STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the matter of

The State of Connecticut and

Norwalk Power LLC

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Trading Agreement

and Order No. 8184 A

Vlhereas, the Commissioner ofEnvironmental Protection ("Commissioner") and Norwalk Power

LLC ("NP") 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 credit

("DERC") trading to reduce nitrogen oxide ("NOx") emissions will achieve this result in a timely

and cost-effective manner:

A. At the request and with the agreement efNP, the Commissioner fInds the following:

.' 1. This Trading Agreement and Order 5upercedes Trading Agreement and Order 8184

issued on January 12,2000.

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2. NP is an exempt wholesale electric generating company with its principal place of

business in Sewickley, Pennsylvania. NP owns one (1) piece of fuel-burning

equipment ("peaking unit'') identified in Table 1 of this Trading Agreement and

Order. This peaking unit is a combustion turbine operated at Manresa Island

Avenue, South Norwalk, CT ("facility").

3. Emission testing perfonned on the dates indicated in Table 1, resulted in a NOx

emission rates as follows:

Table 1

Facility/ Fuel Heat Input Stack Test FLER Allowable Date of Next

Peaking Unit MMBtu!hr (ppmvd) lbslMMBtu Rate Stack Stack

lbsIMMBtu Test Test Due

Norwalk-10 #2 oil 256 94.2 0.52 0.29 6/22/01 I 6/21/06

i

(Printed on Recyclcd Papcr)

79 Elm Street • Hanford, CT 06106 - 5127

htiP ;lldcp.5:at c. CI.1l5

.... n EqUDI 0pporlunity Employu
Norwalk Power LLC 2 Trading Agreement

and Order No. 8184 A

4. NP exceeds the NOx allowable emission rate for the peaking unit specified in

Section 22a-174-22(e) of the Regulations as shown in Table 1 of this Trading

Agreement and Order.

5. Pursuant to the !?epartment ofEnvironmental Protection's "Credit Trading/or

Sources with Jrr~gular NOx Emissions" policy, with a revised date of February 27,

2001, anached'-hereto and incorporated by reference into this Trading Agreement and

Order as Exhibit I, the peaking units have peak daily Ox emissions greater than

three times the average daily emissions during the ozone season and are lherefore

considered sources with irregular NOx emissions.

6. Pursuant to Section 22a-174-22(j) of the Regulations, during the non-ozone season,

NP intends to acquire approved DERCs until May I, 2005 for the peaking units.

Pursuant to Section 22a-174-22G) of the Regulations, during the ozone season, NP

intends to acquire approved Budget discrete emission reduction credits ("BDERCs")

until May I, 2005 for the peaking units.

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

Order, and pursuant to Section 22a-174-22(j) of the Regulations, hereby allows NP to

comply with Section 22a-174-22 of the Regulations through use ofDERC and BDERC

trading.

C. With the agreement ofNP, the Commissioner, acting under Sections 22a-6, 22a-171, 22a174, 22a-176, and 22a-l77 of the Connecticut General Statutes, orders NP as follows:

I. Upon issuance ofthis'Trading Agreement and Order, at the facility, NP shall comply

with Section 22a-174-22 of the Regulations through DERC trading. Until NP

achieves permanent compliance with the emission standard in Section 22a-174-22(e)

ofthe regulation or by May I, 2005 whichever occurs earlier:

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

Order;

b. NP shall have in its possession sufficient approved DERCs to meet applicable

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

c. NP shall comply during operation ofthe peaking units with the FLERS shown in

Table I ofthis Trading Agreement and Order.
Norwalk Power LLC

2. DERC use

3 Trading Agreement

and Order No. 8184 A

a. Until May I, 2005, before the first day of each month, NP shall have in its possession

sufficient approved DERCs for the peaking un.its based on the following calculations.

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

for the peilk'ing units as follows. ,

i. At all times (mass calculation):

Estimated DERCs (in tons) = {{estimated fuel use in MMBru) x {(FLER). - (0.95 x

NOx allowable emission limit»} ~2000 pounds/ton

Where:

-Allowable emission limit= in Ibs/MJvffiru as shown in Table 1 ofthis

Trading Agreement and Order.

• FLER= full load emission rate in Ibs/lvfM:Bru as shown in Table 1 of this

Trading Agreement and Order.

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

ii. During the ozone season only (peak day calculation):

the maximum actual excess NOx emissions (in lbs) on any of the days

projected by the Conunissioner to be "moderate to unhealthful,"

"unhealthful," or "very unhealthful," divided by 3 and then divided by 13

(with the result in tons):

Estimated DERCs (in tons) = [(Maximum estimated excess NOx in Ibs) 3J

~[13 Ibs/day/ton]

b. No later than October 30 of 2003, and 2004 calculate and permanently retire the

DERCs used in the preceding ozone season as the greater of:

i. the actual total excess emissions for the ozone season in tons, as follows:
NOf\'ialk Power LLC 4 Trading Agreement

and Order No. 8184 A

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...,

c.

DERCs (in tons) {(acrual fuel use in MMBru) x «FLER) - (0.95 x NOx

allowable emission limit))}+ 2000 pounds/ton

OR

ii. the maxilflum actual excess NOx emissions (in lbs) on any ofthe days

project.ed!by the Commissioner to be "moderate to unhealthful",

''unhealthful'', or "very unhealthful", divided by 3 and then divided by 13

(with the result in tons):

Acrual DERCs (tons) used = [(Acrual excess NOx in Ibs) +3] + [13

Ibs/day/ton]

As described in Exhibit I of this Trading Agreement and Order. to the extent

that DERCs used to offset on peak day basis exceed the total mass excess

emissions. remaining DERCs may be used in the non-ozone season in the

same or subsequent years through May 1, 2005.

During the non-ozone season starting on October I, 2003:

In addition to meeting the 24-hour emission limit in Table 22-1 of Section 22a174-22 ofthe Regulations, meet a non-Olone season emission limit of 0.15

IblMMBru. Prior to October I, 2003 and October 1, 2004, NP shall estimate

and acquire sufficient DERCs andlor allowances needed to comply with Section

22a-174-22(e)(3) ofthe Regulations as follows:

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

through April 30 x (Estimated maximum emission

rate in IblMMBru during October I through April 30

- (0.95 x 0.15IblMMBru))] + 2000 pounds/ton.

d. No later than May 31 of2004. calculate and permanently retire DERCs used in

the preceding non-Olone season as follows:

Acrual DERCs (tons) [Actual fuel use in MMBru from October 1 through

April 30 x (average emission rate in IblMMBru during

October I through April 30 - (0.95 x 0.15 IblMMBru))]

+ 2000 pounds/ton.
Norwalk Power LLC 5 Trading Agreement

and Order. 0.8184 A

3. BDERCs shall only be used by other NOx budget program sources located in Connecticut.

BDERCs shall only be used to offset ozone season excess emissions, and shall not be used

for compliance during the non-Olone season. BDERCs generated during a given year shall

only be used through the following ozone season. BDERCs are subject to all DERC

requirements set [OM in this Trading Agreement and Order except for those requirements

pertaining solely to non-Olone season DERCS and as otherwise may be provided. " ' "

4. NP 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 number ofDERCs used during the ozone season and

non-ozone season (the remainder ofthe year); during the ozone season, the ozone

classification as forecasted by the Commissioner on the previous day; as well as

documentation attesting to the fact that approved DERCs used during the ozone season

were generated during the ozone season. Generator certification ofthis fact shall be .

sufficient. NP shall maintain and submit such records to the Commissioner in accordance

with Section 22a-174-22 ofthe Regulations.

,~) 5. Record Keeping. NP 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. NP shall provide the records specified above to the

Commissioner within thirty (30) days of receipt of a written request from the

Commissioner.

6. Annual Emission Statement. No later than March I of every year after issuance of this

Trading Agreement and Order, NP shall include with the Annual Emission Statement

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 oftbis Trading Agreement

and Order until all such DERCs have been used or are no longer in NP's possession. NP

shall also include actual NOx emissions from the peaking units and the amount of all

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

and/or purchased from other facilities), generated and/or approved for the previous

calendar year. These reports shall be on a form prescribed by the Commissioner and shall

be in monthly increments. Should NP choose to discontinue the generation ofDERCs, NP

will notify the Commissioner upon discontinuance.

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7. Allowance Use. Pursuant to Section 22a-174-22(d)(3) of the Regulations, NP may use

NOx allowances, pursuant to Section 22a-174-220) of the Regulations to achieve all or a

portion ofthe reductions required by Section 22a·174-22 oftbe Regulations. Any

allowance used for compliance with Section 22a-174-22(e) ofthe Regulations shall be

subject to all restrictions and/or requirements applicable to DERCs contained in this

Trading Agreement and Order. Each allowance used for compliance with Section 22a-
Norwalk Power LLC 6 Trading Agreement

and Order No. 8184 A

174-22 ofthe Regulations shall be equivalent to one discrete emission reduction credit and

shall be deducted from l\TP'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

accowlt to a State of Connecticut NOx allowance retirement account, account ID

CT0000000300 in the NOx Allowance Tracking System. I

8. DERC Doubling. At a minimum, DERCs required shall be adjusted upwards by 100% if

DERCs are not in NP's possession for use prior to the fIrst day of each month or

applicable season. However based on the gravity ofthe noncompliance, the

Commissioner may require additional upwards adjustment.

9. VintalZe Restriction. For the purposes of compliance with Section 22a-174-22 ofthe

Regulations, DERCs/aIJowances 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 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 ofthe Regulations up to and including December 31,

2004.

10. FLER Exceedance. Noncompliance with an established FLER shall subject NP to make

restitution by matching the quantity of emissions (''true up") caused by the exceedance

plus a 100% premium. 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 Ibs/ton. lfthe 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.

II. FLER Modification. FLERs set forth in Table I ofthis Trading Agreement and Order

may be modified only after the consent ofthe Commissioner by wrinen modification of

this Trading Agreement and Order.

12. Emissions Testing. Pursuant to Section 22a-174-22(1<) ofthe Regulations, NP shali

conduct NOx emission tests of the peaking units at least once every five years

commencing from the dates of the NOx emission tests for the peaking units as provided in

i Table 1 ofthis Trading Agreement and Order.
Norwalk Power LLC 7 Tfading Agreement

and Order No. 8184 A

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13. Extension. No later than May 1,2005, with respect to the peaking units, 'NP shall comply

with the requirements of Section 22a-174-22(d)(l) of the Regulations. However, after full

program review afthis and other Trading Agreements and Orders and, if determined to be

appropriate, the Commissioner may grant a written extension ofthis Trading Agreement

and Order.

I'

14. Future Compliance Report. On or before September 1, 2004, NP shall submit a report

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

respect to the Peaking units on and after May 1, 2007.

15. Full compliance. NP 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.

16. Approvals. NP shall use best efforts to submit to the Commissioner all documents

required by this Trading Agreement and Order in a complete and approvable fonn. Ifthe

Commissioner notifies NP that any document or other action is deficient, and does not

approve it with conditions or modifications, it is deemed disapproved, and NP 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 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 deems necessary

to carry out the purposes ofthis Trading Agreement and Order. Nothing in this paragraph

shall excuse noncompliance or delay.

17. Definitions. As used in this Trading Agreement and Order, "Conunissioner" means the

Commissioner ofEnvironmental 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" 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.

18. 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

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
Norwalk Power LLC 6 Trading Agreement

and Order No. 8184 A

•

Connecticut or federal holiday shall be submitted or performed by the next day which is

not a Sarurday, Sunday or Connecticut or federal holiday

19. Certification of documents. Any document, including but not limited to any notice, wruch

is required to be submined to the Commissioner under this Trading Agreement and Order

shall be signed by NP pr, ifNP is not an individual, by NP's chief executive officer or a

duly authorized representative ofsuch officer, as those terms are defined in Section 22a430-3(b)(2) of the Regulations, and by the individual(s) responsible for actually preparing

such document, and N"P or NP's chief executive officer and each such individual shall

, certify in writing as follows:

"1 have personally examined and am familiar with the information submined in this

document and all anachments thereto, and I certify, based on reasonable investigation,

including my inquiry ofthose individuals responsible for obtaining the information, that

the submined 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 offense under Section 53a-157b ofthe Connecticut General

Statutes and any other applicable law."

20. Noncompliance. 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 NP to

an injunction and penalties.

21. 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

ofthe Connecticut General Statutes and any other applicable law.

22. Notice oftransfer; liability ofNP and others. Until NP has fully complied with this

Trading Agreement and Order, NP 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. NP'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.

23. 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 oflaw, prevent or abate pollution, recover costs and narural resource

damages, and to impose penalties for past, present, or future violations oflaw. Ifat any

time the Commissioner determines that the actions taken by NP pursuant to this Trading

Agreement and Order have successfully corrected all violations, fully characterized the
Norwalk Power LLC 9 Trading Agreement

and Order No. 8184 A

extent or degree of any pollution, or successfully abated or prevented pollution, the

Commissioner may institute any proceeding to require iP to undenake funher

investigation or further action to prevent or abate violations or pollution.

24. J\TJ>'s obligations under law. Nothing in this Trading Agreement and Order shall relieve

iF of other obligatio~ under applicable federal, state and local law.

"

25. No assurance by Co'mmissioner. 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 NP pursuant to this Trading Agreement and

Order will result in compliance or prevent or abate pollution.

26. Access to facility. Any representative ofthe Department ofEnvironmental Protection may

enter any of these facilities without prior notice for the purposes ofmonitoring and

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

27. 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.

28. TO Creation ofProperrv Rights. This Trading Agreement and 'Order does not create any

property rights with respect to these DERCs.

29. Notice to Commissioner of changes. Within fifteen (15) days ofthe date NP becomes

aware of a change in any information submined to the Commissioner under this Trading

Agreement and Order, or tb;at any such information was inaccurate or misleading or that

any relevant information was omitted, NP shall submit the correct or omitted information

to the Commissioner.

30. Notification of noncompliance. In the event that NP becomes aware that it did not or may

not comply, or did not or may not comply on time, with any requirement ofthis Trading

Agreement and Order or of any document required hereunder, NP 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 oftbe initial notice, l\tp

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 wrinen approval ofthe

Commissioner, dates by which compliance will be achieved, and NP shall comply with

any dates which may be approved in writing by the Commissioner. Notification by NP

shall Dot 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.
NOIWalk Power LLC 10 Trading Agreement

and Order No. 8184 A

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31. Submission of documents. Any document required to be submitted to the Commissioner

under this Trading Agreement and Order shall, unless othenvise specified in this Trading

Agreement and Order or in writing by the Commissioner, be directed to;

Mr. Michael LaFreur .

Department of£nvlTonrnental ProtectIon

Bureau ofAir Management

Compliance and Field Operations Division

Emissions and Credit Trading Section

79 Elm Street

Hartford, CT 06106
Norwalk Power LLC 11 Trading Agreement

and Order No. 8184 A

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NP consents 10 the issuance of this Trading Agreement and Order without funher notice. The

undersigned certifies that he/she is fully authorized to enter into this Trading Agreement and

Order and to legally bind NP to the tenns and conditions of the Trading Agreement and Order.

Norwalk Power LLC

Signature:

NIDne: C~',~flC Title 'R~IDQI2-I ~'-<JC,-__

Date: L.f--q-D?>

Issued as a final order ofthe Corrunissioner of Envirorunent

~4~~""~;.L/-,,3,-,,2,---_. 2003.

CITY OF NORWALK LAND RECORDS

MAILED CERTIFIED MAlL, ..

RETURN RECEIPT REQUESTED

Certified Document No.