SIP DESCRIPTION PSEG Power Connecticut LLC-Trading Agreement and Order

No. 8244 Modification 1

I. SIP - DESCRIPTION OF DERC CREAnON ANDIOR USE

SIP SUMMARY TABLE

Trading: Ai"reement and Order No. 8244 Modification 1

PSEG Power Connecticut LLC 1 Atlantic Street Bridgeport cr 06604

Identifier IClienl~ Town # li Premise # 45.1 Sequence # 1

Contact Mr. Robert Silvestri Tel: (203) 551-6032 Fax (203) 551-6053

Environmental Qoerations Leader

Pollutant and Regulatory Standard: NOx Section 22a-174-22 ofthe Regulations of

Connecticut State Agencies.

Nonattainment Area Classification Severe

Annual DERCs needed Estimated 5 ozone and 1non-ozone.

Comoliance Time Period Until Anril 30, 2007.

Max. Emission Rate: full load emission rate (FLER) Use. See Table 1 below):

Table I

NOx Emission Rates and Allowable Limits

Unit Fuel Maximum Stack Test FLER Allowable Date of Next

PIR number Capacity (ppmvd) Ibs/MMlltu Rate Stack Stack

MMlltulhr IbsIMMlltu Test Test Due

Unit 4 #2 oil 287 188 0.73 0.29 4/28/00 4/28/05

Turbine

R-0166

T1. SPECIAL REQUIREMENTS

3. This Trading Agreement and Order Modification supersedes Trading Agreement and

Order No. 8244 issued on February 13,2003.

b. Calculations of credits used shall be as specified in Trading Agreement and Order No.

8244.

c. PSEG Power Connecticut LLC shall acquire and pennanently retire seven ozone season

DERCs for every actual ton of excess NOx emitted from the peaking units during the

previous ozone season based upon the actual emissions for each day that Connecticut

one hour ozone levels were forecasted to be "moderate to unhealthful", "unhealthful", or

"very unhealthful".

STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT

AND

PSEG POWER CONNECTICUT LLC

TRADING AGREEMENT AND

ORDER NO. 8244

MODIFICATION NO.1

TRADING AGREEMENT AND ORDER MODIFICATION

In the mateer of aTrading Agreement and Order between the Commissioner of Environmental

Protection ("Commissioner") and PSEG Power Connecticut LLC ("PSEG").

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

forth in Trading Agreement and Order No. 8244 signed by the Commissioner on February 13,

2003, do now, by mutual agreement, modify said Trading Agreement and Order as follows:

1. Delete paragraph A.7. and substitute the following therefor:

Reserved.

2. Delete the date May 1, 2005, and substitute therefor May 1,2007, in paragraphs

C.3. and C.4.

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

Have in its possession sufficient approved DERCs for the current day, based on

the following calculations;

At all times:

Estimated DERCs (in tons) =[«FLER in IbslMMBtu) - (0.95 x NOx RACT in

IbslMMBtu)) x (estimated fuel use in MMBtu)]

.,. 2000 pounds/ton

No later than the twentieth day of each month, PSEG shall calculate and

permanently retire DERCs used in the preceding calendar month, as follows:

Actual DERCs (in tons) = [«(FLER in IbslMMBtu) - (0.95 x NOx RACT in

IbslMMBtu)) x (actual fuel use in MMBtu)J .,. 2000

pounds/ton

(Printed on Recycled Paper)

79 Elm Streel • Hartford, cT 06106 - 5127

hItp:/Idcp.state. Cl.us

An Equal Opportunity Employer
PSEG Power Connecticut liC 2 Trading Agreement and Order No.

8244 Modification No.1

During the ozone season onlY:

No later than December 31s1 each year, PSEG shall acquire and permanently retire

seven ozone season DERCs for every actual ton of excess NOx emirred from the

peaking unit during the previous ozone season based upon the actual emissions for

each day that Connecticut one hour ozone levels were forecasted to be "moderate

to unhealthful", "unhealthful", or "very unhealthful", until such time that the EPA

revokes the l·hour standard. Upon such revocation, PSEG shall calculate and

permanently retire seven ozone season DERCs for every actual ton of excess NOx

emitted from the peaking unit during such ozone season based upon the actual

emissions for each day that Connecticut eight hour ozone levels were forecasted

to be "unhealthy for sensitive groups", "unhealthy", or "very unhealthy".

Where:

Actual ton of «cess NOx emined = [«(HER in IbslMMBtu) - (0.95 x

NOx RACT in IbslMMBtu)) x (actual fuel

use in MMBtu)J 2000 pounds/ton

The total actual tons of excess NOx emitted from the peaking unit during

forecasted ozone exceedance days shall be multiplied by seven and then rounded

to the next greater whole ton, to detennine the number of DERCs to be

permanently retired. This requirement is in addition to the PSEG's requirement to

estimate excess emissions and subsequent permanent retirement of a sufficient

number of approved DERCs in accordance with paragraph C.3.a. of this Trading

Agreement and Order.

4. Delete paragraph C.3.b. and substitute the following therefor:

During the non·ozone season: Until May 1, 2007, from October 1 through April

30, inclusive, each year, the peaking unit shall, in addition to meeting the 24-hour

emission limit in Table 22·1 of Section 22a-174-22 of the Regulations, meet a

non-ozone season emission limit of 0.15 IbJM:rvfBtu. Prior to October I, 2004,

2005 and 2006, PSEG shall have in its possession sufficient approved DERCs or

allowances for the non-ozone season to comply with Section 22a-174-22(e)(3) of

the Regulations based on the following calculations.

Before the first day of each non-ozone season, PSEG shall estimate and acquire

DERCs required for such non-ozone season for the peaking unit as follows:

Estimated DERCs (tons) use; [Estimated fuel use in Mi\1Btu from October 1

through April 30 x (the 24-hour allowable

emission limit in IbslM1v1Btu - (0.95 x 0.15

IbIMMBtu))J + 2000 Ibslton
PSEG Power Connecticut LLC 3 Trading Agreement and Order No.

8244 Modification No.1

No later than May 31 of 2005,2006 and 2007, in addition to the DERCs retired

pursuant to paragraph C.3.a. of this Trading Agreement and Onder, PSEG shall

calculate and permanently retire DERCs used in the preceding non-ozone season as

follows:

Actual DERCs (tons) used = [Actual fuel use in MMBtu from October 1 through

April 30 x (the 24-hour allowable emission limit in

IbslMMBtu - (0.95 x 0.15IblMMBtu))J'" 2000

Ibs/ton

5. Delete paragraph C.3.c. and substitute the following therefor:

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

100% if DERCs are not in PSEG's possession for use prior to the first day of each

month or applicable season. However, nothing in this Trading Agreement and

Order shall affect the Commissioner's authority to institme any proceeding or take

any other action to require additional upward adjusonent, based on the gravity of

any alleged noncompliance or violation of Jaw. PSEG shall permanently retire the

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

sixty (60) days of PSEG's discovery of the DERC shortfall. PSEG shall certify and

report any such DERC retirement to the Commissioner in accordance with

paragraph C.24. of this Trading Agreement and Order.

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

Reserved.

7. Delete paragraph C.3.f. and substitute the following therefor:

(i) Annual DERC Report. No later than March 1 of every year after issuance of this

Trading Agreement and Order, PSEG shall submit in writing to the

Commissioner, a record of each sale or other transfer of DERCs for the previous

calendar year. PSEG shall also include actual NOx emissions from the peaking

unit and the amount of all DERCs used (including serial numbers (if assigned)

and DERCs purchased from other facilities). These reports shall be on forms

prescribed by the Commissioner and shall be in monthly increments, and by

ozone and non-ozone seasons.

(ii)Starting on October 1, 2004: No later than July 30 of every year after issuance

of this Trading Agreement and Order, PSEG shall submit in writing to the

Commissioner the nonvozone season fuel consumption and amount of all

DERCs used (including serial numbers (if assigned) and approved DERCs
PSEG Power Connecticut LLC 4 Trading Agreement and Order No.

8244 Modification No.1

purchased from other facilities) for the peaking unit during lhe October through

April time period in the previous calendar year. These repons shall be on a

form prescribed by the Commissioner.

8. Delete paragraph C.3.j. and substitute the following therefor:

Pursuant to Section 22a-174-22(d)(3) of the Regulations, PSEG may use NO,

allowances, until May 1,2007, pursuant to Section 22a-174-22U) of the

Regulations, to achieve all or a portion of the reductions required by Section 22a174-22 of the Regulations. Any allowance used for compliance with Section 22a·

174-22(e) of the Regulations shall be subject to all restrictions andlor requirements

applicable to DERCs contained in this Trading Agreement and Order.

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

FLER Exceedance. Noncompliance with an established FLER shall subject PSEG

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

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

the R..ER exceedance in IbsIMMBtu, multiplied by the total heat input during the

period of noncompliance divided by 2000 lbs/ton. If the period of noncompliance

is not known, the time period from the completion of the last/previous

Commissioner witnessed emission test through the date the R..ER 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. PSEG shall

pennanently retire DERCs calculated in accordance with the above plus a 100%

premium within sixty (60) days of PSEG's discovery of the FLER exceedance.

PSEG shall report any FLER exceedance to the Commissioner in accordance with

paragraph C.24. of this Trading Agreement and Order.

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

Extension. No later than May I, 2007, with respect to the peaking unit, PSEG shall

comply with the requirements of Sections 22a-174-22(d)(1) and 22a-174-

22(d)(2)(A) of the Regulations. There is no assurance that after full program

review of this and other Trading Agreements and Orders that the Commissioner

will grant a written extension of this Trading Agreement and Order.

11. Delete paragraph C.Il. 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
PSEG Power Connecticut LLC 5 Trading Agreement and Order No.

8244 Modification No.1

compliance with Section 22a-174-22 of the Regulations; "Commissioner" means

the Commissioner or a representative of the Commissioner; "Non-olone season"

means the period from October 1 through April 30 in any given calendar year;

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

calendar year.

12. Delete paragraph C.I2. and substitute the following therefor:

Dates. 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. The date of submission 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 bur nor 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.

13. Delete the word "individual" and substitute therefor the word "Section" in

paragraph C.24.

14. Delete the name "Ms. Wendy Jacobs" from paragraph C.25.

15. Include a new paragraph C.26. as follows:

Future Compliance Report. On or before September 1, 2006, PSEG shall submit a

report in Writing to the Commissioner, as directed in paragraph C.25. of this

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

Section 22a-174-22 of the Regulations with respect to the peaking unit on and after

May 1,2007.

All other terms and conditions of Trading Agreement and Order no. 8244 issued by the

Commissioner acting under Chapter 446c, Sections 22a-6, 22a-171, 22a-174, 22a~176, and 22a177 of the Connecticut General Statutes shall remain in effect.
PSEG Power Connecticut LLC 6 Trading Agreement and Order No.

8244 Modification No.1

PSEG hereby consents to the entry of this modification to the Trading Agreement and Order

without further notice.

Signature:

Type Name:

Type Title:

Date:

Robert T. Parnell

Director of Asset Operations

March 10. 2005

fssued as a modification of an Order of the Commissioner of Environmental Protection.

Date

MAILED CERTIFlED MAIL,

RETURN RECEIPT REQUESTED

Certified Document No. 7002 2030 0006 5643 0079