STATE OF CONNECTICUT

DEPARTMENT OF E. VIRONMENTAL PROTECTION

In the matter of )

)

The State of Co~~ecticut and )

)

PSEG Power Connecticut LLC )

Trading Agreement

and Order No. 8243

Whereas, the Co~~issioner of Environmental Protection

("Commissioner H ) and PSEG Power Connecticut 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 of emission reduction 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:

::-} -' 1. PSEG is an exempt wholesale electric generating

company with its principal place of business 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 in New Haven, Co~~ecticut

("facility") .

2. At the facility, PSEG operates a Babcock and Wilcox

steam generator ("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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PSEG Power Connecticut LLC 2 Trading Agreement

and Order No. 8243

Ibs/MMBtu of heat input.

4. On and after May 31, 1995, Section 22a-174-22(e) of

the Regulations reauires that the boiler emit 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, and pursuant 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 Section A, 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

through April 30, 2007 or until 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) = [Estimated Fuel Us~ in MMBtu x

(0.40 lbs/MMBtu (0.95 x 0.25 lbs/MMBtu»J +

2000 pounds;

, . v

;

b. Document that sufficient approved DERCs are

available for the boiler no later than the

first of each calendar month to assure
PSEG Power Connecticu~ LLC 3 Trading Agreement

and Order No. 8243

compliance for, at a minimum, that calendar

month. At a minimum, DERCs required shall be

adjusted upwards by 100% if DERCs are not in

PSEG'rs possession prior 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 boiler as 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 than March 1, of each year this

Trading Agreement and Order is in effect,

include with its annual emissions report to

the Commissioner, the monthly rate of fuel

consumption for the boiler and DERCs used by

the boiler for the previous calendar year;

f. Retain records and supporting documentation as

described in this section for a minimum of 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 from May 1 through September 30 in

any calendar year. Generator certification of

this face shall be sufficient;

h. Provide the records specified above to the

Commissioner within 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 by
PSEG Power Connecticut LLC 4 Trading Agreement

and Order No. 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

NOx Allowance 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 remain valid for five (5) calendar years

from the year of the generation/allocation of

such DERCs/allowances. DERCs/allowances

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, 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.

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 of NOx per MMBtu of heat input, averaged on a 24-

hour basis.

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.

- .
PSEG Power Co~~ecticut LLC 5 Trading Agreement

and Order No. 8243

5.

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4. Noncompliance with an established FLER shall subject

PSEG to make restitution by matching the auantitr of

emissions ("true UP") caused by the exceedance P us a

100% prem~m. The true UP in tons of DERCs shall be

equal-to·,the FLER exceedance in Lbs/MMBtu, multiplied by the total heat input during the oeriod of

noncompliance dividea by 2000 lbs/ton. If the period of noncompliance is not known, the time period rrom

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 of any 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

Trading Agreement 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 boiler no later than one (1) year

from issuance of this Trading Agreement and Order.

7. No later than"May 1, 2007, PSEG shall comply with the

requirements of Section 22a-174-22{d) (1) 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.

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 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

/
PSEG Power Connecticut LLC 6 Trading Agreement

and Order No. 8243

other action under this Trading Agreement and Order,

the Commissioner may approve the document or other

action as submitted or performed or with such

condition~ or modifications as the Commissioner deems

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 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. C.

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 of any notice by the

Commissioner under this Trading Agreement and Order,

including but not limited to 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 earlier. 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

Connecticut or federal holiday.

Certification of documents. &iY 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 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

,...,.

,.,. J ......,:;-

12.

430-3(b) (2) of the Regulations, and by the

individual(s) responsible for actually preparing 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 of my ~~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 Order may 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 any portion 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 other person

or municipality.

"-.- 15. Co~~issioner's Dowers. Nothing in this Trading

Agreement and Order shall affect the Co~~issionerts
PSEG Power Connecticut LLC 8 Trading Agreement

and Order No. 8243

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 qamages, and to impose penalties for past,

present"or future violations of law. If at any time

the Commissioner determines that the actions taken by

PSEG 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

PSEG to undertake further investigation or further

action to prevent or abate violations or pollution.

16. PSEG's obligations under law. Nothing in this

Trading Agreement.and Order shall relieve PSEG of

other obligations under applicable federal, state and

local law.

o 17. No assurance by 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 PSEG pursuant to this Trading Agreement and

Order will result in compliance or prevent or abate

pOllution.

18. Access to facility. Any representative of the

Department of Environmental Protection may enter the

facility without prior notice for the purposes of

monitoring and enfor~ing the actions required or

allowed by this Trading Agreement and Order.

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

Agreement and Order neither creates nor affects any

rights of persons or municipalities that are not

parties to this Trading Agreement and Order.

20. No Creation of .Property Rights. This Trading

Agreement and Order does not create any property

rights with respect to these DERCs.

21. Notice to Commissioner of changes.

(15) days of the date PSEG becomes

Within fifteen

aware of a change
PSEG ·Power Connecticut LLC 9 Trading Agreement

and Order No. 8243

'-

,

22.

23.

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 ~nformation was omitted, PSEG shall submit

the correct or omitted 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 or may 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, if unavoidable, 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 of Air Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street

Hartford, Connecticut 06106
PSEG Power Connecticut LLC 10 Trading Agreement

and Order No. 8243

PSEG 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 PSEG to the terms and conditions

of the Trading Ag~eement and Order. ,

Environmental Protection on

Issued as a final consent order

('1

J

Name:

Title:

Date:

Power Connecticut LLC

!-i. t100re

Vic ?resldent - Fossil Operations

Januar" 24, 2003

of the Comm1s

iI

&MW",'

CITY OF NEW HAV",N LAND

~AILED CERTIFIED MAIL,

Certified Document No.

RECORDS

RETURN RECEIPT REQUESTED

10