Exhibil3

STATE OF CONNECTICUT

DEPARTMENT OF ENVIRONMENTAL PROTECTION

In the matter of )

)

The State of Connecticut and )

)

Middletown Power LLC )

Consent Order No. 8227

A. With the agreement of Middletown Power LLC ("Respondent"), the

Commissioner of Environmental Protection ("Commissioner") finds the . , . following:

1, Respondent is an exempt wholesale electric generating

company with its principal place of business in

Sewickley, Pennsylvania. On December 15, 1999

Respondent purchased from The Connecticut Light and

Power Company and now owns one fossil fuel-fired

electric generating station, Middletown Station, at

1866 River Road in Middletown, Connecticut

(" facility") .

2. At the facility, NRG Middletown Operations Inc'.

operates an auxiliary boiler, Co~~ecticut Permit Number

104-0002, a 160 million British thermal units per hour

("MMBtu/hr") auxiliary steam boiler ("auxiliary

boiler' )'. The auxiliary boiler operates on residual

fuel oil. An emission test measures nitrogen oxide

("NOx") emissions from the auxiliary boiler.

3. On and after May 31, 1995, the Regulations of

Connecticut State Agencies ("Regulations") require that

the auxiliary boiler emit NOx at a rate no greater than

0.25 pounds per million British thermal units

("lbs/MMBtu") of heat input when operating on residual

fuel oil.

4. On October 10, 1995 the Commissioner issued Trading

Agreem~nt and Order #8106 to The Connecticut Light and

Power Company, which previously owned the facility, to

offset the excess NOx emissions from the auxiliary

boiler until May 31, 1996.

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(Printed on Recycled Paper)

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Art Equal OpportulIiry Employu

Date:
Middletown Power LLC Consent Order No.8227

5. On June 14, 1996, The Connecticut Light and Power

Company performed a NOx emissions stack test on the

auxiliary boiler and based upon Department of

Environmental Protection ("Department") approved stack

test data, the NOx emission rate for the auxiliary

boiler was 0.25 Ibs/MMBtu of heat input when operating

on residual fuel oil.

6. On June 12, 2001, Respondent performed a NOx stack test

and based upon Department approved stack test data, the

NOx emission rate for the auxiliary boiler was 0.399

Ibs/MMBtu of heat input when operating on residual fuel

oil. Respondent notified the Department of the stack

test results and requested a trading order on or about

July 17, 2001.

7. By virtue of the above, Respondent violated Section

22a-174-22(e) of the Regulations.

8. The Department of Environmental Protection issued

notice of violation #14726 dated July 20, 2001 to

Respondent alleging the violation described in

paragraphs A.6 and A.7" of this Consent Order.

9. Respondent proposes to use approved discrete emission

reduction credits ("DERCs") to offset excess NOx

emissions from the auxiliary boiler, until Respondent

complies with the emission limitation in Section 22a174-22{e) of the Regulations.

10. Pursuant to Section 22a-174-22(j) of the Regulations,

Respondent intends to acquire approved DERCs until May

1, 2003 at the facility. Approved DERCs are defined

for purposes of this Consent Order as those for which

the Commissioner has provided written authorization for

use in compliance with Section 22a-174-22 of the

Regulations. Respondent will acquire approved DERCs

monthly on an as-needed basis, as determined by actual

NOx emissions in the event that the 24-hour average of

actual NOx emissions exceeds th~ NOx emission

limitations of Section 22a-174-22(e) of the

Regulations.

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Middletown Power LLC Consent Order No.8227

11. By agreeing to issuance of this Consent Order, Respondent

makes no admission of fact or law with respect to matters

addressed herein other than the facts asserted in

paragraphs A.l., A.2. and A.6. of this Consent Order.

B. The Commissioner, in accordance with the provisions of this

Consent .order, pursuant to Section 22a-l74-22 (d) (3) of the

Regulations, hereby allows Respondent to comply with Section 22a174-22 (d) (1) of the Regulations through use of DERC trading.

C. With the agreement o~ Respondent, the Commissioner, acting under

Sections 22a-6, 22a-171, 22a-174, 22a-176, 22a-177 and 22a-178 of

the Connecticut General Statutes, orders Respondent as follows:

1. On or before thirty (30) days after issuance of this

Consent Order, Respondent shall permanently retire 48 tons

of approved NOx DERCs (15 tons of ozone season NOx DERCS

and 33 tons of non-ozone season NOx DERCs) to offset excess

NOx emissions from the auxiliary boiler from the period of

December 16, 1999 through November 3D, 2001.

2. DERC Use. Approved DERCs shall be acquired for compliance

with the emission standards in Section 22a-174-22 of the

Regulations for the period beginning December 1, 2001, and

continuing until Respondent achieves permanent compliance

for the auxiliary boiler with the emission standards in

Section 22a-174-22(e} of the Regulations or until May 1,

2003, whichever occurs first. Respondent shall acquire

approved DERCs, and document and record the amounts of NOx

emissions and DERCs used by serial number (if assigned) by

the auxiliary boiler each day, and shall maintain and

provide such records in accordance wich the following and

Section 22a-174-4 of the Regulations, until May 1, 2003:

a. Before the first day of each month, beginning the first

full month after the issuance of this Consent Order,

Respondent shall calculate projected worst case DERCs

required for .that calendar month as follows:

DERCS (tons)estimated = {[Full Load Emission Rate

(" FLER") in lbs/MMBtu - ((0. 95) x (the limit in Section

22a-174-22(e) of che Regulations or proportioned

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Middletown Power LLC Consent Order No. 8227

emission rate calculated pursuant to Section 22a174-22 (f) (2) (A) of the Regulations in lbs/MMBtu) I)

x (estimated fuel use in MMBtu)} + 2000 pounds.

b. Respondent shall acquire sufficient approved DERCs

no later ,than the first day of each month to assure

compliance with the emission standards in Section

22a-174-22 of the Regulations for, at a minimum,

that calendar month. Excess DERCs from previous

months can be applied to subsequent months. At a

minimum, DERCs required shall be adjusted upwards

by 100% if DERCs are not in Respondent's possession

prior to the first day of each month.

c. No later than the twentieth day of each month,

beginning the first full month after the issuance

of this Consent Order Respondent shall calculate

DERCs used in the preceding calendar month, as

follows:

DERCs (tons) actual = {[ (?LER in lbs/MMBtu) -

((0.95) x (limit in Section 22a-174-22(e) of

the Regulations or proportioned emission rate

calculated pursuant to Section 22a-174-

22 (f) (2) (A) .of the Regulations in lbs/MMBtu» J

x (actual fuel use in MMBtu)} + 2000 pounds.

d. Respondent shall maintain documentation to attest

to the fact that DERCs used during the ozone season

were generated during the ozone season. Generator

certification of this fact shall be sufficient.

e. After full program review, and if the Commissioner

deems it appropriate, the Commissioner may allow

the survival and use of approved DERCs beyond April

30, 2003.

f. On or before the twentieth day of the month

following the first full month after the issuance

of this Consent Order, Respondent shall permanently

retire approved NOx DERCs, calculated in accordance

with the formula in paragraph C.2.c. of this

Consent Order, to offset the excess NOx emissions

from the auxiliary boiler from the period beginning

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Middletown Power LLC Consent Order No. 8227

December 1, 2001 through the first full month after

issuance of this Consent Order.

g. Respondent shall comply during the operation of the

auxiliary boiler with a FLER of .44 lbs/MMBtu heat

input·, averaged on a 24-h6ur basis, until

Respondent achieves permanent compliance for the

auxiliary boiler with the emission standards in

Section 22a-174-22(e) of the Regulations or until

May 1, 2003, whichever occurs first.

3. In accordance with the provisions of Section 22a-174-22(k) of

the Regulations, Respondent shall conduct a NOx emission test of

the auxiliary boiler no later than June 30th of each calendar

year, following the issuance of this Consent Order, and

continuing until the Commissioner's administrative enforcement

representative approves results of three' consecutive annual NOx

emission tests for the auxiliary boiler, each of which

demonstrate compliance with the allowable emission rate in

Section 22a-174-22(e) of the Regulations.

4. Subsequent to Department approval of three consecutive annual

NOx emission tests for the auxiliary boiler demonstrating

compliance with the allowable emission rate in Section 22a-174-

22(e) of the Regulations, the Respondent shall conduct, in

accordance with the provisions of Section 22a-174-22(k) of the

Regulations, NOx emission tests of. the auxiliary boiler at least

once every five years commencing from the date of the last NOx

emission test of the three consecutive annual NOx emission tests

that demonstrated compliance with the allowable emission rate in

Section 22a-174-22(e) of the Regulations.

5. The FLER as set forth in paragraph C.2.g.of this Consent Order

may be modified only after the consent of the Commissioner by

written modification of this Consent Order.

6. Noncompliance with an established FLER shall subject Respondent

to make restitution by matching the quantity of emissions (~true

up") caused by the exceedance plus a 100% premium. The true up

in tons of DERCs shall be equal to the FLER exceedance in

Lbs/MMB~u, multiplied by the total heat input during the period

of noncompliance divided by 2000 Ibs/ton. If the period of

noncompliance is not known, the time period from the completion

of the last/previous Department witnessed stack test through the

date the FLER compliance is achieved as approved by the

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Middletown Power LLC Consent Order No_ 8227

Commissioner shall be used. However, nothing in this Consent

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.

7. Upon issuance of this Consent Order Respondent shall maintain

records for the auxiliary boiler showing daily NOx mass

emissions,' and actual NOx emission rates (24-hour average).

8. No later than March 1 of every year after issuance of this

Consent Order, Respondent shall include with the Annual Emission

Statement provided to the Commissioner, actual NOx emissions

from the auxiliary boiler, and the amount of all DERCs used

(including serial numbers (if assigned) and approved DERCs

purchased from other facilities) for the previous calendar year.

These reports shall be on a form prescribed by the

Commissioner. This reporting shall be consistent with the

records produced in accordance with paragraph C.2. of this

Consent Order. This reporting may cease if a central registry

is approved by the Commissioner.

9. Respondent shall retain records and supporting documentation

as described in this Consent Order for a minimum of five years,

commencing on the date such records were created. Respondent

shall provide the records specified above to the Commissioner

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

Commissioner.

10. Full compliance. Respondent shall not be considered in full

compliance with this consent order until all actions required by

this consent order have been completed as approved and to the

Commissioner's satisfaction.

11. Civil penalty. On or before fourteen (14) days after

issuance of this Consent Order, Respondent shall pay a penalty

of $12,480 as the total civil penalty to be sought by the

Commissioner for those, and only those, violation(s) described

in paragraphs A.6 and A.7. of this Consent Order.

12. Payment of penalties. Payment of penalties under this Consent

Order shall be mailed or personally delivered to Dennise

Goulbourne, Bureau of Air Management, Department of

Environmental Protection, 79 Elm Street, Hartford, CT 06106-

5127, and shall be by certified or bank check payable to the

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Middletown Power LLC Consent Order No. 8227

Connecticut Department of Environmental Protection. The check

shall state on its face, aBureau of Air Management, civil

penalty, Consent Order #8227." .

13. Approvals. Respondent shall use best efforts to submit to

the Commissioner all documents required by this Consent Order in

a complete and approvable form. If the Commissioner notifies

Respondent that any document or other action is deficient, and

does not approve it with conditions or modifications, it is

deemed disapproved, and Respondent 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 other action under this Consent Order,

the Commissioner may approve the document or other action as

submitted or performed or with such conditions or modifications

as the Commissioner deems necessary to carry out the purposes of

this Consent Order. Nothing in this paragraph shall excuse

noncompliance or delay.

14. Definitions. As used in this Consent Order,"Approved DERCs"

are those for which the Commissioner has provided written

authorization for use in compliance with Section 22a-174-22 of

the Regulations; "Comrhissioner" means the Commissioner or a

representative of the Commissioner; "Ozone season II means the

period from May 1 through September 30 in any given calendar

year. The date of "issuance" of this Consent Order is the date

the Consent Order is deposited in the U.S. mail or personally

delivered, whichever is earlier.

15. Dates. The date of submission to the Commissioner of any

document required by this Consent Order shall be the date such

document is received by the Commissioner. The date of any

notice by the Commissioner under this Consent 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 Consent

Order, the word "day" as used in this Consent Order means

calendar day. Any document or action which is required by this

Consent 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.

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Middletown Power LLC Consent Order No. 8227

16. Certification of documents. Any document, including but not

limited to any notice, which is required to be submitted to

the Commissioner under this Consent Order shall be signed by

Respondent or, if Respondent is not an individual, by

Respondent's chief executive officer or a duly authorized

representative of such officer, as those terms are defined in

§22a-430-3(b) (2) of the Regulations of Connecticut State

Agencies, and by the indiyidual(s) responsible for actually

preparing such document, and Respondent or Respondent's chief

executive officer and each such individual shall certify in

writing as follows: III 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 ~ndividuals

responsible for obtaining the information, that the submitted

information is true, accurate and complete to the best of my

knowledge and belief. I understand that any false statement

made in the submitted information is punishable as a criminal

offense under §53a-157b of the Connecticut General Statutes

and any other applicable law. II

17. Noncompliance. This Consent Order is a final order of the

Commissioner with respect to the matters addressed herein,

and is nonappealable and immediately enforceabie. Failure to

comply with this Consent Order may subject Respondent to an

injunction and penalties.

18. False statements: Any false statement in any information

submitted pursuant to this Consent Order is punishable as a

criminal offense under §53a-157b of the Connecticut General

Statutes and any other applicable law.

19. Notice of transfer; liability of Respondent. Until

Respondent has fully complied with this Consent Order,

Respondent shall notify the Commissioner in writing no later

than 15 days after transferring all or any portion of the

facility, the operations, the site or the business which is

the subject of this Consent Order or after obtaining a new

mailing or location add~ess. Respondent's obligations under

this Consent Order shall not be affected by the passage of

title to any property to any other person or municipality.

20. Commissioner's powers. Nothing in this Consent Order shall

affect the Commissioner'S authority to institute any

proceeding or take any other action to prevent or abate

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Middletown Power LLC Consent Order No. 8227

violations of law, prevent or abate pollution, recover costs

and natural resource damages, a~d to impose penalties for

past, pres~nt, or future violations of law. If at any time

the Commissioner determines that the actions taken by

Respondent pursuant to this Consent Order have not

successfully corrected all violations, fully characterize~

the extent or degree of any pollution, or successfully abated

or prevented pollution, the Commissioner may institute any

proceeding to require Respondent to undertake further

investigation or further action to prevent or abate

violations or pollution.

21. Respondent's obligations under law. Nothing in this Consent

Order shall relieve Respondent of other obligations under

applicable federal, state and local law.

22. No assurance by Commissioner. No provision of this Consent

Order and no action or inaction by the COmmissioner shall be

construed to constitute an assurance by the Commissioner that

the actions taken by Respondent pursuant to this Consent

Order will result in compliance or prevent or abate

pollution.

23. Access to facility. Any representative of the Department of

Environmental Protection may enter the facility without prior

notice for the purposes of monitoring and enforcing the

actions required or allowed by this Consent Order.

24. No effect on rights of other persons.

neither creates nor affects any rights

municipalities that are not parties to

This Consent Order

of persons or

this Consent Order.

25. No Creation of Property Rights.

create any property rights with

This Consent Order does

respect to these DERCs.

not

26. Notice to Commissioner of changes. Within 15 days of the

date Respondent becomes aware of a change in any information

submitted to the Commissioner under this Consent Order, or

that any such information was inaccurate or misleading or

that any relevant information was omitted, Respondent shall

submit the correct or omitted information to the

Commissioner.

27. Notification of noncompliance. In the event that Respondent

becomes aware that it did not or may not comply, or did not

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Middletown Power LLC Consent Order No. 8227

or may not comply on time, with any requirement of this

Consent Order or of any document required hereunder,

Responde~t 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, Respondent 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 Respondent shall comply with

any dates whicn may be approved in writing by the

Commissioner. Notification by Respondent shall not eXCUSe

noncompliance or delay, and the Commissionerrs approval of

any complianc~ dates proposed shall not excuse noncompliance

or delay unless specifically so stated by the Commissioner in

writing.

28. Submission of documents. Any document required to be

submitted to the Commissioner under this Consent Order shall,

unless otherwise specified in this Consent Order or in

writing by the Commissioner, be directed to:

Elizabeth McAuliffe

Department of Environmental ?rotection

Bureau o£ Air Management

Compliance and Field Operations Division

79 Elm Street

Hartford, Connecticut 06106-5127

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Middletown Power LLC Consent Order No. 8227

Respondent consents to the issuance of this Consent Order without

further notice. The undersigned certifies ~hat he/she is fully

authorized to enter into this Consent Order and to legally bind

Respondent to the terms and conditions of the Consent Order.

Signature:

Type Name:

Type Title:

Middletown Power LLC

~~ \:,~~

Date:

Issued as a final order of the

Environmental Protection on

Town of Middletown

LAND RECORDS

MAILED CERTIFIED MAIL, RETURN RECEIPT REQUESTED

Certified Document No.

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