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 ofthe Regulations of Connecticut State Al!encies. Nonattainment Area Classification Severe Annual DERCs needed Estimated 5 ozone and 1non-ozone. Comnliance Time Period Until Anri! 30,2007. Max. Emission Rate: full load emission rate rFLER) for Use. (See Table 1below)

Table 1 NOx Emission Rates and Allowable Limits 

### Unit Fuel 

### Maximum StackTest 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 OrderModification supersedes Trading Agreement and OrderNo. 8182A issued on April 22, 2003. b. Calculations ofcredits 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 ofexcess NOx emitted from the peaking unit during the previous ozone season based upon the actual emissions for each day that Connecticut one hourozone levels were forecasted to be "moderate to unhealthful", "unhealthful", or "very unhealthful",

# STATE OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT 

### AND MIDDLETOWN POWERliC TRADING AGREEMENT AND ORDER NO. 8182A MODIFICATION NO. I

TRADING AGREEMENT AND ORDERMODIFICATION 

### In the matter ofaTrading Agreement and Orderbetween the CommissionerofEnvironmental Protection ("Commissioner") and Middletown PowerIl..C ("NIP"). 

### WHEREAS, the Commissioner and MP, having agreed to the tenns and conditions set forth in Trading Agreement and OrderNo. 8182A signed by the Commissioneron 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 thereforMay 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 ofeach month MP shall have in its possession sufficient approvedDERCs for the current day for the peaking unit based on the following calculations; Before the first day ofeach 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:/ldep,Itlle.el.\II

## ,

Middletown PowerLLC 

### 2 Trading Agreement and Order No. 8182A Modification! o. I No later than the twentieth day ofeach month, MP shall calculate and 

### permanently retire DERCs used in the preceding calendarmonth, 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 inTable 1of this Trading Agreement and Order.



### • FLER ;;;: full load emission rate in Ibsflv11v1Btu as shown in Table 1 ofthis Trading Agreement and Order.

• Discount (0.95) 

### = 5% design margin applied to the allowable limitrate. ii) 

### During the ozone season onlv: No later than December31 st each year, MP shall acquire and permanently retire 

### seven ozone season DERCs forevery actual ton ofexcess NOx emined from the peaking unit during the previous ozone season based upon the actual emissions for each day that Connecticut one hourozone 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 permanentlyretire seven ozone season DERCs for every actual ton ofexcess NOx emitted from the peaking unitduring such ozone season based upon the actual emissions for each day that Connecticut eight hourozone levels were forecasted to be "unhealthy for sensitive groups", "unhealthy", or "very unhealthy". Where: Actual ton ofexcess 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 ofexcess 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 numberofDERCs to be permanently retired. This requirement is in addition to the :MP's requirement to estimate excess emissions and subsequentpermanentretirement ofa sufficient number ofapproved DERCs in accordance with paragraph C.2.a.(i) ofthis Trading Agreement and Order.Middletown PowerliC 

### 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 1through April 30, inclusive, each year, the peakingunitshall. in addition to meeting the 

### 24-houremission limit in Table 22-1 ofSection 22a-174-22 ofthe Regulatiops, meet anon-ozone season emission 

### limit of0.15 

### Ib&1MBtu. Priorto October 1, 2004, October I, 2005 and October I, 2006, 

### MiP shall estimate and acquire the 

### amount ofDERCs orallowances required for such non-ozone season needed to comply with Section 22a-174-22(e)(3) ofthe Regulations as follows: 

### EstimatedDERCs (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 laterthan May 31 of2005, 2006 and 2007, in addition to the DERCs retired 

### pursuant to paragraph C.2.a. ofthis 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 1ofevery year afterissuance of this TradingAgreement and Order, MP shall submit in writing to the Commissioner, arecordofeach sale orothertransfer ofDERCs forthe previous calendaryear. MP shall also include actual NOx emissions from the peaking unit and the amount ofall DERCs used (including serial numbers (if assigned) and DERCs purchased from otherfacilities). These reports shall be 

### on forms prescribed 

### by the Commissionerand 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 laterthan July 30 ofevery yearafter issuance ofthis Trading Agreement and Order, MP shalf submit in writing to the 

### Commissionerthe**non~ozone** 

### season fuel consumption and amountofall DERCs used (including serial numbers (ifassigned) and approved DERCs purchased from otherfacilities) for the peaking unit during the October through April time period in the previous calendaryear. 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) ofthe Regulations, MP 

### may use NOx allowances, until May 1. 2007, forthe peaking unitpursuant to Section 22a-174-22(j) ofthe Regulations to achieve all or a portion ofthe 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/orrequirements 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 ofthe Regulations shall be equivalent to one discrete emission reduction credit. Allowances shall be considered used for compliance with Section 22a174-22 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

# 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 adjustedupwards by

100% ifDERCs are not in MP's possession for use prior to the fIrst day ofeach month orapplicable season. However, nothing in this Trading Agreement and Ordershall 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 oflaw. MP shall pennanently retire the quantity ofDERCs equivalent to the excess emissions plus a 100% premium within sixty (60) days ofMP's discovery ofthe DERC shortfall. MP shall certify and report any such DERC retirement to the Commissionerin accordance with paragraph C.30. ofthis Trading Agreement and Order.

### Middletown PowerLLC 

### 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 subjectl\1P to make restitution by matching the quantity ofemissions ("true up") caused by the exceedance plus a 100% premium. The true up in tons ofDERCs shall be equal to the FLER exceedance in Ibsl!vlMBtu, multipliedby the total heatinput during the period ofnoncompliance divided by 2000 Ibslton. 

### Ifthe period ofnoncompliance is not known, the time period from the completion ofthe last/previous Commissionerwitnessed 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 ortake any other action to require additional upward adjustment, based on the gravity ofany alleged noncompliance or violation oflaw. l\1P 

### shall pennanently retire DERCs calculated in accordance with the above plus a 100% premium within sixty (60) days ofl\1P's discovery ofthe FLER exceedance. :MP 

### shall repon any HER exceedance to the Commissionerin accordance with paragraph C.30. ofthis Trading Agreement and Order. 11. Delete paragraph C.l3. and substitute the following therefor: Extension. No laterthan May 1, 2007, with respect to the peaking unit, l\1P shall comply with the requirements ofSections 22a-174-22(d)(I) and 22a-174- 22(d)(2)(A) ofthe Regulations. There is no assurance that afterfull program review ofthis and otherTrading Agreements and Orders that the Commissioner will grant awritten extension ofthis Trading Agreement and Order. 12. Delete paragraph C.14. and substitute the following therefor: Future Compliance Report. On orbefore September 1, 2006, MP shall submita report in writing to the Commissioner, as directed in paragraph C.31. ofthis Trading Agreement and Order, indicating how the facility shall comply with Section.22a-174-22 ofthe 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, "ApprovedDERCs" are those for which the Commissionerhas provided wrinen authorization for use in compliance with Section 22a-174-22 ofthe Regulations; "Commissioner" means the Commissioneror arepresentative ofthe Commissioner; "Non-ozone season" means the period from October I through April 30 in any given calendar year; "Ozone season" means the periodMay 1 through September 30 in any givenMiddletown PowerLLC

calendaryear. 

### 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" ofthis Trading Agreement and Orderis the date the Trading Agreement and Orderis deposited in the U.S. mail orpersonally delivered, whichever is earlier. The date ofsubmission to the Commissionerofany document required by this Trading Agreement and Order shall be the date such 

### document is received by

### the Commissioner. The date ofany notice by

### the Commissionerunder this Trailing Agreement andOrder, including but not limited (0 

### notice ofapproval ordisapproval ofany document orotheraction, shall be 

### the date such notice is deposited in the U.S. mail oris 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 Ordermeans calendarday. Any document or action which is required by this Trading Agreement and Order to be submitted orperfonned by a date which falls on a Saturday, Sunday ora Connecticut orfederal holiday shall be submitted orperformed by the next day which is not a Saturday, Sundayor Connecticut orfederal 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 othertenns andconditions ofTrading Agreement and Order no. 8182A issued by the Commissioner acting under Chapter446c, Sections 22a-6, 22a-171, 22a-174, 22a·176, and 22a· 177 ofthe Connecticut General Statutes shall remain in effect.

### Middletown PowerLLC 7 

### Trading Agreement and Order No. 8182A Modification No.1 

### MP hereby consents to the entry ofthis modification to the Trading Agreement and Order 

### without further notice. Middletown PowerLLC Signature:

## ~~ct~ Type Name: 

# C,/(}fhlti... L I(Of'IIC Type Title 

## RtJiMrjEnl)J((Jl)fYIf'lrhl 

# tiJ al1C :j'C'r Date: 

# 3

-IS--ojIssued as amodification ofan Orderofthe CommissionerofEnvironmental Protection.

MAJLED CERTIFIED MAlL,

RETURN RECEIPT REQUESTED 

### CertifiedDocumentNo. 7002 2030 0006 5643 0055