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STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the matter of

The State of Connecticut and

City of Norwich Department

ofPublic Utilities "

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Trading Agreement

and Order No. 8119A

Whereas, the Commissioner ofEnviromnental Protection ("Commissioner") and City ofNOrwlCh

Department of Public Utilities ("Norwich") 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 C"DERC") 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'Korwich, the Commissioner finds the following:

". I. This Trading Agreement and Order supercedes Trading Agreement and Order 8119

issued on March 4,1996, and Trading Agreement and Order 8119 Modification

issued April 29, 1999.

2. NOIWich is a municipal corporation operating an electric generation and distribution

utility plant at 16 South Golden Street, Norwich, CT ("facility").

3. At the facility, NOIWich operates one piece of fuel burning equipment, consisting of

a combustion turbine ("peaking unit"), which is subject to Subsection 22a-174-22 of

the Regulations of Connecticut State Agencies ("Regulations").

4. Emission testing perfonned on the dates indicated in Table I, resulted in a NOx

emission rates as follows:

Tahle I

NOx Emission Rates in IbstM:MBtu

Peaking Unit Fuel Heat Input Stack Test FUR Allowable Date of Next Stack

MMBtuIhr (ppmvd) IbsIMMBru Rate Stack Test Test Due

IbsIMMBru

Rolls Royce #2 oil 249 135.5 0.620 0.29 12122199 I 12122104

(Prilllcd on Recycled Papel)

79 Elm SUCCI • Hanford, CT 06106·5127

tIlL p:lJd 'p.Sta I••CI. us

All Eq;.al OpporruIlil;.' £",ployu
City of Norwich Depanment

of Public Utihties

2 Trading Agreement

and Order No. 8119A

5. Norwich exceeds the NOx allowable emission rate for the peaking unit specified in

Section 22a-174-22(e) of the Regulations as shown in table 1 of this Trading

Agreement and Order.

6. Pursuant to the Department ofEnvironmental Protection's "Credit Trading/or

Sources with lrr~gu/ar NOx Emissions" policy, with a revised date of February 27,

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

Order as Exhibit I, the peaking unit 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.

7. Pursuant to Section 22a-174-22(j) oftbe Regulations, during the non-ozone season,

Norwich intends to acquire and use approved DERCs until May I, 2005 for the

peaking unit.

8. The peaking unit's estimated annual usage of budget discrete emission reduction

credits ("BDERCs") is 20 tons on a peak rate basis and 5 tons on a mass basis. 15

tons are required to meet the difference between the mass and peak rate basis. As an

alternative to purchasing 15 tons at the peak rate, NoIWich intends to continue to

implement an enviromnentally beneficial project, as approved in Trading Agreement

and Order 8119, to reduce the emissions of NOx and other ozone precursors from

mobile sources in the state. In addition, Norwich has agreed to certain operating

restrictions designed to minimize NOx emissions during days when the ozone

concentration in ambient air is classified by the Commissioner as "moderate to

Wlhealthful", "unhealthful", or "very Wlhealthful".

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9. Pursuant to Section 22a-174.22G) ofthe Regulations, during the ozone season,

Norwich intends to acquire and use approved DERCs andlor BDERCs until May 1,

2005 to offset emissions, on a mass basis, for the peaking unit.

10. The Commissioner, pursuant to Section 22a-174-22(j) ofthe Regulations, previously

approved the NOx DERCs referenced in Table 2 ofthis Trading Agreement and

Order. DERCs are subject to the vintage restrictions of this Trading Agreement and

Order. Dates after which the DERCs will no longer be eligible for use as a result of

the vintage restrictions are provided in Table 2 of this Trading Agreement and Order

in the expiration date column.

Table 2

Ye2r of Ozone season DERC serial IOzone Non~Ozone season Non- Expiration

Generation numbers DERC serial numbers Ozone D2te

Pre 2000 Not assigned I 9 N/A N/A 12/31/04
City of Norwich Department

of Public Utilities

3 Trading Agreement

and Order. 0.8ll9A

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

Order, and pursuant to Section 22a-174-22(j) ofthe Regulations, hereby allows Norwich

10 comply with Section 22a-174-22 of the Regulations through use of DERC and BDERC

trading. Additionally, the G:ommissioner herby allows Norwich to make monetary

investment of not Jess than $15,000 per year in the environmentally-beneficial project

referenced in paragraph A.8. ofthis Trading Agreement and Order, as approved in

Trading Agreement and Order 8119, and incorporated by reference into this Trading

Agreement and Order as Exhibit 2, Norwich Proposal 10 the State o/Connecticut, to

achieve a portion of the NOx emission reductions required by Section 22a-174-22(d)(3)

C. With the agreement ofNorwich, the Commissioner, acting under Sections 22a-6, 22a171, 22a-174, 22a-176, and 22a-177 ofthe Connecticut General Statutes, orders Norwich

as follows:

1. Upon issuance ofthis Trading Agreement and Order, at the facility, Norwich shall

comply with Section 22a-174-22 ofthe Regulations through DERC trading. Until

Norwich achieves permanent compliance with the emission standard in Section 22a174-22(e) of the regulation or by May 1, 2005, whichever occurs earlier:

a Norwich shall use approved DERCs as required under this Trading Agreement

and Order;

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

applicable NOx emission limits as allowed under this Trading Agreement and

Order; and

c. Norwich shall comply during operation of the peaking unit with the FLERS

shown in Table 1 ofthis Trading Agreement and Order.

2. DERC use

a. Until May I, 2005, before the first day of eacb month, Norwich shall have in irs

possession sufficient approved DERCs for the peaking unit based on the following

calculations.

Before the first day of each month, Nof'\ltlich shall estimate DERCs required for such

month for the peaking unit as follows.
City of Norwich Department

of Public Utilities

4 Trading Agreement

and Order No.8 J 19A

Estimated DERCs (in tons) = {(estimated fuel use in MMBtu) x {(FLER) - (0.95 x

NOx allowable emission limit»)} .;. 2000 pounds/ton

Where:

-Allowable emission limit - in IbsIMMBtu as shown in table I ofthis

Trading Agreement and Order. ,

• FLER - full load emission rate in IbsIMMBtu as shown in table 1 of this

Trading Agreement and Order.

• Disco1.U1t (.95) = 5% design margin applied to the allowable limit.

b. No later than the twentieth day of each month, calculate and permanently retire

DERCs used in the preceding calendar month for the peaking unit as follows:

Actual DERCs (in tons) = {(actual fuel use in MMBtu) x «(FLER) - (0.95 x NO.

allowable emission limit))} .;. 2000 pounds/ton

t9. ;J c. In addirion to acquiring and using DERCs and/or BDERC as required in paragraph

C.2.a. of this Trading Agreement and Order, Norwich implemented. the supplemental

environmental program ("SEP") incorporated by reference into Trading Agreement

and Order No. 8119 by Exhibit 2. The SEP was designed to allow conversion ofthe

City ofNonvich's vehicles to natural gas, and to provide the necessary infrastrucrure

to help encourage other vehicle owners in the Southeastern Connecticut region to

cooven their vehicles to natural gas. Norwich shall continue to work with

Connecticut State Agencies and the administration to encourage the use ofAlternative

Fuel Vehicles ("AFVs") in the state.

d. During the non-azone season starting on October 1, 2003:

In addition to meeting the emission limit in Table 22-1 of Section 22a-174-22 of

the Regulations, meet a non-ozone season emission limit of 0.15 lblM:MBru.

Prior to October 1, 2003 and October 1, 2004, Norwich shall estimate and

acquire sufficient DERCs and/or allowances needed to comply with Section

22a-174-22(e)(3) of the Regulations as follows:

Estimated DERCs (tons) [Estimated fuel use in MMBtu from October 1

through April 30 x (FLER in IbsIMMBtu - (0.95 x

0.15 IblMMBtu))] .;. 2000 pounds/ton.
City of Norwich Department

of Public Utilities

5 Trading Agreement

and Order No. 8119A

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e. No later than May 31 of 2004, calculate and pennanently retire DERCs used in

the preceding non-ozone season as follows:

Acrua} DERCs (tons) [Acrual fuel use in MMBru from October I through

April 30 x (FLER in IbsIMMBru- (0.95 x 0.15

IblMMBru))] .;. 2000 pounds/ton.

,

3. BDERCs shall only be used by other NOx budget program sources located in Connecticut.

BDERCs shall only be used to offset ozone season excess emissions, and shall not be used

for compliance during the non-ozone season. BDERCs generated during a given year shall

only be used through the following ozone season. BDERCs are subject to all DERC

requirements set forth in this Trading Agreement and Order except for those requirements

penaining solely to non-ozone season DERCS and as otherwise may be provided.

4. Norwich shall make and keep records of: daily fuel use and fuel type; 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 attesting 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. NoIWich shall maintain and submit such records to the Commissioner in

accordance with Section 22a-174-22 ofthe Regulations.

5. Record Keeping. Notwich 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. Norwich shall provide the records specified above to the

Commissioner within thirtY (30) days of receipt of a written request from the

Commissioner. ,,-

6. Annual Emission Statement. No later than March 1 of every year after issuance ofthis

Trading Agreement and Order, NoIWich 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 Norwich's possession.

Norwich shall also include actual NOx emissions from the peaking unit and the amount of

all DERCs used, including serial nwnbers (if assigned), and approved DERCs generated

and/or purchased from other facilities. These reports shall be on a form prescribed by the

Commissioner and shall be in monthly increments. In addition, Norwich shall provide to

the Commissioner an annual report documenting the progress and results of the
City of Norwich Department

of Public Utilities

6 Trading Agreement

and Order No. 8119A

-'

environmentally-beneficial program referenced in paragraph A.8 oftrus Trading

Agreement and Order as well as expenditures to date

7. Allowance Use. Pursuant to Section 22a-174-22(d)(3) ofthe Regulations, NoIWich may

use NOx allowances, pursuant to Section 22a-174-22(j) ofthe Regulations to achieve all

or a portion of the redt,1ctions required by Section 22a-174-22 of the Regulations. Any

allowance used for compliance with Section 22a-174-22(e) of the Regulations shall be

subject to all restrictions and/or requirements applicable to DERCs contained in this

Trading Agreement and Order. Each allowance used for compliance with Section 22a174-22 of the Regulations shall be equivalent to one discrete emission reduction credit and

shall be deducted from Norwich's NOx Budget Program compliance account upon such

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

Regulations when they are transferred from the facility's compliance account or overdraft

account to a State of Connecticut NOx allowance retirement account, account ill

CT0000000300 in the NOx i\.llowance Tracking System.

8. DERC Doubling. At a minimwn, DERCs required shall be adjusted upwards by 100% if

DERCs are not in Norwich's possession for use prior to the first day of each month or

applicable season. However based on the gravity ofthe noncompliance, the

Commissioner may require additional upwards adjustment.

9. 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. DERCsJallowances

older than five (5) calendar years from their creation/allocation are not valid for use for

compliance with Section 22a-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.

10. FLER Exceedance. Noncompliance with an established FLER shall subject oxwich 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 IbsIMMBtu, multiplied by the total heat input during the period of

noncompliance divided by 2000 lbs/ton. Ifthe period of noncompliance is not known, the

time period from the completion ofthe last/previous Department wimessed 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 of law.
City of Norwich Depanment

ofPublic Utilities

7 Trading Agreement

and Order No. 8119A

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11. FLER Modification. FLERs set forth in Table 1 of this Trading Agreement and Order

may be modified only after the consent of the Commissioner by wrinen modification of

this Trading Agreement and Order.

12. Emissions Testing. Pursuant to Section 22a-174-22(1<) of the Regulations, Norwich shall

conduct NOx emissio~tests ofthe peaking unit at least once every five years commencing

from the dates oftbe-N'Ox emission tests for the peaking unit as provided in Table 1 ofthis

Trading Agreement and Order.

13. Extension. No later than May 1, 2005, with respect to the peaking unit, Norwich shall

comply with the requirements of Section 22a-174-22(d)(l) ofthe Regulations. However,

after full program review of this and other Trading Agreements and Orders and, jf

detennined to be appropriate, the Conunissioner may grant a written extension of this

Trading Agreement and Order.

14. Future Compliance Report. On orhefore September I, 2004, Norwich shall submit a

report indicating how the facility shall comply with section 22a-174-22 of the Regulations

with respect to the Peaking unit on and after May I, 2005.

15. Full compliance. Norwich shall not be considered in full compliance with this Trading

Agreement and Order until all actions required by this Trading Agreement and Order have

been completed as approved. and to the Commissioner's satisfaction.

16. Approvals. Norwich shall use best efforts to submit to the Commissioner all documents

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

Commissioner notifies Norwich that any document or other action is deficient, and does

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

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 ofthe

Commissioner's notice 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 perfonned 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.

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

Commissioner ofEnvironmental Protection or an agent of the Commissioner. "Ozone

season" means the period from May 1 through September 30 in any given calendar year.

The date of "issuance" of this 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.
City of Norwich Department

of Public Utilities

8 Trading Agreemenl

and Order No. 8119A

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18. Dates. The date ofsubmission to the COmnUssioner of any document required by this

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

Conunissioner. The date of any notice by the Conunissioner 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

COIUlecticut or federal holiday shall be submitted or performed by the next day which is

not a Saturday, Sunday or Connecticut or federal holiday

19. 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 signe~ by W or, ifrv1P is not an individual, by an individual who is an authorized

representative ofthe Respondent, in accordance with Section 22a-174-2a(a) of the

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 as

follows:

"1 have personally examined and am familiar with the information submitted in this

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

including my inquiry of those individuals responsible for obtaining the information, that

the submitted information is true, accurate and complete to the best ofmy knowledge and

belief. 1understand that any false statement made in the submitted information is

punishable as a criminal offense under Section 53a-157b ofthe Connecticut General

Statutes and any other applicable law."

20. oncompliance. This Trading Agreement and Order is a final order ofthe Commissioner

with respect to the matters addressed herein, and is nonappealable and immediately

enforceable. Failure to comply with this Trading Agreement and Order may subject

Norwich to an injunction and penalties.

21. False statements. Any false statement in any information submitted pursuant to this

Trading Agreement and Order is punishable as a criminal offense W1der Section 53a·157b

ofthe Connecticut General Statutes and any other applicable law.

22. Notice oftransfer: liabilirv ofNorwich and others. Until Norwich has fully complied

with this Trading Agreement and Order, . orwich shall notify the Commissioner in

writing no laterthan fifteen (15) days aftertransferring all or any portion of any of 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. NOf'INich's
City of Norwich Department

of Public Utilities

9 Trading Agreement

and Order No. 8119A

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25.

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

of title to any property to any other person or municipality.

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 of~aw, prevent or abate pollution, recover costs and natural resource

damages, and to impose penalties for past, present, or future violations oflaw. Ifat any

time the Commissioner determines that the actions taken by Norwich 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 Norwich to

undertake further investigation or funher action to prevent or abate violations or

pollution.

Norwich's obli2ations under law. Nothing in this Trading Agreement and Order shall

relieve Norwich of other obligations under applicable federal, state and local law.

No assurance bv Commissioner. No provision of this 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 Norwich pursuant to this Trading

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

26. Access to facility. Any representative of the Department of Environmental Protection

may enter any ofthese facilities without prior notice for the purposes ofmonitoring and

enforcing the actions required or allowed by this Trading Agreement and Order.

. 27. No effect on rights 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.

28. No Creation ofProperrv Ricl1ts. This Trading Agreement and Order does not create any

property rights with respect to these DERCs.

29. Notice to Commissioner of changes. Within fifteen (15) days ofthe date Norwich

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

Trading Agreement and Order, or that any such infonnation was inaccurate or misleading

or that any relevant information was omined, Norwich shall submit the correct or omined

information to the Commissioner.

30. Notification of noncompliance. In the event that Norwich 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, Norwich shall
City of Norwich Depanment

of Public Utilities

10 Trading Agreement

and Order No. 8119A

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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 of the

initial notice, Norwich shall submit in writing the date, time, and duration of the

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

review and written ap,proval ofthe Commissioner, dates by which compliance will be

achieved, and Norwich shall comply with any dates which may be approved in vmting by

the Commissioner. Notification by Norwich 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.

Submission of documents, Any document required to be submitted to the'Commissioner

under this Trading Agreement and Order shall, unless otherwise specified in this Trading

Agreement and Order or in writing by the Commissioner, be directed to:

Mr. Michael LaFleur

Department ofEnvironmental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trad,ing Section

79 Elm Street

Hartford, CT 06106
City of Norwich Department

of Public Utilities

11 Trading Agreement

and Order No. 8119A

Norwich consents to the issuance of this Trading Agreement and Order without further notice.

The lU1dersigned cenifies that he/she is fully authorized to enter into this Trading Agreement

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

and Order.

City ofNonrich Department ofPublic Utilities

Signature t~ Name: 2ic.h.o..-cI De.sRDC-h.e.S

Title: G·eV'€-ra.i Mo"Cl§U'"

Date 'i- ;);,- 0.3

Issued as a fina

/

/

order of the Commissioner ofEnvironmental Protection on '(/ .

U.A ,2003.

'J /' ~-, ~~~t6-;(/ /"firthur 1. Rocque, Jr,

~/ Commissioner

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CITY OF NORWICH LAND RECORDS

MlllLED CERTIFIED MAlL,

RETURN RECEIPT REQUESTED

Cenified Docrnnent No.