# STATE OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT AND CITY OF NORWICH DEPARTMENT OF PUBLIC UTILITIES TRADING AGREEMENT AND ORDER NO. 8119A MODIFICATION NO.2

TRADING AGREEMENT AND ORDER MODIFICATION In the matterofa Trading Agreement and Orderbetween the Commissioner of Environmental Protection ("Commissioner") and City ofNorwich Department ofPublic Utilities ("Norwich"). WHEREAS, the Commissioner and Norwich, having agreed to the tenns and conditions set forth in Trading Agreement and OrderNo. 81l9A signedby the Commissioneron April 29, 2003, and a modification thereto issued on March 21,2005, do now, by mutual agreement, modify Trading Agreement and OrderNo. 8119A as follows:1. Delete paragraph A4. in its entirety and substitute the following therefor: Emission testing perfonned on the dates indicated in Table 1, resulted in NOx emission rates as follows: 

### Table 1
Emission Unit Fuel Heat Input FLER Allowable Date of Next MMBtulhr Lbs/MMBtu Rate Stack Test Emission LbslMMBtu Test Due Rolls Royce #2 oil 249 .620 0.29 10119/04 10/19/09

2. Delete paragraph A6. and substitute the following therefor: Reserved. 3. Delete the date May 1,2005, and substitute thereforMay 1, 2009, in paragraphs A7., A9., C.I., and C.2.a. 4. Delete paragraph A.IO. in its entirety.

( Printed on Recycled Paper) 79 Elm Street • Hartford. CT 06106-5127 An Equal Opportunity EmployerCity ofNorwich Department ofPublic Utilities 2 Trading Agreement and Order No. 8119A Modification No.2 5. Delete paragraph C.2.d. and substitute the following therefor: During the non-ozone season: Until May I, 2009, 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 ofSection 22a-174-22 of the Regulations, meet anon-ozone season emission limit of0.15 Ib/MMBtu. Prior to October 1, 2006, October 1, 2007 and October I, 2008, Norwich shall estimate and acquire the amount ofDERCs or allowances required for such non-ozone season needed to complywith Section 22a-174-22(e)(3) ofthe Regulations as follows: Estimated DERCs (tons) use = [Estimated fuel use in MMBtu from October 1 through Apri130 x (allowable emission rate in Ibs/MMBtu

- (0.95 x 0.15 Ib/MMBtu))] + 2000 lbs/ton 6. Delete paragraph C.2.e. and substitute the following therefor: No laterthan May 31 of2007, 2008 and 2009, in addition to the DERCs retired pursuant to paragraph C.2.b. ofthis Trading Agreement and Order, Norwich shall calculate and permanentlyretire DERCs used in the preceding non-ozone season as follows: Actual DERCs (tons) used = [Actual fuel use inMMBtu from October 1 through April 30 x (allowable emissionrate in Ibs/MMBtu

- (0.95 x 0.15 Ib/MMBtu))] + 2000 Ibs/ton 7. Delete paragraph C.6. and substitute the following therefor: Annual Emission Statement andNon-Ozone Season Emission Statement. No laterthan March I for the previous calendar year and July 30 (forthe Octoberthrough April time period only starting in 2003) ofevery year after issuance ofthis Trading Agreement and Order, Norwich shall provide to the Commissioner, arecord ofeach sale or other transfer, and use ofany and all ofthe DERCs approved within and subsequent to issuance ofthis Trading Agreement and Orderuntil all such DERCs have been used or are no longer inNorwich's possession. Norwich shall also include actual NOx emissions from the peaking unit and the amount ofall 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, andby ozone andnon-ozone seasons.8. Delete paragraph C.7. and substitute the following therefor:

9. Delete paragraph e.8. and substitute the following therefor: a. In order for Norwich to use NOx allowances, Norwich shall create a general account oruse an existing compliance account or overdraft account in EPA's NOx Allowance Tracking System ("NATS"); and Trading Agreement and Order No. 8119AModification No.2 3

In addition, Norwich shall provide to the Commissioner an annual report documenting the progress andresults ofthe environmentallybeneficial program referenced in paragraph A.8 ofthis Trading Agreement and Order, as approved in Trading Agreement and Order 8119.

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 22a-174-22 ofthe Regulations when they are transferred from the facility's NOx general account inthe NATS orthe facility's NOx compliance account in the NATS to the CT State NOx Retirement Account (Account ID CT0000000300 in the NATS). Allowance Use. Pursuantto Section 22a-174-22(d)(3) ofthe Regulations, Norwich may use NOx allowances, until May 1,2009, for the peaking unit pursuant 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 shallbe subject to all restrictions and/or requirements applicable to DERCs contained in this Trading Agreement and Order;

DERC Shortfall. At aminimum, DERCs required shall be adjusted upwards by 100% ifDERCs are not in Norwich's possession for useprior to 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 ofany alleged noncompliance orviolation oflaw. Norwich shall permanently retire the quantity ofDERCs equivalentto the excess emissions plus a 100% premium within sixty (60) days ofNorwich's discovery ofthe DERC shortfall. Norwich shall certify and report any such DERC retirement to the Commissionerin accordance withparagraph C.30. ofthis Trading Agreement and Order. City ofNorwich Department ofPublic UtilitiesFLERExceedance. Noncompliance with an established FLER shall

11. Delete paragraph C.13. and substitute the following therefor:

12. Deleteparagraph C.14. and substitute the following therefor: Trading Agreement and Order No. 8ll9A ModificationNo.2 4

Extension. No laterthanMay 1, 2009, with respect to the peaking unit, Norwich shall complywiththe requirements ofSections 22a-174-22(d)(1) and 22a-174-22(d)(2)(A) ofthe Regulations and amendments thereto. There is no assurance that the Commissionerwill grant awritten extension ofthis Trading Agreement and Order.

Future Compliance Report. On orbefore September 1, 2008, Norwich shall submit areport 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 1,2009.

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 subjectNorwich to make restitution by matching the quantity ofemissions ("true up") causedbythe exceedance plus a 100% premium. The true up in tons ofDERCs shall be equal to the FLER exceedance in Ibs/MMBtu, multipliedby the total heat input during theperiod ofnoncompliance divided by 2000 lbs/ton. Ifthe period ofnoncompliance is not known, the time period from the completion ofthe 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 Commissioner's authority to institute any proceeding ortake any other action to require additional upward adjustment, based on the gravity ofany allegednoncompliance or violation oflaw. Norwich shall permanently retire DERCs calculated in accordance with the aboveplus a 100% premium within sixty (60) days of Norwich's discovery ofthe FLER exceedance. Norwich shall report any FLER exceedance to the Commissionerin accordance with paragraph C.30. ofthis Trading Agreement and Order.

13. Delete paragraph C.l? and substitute the following therefor: 10. Delete paragraph C.IO. and substitute the following therefor: City ofNorwich Department ofPublic Utilities

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Certified DocumentNo. 7002 2030 0006 5680 7444 Date Trading Agreement and Order No. 8119A Modification No.2**'l).tJUJ~WBePt** ofPublic Utilities

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Type Title: Date: Type Name: Signature:

MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED Issued as a modification ofan Orderofthe Commissioner ofEnvironmental Protection. Norwich hereby consents to the entry ofthis modification to the Trading Agreement and Orderwithout further notice. City ofNorwich Department ofPublic Utilities