# .- STATE OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT AND COMBUSTION ENGINEERING, INC. TRADING AGREEMENT AND ORDER NO. 8I54A MODIF[CATION NO. 1

TRADING AGREEMENT AND ORDER MODIFICATION [n the matter ofaTrading Agreement and Orderbetween the Commissioner ofEnvironmental Protection ("Commissioner") and Combustion Engineering ("CE"). WHEREAS, the Commissioner and CE, having agreed to the terms and conditions set forth in Trading Agreement and Order No. 8154A issued on April 26, 2003, do now, by mutual agreement, modify Trading Agreement and Order No.8I54A as follows: 1. Delete the date April 30, 2007, and substitute therefor May I, 2009, in paragraph A.6. 2. Delete Table 2 in paragraph A.8. in its entirety and substitute the following therefor: 

### Table 2 Purchased Approved DERCs Year Ozone Season Tons Non-ozone Tons Expiration season Date 2001 SIN not assigned 9 SIN not assib'11ed 6 12/31/06

3. Delete the date April 30, 2007, and substitute therefor May I, 2009 in paragraph C.1. and C.2. 4. Delete paragraph C.5. and substitute the following therefor: Annual Emission Statement and Non-Ozone Season Emission Statement. No later than March 1 for the previous calendar year and July 30 (for the October through April time period only starting in 2003) ofevery year after issuance of this Trading Agreement and Order, CE shall provide to the Commissioner, a

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- 5127 All Equal Op/wrlllll;ty EmployerCombustion Engineering, Inc. 2 Trading Agreement and Order No. 8154A ModificationNo. I record ofeach sale or othertransfer, and use ofany and all ofthe DERCs approved within and subsequentto issuance ofthis Trading Agreement and Order until all such DERCs have been used or are no longerin CE's possession. CE shall also include actual NOx emissions from the boiler and the amount of all DERCs used (including serial numbers (ifassigned) and approved DERCs generated and/orpurchased from other facilities), generated and/or approved for the previous calendaryear and Octoberthrough April time period. These reports shall be on a form prescribed by the Commissioner and shall be in monthly increments, and by ozone and non-ozone seasons. 5. Deleteparagraph C.6. and substitute the following therefor: Allowance Use. Pursuant to Section 22a-174-22(d)(3) ofthe Regulations, CE may use NOx allowances, until May I, 2009, for the boilerpursuantto Section 22a-174-22(j) ofthe Regulations to achieve all or aportion 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 subjectto all restrictions and/orrequirements applicable to DERCs contained in this Trading Agreement and Order;
a. In orderfor CE to use NOx allowances, CE shall create a general account oruse an existing compliance account oroverdraft account in EPA's NOx Allowance Tracking System (UNATS"); and b. Each allowance used for compliance with Section 22a-174-22 ofthe Regulations shall be equivalentto 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 orthe facility's NOx compliance account in the NATS to the CT State NOx Retirement Account (Account ill CT0000000300 in the NATS) 6. Deleteparagraph C.7. and substitute the following therefor: DERC Shortfall. At a minimum, DERCs required shall be adjusted upwards by 100% ifDERCs are not in CE's possession for usepriorto the first day ofeach month or applicable season. However, nothing in this Trading Agreement and Order shall affect the Commissioner's authority to institute anyproceeding ortake any other action to require additional upward adjustment, based on the gravity of any alleged noncompliance or violation oflaw. CE shall permanentlyretire the quantity ofDERCs equivalent to the excess emissions plus a 100% premium within sixty (60) days ofCE's discovery ofthe DERC shortfall. CE shall certifY and report any such DERC retirement to the Commissionerin accordance,---------------------------------------

Combustion Engineering, Inc. 3 Trading Agreement and Order No. 8154A ModificationNo. I withparagraph C.30. ofthis Trading Agreement and Order. 7. Delete paragraph C.9. and substitute the following therefor: FLERExceedance. Noncompliance with an established FLER shall subject CE to make restitution bymatching the quantity ofemissions ("true up") caused bythe exceedance plus a 100% premium. The true up in tons ofDERCs shall be equal to the FLER exceedance in IbslMMBtu, multiplied bythe total heat input during the period ofnoncompliance divided by 2000 Ibs/ton. Ifthe period ofnoncompliance 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 bythe Commissioner shall be used. However, nothing in this Trading Agreement and Order shall affect the Commissioner's authorityto institute anyproceeding ortake any other action to require additional upward adjustment, based on the gravity ofany alleged noncompliance orviolation oflaw. CE shall pennanentlyretire DERCs calculated in accordance with the above plus a 100% premium within sixty (60) days ofCE's discovery ofthe FLER exceedance. CE shall report any FLER exceedance to the Commissionerin accordance withparagraph C.30. ofthis Trading Agreement and Order. 8. Delete paragraph C.12. and substitute the following therefor: Extension. No laterthan May 1,2009, with respect to the boiler, CE shall comply with the requirements ofSections 22a-174-22(d)(l) and 22a-174-22(d)(2)(A) of the Regulations and amendments thereto. There is no assurance that the Commissionerwill grant awritten extension ofthis Trading Agreement and Order. 9. Delete paragraph C.l3. and substitute the following therefor: Future Compliance Report. On orbefore September I, 2008, CE shall submit a report in writing to the Commissioner, as directed in paragraph C.30. ofthis Trading Agreement and Order, indicating how the facility shall complywith Section 22a-174-22 ofthe Regulations with respect to the boiler on and afterMay 1, 2009. 10. Delete paragraph C.16. and substitute the following therefor: Definitions. As used in this Trading Agreement and Order, "ApprovedDERCs" are those for which the Commissionerhas provided written authorization for use in compliance with Section 22a-174-22 ofthe Regulations; "Commissioner"'f,**'.~**
Combustion Engineering, Inc. 4 Trading Agreement and Order No. 8154AModification No.1
means the Commissioner or arepresentative ofthe Commissioner; "Non-ozone season" means the period from October 1 through April 30 in any given calendar year; "Ozone season" means theperiod May 1 through September 30 in any given calendaryear. 11. Delete paragraph C.17. 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 Commissioner of any document required bythis Trading Agreement and Order shall be the date such document is received by the Commissioner. The date ofany notice bythe Commissionerunderthis Trading Agreement and Order, includingbut not limited to notice ofapproval or disapproval ofany document or other action, 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 Orderto be submitted orperformed by a date which falls on a Saturday, Sundayor a Connecticut or federal holiday shall be submitted orperformed bythe next day which is not a Saturday, Sundayor Connecticut orfederal holiday. 12. Delete the word "individual" and substitute thereforthe word "Section" in paragraph C.29. 13. Delete the name "Mr. Roland L. Severance Jr., PE" in paragraph C.30.
All otherterms and conditions ofTrading Agreement and OrderNo. 8154A issued bythe Commissioner acting under Chapter446c, Sections 22a-6, 22a-171, 22a-174, 22a-176, and 22a177 ofthe Connecticut General Statutes shall remain in effect.

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Combustion Engineering, Inc. 

### 5 Trading Agreement and Order No. 8154A Modification No. I

Signature: CE hereby consents to the entry ofthis modification to the Trading Agreement and Order without further notice.
COMBUSTION ENGINEERING INC.

# ~~ Type Name: Type Title: Date: R. Keith Knauerhase Director, Environmental Engineering and Support October 2, 2006

Issued as a modification ofan Order ofthe Commissioner ofEnvironmental Protection.

Date i

TOWN OF WINDSOR LAND RECORDS MAILED CERTIFIED MAIL, RETURN RECEIPT REQUESTED Certified Document No. 7005 3110 0001 2315 1086