# STATE OFCONNECTICUT DEPARTMENT OFE.VIRONMENTALPROTECTION

In the matter of ) ) 

### The State of**Co~~ecticut** 

### and ) ) 

### PSEG PowerConnecticut LLC ) Trading Agreement and OrderNo. 8243

Whereas, the**Co~~issioner** of Environmental Protection 

### ("CommissionerH ) 

### and PSEG PowerConnecticut LLC ("PSEGN) 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 ofemissionreduction trading will achieve this result in a timely and cost-effective manner:

A. At the request and with the agreement of PSEG, the 

### Commissioner finds the following: 

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# -' 1. 

### PSEG is an exempt 

### wholesale electric generating company with 

### its principal place ofbusiness in Newark, New Jersey. On December 6, 2002 PSEG purchased from Wisvest-Connecticut, LLC and now owns a fossil fuel-fired electric**genera~ing** station at 1 Waterfront Street inNew Haven,**Co~~ecticut** ("facility")

.
2. At the facility, PSEG operates a Babcock and Wilcox steamgenerator ("boiler"), Connecticut Permit 117- 0021, which is subject to Section 22a-174-22 of the Regulations of Connecticut State Agencies ("Regulations"). The boiler is used as an auxiliary
source of steam (heating and process) principally when the main electric generating unit is not operating.

3. At the facility, PSEG can operate the boiler on either NO.2 fuel oil or NO.6 fuel oil. When operating on NO.2 fuel oil, the boiler complies with the applicable nitrogen oxide ("NOx") emission rate limit of 0.20 pounds per million British thermal units**("lbs/~~Btu")** of heat input. When operating on No.6 fuel oil, the NOx emission rate for the boiler has been measured at 0.36**lbs/MM3~u** of heat input, in
excess of the applicable NOx emission rate of 0.25

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Ibs/MMBtu of heat input.

4. On and afterMay 31, 1995, Section 22a-174-22(e) of the Regulations reauires that the boileremit NOx at a 

## , 

# . rate no greater than 0.25 Ibs/MMBtu of heat input when operating on NO.6 fuel oil. PSEG proposes to use approved discrete emission reduction credits ("DERCs") for compliance purposes at the faCility, when and if PSEG chooses to operate the boiler on No.6 fuel oil.

B. The Commissioner, 

### in accordance with the provisions of this Trading Agreement and Order, andpursuant to Section 22a174-22(j) of the Regulations, hereby allows PSEG to c?mply with Section 22a-174-22 of the Regulations through use of emission reduction trading referenced in SectionA, herein, to achieve the NOx emission reduction required by Section 22a-174-22(d)(1) of the Regulations.



### c. With the agreement of PSEG, the Commissioner, acting under Sections 22a-6, 22a-171, 22a-174, 22a-176, and 22a-177 of the Connecticut General Statutes, orders PSEG as follows:

1. Upon issuance of this Trading Agreement and Order, and throughApril 30, 2007 oruntil PSEG achieves compliance with the emission standards in Section 22a174-22(e) of the Regulations, whichever occurs earlier, PSEG'shall have in its possession approved DERCs and shall document and record the amounts of all fuel and DERCs used by the boiler each month, and provide such records in accordance with the following and Section 22a-174-22 of the Regulations:

a. Before the first day of each month, calculate projected DERCs required for the next calendar month for the boiler as follows:

DERCs (tons) 

## = [EstimatedFuel**Us~** in MMBtu x (0.40 lbs/MMBtu (0.95 x 0.25 lbs/MMBtu»J + 2000 pounds;



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; b. Document that sufficient approved DERCs are available for the boilerno later than the first of each calendar month to assure

### PSEG Power**Connecticu~** 

### LLC 3 

### Trading Agreement and OrderNo. 8243

compliance for, at a minimum, that calendar month. At a minimum, DERCs required shall be adjusted upwards by 100% ifDERCs are not in PSEG'rs possessionprior to the first day of each month;

c. No later than the tenth day of each month, calculate DERCs used in the preceding calendar month for the boileras**fo~lows:** 

### DERCs (tons) 

## = [Actual Fuel Use in MMBtu

x (.40. lbs/MMBtu

- (.95 x .25 lbs/MMBtu))] + 2000 pounds;



### d. Document and record monthly consumption of -fuel and DERCs;

,0·' 

### ,

### .. e. No later thanMarch 1, of each year this TradingAgreement andOrder is in effect, include with its annual emissions report to the Commissioner, the monthly rate of fuel consumption for the boiler and DERCs usedby the boiler for the previous calendar year;
f. Retain records and supporting documentation as described in this section for a minimumof five years, commencing on the date such records were created;

g. Maintain documentation to attest to the fact that DERCs used during the ozone season were generated during the ozone season. The ozone season is fromMay 1 through September 30 in any calendaryear. Generator certification of this face shall be sufficient;

h. Provide the records specified above to the Commissionerwithin thirty (30) days of receipt of a written request from the**Co~~issioner;** i. 

### Pursuant to Section 22a-174-22(d)(3) of the Regulations, PSEG may use NOx allowances, through April 30, 2007, pursuant to Subsection (jl 

### of Section 22a-174-22 of the Regulations to achieve all or a portion of the reductions required byPSEG Power Connecticut LLC 4 Trading Agreement and OrderNo. 8243



# o j .

k. Section 22a-174-22 of the Regulations. Any allowance used for comoliance with Section 22a174-22(e) of the Regulations shall be subject to all restrictions and/or requirements applicable to DERCs contained in this Trading Agreement and Order;
In order for PSEG to use NOx allowances, PSEG shall create a general account or use an eXisting compliance account or overdraft account,in EPA's NOxAllowance Tracking System**(\\N~.TS");** 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 of the Regulations when they are transferred from the facility's NOx general account in the NATS or the facility'S NOx compliance account or overdraft account in the NATS to the CT State NOx Retirement Account (Account ID CT0000000300 in the NATS); and

1. For the purposes of compliance with Section 22a174-22 of the Regulations, DERCs/allowances shall only remainvalid for five (5) calendaryears from theyear of the generation/allocation of such DERCs/allowances. DERCs/allowances generated/allocatedmore than five (5) calendar years ago are not valid for use for compliance with Section 22a-174-22 of the Regulations. Notwithstanding the above, DERCs/allowances generated/allocatedprior to calendaryear 2000
are valid for use for compliance with Section 22a-174-22 of the Regulations up to and including December 31, 2004.

2. Prior to May 1, 2007, PSEG shall comply during operation on No. 6 fuel oil with an enforceable maximum full load emission rate limit (\\FLER")of 0.40 Ibs ofNOx perMMBtu of heat input, averaged on a 24- hourbasis.

3. The FLER referenced in**para~raph** C.2. may be modified only after the consent of tne Commissioner by written modlfication of this Trading Agreement and Order.



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### PSEG Power**Co~~ecticut** 

### LLC 5 

### Trading Agreement and OrderNo. 8243

5.**.~~** 

### ''J 4. Noncompliance with an established FLER shall subject PSEG to make restitution by matching the auantitrof emissions ("true UP") causedby the exceedance P us a 100%**prem~m.** 

### The true UP 

### in tons ofDERCs shall be equal-to·,the FLERexceedance in Lbs/MMBtu, multiplied by the total heat input during the oeriod of noncompliance divideaby 2000 lbs/ton. If the period ofnoncompliance is not known, the time periodrrom the completion of the last/previous Department witnessed emission test through the date the FLER compliance is achieved as**ap~roved** 

### by the Commissioner shall be used. However,**noth~ng** 

### in this Trading Agreement and Order shall affect the Commissioner's authority to institute any**~roceeding** 

### or take any other action to**r~quire add~tional**  

### upward adjustment, based on the**grav~ty** 

### ofany alleged**noncompl~ance** 

### or violation of law.
PSEG shall conduct NOx emission tests of the boiler at least once every two years commencing from the date of the applicable emission test for the boiler to be conducted in accordance with paragraph C.6. of this TradingAgreement and Order.

6. In accordance with the methodology 

### in Section 22a-174- 22(k) of the Regulations, PSEG shall conduct a NOx emission test of the boilerno later than one (1) year from issuance of this TradingAgreement and Order.

7. No later than"May 1, 2007, PSEG shall comply with the requirements of Section 22a-174-22{d)(1) ofthe Regulations. However, after full programreview of this and otherTradingAgreements and Orders and, if determined to be appropriate, the Commissionermay grant a written extension of this Trading Agreement and Order.

8. 

### Approvals. PSEG shall use best efforts to**submi~ ~o** **~he** 

### Commissioner all documents required by this Trading Agreement and Order in a complete and approvable form. If the Commissioner notifies PSEG that any document or other action is deficient, and does not approve it with conditions or modifications, it is deemed disapproved, and PSEG shall correct the deficiencies and resubmit it within the time specified by 

### the Commissioneror, ifno time is specified by the Commissioner, within 30 days of the Commissioner's notice of deficiencies. In approving any document or

/PSEG Power Connecticut LLC 6 Trading Agreement and OrderNo. 8243

other action under this Trading Agreement and Order, the Commissionermay approve the document or other action as submitted orperformed or with such**condition~** or modifications as the Commissionerdeems necessary to carry out the'purposes of this Trading Agreement and Order. Nothing 

### in this paragraph shall
excuse noncompliance or delay.

9. Definitions. As used in this Trading Agreement and Order, "Conunissioner" means the Corrunissioner of Environmental Protection or an agent of the Commissioner. "Ozone season" means the period from May 1 through September 30 in any given calendaryear. The date of "issuance" of this TradingAgreement and Order is the date the TradingAgreement and Order is deposited in the U.S. mail orpersonally delivered, whichever is earlier. 

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J 10.

11. 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 ofany notice by the Commissionerunder this TradingAgreement and Order, including but not limited to notice of approval or disapproval of any document or otheraction, 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 Ordermeans calendar day. Anydocument
or action which is required by this TradingAgreement and Order to be submitted orperformed by a date which falls on a Saturday, Sundayor a Connecticut or federal holiday shall be submitted orperformedby the next day which is not a Saturday, Sunday or Connecticut or federal holiday.

Certification of documents. &iYdocument, including but not limited to any notice, which is required to be submitted to the Commissionerunder this Trading Agreement and Order shall be signedby PSEG or, if PSEG is not an individual, by PSEG's chief executive officer or a duly authorized representative of such officer, as those terms are defined in Section 22a-PSEG Power Connec-ticut LLC 7 Trading Agreement and Order No. 8243



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### ......,:;- 12. 430-3(b)(2) of the Regulations, and by the individual(s) responsible for actuallypreparing such document, and PSEG or PSEG's chief executive officer and each**~uch** individual shall certify in writing as follows:, "! 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 ofmy**~~owledge** 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."
Noncompliance. This Trading Agreement and Order is a final order of the Commissioner with respect to the matters addressed herein, and is nonappealable and immediately enforceable. Failure to comply with this Trading Agreement and Ordermay subject PSEG to an injunction and penalties.

13. 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.

14. Notice of transfer; liability of PSEG and others. Until PSEG has fully complied with this Trading Agreement and Order, PSEG shall notify the Commissioner in writing no later than fifteen (IS) days after transferring all or anyportion 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. PSEG=s obligations under this Trading Agreement and Order shall not be affected by the passage of title to any property to any otherperson
or municipality.

"-.- 15.**Co~~issioner's** Dowers. Nothing in this Trading Agreement and Order shall affect the**Co~~issionerts**

### PSEG PowerConnecticut LLC 8 

### TradingAgreement andOrderNo. 8243

authority to institute anyproceeding ortake any other action to prevent orabateviolations of law, prevent or abate pollution, recover costs and natural
resource qamages, and to impose penalties forpast, present"or future violations oflaw. Ifat anytime the Commissionerdetermines that the actions takenby PSEGpursuant to this TradingAgreement andOrderhave successfullycorrected all violations, fully characterizedthe extentordegree ofanypollution,
or successfullyabatedorpreventedpollution, the Commissionermay institute anyproceeding to require PSEG to undertake further investigationorfurther action toprevent orabateviolations orpollution.

16. PSEG's obligations underlaw. Nothing in this TradingAgreement.andOrder shall relieve PSEG of otherobligations underapplicable federal, state and local law. 

# o 17. 

### No assurance byCommissioner. Noprovisionofthis TradingAgreement andOrder and no action or inaction by the Commissioner shall be construed to constitute
an assurance bythe Commissioner that the actions takenbyPSEGpursuant to this TradingAgreement and Orderwill result in compliance orprevent orabate pOllution.

18. Access to facility. Any representative ofthe Department ofEnvironmental Protection may enter the facility without priornotice for thepurposes of monitoring and**enfor~ing** 

### the actions requiredor allowed by

### this TradingAgreement andOrder.

19. No effect on rights ofotherpersons. This Trading Agreement and Orderneither creates nor affects any rights ofpersons ormunicipalities that are not parties to this TradingAgreement andOrder.

20. No Creationof.PropertyRights. This Trading Agreement and Order does not create any property rights with respect to these DERCs.

21. 

### Notice to Commissionerofchanges. (15) days ofthe date PSEGbecomes Within fifteen
aware ofa changePSEG·Power Connecticut LLC 9 Trading Agreement and Order No. 8243



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, 22.

23. in any information submitted to the Commissionerunder this Trading Agreement and Order, or that any such information was inaccurate ormisleading or that any relevant**~nformation** was omitted, PSEG shall submit 

### the correct oromitted information to the**Co~~issioner.** Notification of noncompliance. In the event that PSEG becomes aware that it did not or may not comply, or did not ormay not comply on time, with any requirement of this Trading Agreement and Order or of any document required hereunder, PSEG 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, ifunavoidable, is minimized to the greatest extent possible. Within five (5) days of the initial notice, PSEG 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 PSEG shall comply with any dates which may be approved in writing by the Commissioner. Notification by PSEG 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:

Ms. Wendy Jacobs Department of Environmental Protection Bureau ofAir Management Compliance and Field Operations Division Emissions and Credit Trading Section 79 Elm Street Hartford, Connecticut 06106

### PSEG PowerConnecticut LLC 10 

### Trading Agreement and OrderNo. 8243



### PSEG consents to the issuance of this TradingAgreement and Orderwithout furthernotice. The undersignedcertifies that he/she is fully authorized to enter into this TradingAgreement andOrder and to legallybind PSEG to the terms and conditions of the Trading**Ag~eement** 

### andOrder.

,



### Environmental Protectionon Issuedas a final consent order



### ('1 J Name:

Title:

Date: PowerConnecticut LLC

!-i. 

### t100re
Vic ?resldent

- Fossil Operations

Januar" 24, 2003

of the 

### Comm1s iI 

# &MW",'

CITY OF NEW HAV",N LAND**~AILED** 

### CERTIFIED MAIL, 

### CertifiedDocumentNo. RECORDS RETURN RECEIPT REQUESTED

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