SIP DESCRIPTION Middletown Power LLC Trading Agreement and Order

No. 8214A Modification 1

I. SIP - DESCRIPTIO' OF DERC CREATION AND/OR USE

SIP SUMMARY TABLE

Tradin2 A2reement and Order No. 8214A

Middletown Power LLC 1866 River Road Middletown CT 06457

Identifier IClient 7741 Town # 104 Premise # 241 Sequence # 2.

Contact Ms. Cynthia Karlic Tel: (860) 343-6962 Fax (860) 343-6969

Regional Manager

Pollutant and Regulatory Standard: NOx ISection 22a-174-22 of the Regulations of

Connecticut State A.'!:encies.

Nonattainment Area Classification Severe

Annual DERCs needed Estimated 150 non-ozone

Annual DERCs 2enerated Estimated 50 ozone (BDERCs)

Compliance Time Period Until A01;130, 2007.

Max. Emission Rate: CEM and full load emission rate (FLER) for Generation and

Use. (See Table I below):

Table 1

NOx Emission Rates and Allowable Limits

Unit Fuel Maximum Stack Test FLER Allowable Date of Next

PIR number Capacity (ppmvd) IbsIMMBru Rate Stack Stack

MMBruIhr IbsIMMBru Test Test Due

Boiler 3 #6 oil 2370 CEM CEM 0.43 NA NA

R· 104-0 100 #2 oil " " " 0.17 " "

Nat. gas " " " 0.43 " "

Non-olonec " " " 0.15 " "

n. SPECIAL REQUIREMENTS

a. This Trading Agreement and Order Modification supersedes Trading Agreement and

Order o. 8214A issued on April 30, 2003.

b. Calculations of credits used or generated shall be as specified in Trading Agreement and

Order No. 8214A.

c. Starting on October 1, 2003 and until April 30, 2007 during the non-alone season; For

purposes of generating DERCs from the boiler at the facility, Middletown Power LLC

shall use 0.15 IbslIvlMBtu of heat input when operating on No.6 fuel oil, No.2 fuel oil

and/or natural gas as the non-ozone season baseline emission rate for the boiler. Ten

(10) percent of ali DERCs (tons) generated by the boiler shall be retired by the facility

and pennanently removed from all calculations on a non-alone season basis to assure a

benefit to the envirorunent.

STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

STATE OF CONNECTIClIT

AND

MIDDLETOWN POWER LLC

¥l~ \~ UIf! ~\ \li~ Sty J ! 2D~4 I

~8iJ.y======i=fR ADING AGREEMENT AND

ORDER NO. 8214A

MODIFICATION NO. I

TRADING AGREEMENT AND ORDER MODIFICATION

In the matter of a Trading Agreement and Order between the Commissioner of Environmental

Protection ("Commissioner") and Middletown Power LLC ("MP").

WHEREAS. the Commissioner and MP. having agreed to the terms and conditions set forth

in Trading Agreement and Order No. 8214A issued on Apri130, 2003, do now, by mutual

agreement, modify said Trading Agreement and Order as follows:

1. Delete the date September 30,2004, and substitute therefor May 1, 2oo?, in

paragraphs A.9., C.l., C.2., C.3.a., C.3.a. footnote 3, C.3.b., C.3.c., C.3.d., C.3.e.,

C.3.f., and C.6.

2. Delete paragraph A.6. and substitute the following therefor:

Pursuant to Section 22a-174-22U) of the Regulations, :rv:tP intends both to acquire

and generate approved DERCs until May I, 2007 for boiler 3 at the facility.

Approved DERCs are defined for purposes of this Trading Agreement and Order

as those for which the Commissioner has provided written authority for use in

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

3. Delete paragraph B.l. and substitute the following therefor:

Comply with Section 22a-174-22(d)(I) of the Regulations through use of Budget

Discrete Emission Reduction Credit ("BDERC") and DERC trading.

4. Delete paragraph C.6.b. and substitute the following therefor:

During the non·ozone season:

During the period from October 1 through April 30, inclusive, each year until May

1,2007, the boiler shall, in addition to meeting the 24-hour emission limit in

Table 22-1 of Section 22a·174-22 of the Regulations, meet a non~ozone season

emission limit of 0.15 IblMMBtu. Prior to October I, 2003, October 1,2004,

October I, 2005, and October 1, 2006,:MP shall estimate and acquire the amount

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Middletown Power LLC 2 Trading Agreement and Order

No. 8214A Modification No. I

of non-Olone season DERCs or allowances needed to comply with Section 22a174-22(e)(3) of the Regulations as follows:

Estimated DERCs (tons) = [Estimated fuel use in MMBtu from October I through

April 30 x (lower of the estimated seasonal average NOx emission rate or the

proportioned 24-hour allowable emission limit in Ibl?v1J.\1Btu during October 1

through April 30 - (0.95 x 0.15 IblMMBtu))J'" 2000 pounds/ton.

No later than May 31 of 2004,2005,2006, and 2007, in addition to the DERCs

retired pursuant to paragraph C.6.a. of this Trading Agreement and Order, MP

shall calculate and permanently retire DERCs used in the preceding non-Olone

season as follows:

Actual DERCs (tons) =[Actual fuel use in MMBtu from October I through April

30 x (lower of the actual seasonal average NOx emission ratc or the proportioned

24-hour allowable emission limit in lbtM:MBtu during October 1 through April 30

- (0.95 x 0.15 IblMMBtu))J ... 2000 pounds/ton.

5. Delete paragraph C.lO. and substitute the following therefor:

Annual Emission Statement and Non-Ozone Season Emission Statement. No later

than March I for the previous calendar year and July 30 (for the October through

April time period only staning in 2003) of every year after issuance of this

Trading Agreement and Order, MP shall provide 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 of this Trading Agreement and Order until all such

DERCs have been used or are no longer in MP'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 and October through April time period. These reports shall be on a

form prescribed by the Commissioner and shall be in monthly increments, and by

ozone and non-ozone seasons.

6. Delete paragraph C.12. and substitute the following therefor:

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

100% ifDERCs are not in MP's possession for use prior [0 the first clay of each

month or applicable season. 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. MP shall pennanently retire the

quantity of emissions caused by the exceedance plus a 100% premium within
Middletown Power u..C 3 Trading Agreement and Order

No. 8214A Modification No.1

sixty (60) days of MiP's discovery of the DERC shortfall. MiP shall certify and

report any such DERC retirement to the Commissioner in accordance with

paragraph C.31 of this Trading Agreement and Order.

7. Delete paragraph C.14. and substitute the following therefor:

Extension. No later than May 1, 2007, with respect to the boiler, MiP shall comply

with the requirements of Sections 22a-174-22(d)(I) and 22a-174-22(d)(2)(A) of

the Regulations. There is no assurance that after full program review of this and

other Trading Agreements and Orders that the Commissioner will grant a written

extension of this Trading Agreement and Order.

8. Delete paragraph C.15. and substitute the following therefor:

Future Compliance Report. On or before September 1, 2006, 11P shall submit a

report in writing to the Commissioner, as directed in paragraph C.32. of this

Trading Agreement and Order, indicating how the facility shall comply with

section 22a-174-22 of the Regulations with respect to the boiler on and after May

1,2007.

All other tenns and conditions of Trading Agreement and Order no. 8214A issued by the

Commissioner acting under Chapter 446c, Sections 22a-6, 22a-171, 22a-174, 22a-176, and 22a177 of the Connecticut General Statutes shall remain in effect.
Middletown Power LLC 4 Trading Agreement and Order

No. 8214A Modification No.1

MP hereby consents to the entry of this modification to the Trading Agreement and Order

without further notice.

Middletown Power LLC

Signature:

Type Name:

Type Title:

Date:

==R®J!!na/ t:f\VI'ronmerrraJ rno~tr

q-/S-Olj

Entered as a modification of an Order of the Commissioner pf Environmental Protection

Arthur J. R que, Jr.)

Commissioner L,-/

numbered 8214A this --,/c:..::~=-d.- day of ~et;~~~

MAILED CERTIFIED MAll..,

RETURN RECEIPT REQUESTED

Certified Document No.