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3. Instrument Air Upgrade
At a power plant, an instrument air system operates the
valves located throughout the plant. The instrument air system
provides the force that changes the positions of the valves in
the plants. FPL claims ITCs for the instrument air upgrade for
the 1988, 1989, and 1990 taxable years.
Apparently, the instrument air system at St. Lucie Unit 1
experienced problems, and FPL initiated a study to determine the
cause of the problems.60 The study culminated in a
recommendation on June 22, 1983, to remove existing equipment and
replace it with new equipment. A letter dated October 22, 1984,
states that FPL held a meeting in May 1984 to discuss the
problems and potential solutions for the instrument air systems
for both units at St. Lucie. In that letter, FPL expressed its
intent to solicit bids to acquire four new compressors and two
new dryers. According to a letter dated December 28, 1984, FPL
anticipated that it would complete the bid review and provide an
engineering schedule by January 18, 1985.
ER No. 9009, processed on October 23, 1985, authorized
$75,000 to upgrade the instrument air system at St. Lucie Unit 1.
The ER stated:
The present instrument air systems are not capable
of suppling [sic] the total plant needs for instrument
60 Mr. Paduano testified that the instrument air upgrade was
a type 1 backfit item.
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