Section 336.1822. CAIR NOX ozone season trading program; allowance allocations.

Rule 822. (1) The CAIR NOX ozone season trading program budget allocated by the department under subrule (3) of this rule for the CAIR NOX ozone season control periods to the EGUs, non-EGUs, and renewable energy sources shall annually equal the total number of tons of oxides of nitrogen emissions as indicated in the following manner:

(a)   The total CAIR NOX ozone season budget for the ozone season time period of 2010 to 2014 is 31,180 tons.  These allocations shall be distributed as follows:

(i)    The CAIR NOX ozone season budget available to existing and newly-affected EGUs.  The following applies:

(A)  For 2010 and 2011 ozone season control periods equals 28,321 tons.

(B)  For 2012 to 2014 ozone season control periods equals 28,021 tons.

(ii)    The CAIR NOX ozone season budget available to existing non-EGUs for the 2010 to 2014 ozone season control periods is 1,309 tons.

(iii)    The CAIR NOX ozone season budget available to new non-EGUs and EGUs. The following applies:

(A)  For 2010 and 2011 ozone season control periods is 700 tons.

(B)  For 2012 to 2014 ozone season control periods is 1,000 tons.

(iv)   The CAIR NOX ozone season budget available to renewable energy sources and projects in the 2010 to 2014 ozone season control periods is 200 tons.

(v)    The CAIR NOX ozone season budget available to all existing EGUs and non- EGUs that have submitted an acceptable demonstration of a hardship to the department, in the 2010 to 2014 ozone season control periods is 650 tons.

(b)   The total CAIR NOX ozone season budget for the ozone season time period of 2015 and thereafter is 26,351 tons. These allocations shall be distributed as follows:

(i)   The CAIR NOX ozone season budget available to existing EGUs in the 2015 and thereafter ozone season control periods is 22,792 tons.

(ii)    The CAIR NOX ozone season budget available to existing ozone season non- EGUs for the 2015 and thereafter ozone season control periods is 1,309 tons.

(iii)   The CAIR NOX ozone season budget available to new non-EGUs and EGUs in the 2015 and thereafter ozone season control periods is 1,400 tons.

(iv)   The CAIR NOX ozone season budget available to renewable energy sources and projects in the 2015 and thereafter ozone season control periods is 200 tons.

(v)   The CAIR NOX ozone season budget available to all existing EGUs and non- EGUs that have submitted an acceptable demonstration of hardship to the department, in the 2015 and thereafter ozone season control periods is 650 tons.

(2)    CAIR NOX allowances for the 2009 ozone season control period shall be the same allowances as were allocated under the NOX budget trading program. For newly- affected EGUs which were not subject to the federal NOX budget program, these units are eligible to apply for allowances from the CAIR NOX ozone season new source set- aside pool for the 2009 ozone season, pursuant to R 336.1823.

(3)   The department shall allocate CAIR NOX ozone season allowances to existing EGUs and non-EGU ozone season units for calendar years 2010 and thereafter according to the following schedule:

(a)   A 3-year allocation that is 3 years in advance of the 2010 ozone season and 4 years in advance of each subsequent ozone season control period. The 3-year allocation shall be as follows:

(i)    By 60 days after the effective date of this rule or April 30, 2007, whichever is earlier, the department shall submit to the U.S. environmental protection agency the CAIR NOX ozone season allowance allocations, under this subrule, for the ozone season control periods in 2010 and 2011.

(ii)    By October 31, 2008, the department shall submit to the U.S. Environmental protection agency the CAIR NOX ozone season allowance allocations, under this subrule, for the ozone season control periods in 2012, 2013, and 2014.

(iii)    By October 31, 2011, and thereafter each October 31 of the year that is 3 years after the last year of allocation submittal, the department shall submit to the U.S. environmental protection agency the CAIR NOX ozone season allowance allocations as indicated under this subrule.

(4)   For the CAIR NOX ozone season control periods under subrule (3) of this rule, the department shall allocate allowances to existing EGU and non-EGU ozone season units that commenced operation before January 1 of the most recent year of the 5-year period used to calculate heat input as follows:

(a)   The department shall allocate allowances to each existing EGU ozone season unit as follows:

(i)   During calendar years 2010 to 2014 as follows:

(A)   Existing EGUs with a permitted NOX emission rate equal to or less than 0.10 pounds per million Btu shall receive an initial unadjusted allocation of allowances determined by calculating the arithmetic average of the CAIR target emission rate multiplied by the appropriate fuel adjustment factor plus the unit's permitted NOX emission rate, which is then multiplied by the heat input as determined under subrule (6) of this rule, divided by 2,000 pounds per ton, and rounded to the nearest whole oxides of nitrogen allowance, as appropriate.

(B)      All other existing EGUs shall receive an initial unadjusted allocation of allowances in an amount equaling 0.15 pounds per million Btu multiplied by the appropriate fuel adjustment factor and multiplied by the heat input as determined under subrule (6) of this rule, divided by 2,000 pounds per ton, and rounded to the nearest whole oxides of nitrogen allowance, as appropriate.

(ii)   During calendar years 2015 and thereafter as follows:

(A)   Existing EGUs with a permitted NOX emission rate equal to or less than 0.10 pounds per million Btu shall receive an initial unadjusted allocation of allowances determined by calculating the arithmetic average of the CAIR target emission rate multiplied by the appropriate fuel adjustment factor plus the unit's permitted NOX emission rate, which is then multiplied by the heat input as determined under subrule (6) of this rule, divided by 2,000 pounds per ton, and rounded to the nearest whole oxides of nitrogen allowance, as appropriate.

(B)      All other existing EGUs shall receive an initial unadjusted allocation of allowances in an amount equaling 0.125 pounds per million Btu multiplied by the appropriate fuel adjustment factor and multiplied by the heat input as determined under subrule (6) of this rule, divided by 2,000 pounds per ton, and rounded to the nearest whole oxides of nitrogen allowance, as appropriate.

(b)   The department shall allocate allowances to each existing non-EGU ozone season unit for calendar years 2010 to 2015 and thereafter in an amount equaling 0.17 pounds per million Btu or the permitted NOX emission rate, as defined in R 336.1821, whichever is more stringent, multiplied by the heat input as determined under subrule (6) of this rule, divided by 2,000 pounds per ton, and rounded to the nearest whole oxides of nitrogen allowance, as appropriate.

(5)     If the initial total number of CAIR NOX ozone season budget allowances allocated to either all existing EGU or all existing non-EGU ozone season units for the years under subrule (4) of this rule does not equal the budgeted tons for such units as specified in subrule (1) of this rule, then the department shall adjust up or down the total number of CAIR NOX ozone season budget allowances allocated to each existing EGU

or non-EGU, as appropriate, so that the total number of CAIR NOX ozone season budget allowances allocated to the entire group of EGUs or non-EGUs equals the appropriate values in subrule (1) of this rule. The adjustment shall be made by multiplying each unit's unadjusted initial allocation by a correction factor determined by dividing the appropriate existing EGU or non-EGU total budget tons from subrule (1) of this rule by the sum of all existing EGU or non-EGU units' initial unadjusted allocations, and rounding to the nearest whole number, as appropriate.

(6)   The heat input, in million Btu's, used for calculating oxides of nitrogen allowance allocations for each subject unit under this rule shall be the unit's average of the 2 highest heat inputs for the ozone season control period in the 5 years immediately preceding the year in which the department is required to submit the oxide of nitrogen allocations. If the unit operated less than 2 full ozone seasons of the 5-year time period, then the unit's single highest ozone season heat input shall be used.

History: 2007 AACS.; 2009 AACS.