STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the maner of

The State of Connecticut and

Northeast Generation Company

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Trading Agreement

and Order No. 8175 A

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

Generation Company ("NGC") agree that it is in the public interest that th~y work cooperatively to

improve the air quality within the State of Connecticut and that the use of discrete emission

reduction credit ("DERC") trading to reduce nitrogen oxide ("NOx") emissions will achieve this

result in a timely and cost·effective mariner:

A. At the request and with the agreement ofNGe, the Commissioner finds the following;

1. This Trading Agreement and Order supercedes Trading Agreement and Order 8175

issued on February I, 2000, and Trading Agreement and Order 8175 Modification

No.1 issued March 13,2000.

2. NGC is an exempt wholesale electric generating company with its principle place of

business in Berlin, COllllecticut. NGC owns and operates one piece offuel bu.1Ung

equipment, ("peaking unit") at Tunnel Road, Preston, CT. The peaking unit is a

combustion turbine ~t identified in Table 1 ofthis Trading Agreement and Order.

3. Emission testing performed on the dates indicated in Table 1, resulted in a NOx

emission rates as follows:

Table 1

Facility/ Fuel Allowable . ,$tack Test FLER Allowable Date of Next

Peaking Unit - - Limit - - (ppmvd) lbsIMMBlU Rate Stack Stack

(oomvd) . IbsIMMBlU Test Test Due

Tunnel Road other oil 75 138.7 0.72 0.29 5/24/01 I

5/24/06

Preston·} 0

(Printed on Recycle~ Paper)

79 Elm Stleet • Hanford, CT 06106 - $127

hllp:lldep.stlle.cl.lu

,.l,/I Equal Oppartuniry Emplaxu
Northeast Generation Company 2 Trading Agreement

and Order No. 8175 A

4. NGC exceeds the NOx allowable emission rate for the peaking unit specified in

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

Agreement and Order.

5. Pursuant to the Department of Environmental Protection's "Credit Trading/or

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

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

Order as Exhibit I, the peaking unit has 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.

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

NGC intends to acquire and use approved DERCs until May I, 2005 for the peaking

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

NGC intends to acquire and use approved DERCs andlor budget emission reduction

credits ("BDERCs") until May I, 2005 ior the peaking unit.

7. The Commissioner, pursuant to Section 22a-174-22(j) ofthe Regulations, previously

approved the NOx DERCs referenced in Table 2 oftrus 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.

Table?- Year of Ozone season DERC serial Ozone Non-Ozone season INon- ! Expiration

Generation numbers DERC serial numbers Ozone Date

1992 Not assigned 32 I I 12/31/04

1999 I Not assigned I 37 112131/04

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

Order, and pursuant to Section 22a-174-220} oi the Regulations, hereby allows NGC to

comply with Section 22a-174-22 oithe Regulations through use oiDERC trading.

C. With the agreement ofNGC, the Commissioner, acting under Sections 22a-6, 22a-171.

22a-174, 22a-176. and 22a-177 of the Connecticut General Statutes, orders NGC as

iollows:

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

with Section 22a-174-22 oithe Regulations through DERC trading. Until NGC
Northeast Generation Company 3 Trading Agreement

and Order No. 8175 A

achieves pennanent compliance with the emission standard in Section 22a-174·22(e) of

the regulation or by May 1,2005 whichever occurs earlier:

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

Order;

b. NGC shal(h~ve in its possession sufficient approved DERCs to meet applicable

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

c. NGC shall comply during operation of the peaking unit with the FLERS shown

in Table 1 of this Trading Agreement and Order.

2. DERC use

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

possession sufficient approved DERCs for the peaking unit based on the following

calculations.

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

month for the peaking unit 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))) -i- 2000 pounds/ton

Where:

-Allowable emission limit= in IbslM:MBtu as shown in Table 1 of this

Trading Agreement and Order.

- FLER= full load emission rate in Ibs/tvUvIBtu as shown in Table 1 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 Ibs) on any of the days

projected by the Commissioner to be "moderate to unhealthful,"
Nonheast Generation Company 4 Trading Agreement

and Order No. 8175 A

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.,-<-.:oJ

"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) + 3

.,. 13 (Ibs/day/ton)

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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 limit))} .,. 2000 pounds/ton

OR

ii. the maximum actual excess NOx emissions (in lbs) on any of the 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 DERCs (tons) used = (Actual excess NOx in Ibs).,. 3.,. 13

(lbslday/lon)

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 ozone DERCs may be used in the non-ozone season in

the same or subsequent years through May I, 2005.

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

In addition to meeting the emission limit in Table 22-1 ofSection 22a-174-22 of

the Regulations, meet a non-ozone season emission limit of 0.15 IbJM:MBtu.

Prior to October I, 2003 and October I, 2004, NGC shall estimate and acquire

sufficient DERCs and/or allowances needed to comply with Section 22a-174-

22(e)(3) of the Regulations as follows:
Nonheast Generation Company 5 Trading Agreement

and Order No. 8175 A

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

through April 30 x (FLER in IbsIMMBru - (0.95 x

0.15 IblMMBru)J .;. 2000 pounds/ton.

d. No later than May 31 of 2004 and 1005, calculate and pennanently retire

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

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Acrual DERCs (tons) [Acrual fuel use in MMBru from October 1 through

Apri130 x (FLER in IbsIMMBru - (0.95 x 0.15

IblMMBru))J 2000 pounds/ton.

3. BDERCs are subject to all DERC requirements set forth in this Trading Agreement and

Order except as expressly indicated. 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.

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

the number of DERCs 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 of DERCs used during the ozone season and

non-ozone season (the remainder oftbe year); during the ozone season, the ozone

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

documentation anesting to the fact that approved DERCs used during the ozone season

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

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

accordance with Section 22a-174-22 ofthe Regulations.

5. Record Keepine:. NGC 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. NGC shall provide the records specified above to the

Commissioner within thirty (30) days ofreceipt of a ",'linen request from the

Commissioner.

6. Annual Emission Statement. No later than March 1 of every year after issuance of this

Trading Agreement and Order, NGC 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 DERCs approved within and subsequent to issuance ofmis Trading Agreement

and Order until all such DERCs have been used or are no longer in NGC's possession.

NGC shall also include actual NOx emissions from the peaking unit and the amount of all

DERCs used (including serial numbers (if assigned) and approved DERCs generated
Northeast Generation Company 6 Trading Agreement

and Order No. 8175 A

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

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

be in monthly increments.

7. Allowance Use. Pursuant to Section 22a-174-22(d)(3) of the Regulations, NGC may use

NOx allowances, purs1;1ant to Section 22a-174-22(j) ofthe Regulations to achieve all or a

portion ofthe 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 22a174-22 of the Regulations shall be equivalent to one discrete emission reduction credit and

shall be deducted from NGC'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 ID

CTOOOOOOO300 in the NOx Allowance Tracking System.

8. DERC Doubling. At a minimum, DERCs required shall be adjusted upwardS by 100% if

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

applicable season. However based on the gravity of the noncompliance, the

Conunissioner may require additional upwards adjustment.

9. Vinta2e Restriction. For tbe purposes of compliance with Section 22a-174-22 of the

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

the year ofthe generation/allocation ofsuch DERCslallowances. DERCs/aliowances

older than five (5) calendar-years from their Greationlallocation are not valid for use for

compliance with Section 22a-174-22 oftbe 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. BDERCs are subject to the vintage restriction provided in paragraph C.3. of this

Trading Agreement and Order.

10. FLER Exceeda.~ce. oncompliance with an established FLER shall subject NGC to ma."e

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 IbslM:MBtu, multiplied by the total heat input during the period of

noncompliance divided by 2000 lbs/ton. Ifthe period of noncompliance is not known, the

time period from the completion ofthe last/previous Department witnessed emission test

tlrrough the date the FLER compliance is achieved as approved by the Commissioner shall

be used. 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
Northeast Generation Company 7 Trading Agreement

and Order No. 8175 A

additional 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 Conunissioner by v-rritten modification of

this Trading Agreement and Order.

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12. Emissions Testing. Pursuant to Section 22a-174-22(k) of the Regulations, NGC shall

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

from the dates of the NOx emission tests for the peaking unit as provided in Table 1 ofthis

Trading Agreement and Order.

13. Extension. No later than May 1, 2005, with respect to the peaking unit, NGC shall comply

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

program review of this and other Trading Agreements and Orders and, if detennined to be

appropriate, the Commissioner may grant a wrinen extension ofthis Trading Agreement

and Order.

14. Future Compliance Report. On or before September I, 2004, NGC shall submit a report

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

respect to the Peaking unit on and· after May I, 2005.

15. Full compliance. NGC 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.

16. Approvals. NGC shall use best efforts to submit to the Conunissioner all documents

required by this Trading Agreement and Order in a complete and approvable fonn. If the

Conunissioner notifies NGC that any document or other action is deficient, and does not

approve it with conditions or modifications, it is deemed disapproved, and NGC shall

correct the deficiencies and resubmit it within the time specified by 'the Commissioner or,

ifno time is specified by the Commissioner, within 30 days of the Conunissioner'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

perfonned 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.

17. Definitions. As used in this Trading Agreement and Order, "Commissioner" 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.

The date of "issuance" of this Trading Agreement and Order is the date the Trading
Nonheast Generation Company 8 Trading Agreement

and Order No. 8175 A

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 document is received by the

Commissioner. The ct;3te 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 NGC or, ifNGC is not an individual, by an individual who is an

authorized representative of the Respondent, in accordance with Section 22a-174-2a(a) of

the Regulations of COIUlecticut State Agencies, and by the individua1(s) responsible for

actually preparing such document, and each such individual shall ceIlify in writing as

follows:

"I have personally examined and am familiar with the information su~mitted in this

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

including my inquiry ofthose individuals responsible for obtaining the information, that

the submitted information is true, accurate and complete to the best ofmy 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."

20. Noncompliance. This Trading Agreement and Order is a final order ofthe 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 NGC

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

of the Connecticut General Statutes and any other applicable law.

22. Notice of transfer: liability ofNGC and others. Until NGC has fully complied with this

Trading A~eement and Order, NGC shall notify the Commissioner in writing no later
Northeasl Generation Company 9 Trading Agreement

and Order No. 8175 A

than fifteen (15) days after transferring all or any portion of any of the facilities, the

operations, the sites or the businesses which are the subject oftrus Trading Agreement

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

23. Commissionets po.wb-s. 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 NGC pursuant to this

Trading Agreement and Order have 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 NGC to undertake

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

24. NGC's oblieations under law. Nothing in this Trading Agreement and Order shall relieve

NGC of other obligations under applicable federal, state and local law.

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-,. No assurance bv 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 NGC pursuant to this Trading Agreement

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

26. Access to facility. Any representative ofthe Department ofEnvironrnental 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.

27. No effect on rights of other Dersons. This Trading Agreement and Order neither creates

nor affects any rights of persons or municipalities that are not panies to this Trading

Agreement and Order.

28. No Creation of Propertv Rights. This Trading Agreement and Order does not create any

property rights with respect to these DERCs.

29. Notice to Commissioner of chan.es. Within fifteen (15) days of the date NGC becomes

aware of a change in any information submined to the Commissioner under this Trading

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

any relevant infonnarion was omined, NGC shall submit the correct or omined

infonnation to the Commissioner.

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30. Notification of noncomoliance. In the event that NGC becomes aware that it did not or
Northeast Generation Company 10 Trading Agreement

and Order No. 8175 A

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31.

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, NGC shall

immediately notify by telephone the individual 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, NGC 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 ofthe Commissioner, dates by which compliance will be

achieved, and NOC shall comply with any dates which may be approved in writing by the

Commissioner. Notification by NGC 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.

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

under this Trading Agreement and Order shall, unless otherwise specified in this Trading

Agreement and Order or in writing by the Commissioner, be directed to:

Mr. Michael LaFleur

Department ofEnvironmental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street

Hartford, CT 06106
Northeast Generation Company 11 Trading Agreement

and Order No. 8175 A

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_TGC consents to the issuance of this Trading Agreement and Order without further notice. Tne

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

Order and (0 legally bind NGC to the terms and conditions of the Trading Agreement and

Order.

Northeast Generatio ompany ,

Signature: -<4,.L<-""F'--f~'-P.,,,:L==,,=,--, _

Narne: _1I00.-/lLb--=::',---,,,-,--,--=,,,,-,,-,,,,,,,-_

Title: It'<-., !?-w.-J...cL

Date: r6<f!L-'{!"'3

Issued {2;;J0fthe Commissioner ofEnvirorunental Protection on

~J?' ,2003.

/n",uUI J. Rocque, Jr.

mmlSSloner

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CITY OF PRESTON LAN"]) RECORDS

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RETURN RECEIPT REQUESTED

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