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. 8157

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 Middletown Station at 1866 River Road in Middletown,

Connecticut ("facility"). At the facility, CL&P

operates Middletown Station Unit 4, a 400 megawatt

tangentially-fired boiler on No. 6 fuel oil,

Connecticut Permit Number 104-0003, ("boiler"). A

continuous emissions monitor ("CEM"), certified to 40

Code of Federal Regulations Part 75, measures nitrogen

oxide (NOx")emissions from the boiler.

3. During the year 1981, prior to modifications of the

boiler's burner, combustion controls and operating

conditions, and based on Department of Environmental

Protection approved stack test data, the average annual

NOx emission rate for Middletown Station Unit 4 was

0.278 pounds per million British thermal units

("lbs/MMBtu") of heat input when operating on No. 6

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79 Elm Streel • Hartford, CT 06106 - 5127

http://dep.stlte.ct.us

All Equal Oppo,tulIlty Employer

Date:
The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

fuel oil. On and after May 31, 1995, the Regulations

of Connecticut State Agencies ("Regulations") require

that the boiler 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 of the

boiler's burner and combustion controls, and began to

test and adjust operating conditions, thereby reducing

the boiler's NOx emission rates below its permitted,

allowed and actual baseline emissions rate. Such

modifications enabled CL&P's boiler 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 boiler 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").

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

Regulations.

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 Ij} (3) of the

Regulations. Specifically, the reductions will be:

Real because they result in a reduction of actual

emissions released into the air, net of any

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

consequential increase in actual emissions resulting

from shifting demand. The emission reductions are

properly measured, recorded and reported.

Ouantifiable 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 system is 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, 234 ERCs were created by the boiler between

November 1, 1996 and September 30, 1997 (IDS during the

ozone season and 129 during the non-ozone season). This

number of ERCs takes into consideration the ten (10)

percent environmental discount.

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

Trading Agreement and Order, pursuant to Section 22a-l74-

22 (d) (4) of the Regulations, will allow CL&P and approved

sources within Connecticut to use 234 tons of NOx ERCs

referenced in paragraph A.8. of this Trading Agreement and

Order (105 during the ozone season and 129 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.

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

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 boiler 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 boiler. When

calculating ERCs, CL&P shall use the lower of CEMrecorded NOx emission rate* or actual fuel usage data

for the boiler in MMBtu/day, when determining heat

input. Ten (10) percent of all ERes (tons) created by

the boiler 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 75.

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 boiler with the

emission standards in Section 22a-174-22(e) of the

Regulations or until May I, 2003, whichever occurs

first. CL&P shall acquire approved ERCs, and document

and record the amounts of NOx emissions and ERCs used

by the boiler each month, and shall maintain and

provide such records in accordance with the following

and Section 22a-l74-4 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:

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

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 boiler 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 boiler has 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 lbs/MMBtu) -

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

(actual fuel use in MMBtu)} + 2000 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 boiler showing

daily NOx mass emissions, and actual NOx emission rates

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

(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 ERe 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.

5. 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 boiler, 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 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.,

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

of this Trading Agreement and Order, the Commissioner

may provide written approval of ERCs created by CL&P

retrospectively, in addition to 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 I, 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 boiler has 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 lbs/MMBtu) - (the CEM-recorded NOx

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

where:

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

boiler 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,

"Commissioner" means the Commissioner of Environmental

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

Protection or an agent of the Commissioner.

season" means the period from May 1 through

30 in any given calendar year.

"Ozone

September

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

submitted to the Commissioner under this Trading

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

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

reasonable investigation, including my inquiry of those

individuals responsible for obtaining the information,

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 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 53a157b of the Connecticut General Statutes, and in

accordance with any other applicable statute."

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.

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.

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

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 obligations under law. Nothing in this Trading

Agreement and Order shall relieve CL&P of other

obligations under applicable federal, state and local

law.

19. Access to records and facility. Any representative of

the Department of Environmental Protection may enter

and 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. No effect on rights of other persons. This Trading

Agreement and Order shall neither create nor affect any

rights of persons who or municipalities which are not

parties to this Trading Agreement and Order.

21. No Creation of Property Rights. This Trading Agreement

and Order does not create any property rights with

respect to these ERCs.

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

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

information submitted to the Commissioner under this

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and Power Company

Trading Agreement

and Order No. 8157

Trading Agreement and Order, or that any such

information was inaccurate or misleading or that any

relevant information was omitted, CL&P shall submit the

correct or omitted information to the Commissioner.

23. Submission of documents. Any document required to be

submitted to the Commissioner under this Trading

Agreement and Order shall, unless otherwise specified

in writing by the Commissioner, be directed to:

Mr. David Jawin

Department of Environmental Protection

Bureau of Air Management

Compliance and Field Operations Division

Emissions Trading Unit

79 Elm Street

Hartford, Connecticut 06106

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The Connecticut Light

and Power Company

Trading Agreement

and Order No. 8157

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

ower Company

. Nadeau

Vice President

April 28, 1999

Issued as a final consent order of the Commissioner of

Environmental Protection on 1999.

Arthur . Rocque, Jr.

Commissioner

CITY OF MIDDLETOWN LAND RECORDS

MAILED CERTIFIED MAIL, RETURN RECEIPT REQUESTED

Certified Document No.

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