STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENT err.: , Ilf Ie'; U\Y t£

APR 1 7 2003

In the matter of

The State of Connecticut and

Middletown Power LLC."

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By

Trading Agreement

and Order No. 8227A

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

Middletown Power LLC ("!viP") 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 (DERC) trading to reduce nitrogen oxide ("NOx")

emissions will achieve this result in a timely and cost-effective manner.

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A. At the request and with the agreement ofW, the Commissioner finds the

following:

1. This Trading Agreement and Order supercedes Consent Order 8227 issued on

February 20,2002.

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

place ofbusiness in Sewickley, Pennsylvania. :MP purchased from The

COIU1ecticut Light and Power Company and now owns one fossil fuel-fired

electric generating station, Middletown Station, at 1866 River Road in

Middletown, ConneCticut ("facility").

3. At the facility, NRG Middletown Operations Inc. operates fuel burning

equipment consisting of an auxiliary boiler, Connecticut Pennit Number 104·

0002 (''boiler''), which is subject to Subsection 22a-174-22 of the Regulations

ofConnecticut State Agencies ("Regulations"). The boiler has the capacity to

operate on No.6 fuel oil.

4. Emission testing perfonned on the dates indicated in Table I resulted in NOx

emission rates set forth as follows:

TABLE 1

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Emission Fuel Heat Input Emission rates (IbsIMMBtu) Date of Next

Unit MMBruIhr Test rate FLER Allowable Emission Emission

Ra" Test Test Due

Auxiliary #6 oil 160 .399 0.44 0.25 5112/01

I

5112106

Boiler

(PriDlcll on Recyclcll Paper)

79 Elm Slrecl • Hanford, CT 06106·5127

bllp:l/dcp.SlIlc.el.U$

A" Eq"'QI 0ppOrl"'"i:y £mplo.~u
Middletown Power LLC 2 Trading Agreement

and Order 8227A

5. When operating the boiler, :MP exceeds the NOx allowable emission rate

specified in Section 22a.174·22(e) of the Regulations as shown in Table I of

this Trading Agreement a.1d Order.

6. Pursuant to Section 22a-174-22(j) oftbe Regulations, MJ' proposes, when

operating the boiler, to acquire and use DERC trading to comply with the

applicable emission limitations contained in Section 22a·174-22(e) of the

Regulations uiItil May 1, 2007 at the facility in accordance with this Trading

Agreement and Order.

7. W proposes to use Full Load Emission Rates ("FLERs") identified in Table 1

of this Trading Agreement and Order for the purposes of calculating the

DERCs required.

B. The Commissioner in accordance with the provisions ofthis Trading Agreement

and Order, pursuant to Section 22a-174-220) ofthe Regulations hereby allows

MP to comply with Section 22a-174-22(d) ofthe Regulations through use of

DERC trading to achieve the NOx emission reduction required by Section 22a·

174-22(d)(I) ofthe Regulations.

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c. With the agreement of:MP, the Commissioner, acting under Sections 22a-6, 22a·

171. 22a·174, 22a-176, and 22a-177 ofthe Connecticut General Statutes, orders

?v!P as follows:

1. Upon issuance of this Trading Agreement and Order, at the facility, :MP

shall comply with Section 22a-174-22 ofthe Regulations through DERC

trading. Until:MP achieves permanent compliance with the emission

standard in Section 22a-174-22(e) ofthe regulation or by April 30, 2007,

whichever occurs earlier:

a. MP shall use approved DERCs as required under this Trading

Agreement and Order;

b. ?v!P shall have in its possession sufficient approved DERCs to meet

applicable NOx emission limits as allowed under this Trading

Agreement and Order; and

c. MP shall comply during operation of the boiler with the FLERS shown

in Table I ofthis Trading Agreement and Order.

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Middletown Power LLC

2. DERC use

3 Trading Agreement

and Order 8227A

a. Until April 30, 2007. before the first day of each month, M:P shall have in

its possession, sufficient approved DERCs for the boiler based on the

following calculations.

Before the first day of each month, MP shall estimate DERCs required for

such month for the boiler as follows.

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Estimated DERCs (in taos) = «estimated fuel use in MMBtu)J x «FLER)

(0.95 x NOx allowable emission limit»)

+2000 pounds/ton

Where:

-Allowable emission limit= in Ibs/Jv11vfBtu as shown in Table

1 of this Trading Agreement and Order.

• FLER= full load emission rate in IbsIMMBtu as shown in Table I of

this Trading Agreement and Order.

• Discount (.95)= %5 design margin applied to the allowable limit.

b. No later than the twentieth day of each month, calculate DERCs used in the

preceding calendar month for the boiler as follows:

DERCs (in toos) = «(actual fuel use in MMBtu) x «(FLER) . (0.95 x NOx

allowable emission Iimit»)}+ 2000 pounds/ton

3. MP 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 nwnber of

DERCs used during the ozone season and non-ozone season (the remainder of

the 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 oithis fact shall be sufficient. :MP

shall maintain and submit such records to the Commissioner in accordance with

Section 22a-174-22 of the Regulations.
Middletown Power LLC , Trading Agreement

and Order 8227A

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4. Record Keeping. MP shall retain records and supporting documentation as

described in this Trading Agreement and Order for a minimum offive years,

commencing on the date such records were created. JvfP shall provide the

records specified above to the Commissioner within thirty (30) days ofreceipt

of a written request from the Commissioner.

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

of this Trading Agreement and Order, N1P shall include with the Annual

Emission Staterpent provided to the Commissioner, a record of each sale or

other transfer, and use of any and all of the DERCs approved within and

subsequent to issuance ofthis Trading Agreement and Order until all such

DERCs have been used or are no longer in M.P's possession. MP shall also

include actual NOx emissions from the boiler and the amount of all DERCs

used (including serial numbers (if assigned) and approved DERCs generated

andlor purchased from other facilities), generated andlor approved for the

previous calendar year. These reports shall be on a fonn prescribed by the

Commissioner and shall be in monthly increments. Should choose to .

discontinue the generation ofDERCs, MJ> will notify the Commissioner upon

discontinuance.

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

may use NOx allowances, pursuant to Section 22a-174-220) of the Regulations

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

the Regulations. Any allowance used for compliance with Section 22a-174-

22(e) ofthe 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 ofthe Regulations

shall be equivalent to one discrete emission reduction credit and shall be

deducted from MP's NOx Budget Program compliance account upon such use.

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

the Regulations when they are transferred from the facility's compliance

account or overdraft account to a State ofConnecticut NOx allowance

retirement account, account ID CTOOOOO00300 in the Ox Allowance Tracking

System.

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

100% ifDERCs are not in :MP's possession for use prior to the fIrst day of each

month or applicable season. However based on the gravity of the

noncompliance, the Commissioner may require additional upwards adjustment.

8. Vintaee 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 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
Middletown Power LLC 5 Trading Agreement

and Order 8227A

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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 MP

to make restitution by matching the quantity of emissions ("true up") caused by

the exceedance pIlUS a 100% premiwn. The true up in tons ofDERCs shall be

equal to the FLER exceedance in IbsIMMBtu, multiplied by the total heat input

during the period of noncompliance divided by 2000 Ibslton. Ifthe period of

noncompliance is not known, the time period from the completion ofthe

last/previous Department 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.

10. FLER Modification. FLERs set forth in Table I ofthis Trading A!'7eement and

Order may be modified only after the consent ofthe Commissioner by wrinen

modification ofthis Trading A!'7eement and Order.

11. Emissions Testing. Pursuant to Section 22a-174-22(k) of the Regulations, MP

shall conduct NOx emission tests of the boiler at least once every five years

commencing from the dates ofthe NOx emission tests for the boiler as provided

in Table 1 ofthis Trading Agreement and Order.

12. Extension. No later than April 30, 2007, with respect to the boiler, MP shall

comply with the requirements of Section 22a-174-22(d)(I) of the Regulations.

However, after full program review ofthis and other Trading Agreements and

Orders and, ifdetennined 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, 2006, MP shall submit a

repon indicating how the facility shall comply with section 22a-174-22 ofthe

Regulations with respect to the Boiler on and after May I, 2007.

14. Full compliance. MP 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. MP shall use best efforts to submit to the Commissioner all

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

approvable form. If the Commissioner notifies }..1P that any document or other

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MiddlelOwn Power LLC 6 Trading Agreement

and Order 8227A

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

deemed disapproved, and rvfP shall correct the deficiencies and resubmit it

within the time specified by the Commissioner or, ifno time is specified by the

Commissioner, within 30 days ofthe 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 perfonned or with such conditions or modifications as the

Commissioner deFms necessary to carry out the pwposes of this Trading

Agreement and-0rder. Nothing in this paragraph shall excuse noncompliance

or delay.

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

means the Commissioner of Environmental Protection or an agent ofthe

Commissioner. "Ozone season" means the period from May 1 through

September 30 in any given calendar year. The date of "issuance" ofthis 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.

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 Commissioqer. 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 perfonned by a date which falls on a Saturday, Sunday or a

Connecticut or federal holiday shall be submitted or perfonned by the next day

which is not a Saturday, Sunday or Connecticut or federal holiday.

18. Certification of documents. Any document, including but not limited to any

notice, which is required to be submined to the Commissioner under this Trading

Agreement and Order shall be signed by MP or, ifMP is not an individual, by an

individual who is an authorized representative ofthe MP, in accordance with

Section 22a-174-2a(a) of the Regulations of Connecticut State Agencies, and by

the individua1(s) responsible for actually preparing such document, and each

such individual shall certify in writing as foUows:

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

this document and all anachments thereto, and I cenify, 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 knowledge and belief. I understand that any false

statement made in the submitted information is punishable as a criminal

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Middletown Power LLC 7 Trading Agreement

and Order 8227A

offense under Section 53a-157b of the Connecticut General Statutes and any

other applicable law."

19. oncomDliance. This Trading Agreement and Order is a final order ofthe

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 !viP to an injunction and penalties.

20. False statements. 'Any false statement in any infonnation submitted pursuant to

this Trading Agreement and Order is punishable as a criminal offense under

Section 53a-157b ofthe Connecticut General Statutes and any other applicable

law.

21. Notice oftransfer; liability ofMl' and others. Until Ml' has fully complied with

this Trading Agreemen~ and Order. MY shall notify the Commissioner in writing

no later than fifteen (15) days after transferring all or any portion of any of the

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. ~'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 of law, prevent or abate pollution, recover

costs and natural resource damages, and to impose penalties for past, present, or

future violations oflaw. If at any time the Commissioner determines that the

actions taken by MJ> p~uant 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 to undertake further investigation or

further action to prevent or abate violations or pollution.

23. MP's obli2ations under law. Nothing in this Trading Agreement and Order shall

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

24. No assurance bv Commissioner. No provision of chis 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 :rvfP

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

prevent or abate pollution.

25. Access to facility. My representative ofthe Department ofEnvironmental

Protection may enter any of these facilities without prior notice for the purposes
Middletown Power LLC 8 Trading Agreement

and Order 8227..0.

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 nor affects any rights of persons or municipalities that are not panics to

this Trading Agreement and Order.

27. No Creation ofPropertv Rights. This Trading Agreement and Order does not

create any property rights with respect to these DERCs.

28. alice to Commissioner of changes. Within fifteen (15) days afthe date MP

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, M:P shall

submit the correct or omitted information to the Commissioner.

29. Notification ofnoncomnliance. In the event that:MY 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, !vIP 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, iflUlavoidable, is minimized to the

greatest extent possible. Within five (5) days of the initial notice, MJ> shall

submit in writing the date, time, and duration ofthe 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

!vIP shall comply with any dates which may be approved in writing by the

Commissioner. Notification by MJ> shall not excuse noncompliance or delay,

and the Commissioner's approval of any compliance dates proposed shall not

excuse noncompliance or delay lUlless specifically so stated by the

Commissioner in writing.

30. Submission of documents. Any docwnent required to be submitted to the

Commissioner lUlder 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

Deparnnent ofEnvironmental Protection

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street

Hartford, CT 06 I06
Middletown Power LLC 9 Trading Agreement

and Order 8227A

MP consents to the issuance ofthis Trading Agreement and Order without further notice.

The undersigned ceI1ifies that he/she is fully authorized to enter into this Trading

Agreement and Order and to legally bind MP to the tenns and conditions ofthe Trading

Agreement and Order.

Middletown Power LLC

e 1/_ A,,'

Signature: a.

Name '~L- K!uliC

Title R!§ IDncJ fY\tultlj""'er'---__

Date: 4- 01 1-0:::>

Issued as a fina~der ofthe Commissioner ofthe Department ofEnvironmental Protection on

'1;# .2003

ur J. Rocque, Jr.

ommlSSloner

CITY OF MIDDLETOWN LAND RECORDS

MAILED CERTIFIED MAlL,

RETURN RECEIPT REQUESTED

Certified Document No.