STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

-. ........,

In the matter of

The State of Connecticut and

Trading Agreement

and Order No. 8153

The United Illuminating Company

Whereas, the Commissioner of Environmental Protection

("Commissioner") and The United Illuminating Company ("UI") 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 UI, the Commissioner

finds the following:

1. UI is an electric utility with headquarters in New Haven,

Connecticut. which owns and operates three fossil fuelfired electric generating stations within the state.

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

stations within the state that UI owns and operates is New

Haven Harbor Station at 1 Waterfront Street in New Haven,

Connecticut ("facility"). At the facility, UI operates

New Haven Harbor Station Unit 1, Connecticut Permit 117-

0031, a tangentially-fired boiler, currently rated at

485 megawatts ("boiler"). The boiler has the dual

capacity to operate on fuel oil (No. 6 or No.2)

and/or natural gas. No.2 fuel oil is used primarily

as a start-up fuel. A continuous emissions monitor

("CEM"), certified to 40 Code of Federal Regulations

Part 75, measures nitrogen oxide ("NOx")emissions from

the boiler.

Date:

3.

Initials:

During the year 1990, prior to installation of the new

system of 16 water-wall water lances, and based on CEM

and Method 7-E stack test data, the average annual NOx

emission rate for New Haven Harbor Station Unit 1 was

0.28 pounds per million British thermal units

("lbs/MMBtu") of heat input when operating on No. 6

fuel oil, 0.17 lbs/MMBtu of heat input when operating

on No. 2 fuel oil and 0.20 lbs/MMBtu of heat input

when operating on natural gas. On and after May 31,

1995, the Regulations of Connecticut State Agencies

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79 Elm Street • HartCord, CT 06106·5127

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A.n Equal Opportunity Employer
The United Illuminating Company Trading Agreement

and Order No. 8153

("Regulations") require that New Haven Harbor Station

Unit 1 emit NOx at a rate no greater than 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

No.2 fuel oil or natural gas.

4. In December 1994, UI, through its contractors,

completed installation and began to test and make

fully operational, a new system of 16 water-wall water

lances at the facility, thereby reducing the boiler's

NOx emission rates below its permitted, allowed and

actual 1990 emission rates. Such control system

enabled UI's boiler to frequently meet and operate

below the emission limitation specified in Section

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

5. After January 1, 1997, UI 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, 0.17 Ibs/MMBtu of heat input when operating on

No.2 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,

UI 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 22a-174-22 of the Regulations. UI 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.

7. When properly documented by UI, and approved by the

Commissioner, the emission reductions identified

above, and as computed in accordance with the terms of

this Trading Agreement and Order, will conform to the

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

Regulations. Specifically, the reductions will be:

Initials: 2 Date:
The United Illuminating Company Trading Agreement

and Order No. 8153

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.

Ouantifiable 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 is 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

UI 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, 1,003 ERCs were created by the boiler

between January 1, 1997 and September 30, 1998(390

during the ozone season and 613 during the non-ozone

season) .

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

Trading Agreement and Order, pursuant to Section 22a-l74-

22 (d) (4) of the Regulations, will allow UI and approved sources

within Connecticut to use 1,003 tons of NOx ERCs referenced in

paragraph A.8. of this Trading Agreement and Order (390 during

the ozone season, and 613 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.

Initials: 3 Date:
The United Illuminating Company Trading Agreement

and Order No. 8153

Upon sufficient documentation as prescribed below, the

Commissioner may provide written approval of additional ERCs

by UI retrospectively. Approved ERCs created by UI may be

held by UI 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 UI, the Commissioner, acting under

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

the Connecticut General Statutes, orders UI as follows:

1. ERC aeneration. For purposes of generating ERCs from

the boiler at the facility, UI shall use the

appropriate baseline emission rate(s) of 0.25

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

oil, 0.17 Ibs/MMBtu of heat input when operating on

No. 2 fuel oil and 0.20 lbs/MMBtu of heat input when

operating on natural gas, or use 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.

U! shall use the above referenced baseline emission

rate(s) when calculating the proportioned baseline

emission rate. When calculating ERCs, UI shall use

the lower of CEM-recorded NOx emission rate(s)* or

actual fuel usage data for the boiler in MMBtu/day,

when determining heat input. The ten (10) percent

uncertainty discount due to not having data from an

official Method 7-E stack test or CEM data while

operating on No. 2 fuel oil and/or natural gas shall

be incorporated into the proportioned baseline

emission rate whenever the boiler is operating on No.

2 fuel oil and/or natural gas as referenced in

paragraph C.lO. of this Trading Agreement and Order

and shall be retired by the facility and permanently

removed from all calculations on a daily or monthly

basis. An additional ten (10) percent of all ERCs

(tons) created shall also be retired by the facility

and permanently removed from all calculations on a

daily or monthly basis to assure a benefit to the

environment.

shall be calculated pursuant to

described in 40 Code of Federal

Initials:

* This rate

methodology

4 Date:

the
The United Illuminating Company

Regulations Part 75.

Trading Agreement

and Order No. 8153

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

period beginning June 1, 1995 until UI 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. UI

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 the

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/MMBtull) x (Estimated fuel use in MMBtul I

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

credits from previous months can be applied to

subsequent months. ERCs required shall be

adjusted upwards by 100% if ERCs are not in UI'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 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

Initials: 5 Date:
The United Illuminating Company

used, as follows:

Trading Agreement

and Order No. 8153

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

average emission rate in lbs/MMBtu) -

((0.95) x (NOx RACT limit or proportioned

emission rate calculated pursuant to Section

22a-174 -22 (fl (2 I (AI of the Regulations in

lbs/MMBtul I] x (actual fuel use in MMBtul)

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. UI shall maintain records for the boiler showing daily

NOx mass emissions, and actual NOx emission rates (24-

hour average). UI shall also maintain records showing

a daily or monthly total of all ERCs generated net of

the applicable uncertainty and environmental

discounts.

4. In requesting ERC approval, ur shall provide

documentation containing daily or monthly operating

reports of actual fuel usage in MMBtu and actual heat

input based upon CEM-recorded data, daily or monthly

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, referenced in

paragraph C.l. of this Trading Agreement and Order,

net of the applicable uncertainty and environmental

discounts.

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

this Trading Agreement and Order, ur 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

Initials: 6 Date:
The United Illuminating Company Trading Agreement

and Order No. 8153

subsequent to issuance of this Trading Agreement and

Order until all such ERCs have been used. UI 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 UI choose to discontinue the generation of

ERCs, UI 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. UI 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. UI 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 UI has met the

requirements of paragraphs C.l., C.3, C.4., and C.lO.,

of this Trading Agreement and Order, the Commissioner

may provide written approval of ERCs created by UI

retrospectively, in addition to the 1,003 ERCs

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 UI 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.

9. Should UI choose to generate additional ERCs, reports

documenting these credits 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 or monthly NOx emissions

Initials: 7 Date:
The United Illuminating Company Trading Agreement

and Order No. 8153

below the applicable baseline emission rate(s) or the

proportioned baseline emission rate, UI shall

calculate the amount of ERCs generated as follows:

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

x ((proportioned baseline emission rate 2 ) (the CEMrecorded NOx emission rateJ ))] + 2000 lbs/ton} x

(0.90).'

1 Heat input shall be calculated using the lower of CEM-recorded

data or actual fuel usage data in MMBtu per unit of fuel

combusted.

2 This rate shall be calculated by 1Imultiplying 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, UI may replace the proportioned baseline emission rate

with the applicable baseline emission rate, for that fuel. The

ten (10) percent uncertainty discount due to not having data

from an official Method 7-E stack test or CEM data while

operating on No. 2 fuel oil and/or natural gas shall be

incorporated into the proportioned baseline emission rate

whenever the boiler is operating on No. 2 fuel oil and/or

natural gas.

) This rate shall be calculated pursuant to the methodology

described in 40 Code of Federal Regulations Part 75.

4 An additional ten (10) percent of all ERCs (tons) created shall

also be retired by the facility and permanently removed from all

calculations on a daily or monthly basis to assure a benefit to

the environment.

11. As used in this Trading Agreement and Order,

"Commissioner" means the Commissioner of Environmental

Protection or an agent of the Commissioner. "Ozone

season H means the period from May 1 through September

30 in any given calendar year.

8 Date:

Notification of noocompliance. In the event that UI

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

did not or may not comply on time, with any

requirement of this Trading Agreement and Order or of

any document required hereunder, UI 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

1hJ/17

12.

Initials:
The United Illuminating Company Trading Agreement

and Order No. 8153

Commissioner, UI 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 UI shall

comply with any dates which may be approved in writing

by the Commissioner. Notification by UI 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 the chief

executive officer of UI or a duly authorized

representative of such officer, as those terms are

defined in Section 22a-430-3Ib) (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-l75 of the

Connecticut General Statutes or, in accordance with

Section 22a-6 of the Connecticut General Statutes,

under Section 53a-157b of the Connecticut General

Statutes, and in accordance with any other applicable

statute."

Date:

14.

Initials:

Final Agreement and Order. This

Order is the final agreement and

9

Trading Agreement and

order by and between

fhoh7
The United Illuminating Company Trading Agreement

and Order No. 8153

the Commissioner and UI with respect to the matters

addressed herein, 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-lS7b of the Connecticut General

Statutes.

16. Notice of transfer; liability of UI and others. Until

UI has fully complied with this Trading Agreement and

Order, UI shall notify the Commissioner in writing no

later than fifteen (IS) days after transferring all or

any portion of the facility, the operations, 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. UI'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 law,

prevent or abate pollution, recover costs and natural

resource damages, 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 violations of any

permit issued by the Commissioner. If at any time the

Commissioner determines that the actions taken by UI

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 UI and/or require UI to undertake

further investigation or further action.

Initials: 10 Date:
The United Illuminating Company Trading Agreement

and Order No. 8153

18. UI's obligations under law. Nothing in this Trading

Agreement and Order shall relieve 01 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. No 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 UI 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, 01 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, Conn~cticut 06106

Initials: ~-- 11 Date: r /
The United Illuminating Company Trading Agreement

and Order No. 8153

UI 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 ur to the terms and conditions of the Tradi.lg

Agreement and Order.

Company

Signature:

The ~un~I11uminating

I /t4dz-. J

_~c...':::L===-- _ Type Name: Albert N. Henricksen

Type Title: Group Vice President Support Services

Date: April 30, 1999

Issued as a final consent order of the Commissioner of

Environmental Protection on April 30 1999.

Arth r J. Rocque, Jr.

Commissioner

CITY OF NEW HAVEN LAND

MAILED CERTIFIED MAIL,

Certified Document' No.

RECORDS

RETURN RECEIPT REQUESTED

12