STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT

AND

ALGONQUIN POWER

WINDSOR LOCKS LLC

TRADING AGREEMENT AND

ORDER NO. 8261

MODIFICATION NO.1

TRADING AGREEMENT AND ORDER MODIFICATION

In the matter of a Trading Agreement and Order between the Commissioner of Environmental

Protection ("Commissioner") and Algonquin Power Windsor Locks LLC ("Algonquin").

WHEREAS, the Commissioner and Algonquin, having agreed to the tenns and conditions set

forth in Trading Agreement and Order No. 8261 issued on April 25, 2005, do now, by mutual

agreement, modify Trading Agreement and Order No. 8261 as follows:

I. Delete the date May 1, 2007, and substitute therefor May 1, 2009, in paragraphs

A.4. and c.l.

2. Delete paragraph C.2. and substitute the following therefor:

DERC use. Starting on October 1, 2004, and until May 1,2009, before the first

day of each non-ozone season, Algonquin shall have in its possession sufficient

approved DERCs for the turbines based on the following:

a. During the non-ozone season:

Algonquin shall meet a non-ozone seasonal average emission limit of 0.15

IbsIMMBtu. Prior to October I, 2006, October 1, 2007, and October 1,2008,

Algonquin shall estimate and acquire the amount ofDERCs or allowances

required for such non-ozone season needed to comply with Section 22a-174-

22(e)(3) ofthe Regulations as follows:

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

through April 30 x (estimated seasonal average

NOx emission rate in IbsIMMBtu during October

1 through April 30 - (0.95 x 0.15 IbsIMMBtu))]-i2000 pounds/ton.

( Printed on Recycled Paper)

79 Elm Street • Hartford. CT 06106 - 5127

An Equal 0p{Jorlllllity Employer
Algonquin Power Windsor Locks LLC 2 Trading Agreement and Order

No. 8261 Modification No. I

No later than May 31 of2007, 2008, and 2009, when the turbines have a nonozone seasonal average actual NOx emission rate exceeding 0.15 Ibs/MMBtu,

Algonquin shall calculate and permanently retire the amount ofDERCs used in

the preceding non-ozone season as follows:

Actual DERCs (tons) = [Actual fuel use in MMBtu from October I through April

30 x (actual seasonal average NOx emission rate in

Ibs/MMBtu during October I through April 30 - (0.95 x

0.15 Ibs/MMBtu»] -i- 2000 pounds/ton.

b. When the non-ozone season CEM-recorded NOx emission rate is used to

calculate DERCs used by the turbines, Algonquin shall include missing data

calculated in accordance with missing data substitution procedures under 40

CFRPart 75.

c. Algonquin shall not exceed any NOx permit limitations for the turbines.

3. Delete paragraph C.6. and substitute the following therefor:

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

Algonquin may use NOx allowances, until May 1,2009, for the peaking unit

pursuant to Section 22a-174-22(j) ofthe Regulations to achieve all or a portion of

the reductions required by Section 22a-174-22 ofthe Regulations. Any allowance

used for compliance with Section 22a-174-22(e) ofthe Regulations shall be

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

this Trading Agreement and Order;

a. In order for Algonquin to use NOx allowances, Algonquin shall create a

general account or use an existing compliance account or overdraft 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 or the facility's NOx compliance account in the NATS

to the CT State NOx Retirement Account (Account ill CT0000000300 in the

NATS).

4. Delete paragraph C.7. and substitute the following therefor:

DERC Shortfall. At a minimum, DERCs required shall be adjusted upwards by
Algonquin Power Windsor Locks LLC 3 Trading Agreement and Order

No. 8261 Modification No.1

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

each non-ozone season. 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. Algonquin shall permanently retire

the quantity of DERCs equivalent to the excess emissions plus a 100% premium

within (60) days of Algonquin's discovery ofthe DERC shortfall. Algonquin

shall certify and report any such DERC retirement to the Commissioner in

accordance with paragraph C.26. ofthe Trading Agreement and Order.

5. Delete paragraph C.9. and substitute the following therefor:

Extension. No later than May I, 2009 with respect to the turbines, Algonquin

shall comply with the requirements of Section 22a-174-22(d)(2)(A) ofthe

Regulations. There is no assurance that the Commissioner will grant a written

extension ofthis Trading Agreement and Order.

6. Delete paragraph C.I O. and substitute the following therefor:

Future Compliance Report. On or before September I, 2008, Algonquin shall

submit a report in writing to the Commissioner, as directed in paragraph C.27. of

this Trading Agreement and Order, indicating how the facility shall comply with

Section 22a-174-22 ofthe Regulations with respect to the turbines on and after

May I, 2009.

7. Delete paragraph C.14. and substitute the following therefor:

Definitions. As used in this Trading Agreement and Order, "Approved DERCs"

are those for which the Commissioner has provided written authorization for use

in compliance with Section 22a-174-22 ofthe Regulations; "Commissioner"

means the Commissioner or a representative ofthe Commissioner; "Non-ozone

season" means the period from October I through April 30 in any given calendar

year.

8. Delete paragraph C.15. and substitute the following therefor:

Dates. 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. 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
•

Algonquin Power Windsor Locks LLC 4 Trading Agreement and Order

No. 8261 Modification NO.1

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.

All other terms and conditions of Trading Agreement and Order no. 8261 issued by the

Commissioner acting under Chapter 446c, Sections 22a-6, 22a-171, 22a-174, 22a-176, and 22a177 ofthe Connecticut General Statutes shall remain in effect.
i .

A

Algonquin Power Windsor Locks LLC 5 Trading Agreement and Order

No. 8261 Modification No. 1

Algonquin hereby consents to the entry ofthis modification to the Trading Agreement and Order

without further notice.

Algonq

Signature:

Type Name:

Type Title:

Date:

rLocks LLC

James A. White

Plant Manager

9/28/2006

r

a modification of an Order ofthe Commissioner of Environmental Protection.

Date

TOWN OF WINDSOR LOCKS

MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED

Certified Document No. 7004 1160 0002 2804 0546