SIP DESCRIPTION - Middletown Power LLC-Trading Agreement and Order

No. 8I82A Modification 1

I. SIP - DESCRIPTION OF DERC CREATION AND/OR USE

SIP SUMMARY TABLE

TradinQ: Ap'reement and Order No. 8182A

Middletown Power LLC 1866 River Road Middletown CT 06457

Identifier Client 7741 Town # 104 Premise # 24 Sequence #.fContact Ms. Cynthia Karlic Tel: (860) 343-6962 Fax (860) 343-6969

Regional Mana2:er

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

Connecticut State Al!encies.

Nonattainment Area Classification Severe

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

Comnliance Time Period Until Anri! 30,2007.

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

Table 1

NOx Emission Rates and Allowable Limits

Unit Fuel Maximum Stack Test FLER Allowable Date of Next

PIR number Capacity (ppmvd) IbsIMMBtu Rate Stack Stack

MMBtulhr IbsIMMBtu Test Test Due

PWFT4A-8 #2 oil 256 148.8 0.67 0.29 6/1 1/01 6/1 1/06

Middletown·! 0

R-102

II. SPECIAL REQUIREMENTS

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

Order No. 8182A issued on April 22, 2003.

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

8182A.

c. Middletown Power LLC shall acquire and pem1anently retire seven ozone season

DERCs for every actual ton of excess NOx emitted 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",

STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT

AND

MIDDLETOWN POWER liC

TRADING AGREEMENT AND

ORDER NO. 8182A

MODIFICATION NO. I

TRADING AGREEMENT AND ORDER MODIFICATION

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

Protection ("Commissioner") and Middletown Power Il..C ("NIP").

WHEREAS, the Commissioner and MP, having agreed to the tenns and conditions set forth

in Trading Agreement and Order No. 8182A signed by the Commissioner on April 22, 2003, do

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

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

Reserved.

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

A.6. and C.l.

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

Until May 1,2007, before the first day of each month MP shall have in its

possession sufficient approved DERCs for the current day for the peaking unit

based on the following calculations;

Before the first day of each month, MP shall estimate DERCs required for such

monlh for the peaking unit as follows:

(i) At all times:

Estimated DERCs (in tons) use = [«(FlER in IbslMMBtu) - (0.95. NO.

allowable rate in IbsJ'M]yffitu» x (estimated

fuel use in MMBtu)].,. 2000 pounds/ton

(Printed on Recycled PIper)

79 Elm Street • Hartford, CT 06106·5127

hltp :/ld e p,Itll e.el. \I I
,

Middletown Power LLC 2 Trading Agreement and Order

No. 8182A Modification! o. I

No later than the twentieth day of each month, MP 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 allowable rate

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

pounds/ton

Where:

• NOx allowable rate:;;; allowable limit rate in Ibs/M1vfBtu shown in Table 1 of

this Trading Agreement and Order.

• FLER ;;;: full load emission rate in Ibsflv11v1Btu as shown in Table 1 of this

Trading Agreement and Order.

• Discount (0.95) = 5% design margin applied to the allowable limit rate.

ii) During the ozone season onlv:

No later than December 31st each year, MP shall acquire and permanently retire

seven ozone season DERCs for every actual ton of excess NOx emined 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 I-hour standard. Upon such revocation, tv1P 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 excess NOx emitted = [«(FLER in IbslMMBtu) - (0.95 x

NOx allowable rate in IbslMMBtu» , (actual

fuel use in MMBtu)].;. 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 determine the number of DERCs to be

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

estimate excess emissions and subsequent permanent retirement of a sufficient

number of approved DERCs in accordance with paragraph C.2.a.(i) of this

Trading Agreement and Order.
Middletown Power liC 3 Trading Agreement and Order

No. 8182A Modification No.1

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

Reserved.

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

During the non-ozone season: Until May I, 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 Regulatiops,

meet a non-ozone season emission limit of 0.15 Ib&1MBtu. Prior to October 1,

2004, October I, 2005 and October I, 2006, MiP shall estimate and acquire the

amount of DERCs or allowances required for such non-ozone season needed to

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

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

through April 30 x (allowable emission rate in

IbslMMBtu - (0.95 x 0.15 IblMMBtu»] .,. 2000

Ibslton

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

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

pursuant to paragraph C.2.a. of this Trading Agreement and Order, rv1P 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 (allowable emission rate in Ibs&11vffitu

- (0.95 x 0.15 IblMMBtu»]'" 2000 Ibslton

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

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

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

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

previous calendar year. MP 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.
Middletown Power liC 4 Trading Agreement and Order

No. 8182A Modification No.1

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

of this Trading Agreement and Order, MP shalf submit in writing to the

Commissioner the non~ozone season fuel consumption and amount of all

DERCs used (including serial numbers (if assigned) and approved DERCs

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

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

fonn prescribed by the Commissioner.

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

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

may use NOx allowances, until May 1. 2007, for the peaking unit pursuant to

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

reductions 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;

a. In order for MP to use NOx allowances, :MP 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 of the

Regulations shall be equivalent to one discrete emission reduction credit.

Allowances shall be considered used for compliance with Section 22a174-22 of the 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 cr State NOx Retirement Account (Account

ID CT0000000300 in the NATS).

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

DERC ShQrtfal1. At a minimum, DERCs required shall be adjusted upwards by

100% ifDERCs are not in MP'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 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. MP shall pennanently retire the

quantity ofDERCs equivalent to the excess emissions plus a 100% premium

within sixty (60) days of MP's discovery of the DERC shortfall. MP shall certify

and report any such DERC retirement to the Commissioner in accordance with

paragraph C.30. of this Trading Agreement and Order.
Middletown Power LLC 5 Trading Agreement and Order

No. 8182A Modification No.1

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

FLER Exceedance. Noncompliance with an established HER shall subject l\1P to

make restitution by matching the 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 FLER exceedance in Ibsl!vlMBtu, multiplied by the total heat input during the

period of noncompliance divided by 2000 Ibslton. 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 FLER compliance is

achieved as approved by the Commissioner shall be used. However, nothing in this

Trading Agreement and Order shall affect the Conunissioner'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. l\1P shall

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

premium within sixty (60) days of l\1P's discovery of the FLER exceedance. :MP

shall repon any HER exceedance to the Commissioner in accordance with

paragraph C.30. of this Trading Agreement and Order.

11. Delete paragraph C.l3. and substitute the following therefor:

Extension. No later than May 1, 2007, with respect to the peaking unit, l\1P shall

comply with the requirements of Sections 22a-174-22(d)(I) 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.

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

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

report in writing to the Commissioner, as directed in paragraph C.31. 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.

13. Delete paragraph C.l? and substitute the following therefor:

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

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

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

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

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

year; "Ozone season" means the period May 1 through September 30 in any given
Middletown Power LLC

calendar year.

6 Trading Agreement and Order

No. 8182A Modification No. l

14. Delete paragraph C.18. 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 Trailing Agreement and Order, including but not limited

(0 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 perfonned 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.

15. Delete the word "individual" and substitute therefore the word "Section" in

paragraph C.30.

16. Delete the name "Mr. Michael LaFleur" in paragraph C.31.

All other tenns and conditions of Trading Agreement and Order no. 8182A issued by the

Commissioner acting under Chapter 446c, Sections 22a-6, 22a-171, 22a-174, 22a·176, and 22a·

177 of the Connecticut General Statutes shall remain in effect.
Middletown Power LLC 7 Trading Agreement and Order

No. 8182A Modification No.1

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

without further notice.

Middletown Power LLC

Signature: ~~ct~

Type Name: C,/(}fhlti... L I(Of'IIC

Type Title RtJiMrj Enl)J((Jl)fYIf'lrhl tiJal1C:j'C'r

Date: 3 -IS--ojIssued as a modification of an Order of the Commissioner of Environmental Protection.

MAJLED CERTIFIED MAlL,

RETURN RECEIPT REQUESTED

Certified Document No. 7002 2030 0006 5643 0055