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STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the maner of

The State of Connecticut and

Montville Power LLC

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Trading Agreement

and Order No. 8183 A

Whereas, the Commissioner ofEnvironmental Protection ("Commissioner") and Montville Power

LLC ("MPLLC") 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

("DERC") trading to reduce nitrogen oxide (''NOx'') emissions will achieve this result in a timely

and cost-effective manner:

A. At the request and with the agreement of:MPLLC, the Commissioner finds the following:

J. This Trading Agreement and Order supercedes Trading Agreement and Order 8183

issued on January 12, 2000.

2. .MPLLC is an exempt wholesale electric generating company with its principal place

of business in Sewickley, Pennsylvania. MPLLC owns two (2) piece of fuel-burning

equipment ("peaking unit") identified in Table 1 ofthis Trading Agreement and

Order. These peaking units are diesel generators operated at 74 Lathrop Road,

Montville, CT ("facility").

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

emission rates as follows:

Table 1

Facilityl Fuel Heat Input Stack Test FLER Allowable Date of Next

Peaking Unit MMBtuIhr (gm/bhplhr) IbsIMMBtu Rate Stack Stack

IbsIMMBtu Test Test Due

Montville-I 0 #2 oil 256 9.718 3.11 2.35 5123/01 5123106

Montville-II #2 oil 256 10.236 2.96 2.35 5/23/01 5/23/06

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79 Elm Strcct • H.rlford, CT 06106·5127

hltl':lIdcl'.$l,IC,Cl.US

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Montville Power LLC 2 Trading Agreement

and Order No. 8183 A

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4. MPLLC 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 ofEnvironmental Protection's "Credit Trading/or

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

2001, artached'ilereto and incorporated by reference into this Trading Agreement and

Order as Exhibit I, the peaking units have 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-174-22G) ofthe Regulations, during the non-ozone season,

MPLLC intends to acquire approved DERCs until April 30, 2007 for the peaking

units.

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

Order, and pursuant to Section 22a-174-22(j) ofthe Regulations, hereby allows MPLLC

to comply with Section 22a-174-22 of the Regulations through use ofDERC trading.

C. With the agreement ofMPLLC, the Commissioner, acting under Sections 22a-6, 22a-I7I,

22a-174, 22a-176, and 22a-177 ofthe Connecticut General Statutes, orders MPLLC as

follows:

1. Upon issuance ofthis Trading Agreement and Order. at the facility, MPLLC shall

comply with Section 22a-174-22 ofthe Regulations through DERC trading. Until

JvfPLLC achieves pennanent compliance with the emission standard in Section 22a174-22(e) of the regulation or by April 30, 2007 whichever occurs earlier:

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

and Order;

b. M:PLLC shall have in its possession sufficient approved DERCs to meet

applicable NOx emission limits as allowed under this Trading Agreement and

Order; and

c. MPLLC shall comply during operation of the peaking units with the FLERS

shown in Table 1 ofthis Trading Agreement and Order.
Montville Power LLC

2. DERC use

3 Trading Agreement

and Order No. 8183 A

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a. Until April 30, 2007, before the first day of each month, MPLLC shall have in. its

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

calculations.

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

month for the peaking units 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))} ~2000 pounds/ton

Where:

ollliowable limit= in Ibs/MMBtu as shown in Table I of this Trading

Agreement and Order.

• FLER= full load emission rate in Ibs/1vfMBtu 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 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):

Estimated DERCs (in tons) = [(Maximum estimated excess NOx in Ibs) 3)

+[13 Ibs/day/ton]

b. No later than October 30 of 2003,2004,2005, and 2006 calculate and permanently

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:

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Montville Power LLC 4 Trading Agreement

and Order No.8 I83 A

DERCs (in tons) = ({acrual fuel use in MMBru) x {(FLER) - (0.95 x NOx

allowable emission limit))}~ 2000 pounds/ton

OR

ii. the maxirp.um acrual excess NOx emissions (in Ibs) 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):

Acrual DERCs (tons) used ~[(Acrual excess NOx in Ibs) ~3] (13

Ibs/day/ton]

As described in Exhibit I 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 DERCs may be used in the non-ozone season in the

same or subsequent yem; through April 30, 2007.

o 3. NIPLLC 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 ofthe 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. :tv1PLLC shall maintain and submit such records to the Commissioner in

accordance with Section 22a-174-22 of the Regulations.

4. Record Keeping. MPLLC 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. :tv1PLLC shall provide the records specified above to the

Commissioner within thiny (30) days ofreceipt of a wrinen request from the

Commissioner.

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5. Annual Emission Statement. No later than March 1 of every year after issuance ofthis

Trading Agreement and Order, :tv1PLLC shall include with the Annual Emission Statement

provided to the Conunissioner, a record of each sale or other transfer, and use of any and all

of the DERCs approved within and subsequent to issuance of this Trading Agreement and

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

MPLLC shall also include acrual NOx emissions from the peaking units and the amount of
Montville Power LLC 5 Trading Agreement

and Order No. 8183 A

all DERCs used (including serial nwnbers (if assigned) and approved DERCs generated

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

year. These reports shall be on a form prescribed by the Commissioner and shall be in

monthly increments. Should :MYLLC choose to discontinue the generation ofDERCs,

?v1PLLC will notify the Commissioner upon discontinuance.

I

6. Allowance Use. Pursuant to Section 22a-174-22(d)(3) ofthe Regulations, MPLLC may

use NOx allowances, through April 30, 2007, pursuant to Subsection (j) of Section 22a174-22 of the Regulations to achieve all or a portion of the reductions required by Section

22a~174~22 ofthe Regulations. Iuly allowance used for compliance with Section 22a-174-

22(e) of the Regulations shall be subject to all restrictions and/or requirements applicable to

DERCs contained in this Trading Agreement and Order;

a. In order for MPLLC to use NOx allowances, MPLLC shall create general

account in EPA's NOx Allowance Tracking System ("NATS"); and

b. Each allowance used for compliance with Section 22a-174-22 of the

Regulations shall be equivalent to one discrete emission reduction credit.

Allowances shall be considered used for compliance with Section 22a-174-22

ofthe Regulations when they are transferred from the facility's NOx general

account in the NATS to the CT State NOx Retirement Account (Account ID

CT0000000300 in the NATS).

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

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

However based on the gravity of the noncompliance, the Commissioner may require

additional upwards adjustment.

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

Regulations, DERCs/allowances shall only remain valid for five (5) calendar years from the

year ofthe generation/allocation ofsuch DERCs/allowances. DERCs/allowances older

than five (5) calendar years from their creation/allocation are not valid for use for

compliance with Section 22a-174-22 ofthe Regulations. Notwithstanding the above,

DERCs/allowances generated/allocated prior to calendar year 2000 are valid for use for

compliance with Section 22a-174-22 of the Regulations up to and including December 31,

2004.

9. FLER Exceedance. Noncompliance with an established FLER shall subject "M:PLLC to

make 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 IbslMMBru, multiplied by the total heat input during the period of

.-' noncompliance divided by 2000 lbs/ton. If the period of noncompliance is not known, the
Montville Power LLC 6 Trading Agreement

and Order No. 8183 A

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time period from the completion of the last/previous Deparnnent witnessed emission test

through 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

additional upward adjustment, based on the gravity of any alleged noncompliance or

violation of law. I

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10. FLER Modification. FLERs set forth in Table I ofthis Trading Agreement and Order may

be modified only after the consent ofthe Commissioner by written modification of this

Trading Agreement and Order.

II. Emissions Testing. Pursuant to Section 22a-174-22(k) ofthe Regulations, MPLLC shall

conduct NOx emission tests ofthe peaking units at least once every five years commencing

from the dates ofthe NOx emission tests for the peaking units as provided in Table 1 ofthis

Trading Agreement and Order.

12. Extension. No later than April 30, 2007, with respect to the peaking units, MPLLC shall

comply with the requirements ofSection 22a-174-22(d)(I) ofthe Regulations. However,

after full program review oftrus and other Trading Agreements and Orders and, if

determined to be appropriate, the Commissioner may grant a wrinen extension of this

Trading Agreement and Order.

13. Future Compliance Report. On or before September I, 2004, MPLLC shall submit a report

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

respect to the Peaking units on and after May I, 2007.

14. Full compliance. WLLC 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.

15. Approvals. :tv!PLLC shall use best effons to submit to the Commissioner all documents

required by this Trading Agreement and Order in a complete and approvable form. Ifthe

Commissioner notifies :MPLLC that any document or other action is deficient, and does not

approve it with conditions or modifications, it is deemed disapproved, and :tv1PLLC 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 Conunissioner deems necessary

to carry out the purposes ofthis Trading Agreement and Order. Nothing in this paragraph

shall excuse noncompliance or delay.
Montville Power LLC 7 Trading Agreement

and Order No. 8183 A

16. Definitions. As used in this Trading Agreement and Order, "Commissioner" means the

Commissioner ofEnvironmental Protection or an agent cfthe Commissioner. "Ozone

season" means the period from May 1 through September 30 in any given calendar year.

The date of "issuance" oftms 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. I

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17. 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 date of any notice by the Commissioner under this Trading Agreement

and Order, including but not limited to Dotice of approval or disapproval of any docl!ffient

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 otheI"'Nise specified in this Trading Agreement

and Order, the word "day" as used in this Trading Agreement and Order means c~lendar

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 perfoI1l1ed by the next day which is not a Saturday,

Sunday or Connecticut or federal holiday.

:,::J 18. Certification of documents. Any document, including but Dot limited to any notice, which

is required to be submitted to the Commissioner under this Trading Agreement and Order

shall be signed by MPLLC or, ifMPLLC is not an individual, by MPLLC's chief executive

officer or a duly authorized representative ofsuch officer, as those terms are defined in

Section 22a-430-3(b)(2) ofthe Regnlations, and by the individual(s) responsible for

actually preparing such documen~ and MPLLC or MPLLC's chief executive officer and

each such individual shall certify in writing as follows:

"I have personally examined and am familiar with the information submitted in thi~

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 lmowledge and

belief. I understand that any false statement made in the submitted information is

punishable as a criminal offense under Section 53a·157b ofthe Connecticut General

Statutes and any other applicable law."

19. Noncompliance. This Trading Agreement and Order is a fmal order ofthe Commissioner

with respect to the maners addressed herein, and is nonappealable and immediately

enforceable. Failure to comply with this Trading Agreement and Order may subject

MPLLC to an injunction and penalties.

20. 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
Montville Power LLC 8 Trading Agreement

and Order No. 8183 A

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of lhe Cormecticut General Statutes and any other applicable law.

21. Notice of transfer: liability ofMPLLC and others. Until MPLLC has fuily complied with

this Trading Agreement and Order, h1PLLC shall norify the Commissioner in \¥fiting no

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

operations, the sites or the businesses which are the subject of this Trading Agreement and

Order or after obtaining a new mailing or location addresses. WLLC's obligations under

this Trading Agreement and Order shall not be affected by the passage oftitle to any

property to any other person or municipality.

22. 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 oflaw, prevent or abate pollution, recover costs and natural resource

damages, and to impose penalties for past, present, or future violations of law. 1f.at any

time the Commissioner detennines that the actions taken by MPLLC 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 :MPLLC to undertake further

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

23. :MPLLC's obligations under law. Nothing in this Trading Agreement and Order shall

relieve :M:PLLC of other obligations under applicable federal, state and local law.

24. No assurance by Commissioner. No provision ofthis Trading Agreement and Order and no

action or inaction by the Commissioner shall be consnued to constitute an assurance by the

Commissioner that the actions taken by 'MPLLC pursuant to this Trading Agreement and

Order will result in compliance or prevent or abate pollution.

25. Access to facilitv. Any representative oftbe Department ofEnvironmental 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.

26. No effect on rights of other persons. This Trading Agreement and Order neither creates Dor

affects any rights of persons or municipalities that are not parties to this Trading Agreement

and Order.

27. No Creation of Property Rights. This Trading Agreement and Order does not create any

property rights with respect to these DERCs.

28. Notice to Commissioner of changes. Within fifteen (15) days of the date MPLLC becomes

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

Agreement and Order, or that any such infonnation was inaccurate or misleading or that
Montville Power LLC 9 Trading Agreement

and Order No. 8183 A

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any relevant information was omined, 1vIPLLC shall submit the correct or omitted

information to the Commissioner.

29. Notification of noncompliance. In the event that lvIPLLC becomes aware that it did not or

may not comply, or did not or may not comply on time, with any requirement ofthis

Trading Agreement and Order or of any document required hereunder, 1v1PLLC 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, M:PLLC shall submit in writing the date, time, and duration aftbe 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 :MPLLC

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

Notification by :MPLLC 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.

30. 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

Deparonent ofEnvironmental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street

Hartford, CT 06106
Montville Power LLC 10 Trading Agreement

and Order No. 8183 A

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MPLLC 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 NfPLLC to the terms and conditions of the Trading Agreement

and Order.

Montville Power LLC

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Signature: ~~

Name: -'4C~'-U-!.~-,--",~",,-=L.'-2..~=--,-,-,li~_ Title: _-,-,R,""~,¥~!<.lM-,-"a/"----J...m,-"M~~"f'8'-<JC,--__

Date: __<'I,-:q...LJ~D",,-,3,-- _

Issued as a final order of the Commissioner ofEnvironme

LJ~I .~ -L9:JJ~"""'-L-"'.'-'-"'---~' 2003.

TOWN OF MONTVILLE LAND RECORDS

MAILED CERTIFIED MAIL,

RETURN RECEIPT REQUESTED

Certified Document No.

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