STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the matter of

The State of Connecticut and

Devon Power LLC

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Trading Agreement

and Order No. 8181 A

Whereas, the Commissioner ofEnvironmental Protection ("Commissioner") and Devon Power LLC

("DP'j agree that it is in the public interest that they work cooperatively to improve the air quality

within the State of Connecticut and that the use of discrete emission reduction credit ("DERe")

trading to reduce nitrogen oxide (''NOx'') emissions will achieve this result in a timely and costeffective manner:

A. At the request and with the agreement ofDP, the Commissioner finds the following:

...7).r. ........

1. This Trading Agreement and Order supercedes Trading Agreement and Order 8181

issued on January 12, 2000.

2. DP is an exempt wholesale electric generating company with its principal place of

business in Sewickley, PelU1sylvania. DP O\lmS one (1) piece offuel-burning

equipment ("peaking unit") identified in Table 1 oftrus Trading Agreement and

Order. This peaking unit is a combustion turbine operated at Naugatuck Avenue,

Milford, CT ("facility").

3. Emission testing perfonned on the dates indicated in Table 1, resulted in a NOx

emission rates as follows:

Table 1

Facility/ Fuel Heat Input Stack Test FLER Allowable Date of Next

Peaking Unit MMBtuIbr (ppmvd) lbsIMMBtu Rate Stack Stack

IbsIMMBtu Test Test Due

Devon-IO #2 oil 256 181.6 0.74 0.29 4/16/01

I

4/16/06

(Printed on Recycled Paper)

79 Elm Street • Hartford, CT 06106·5127

http://dep.stalc.cl.US

An Equa' Opponuniry Employ~'
Devon Power LLC 2 Trading Agreement

and Order No. 8181 A

4. DP exceeds the NOx allowable emission rate for the peaking unit specified in

Section 22a-174-22(e) of the Regulations as shown in Table I of this Trading

Agreement and Order.

5. Pursuant to the Department ofEnvironmental Protection's "Credit Trading/or

Sources with 'Jrrrgu/ar NOx Emissions" policy, with a revised date ofFebruary 27,

2001, anachedJ'iereto and incorporated by reference into this Trading Agreement and

Order as Exhibit I, the peaking units have peak daily NOx emissions greater than

three times the average daily emissions during the ozone season and are therefore

considered sources with irregular NOx emissions.

6. Pursuant to Section 22a-174-220) ofthe Regulations, during the non-ozone season,

DP intends '0 acquire approved DERCs until May I, 2005 for the peaking units.

Pursuant to Section 22a-174-22(j) of the Regulations, during the ozone season, DP

intends to acquire approved Budget discrete emission reduction credits ("BDERCs")

until May I, 2005 for the peaking units.

B. The Corrunissioner, in accordance with the provisions ofthis Trading Agreement and

...-. Order, and pursuant to Section 22a-l74.22(j) ofthe Regulations, hereby allows DP to '",J comply with Section 22a-174-22 of the Regulations through use ofDERC and BDERC

trading.

C. With the agreement ofDP, the Commissioner, acting under Sections 22a-6, 22a-171, 22a174, 22a-176, and 22a-l77 ofthe Connecticut General Statutes, orders DP as follows:

I. Upon issuance ofthis Trading Agreement and Order, at the facility, DP shall comply

with Section 22a-174-22 ofthe Regulations through DERC trading. Until DP

achieves pennanent compliance with the. emission standard in Section 22a-174-22(e)

of the regulation or by May I, 2005 whichever occurs earlier:

a. DP shall use approved DERCs as required under this Trading Agreement and

Order;

b. DP shall have in its possession sufficient approved DERCs to meet applicable

NOx emission limits as allowed WIder this Trading Agreement and Order; and

c. DP shall comply during operation ofthe peaking units with the FLERS shown in

Table I of this Trading Agreement and Order.

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Devon Power LLC

2. DERC use

3 Trading Agreement

and Order No. 8181 A

a. Until May 1, 2005, before the first day of each month, DP shall have in its possession

sufficient approved DERCs for the peaking units based on the following calculations.

Before the first day of each month, DP shall estimate DERCs required for such month

for the peaJclng units as follows.

i. At all times (mass calculation):

Estimated DERCs (in tons) = {(estimated fuel use in MMBtu) x ((FLER) - (0.95 x

NOx allowable emission limit))) +2000 pounds/ton

'Where:

-Allowable emission limit- in Ibs/1'vfMBtu as shown in Table 1 ofthis

Trading Agreement and Order.

- FLER= full load emission rate in Ibs/1'vfMBtu as shown in Table 1 of this

Trading Agreement and Order.

- Discount (.95)= %5 design margin applied to the allowable limit.

ii. During the ozone season only (peak day calculation):

the maximum actual excess NOx emissions (in lbs) on any ofthe days

projected by the Commissioner to be "moderate to unhealthful,"

"unhealthful," or "very unhealthful," divided by 3 and then divided by 13

(with the result in tons):

Estimated DERCs (in tons) = [(MaximlUI1 estimated excess NOx in Ibs) + 3]

+[13Ibs/day/ton]

b. No later than October 30 of2003, and 2004 calculate and permanently retire the

DERCs used in the preceding ozone season as the greater of:

i. the actual total excess emissions for the ozone season in tons, as follows:

DERCs (in tons) = {(actual fuel use in MMBtu) x ((FLER) - (0.95 x NOx

allowable emission limit))}+ 2000 pounds/ton

OR
Devon Power LLC 4 Trading Agreement

and Order No. 8181 A

c.

ii. the maximum actual excess NOx emissions (in lbs) on any ofthe days

projected by the Commissioner to be "moderate to unhealthful",

"unhealthful", or "very unhealthful", divided by 3 and then divided by 13

(with the result in tons):

,

Actual DERCs (tons) used [(Actual excess NOx in lbs) .;.3].;. [13

lbsldaylton)

As described in Exhibit 1 of this Trading Agreement and Order, to the extent

that DERCs used to offset on peak day basis exceed the total mass excess

emissions, remaining DERCs may be used in the non-ozone season in the

same or subsequent years tmough May 1, 2005.

During the non-ozone season starting on October 1,2003:

In addition to meeting the 24-bour emission limit in Table 22-1 of Section 22a174-22 of the Regulations, meet a non-ozone season emission limit of 0.15

IblMMBtu. Prior to October I, 2003 and October 1,2004, DP shall estimate

and acquire sufficient DERCs andlor allowances needed to comply with Section

22a-174-22(e)(3) ofthe Regulations as follows:

Estimated DERCs (tons) [Estimated fuel use in MMBtu from October I

through April 30 x (Estimated maximum emission

rate in IblMMBtu during October I through April

30 - (0.95 x 0.15 IblMMBtu))J ).;. 2000

poundslton.

, - -

d. No later than May 31 of 2004, calculate and permanently retire DERCs used in

the preceding non-ozone season as follows:

Actual DERCs (tons) [Actual fuel use in MMBtu from October I through

April 30 x (average emission rate in lblMMBru during

October I through April 30 - (0.95 x 0.15 IblMMBtu))]

.;. 2000 poundslton.

BDERCs shall only be used by other NOx budget program sources located in Connecticut.

BDERCs shall only be used to offset ozone season excess emissions, a.TId shall not be used

for compliance during the non-ozone season. BDERCs generated during a given year shall

only be used through the following ozone season. BDERCs are subject to all DERC

requirements set forth in this Trading Agreement and Order except for those requirements

pertaining solely to non-ozone season DERCS and as otherwise may be provided..
Devon Power LLC 5 Trading Agreement

and Order No. 8181 A

..

4. DP shall make and keep records of: daily fuel use and fuel type; excess NOx emissions;

the number ofDERCs in its possession, created, purchased and used (by serial number if

assigned) each month in accordance with the appropriate emission rates and limits in this

Trading Agreement and Order; the number ofDERCs used during the ozone season and

non-ozone season (the remainder ofthe year); during the ozone season, the ozone

,

classification as fore«asted by the Commissioner on the previous day; as well as

documentation attesting to the fact that approved DERCs used during the ozone season

were generated during the ozone season. Generator certification ofthis fact shall be

sufficient. DP shall maintain and submit such records to the Commissioner in accordance

with Section 22a-174-22 ofthe Regulations.

5. Record Keeping. DP shall retain records and supporting documentation as described in

this Trading Agreement and Order for a minimum offive years, commencing on the date

such records were created. DP shall provide the records specified above to the

Commissioner within thirty (30) days ofreceipt of a written request from the

Commissioner.

6. Annual Emission Statement. No later than March I of every year after issuance of this

Trading Agreement and Order, DP shall include with the Annual Emission Statement

provided to the Commissioner, a record of each sale or other transfer, and use of any and

all ofthe DERCs approved within and subsequent to issuance of this Trading Agreement

and Order until all such DERCs have been used or are no longer in DP's possession. DP

shall also include actual NOx emissions from the peaking units and the amount of all

DERCs used (including serial numbers (if assigned) and approved DERCs generated

andlor purchased from other facilities), generated and/or approved for the previous

calendar year. These reports shall be on a fonn prescribed by the Commissioner and shall

be in monthly increments. Should DP choose to discontinue the generation ofDERCs, DP

will notify the Commissioner upon discontinuance.

7. Allowance Use. Pursuant to Section 22a-174-22(d)(3) ofthe Regulations, DP may use

NOx allowances, pursuant to Section 22a-174-22G) of the Regulations to achieve all or a

portion ofthe reductions required by Section 22a-174-22 of the Regulations. Any

allowance used for compliance with Section 22a-174-22(e) ofthe Regulations shall be

subject to all restrictions and/or requirements applicable to DERCs contained in this

Trading Agreement and Order. Each allowance used for compliance with Section 22a174-22 ofthe Regulations shall be equivalent to one discrete emission reduction credit and

shall be deducted from DP's. Ox Budget Program compliance account upon such use.

Allowances shall be considered used for compliance with Section 22a-174-22 ofthe

Regulations when they are transferred from the facility's compliance account or overdraft

account to a State of Connecticut NOx allowance retirement account, account ID

CT0000000300 in the NOx Allowance Tracking System.
Devon Power LLC 6 Trading Agreement

and Order No. 8181 A

8. DERC Doublimz. At a minimum, DERCs required shall be adjusted upwards by 100% if

DERCs are not in DP's possession for use prior to the first day of each month or

applicable season. However based on the gravity ofthe noncompliance, the

Commissioner may require additional upwards adjustment. , "

9. Vintage Resniction. For the purposes of compliance with Section 22a-174-22 ofthe

Regularions, DERCsiallowances shall only remain valid for five (5) calendar years from

the year ofthe generation/allocation ofsuch DERCsiallowances. DERCs/allowances

older than five (5) calendar years from their creation/allocation are Dot valid for use for

compliance with Section 22a-174-22 of the Regulations. Notwithstanding the above,

DERCs/allowances generated/allocated prior to calendar year 2000 are valid for use for

compliance with Section 22a-174-22 ofthe Regulations up to and including December 31,

2004.

10. FLER Exceedance. Noncompliance with an established FLER shall subject DP to make

restitution by matching the quantity of emissions ("true up") caused by the exceedance

plus a 100% premium. The true up in tons ofDERCs shall be equal to the FLER

exceedance in IbsIMMBtu, multiplied by the total heat input during the period of

noncompliance divided by 2000 Ibs/ton. Ifthe period ofooncompliance is not known, the

time period from the completion of the last/previous Department 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 or take any other action to require

additional upward adjustmept, based on the gravity of any alleged noncompliance or

violation of law.

11. FLER Modification. FLERs set forth in Table 1 of this Trading Agreement and Order

may be modified only after the consent ofthe Commissioner by written modification of

this Trading Agreement and Order.

12. Emissions Testing. Pursuant to Section 22a-174-22(k) ofthe Regulations, DP shall

conduct NOx emission tests of the peaking units at least once every five years

commencing from the dates ofthe NOx emission tests for the peaking units as provided in

Table 1 ofthis Trading Agreement and Order.

13. Extension. No later than May 1, 2005, with respect to the peaking units, DP shall comply

with the requirements of Section 22a-174-22(d)(I) of the Regulations. However, after full

program review ofthis and other Trading Agreements and Orders and, if detennined to be

appropriate, the Commissioner may grant a v..rrinen extension of this Trading Agreement

and Order.
Devon Power LLC 7 Trading Agreement

and Order No. 8181 A

r)

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14. Future Compliance Report. On or before September 1,2004, DP shall submit a report

indicating how the facility shall comply with section 22a·174·22 ofthe Regulations with

respect to the Peaking units on and after May 1,2007.

15. Full compliance. DP shall not be considered in full compliance with this Trading

Agreement and Ord~ hntil all actions required by this Trading Agreement and Order have

been completed as approved and to the Commissioner's satisfaction.

16. Approvals. DP shall use best effons to submit to the Commissioner all documents

required by this Trading Agreement and Order in a complete and approvable form. lfthe

Commissioner notifies DP that any document or other action is deficient, and does not

approve it with conditions or modifications, it is deemed disapproved, and DP shall correct

the deficiencies and resubmit it within the time specified by the Commissioner or, if no

time is specified by the Commissioner, within 30 days of the Commissioner's notice of

deficiencies. In approving any document or other action under this Trading Agreement

and Order, the Commissioner may approve the document or other action as submitted or

perfonned or with such conditions or modifications as the Commissioner deems necessary

to carry out the purposes ofthis Trading Agreement and Order. Nothing in this paragraph

shall excuse noncompliance or delay.

17. Definitions. As used in this Trading Agreement and Order, "Commissioner" means the

Commissioner of Environmental Protection or an agent of the Commissioner. "Ozone

season" means the period from May 1 through September 30 in any given calendar year.

The date of "issuance" ofthis Trading Agreement and Order is the date the Trading

Agreement and Order is deposited in the U.S. mail or personally delivered, whichever is

earlier.

18. Dates. The date ofsubmission to the Commissioner of any document required by this

Trading Agreement and Order shall be the date such document is received by the

Commissioner. The date of any notice by the Commissioner under this Trading

Agreement and Order, including but not limited to notice of approval or disapproval of

any document or other action, shall be the date such notice is deposited in the U.S. mail

or is 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

Order means calendar day. Any document or action which is required by this Trading

Agreement and Order to be submined or performed by a date which falls on a Saturday,

Sunday or a Connecticut or federal holiday shall be submitted or perfonned by the next

day which is not a Saturday, Sunday or Connecticut or federal holiday

19. Cenification of documents. Any document, including but not limited to any notice,

which is required to be submined to the Commissioner under this Trading Agreement and
Devon Power LLC 8 Trading Agreement

and Order 0.8181 A

Order shall be signed by DP or, ifDP is not an individual, by DP's chief executive officer

or a duly authorized representative ofsuch officer, as those terms are defined in Section

22a-430-3(b)(2) of the Regulations, and by the individual(s) responsible for actually

preparing such document, and DP or DP's chief executive officer and each such

individual shall certify in writing as follows:

I

"1 have personally examined and am familiar with the information submitted in this

document and all attachments thereto, and 1 certify, based on reasonable investigation,

including my inquiry ofthose individuals responsible for obtaining the information, that

the submitted information is true, accurate and complete to the best ofmy knowledge and

belief I understand that any false statement made in the submitted information is

punishable as a criminal offense under Section 53a-157P ofthe Connecticut General

Statutes and any other applicable law."

20. Noncompliance. This Trading Agreement and Order is a final order ofthe Commissioner

with respect to the matters addressed herein, and is nonappealable and immediately

enforceable. Failure to comply with this Trading Agreement and Order may subject DP

to an injunction and penalties.

I"""''''l:

;~S 21. False statements. Any false statement in any information submitted pursuant to this

Trading Agreement and Order is punishable as a criminal offense under Section 53a·157b

ofthe Connecticut General Statutes and any other applicable law.

22. Notice oftransfer; liability ofDP and others. Until DP has fully complied with this

Trading Agreement and Order, DP shall notify the Commissioner in writing no later than

fifteen (15) days after transferring all or any portion of any of the facilities, the

operations, the sites or the businesses which are the subject ofthis Trading Agreement

and Order or after obtaining a new mailing or location addresses. DP's obligations under

this Trading Agreement and Order shall not be affected by the passage oftitle to any

property to any other person or municipality.

Commissioner's powers. Nothing in this Trading Agreement and Order shall affect the

Commissioner's authority to institute any proceeding or take any other action to prevent

or abate violations oflaw, prevent or abate pollution, recover costs and natural resource

damages, and to impose penalties for past, present, or future violations oflaw. Ifat any

time the Commissioner determines that the actions taken by DP pursuant to this Trading

Agreement and Order have successfuIly corrected all violations, fully characterized the

extent or degree of any pollution, or successfully abated or prevented pollution, the

Commissioner may institute any proceeding to require DP to undertake further

investigation or further action to prevent or abate violations or pollution.

24. DP's oblie:ations under law. Nothing in this Trading Agreement and Order shall relieve
Devon Power LLC 9 Trading Agreement

and Order No. 8181 A

7- -).

26.

27.

28.

DP of other obligations under applicable federal, state and local law.

No assurance bv Commissioner. No provision of this Trading Agreement and Order and

no action or inaction by the Commissioner shall be construed to constitute an assurance

by the Commissioner that the actions taken by DP pursuant to this Trading Agreement

and Order will result ih compliance or prevent or abate pollution. !

,

Access to facility. Any representative ofthe Department of Environmental Protection

may enter any ofthese facilities without prior notice for the purposes ofmonitoring and

enforcing the actions required or allowed by this Trading Agreement and Order.

No effect on rights of other persons. This Trading Agreement and Order neither creates

nor affects any rights of persons or municipalities that are not parties to this Trading

Agreement and Order. .

No Creation ofPropertv RilZhtS. This Trading Agreement and Order does not create any

property rights with respect to these DERCs.

,....,,,\ 29. Notice to Commissioner of chanQ':es. Within fifteen (15) days of the date DP becomes

':"',.~J aware of a change in any infonnation submitted to the Commissioner under this Trading

Agreement and Order, or that any such information was inaccurate or misleading or that

any relevant information was omitted, DP shall submit the correct or omitted information

to the Commissioner.

30. Notification of noncompliance. In the event that DP becomes aware that it did not or may

not comply, or did not or may not comply on time, with any requirement ofthis Trading

Agreement and Order or of any document required hereWlder, DP shall immediately

notify by telephone the individual identified in the next paragraph and shall take all

reasonable steps to ensure that any noncompliance or delay is avoided or, if unavoidable,

is minimized to the greatest extent possible. Within five (5) days of the initial notice, DP

shall submit in writing the date, time, and duration of the noncompliance and the reasons

for the noncompliance or delay and propose, for the review and written approval ofthe

Commissioner, dates by which compliance will be achieved, and DP shall comply with

any dates which may be approved in writing by the Commissioner. Notification by DP

shall not excuse noncompliance or delay, and the Commissioner's approval of any

compliance dates proposed shall not excuse noncompliance or delay unless specifically so

stated by the Commissioner in writing.

31. Submission of documents. Any document required to be submitted to the Corrunissioner

under this Trading Agreement and Order shall, unless otherwise specified in this Trading

\, ) Agreement and Order or in writing by the Commissioner, be directed to:
Devon Power LLC 10 Trading Agreement

and Order No. 8181 A

Mr. Michael Lafleur

Department of Envirorunental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street,

Hanford, CT 06106
Devon Power LLC 11 Trading Agreement

and Order No. 8181 A

DP consents to the issuance of this Trading Agreement and Order without further notice. The

undersigned certifies that he/she is fully authorized to enter into this Trading Agreement and

Order and to legally bind DP to the terms and conditions ofthe Trading Agreement and Order.

Devon Power LLC

:::nrre c~,;::: .

Title :Jf(¥jIDnaJ ~te

Date; Lj- 0-63

Issued as a final order ofthe Commissioner ofEnvironment

--,,4"¥'~<LL.!.'I--",lko=..__" 2003.

CITY OF MILFORD LAND RECORDS

MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED

Certified Document No.