Memorandum of Understanding Among the States of the Ozone

Transport Commission Concerning the Incorporation of High Electrical 

Demand Day Emission Reduction Strategies into Ozone Attainment State 

Implementation Planning 

Whereas the Ozone Transport Commission (OTC) was established under

Sections 176A and 184 of the federal Clean Air Act (CAA) to ensure the

development and implementation of regional strategies to reduce ground-level

ozone to healthful levels; and 

Whereas the adverse health effects of ground-level ozone are well 

documented, and in spite of significant reductions of ozone precursor 

emissions achieved to date as a result of our NOx MOU of 1994, the US 

Environmental Protection Agency (EPA) NOx SIP call effective in 2003, and 

expected reductions to be further achieved by federal and state programs over 

the next decade, a significant portion of the ozone problem continues to be 

caused by nitrogen oxides (NOX) transported into and generated within our 

region by electrical generating units (EGUs); and 

Whereas, high electrical demand day (HEDD) operation of EGUs generally

have not been addressed under existing air quality control requirements, and 

these units are called into services on the very hot days of summer when air

pollution levels are highest, and 

Whereas, HEDD unit operations are a significant contributor to NOx emissions

on high ozone days; and 

Whereas, the NOx cap and trade program, although effective generally has, 

by its very nature, had limited success in reducing emissions from HEDD units

on HEDDs; and 

Whereas, OTC staff, state environmental and utility regulators, EPA staff, 

EGU owners and operators and the independent regional systems operators

have been meeting to assess emissions associated with HEDD during the 

ozone season and to address excess NOx emissions on HEDDs, and 

Whereas, OTC is guided by its precepts to seek reductions in the most 

comprehensive, cost effective manner possible in order to maximize public

health, environmental and economic benefits while ensuring an adequate 

electrical capacity and reliability for the region; and

___________

Connecticut 

Delaware 

District of Columbia 

Maine 

Maryland 

Massachusetts 

New Hampshire 

New Jersey

New York 

Pennsylvania 

Rhode Island 

Vermont 

Virginia 

___________

Christopher Recchia 

Executive Director 

___________

444 N. Capitol St. NW

Suite 638 

Washington, DC 20001 

(202) 508-3840 

FAX (202) 508-3841 

Email: ozone@otcair.org

___________
Whereas, our investigations have found that NOx emissions are much higher on 

a high electrical demand day than on a typical summer day and there is the 

potential to reduce HEDD emissions by approximately 25% in the short term 

through the application of known control technologies to HEDD combustion 

turbine, coal and residual oil burning units; and 

Whereas, installing typically used NOx control technologies may not be available 

to, or be the most cost effective method of, controlling HEDD NOx emissions 

from specific units; and 

Whereas, energy efficiency is the most cost effective method to reduce HEDD 

NOx emissions, but cannot alone, nor in the short term, achieve sufficient 

emission reductions to achieve attainment of the ozone standard in many areas; 

and 

Whereas, demand response programs can be a very cost effective mechanism 

to reduce emissions if they result in clean behind the meter generation and are 

supported by appropriate market devices, including but not limited to dynamic 

pricing; and 

Whereas, any strategy to address HEDD emissions must recognize and address 

the issue of high emitting behind the meter units; and 

Whereas, EPA and State workgroups estimate that using a cap and trade 

mechanism alone to provide sufficient financial incentives to cause the clean up 

of HEDD units would need an 18:1 retirement ratio and such a strategy would 

consume 74% of all available CAIR allowances for 12 HEDD days; 

Therefore, be it RESOLVED that 

The OTC States identified in the following table commit to pursue the following 

reductions in NOx emissions associated with HEDD units on high electrical 

demand days during the ozone season; such reductions to be achieved 

beginning with the 2009 ozone season or as soon as feasible thereafter, but no 

later than 2012: 
State NOx 

(tons per day) 

Percent Reduction from 

HEDD Units 

CT 11.7 25% 

DE 7.3 20% 

MD 23.5 32% 

NJ 19.8 28% 

NY 50.8 27% 

PA 21.8 32% 

Total 134.9 

Furthermore, that such reduction commitment will be included in each of the 

several states’ 8-hour ozone attainment State Implementation Plan submissions 

to EPA due in June 2007; and 

Furthermore, that each state shall select the strategy or combination of 

strategies that provides both maximum certainty and appropriate flexibility for that 

state and its electric generators. Such mechanisms for achieving the reductions 

may include but are not limited to: 

• regulatory caps for emissions from HEDD units on HEDDs; 

• performance standards; 

• State/generator HEDD partnership agreements; 

• energy efficiency programs; 

• demand response programs, provided that such programs reduce and/or 

preclude the installation or use of distributed generation with 

unacceptably high emissions; 

• regulatory standards or controls for behind-the-meter generators; 

• effective adjustment of the NOx retirement ratio to provide reductions on 

HEDDs; and 

Furthermore, the undersigned states for whom no state-specific target emission 

reduction is specified above sign this MOU in support and appreciation of the 

listed states making this commitment, will continue to evaluate the HEDD issue in 

their state and, as necessary and appropriate, may choose to pursue additional 

emission reductions from the HEDD sector in their state. 

Be it FURTHER RESOLVED that the OTC states will continue their work to 

establish long-term standards and programs to address emissions on HEDDs, 

such programs and standards to include: 

• continued work with state energy and utility regulators as well as the 

regional transmission operators regarding energy efficiency, dynamic 

pricing and other market oriented incentives toward significant demand 

reduction and clean new or repowered supply 
• development of long-term performance standards that will ensure 

reliable, clean future generation. 

• development of emissions portfolio standards applicable to load serving 

entities, distribution companies, “aggregators” and generators, according 

to the structure of the energy supply market 

Executed by the undersigned States this 2nd day of March, 2007: 

_______________________________ 

Connecticut 

_______________________________

Delaware 

_______________________________ 

District of Columbia 

_______________________________

Maine 

______//s//_________________________

Maryland 

_______________________________

Massachusetts 

______________________________ 

New Hampshire 

_______________________________

New Jersey

_______________________________ 

New York 

_______________________________

Pennsylvania 

_______________________________ 

Rhode Island 

_______________________________

Vermont 

_______________________________ 

Virginia