Section 336.1823. New EGUs, new non-EGUs, and newly-affected EGUs under CAIR NOX ozone season trading program; allowance allocations.

(1) The department shall establish a set-aside pool for each CAIR NOX ozone season control allocation year for new EGUs and non-EGUs. This set-aside pool shall be allocated on a yearly basis as follows:

(a)   For 2009, a total of 1,385 tons of CAIR NOX ozone season allowances, which have been carried over from the federal NOX budget program, for any new and newly- affected EGUs or new non-EGUs.

(b)    For years 2010 and 2011, a total of 700 tons of CAIR NOX ozone season allowances for any new EGUs or new non-EGUs.

(c)    For years 2012 to 2014 ozone season control periods, a total of 1,000 tons of CAIR NOX ozone season allowances for any new EGUs or new non-EGUs.

(d)  For years 2015 and thereafter, a total of 1,400 tons of CAIR NOX ozone season allowances for any new EGUs or new non-EGUs.

(2)    The CAIR authorized account representative of a newly-affected CAIR NOX ozone season EGU under this rule may submit to the department a request, in a format specified by the department, to receive CAIR NOX ozone season allowances for the 2009 CAIR NOX ozone season control period.   All of the following apply:

(a)    The oxides of nitrogen allowance allocation request shall be submitted before March 1 of the 2009 ozone season control period.

(b)    The CAIR authorized account representative of any newly-affected EGU may request 2009 CAIR NOX ozone season allowances, based on an amount equaling 0.15 pounds per million Btu multiplied by the unit's ozone season heat input, divided by 2,000 pounds per ton, and rounded to the nearest whole oxides of nitrogen allowance, as appropriate.

(c)   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 heat input shall be used.

(3)   The CAIR authorized account representative of a new CAIR NOX ozone season non-EGU under this rule may submit to the department a request, in a format specified by the department, to receive CAIR NOX ozone season allowances starting with the ozone season control period during which the CAIR NOX ozone season unit commenced or is projected to commence operation and ending with the control period preceding  the control period for which it shall receive an allocation under R 336.1822. Both of the following apply:

(a)    The CAIR NOX ozone season allowance allocation request shall be submitted before March 1 of the year of the first ozone control period for which the oxides of nitrogen allowance allocation is requested and after the date on which the department issues a permit to install for the non-EGU, if required, and each following year by March 1.

(b)   The CAIR authorized account representative of any new non-EGU may request CAIR NOX ozone season allowances, based on an amount equaling 0.17 pounds per million Btu or the permitted NOX emission rate, whichever is more stringent, multiplied by the nameplate design heat input rate for the unit, in million Btu's per hour, multiplied by the predicted hours of operation for the control period, divided by 2,000 pounds per ton and rounded to the nearest whole oxides of nitrogen allowance, as appropriate.

(4)   The CAIR authorized account representative of a new EGU CAIR NOX ozone season unit under this rule may submit to the department a written request, in a format specified by the department, to receive CAIR NOX ozone season allowances, starting with the ozone season control period during which the

CAIR NOX ozone season unit commenced or is projected to commence operation and ending with the control period preceding the control period for which it shall receive an allocation under R 336.1822. All of the following apply:

(a)       The CAIR NOX ozone season allowance allocation request shall be submitted before March 1 of the year of the first ozone control period for which the oxides of nitrogen allowance allocation is requested and after the date on which the department issues a permit to install for the EGU, if required, and each following year by March 1.

(b)      The allocation methodology used for the first ozone season for which each new EGU requests allowances shall be calculated using the following formula:

Allocation = 1.0lb NOx X

MWh

Size of unit in MW x hours of operation

2000 lb / ton

X 70%

Where:

Allocation =                        The unadjusted NOX allowance allocation, in tons.

1.0 lb NOx/MWh =            The factor for allocating NOX allowances based on gross electric

generation.

Size of the unit =                The nameplate capacity, as defined in the CAIR NOX program of the EGU in megawatts.

Hours of Operation =         Predicted hours of operation per control period. MWh =                                           Megawatt hours.

(c)      The allocation methodology used for each consecutive ozone season for which each new EGU requests allowances shall be calculated using the following formula:

Allocation = 1.0lb NOx

MWh

X  Actual Megawatt hours

2000 lb / ton

Where:

Allocation =                               The unadjusted NOX allowance allocation, in tons.

1.0 lb NOX/MWh =                    The factor for allocating NOX allowances based on gross

electric generation.

Actual megawatt hours =           The actual megawatt hours of electricity generated during the

control period immediately preceding the request.

MWh =                                      Megawatt hours.

(d)  When the new EGU has been placed in the existing pool, the calculation methods under R 336.1822 apply.

(5)   The department shall review and allocate oxides of nitrogen allowances pursuant to each allocation request on a pro rata basis as follows:

(a)      Upon receipt of the CAIR NOX unit's allowance allocation request, the department shall determine whether allowances are available and shall make necessary adjustments to the request to ensure that for the CAIR NOX ozone season control period, the number of allowances specified, are consistent with the requirements of subrule (1) of this rule.

(b)   If the allocation set-aside pool for the CAIR NOX ozone season control period for which CAIR NOX ozone season allowances are requested has an amount greater than or equal to the number requested, as adjusted under subdivision (a) of this subrule, then the department shall allocate the amount of the CAIR NOX ozone season allowances requested.

(c)    If the allocation set-aside pool for the CAIR NOX ozone season control period for which CAIR NOX ozone season allowances are requested has an amount of oxides of nitrogen allowances less than the number requested, as adjusted under subdivision (a) of this subrule, then the department shall proportionately reduce the number of CAIR NOX ozone season allowances allocated to each CAIR NOX ozone season unit so that the total number of CAIR NOX ozone season allowances allocated are equal to the amounts referenced in subrule (1)(a), (b), (c), or (d) of this rule.

(6)    CAIR NOX ozone season allowances not allocated or requested that remain in the new source set-aside pool for any allocation year shall be re-allocated to the existing EGU and non-EGU source pools, using the allocation methodologies as outlined in R 336.1822 and based on a ratio of the number of allowances remaining in the pool and the number of allowances in the EGU's and non-EGU's budget.

(7)    Not later than July 31 of the year for which the allowances are allocated, the department shall submit to the U.S. environmental protection agency the CAIR NOX ozone season allowance allocations, as determined under this rule.

History: 2007 AACS.; 2009 AACS.