450 74 . 9. 2. 1 00 8657. 91 . 4395 6643. 13 4464)
2460 07 9849 6320. 05 2478 472. 56 . 3957 19
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2370 80, 9. 2. 1.00 2040.13 3334 2213.39 3213)
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2610 82. 10. 2. 1. 00 1554. 95 5061 1340. 06 . 5089)
2620 25. 81 . 5571 137 62 4968 206. 61 . 4000 0
2630 83. 10. 2. 1. 00 1554 85 5061 1340. 06 5089)
2640 23. 81 . 5571 137. 62 4968 206. 61 4000 0
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2670 85, tO. 2. I. 00 90091. 14 0797 83534. 08 0792)
2680 751.78 .1139 27019.25 .0257 11806.86 0335 .38
2690 56. tO. 2. 1. 00 111976. 43 . 0627 103788. 07 . 0623>
2700 1152.63 0806 30383.51 0166 13049.24 0257 0
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2740 51231.91 .0012 103269.41 .0176 40781.77 .0333 40
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2760 91231.91 .0012 103289 41 0176 40781.77 .0233 0
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2800 81231.91 .0012 103269.41 .0176 40791.77 0233 40
2910 92. 13. 2. 1. 00 1359334 55 . 0256 1179326. 52 0244)
2620 81231.91 0012 103269.41 .0176 40791.77 .0233 0
2930 93, 14. 2. I. 00 217713. 03 . 1522 203535. 93 1499)
2940 966. 42 . 2402 4327. ‘97 . 1994 3150 70 . 2033 75
2950 94, 14. 2. 1. 00 217713. 03 1322 203535. 93 1499)
2860 966. 42 . 2402 42 7 97 . 1984 3130. 70 . 2033 0
2970 95; 14. 2. 1. 00 217713. 03 1522 203535. 93 . 1499)
2880 966. 42 . 2402 4227 97 . 1984 3190. 70 . 2033 0
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2900 966. 43 . 24.02 4227. 97 . 1994 3130. 70 . 2033 . 32
2910 97; 15. 2. 1. 00 217713. 03 1522 203535. 93 . 1499>
2920 966. 42 . 2402 4227. 97 . 1994 3150. 70 . 5033 0
2930 99. 15. 2. 1.00 217713.03 .1322 203535.93 1499)
2940 966. 42 . 2402 4227. 97 . 1994 3130. 70 .. 2033 0
2950 99, 16. 3. 1. 00 217713. 03 . 1523 203534. 93 . 1499)
2980 966. 42 . 2403 4227. 97 . 1984 3150. 70 . 2033 . 79
2970 100, 16. 2. I. 00 217713. 03 . 1532 203533. 93 . 1499)
2980 966. 42 . 2402 4327. 97 . 1984 3130. 70 2033 0
2990 101. 16. 2. 1. 00 217713. 03 . 1552 203535. 93 . 1499)
3000 966.42 .2405 4237.97 .1984 3130.70 .2033 0
3010 102. 4. 4. 1.00 2215.35 .3554 2117.36 5510)
3020 1. 21 8495 2550. 05 3479 84. 92 6063 1. 00
3030 103. 5. 4. 1. 00 8478. 83 . 3996 7707. 92 . 3986)
3040 0 0 100199. 96 0 671. 18 3874 1. 00
3030 104, 5. 4. 1. 00 395341. 17 . 1939 350319. 68 1938)
(continued)
-------
Exhibit A—S (continued)
3060
3070
3080
3090
3100
3110
3120
3130
3140
. .
‘ —
3160
3170
3180
3190
3200
3210
3220
3230
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3250
3260
3270
3280
3290
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3330
3340
3350
3360
3370
3380
3390
3400
3410
3420
3430
3440
3430
3460
3470
3480
3490
3300
3510
3520
3530
3340
3550
3560
3570
3590
3590
3600
3610
3620
3630
3640
3830
3660
Page 6 of 5
0 129299. 91 0 337 92 . 5244
3. 263. 14 7587 235. 84 . 7590)
9999 109.93 6038 3.36 9712
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8. 4. 1. 00 7037 8$ . 3088 3537. 89 5096>
99 8815 34362. 76 . 1972 309. 18 4932
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13 9963 3389. 02 3092 1056. 11 . 3862
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69. 33 7324 31793. 79 1762 144. 07 6258
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0 1. 0222 2. 66 8447 43 9669
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126. 89 4500 8669 39 1911 30. 31 . 5676
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144 62 2723 11428.93 0909 1195.60 .2103
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8123%. 91 . 0012 103269. 41 . 0176 40791. 77 . 0233
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81231.91 .0012 103269.41 .0176 40781.77 .0233
14. 4. 1.00 217713.03 .1322 203533.93 .1499)
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32
75
-------
Exhibit A—9
COST A O COVERftGE DATA FOR MISCELLANEOUS
AIR POLLUTION CONTROLS
Cost per Plant 1
(millIons of 1976 dollars)
Capital O&M
Pacilitles
New Facilities
6.13
5.57
1.40
1.40
Coverage Data
1976 1977 1978 1979 1980—1990
0.40 0.50 0.65 0.90 1.00
1 Plant size is 204.7 million 9tu per hour.
-------
Exhibit A—tO
OEL PLANT COST DATA FOR
WATER POLLUTION CONTROLS
(See Development Document, y 1982)
-------
Exhibit A—i 1
COVERAGE DATA FOR WATER POLLUTION CONTROLS 1
Pace I o 3
DPI
V I Y2 V3 V4 VS Y7 Y9
P1 0507 0507 0620 0643 0667 0690 0831 0973 1114
P2 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P3 0583 0675 0728 0792 0957 0921 0947 0974 1000
P4 0 613 0 709 0 772 0 931 0.890 0 949 0 981 1 012 1 044
P5 0598 0590 0599 0599 0398 0598 0732 0366 1000
P b 0 708 0 019 0 949 0 999 0 950 1 000 1 000 1 000 I 000
P7 0 709 0 919 0 349 0 991 0 934 0 977 0 983 0 992 1 000
P8 0126 0040 0840 0993 0947 1000 1000 1000 1000
P9 0 752 0 758 0 764 0 770 0 776 0 782 0 953 0 927 1 000
P10 0752 09,1 0992 0928 0964 1000 1000 1000 1000
P 11 0 293 0 327 0 429 0.327 0626 0.724 0916 0908 1 000
P12 0433 0409 0575 0.692 0809 0926 0951 0975 1000
P13 0763 0.763 0763 0763 0763 0.763 0.943 0922 1 000
P14 0796 0796 0796 0.796 0786 0796 0957 0929 1000
P15 0691 0800 0919 0851 0904 0917 0945 0972 1000
P16 0 691 0 800 0 918 0 978 0 939 1 000 I 000 1 000 1 000
P11 0691 0800 0918 0322 0.827 0932 0888 0944 1000
P Ie 0 764 0 784 0 764 0 764 0 764 0.764 0.943 0 921 1 000
P19 0814 0914 0914 0.814 0814 0914 0976 0938 1000
P20 0 691 0 900 0 919 0 970 0.922 0 974 0 993 0 991 1 000
P21 0670 • 0679 0670 0678 0.678 0678 0795 0993 1000
P2 0691 0703 0120 0.795 0.970 0943 0963 0982 1000
P23 0393 0.593 0593 0593 0393 0593 0.729 0864 1000
P24 0691 0800 0918 0979 0939 1000 1000 1000 1000
P25 0416 0481 0481 0506 0.690 0195 0963 0932 1000
P26 0 416 0 481 0 481 0. 644 0. 807 0 970 0 980 0 990 1 000
P27 0 416 0.481 0 481 0 634 0.827 1.000 1.000 1 000 1 000
P28 0416 0481 0481 0625 0769 0.913 0.942 0971 1000
P29 0631 0130 0730 0775 0819 0.964 0909 0955 1000
P30 0 631 0 130 0 130 0.920 0910 1 000 1.000 1000 1 000
P31 0405 0469 0558 0639 0121 0803 0869 0934 1000
P32 0405 0469 0550 0685 0913 0940 0960 0980 1000
P 33 0364 0421 0517 0533 0549 0563 0710 0955 1000
P34 0364 0421 0317 0.586 0655 .0724 0816 0908 1000
P35 0 364 0 421 0 517 0 678 0 939 1 000 1 000 1 000 1 000
P36 0364 0421 0511 0631 0784 0918 0945 0973 1000
P37. 0 364 0 421 0 517 0 584 0 630 0 716 0 811 0 905 1 000
P38 0503 0582 0632 0.705 0759 0813 0875 0930 1000
P39 0500 0582 0632 0163 0879 0993 0995 0999 1000
P40 0336 0389 0438 0594 0748 0902 0935 0967 1000
P41 0 336 0 309 0 439 0 615 0 190 0 963 0 977 0 998 1 000
P42 0.336 0309 0 439 0 828 0.913 1 000 1.000 1 000 1 000
P43 0336 369 0439 0597 0.755 0913 0942 0971 1000
P44 0336 0309 0439 0826 0013 1000 1000 1000 1000
P45 0336 0389 0439 0.626 0.913 1000 1.000 1000 1000
P46 0336 0389 0439 0626 0813 1000 1000 1000 1000
P47 0336 0399 0439 0626 0813 1000 1.000 1000 1000
P48 0515 0596 0630 0739 0847 0.956 0.911 0905 1000
P49 0515 0596 0630 0740 0951 0.961 0974 0997 1000
P50 0515 0596 0630 0.730 0.029 0929 0953 0.976 1000
P51 0515 0596 0630 0753 0977 1000 1000 1000 1000
P52 0498 0516 0611 0.739 0.863 0992 0995 0987 1000
P53 0 498 0 576 0 621 0. 739 0 967 0 995 0 99t 0 999 1 000
P54 0498 0576 0611 0.733 0.954 0976 0994. 0982 1000
P55 0490 0516 0611 0141 0.870 1000 1.000 1000 1000
P56 0498 0.576 0611 0.702 0.792 0002 0921 0961 1000
P57 0.372 0 431 0 528 0.841 0.757 0 972 0 915 0 957 1 000
P58 0372 0431 0526 0.669 0813 0956 0911 0.985 1000
0372 0.402 0526 0630 0.175 0999 0933 0966 1000
P60 0. 372 0 431 0 528 0. 602 0 679 0. 756 0. 837 0 919 1 000
P61 0 215 0 249 0 314 0 554 0 133 0 912 0 941 0 971 1 000
P62 0215 0249 0374 0319 0.661 0905 0870 0935 1000
P63 0 419 0 419 0 419 0. 419 0 419 0 419 0 813 0 306 1 000
P64 0000 0000 0000 0.000 0000 0000 0000 0000 0000
P83 0561 0649 0707 0905 0.902 1000 1.000 1000 1000
P66 0 561 0 649 0 707 0 905 0 902 1 000 1. 000 1 000 1 000
(continued)
-------
Exhibit A—I I (con1 Inued)
Page 2 of 3
8 *7
VI Y2 Y3 Y4 Y5 V a Y7 VS Y9
P1 0180 0209 0208 0.218 0229 0239 0493 0.746 1000
P2 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P 3 0 039 0 059 0 059 0 067 0 076 0 085 0 390 0 695 1 000
P4 0 126 0 126 0 126 0. 165 0 204 0 243 0 495 0 748 1 000
P3 0. 000 0 000 0 000 0. 000 0. 000 0 000 0 000 0 000 0 000
P6 0 000 0 000 0 000 0. 260 0 519 0 719 0 853 0 926 1 000
P7 0 000 0 000 0 000 0 041 0 083 0 124 0 416 0 708 1 000
P9 0 000 0 000 0 000 0. 062 0 124 0. tao 0 430 0 729 1 000
P9 0000 0000 0000 0.000 0000 0000 0.000 0000 0000
P10 0 000 0 000 0 000 0 099 0 1,8 0. 297 0 331 0 766 1 000
P11 0.001 0.031 0 031 0.021 0 010 0 000 0 333 0 667 1 000
P12 0 000 0000 0 000 0.121 0.242 0.303 0.375 0788 1 000
P13 0 156 0 180 0 180 0 *80 0 100 0 180 0.180 0 180 0 180
P 14 0 130 0 190 0 180 0 *80 0 180 0. 180 0 180 0 180 0 180
P13 0 162 0 100 0 180 0 100 0 180 0 180 0 180 0 180 0 180
P16 0 *62 0 180 0 190 0. 190 0 180 0. 180 0 180 0 180 0 180
P17 0 151 0. 180 0 180 0. 180 0. 180 0. 150 0. 180 0 180 0 190
P18 0 137 0 180 0 180 0. *80 0 180 0. 180 0 180 0 100 0 180
P19 0 136 0 136 0 136 0 136 0 136 0 136 0 136 0 136 0 136
P20 0 130 0 136 0 136 0 136 0 136 0. 136 0 136 0 136 0 136
P21 0 027 0 027 0 027 0 027 0 027 0 027 0 027 0 021 0 027
P22 0. 037 0 027 0 087 0 087 0 087 0 027 0 027 0 027 0 027
P23 0 130 0 130 0 130 0 130 0 130 0 130 0 130 0 130 0 130
P24 0 130 0. 130 0 130 0 130 0 130 0 130 0 130 0 130 0 130
P23 0000 0000 0000 0.000 0.000 0000 0.000 0000 0000
P26 0000 0.000 0000 0.000 0000 0000 0000 0000 0000
P27 0000 0.000 0000 0.000 0000 0000 0000 0000 0000
P28 0000 0000 0000 0000 0000 0000 0000 0000 0000
P29 0000 0000 0000 0000 0000 0000 0000 0000 0000
P30 0030 0000 0000 0000 0.000 0000 0000 0000 0000
P31 0000 0.000 0000 0009 0.017 0026 0026 0026 0026
P 33 0000 0.000 0000 0009 0017 0026 0036 0026 0026
P33 0 000 0. 000 0 000 0 041 0. 082 0 123 0. 123 0. 123 0 123
P34 0 000 0 000 0 000 0 041 0 082 0 123 0. 123 0 123 0 123
P33 0 000 0 000 0 000 0 041 0 083 0 123 0 123 0 123 0 123
P36 0 000 0 000 0 000 0.041 0082 0 182 0 *23 0 123 0 123
P 37 0000 0000 0000 0041 0082 0123 0123 0123 0123
P38 0 000 0 000 0 000 0 000 0. 000 0 000 0 000 0 000 0 000
P39 0000 0.000 0000 0000 0000 0000 0000 0000 0000
P40 0201 0232 0233 0250 0266 0283 0283 0283 0283
P41 0201 0232 0233 0.230 0264 0203 0283 0203 0283
P42 0201 0.232 0233 0250 0266 0283 0283 0203 0293
P43 0201 0 232 0.233 0230 0.266 0283 0203 0 293 0283
P44 0000 0000 0000 0.000 0000 0000 0000 0000 0000
P45 0 000 0 000 0 000 0 000 0 000 0. 000 0 000 0 000 0 000
P46 0000 0000 0000 0000 0000 0000 0000 0000 0000
P47 0 000 0 003 0 000 0. 000 0 000 0 000 0 000 0 000 0 000
P48 0080 0092 0092 0.255 0418 0581 0581 0301 0581
P49 0080 0092 0092 0255 0418 0591 0581 0581 0581
P90 0080 0092 0092 0255 0418 0.591 0581 0501 0381
P51 0090 0092 0092 0235 0418 0381 0581 0381 0581
P52 . 0000 0000 0000 0007 0015 0022 0022 0022 0022
P53 0000 0000 0000 0.007 0015 0022 0022 0022 0022
P34 0000 0.000 0000 0007 0013 0.082 0022 0022 0022
P35 0000 0000 0000 0007 0013 0022 0022 0022 0022
P36 0000 0000 0000 0007 00*3 0022 0022 0022 0022
P57 0 120 0 120 0 120 0. 120 0 120 0 120 0. 120 0 120 0. 120
P 98 0338 0391 0391 0423 0.498 0.492 0.061 0831 1000
P39 0. 120 0. 120 0 120 0 120 0. 120 0 120 0. 120 0 120 0 120
P60 0338 0391 03 1 0538 0686 0833 0889 0944 1000
P61 0 *12 0 112 0 112 0 114 0 117 0 120 0 120 0 120 0 120
P62 • 0000 0000 0000 0000 0000 0000 0353 0667 1000
P63 0 112 0 112 0 112 0 114 0.117 0 120 0 120 0 120 0 120
P64 0. 000 0. 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P65 0000 0000 0000 0040 0080 0120 0120 0120 0*20
P66 0 000 0 000 0 000 0. 333 0 667 1 000 1 000 1 000 1 000
(continued I
-------
ExhibIt A—Il (conllnued)
Page 3 of 3
PSES
V I Y2 Y3 Y4 VS Yb V7 Ye Y9
Pt 0 190 0 208 0 209 0 402 0 596 0 790 0 860 0 930 1 000
P2 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P3 0 138 0 160 0 160 0 401 0 633 0 900 0 933 0 967 1 000
P4 0 190 0 174 0 179 0 436 0 695 0 953 0 969 0 994 1 000
P5 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P6 0 000 0 000 0 000 0 333 0 667 1 000 1 000 1 000 1 000
P7 0000 0000 0000 0333 0661 1000 1000 1000 1000
p9 0000 0000 0000 0000 0000 0000 0.000 0000 0000
P9 0000 0.000 0000 0000 0000 0000 0000 0000 0000
P lO 0 000 0 000 0 000 0 323 0. 667 1. 000 1 000 1 000 1 000
P11 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P 12 0 000 0 000 0 000 0 329 0 638 0 907 0. 991 0 996 1 000
P13 0 162 0 189 0 206 0 471 0 735 1 000 1 000 1 000 1 000
P14 0 142 0.188 0206 0.438 0 669 0901 0934 0967 1 000
P13 0162 0189 0206 0368 0529 069* 0794 0897 1000
P16 0000 0000 0000 0000 0000 0000 0000 0000 0000
P17 0 162 0 198 0 206 0. 406 0 606 0 806 0. 871 0 925 1 000
P19 0162 0188 0206 047! 0735 1000 1000 1000 1000
P19 0 162 0 199 0 206 0 471 0. 733 1 000 1 000 1 000 1 000
P20 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P21 0 162 0 188 0 206 0 471 0 135 1 000 I 000 1 000 1 000
P22 0000 0000 0000 0000 0000 0000 0000 0000 0000
P23 0 162 0 188 0 20o 0 471 0. 735 1 000 1 000 1 000 1 000
P24 0000 0000 0000 0000 0000 0000 0000 0000 0000
P25 0000 0000 0000 0000 0000 0000 0000 0000 0000
P26 0046 0053 0053 • 0115 0176 0239 0492 0746 1000
P27 0000 0.000 0000 0.000 0.000 0000 0000 0000 0000
P29 0046 0053 0053 0010 0089 0105 0403 0702 1000
P29 0000 0000 0000 0106 0212 0318 0545 0773 1000
P30 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P31 0 000 0 000 0 000 0 322 0 661 1 000 1 000 1 000 1 000
P32 0 000 0 000 0 000 0 323 0. 467 1 000 1. 000 1 000 1 000
P33 0 000 0 000 0 000 0 000 0 000 0 000 0 333 0 667 1 000
P34 0 000 0 000 0 000 0. 000 0 000 0 000 0 333 0 667 1 000
P35 0000 0000 0000 0000 0000 0000 0000 0000 0000
P36 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P37 0000 0000 0000 0000 0000 0000 0000 0000 0000
P38 0 000 0 000 0 000 0 333 0 667 1 000 I 000 1 000 1 000
P39 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P40 0 215 0 249 0 250 0 312 0 373 0 435 0 623 0 812 1 000
P41 0215 0249 0230 033? 0423 0512 0675 0837 1000
P42 0213. 0249 0230 0270 0290 0310 0940 0770 1000
P43 0213 0249 0250 0359 0469 0578 0719 0859 1000
P44 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P45 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P46 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P47 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P49 0005 0098 0099 0395 0692 0909 0993 0996 1000
P’9 0005 0099 0099 0149 0.200 0251 0301 0750 1000
P50 0005 0099 0099 0.176 0255 0333 0955 0778 1000
P 51 0000 0000 0000 0000 0000 0000 0000 0000 0000
P32 0000 0000 0000 0000 0.000 0000 0000 0000 0000
P33 0000 0000 0000 0.019 0030 0057 0371 0686 1000
P54 0000 0000 0000 0133 0266 0399 0590 0800 1000
P55 0000 0000 0000 0.267 0.533 0800 0967 0933 1000
P56 0000 0000 0000 0.002 0163 0.347 0490 0749 1000
P57 0263 0263 0263 0.263 0265 0263 09 0 0755 1000
P 58 0.000 0000 0000 0000 0000 0000 0000 0000 0000
P50 0338 0.391 0391 0498 0606 0113 0809 0904 1000
P60 0 338 0 301 0. 391 0 468 0. 546 0 623 0 149 0. 874 1. 000
P61 0.000 0 000 0 000 0000 0.000 0.000 0000 0 000 0000
P62 0000 0000 0000 0000 0.000 0000 0000 0000 0000
P63 0. 000 0. 000 0 000 0 000 0 000 0 000 0 000 0 000 0 000
P64 oooo oboo 0000 0000 0000 oooo 0000 0000 0000
P65 0 000 0 000 0 000 0 047 0 093 0. 140 0 427 0 713 1 000
P46 0.000 0.000 0 000 0000 0000 0000 0000 0 000 0000
t Processes PI-P66 Indlcsted on ExhIbIl 19; years Yl—Y9 correspond ?o 1976—1984.
-------
Exhibfl A—12
SU8CATEGORY/FR UCTION PR ESS CONVERSION DATA
RICES DIRECT INDIRECT NEW
• 3050 0236 . 5296
• 7361 . 1633 1. 0000
0 0 0
9780 0216 1.0000
4991 0 4891
•21A9 0 .2169
1628 0314 . 1942
• 9397 . 0491 . 5888
.0661 0 .0661
10 .1069 .0200 .1269
12 2604 . 1396 1
12 .9562 0438 1
13 4964 0 4964
14 .3713 0290 .4003
15 .0292 0042 . 0334
16 .0738 0 .0738
17 .0313 0 .0313
18 .0072 0 .0072
42 0111 0 0111
13 .0043 0 .0043
14 .0106 0 0106
17 .9645 .0994 .9639
18 . 1216 0002 . 1219
29 .0001 0 .0001
42 0124 0 0124
13 .2858 .0073 .2931
14 .6234 .0397 .6631
15 .0376 .0005 .0381
18 .0077 0 .0077
20 .0025 0 0025
13 .0043 0 .0043
17 .6038 0763 .6821
19 .0272 .0002 .0274
31 .0027 0 .0027
13 0 0 0
17 .3 .0450 .3673
19 .0329 .0002 .0330
19 .0009 0 .0009
26 • 0032 . 0006 . 0029
29 0037 0 . 0037
31 .0001 .0001 .0002
40 0 .00031 0
41 .0599 .0276 0
42 .0699 .0029 0
43 0 .0009 0
43 0 0 .1605
49 0 0 0
54 .0279 .0021 .0299
35 .0018 .0013 .0033
Page I o 3
103 c •• WATER DATA - 1901 VERSION: •••.
300 C FRACTIONS OF CAPACITY D ISCHAR$5!N0 DIRECTLY AND INDIRECTLY
400 C CAPACITY 9REMDO(4N FIRST 3Y AOL CATACORY AND T1 iEN 3Y
500 C RICE CATACCRY
600 C INPUT 8/14/91 OWS
630 C CORRECTIONS MADE FOR REVISED AOL CAPACITIES 8/31/81 OWS
675 C AD .IJUSThENTS PlACE FOR EXPECTED NEW ADDITIONS 9/1/91 RPM
676 C CORRECTIONS 9/21/91 RPM
oea C CORRECTIONS 9/22/91 OWS
694 C MAJOR UPDATE 12/1/91 .JPF
700 C:.:::::::::::::..::::: .:.:: :::.::::.:.:: :
800 C ADLI
900 1. 4 3
1000 2i 5 1
1100 Si 3 2
1200 4; 7 4
1300 Si 9 8
1400 6; 9 5
1300 7; 9 6
1600 9i 9 7
1700 9i 10 9
18C0 10; 10
1900 11. 12
2000 12; 13
2100 ISi 14
2200 14; 14
3300 13 . 14
2400 16. 14
2500 17; 14
2600 ISi 14
2700 19 14
280-3 20; 15
2900 21; IS
3000 22; 15
3100 23. 13
3200 24. IS
3300 25; 19
3400 26. 16
3300 27; 16
3600 22; 16
3700 29; 16
3800 30 ; 16
3900 31; 17
4000 32. 17
4100 33; 17
4200 34; 17
4300 35. 18
4400 36. 18
4500 37; 19
4600 38. 18
4700 39; 19
4800 40; 19
49Ø. 413 19
5000 42; 18
9100 43. 18
3200 44; 19
5300 45. 18
9400 46. 18
5500 47j 19
5.600 48; 12
3700 49; 18
(conl lnued)
-------
exhibit A -12 (continued)
Page 2 of 3
5800 30 ; 18 57 0 0 0
5900 Sli 19 17 2587 0 2587
6000 32; 19 18 0111 0 0111
6100 33; 19 26 0109 0 .0109
8200 54; 19 29 0046 0109 0135
6300 33; 19 31 . 0175 0029 0203
6400 36; 19 32 0397 0046 0443
6300 57; 19 41 .0316 0144 0
6800 58; 19 42 0068 0 0
6703 39, 19 43 0 0167 0
6803 601 19 45 0397 0 .2196
6900 61 a 19 49 . 0301 . 0304 0
7000 62; 19 34 .0466 0025 0
7103 63; 19 59 0967 0033 I. 000
7200 64; 19 60 . 0306 . 0098 0402
7300 65 19 63 . 0020 . 0013 0033
7400 66; 20 36 . 0068 0 . 0068
7300 67; 21 23 . 6077 0271 6348
7603 6G 21 24 . 1451 0 1451
7700 69 21 27 0021 0 0021
7800 70i 21 31 . 0233 0001 0234
7900 71. 21 32 .0019 0 0019
9000 72; 21 38 0170 0 . 0170
8100 73; 21 39 . 0032 0 0032
9200 74; 21 40 .0085 0 0
9300 75, 21 42 0037 0 0
9400 76. 21 43 1017 . 0054 0
95’ 0 77; 21 47 0 0 1423
8600 78; 21 50 .0038 0 0
8700 79; 21 36 .0162 0010 0
880 -3 80i 21 37 . 0259 0 0259
8903 81. 2i 58 .0224 0 .0224
9000 82; 22 13 0052 0 0032
9100 93; 23 17 . 0414 0009 0423
9200 84. 22 19 7512 0242 7754
9300 85; 22 20 0212 0 0212
9400 86 . 22 25 .0008 0 0008
50 7 32 29 . 0027 0009 . 0046
9600 93; 22 30 .0001 0 0001
9700 99; 22 31 .0033 0001 0034
9300 W 22 32 . 1343 . 0095 1438
9900 91. 22 40 .2243 0023 0
10000 92; 22 41 .0004 0 0
10100 93; 23 44 0 0 .7993
10200 94, 22 48 .4280 .0179 0
10300 95; 22 31 .0723 0 0
10100 96. 22 52 .0010 0 0
10500 97; 22 52 . 0431 0002 0
10600 99. 22 37 .0331 .0029 .0560
10700 99; 22 58 .0330 0 .0330
10800 100; 22 61 .0002 0 0002
10900 101 22 62 .0039 0 0039
11000 102; 22 63 0056 0 .0056
11100 103. 24 23 .4394 0 .4394
11200 104; 24 24 .0456 0 .0456
11300 105; 24 27 . .0027 0 .0027
11400 106. 24 31 0559 .0001 .0260
11300 107 , 24 38 .3199 .0010 3209
11600 108 ; 24 39 .1375 0 .1375
11700 109i 24 40 .0101 0 0
11800 110; 24 43 .0044 0 0
(continued)
-------
Exhibit A—12 (continued)
Page 3 of 3
11900 111k 24 43 . 1241 0143 0
12000 tt2 24 47 0 0 1967
12100 113i 24 50 .0089 0 0
I2 00 114i 24 56 0229 0020 0
12300 115i 24 57 0311 0 0311
12400 116i 24 58 .0271 0 .0271
12500 117i 25 33 .0443 0128 0573
12600 118. 25 34 .4187 .0175 .4362
12700 119i 25 55 .5876 0 .3876
12900 lZOi 25 36 . 1480 0 1460
12900 121i 25 37 . 2097 0 . 2097
13000 122i 27 32 0301 0 . 0301
13100 123i 20 15 0 0 0
15200 124i 29 17 .0051 0 .0051
13300 123. 28 18 0 0 0
15400 126. 28 19 .2803 .0183 2966
13500 127. 29 20 .0100 0 .0100
13600 129. 29 21 . 6935 0699 7533
13700 129. 28 22 .0967 0 .0967
13800 130. 28 23 0003 0 .0003
13900 lit, 28 40 .0363 0 0
14000 1323 28 42 .0017 0 0
14100 133. 28 43 0 .0009 0
14200 134. 28 49 .0299 0 0
14300 133. 28 52 .0163 0 0
14400 156. 28 57 0 .0005 .0005
14450 137. 29 44 0 0 0783
14300 139, 30 I I .089 0 .089
14600 139. 30 11 .089 0 089
14700 140. 30 I I .069 0 099
‘Numbered in Exhibits 10 and 19.
-------
Exhibit A— 13
MAJOR FINANCIAL ASSU TIONS
HISTORICAL DATA
Real
Return on Equity
(percent)
Dividend
Payout
Ratio 1
(percent)
Additions
to Common Stock
(millions of dollars)
Debt
Refunding Rate
(percent of 1976 debt)
interest
Rate
n Debt 2
(percent)
1976
1977
1978
1979
1980
0.44%
0.88
4.70
9.15
5.91
47.6%
373.0
41.3
51.4
36.9
51,171.6
1,003.6
443.0
765.4
0.0
3.3%
3.7
4.1
4.1
4 • 1 a
5.8%
9.7
3.9
g.3
2.7
TAX RATES (percent)
Federal
State
Property
Sales
inveslinent Tax Credit
46.00%
7.55
2.38
3.99
10.00
3ALA CZ SHEET——1976 (S millions)
Long—Term Debt
Wor1 ing Capital
Capital Equipment
E qui1 y
Deferred Taxes
S 4,934.2
4,089.3
17,Q84.9
12,130.7
2,557.0
FACTORS USED TO CONVERT CAPITAL CPENDITI RES TO CASH FLOWS
Cap iral
Expenditures
Cash Flow
Year 0
Year 0
Year 1
Year 2
Year 3
reer 4
Product ion Equipment
1976—1982
1983—1984
Pollution Control
Equipment
1.00
1.00
1.00
0.15
0.10
0.20
0.35
0.30
0.40
0.35
0.30
0.40
0.15
0.20
0.00
0.00
0.10
0.00
145 percent for 1980—1990.
21g76..i979 are nominal rates; 1980—1990 are real rates.
aqepeated to 1990.
-------
(xiilblt A— 14
IN1EI1EST I ATES AND
COST ESCAlATION FACTORS FOR $916 PRICES
Capital Labor and Other Raw interest
Expenditures Overhead Materials Power Fuel iron Ore Coal Scrap Rates
1916 1.000 1.000 1.000 1.000 l O00 1.000 1.000 1.000 1.000 6.8%
1977 1.060 1.052 1.111 1.060 1.126 1.220 1.053 1.118 0.812 9.1
1916 1.131 1.121 1.218 1.137 1.251 1.322 1.154 1.234 0.980 8.9
1919 1.239 1.194 1.356 1.239 1.377 1.792 1.257 1.293 1.258 9.3
1980 1.350 1.212 1.512 1.350 1.638 2.443 1.297 1.341 1.319 11.7
1981 1.471 1.352 1.685 1.504 1.814 2.912 1.380 1.434 1.443 9.9
1982 1.594 1.425 1.892 1.659 2.099 3.299 1.466 1.551 1.557 10.6
1983 1.101 1.499 2.110 1.195 2.307 3.897 1.633 1.712 1.668 9.8
1984 1.806 1.567 2.327 1.942 2.505 4.559 1.198 1.894 1.164 8.5
$985 1.901 1.631 2.546 2.086 2.678 5.220 1.915 2.089 1.058 8.0
$986 1.985 1.686 2.745 2.230 2.908 5.961 2.168 2.304 1.939 1.1
1967 2.062 1.735 2.931 2.372 3.129 6.772 2.355 2.514 2.015 6.6
1988 2.157 1.806 3.125 2.529 3.348 7.666 2.543 2.727 2.108 7.3
1989 2.250 1.877 3.325 2.668 3.556 8.616 2.729 2.940 2.198 7.0
1990 2.347 1.944 3.53 1 2.841 3.751 9.366 2.917 3.134 2.293 1.0
Source: Data Resources, Inc. 0 1 3 T 1 1tON0068I 1 AISI Annual Statistical Reports ; TUS analysis.
-------
Exhibit A—15
SENSITIVITY ANALYSIS——HiGIi [ R INFLATION RATES
INTEREST RAIlS Al4 cOSI ESCALATION FACIOftS FOR 1916 I4UCES
Capital Labor and Other Raw interest
GNP Expenditures Ovarhoad Materials Power Fuel Iron Ore Coal Scrap Rates
1976 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 6.8%
1977 1.060 1.052 1.1 1 1 1.060 1.126 1.228 1.053 1.118 0.812 9.7
1978 1.131 1.121 1.218 1.137 1.251 1.322 1.154 1.234 0.980 0.9
1919 1.239 1.194 1.356 1.239 1.377 1.192 1.257 1.293 1.258 9.3
1900 1.350 1.272 1.572 1.350 1.638 2.44) 1.297 1.341 1.319 11.1
1901 1.479 1.353 1.680 1.479 1.075 2.919 1.303 1.436 1.444 12.3
1982 1.609 1.439 1.050 1.609 2.119 3.445 1.508 1.574 1.571 11.5
1983 1.744 1.531 2.070 1.744 2.365 4.068 1.616 1.157 1.70$ 11.1
1984 1.901 1.647 2.333 1.901 2.639 4.910 1.907 2.008 1.851 11.1
1985 2.076 1.790 2.589 2.076 2.972 5.907 2.180 2.313 2.020 11.9
1986 2.265 1.951 2.853 2.265 3.346 7.047 2.500 2.655 2.212 11.8
1987 2.446 2.110 3.110 2.446 3.731 8.245 2.803 2.990 2.389 10.7
1988 2.649 2.261 3.440 2.649 4.104 9.614 3.122 3.346 2.587 11.0
1989 2.800 2.433 3.828 2.880 4.555 11.268 3.525 3.794 2.8)2 11.4
1990 3.130 2.633 4.200 3.130 5.093 13.048 3.983 4.306 3.057 11.4
Source: Data Resources 1 Inc. CYaELONGO68I; AISI Annual Statistical Reports ; ras analysis.
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Exhibit A— 16
MAJOR C NOM1C ASSU TIONS
I. Relationship of real return on equity Cr) to capacity utilization Cu).
• For u < 85%, r • 0
• For u > 85%, r all—manufacturing return x Cu — 35%) 15%
Note: Relationship does not include retirn on equity added for the sensitivity analysis examining
100 percent pass—through of cost savings and profit.
All—Manufacturinq Real Return on Equity 1981—1990 (percent)
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
Return 1.9% 2.8% 3.6% 4.2% 4.5% 4.4% 4.7% 5.0% 8.2% 5.3%
2. Relationship of cost savings Cs) to capacity declines Cd).
• For d < 3 million tons, s (S80/ton)d
• Ford >3 million tons, s S240 million + ((S30/ton)(d — 3.0)1
3. Relationship of capacity decline to reduced expenditures for existing equipment (see p. 11—10).
4. Relationship of production, market share, and employment to capacity constraints.
Production, market share, and employment levels required to gain a ful I 84.5 percent domestic market
share are reduced when the uti I ization rate of raw steel capacity exceeds 90 percent in the fol lowing
equation.
x x at 84.5% market share x (90% , utilization of raw steel production)
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N..
r
conomic Analysis of Final Effluent
rimitations Guidelines, New Source Performance
Standards 1 and Pretreatment Standards for the Iron
‘ i a ‘ ‘i’-ee Cat ôrv
3. Ricipi,ei’s ..4e.
*4po Mce —
January, 1982
6.
Richard P. McNeil et al
1. 1a 44I aouI% Rrpc.
N..
9. Pet or iag ;sauauoo Nsa. a d A4esz
Temple, Barker & Sloane, Inc.
33 a7den Avenue
Lexington, Massachusetts 02173
10. P o;e /Ta&e/’4 o , c Ua,i No.
fl.C .ocz/Q,aog. ib..
68—01-4341, 68—01—
5845
13, 5pe .s sa Io i*aLaos Nia d Mdiau
Office of Policy Analysis
Znvirocmental Protection Agency
Washington, D.C. 20460
13. Type.J Rpori Ii P,:iod
qo a teI?
1
1 . S pL..sowy Nocos
Ié.Ab.usci.s T55 performed an analysis of the economic and financial efZects
of the final water effluent guidelines on the iron and steel industry.
Additional capital expenditure requirements for water pollution control
equipment will be S463.1 million in 1982—1985. An additional $267.0 mil-
lion will be required for NSPS additions in 1986—1990. These capital re-
quirements will probably cause the steel industry to reduce expenditures
for existing capacity in the mid 1980s. This in turn will probably result
in an approximate 0.6 percent decline in industry production capacity, a
0.5 percent decrease in domestic market share, and a potential decline in
steel industry employment of about 2,180 jobs by 1985. These impacts woulc
be virtually eliminated by the early 1990s by the improved economic and
financial conditions of the industry.
Il. Lo, x4a a4 Dx soe A. 1ys a. Ill. Ds.c:iptoii
Economic Analysis
Ef fluent Guidelines
Steel Industry
Policy—Testing model:
iTh. W rs/Op,a.E 4 .d 1.,.a
17 . . C ATT rw/Grsiup
1.I. Ày .sbi.Lity .-.-—-
PTm (Steel)
i sv. ..?aj
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