# STATE OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT AND PSEG POWER CONNECTICUT liC TRADING AGREEMENT AND ORDER NO. 8253 MODIFICATION NO.2
TRADING AGREEMENT AND ORDER MODIFICATION



### In the matter ofaTrading Agreement and Orderbetween the CommissionerofEnvironmental Protection ("Commissioner") and PSEG PowerConnecticutliC ("PSEG"). WHEREAS, the Commissioner and PSEG, having agreed to the terms and conditions set forth in Trading Agreement and OrderNo. 8253 signed by the Commissioneron April 22, 2003, and Trading Agreement and Order 8253 Modification I issued September IS, 2004 do now, by mutual agreement, modify said Trading Agreement and OrderNo. 8253 as follows: I. Delete the date May I, 2005, and substitute thereforMay 1,2009, in paragraphs A.4. and C. I.
2. Delete paragraph C.2 and C.2.a and substitute the following therefore: DERC use. Before the first day ofeach non-ozone season, PSEG shall have in its possession sufficient approved DERCs for the boilerbased on the following:
a. During the non-ozone season: During the period from October I through April 30, inclusive, each year until May 1,2009, the boiler shall, in addition to meeting the 24-hour emission limit in Table 22-I ofSection 22a-I74-22 ofthe Regulations, meet a non-ozone season emission limit of0.15 IbsIMMBtu. Priorto October 1, 2006, 2007 and 2008, PSEG 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:

(Printed on Recycled Paper) 79 Elm Slreet • Hartford, CT 06106 - 5127 An Equal Opportunity EmployerPSEG Power ConnecticutLLC 2 Trading Agreement and OrderNo. 8253 Modification No.2 EstimatedDERCs (tons) = [Estimatedfuel use in MMBtu from October 1 through April 30 x (lower ofthe estimated seasonal average NOx emission rate orthe proportioned 24- hour allowable emission limit in IbslMMBtu during October 1 through April 30)

- (0.95 x 0.15 IbslMMBtu)] .;. 2000 pounds/ton. No laterthan May 31, 2007, 2008 and 2009, when the boilerhas a non-ozone seasonal average actual NOx emission rate exceeding .15 IbslMMBtu, PSEG shall calculate and permanently retire the amount ofDERCs used in the preceding non-ozone season as follows: Actual DERCs (tons) 

## =[Actual fuel use in MMBtu from October 1 through April 30 x (lowerofthe actual seasonal average NOx emission rate orthe proportioned 24-hour allowable emission limit in IbslMMBtu during October 1 through April 30)

- (0.95 x 0.15 IbsIMMBtu)] .;. 2000 pounds/ton.
3. Delete paragraph C.6. and substitute the following therefore: Allowance Use. Pursuant to Section 22a-174-22(d)(3) ofthe Regulations, PSEG may use NOx allowances, until May 1, 2009, for the peaking units pursuant 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 orderfor PSEG to use NOx allowances, PSEG shall create a general account oruse 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 orthe facility's NOx compliance account in the NATS to the CT State NOx Retirement Account (Account ill CT0000000300 in the NATS).PSEG PowerConnecticutLLC 3 Trading Agreement and OrderNo. 8253 Modification No.2

4. Delete paragraph C.7. and substitute the following therefor: DERC Shortfall. At a minimum, DERCs required shall be adjusted upwards by 100% ifDERCs 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 institute any proceeding ortake any other action to require additional upward adjustment, based on the gravity ofany alleged noncompliance or violation oflaw. PSEG shall permanently retire the quantity ofDERCs equivalent to the excess emissions plus a 100% premium within sixty (60) days ofPSEG's discovery ofthe DERC shortfall. PSEG shall certify and report any such DERC retirement to the Commissionerin accordance with paragraph C.26. ofthis Trading Agreement and Order.
5. Delete paragraph C.9. and substitute the following therefor: Extension. No laterthan May 1,2009, with respect to the boiler, PSEG shall comply with the requirements ofSections 22a-174-22(d)(l) and 22a-174- 22(d)(2)(A) ofthe Regulations and amendments thereto. There is no assurance that the Commissioner will grant a written extension ofthis Trading Agreement and Order.
6. Delete paragraph C.lO. and substitute the following therefor: Future Compliance Report. On orbefore September 1, 2008, PSEG shall submit areport in writing to the Commissioner, as directed in paragraph C.27. ofthis Trading Agreement and Order, indicating how the facility shall comply with Section 22a-174-22 ofthe Regulations with respect to the boileron and afterMay 1, 2009.
7. Delete the word "individual" and substitute therefore the word "Section" in paragraph C.26. 8. Delete the name "Ms. Wendy Jacobs" in paragraph

# c.n.PSEG Power ConnecticutLLC 4 Trading Agreement and OrderNo. 8253 Modification NO.2

All otherterms and conditions ofTrading Agreement and OrderNo. 8253 and issued by the Commissioner acting under Chapter446c, Sections 22a-6, 22a-171, 22a-174, 22a-176, ancl22a177 ofthe Connecticut General Statutes shall remain in effect.

PSEG hereby consents to the entry ofthis modification to the Trading Agreement and Order without further notice. 

### PSEG POWER

# ~l~ SIgnature:

# ~~:-_'::'-':-'--.:1.\=~:L_ Type Name: Type Title: Date: 

### Robert T. Parnell Director of Asset Operations August 2, 2006
Issued as a modification ofan Order ofthe CommissionerofEnvironmental Protection. 

# --R**(GiI1aMC~hy** Commissioner
MAILED CERTIFIED MAlL, RETURN RECEIPT REQUESTED 

# $--eft. 1 , 700 Date

Certified DocumentNo. 7001 2510 0000 6250 4274