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. 8158

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 Norwalk Harbor Station at Manresa Island Avenue in

Norwalk, Connecticut ("facility"'). At the facility,

CL&P operates Norwalk Harbor Station Unit 1, a 164

megawatt tangentially-fired boiler on No. 6 fuel oil

and Norwalk Harbor Station Unit 2, a 172 megawatt

tangentially-fired boiler on No. 6 fuel oil,

Connecticut Registration Numbers 137-0028 and 137-0030

respectively, ("boilers"). A continuous emissions

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

Regulations Part 75, measures nitrogen oxide ("NOx")

emissions at a common stack from the boilers.

3. During the year 1979, prior to modifications of the

boilers' burners, combustion controls and operating

conditions, and prior to the installation of a

selective noncatalytic reduction system, and based on

Initials:

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An Eqll.1I1 Opportunity Employu

Date:
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

Department of Environmental Protection approved stack

test data, the average annual NOx emission rate for

Norwalk Harbor Station Unit 1 was 0.285 pounds per

million British thermal units ("lbs/MMBtu") of heat

input when operating on No. 6 fuel oil and the average

annual NOx emission rate for Norwalk Harbor Station

Unit 2 was 0.282 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 boilers emit NOx at a

rate no greater than 0.25 lbs/MMBtu of heat input when

operating on No.6 fuel oil.

4. In January 1994, CL&P completed modifications on both

boilers' burners and combustion controls, and began to

test and adjust operating conditions, thereby reducing

both boilers' NOx emission rates below their

permitted, allowed and actual baseline emission rates.

A selective noncatalytic reduction system was

installed at the facility by June, 1995 to provide

further reductions of NOx emissions. Such

modifications and control equipment enabled CL&P's

boilers 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 boilers at a rate which is below 0.25

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

oil for use as emission reduction credits ("ERCs").

2 Date:

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 22a-174-22 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

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The Connecticut Light

and Power Company

Regulations.

Trading Agreement

and Order No. 8158

7. 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 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 systems 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, 116 ERCs were created by the boilers

between November 1, 1996 and September 3D, 1997 (74

during the ozone season and 42 during the non-ozone

season). This number of ERCs takes into consideration

Initials: 3 Date:
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

the ten (10) percent environmental discount.

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 116 tons of NOx ERCs

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

Order (74 during the ozone season and 42 during the nonozone season) for purposes of compliance under Section 22a174-22(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 boilers at the facility, CL&P shall use 0.25

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

oil as the baseline emission rate for the boilers.

When calculating ERCs, CL&P shall use the lower of

CEM-recorded NOx emission rate* or actual fuel usage

data for the boilers in MMBtu/day, when determining

heat input. Ten (10) percent of all ERCs (tons)

created by the boilers shall be retired by the

facility and permanently removed from 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 15.

4 Date:

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 boilers

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

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 boilers 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 in

lbs/MMBtu))} x (Estimated fuel use in MMBtu)) " 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 boilers 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 boilers have 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)

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

(0.95) x (NOx RACT limit in lbs/MMBtu))] x

(actual fuel use in MMBtu)} 72000 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 boilers 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, net of the ten (10)

percent environmental discount.

6 Date:

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 boilers,

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

~ifh,

5.

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

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.l., C.3, C.4., and C.lO.,

of this Trading Agreement and Order, the Commissioner

may provide written approval of ERCs created by CL&P

retrospectively, in addition to the 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.

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 boilers have daily NOx emissions below the

baseline emission rate, CL&P shall calculate the

amount of ERCs generated as follows:

ERCs (tons) = {[Total heat inputl of No.6 fuel oil in

MMBtu x ((0.25 1bs/MMBtu) - (the CEM-recorded NOx

emission rate'))] + 2000 1bs/ton} x (0.90).'

where:

Initials: 7 Date:
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

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 pursuant to the

methodology described in 40 Code of Federal

Regulations Part 75.

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

boilers 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,

"Conunissioner" means the Commissioner of Environmental

Protection or an agent of the Commissioner. "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 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

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D

:::: Tradi~flff
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

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 submitteq 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, 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. 'I

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, 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.

Initials: 9 Date:
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

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 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. 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 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 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 obligatioos ynder law. Nothing in this Trading

Agreement and Order shall relieve CL&P of other

obligations under applicable federal, state and local

law.

Date:

19.

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Access to records

the Department of

and facility,

Environmental

10

Any representative of

Protection may enter and

1&.8117
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

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. NQ effect on rights Qf Qther oerSQns. This Trading

Agreement and Order shall neither create nQr affect any

rights of persons who or municipalities which are not

parties tQ this Trading Agreement and Order.

21. No CreatiQn Qf Property Rights. This Trading Agreement

and Order dQes not create any prQperty rights with

respect to these ERCs.

22. Notice to CQmmissioner of changes. Within fifteen (15)

days of the date CL&P becQmes aware Qf a change in any

informatiQn submitted tQ the CQmmissiQner under this

Trading Agreement and Order, Qr that any such

infQrmatiQn was inaccurate or misleading or that any

relevant infQrmation was omitted, CL&P shall submit the

correct or Qmitted infQrmatiQn tQ the CQmmissiQner.

23. SubmissiQn Qf dQcuments, Any document required to be

submitted to the CQmmissiQner under this Trading

Agreement and Order shall, unless Qtherwise specified in

writing by the CommissiQner, be directed to:

Mr. David Jawin

Department of Environmental Protection

Bureau Qf Air Management

Compliance and Field OperatiQns DivisiQn

Emissions Trading Unit

79 Elm Street

HartfQrd, Connecticut 06106

Initials: 11 Date:
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8158

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

Company

Will::!:~~ Vice President

April 28 , 1999

Issued as a final consent order

Environmental Protection on

Commissioner of

, 1999.

Arthur J. Rocque, Jr.

Commissioner

CITY OF NORWALK LAND RECORDS

MAILED CERTIFIED MAIL, RETURN RECEIPT REQUESTED

Certified Document No.

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