# STATE OFCONNECTICUT DEPARTMENT OFENVIRONMENTALPROTECTION

In the matter of

The State of Connecticut and

The Connecticut Light 

### and PowerCompany Trading Agreement and Order No. 8160

Whereas, the Commissioner ofEnvironmental Protection 

### ("Commissioner") andThe Connecticut Light and PowerCompany ("CL&P") agree 

### that it is in the public interest that theywork cooperatively to improve the air quality within the State of 

### Connecticut and that the use ofemission reduction trading will achieve this result in a timely and cost-effective manner:
A. At the request and with the agreement ofCL&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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### The Connecticut Light and Power Company Trading Agreement and OrderNo. 8160

units ("lbs/MMBtu") ofheat inputwhen operating on No. 6 fuel oil. On and afterMay 31, 1995, the Regulations ofConnecticut StateAgencies ("Regulations") require that the boileremitNOx at a rate no greater than 0.25 lbs/MMBtu ofheat input when operating on No. 6fuel oil and 0.20 lbs/MMBtu ofheat inputwhen operating on natural gas.
4. In January 1994, CL&P completedmodifications of the boiler's burnerand combustion controls, andbegan 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 toprovide further reductions ofNOx emissions. Suchmodifications and installation capabilities enabledCL&P's boiler to frequently meet and operatebelow the emission limitation specified in Section 22a-174-22{e)ofthe Regulations.

5. 

### AfterNovember 1, 

### 1996, CL&Pmay obtain approval of actual reductions in NOx emissions, generatedby operating the boilerat a rate which is below 0.25 lbs/MMBtu ofheat inputwhen operating on No. 6fuel oil and 0.20 lbs/MMBtu ofheat inputwhen operating on natural gas for use as emission reduction credits ("ERCs")

. 6 • 

### Pursuant to Section 22a-174-22(j) ofthe Regulations, CL&P intends to acquire and generate approvedERCs until May 1, 2003 at the facility. ApprovedERCs are defined for purposes of this Trading Agreement and Order as those for which the Commissionerhas provided written authorization for use in compliance with Section 22a174-22 ofthe Regulations. CL&P will acquire approved ERCs monthly on an as-neededbasis, as determinedby actual NOx emissions in the event that the 24-hour average exceeds the NOx emission limitations ofSection 22a-174-22{e) ofthe Regulations.

Date: 2 

### When properly documentedby CL&P, and approvedby the Commissioner, the emission reductions identified above, and as computedin accordance with the terms ofthis 

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### The Connecticut Light and Power Company Trading Agreement and OrderNo. 8160

Trading Agreement andOrder, will conformto the requirements ofSection 22a-174-22(j)

### (3) of the 

### Regulations. Specifically, the reductions will be:

because they result in a reduction ofactual emissions released into the air, net ofany consequential increase in actual emissions resulting from shifting demand. The emission reductions are properlymeasured, recorded and reported. Quantifiablebecause they are based on continuous emissionmonitoring data as applied in an appropriate reliable and replicable protocol, providing the rate and total mass amount ofreduction. Surplus because they are not required by any Connecticut statute or regulation mandatedby a current State Implementation Plan ("SIP"), and are not currently relied upon in any applicable attainment plan, any reasonable further progress plan ormilestone demonstration.

Permanent because the advanced control systemand installation capabilities are in place and operating, and an appropriate tracking systemis in place to monitor all data required to verify and quantify the creation ofERCs.

Enforceable because the ERCs are approved by the Commissioner retrospectively after the submission by CL&P ofthe quarterly or semi-annual report that will document their creation.

8. As documented inAttachment 1, attached to and incorporatedby reference into this TradingAgreement and Order, 46 ERCs were createdby the boilerbetween 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 createdbelow the standards prescribedin 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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### Date: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 Commissionermay provide written approval of additional ERCs by CL&P retrospectively. Approved ERCs createdby 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 ofCL&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 proportionedbaseline emission rate set forth in footnote 2 ofparagraph 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 ofCEM-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 PowerCompany Trading Agreement and OrderNo. 8160

all calculations on a dailybasis to assure a benefit to the environment.
*This rate shallbe calculatedpursuantto themethodology describedin 40 

### Code ofFederal 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) ofthe Regulations or until May 1, 2003, whichever occurs first. CL&P shall acquire approved ERCs, and document and record the amounts ofNOx 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 ofthe Regulations, until May 1, 

### 2003:

a. Before the first day ofeach month, calculate projected worst case ERCs required for the same calendarmonth as follows:

ERCs (tons)
= 

### {[estimatedworst case NOx emission rate in lbs/MMBtu

- ((0.95) x (NOx RACT limit or proportioned emission rate calculatedpursuant to Section 22a-174-22(f)(2)(A) ofthe Regulations in lbs/MMBtu))] x (Estimated fuel use in MMBtu)} 7 

### 2000 pounds.

b. Acquire sufficient approved ERCs no later than the first ofeachmonth to assure compliance for, at a minimum, that calendarmonth. Excess ERCs from previous months can be applied to subsequent months. ERCs required shall be adjusted upwards by 100% ifERCs are not in CL&P's possession prior to use.

c. No later than the twentieth day ofeach month, calculate ERCs used in the preceding calendar month, as follows:
(1) 

### For the boiler on each day, determine whether

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### Date: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 ofERCs used, as follows:


### ERCs (tons) {[{CEM-recordedNOx 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) ofthe Regulations in lbs/MMBtu))] x (actual fuel use inMMBtu)} + 

### 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 Commissionermay 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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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 ofreceipt of a written request from the Commissioner.

8. Upon sufficient documentation that CL&P has met the requirements ofparagraphs C.1., 

### C.3, C.4., and 

### C.10., of this Trading Agreement and Order, the Commissioner may provide written approval ofERCs 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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9. ShouldCL&P choose to generate additional ERCs, reports documenting these ERCs may be submittedon a quarterly
or semi-annual basis. Such reports shall be compiled
on a monthly basis.

10. 

### When the boilerhas daily NOx emissions below the applicable baseline emission rate(s), or the proportionedbaseline emission rate, CL&P shall calculate the amount ofERCs generated as follows:

ERCs (tons) = 

### {[Total heat inputl 

### ofall fuels inMMBtu

x 

### {(proportionedbaseline emission rate2) - 

### (the CEMrecorded NOx emission rate3))] 7 2000 

### lbs/ton} x (0.90).4

1 Heat input shall be calculatedusing the lower ofCEMrecordeddata or actual fuel usage data inMMBtu perunit of fuel combusted.

2This rate shall be calculatedby llrnultiplying the heat input ofeach fuel combustedby the baseline emission rate(s) for such fuel; 2) summing those products; and 3) dividing the
sumby the total heat input. Ifthe,boiler is operating exclusively on one fuel, CL&Pmay replace the proportioned baseline emission rate with the applicable baseline emission rate, for that fuel.

3 This rate shall be calculatedpursuant to the methodology described in 40 Code ofFederal Regulations Part 75.

4Ten (10) percent ofall ERCs (tons) createdby the boiler shall be retiredby the facility andpermanently removed from all calculations on a daily basis to assure a benefit to the environment.


### 11. As used in this Trading Agreement andOrder, "corrunissioner" means the Corrunissioner ofEnvironmental Protection or an agent ofthe Corrunissioner. "Ozone season" means the period fromMay 1 

### through September 30 

### in any given calendar year.
12. Notification ofnoncompliance. In the event that CL&P becomes aware that it did not ormay not comply, ordid not ormay not comply on time, with any requirement of

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### The Connecticut Light and Power Company Trading Agreement andOrderNo. 8160

this TradingAgreement and Order or ofany document required hereunder, CL&P shall immediately notify the Commissionerand shall take all reasonable steps to 

### ensure that anynoncompliance ordelay 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 andpropose, for the review and written approval of the Commissioner, dates bywhich compliance will be achieved, and CL&P shall complywith any dates which may be approved in writing by the Commissioner. Notification by CL&P shall not excuse noncompliance ordelay, and the Commissioner's approval ofany compliance dates proposed shall not excuse noncompliance or delay unless specifically so statedby the Commissioner in writing.

13. Certification ofdocuments. 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 signedby a responsible corporate officerofCL&P or a duly authorized representative of such officer, as those terms are defined in Section 22a-430-3{b)(2) ofthe Regulations, andby the individual or individuals responsible for actually preparing such document, each ofwhom shall examine andbe familiar with the information submittedin the document and all attachments thereto, and shall make inquiry ofthose individuals responsible for obtaining the information to determine that the information is true, accurate, and complete, and each ofwhom shall certify in writing as follows:

"I have personally examined and amfamiliar with the information submitted in this document and all attachments thereto, and I certify that basedon reasonable investigation, includingmy inquiry ofthose individuals responsible for obtaining the information, the submitted information is true, accurate and complete to the best ofmy knowledge andbelief. I understand that any false statementmade in the submitted informationmay bepunishable as a criminal offense under Section 22a-175 ofthe Connecticut General Statutes or,

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### Date: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 hereint and shall not be modified without the written agreement ofboth parties.

15. False statements, Any false statement in any information submittedpursuant 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 ofCL&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 pollutiont 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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violations ofanypermit issuedby the Commissioner. Ifat any time the Commissioner**dete~ines** that the actions takenby CL&P pursuant to this TradingAgreementandOrderhave not.fully achievedcompliance with Section22a-174-22 ofthe Regulations, the Commissionermay institute any proceeding against CL&P and/or require CL&P to undertake further investigationor further action.

18. CL&P's obligations under law. Nothing in this TradingAgreement andOrder shall relieve CL&Pofotherobligations under applicable federal, state and local law.

19. Access to records and facility. Any representative ofthe Department ofEnvironmental Protectionmay enterandinspect the facility andinspectandcopy records within normalbusiness hours withoutprior notice for the purposes ofmonitoring and enforcing the actions required orallowedby this Trading Agreement andOrder.

20. No effecton rights ofotherpersons. This Trading Agreement andOrder shall neithercreate nor affectany rights ofpersons who ormunicipalities which are notparties to this Trading Agreement andOrder.

21. NQ CreationofProperty Rights. This Trading Agreement and Order does not create anyproperty rights with respect to these ERCs.

22. Notice to Commissionerofchanges, Within fifteen (15) days of the date CL&Pbecomes aware ofa change in any information submitted to the Commissioner under this Trading Agreement and Order, or that any such informationwas inaccurate ormisleading
or that any relevant informationwas omitted, CL&P shall submit the correct oromittedinformation to the Commissioner.

23. Submissionofdocuments, Any document required to be submitted to the Commissioner under this TradingAgreement andOrder shall, unless otherwise specified inwriting by the Commissioner, be directed to:
Mr. DavidJawin DepartmentofEnvironmental Protection BureauofAirManagement Compliance andFieldOperations Division Emissions Trading Unit 79 ElmStreet Hartford, Connecticut 06106



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### The Connecticut Light and PowerCompany Trading Agreement andOrderNo. 8160

CL&P consents to the issuance of this TradingAgreement andOrder without further notice. The undersigned certifies that he/she is fully authorized to enter into this TradingAgreement andOrder and to legally bind CL&P to the terms and conditions ofthe 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 ofthe Commissionerof

Environmental Protection on 1999.



### Arthur J. Rocque, Jr. Commissioner



### CITYOFMIDDLETOWN LANDRECORDS MAILED CERTIFIEDMAIL, RETURNRECEIPT REQUESTED Certified DocumentNo.

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