# STATE OF CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the maner of The State ofConnecticut and Northeast Generation Company 

# , ) ) ) ) ) Trading Agreement 

### and Order No. 8175 A

Whereas, the CommissionerofEnvironmental Protection ("Commissioner") andNortheast Generation Company ("NGC") agree that it is in the public interest that**th~y** work cooperatively to 

### improve the air quality within the State ofConnecticut and that the use ofdiscrete emission reduction credit ("DERC") trading to reduce nitrogen oxide ("NOx") emissions 

### will achieve this result in atimely and cost·effective mariner:

A. At the request and 

### with the agreement 

### ofNGe, the Commissioner finds the following; 1. This Trading Agreement and Ordersupercedes 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
.,$tackTest FLER Allowable Dateof Next Peaking Unit - 

### - Rate 

### Stack Stack Limit

- - (ppmvd) 

### lbsIMMBlU (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 EmplaxuNortheast Generation Company 2 Trading Agreement and OrderNo. 8175 A 4. NGC exceeds the NOx allowable emission rate for the peaking unit specified in Section 22a-174-22(e) ofthe Regulations as shown in Table 1 ofthis Trading Agreement and Order. 5. Pursuant to the Department ofEnvironmental Protection's "Credit Trading/or Sources with IrregularNOxEmissions"policy, with arevised date ofFebruary 27, 2001, attached'hereto and incorporated by reference into this Trading Agreement and Order as Exhibit I, the peaking unit has peak dailyNOx emissions greaterthan three times the average daily emissions during the ozone season and are therefore considered sources with irregularNOx emissions. 6. Pursuant to Section 22a-174-22(j) ofthe 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) ofthe Regulations, during the ozone season, NGC intends to acquire and use approved DERCs 

### andlorbudget emission reduction credits ("BDERCs") until May I, 2005 iorthepeaking 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 ofthis Trading Agreement and Order. Dates after which the DERCs will no longerbe eligible for use as a result of the vintage restrictions are provided in Table 2ofthis Trading Agreement and Order in the expiration date column.
Table?


# - Year of Ozone season DERC serial Ozone Non-Ozone season 

# I Non- 

# ! 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 ofthis Trading Agreement and Order, and pursuant to Section 22a-174-220} oithe 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 ofthe Connecticut General Statutes, orders NGC as iollows:
(. 1. Upon issuance ofthis Trading Agreement and Order, at the facility. NGC shall comply with Section 22a-174-22 oithe Regulations through DERC trading. Until NGCNortheast Generation Company 3 Trading Agreement and OrderNo. 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 ofthe peaking unit with the FLERS shown in Table 1 ofthis Trading Agreement and Order.

2. DERC use
a. Until May I, 2005, before the first day ofeach month, NGC shall have in its possession sufficient approved DERCs for the peaking unit based on the following calculations. Before-the first day ofeach 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 ofthis 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 ofthe days projected by the Commissioner to be "moderate to unhealthful,"Nonheast Generation Company 4 Trading Agreement and Order No. 8175 A



# .

. .,-<-.: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)


# , b. No laterthan October30 of2003, 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 ofthe days projectedby the Commissionerto 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 ofthis 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 maybe 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 limitin Table 22-1 ofSection 22a-174-22 of the Regulations, meet a non-ozone season emission limit of0.15 IbJM:MBtu. Priorto October I, 2003 and October I, 2004, NGC shall estimate and acquire sufficientDERCs and/or allowances needed to comply with Section 22a-174- 22(e)(3) ofthe Regulations as follows:Nonheast Generation Company 5 Trading Agreement and OrderNo. 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 .;. 2000pounds/ton. d. No laterthan May 31 of2004 and 1005, calculate and pennanently retire DERCs used 

### in the preceding non-ozone season as follows: 

# , , Acrual DERCs (tons) [Acrual fuel use in MMBru from October 1 through Apri130 x (FLER in IbsIMMBru

- (0.95x 0.15 IblMMBru))J 2000pounds/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 otherNOx budget program sources located in Connecticut. BDERCs shall only be used to offset ozone season excess emissions, and shall notbe used for compliance during the non-ozone season. BDERCs generated during agiven 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 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 oftbe year); during the ozone season, the ozone classification as forecasted by the Commissioneron 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 ofthis 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 aminimum offive years, commencing on the date such records were created. NGC shall provide the records specified above to the Commissioner

### within thirty (30) days ofreceipt ofa ",'linen request from the Commissioner. 6. Annual Emission Statement. No laterthan March 1 ofevery year afterissuance ofthis Trading Agreement and Order, NGC shall include with the Annual Emission Statement provided to the Commissioner, arecord ofeach sale or other transfer, and use ofany and all ofthe DERCs approved within and subsequent to issuance ofmis Trading Agreement and Orderuntil 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 ofall DERCs used (including serial numbers (ifassigned) and approved DERCs generatedNortheast Generation Company 6 Trading Agreement and Order No. 8175 A andlor purchased from otherfacilities), 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. Pursuantto Section 22a-174-22(d)(3) ofthe 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/orrequirements applicable to DERCs contained in this Trading Agreement and Order. Each allowance used for compliance with Section 22a174-22 ofthe 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 ofthe Regulations when they are transferred from the facility's compliance account or overdraft account to a State ofConnecticutNOx 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 ofeach month or applicable season. Howeverbased on the gravity ofthe noncompliance, the Conunissionermay require additional upwards adjustment. 9. Vinta2e Restriction. Fortbe purposes ofcompliance with Section 22a-174-22 ofthe Regulations, DERCsiallowances shall only remain valid for five (5) calendaryears from the year ofthe generation/allocation ofsuch DERCslallowances. DERCs/aliowances olderthan 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/allocatedpriorto calendaryear 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 subjectNGC to ma."e restitution bymatching the quantity ofemissions ("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 ofnoncompliance is notknown, the time period from the completion ofthe last/previous Departmentwitnessed 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 ortake any other action to require

### Northeast Generation Company 7 

### Trading Agreement and Order No. 8175 A additional upward adjustment, based on the gravity ofany alleged noncompliance or violation oflaw. II. FLER Modification. FLERs set forth in Table I ofthis Trading Agreement and Order maybe modified only afterthe consent ofthe Conunissionerby v-rritten modification of this Trading Agreement and Order. 

# , ., 12. Emissions Testing. Pursuantto Section 22a-174-22(k) ofthe Regulations, NGC shall conduct NOx emission tests ofthe peaking unit at least once every five years conunencing from the dates ofthe NOx emissiontests 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 ofSection 22a-174-22(d)(I) ofthe Regulations. However, after full program review ofthis and other Trading Agreements and Orders and, ifdetennined to be appropriate, the Commissionermay grant awrinen extension ofthis Trading Agreement and Order. 14. Future Compliance Report. On orbefore September I, 2004, NGC shall submit areport indicating how the facility shall comply with section 22a·174-22 ofthe Regulations with respect to the Peaking unit on and·afterMay I, 2005. 15. Full compliance. NGC shall notbe considered in full compliance with this Trading Agreement and Orderuntil all actions requiredby this Trading Agreement and Orderhave been completed as approved and to the Commissioner's satisfaction. 16. Approvals. NGC shall use best efforts to submitto the Conunissioner all documents requiredby this Trading Agreement and Orderin acomplete and approvable fonn. Ifthe Conunissionernotifies NGC that any document or otheraction is deficient, and does not approve it with conditions ormodifications, it is deemed disapproved, and NGC shall correct the deficiencies and resubmit it within the time specifiedby'the Commissioneror, ifno time is specifiedby the Commissioner, within 30 days ofthe Conunissioner's notice ofdeficiencies. In 

### approving any document orotheraction under this Trading Agreement and Order, the Commissionermay approve the document orother action as submitted or perfonned or with 

### such conditions ormodifications as the Commissioner deems necessary to carry 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 ofthe 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 TradingNonheast Generation Company 8 Trading Agreement and OrderNo. 8175 A Agreement and Order is deposited in the U.S. mail orpersonally delivered, whicheveris earlier. 18. Dates. The date ofsubmission to the Commissioner ofany document required by this Trading Agreement and Order shall be the date such document is received by the Commissioner. The ct;3te ofany notice bythe Commissionerunder this Trading Agreement and Order; including but not limited to notice ofapproval or disapproval of anydocument or other action., shall be the date such notice is deposited 

### in the U.S. mail or is personally delivered, whicheveris earlier. Except as otherwise specified in this Trading Agreement and Order, the word "day" as used 

### in this Trading Agreement and Ordermeans calendar day. Any document or action which is required by this Trading Agreement and Orderto be submitted orperformedby a date which falls on a Saturday, Sunday or a Connecticut orfederal holiday shall be submitted orperformed by the next day which is not a Saturday, Sunday or Connecticut or federal holiday 19. Certification ofdocuments. Any document, including but not limited to any notice, which is required to be submitted to the Commissionerunder this Trading Agreement and Order shall be signed byNGC or, ifNGC is not an individual, by an individual who is an authorized representative ofthe Respondent, 

### in accordance with Section 22a-174-2a(a) of the Regulations ofCOIUlecticut State Agencies, and bythe 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 submittedinformation is true, accurate and complete to the best ofmy knowledge and belief. Iunderstand that any false statement made 

### in the submitted information is punishable as acriminal offense under Section 53a-157b ofthe Connecticut General Statutes and any other applicable law." 20. Noncompliance. This Trading Agreement and Orderis afinal order ofthe Commissioner with respect to the matters addressed herein, and is nonappealable and immediately enforceable. Failure to comply with this Trading Agreement and Ordermay subject NGC to an injunction and penalties. 21. False statements. Any false statement in any information submitted pursuantto this Trading Agreement and Orderis punishable as acriminal offense under Section 53a-157b ofthe Connecticut General Statutes and any other applicable law. 22. Notice oftransfer: 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 OrderNo. 8175 A than fifteen (15) days after transferring all or any portion ofany ofthe facilities, the operations, the sites orthe businesses which are the subject oftrus Trading Agreement and Orderor after obtaining anew mailing or location addresses. NGC's obligations underthis Trading Agreement and Order shall not be affected by the passage oftitle to any property to any otherperson ormunicipality. 23. Commissionets po.wb-s. Nothing in this Trading Agreement and Order shall affect the Commissioner's authority to institute anyproceeding ortake any other action to prevent or abate violations oflaw, prevent or abate pollution, recover costs and natural resource damages, and to impose penalties forpast, present, orfuture violations oflaw. Ifat any time the Commissionerdetermines that the actions taken byNGC pursuant to this Trading Agreement and Orderhave successfully corrected all violations, fully characterized the extentordegree ofany pollution, or successfully abated orprevented pollution, the Commissionermay institute anyproceeding to require NGC to undertake further investigation orfurther action to prevent or abate violations orpollution. 24. NGC's oblieations under law. Nothing 

### in this Trading Agreement and Order shall relieve NGC ofotherobligations under applicable federal, state and local law.**~)**

## ....

. 

# '" -,. No assurance bv Commissioner. No provision ofthis TradingAgreement and Order and no action orinaction by the Commissioner shall be constrUed to constitute an assurance by the Commissionerthat the actions taken byNGC pursuant to this Trading Agreement and Orderwill result 

### in compliance orpreventor abate pollution. 26. Access to facility. Any representative ofthe Department ofEnvironrnental Protection may enter any ofthese facilities withoutpriornotice forthe purposes ofmonitoring and enforcing the actions required or allowedby this Trading Agreement and Order. 27. No effect on rights ofotherDersons. This Trading Agreement and Orderneithercreates nor affects any rights ofpersons ormunicipalities that are notpanies to this Trading Agreement and Order. 28. No Creation ofPropertv Rights. 

### This Trading Agreement and Orderdoes not create any 

### propertyrights withrespect to these DERCs. 29. Notice to Commissionerofchan.es. Within fifteen (15) days ofthe date NGC becomes aware ofa change in any information submined to the Commissionerunderthis Trading Agreement and Order, orthat any such infonnation was inaccurate or misleading orthat any relevant infonnarion was omined, NGC shall submit the corrector omined infonnation to the Commissioner. 

# "

" 

### 30. Notification ofnoncomoliance. In 

### the event that NGC becomes aware that it did not orNortheast Generation Company 10 Trading Agreement and Order No. 8175 A

\.. 31. may not comply, ordid not or may not complyon time, with any requirement ofthis Trading Agreement and Order or ofany 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 anynoncompliance or delay is avoided or, if unavoidable, is minimized to the greatest extentpossible. Within five (5) days ofthe 

### 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 byNGC shall not excuse noncompliance or delay, and the Commissioner's approval ofany compliance dates proposed shall not excuse noncompliance or delay unless specifically so stated by the Commissionerin writing. Submission ofdocuments. Any document required to be submitted to the Commissioner underthis 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 CreditTrading Section 79 Elm Street Hartford, CT 06106

### Northeast Generation Company 

### 11 Trading Agreement and Order No. 8175 A



### I 

## .... .".- 

### _ TGC consents to the issuance ofthis TradingAgreement and Orderwithout further notice. Tne undersigned certifies that he/she is fully authorized to enterinto this TradingAgreement and Orderand (0 

### legally bind NGC to the terms and conditions ofthe 

### 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;;J0f the CommissionerofEnvirorunental Protection on

# ~J?' ,2003.

/n",uUI 

### J. 

### Rocque, Jr. 

### mmlSSloner I ,
CITY OF PRESTON LAN"]) RECORDS MAILED CERTIFIED MAIL, RETURN RECEIPT REQUESTED 

### Certified DocumentNo.