STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the matter of

The State of Connecticut and

The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

Whereas, the Commissioner of Environmental Protection

("Commissioner") and The Connecticut Light and Power Company

("CL&P") 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 emission reduction trading will

achieve this result in a timely and cost-effective manner:

A. At the request and with the agreement of CL&P, the

Commissioner finds the following:

1. CL&P is an electric utility with headquarters in

Berlin, Connecticut, which owns and operates four

fossil fuel-fired electric generating stations within

the state.

2. One of the four fossil fuel-fired electric generating

stations within the state that CL&P owns and operates is

Middletown Station at 1866 River Road in Middletown,

Connecticut ("facility"). At the facility, CL&P

operates Middletown Station Unit 2, a 120 megawatt

front-fired boiler on No. 6 fuel oil and/or natural gas,

Connecticut Registration Number 104-0098, ("boiler"). A

continuous emissions monitor ("CEM"), certified to 40

Code of Federal Regulations Part 75, measures nitrogen

oxide ("NOx")emissions from the boiler.

3. During the year 1981, prior to modifications of the

boiler's burner, combustion controls and operating

conditions, and prior to the installation of natural gas

operating capabilities, and based on Department of

Environmental Protection approved stack test data, the

average annual NOx emission rate for Middletown Station

Unit 2 was 0.283 pounds per million British thermal

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An Equal Oppor/unlf)' Emplo)'u

Date:
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

units ("lbs/MMBtu") of heat input when operating on No.

6 fuel oil. On and after May 31, 1995, the Regulations

of Connecticut State Agencies ("Regulations") require

that the boiler emit NOx at a rate no greater than 0.25

lbs/MMBtu of heat input when operating on No. 6 fuel oil

and 0.20 lbs/MMBtu of heat input when operating on

natural gas.

4. In January 1994, CL&P completed modifications of the

boiler's burner and combustion controls, and began to

test and adjust operating conditions, thereby reducing

the boiler's NOx emission rates below its permitted,

allowed and actual baseline emission rates. Natural gas

operating capabilities were installed at the facility by

July, 1997 to provide further reductions of NOx

emissions. Such modifications and installation

capabilities enabled CL&P's boiler to frequently meet

and operate below the emission limitation specified in

Section 22a-174-22{e)of the Regulations.

5. After November 1, 1996, CL&P may obtain approval of

actual reductions in NOx emissions, generated by

operating the boiler at a rate which is below 0.25

lbs/MMBtu of heat input when operating on No. 6 fuel oil

and 0.20 lbs/MMBtu of heat input when operating on

natural gas for use as emission reduction credits

("ERCs") .

6 • Pursuant to Section 22a-174-22(j) of the Regulations,

CL&P intends to acquire and generate approved ERCs until

May 1, 2003 at the facility. Approved ERCs are defined

for purposes of this Trading Agreement and Order as

those for which the Commissioner has provided written

authorization for use in compliance with Section 22a174-22 of the Regulations. CL&P will acquire approved

ERCs monthly on an as-needed basis, as determined by

actual NOx emissions in the event that the 24-hour

average exceeds the NOx emission limitations of Section

22a-174-22{e) of the Regulations.

2 Date:

When properly documented by CL&P, and approved by the

Commissioner, the emission reductions identified above,

and as computed in accordance with the terms of this

f;5f!n

7.

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

Trading Agreement and Order, will conform to the

requirements of Section 22a-174-22 (j) (3) of the

Regulations. Specifically, the reductions will be:

because they result in a reduction of actual

emissions released into the air, net of any

consequential increase in actual emissions resulting

from shifting demand. The emission reductions are

properly measured, recorded and reported.

Quantifiable because they are based on continuous

emission monitoring data as applied in an appropriate

reliable and replicable protocol, providing the rate and

total mass amount of reduction.

Surplus because they are not required by any Connecticut

statute or regulation mandated by a current State

Implementation Plan ("SIP"), and are not currently

relied upon in any applicable attainment plan, any

reasonable further progress plan or milestone

demonstration.

Permanent because the advanced control system and

installation capabilities are in place and operating,

and an appropriate tracking system is in place to

monitor all data required to verify and quantify the

creation of ERCs.

Enforceable because the ERCs are approved by the

Commissioner retrospectively after the submission by

CL&P of the quarterly or semi-annual report that will

document their creation.

8. As documented in Attachment 1, attached to and

incorporated by reference into this Trading Agreement

and Order, 46 ERCs were created by the boiler between

November 1, 1996 and September 30, 1997 (20 during the

ozone season and 26 during the non-ozone season). Of the

20 ozone season ERCs, 5 early emission reduction credits

were created below the standards prescribed in Section

22a-174-22a of the Regulations (the NOx Budget Program)

during 1997 by the boiler and shall be converted into

allowances.

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

9. Ten (10) percent of these ERCs (5) are retired and

permanently removed from all calculations to assure a

benefit to the environment, leaving 36 ERCs available

for use (13 ozone season and 23 non-ozone season).

B. The Commissioner, in accordance with the provisions of this

Trading Agreement and Order, pursuant to Section 22a-174-

22(d) (4) of the Regulations, will allow CL&P and approved

sources within Connecticut to use 36 tons of NOx ERCs

referenced in paragraph A.9. of this Trading Agreement and

Order (13 during the ozone season and 23 during the non-ozone

season) for purposes of compliance under Section 22a-174-

22{j) and/or Section 22a-174-3(1) (5) of the Regulations to

achieve a portion of the nitrogen oxide emission reductions

required or as emission offsets for new sources.

Upon sufficient documentation as prescribed below, the

Commissioner may provide written approval of additional ERCs

by CL&P retrospectively. Approved ERCs created by CL&P may

be held by CL&P or transferred to other persons. Such ERCs

shall remain valid until they are used or until May 1, 2003,

whichever occurs first.

C. With the agreement of CL&P, the Commissioner, acting under

Sections 22a-6, 22a-171, 22a-174, 22a-176, and 22a-177 of the

Connecticut General Statutes, orders CL&P as follows:

1. ERC generation. For purposes of generating ERCs from

the boiler at the facility, CL&P shall use 0.25

Ibs/MMBtu of heat input when operating on No. 6 fuel oil

and 0.20 Ibs/MMBtu of heat input when operating on

natural gas as the baseline emission rates for the

boiler, or the proportioned baseline emission rate set

forth in footnote 2 of paragraph C.10. of this Trading

Agreement and Order, when simultaneously operating on

more than one fuel. CL&P shall use the above referenced

baseline emission rate(s) when calculating the

proportioned baseline emission rate. When calculating

ERCs, CL&P shall use the lower of CEM-recorded NOx

emission rate* or actual fuel usage data for the boiler

in MMBtu/day, when determining heat input. Ten (10)

percent of all ERCs (tons) created by the boiler shall

be retired by the facility and permanently removed from

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

all calculations on a daily basis to assure a benefit to

the environment.

*This rate shall be calculated pursuant to the methodology

described in 40 Code of Federal Regulations Part 75.

2. ERC Use. Approved ERCs shall be acquired for the period

beginning June 1, 1995 and continuing until CL&P

achieves permanent compliance for the boiler with the

emission standards in Section 22a-174-22(e) of the

Regulations or until May 1, 2003, whichever occurs

first. CL&P shall acquire approved ERCs, and document

and record the amounts of NOx emissions and ERCs used

by the boiler each month, and shall maintain and

provide such records in accordance with the following

and Section 22a-174-4 of the Regulations, until May 1,

2003:

a. Before the first day of each month, calculate

projected worst case ERCs required for the same

calendar month as follows:

ERCs (tons) = {[estimated worst case NOx emission

rate in lbs/MMBtu - ((0.95) x (NOx RACT limit or

proportioned emission rate calculated pursuant to

Section 22a-174-22(f) (2) (A) of the Regulations in

lbs/MMBtu))] x (Estimated fuel use in MMBtu)} 7

2000 pounds.

b. Acquire sufficient approved ERCs no later than the

first of each month to assure compliance for, at a

minimum, that calendar month. Excess ERCs from

previous months can be applied to subsequent

months. ERCs required shall be adjusted upwards

by 100% if ERCs are not in CL&P's possession prior

to use.

c. No later than the twentieth day of each month,

calculate ERCs used in the preceding calendar

month, as follows:

(1) For the boiler on each day, determine whether

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

the 24-hour average NOx emission rate is less

than the baseline emission rate or greater

than the NOx RACT limit.

(2) When the boiler has a daily NOx emission rate

(24-hour average) exceeding the NOx RACT

limit, calculate the amount of ERCs used, as

follows:

ERCs (tons) {[{CEM-recorded NOx daily

average emission rate in Ibs/MMBtu) - ({0.9S)

x (NOx RACT limit or proportioned emission

rate calculated pursuant to Section 22a-174-

22(f) (2) (A) of the Regulations in

lbs/MMBtu))] x (actual fuel use in MMBtu)} +

2000 pounds.

d. Maintain documentation to attest to the fact that

ERCs used during the ozone season were generated

during the ozone season. Generator certification

of this fact shall be sufficient.

e. After full program review, and if the Commissioner

deems it appropriate, the Commissioner may allow

the survival and use of these ERCs beyond April

30, 2003.

3. CL&P shall maintain records for the boiler showing

daily NOx mass emissions, and actual NOx emission rates

(24-hour average). CL&P shall also maintain records

showing a monthly total of all ERCs generated net of

the ten (10) percent environmental discount.

4. In requesting ERC approval, CL&P shall provide

documentation containing monthly operating reports of

actual fuel usage in MMBtu and actual heat input based

upon CEM-recorded data, daily actual NOx mass emissions

and NOx emission rates {24-hour average}, number of

operating hours per day, and ERCs generated using the

baseline emission rate(s), or the proportioned baseline

emission rate, net of the ten (10) percent

environmental discount.

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

5. No later than March 1 of every year after issuance of

this Trading Agreement and Order, CL&P 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 of the ERCs approved within and

subsequent to issuance of this Trading Agreement and

Order until all such ERCs have been used. CL&P shall

also include actual NOx emissions from the boiler, and

the amount of all ERCs used (including approved ERCs

generated and/or purchased from other facilities),

generated and/or approved for the previous calendar

year. These reports will be on a form prescribed by

the Commissioner. This reporting may cease if a

central registry is approved by the Commissioner.

Should CL&P choose to discontinue the generation of

ERCs, CL&P will notify the Commissioner upon

discontinuance.

6. In order to consider CEM-recorded NOx emission rates

valid for ERC approval, all NOx and CO2 /02 CEMs must

comply with 40 Code of Federal Regulations Part 75.

7. CL&P shall retain records and supporting documentation

as described in this Trading Agreement and Order for a

minimum of five years, commencing on the date such

records were created. CL&P shall provide the records

specified above to the Commissioner within thirty (30)

days of receipt of a written request from the

Commissioner.

8. Upon sufficient documentation that CL&P has met the

requirements of paragraphs C.1., C.3, C.4., and C.10.,

of this Trading Agreement and Order, the Commissioner

may provide written approval of ERCs created by CL&P

retrospectively, in addition to those approved in

paragraph B. of this Trading Agreement and Order.

Requests for approval of all subsequent ERCs created

shall be submitted in writing to the Commissioner.

Approved ERCs created by CL&P may be held or

transferred to other persons. Such ERCs shall remain

valid until they are used or until May 1, 2003,

whichever occurs first.

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

9. Should CL&P choose to generate additional ERCs, reports

documenting these ERCs may be submitted on a quarterly

or semi-annual basis. Such reports shall be compiled

on a monthly basis.

10. When the boiler has daily NOx emissions below the

applicable baseline emission rate(s), or the

proportioned baseline emission rate, CL&P shall

calculate the amount of ERCs generated as follows:

ERCs (tons) = {[Total heat inputl of all fuels in MMBtu

x {(proportioned baseline emission rate2 ) - (the CEMrecorded NOx emission rate 3 ))] 7 2000 lbs/ton} x (0.90).4

1 Heat input shall be calculated using the lower of CEMrecorded data or actual fuel usage data in MMBtu per unit of

fuel combusted.

2 This rate shall be calculated by llrnultiplying the heat

input of each fuel combusted by the baseline emission rate(s)

for such fuel; 2) summing those products; and 3) dividing the

sum by the total heat input. If the ,boiler is operating

exclusively on one fuel, CL&P may replace the proportioned

baseline emission rate with the applicable baseline emission

rate, for that fuel.

3 This rate shall be calculated pursuant to the methodology

described in 40 Code of Federal Regulations Part 75.

4 Ten (10) percent of all ERCs (tons) created by the boiler

shall be retired by the facility and permanently removed from

all calculations on a daily basis to assure a benefit to the

environment.

11. As used in this Trading Agreement and Order,

"corrunissioner" means the Corrunissioner of Environmental

Protection or an agent of the Corrunissioner. "Ozone

season" means the period from May 1 through September 30

in any given calendar year.

12. Notification of noncompliance. In the event that CL&P

becomes aware that it did not or may not comply, or did

not or may not comply on time, with any requirement of

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

this Trading Agreement and Order or of any document

required hereunder, CL&P shall immediately notify the

Commissioner 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. In so notifying the Commissioner, CL&P shall

state in writing the reasons for the noncompliance or

delay and propose, for the review and written approval

of the Commissioner, dates by which compliance will be

achieved, and CL&P shall comply with any dates which may

be approved in writing by the Commissioner. Notification

by CL&P 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.

13. Certification of documents. Any document, including but

not limited to any notice, which is required to be

submitted to the Commissioner under this Trading

Agreement and Order shall be signed by a responsible

corporate officer of CL&P or a duly authorized

representative of such officer, as those terms are

defined in Section 22a-430-3{b) (2) of the Regulations,

and by the individual or individuals responsible for

actually preparing such document, each of whom shall

examine and be familiar with the information submitted in

the document and all attachments thereto, and shall make

inquiry of those individuals responsible for obtaining

the information to determine that the information is

true, accurate, and complete, and each of whom shall

certify in writing as follows:

"I have personally examined and am familiar with the

information submitted in this document and all

attachments thereto, and I certify that based on

reasonable investigation, including my inquiry of those

individuals responsible for obtaining the information,

the submitted information is true, accurate and complete

to the best of my knowledge and belief. I understand

that any false statement made in the submitted

information may be punishable as a criminal offense under

Section 22a-175 of the Connecticut General Statutes or,

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8160

in accordance with Section 22a-6 of the Connecticut

General Statutest under Section 53a-157b of the

Connecticut General Statutes, and in accordance with any

other applicable statute."

14. Final Agreement and Order. This Trading Agreement and

Order is the final agreement and order by and between the

Commissioner and CL&P with respect to the matters

addressed herein t and shall not be modified without the

written agreement of both parties.

15. False statements, Any false statement in any information

submitted pursuant to this Trading Agreement and Order

may be punishable as a criminal offense under Section

22a-175 of the Connecticut General Statutes or, in

accordance with Section 22a-6, under Section 53a-157b of

the Connecticut General Statutes.

16. Notice of transfer; liability of CL&P and others. Until

CL&P has fully complied with this Trading Agreement and

Order, CL&P shall notify the Commissioner in writing no

later than fifteen (15) days after transferring all or

any portion of the facility, the operationst the site or

the business which are the subject of this Trading

Agreement and Order, or obtaining a new mailing or

location address. Any license transfer shall be

conducted in accordance with Section 22a-60 of the

Connecticut General Statutes. CL&P's obligations under

this Trading Agreement and Order shall not be affected by

the passage of title to any property to any other person

or municipality. Any future owner of the facility may be

subject to the issuance of a Trading Agreement and Order

from the Commissioner.

17. 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 of lawt prevent or abate

pollution t recover costs and natural resource damagest

and to impose penalties for violations of law which are

willful or criminally negligent or for which penalties

have not been specifically provided in this Trading

Agreement and Order, including but not limited to

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and Power Company

Trading Agreement

and Order No. 8160

violations of any permit issued by the Commissioner. If at any

time the Commissioner dete~ines that the actions taken by CL&P

pursuant to this Trading Agreement and Order have not. fully

achieved compliance with Section 22a-174-22 of the Regulations,

the Commissioner may institute any proceeding against CL&P

and/or require CL&P to undertake further investigation or

further action.

18. CL&P's obligations under law. Nothing in this Trading Agreement

and Order shall relieve CL&P of other obligations under

applicable federal, state and local law.

19. Access to records and facility. Any representative of the

Department of Environmental Protection may enter and inspect the

facility and inspect and copy records within normal business

hours without prior notice for the purposes of monitoring and

enforcing the actions required or allowed by this Trading

Agreement and Order.

20. No effect on rights of other persons. This Trading Agreement

and Order shall neither create nor affect any rights of persons

who or municipalities which are not parties to this Trading

Agreement and Order.

21. NQ Creation of Property Rights. This Trading Agreement and Order

does not create any property rights with respect to these ERCs.

22. Notice to Commissioner of changes, Within fifteen (15) days of

the date CL&P becomes aware of a change in any information

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, CL&P shall submit

the correct or omitted information to the Commissioner.

23. Submission of documents, Any document required to be submitted

to the Commissioner under this Trading Agreement and Order

shall, unless otherwise specified in writing by the

Commissioner, be directed to:

Mr. David Jawin

Department of Environmental Protection

Bureau of Air Management

Compliance and Field Operations Division

Emissions Trading Unit

79 Elm Street

Hartford, Connecticut 06106

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and Power Company

Trading Agreement

and Order No. 8160

CL&P 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 CL&P to the terms and conditions of the Trading

Agreement and Order.

Signature:

Type Name:

Type Title:

Date:

The Connecticut Light

Pow Company

Vice President

April 28, 1999

Issued as a final consent order of the Commissioner of

Environmental Protection on 1999.

Arthur J. Rocque, Jr.

Commissioner

CITY OF MIDDLETOWN LAND RECORDS

MAILED CERTIFIED MAIL, RETURN RECEIPT REQUESTED

Certified Document No.

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