~~2 STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the matter of

The State ofConnecticut and

Connecticut Jet Power LLC

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Trading Agreement

and Order No. 8180 A

Whereas, the Commissioner of Environmental Protection ("Commissioner") and Connecticut Jet

Power LLC ("CJP") 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 ("NUx") emissions will achieve this result in a timely

and cost-effective manner:

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

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1. This Trading Agreement and Order 5upercedes Trading Agreement and Order 8180

issued on January 12, 2000 and Trading Agreement and Order 8180 Modification

No.1 issued on May 7, 2002.

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

business in Sewickley, Pennsylvania. CJP owns fuel burning equipment consisting

ofsix (6) combustion turbines ("peaking units") at the facilities identified in Table 1

of this Trading Agreement and Order.

3. NRG Middletown Operations Inc. operates the peaking units at CJP's four (4)

facilities identified in Table 1 ofthis Trading Agreement and Order.

4. Emission -testing performed on the dates indicated in Table I, resulted in a NOx

emission rates as follows:

(Printed on Recycled Piper)

79 Elm Streel • Hartford, CT 06106·5127

hllp:lldep.$tllc.Ct.l,I$

,01./1 EquQf Opp0rfu/liry Employa
CO!Ulecticut Jet Power LLC 2

Table 1

Trading Agreement

and Order No. 8180 A

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

Peaking VItit MMBruIhr (ppmvd) IbsIMMBru Rate Stack Stack

(serial #) , IbsIMMBru Test Test Due

Boston Post Road #2 oil 256- 184 0:80 0.29 9/6/01 9/6/06

Branford -10

(675102)

Sound Shore Drive #2 oil 256 193 0.80 0.29 8/22/01 8/22106

Greenwich-I 0

(675337)

Sound Shore Drive #2 oil 256 144 080 0.29 8/23/0 I 8/23/06

Greenwich-II

(675192)

Sound Shore Drive #2 oil 256 182 0.80 0.29 8/23/01 8/23/06

Greenwich·12

(675342)

FrankJin Drive #2 oil 256 194 0.80 0.29 4120101 4120106

Torrington-IO

(F662098)

;.;J Sou·th Main Street #2 oil 256 197 0.80 0.29 4119/01 4119/06

Torrington-IO

(612599)

5. CJP exceeds the NOx allowable emission rate for the peaking units specified in

Section 22a-174-22(e) oftbe Regulations as sbown in Table 1 of this Trading

Agreement and Order.

6. Pursuant to the Department ofEnviromnental Protection's "Credit Trading/or

Sources with Irregular NOx Emissions" policy, with arevised date of February 27,

2001, attached hereto and incorporated by reference into this Trading Agreement and

Order as Exhibit I, the p~aking 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.

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

CJP intends to acquire approved DERCs until May I, 2005 for tbe peaking units.

Pursuant to Section 22a-174-220) oftbe Regulations, during tbe ozone season, CJP

intends to acquire approved. Budget discrete emission reduction credits ("BDERCs'j

until May 1,2005 for tbe peaking units.

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Connecticut Jet Power LLC 3 Trading Agreement

and Order No. 8180 A

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8. The Commissioner, pursuant to Section 22a-174-22U) ofthe Regulations, previously

approved the NOx DERCs referenced in Table 2 ofthis Trading Agreement and

Order. DERCs are subject to the vintage restrictions of this Trading Agreement and

Order. Dates after which the DERCs will no longer be eligible for use as a result of

the vintage restrictions are provided in Table 2 ofthis Trading Agreement and Order

in the expiration date column.

I

Table 2

Year of Ozone season DERC serial Ozone I Non-Ozone season Non· Expiration

Generation numbers DERC serial numbers Ozone Date

2001 Not assigned 3 I N/A 0 12/31/2004

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

Order, and pursuant to Section 22a-174-22(j) ofthe Regulations, hereby allows CJP to

comply with Section 22a-174-22 of the Regulations through use ofDERC and BDERC

trading.

-. C. With the agreement of CJP, the Commissioner, acting under Sections 22a·6, 22a-171,

22a-174, 22a-176, and 22a-177 ofthe Connecticut General Statutes, orders CJP as

follows:

1. Upon issuance of this Trading Agreement and Order, at the facility, CJP shall comply

with Section 22.-174-22 of the Regulations through DERC trading. Until CJP achieves

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

regulation or by May I, 2005 whichever occurs earlier:

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

Order;

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

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

c. CJP shall comply during operation of the peaking units with the FLERS sbown in

Table 1 of this Trading Agreement and Order.

2. DERC use

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

sufficient approved DERCs for the peaking units based on the following calculations.
Connecticut Jet Power LLC 4 Trading Agreement

and Order No. 8180 A

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

for the peaking 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.lJvl.:MBtu as shown in Table 1 ofthis

Trading Agreement and Order.

• FLER= full load emission rate in IbsIMMBtu as shown in Table I 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) ~[(Maximum estimated excess NOx in Ibs) + 3J

+(13Ibsldaylton]

b. No later than October 30 of 2003, and 2004 calculate and pennanently 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 Iimit))}+ 2000 poundslton

OR
Connecticut Jet Power LLC 5 Trading Agreement

and Order No.8 J80 A

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.pERCs (tons) used [(Actual excess NOx in Ibs) +3J + [13

Ibs/day/ton]

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 through May I, 2005.

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

In addition to meeting the 24-hour 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 I, 2004, CJP shall estimate

and acquire sufficient DERCs and/or allowances needed to comply with Section

22a-174-22(e)(3) of the 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))] + 2000 pounds/ton.

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 Ib/NUvfBtu during

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

+ 2000 pounds/ton.

3. 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, and 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

i pertaining solely to non-ozone season DERCS and as otherwise may be provided.

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Connecticut Jet Power LLC 6 Trading Agreement

and Order No. 8180 A

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

the nwnber 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 forecasted by the Commissioner on the previous day; as well as

documentation attest~ng to the fact that approved DERCs used during the ozone season

were generated during the ozone season. Ge.nerator certification of this fact shall be

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

with Section 22a-174-22 ofthe Regulations.

5. Record Keepine. CJP 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. CJP shall provide the records specified above to the

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

Commissioner.

6. Arumal Emission Statement. No later than March I of every year after issuance ofthis

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

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

all of the 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 CJP's possession. CJP

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

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

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

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

CJP will notify the Conunissioner upon discontinuance.

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

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

portion of the reductions required by Section 22a-174-22 ofthe 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 22a~

174~22 ofthe Regulations s~all be equivalent to one discrete emission reduction credit and

shall be deducted from CJP's NOx 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 II>

CT0000000300 in the NOx Allowance Tracking System.
Connecticut Jet Power LLC 7 Trading Agreement

and Order No. 8180 A

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8. DERC Doubling. At a minimum, DERCs required shall be adjusted upwards by J00% if

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

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

Commissioner may require additional upwards adjustment.

9. Vintage Restriction. Fqr the purposes of compliance with Section 22a-174-22 of the

Regulations, DERCstallawances shall only remain valid for five (5) calendar years from

the year o~the generation/allocation ofsuch DERCs/allowances. DERCs/allowances

older than five (5) calendar years from their creation/allocation are not valid for use for

compliance with Section 22a-174-22 ofthe 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 CJP 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 lbs/ton. !fthe period of noncompliance is not la10wn, the

time period from the completion ofthe 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 Trad.ing Agreement and Order shall affect the

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

add.itional upward adjustment, based on the gravity of any alleged noncompliance or

violation of law.

II. FLER Modification. FLERs set forth in Table I 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, CJP shall

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

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

Table I ofthis Trading Agreement and Order.

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

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

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

appropriate, the Commissioner may grant a written extension of this Trading Agreement

and Order.
Connecticut Jet Power LLC 8 Trading Agreement

and Order No. 8180 A

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

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

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

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

Agreement and Order until all actions required by this Trading Agreement and Ord"er have

been completed as aRP~oved and to the Commissioner's satisfaction.

16. Approvals. CJP shall use best efforts to submit to the Commissioner all documents

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

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

approve it with conditions or modifications, it is deemed disapproved, and CJP 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 docwnent or other action as submitted or

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

to cany 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 ofEnvironmental 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 docwnent is received by the

COID.1T'jssioner. 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

19. 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 CJP or, ifelF is not an individual, by CJP's chief executive officer or a
Connecticut Jet Power LLC 9 Trading Agreement

and Order No. 8180 A

()

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

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

actually preparing such document, and eJP or CJP's chief executive officer and each

such individual shall certify in writing as follows:

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

document and all atta6hments thereto, and I certify, based on reasonable investigation,

including my inquiry of those individuals responsible for obtaining the information, that

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

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

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

Statutes and any other applicable law."

20. Noncompliance. This Trading Agreement and Order is a final order of the 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 CJP

to an injunction and penalties.

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 of transfer: liability ofCJP and others. Until CJP has fully complied with this

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

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

operati.ons, th,e sites or the businesses which are the subject of this Trading Agreement

and Order or after obtaining a new mailing or location addresses. CJP'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.

23. 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. If at any

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

Agreement and Order have successfully corrected all violations, fully chaIacterized the

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

Commissioner may institute any proceeding to require ClP to undertake further

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

24. (]P'S obligations under law. otbing in this Trading Agreement and Order shall relieve

CJP of other obligations under applicable federal, state and local law.
Connecticut Jet Power LLC 10 Trading Agreement

and Order No. 8180 A

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26.

27.

28.

No assurance bv Commissioner. No provision ofthis 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 CJP pursuant t9 this Trading Agreement

and Order will result in compliance or prevent or abate pollution.

Access to facility. .¥J representative ofthe Department ofEnviromnental 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 riehts 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 ofPropenv Rililits. This Trading Agreement and Order does not create any

property rights with respect to these DERCs.

~,':"'7

29. Notice to Commissioner of changes. Within fifteen (15) days ofthe date CJP becomes

aware of a change in any infonnation submitted to the Corrunissioner under this Trading

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

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

infonnation to the Commissioner.

30. Notification of noncompliance. In the event that CJP 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 Orp.er or of any document required hereunder, CJP shall

immediately notify by telephone the individual identified in the next paragrapb 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, CJP shall submit in writing the date, time, and duration ofthe

noncompliance and 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 CJP shall comply with any dates which may be approved in writing by the

Commissioner. Notification by CJP 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 docwnents. Any document required to be submitted to the Commissioner

under this Trading Agreement and Order shall, unless otherv.rise specified in this Trading

Agreement and Order or in writing by the Commissioner, be directed to:
Connecticut Jet Power LLC 11 Trading Agreement

and Order No. 8180 A

Mr. Michael LaFleur

Department ofEnvirorunental Protection

Bureau of Air Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street .

Hartford, CTQ6\06
Connecticut Jet Power LLC 12 Trading Agreement

and Order No. 8180 A

CJP consents to the issuance of this Trading Agreement and Order without funher notice. The

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

Order and to legally bind CJP to the tenns and conditions of the Trading Agreement and Order.

COIUlecticut Jet Power LLC

Signature =er~ Name' =n;c; L.=

Title R~tJntU (f}flf1t7§Br

Date: 4- t:rC;3

Issued as a final order of the Commissioner ofEnvironment

_-!-Il~fM=·!...I"'::Z="::;~I-I '2003.

/.".)

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