SIP DESCRIPTION - Algonquin Windsor Locks LLC-Trading Agreement and Order

No. 8261

I. SIP - DESCRIPTION OF DERC CREATION AND/OR USE

SIP SUMMARY TABLE

T"radine: Ae:recment and Order No. 8261

Algonquin Windsor Locks LLC 26 Canal Bank Road Windsor Locks 06096

Identifier IClient 8095 Town # 213 Premise # 1 ISequence # 1

Contact Mr. James White Tel: (860) 627-6616 Fax (860) 623-4206

Plant Manaeer

Pollutant and Regulatory Standard: NOx Section 22a·174-22 ofthe Regulations of

Connecticut State Agencies.

Nonattainment Area Classification Severe

Annual DERCs needed Estimated 0

Comoliance Time Period Until Amil 30. 2007.

Max. Emission Rate: full load emission rate (FLER Use. (See Table I below);

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Table 1

NOx Emission Rates and Allowable Limits

-Unit Fuel Maximum Stack Test FLER Allowable Date of Next

PIR number Capacity (ppmvd) IbslMMBtu Rate Stack Stack

MMBtufhr IbsIMMBtu Test Test Due

GE Cogen Nat gas 530 CEM CEM .15 NA NA

Turbine

#2 fuel

P-213-0029

II. SPECIAL REQUIREMENTS

a. Calculations of credits used shall be as specified in Trading Agreement and Order No.

8261.

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STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the maner of

The State of Connecticut and

Algonquin Power Windsor Locks LLC

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Trading Agreement

and Order No. 8261

Whereas, the Commissioner of Environmental Protection ("Commissioner") and Algonquin

Power Windsor Locks LLC ("Algonquin") 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 ("DERen) trading to reduce nitrogen oxide

("NOxt» emissions will achieve this result in a timely and cost-effective manner..

A. At the request and with the agreement of Algonquin, the Commissioner finds the

following:

1. Algonquin owns and operates one cogeneration facility at 26 Canal Bank Road,

Windsor Locks, Connecticut ("facility").

2. At the facility, Algonquin operates fuel burning equipment, consisting of one

56 megawan GE PB6541(B) cogeneration turbine, Connecticut Permit Number

213-0029 ('~urbine") which is subject to Section 22a-174-22 of the Regulations

of Connecticut State Agencies ("Regulations") penaining to the control of NOx

emissions. The turbine operates on natural gas or No.2 fuel oil. A. continuous

emissions monitor ("CEM") certified to 40 Code of Federal Regulations

("CFR") Part 75 measures NO. emissions from the turbine.

3. When operating the turbine,Algonquin sometimes exceeds the NOx allowable

emission rate limit specified in Section 22a-174-22(e)(3) of the Regulations.

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

season, Algonquin intends to acquire approved DERCs until May I, 2007 for

the turbine at the facility.

5. On November 13, 2003, Algonquin Windsor Locks LLC changed its name to

Algonquin Power Windsor Locks LLC.

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Algonquin Power Windsor Locks LLC Trading Agreement and

Order No. 8261

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

Order, pursuant to Section 22a-174-22(d)(3) of the Regulations, hereby allows Algonquin

to comply with Section 22a-174-22(d)(2) of the Regulations through use of DERC trading.

c. With the agreement of Algonquin, the Conunissioner, acting under Sections 22a-6,

22a-171, 22a-174, 22a-176, and 22a-177 of the Connecticut General Statutes, hereby

orders Algonquin as follows:

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

comply with Section 22a-174-22 of the Regulations through emission reduction trading.

Until Algonquin achieves pennanent compliance with the emission standard in Section

22a-174-22(e) of the Regulations or by May 1,2007, whichever occurs earlier:

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

and Order; and .

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

applicable NOx emission limits as allowed under this Trading Agreement and

Order.

2. DERC use. Starting on October I, 2004, and until May I, 2007, before the first day

of each non-ozone season. Algonquin shall have in its possession sufficient

approved DERCs for the turbine based on the following:

a During the non-ozone season:

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

IbslMMBtu. Prior to October I, 2004, October I, 2005 and October I,

2006, Algonquin 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:

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

through April 30 x (estimated seasonal average

NOx emission rate in IbsJM:MBtu during October 1

through April 30 - (0.95 x 0.15 lbslMMBtu»] .;-

2000 pounds/ton.

No later than May 31, 2005, May 31, 2006, and May 31, 2007, when the turbine

has a non-ozone seasonal average actual NOx emission rate exceeding 0.15

IbslMMBtu, Algonquin shall calculate and permanently retire the amount of

DERCs used in the preceding non-alone season as follows:

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Algonquin Power Windsor Locks LLC Trading Agreement and

Order No. 8261

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

April 30 x (actual seaso'nal average NOx. emission rate

in IbsIMMBlU during October I through April 30 -

(0.95 x 0.15 IbslMMBtu»] .;. 2000 pounds/ton.

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

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

calculated in accordance with missing data substitution procedures under 40

CFR Pan 75.

c. Algonquin shall not exceed any NOx pennit limitations for the turbine.

3. Algonquin shall make and keep records for the turbine of: non-ozone season fuel

use and fuel type; non-ozonc season NOx emission rates, number of operating

hours per non-ozone season, the number of invalid data hours of the total operating

hours per non-ozone season; the number of nERCs in its possession, purchased and

used (by serial number if assigned) each non-ozonc season in accordance with the

appropriate emission rates and limits in this Trading Agreement and Order.

Algonquin shall maintain and submit such records in accordance with Section 22a174-22 of the Regulations.

4. Record Keeping. Algonquin shall retain records and supporting documentation as

described in this Trading Agreement and Order for a minimum of live years,

commencing on the date such records were created. Algonquin shall provide the

records specified above to the Commissioner within thirty (30) days of receipt of a

written request from the Commissioner.

5. Reporting. No later than July 30 of every year after issuance of this Trading

Agreement and Order, Algonquin shall submit in writing to the Commissioner the

non-ozone season fuel consumption and amount of all nERCs used (including serial

numbers (if assigned) and approved DERCs purchased from other facilities), for the

turbine during the previous October through April time period. These reports shall

be on a form prescribed by the Commissioner.

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

Algonquin may use NOx allowances, pursuant to Section 22a-174-22(j) of the

Regulations to achieve all or a portion of the reductions required by Section 22a174-22 of the Regulations. Any allowance used for compliance with Section 22a174-22(e) of the Regulations shall be subject to all restrictions andlor requirements

applicable to DERCs contained in this Trading Agreement and Order. Each

allowance used for compliance with Section 22a-174-22 of the Regulations shall be

equivalent to one discrete emission reduction credit and shall be deducted from

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Algonquin Power Windsor Locks LLC Trading Agreement and

Order No. 8261

Algonquin's NOx Budget Program compliance account upon such use. Allowances

shall be considered used for compliance with Section 22a-174-22 of the 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 NO, Allowance Tracking System.

7. DERC Shortfall. At a minimum, DERCs required shall be adjusted upwards by

100% ifDERCs are not in Algonquin's possession for use priorto 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 of law. Algonquin shall pennanently retire the

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

sixty (60) days of Algonquin's discovery of the DERC shortfall. Algonquin shall

certify and repoI1 any such DERC retirement to the Commissioner in accordance

with paragraph C.26 of this Trading Agreement and Order.

8. Vintage Restriction. For the purposes of compliance with Section 22a-174-22 of the

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

from the year of the generation/allocation of such DERCsiallowances.

DERCslallowances generated/allocated more than five (5) calendar years ago are

not valid for use for compliance with Section 22a-174-22 of the Regulations.

Notwithstanding the above the DERCsiallowances generated/allocated prior to

calendar year 2000 shall be valid for use until December 31,2004.

9. Extension. No later than May I, 2007, with respect to the turbine, Algonquin shall

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

There is no assurance that after full program review of this and other Trading

Agreements and Orders that the Commissioner will grant a written extension of this

Trading Agreement and Order.

10. Future Compliance Report. On or before September I, 2006, Algonquin shall

submit a report in writing to the Commissoner, as directed in paragraph C.27. of this

Trading Agreement and Order, indicating how the facility shall comply with Section

22a-174-22 of the Regulations with respect to the turbine on and after May 1,2007.

II. Algonquin shall notify the Commissioner at least thirty (30) days prior to any

subsequent name changes.

12. Full compliance. Algonquin shall not be considered in full compliance with this

Trading Agreement and Order until all actions required by this Trading Agreement

and Order have been completed as approved and to the Commissioner's satisfaction.

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n" " Algonquin Power Windsor Locks LLC Trading Agreement and

Order No. 8261

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13. Approvals. Algonquin 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 Algonquin that any document or

other action is deficient, and docs not approve it with conditions or modifications, it

is deemed disapproved, and Algonquin 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 document or other action as submitted or

performed or with such conditions or modifications as the Commissioner deems

necessary to carry out the purposes of this Trading Agreement and Order. Nothing

in this paragraph shall excuse noncompliance or delay.

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

those for which ¢e Commissioner has provided written authorization for use in

compliance with Section 22a-174-22 of the Regulations; "Commissioner" means the

Commissioner or a representative of the Commissioner; "Non-ozone season" means

the period from October 1 through April 30 in any given calendar year.

15. Dates. The date of "issuance" of this 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 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.

16. 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 Algonquin or, ifAlgonquin is not an

individual, by an individual who is an authorized representative of Algonquin, in

accordance with Section 22a-174-2a(a) of the Regulations of Connecticut State

Agencies, and by the individual(s) responsible for actually preparing such

document, and each such individual shall certify in writing as follows:

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Algonquin Power Windsor Locks liC Trading Agreement and

Order No. 8261

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

this document and all attachments 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 of my knowledge and belief. I understand that any false

statement made in the submitted information is punishable as a criminal offense

under Section 53a-157b of the Connecticut General Statutes and any other

applicable law."

17. 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 Algonquin to an injunction and penalties.

18. 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 of the Connecticut General Statutes and any other applicable law.

19. Notice of transfer; liability of Algonquin. Until Algonquin has fully complied with

this Trading Agreement and Order, Algonquin shall notify the Commissioner in

writing no later than 15 days after transferring all or any portion of the facility, the

operations, the site or the business which is the subject of this Trading Agreement

and Order or after obtaining a new mailing or location address. Algonquin's

obligations under this Trading Agreement and Order shall not be affected by the

passage of tide to any property to any other person or municipality.

20. 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 past, present, or future

violations of law. If at any time the Commissioner determines that the actions taken

by Algonquin'pursuant to this Trading Agreement and Order have not successfully

corrected all violations, fully characterized the extent or degree of any pollution. or

successfully abated or prevented pollution. the Commissioner may institute any

proceeding to require Algonquin to undertake further investigation or further action

to prevent or abate violations or pollution.

21. Algonquin's obligations under law. Nothing in this Trading Agreement and Order

,shall relieve Algonquin of other obligations under applicable federal, state and local

law.

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Algonquin Power Windsor Locks LLC Trading Agreement and

Order No. 8261

22. No assurance by Commissioner. No provision of this 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 Algonquin

pursuant to this Trading Agreement and Order will result in compliance or prevent

or abate pollution.

23. Access to facility. Any representative of the Department of Environmental

Protection may entcr the facility without prior notice for the purposes of monitoring

and enforcing the actions required or allowed by this Trading Agreement and Order.

24. No effect on rights 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.

25. No Creation of Prooertv Rights. This Trading Agreement and Order does oot create

any property rights with respect to these DERCs.

26. Notice to Commissioner of changes. Within IS days of the date Algonquin

becomes aware of a change in any infonnation 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, Algonquin

shall submit the correct or omitted infonnation to the Commissioner.

27. Notification of noncompliance. In the event that Algonquin 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, Algonquin shall immediately notify by telephone the Section identified

in the next paragraph 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, Algonquin shall submit in

writing the date, time, and duration of the 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 Algonquin shall

comply with any dates which may be approved in writing by the Commissioner.

Notification by Algonquin 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.

28. Submission of documents. Any document required to be submitted to the

Commissioner under this Trading Agreement and Order shall, unless otherwise

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Algonquin Power Windsor Locks liC Trading Agreement and

Order No. 8261

specified in this Trading Agreement and Order or in writing by the Commissioner,

be directed to:

Department of Environmental Protection

Bureau of Air Management

Emissions and Credit Trading Section

79 Elm Street

Hartford, Connecticut 06106-5127

Algonquin consents to the issuance of this Trading Agreement and Order without further notice. The

undersigned certifies that helshe is fully authorized to enter into this Trading Agreement and Order

and to legally bind Algonquin to the tcnns and conditions of the Trading Agreement and Order.

.ndsor Locks liC

Signature:

Type Name: James A. White

Type Title: Plant Manager (}

Date: April 8, 2005

Issued as an Order of the Commissioner of Environmental Protection.

Gin.McCarthy

Commissioner .

Mi\.LLJ:JJ CERTIFIED MAll..,

RETURN RECEIPT REQUESTED

Certified Document No. 7002 2030 0007 9636 0991

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Date