STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTICUT

AND

CAPITOL DISTRICT ENERGY CENTER

COGENERATION ASSOCIATES

TRADING AGREEMENT AND

ORDER NO. 8249

MODIFICATION NO.2

TRADING AGREEMENT AND ORDER MODIFICATION

In the matter of a Trading Agreement and Order between the Commissioner of Environmental

Protection ("Commissioner") and Capitol District Energy Center Cogeneration Associates

("CDEC").

WHEREAS, the Commissioner and CDEC, having agreed to the terms and conditions set

forth in Trading Agreement and Order No. 8249 issued on September 29,2003, and a

Modification thereto issued on April 11,2005, do now, by mutual agreement, modify Trading

Agreement and Order No. 8249 and supersede the earlier modification as follows:

I. Delete "EI Paso Corporation" in paragraph A.1. and substitute therefor "Maxim

Power Corporation".

2. Delete the date May I, 2005, and substitute therefor May 1,2009, in paragraphs

A.4. and C.1.

3. Delete paragraph C.2. and substitute the following therefor:

DERC use. Starting on October 1,2004, and until May 1,2009, before the first

day of each non-ozone season, CDEC shall have in its possession sufficient

approved DERCs for the turbine based on the following:

a. During the non-ozone season:

CDEC shall meet a non-ozone seasonal average emission limit of 0.15

IbslMMBtu. Prior to October 1, 2006, October 1, 2007, and October 1,2008,

CDEC shall estimate and acquire the amount of DERCs or allowances

required for such non-ozone season needed to comply with Section 22a-174-

22(e)(3) of the Regulations as follows:

( Printed on Recycled Paper)

79 Elm Street • Hartford. CT 06106 - :'i127

All Equal OPPOT//llliIY Em,,/oyer
Capitol District Energy Center

Cogeneration Associates

2 Trading Agreement and Order

No. 8249 Modification NO.2

Estimated DERCs (tons) =[Estimated fuel use in MMBtu from October 1

through April 30 x (estimated seasonal average

NOx emission rate in IbslMMBtu during October

1 through April 30 - (0.95 x 0.15 IbsIMMBtu))] -;-

2000 pounds/ton.

No later than May 31 of 2007,2008, and 2009, when the turbine has a non-ozone

seasonal average actual NOx emission rate exceeding 0.15 IbslMMBtu, CDEC

shall calculate and permanently retire the amount of DERCs used in the preceding

non-ozone season as follows:

Actual DERCs (tons) = [Actual fuel use in MMBtu from October 1 through April

30 x (actual seasonal average NOx emission rate in

Ibs/MMBtu during October 1 through April 30 - (0.95 x

0.15 Ibs/MMBtu))] -;- 2000 pounds/ton.

b. When the non-ozone season CEM-recorded NOx emission rate is used to

calculate DERCs used by the turbine, CDEC shall include missing data

calculated in accordance with missing data substitution procedures under 40

CPR Part 75.

c. CDEC shall not exceed any NOx permit limitations for the turbine.

4. Delete paragraph C.6. and substitute the following therefor:

Allowance Use. Pursuant to Section 22a-174-22(d)(3) of the Regulations, CDEC

may use NOx allowances, until May 1, 2009, for the turbine pursuant to

Section 22a-174-22U) of the Regulations to achieve all or a portion of the

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

used for compliance with Section 22a-174-22(e) of the Regulations shall be

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

this Trading Agreement and Order;

a. In order for CDEC to use NOx allowances, CDEC shall create a general

account or use 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 of the

Regulations shall be equivalent to one discrete emission reduction credit.

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

of the Regulations when they are transferred from the facility's NOx general

account in the NATS or the facility's NOx compliance account in the NATS
Capitol District Energy Center

Cogeneration Associates

3 Trading Agreement and Order

No. 8249 Modification No.2

to the CT State NOx Retirement Account (Account ill CT0000000300 in the

NATS).

5. 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 CDEC's possession for use prior to the first day of

each non-ozone season. 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 adjustment, based on the gravity of any

alleged noncompliance or violation oflaw. CDEC shall permanently retire the

quantity ofDERCs equivalent to the excess emissions plus a 100% premium

within (60) days ofCDEC's discovery ofthe DERC shortfall. CDEC shall certify

and report any such DERC retirement to the Commissioner in accordance with

paragraph C.26. ofthe Trading Agreement and Order.

6. Delete paragraph C.9. and substitute the following therefor:

Extension. No later than May 1,2009 with respect to the turbine, CDEC shall

comply with the requirements of Section 22a-174-22(d)(2)(A) ofthe Regulations.

There is no assurance that the Commissioner will grant a written extension of

this Trading Agreement and Order.

7. Delete paragraph C.IO. and substitute the following therefor:

Future Compliance Report. On or before September I, 2008, CDEC shall submit

a report 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 turbine on and after

May I, 2009.

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

Definitions. As used in this Trading Agreement and Order, "Approved DERCs"

are those for which the Commissioner has provided written authorization for use

in compliance with Section 22a-174-22 ofthe Regulations; "Commissioner"

means the Commissioner or a representative ofthe Commissioner; "Non-ozone

season" means the period from October I through April 30 in any given calendar

year.

9. Delete paragraph C.14. and substitute the following therefor:
Capitol District Energy Center

Cogeneration Associates

4 Trading Agreement and Order

No. 8249 Modification No.2

Dates. 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. The date ofsubmission to the Commissioner of

any document required by this Trading Agreement and Order shall be the date s

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 submitted or performed by a date which falls on a Saturday, Sunday or a

Connecticut or federal holiday shall be submitted or performed by the next day

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

10. Delete the word "individual" and substitute therefor the word "Section" in

paragraph C.26.

11. Delete the name "Ms. Wendy Jacobs" from paragraph C.27.

All other terms and conditions ofTrading Agreement and Order no. 8249 issued by the

Commissioner acting under Chapter 446c, Sections 22a-6, 22a-171, 22a-174, 22a-176, and 22a177 ofthe Connecticut General Statutes shall remain in effect.
,---------------------------------------------

Capitol District Energy Center

Cogeneration Associates

5 Trading Agreement and Order

No. 8249 Modification No.2

CDEC hereby consents to the entry ofthis modification to the Trading Agreement and Order

without further notice.

Capitol District Energy Center

Cogeneration Associates

Signature:

Type Name:

Type Title:

Date:

Michael E. Baier

Plant Manager

June 15, 2007

a modification of an Order ofthe Commissioner ofEnvironmental Protection.

Date

CITY OF HARTFORD LAND RECORDS

MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED

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