STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the m:ltter of

The S[~[e of Connecticut and

CJpiw] District Energy Cente~

Cogeneration Associates "

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Trading Agreement

and Order No. 8249

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

District Energy Center Cogeneration Associates ("CDEC") :lgrec that it is in the public

interest that they work coopel.ltively to improve the air quality within the State of

Connecticut and that the use of discrete emission reduction credit ("DERen) tr<1ding to

reduce nitrogen oxide ("1 Ox") emissions will achieve this resuh in a timely and cost·

effective manner.

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

1. CDEC is a general partnership and subsidiary of EI Paso Corporation. CDEC

owns and operates one cogeneration plant at 490 Capitol Avenue, Hartford,

Connecticut ("facility").

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

PG6531 cogeneration turbine with an in-line duct burner, Connecticut Pennit

Number 75-0064 ("turbine"), which is subject to Section 22a-174-22 of the

Regulations of Connecticut State Agencies ("Regulations") pertaining to the

control of NOx emissiops. The turbine operates on natural g:J..S as the primary

fuel and No.2 fuel oil as the backup fuel. A continuous emissions monitor

("CEM") certified to 40 Code of Feder.1 Regulations ("CFR") Part 75,

measures NOx emissions from the turbine. ,

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

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

4. Pursuant (0 Section 22a-174-220) of the Regulations, during the non-ozone

season, CDEC intends to acquire approved DERCs until May 1, 2005 for the

turbine at the facility.

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C:lpicol DislIict Energy Center

Cogeneration Associates

Trading Agreement :lnd

Order No. 8249

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 :lllows CDEC to

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

C. With the agreement of GOEC, the Commissioner, Jcting under Sections 22a-6, 22a171, 22a-174, 22a-176, ::md 22a-177 of the Connecticut General Statutes, hereby

orders CDEC as follows:

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

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

CDEC achieves pennanent compliance with the emission standard in Section 22a-174-

22(e) of the Regulations or by May I, 2005, whichever occurs earlier:

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

Order; and

b. CDEC shall have in its possession sufficient approved DERCs [Q meet applicable

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

2. DERC use. Starting on October I, 2003, and until May 1,2005, before the first day

of each non-ozone se:lson, CDEC shall have in its possession sufficient approved

nERCs for the turbine based on the following:

a. Durin!! the non-ozone season:

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

IbslMMBtu. Prior to October 1, 2003 and October 1, 2004, CDEC 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 1

through April 30 x (estimated seasonal average NOx

emission rate in IbsJM:MBtu during October 1 through

April 30 - (0.95 x 0.151bsIMMBtu))J .;. 2000 pounds/ton.

No larer than May 31,2004, and May I, 2005, when the turbine has a non-ozone

seasonal :lver<lge actual NOx emission rate exceeding 0.15 Ibsfl...{MBtu, CDEC

shaII calculate and permanently retire the amount of DERCs used in the

preceding non-ozone season as follows:

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CJpilOI District Energy Center

Cogenernlion Associmes

Tr<lding Agreement :lnd

Order No. 8249

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Actu,1 DERCs (tOns) = [Actu,l fuel use in lVWBtu from October I through

April 30 x (actual seasonal aveTZlge NOx emission r~lte in

Ibs/M1v1Btu during Ocrober 1 through April 30 - (0.95 x

~.15IbslMMBtu»J';' 2000 pounds/ton.

b. When the noniozone season CEM-recorded NOx emission rale is used to

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

calculated in accordance with missing data substitution procedures under

40 CFR Pm 75.

c. CDEC shall not exceed any NOx permillimitations for the turbine.

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

and fuel type; non-ozone season NOx emission rates, number of operating hours

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

per non-Olone season; the number of DERCs in its possession, purchased and used

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

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

shall maintain and submit such records in accordance with Section 22a-174-22 of

the Regulations.

4. Record Keeoing. CDEC 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. CDEC shall provide the

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

written request from the·'Commissioner.

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

Agreement and Order, CDEC shall submit in writing to [he Commissioner lhe nonozone season fuel consumption and amount of all DERCs 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, CDEC

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

achieve all or a ponion of the reductions required by Section 22a-174-22 of the

Regulations. Any allowance used for compliance with Section 22a-174-22(e) of [he

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 sh::t.ll be deducted from CDEC's NOx Budget

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C::lpitol District Energy Center

Cogenermion Associates

Trading Agreement J.nd

Order No. 8249

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Program compliance account upon such use. Allowances shall be considered used

for compliance with Section 22a-174-22 of the Regulations when they are

tr.:l.nsferred from the facility's compliance account or overdraft account to a Sw.te of

Connecticut NOx .:l.JJowance retirement account, account II) CT0000000300 in the

NOx Allowance Tracking System.

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7. DERC Doubling.:ft,t a minimum, DERCs required shall be adjusted upwards by

100% if DERCs are not in CDEC's possession for use prior to the first day of each

non-ozone season. However, based on the gravity of the noncompliance, the

Commissioner may require additional upward adjustment.

8. Vintage 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 of the generation/allocation of such DERCsiallowances.

DERCsiallowances 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 1,2005, with respect to the turbine, CDEC shall

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

However, after full program review of this and other Trading Agreements and

Orders and, if determined to be appropriate, the Commissioner may grant a written

extension of this Trading Agreement and Order.

10. Future Comoliance Report. On or before September 1, 2004, CDEC shall submit a

report indicating how the facility shall comply with Section 22a-174-22 of the

Regulations with respect 10 the turbine on and after May 1, 2005.

11. Full compliance. CDEC 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.

12. Approvals. CDEC shall use best effons to submit to the Commissioner all

documents required by this Trading Agreement and Order in a complete and

approvable form. If the Commissioner notifies CDEC that any document or other

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

deemed disapproved, and CDEC shaH 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

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C::lpitol District Energy Center

Cogeneration Associates

Trading Agreement and

Order No. 8249

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perfonned or with such conditions or modific::ltions as the Commissioner deems

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

in this paragraph shall excuse noncompliance or delay.

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

those for which the F0mmissioner has provided written authoriz'Hion for use in

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

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

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

14. Dates. The date of submission 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 Trading

Agreement and Order, including but not limited [0 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 earher. 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

Connec'ticut or federal holiday.

15. 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 CDEC or, if CDEC is not an individual, by

an individual who is an authorized representative of CDEC, 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 foHows:

"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 m:lde in the submitted information is punishable as a criminal offense

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

applicable law."

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CJpitol District Energy Center

Cogeneration Associates

Trading Agreement :md

Order No. 8249

16. NoncomoJiance. This Trading Agreement and Order is a final order of the

Commissioner with respect to the maners addressed herein, and is nonappeJbbJe

and immediately enforceable. Failure to comply with this Trading Agreement and

Order may subject CDEC to an injunction and penalties.

17. False statements. Any false statement in any information submitted pursuant to this

Trading Agreern~t and Order is punishable as a criminal offense under Section

53a-157b of the Connecticut General Statutes and any other applicable law.

18. Notice of transfer: liabilitv of CDEC. Until CDEC has fully complied with this

Trading Agreement and Order, CDEC shall notify the Commissioner in writing no

later than 15 days after transferring all or any ponion 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. CDEC'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.

19. Commissioner's DOWers. Nothing in this Trading Agreement and Order shall affect

the Commissioner's authority to institute any proceeding or rake 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 CDEC 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 CDEC to undenake further investigation or further action to

prevent or abate violations or pollution.

20. CDEC's obligations under law. Nothing in this Trading Agreement and Order shall

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

21. 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 CDEC

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

or abate pollution.

22. Access to facilitv. Any representative of the Depanment of Environmental

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

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

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CJpitol DislIict Energy Center

Cogener.Hion Associates

Trading Agreement :lnd

Order No. 8249

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23. No effect on rig:hts of=Qther persons. This Trading Agreement and Order neither

creates nor affects any rights of persons or municipalities !.hat are nOl panies to this

Troding Agreement and Order.

24. No Creation of Propenv Rie:hts. This TrJding Agreement and Order does not create

any property rightsfWith respect to these DERCs.

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25. Notice to Commissioner of changes. Within 15 days of the date CDEC becomes

aware of a change in any information 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, CDEC shall submit the

correct or omitted information to !.he Commissioner.

26. Notification of noncompliance. In the event that CDEC 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,

CDEC 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, CDEC 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 CDEC shall comply with any dates

which may be approved in writing by the Commissioner. Notification by CDEC

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.

27. 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:

Ms. Wendy Jacobs

Department of Environmental Protection

Bureau of !ill' Management

Emissions and Credit Trading Section

79 Elm Street

Hartford, Connecticut 06106-5127

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C,JpilOI District Energy Center

Cogeneration Associates

Trading Agreement ,Jnd

Order No. 8249

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

undersigned certifies th:u he/she is fully authorized to enter into this Trading Agreement and Order

,Jnd to leg,Jlly bind CDEC to the tenns and conditions of (he Trading Agreement and Order.

Capitol Dislrict Energy Center Cogeneration Associates

SignaIU~: .' -JJV, <> ( ~T r- '7

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Nad,~~ /zDOkJ.,ILt ~\'~

TItYICEe: P~~~!D'NT ~, A'-::-- 1.:..0 .': 1'~GI"~- D,r::>O:::I"'TOR "'--"

Date:--l1-f-'h'--LJ+-=/D:...,..J'---_

Issued as a fin.! order of the Commissioner of Environmenlol pro~~--..,.

on ~Z9 ,2003 !.) "

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Arthur J. c

Commiss oner

CITY OF HARTFORD LAND RECORDS

MAll.ED CERTIFIED MAll.,

RETURN RECEIPT REQUESTED

Certified Document No.

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