# STATE OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT AND DEVON POWER LLC TRADING AGREEMENT AND ORDER NO. 8181A MODIFICATION NO.2
TRADING AGREEMENT AND ORDER MODIFICAnON 

### In the matterofaTrading Agreement and Orderbetween the Commissioner ofEnvironmental Protection ("Commissioner") andDevon PowerLLC ("DP"). WHEREAS, the Commissioner and DP, having agreed to the terms and conditions setforth in Trading Agreement and OrderNo. 8181A signed by the Commissioneron April 22,2003, and Trading Agreement and Order 8181A Modification 1 issued March 21,2005 do now, by mutual agreement, modify saidTrading Agreement OrderNo. 8181A as follows: 1. Delete paragraph A.1. and substitute the following therefor: This Trading Agreement and Order supersedes Trading Agreement and Order 8181 issued on January 12, 2000. 2. Delete paragraph

### A.S. and substitute the following therefor: Reserved.



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### 4. Delete the date May 1,2005, and substitute therefor May 1,2009, in paragraphs A.6. and C.l. Delete paragraph C.2.a and substitute the following therefor: Until May 1,2009, before the first day ofeach month 

### DP 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 ofeach month, DP shall estimate DERCs required for such month for the peaking unit as follows:

( Printed on Recycled Paper) 79 Elm Street • Hartford, CT 06106

- 5127 An Equal Opportunity Employer

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Devon PowerLLC 2 Trading Agreement and Order No. 8I8IA Modification No.2 (i) 

### At all 

### times: EstimatedDERCs (in tons) use = [«(FLER in IbslMMBtu)

- (0.95 x NOx allowable rate in IbslMMBtu)) x (estimated fuel use in MMBtu)] -;- 2000 pounds/ton No later than the twentieth day ofeach month, DP shall calculate and permanently retire DERCs used in the preceding calendarmonth, as follows: Actual DERCs (in tons) = [«FLER in Ibs/MMBtu)

- (0.95 x NOx allowable rate in IbslMMBtu)) x (actual fuel use in MMBtu)] -;- 2000 pounds/ton Where: a. NOx allowable rate = allowable limit rate in IbslMMBtu shown in Table 1 of this Trading Agreement and Order. b. FLER = full load emission rate in IbslMMBtu as shown in Table 1 ofthis Trading Agreement and Order. c. Discount (0.95)

## =5% design margin applied to the allowable limit rate. ii) During 

### the ozone season only: No later than December 31 sl each year, DP shall acquire and permanently 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 Connecticutone 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, DP shall calculate and permanently retire seven ozone season DERCs for every actual ton ofexcess NOx emitted from the peaking unit during such ozone season based upon the actual emissions for each day that Connecticuteight hour ozone levels were forecasted to be "moderate to unhealthy for sensitive groups", "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)) x (actual fuel use in MMBtu)] -;- 2000 pounds/ton The total actual tons ofexcess NOx emittedfrom the peaking unit during forecasted ozone exceedance days shall be multiplied by seven and then rounded to the next greaterwhole ton, to determine the number ofDERCs to be permanently retired. This requirement is in addition to the DP's requirement to, '.
Devon PowerLLC 3 Trading Agreement and Order No. 8181AModification No.2

estimate excess emissions and subsequentpermanent retirement ofa sufficient number ofapproved DERCs in accordance with paragraph C.2.a.(i) ofthis Trading Agreement and Order. 5. Delete paragraph C.2.b. and substitute the following therefor: Reserved. 6. Delete paragraph C.2.c. and substitute the following therefor: During the non-ozone season: Until May 1, 2009, from October 1 through April 30, inclusive, each year, the peaking unit shall, in addition to meeting the 24-houremission limit in Table 22-1 ofSection 22a-174-22 ofthe Regulations, meet anon-ozone season emission limit ofO.15IblMMBtu. Priorto October 1, 2006, 2007, and 2008, DP shall estimate and acquire the amount ofDERCs or allowances required for such non-ozone season needed to comply with Section 22a-174-22(e)(3) ofthe Regulations as follows: Estimated DERCs (tons) use

## =[Estimatedfuel use in MMBtu from October 1 through April 30 x (allowable emission rate in IbslMMBtu

- (0.95 x 0.15 I blMMBtu))] + 2000 lbs/ton 7. Delete paragraph C.2.d. and substitute the following therefor: No laterthan May 31 of2007 and 2008, in addition to the DERCs retired pursuant to paragraph C.2.a. ofthis Trading Agreement and Order, DP 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 IbslMMBtu

- (0.95 x 0.15 IbIMMBtu»] + 2000 lbs/ton 8. Delete paragraph C.6. and substitute the following therefor: (a) Annual DERC Report. No laterthan March 1 ofevery year afterissuance of this Trading Agreement and Order, DP shall submit in writing to the Commissioner, a record ofeach sale or othertransfer ofDERCs for the previous calendar year. DP 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. "
Devon PowerLLC 

### 4 Trading Agreement and Order No. 8181A Modification No.2

on forms prescribedby the Commissioner and shall be in monthly increments, and by ozone and non ozone seasons. (b) Forthe Non-ozone season: No laterthan July 30 ofevery year afterissuance ofthis Trading Agreement andOrder, DP shall submit in writing to the Commissionerthe non-ozone season fuel consumption and amount ofall DERCs used (including serial numbers (ifassigned) and approved DERCs purchased from otherfacilities) for the peaking unit during the Octoberthrough April time period in the previous calendar year. These reports shall be on a form prescribedby the Commissioner. 9. Delete paragraph C.7. and substitute the following therefor: Allowance Use. Pursuantto Section 22a-174-22(d)(3) ofthe Regulations, DP may use NOx allowances, until May 1,2009, for the peaking unitpursuant to 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 subject to all restrictions and/orrequirements applicable to DERCs contained in this Trading Agreement and Order;
a. In order for DP to use NOx allowances, DP shall create a general account oruse an existing compliance account oroverdraft 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 orthe facility's NOx compliance accountin the NATS to the CT State NOx Retirement Account (Account ill CT0000000300 in the NATS). 10. Delete paragraph e.8. and substitute the following therefor: DERC Shortfall. At aminimum, DERCs required shall be adjusted upwards by 100% ifDERCs are not in DP's possession for use priorto the first day ofeach month or applicable season. However, nothing in this Trading Agreement and Order shall affect the Commissioner's authority to institute any proceeding ortake any other action to require additional upward adjustment, based on the gravity of any alleged noncompliance orviolation oflaw. DP shall permanently retire the quantity ofDERCs equivalent to the excess emissions plus a 100% premiumDevon PowerLLC 5 Trading Agreement and Order No. 8181A Modification No.2 within sixty (60) days ofDP's discovery ofthe DERC shortfall. DP shall certify and report any such DERC retirementto the Commissionerin accordance with paragraph C.30. ofthis Trading Agreement and Order.
11. Delete paragraph C.1O. and substitute the following therefor: FLERExceedance. Noncompliance with an establishedFLER shall subjectDP to make restitution by matching the quantity ofemissions ("true up") causedby the exceedance plus a 100% premium. The true up in tons ofDERCs shall be equal to the FLERexceedance in IbslMMBtu, multiplied by the total heat input during the period ofnoncompliance divided by 2000 lbs/ton. Ifthe period of noncompliance is not known, the time periodfrom 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 Commissioner's authority to institute any proceeding ortake any other action to require additional upward adjustment, based on the gravity ofany alleged noncompliance orviolation oflaw. DP shall permanently retire DERCs calculatedin accordance with the above plus a 100% premium within sixty (60) days ofDP's discovery ofthe FLER exceedance. DP shall report any FLER exceedance to the Commissionerin accordance with paragraph C.30. ofthis Trading Agreement and Order. 12. Delete paragraph C.13. and substitute the following therefor: Extension. No laterthan May 1, 2009, with respectto the peaking unit, DP shall comply with the requirements ofSections 22a-174-22(d)(l) and 22a-174- 22(d)(2)(A) ofthe Regulations. There is no assurance that the Commissionerwill grant a written extension ofthis Trading Agreement and Order. 13. Delete paragraph C.14. and substitute the following therefor: Future Compliance Report. On orbefore September 1, 2008, DP shall submit a 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 respectto the peaking unit on and after May 1, 2009....------------------------------------------- -_. -



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Devon PowerLLC 6 Trading Agreement and Order No. 8181AModification No.2
14. Delete paragraph C.17. and substitute the following therefor: Definitions. As used in this Trading Agreement and Order, "Approved DERCs" are those for which the Commissionerhas provided written 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 1 through April 30 in any given calendar year; "Ozone season" means the periodMay 1 through September 30 in any given calendaryear. 15. 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 Order is deposited in the U.S. mail orpersonally delivered, whicheveris earlier. The date ofsubmission to the Commissionerof any documentrequired by this Trading Agreement and Order shall be the date such document is receivedby the Commissioner. The date ofany notice by the Commissionerunderthis Trading Agreement and Order, including but not limited to notice ofapproval ordisapproval ofany document orother action, shall be the date such notice is deposited in the U.S. mail oris personally delivered, whichever is earlier. Except as otherwise specifiedin 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 orperformed by adate which falls on a Saturday, Sunday or a Connecticutorfederal holiday shall be submitted orperformedby the next day which is not a Saturday, Sunday orConnecticut orfederal holiday. 16. Delete the word "individual" and substitute therefore the word "Section" in paragraph C.30. 17. Delete the name "Mr. Michael LaFleur" in paragraph C.3l. All otherterms and conditions ofTrading Agreement and Orderno. 8181A and Modification 1 issuedby the Commissioneracting under Chapter446c, Sections 22a-6, 22a-171, 22a-174, 22a176, and 22a-177 ofthe Connecticut General Statutes shall remain in effect.'. 

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Devon PowerLLC 7 Trading Agreement and Order No. 8lBiA Modification No.2
DP hereby consents to the entry ofthis modification to the Trading Agreement and Order without further notice. Devon PowerLLC Signature: 

### THOMAS E. WALKER Type Name: Type Title: Date: 

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Issued as a modification ofan Orderofthe CommissionerofEnvironmental Protection.

Date Commissioner
MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED Certified Document No.