;)lAl..t- V1" CVl'Il'IECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the maner of

The State of Connecticut and

Dominion Nuclear Connecticut, Inc.

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Trading Agreement

and Order No. 8221 A

, . , Whereas, the Commissioner of Environmental Protection ("Commissioner") and Dominion Nuclear

Connecticut, Inc. ("DNC") agree that it is in the public interest that they work cooperatively to

improve the air quality within the State ofConnecticut and that the use of discrete emission

reduction credit ("DERe") trading to reduce nitrogen oxide (''NOx'') emissions will achieve this

result in a timely and cost-effective manner.

A. At the request and with the agreement of 0 C, the Commissioner fmds the following:

I. This Trading Agreement and Order supercedes Trading Agreement and Order 8221

issued on March 29, 2001.

2. On or about March 31, 2001, DNe acquired from Northeast Nuclear Energy

Company (UNNECO") and now owns and operates the Millstone Power Station at

Rope Ferry Road, Waterford, Connecticut ("facility").

3. At the facility, DNC operates fuel burning equipment consisting of two Fairbanks

Morse 38TD 1/8 emergency diesel generators for Unit 2 ("EUs 2.3 and 2.4"), two

Colt PC2 emergency diesel generators for Unit 3 (''EUs 2.5 and 2.6"), one

Electromotive station plackout diesel generator for Unit 3 ("EU 2.1'1 and one

Cummins VTI710 GS/GC emergency engine for plant security ("EU 2.10"). EUs

2.3, 2.4, 2.5, 2.6, 2.7 and 2.10 provide electricity to the three nuclear reactors'

operating equipment when nonnal elecnicity is unavailable.

4. Due to the Nuclear Regulatory Commission ("NRC") requirements for emergency

generator readiness, DNC may be required, in the future, to perfonn scheduled

testing of EUs 2.3, 2.4, 2.5, 2.6, 2.7 and 2.10 on days for which the Commissioner

has forecast that ozone levels will be "moderate to unhealthful", "unhealthful" or

"very unhealthful". Due to the NRC testing requirement EUs 2.3, 2.4, 2.5, 2.6, 2.7

and 2.10 are subject to Section 22a-174-22 ofthe Regulations of Connecticut State

Agencies ("Regulations") pertaining to the control of NOx emissions.

5. Emission testing performed on the dates indicated in Table I, resulted in a NOx

emission rates as follows:

(Printed on Recycled P.per)

79 Elm Slreet • Hm[old, CT 06106.5127

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Dominion Nuclear Connecticut, Inc. 2 Trading Agreement and Order 8221A

Table I

DNC - FLER and NOx ."Uowable Emission Rates

Facilityl Fuel Manufacturer's Stack Test FLER Allowable Last Next

Peaking Unit rating (gmlbhptbr) (gmibhptbr) Rate Emission EmissionTe

bhp gmlbhptbr Test st Due

EU 2.3 (U2A\ Diesel 3825 10 10.96 8 1219198 1219/3

EU 2.4 (U2B) Diesel 3992 "9 10.0 8 12/23/98 12/23/03

EU 2.5 (U3A) Diesel 6941'-, 6.55 N/A 8 lI/17/98 11117/03

EU 2.6 (U3B) Diesel 6941 6.55 N/A 8 1/26199 1/26104

EU 2.7 (SBO) Diesel 3400 13.0 14.3 8 1/20199 I 1/20104

EU2.l0(SEC Diesel 620 10.46 11.6 8 12110/98 12110/03

6. DNC exceeds the NOx allowable emission rate for the four (4) emergency generators

EUs 2.3, 2.4, 2.7 and 2.10 specified in Sectinn 22a-174-22(e) nfthe Regulations as

shown in table 1 of this Trading Agreement and Order.

o

7. Pursuant to the Depanment ofEnvironmental Protection's "Credit Trading/or

Sources with Irregular NOx Emissions" policy, with a revised date ofFebruary 27,

2001, attached hereto and incorporated by reference into this Trading Agreement and

Order as Exhibit I, the four (4) emergency generators EUs 2.3, 2.4, 2.7 and 2.10

have peak daily NOx emissions greater than three times the average daily emissions

during the ozone season and are therefore considered sources with irregular NOx

emissions.

8. Pursuanl to Section 22a-174-22(j) ofthe Regulations, DNC intends to acquire

approved DERCs to offset excess NOx emissions from the four emergency

generators EUs 2.3. 2.4. 2.7 and 2.10. until April 30. 2007.

9. The Commissioner, in accordance with the provisions of Section 22a-174-220) of

the Regulations, aUows the use of previously approved unused NOx DERCs

referenced in Table 2 ofthis Trading Agreement and Order. These DERCs are

subject to the vintage restrictions ofthis Trading Agreement and Order. Dates after

which the unused DERCs will no longer be eligible for use as a result of the vintage

restrictions are provided in Table 2 ofthis Trading Agreement and Order in the

expiration date column.

Table 2

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Previously Approved DERCS (to the extent not already used)

Year of Ozone season NOx DERC Ozone Non-ozone season NOx Non- Expiration

Generation serial number season DERC serial number ozone Date

NOx season

DERC, NOx

DERC

Pre·2000 I N/A 76 N/A 3 I 12131/04
Dominion Nuclear Connecticut, Inc. 3 Trading Agreement and Order 8221A

B. The Commissioner, in accordance with the provisions ofthis Trading Agreement and

Order, and pursuant to Section 22a-174-22(j) of the Regulations, hereby allows DNC to

comply with Section 22a-174-22 ofthe Regulations through use ofDERC trading.

C. With the agreement ofDNC, the Commissioner, acting under Sections 22a-6, 22a-171,

22a-174, 22a-176, and 22a-l77 ofthe Connecticut General Statutes, orders DNC as

follows: r

I. Upon issuance of this Trading Agreement and Order. at the facility, DNC shall

comply with S~tion 22a-174-22 of the Regulations through DERC trading. Until

DNC achieves pennanent compliance with the emission standard in Section 22a174-22(e) ofthe Regulations or by April 30, 2007, whichever occurs earlier:

a. DNC shall use approved DERCs as required under this Trading Agreement and

Order;

b. DNC shall have in its possession sufficient approved DERCs to meet applicable

NOx emission limits as allowed under this Trading Agreement and Order; and

c. DNC shall comply during operation ofthe EUs 2.3, 2.4, 2.7 and 2.10 with the

FLERS shown in Table 1 ofthis Trading Agreement and Order.

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2. DERC use

a. Until April 30, 2007, before the first day of each month, DNC shall have in its

possession sufficient approved DERCs for such month, based on the following

calculations.

Before th~ first day of each month, DNe shall estimate DERCs required for such

month for EUs 2.3, 2.4, 2.7 and 2.10 as follows.

i. At all times (mass calculation):

Estimated DERCs (in tons) = [maximum estimated hours of operation x maximum

bhp rating x (FLER - (0.95 x NOx Allowable limit)) x

(1 pound/454g)) + 2000 pounds/ton

Where:

-Allowable limit = in grtl/bhplhr as shown in Table I ofthis Trading

Agreement and Order.

- FLER full load emission rate in grtl/bhplhr as shown in Table 1 of this

Trading Agreement and Order.

- Discount (.95) .~ %5 design margin applied to the allowable limit.
Dominion Nuclear Connecticut, Inc. , Trading Agreement and Order 8221 A

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3.

11. During the ozone season only (peak day calculation):

The maximum actual excess NOx emissions (in lbs) on any of the days

projected by the Commissioner to be "moderate to unhealthful", "unhealthful"

or "very unhealthful" divided by 3 and then divided by 13 (with the result in

tons):

DERCs (iIlJons) = [(Maximwn excess NOx in Ibs).;. 3J.;. [13 Ibslday/ton] ,

b. No later than October 30 of2003, 2004, 2005, and 2006 calculate and

pennanently retire the DERCs used in the preceding ozone season as the greater

of:

1. the actual total excess emissions for the ozone season in tons, as

follows:

DERCs (in tons) [actual hours operated x maximum bhp rating x (FLER-

(0.95 x NOx Allowable limit)) x (l pound/454g)] .;. 2000

poundslton

OR

11. the maximum actual excess NOx emissions (in lbs) on any of the days

projected by the Commissioner to be "moderate to unhealthful",

"unhealthful", or "very unhealthful", divided by 3 and then divided by

13 (with the result in tons):

DERCs (in tons) = [(Maximum excess NOx in Ibs).;. 3].;. 13 lbsldayiton]

As described in Exhibit 1 ofthis Trading Agreement and Order, to the extent

that DERCs used to offset on peak day basis (method ii) exceed the total

mass excess emissions (method i). remaining DERCs may be used in the nonozone season in the same or subsequent years through April 30, 2007.

DNC shall make and keep records of: daily hours of operation; excess NOx

emissions; the number ofDERCs in its possession. created, purchased and used (by

serial number if assigned) each month in accordance with the appropriate emission

rates and limits in this Trading Agreement and Order; the number ofDERCs used

during the ozone season and non-ozone season (the remainder of the year); during

the ozone season, the ozone classification as forecasted by the Commissioner on the

previous day; as well as documentation anesting to the fact that approved DERCs .

used during the ozone season were generated during the ozone season. Generator

certification of this fact shall be sufficient. DNC shall maintain and submit such

records to the Commissioner in accordance with Section 22a-174-22 of the

Regulations.
Dominion Nuclear Connecticut, Inc. 5 Trading Agreement and Order 8221A

4. Record KeepinQ:. DNC shall retain records and supporting documentation as

described in this Trading Agreement and Order for a minimum offive years,

commencing on the date such records were created. DNC shall provide the records

specified above to the Commissioner within thirty (30) days ofreceipt of a written

request from the Commissioner.

5. Armual Emission'Statement. No later than March 1 of every year after issuance of

this Trading Agreement and Order, DNC shall include with the Annual Emission

Statement provided to the Commissioner, a record of each sale or other transfer, and

use of any and all ofthe DERCs approved within and subsequent to issuance ofthis

Trading Agreement and Order until all such DERCs have been used or are no longer

in DNC's possession. DNC shall also include actual NOx emissions from the

peaking units and the amount of all DERCs used (including serial numbers (if

assigned) and approved DERCs generated and/or purchased from other facilities),

generated and/or approved for the previous calendar year. These repons shall be on

a form prescribed by the Commissioner and shall be in monthly increments. Should

DNC choose to discontinue the generation ofDERCs, DNC will notify the

Commissioner upon discontinuance.

6. Allowance Use. Pursuant to Section 22a-174-22(d)(3) of the Regulations, DNC may

use NOx allowances, through April 30, 2007, pursuant to Section 22a-174-220) of

the Regulations to achieve all or a portion ofthe reductions required by Section 22a174-22 ofthe Regulations. Any allowance used for compliance with Section 22a174-22(e) of the Regulations shall be subject to all restrictions and/or requirements

applicable to DERCs contained in this Trading Agreement and Order;

a. In order for DNC to use NOx allowances, DNC shall create a general account

in EPA's NOx Allowance Tracking System (''NATS''); and

b. Each allowance used for compliance with Section 22a-174-22 ofthe

Regulations shall be equivalent to one discrete emission reduction credit.

Allowances shall be considered used for compliance with Section 22a-174-22

ofthe Regulations when they are transferred from the facility's NOx general

account in the NATS to the CT State NOx Retirement A~count (Account ill

CT0000000300 in the NATS).

7. DERC Doubling. At a minimum, DERCs required shall be adjusted upwards by

100% ifDERCs are not in DNC's possession for use prior to the first day of each

month. However based on the gravity ofthe noncompliance, the Commissioner may

require additional upwards adjustment.

8. Vintage Restriction. For the purposes of compliance with Section 22a-174-22 ofthe

Regulations, DERCs/allowances shall only remain valid for five (5) calendar years

from the year of the generation/allocation ofsuch DERCs/allowances.
Dominion Nuclear Connecticut, Inc. 6 Trading Agreement and Order 822lA

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10.

DERCsiaIlowances older than five (5) calendar years from their creation/allocation

are not valid for use for compliance with Section 222.·174-22 ofthe Regulations.

Notwithstanding the above, DERCsiallowances generated/allocated prior to calendar

year 2000 are valid for use for compliance with Section 22a-174·22 ofthe

Regulations up to and including December 31,2004.

FLER Exceedance. Noncompliance with an established FLER shall subject DNC to

make restitution by matching the quantity of emissions ("true up") caused by the

exceedance plus a 100% premium. The true up in tons ofDERCs shall be equal to

the FLER exceedance in gmlbhplhr, multiplied by the total hours operated during the

period of noncompliance, mUltiplied by the HP rating, divided by 454 grams/lb,

divided by 2000 Ibslton. If the period of noncompliance is not known, the time

period from the completion ofthe last/previous Department witnessed emission test

through the date the FLER compliance is achieved as approved by the Commissioner

shall be used. However, nothing in this Trading Agreement and Order shall affect

the Commissioner's authority to institute any proceeding or take any other action to

require additional upward adjustment,. based on the gravity of any alleged

noncompliance or violation oflaw.

FLER Modification. FLERs set forth in Table I ofthis Trading Agreement and

Order may be modified only after the consent ofthe Commissioner by written

modification ofthis Trading Agreement and Order.

11. Emissions Testing. Pursuant to Section 22a-174-22(k) ofthe Regulations, DNC

shall conduct NOx emission tests of each emergency generator EUs 2.3, 2.4, 2.5, 2.6,

2.7 and 2.10 at least no later than once every five years from the dates ofthe last

NOx emission tests for the emergency generators EUs 2.3, 2.4, 2.5, 2.6, 2.7 and 2.10

as provided in Table I oftms Trading Agreement and Order.

12. Extension. No later than May 1,2007, with respect to the EUs 2.3, 2.4, 2.7 and 2.10,

DNC shall comply with the requirements ofSection 22a-174-22(d)(I) ofthe

Regulations. However, after full program review of this and other Trading

Agreements and Orders and, if detennined to be appropriate, the Commissioner may

grant a written extension ofthis Trading Agreement and Order.

13. Future Compliance Report. On or before September I, 2006, DNC shall submit a

report indicating bow the facility shall comply with section 22a-174-22 ofthe

Regulations with respect to the Peaking units on and after May I, 2007.

14. Full compliance. DNC shall not be considered in full compliance with this Trading

Agreemen£ and Order until all actions required by this Trading Agreement and Order

have been completed as approved and to the Commissioner's satisfaction.
Dominion Nuclear Connecticut, Inc. 7 Trading Agreement and Order 822IA

15. Approvals. DNC shall use best efforts to submit to the Commissioner all documents

required by this Trading Agreement and Order in a complete and approvable form.

If the Commissioner notifies DNC that any document or other action is deficient, and

does not approve it with conditions or modifications, it is deemed disapproved, and

DNC shall correct the deficiencies and resubmit it within the time specified by the

Commissioner or, ifno time is specified by the Commissioner, within 30 days of the

Commissioner\.nbtice of deficiencies. In approving any document or other action

under this Trading Agreement and Order, the Commissioner may approve the

document or other action as submitted or performed or with such conditions or

modifications as the Commissioner deems necessary to carry out the purposes ofthis

Trading Agreement and Order. Nothing in this paragraph shall excuse

noncompliance or delay.

16. Definitions. As used in this Trading Agreement and Order, "Commissioner" means

the Commissioner ofEnvironmental Protection or an agent ofthe Commissioner.

"Ozone season" means the period from May 1 through September 30 in any given

calendar year. The date of "issuance" ofthis Trading Agreement and Order is the

date the Trading Agreement and Order is deposited in the U.S. mail or personally

delivered, whichever is earlier.

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18.

Dates. The date ofsubmission to the Commissioner of any document required by

this Trading Agreement and Order shall be the date such document is received by the

Commissioner. The date of any notice by the Commissioner under this Trading

Agreement and Order, including but not limited to notice of approval or disapproval

of any document or other action, shall be the date such notice is deposited in the U.S.

mail or is personally delivered, whichever is earlier. Except as otherwise specified in

this Trading Agreement and Order, the word "day" as used in this Trading

Agreement and Order means calendar day. Any document or action which is

required by this Trading Agreement and Order to be submitted or performed by a

date which falls on a Saturday, Sunday or a Connecticut or federal holiday shall be

submitted or performed by the next day which is not a Saturday, Sunday or

Connecticut or federal holiday.

Certification of documents. Any docwnent, including but not limited to any notice,

which is required to be submitted. to the Commissioner under this Trading

Agreement and Order shall be signed by DNC or, ifDNC is not an individual, by an

individual who is an authorized representative ofDNC, in accordance with Section

22a-174-2a(a) ofthe Regulations of Connecticut State Agencies, and by the

individual(s) responsible for actually preparing such document, and each such

individual shall certify in writing as follows;

"I have personally examined and am familiar with the infonnation submitted in this

document and all attachments thereto, and I certify, based on reasonable

investigation, including my inquiry ofthose individuals responsible for obtaining the

infonnation, that the submitted information is true, accurate and complete to the tiest
Dominion Nuclear Connecticut, Inc. 8 Trading Agreement and Order 8221A

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of my knowledge and belief. I understand that any false statement made in the

submitted information is punishable as a criminal offense under §53a-157b ofthe

Connecticut General Statutes and any other applicable law."

19. Noncompliance. This Trading Agreement and Order is a final order of the

Commissioner with respect 10 the maners addressed herein, and is nonappealable and

immediately enforceable. Failure to comply with this Trading Agreement and Order

may subject DNC to an injunction and penalties.

20. False statements. Any false statement in any infonnation submitted pursuant to this

Trading Agreement and Order is punishable as a criminal offense under Section 53a·

l57b of the Connecticut General Statutes and any other applicable law.

21. Notice oftransfer: liability ofDNC and others. Until DNC has fully complied with

this Trading Agreement and Order, DNC shall DOtify the Commissioner in writing no

later than fifteen (15) days after transferring all or any portion of any Df the facilities,

the operations, the sites or the businesses which are the subject of this Trading

Agreement and Order or after obtaining a new mailing or location addresses. DNC's

obligations under this Trading Agreement and Order shall not be affected by the

passage oftitle to any property to any other person or municipality.

o 22. Commissioner's powers. Nothing in this Trading Agreement and Order shall affect

the Commissioner's authority to institute any proceeding or take any other action to

prevent or abate violations oflaw, prevent or abate pollution, recover costs and

narural resource damages, and to impose penalties for past, present, or future

violations oflaw. Ifat any time the Commissioner determines that the actions taken

by ONC pursuant to this Trading Agreement and Order have successfully corrected

all violations, fully characterized the extent or degree of any pollution, or

successfully abated or prevented pollution, the Commissioner may institute any

proceeding to require ONC to undertake further investigation or further action to

prevent or abate violations or pollution.

23. DNC's obligations under law. Nothing in this Trading Agreement and Order shall

relieve DNC of other obligatioDs under applicable federal, state and local law.

24. NQ assurance bv Commissioner. No provision ofthis Trading Agreement and Order

and no action or inaction by the Commissioner shall be construed to constitute an

assurance by the Commissioner that the actions taken by ONC pursuant to this

Trading Agreement and Order will result in compliance or prevent or abate pollution.

25. Access to facility. Any representative ofthe Depamnent of Environmental

Protection may enter any of these facilities without prior notice for the purposes of

monitoring and enforcing the actions required or allowed by this Trading Agreement

and Order.
Dominion Nuclear Connecticut, Inc. 9 Trading Agreement and Order 8221A

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26. No effect on riehts of other persons. This Trading Agreement and Order neither

creates nor affects any rights of persons or municipalities that are not parties to this

Trading Agreement and Order.

27. 0 Creation ofPropenv Rights. This Trading Agreement and Order does not create

any property rights with respect to these DERCs. ., '

28. Notice to Commissioner of chanees. Within fifteen (15) days ofthe date DNC

becomes aware of a change in any information submitted to the Commissioner under

this Trading Agreement and Order, or that any such information was inaccurate or

misleading or that any relevant information was omitted, DNC shall submit the

correct or omitted information to the Commissioner.

29. Notification of noncompliance. In the event that DNC becomes aware that it did not

or may not comply, or did not or may not comply on time, with any requirement of

this Trading Agreement and Order or of any document required hereunder, DNC

shall immediately notify by telephone the individual identified in the next paragraph

and shall take all reasonable steps to ensure that any noncompliance or delay is

avoided or, if unavoidable. is minimized to the greatest extent possible. Within five

(5) days ofthe initial notice, DNC shall submit in writing the date, time, and duration

ofthe noncompliance and the reasons for the noncompliance or delay and propose,

for the review and wrinen approval ofthe Commissioner, dates by which compliance

will be achieved, and DNC shall comply with any dates which may be approved in

writing by the Commissioner. Notification by DNC shall not excuse noncompliance

or delay, and the Commissioner's approval of any compliance dates proposed shall

not excuse noncompliance or delay unless specifically so stated by the

Commissioner in writing.

30. Submission of documents. Any document required to be submitted to the

Commissioner under this Trading Agreement and Order shall, unless othenvise

specified in this Trading Agreement and Order or in writing by the Commissioner,

be directed to:

Mrs. Elizabeth McAuliffe

Department ofEnvironmental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street

Hartford, CT 06106
Dominion Nuclear Connecticut, Inc. 10 Trading Agreement and Order 822lA

DNC consents to the issuance ofthis Trading Agreement and Order without funher notice.

The undersigned certifies that he/she is fully authorized to enter into this Trading Agreement

and Order and to legally bind DNC to the tenns and conditions of the Trading Agreement

and Order.

Dominion Nuclear Connecticut, Inc.

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Signature:

Name:

Title:

Date:

Issued as a final order of the Commissioner ofEnvironmental Protection

J 'on ~J2f. 2003.

CITY OF WATERFORD LAND RECORDS

MAILED CERTIF.IED M.AlL,

RETURN RECEll'T REQUESTED

Certified Document No.

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