New Source Set-Asides for "New" Budget EGUs

Section 217 Section 217.768  New Source Set-Asides for "New" Budget EGUs a)         "New" budget EGUs 1)         A "new" budget EGU is one that commenced commercial operation on or after January 1, 1995, and does not receive allowances pursuant to Section 217.764 of this Part. 2)         "New" budget EGUs must have an allowance for every ton of NO x emitted during the control period as provided in Section 217.756(d) of this Part. 3)         A "new" budget EGU may request from the Agency a number of allowances that is not more than the number of allowances for which it is eligible, as determined in subsection (e) of this Section. b)         The Agency shall apportion allowances from the new source set-aside as follows: 1)         For 2004, 2005, and 2006, to budget EGUs that commenced commercial operation on or after January 1, 1995; and 2)         For 2007 and thereafter, to budget EGUs that have not operated the full control period four years prior to the control period for which the allocation is being made. c)         The Agency will establish a new source set-aside for each control period.  Each new source set-aside will be allocated allowances equal to: 1)         5% of the EGU trading budget in 2004, 2005, and 2006, which is 1,535 allowances, subject to adjustment to reflect additions or deletions to the EGU trading budget; 2)         2% of the EGU of the trading budget in 2007 and thereafter, which is 614 allowances, subject to adjustment to reflect additions or deletions to the EGU trading budget. 3)         As of April 30 of the applicable year, beginning in 2009 and thereafter, if the number of allowances in the new source set-aside is greater than or equal to 3% of the total number of tons of NO x emissions in the trading budget apportioned to budget EGUs, which is 921 allowances, subject to adjustment to reflect additions or deletions to the EGU trading budget, pursuant to subsections (i) and (j) of this Section, the number of allowances above 3% will be allocated to budget EGUs receiving allowances pursuant to Section 217.764 of this Part.  These allowances shall be allocated on a pro-rata basis. d)         The account representative of a "new" budget EGU under subsection (a) of this Section may obtain allowances from the new source set-aside by submitting to the Agency a request, in writing or in a format specified by the Agency, to be allocated allowances for the current control period from the new source set-aside. The allocation request for each applicable control period must be submitted after the date on which the Agency issues a construction permit to the budget EGU and before March 1 of the control period for which the allocation is requested. e)         In an allocation request under subsection (d) of this Section, the account representative may request allowances for a control period in a number that does not exceed the projected heat input in mmbtu during the applicable control period multiplied by the more stringent of 0.15 lb/mmbtu or the permitted emission rate, but no more stringent than 0.055 lb/mmbtu.  The projected heat input shall be determined as set forth below, divided by 2000 lbs/ton: 1)         For "new" budget EGUs that have heat input from at least three control periods prior to the allocation year, the average of the budget EGU's two highest seasonal heat inputs from the control periods one to three years prior to the allocation year; 2)         For "new" budget EGUs that have heat input from only two control periods prior to the allocation year, the average of the budget EGU's seasonal heat inputs from the control periods one and two years prior to the allocation year; 3)         For "new" budget EGUs that have seasonal heat input from only the control period prior to the allocation year, the heat input from that control period; or 4)         For "new" budget EGUs that have commenced commercial operation but have not operated for at least 77 days of the control period prior to the allocation year, the budget EGU's maximum design heat input for the control period as designated in the construction permit. f)         Beginning in 2007, the Agency will review and allocate allowances pursuant to each allocation request, contingent upon receiving payment pursuant to subsection (k) of this Section, by April 15 of the applicable year, as follows: 1)         Upon receipt of the allocation request, the Agency will determine whether the request is consistent with the requirements of subsections (d) and (e) of this Section and will make any necessary adjustments to the request to ensure that the control period and the number of allowances requested are consistent with those requirements of subsections (d) and (e) of this Section. 2)         If the new source set-aside for the control period for which allowances are requested has a number of allowances greater than or equal to the total number requested by all "new" budget EGUs, the Agency will allocate the number of allowances requested to the "new" budget EGUs. 3)         If the new source set-aside for the control period for which allowances are requested has a number of allowances less than the total number of allowances requested by all "new" budget EGUs, the Agency will allocate the available allowances to the "new" budget EGUs on a pro-rata basis, based on the number of allowances requested. g)         For "new" budget EGUs that commenced commercial operation on or after January 1, 1995, but prior to January 1, 2004, the Agency will notify the account representative of the number of allowances that have been allocated to the "new" budget EGU by March 30 of the applicable year.  There will be no charge for allowances received under this subsection. h)         For "new" budget EGUs that commenced commercial operation on or after January 1, 2004, the Agency will notify by March 30 of the applicable year the account representative of the number of allowances that are eligible for purchase for the "new" budget EGU pursuant to the requirements of subsection (k) of this Section.  If the Agency does not receive payment by April 15 of the applicable year, the account representative will forfeit his/her eligibility to purchase the allowances offered.  The Agency will make available for purchase those forfeited allowances on a pro-rata basis to "new" budget EGUs that received allocations pursuant to subsection (f)(2) of this Section, up to the number of allowances requested by each account representative.  Such additional allocations are subject to the purchase requirements of subsection (k) of this Section, to the extent applicable. i)          For "new" budget EGUs that have commenced commercial operation but have operated for 76 or fewer days of the control period in 2003, USEPA will deduct allowances to account for the actual utilization of the EGU during the 2004 control period consistent with the provisions of 40 CFR 96.42(e).  Any allowances allocated by the Agency for such "new" budget EGUs that are not used for compliance during the 2004 control period shall be returned to the Agency's new source set-aside account. j)          For the years 2004, 2005, and 2006, any allowances that are not allocated pursuant to subsections (g), (h) and (i) of this Section will be allocated on a pro-rata basis to the budget EGUs listed in Appendix F of this Part.  There will be no charge for allowances received under this subsection. k)         Fees for new source set-aside allowances: 1)         "New" budget EGUs that commence commercial operation on or after January 1, 2004, that obtain allowances allocated from the new source set-aside shall pay for such allocations pursuant to Section 9.9 of the Act. 2)         The price of allowances from the new source set-aside shall be: A)        The average price at which NO x allowances are traded in the interstate NO x Trading Program for the preceding control period; and B)        For 2004 only, the price shall be the average price at which NO x allowances were traded in 2003 in the Ozone Transport Region. 3)         The fees collected by the Agency from the sale of allowances will be distributed pro-rata to budget EGUs receiving allowances pursuant to Section 217.764 of this Part on the basis of allocated allowances subject to Agency administrative costs assessed pursuant to Section 9.9 of the Act. l)          A "new" budget EGU will become an existing budget EGU and will receive allowances pursuant to the requirements of Section 217.764 of this Part, as follows: 1)         For a budget EGU that commences commercial operation between and including January 1, 1995, and April 30, 2003, the budget EGU will be allocated allowances in 2004 for the 2007 control period and will become an existing budget EGU on May 1, 2007. 2)         For a budget EGU that commences commercial operation after April 30, 2003, the budget EGU will become an existing budget EGU in the control period for which it receives an allocation pursuant to Section 217.764 of this Part.  It will be considered a "new" budget EGU and will receive its allowances from the new source set-aside in the intervening years from start-up until it receives allocations pursuant to Section 217.764 of this Part. BOARD NOTE:  Because of litigation involving the NO x SIP Call, Michigan v. EPA, No. 98-1497 2000 WL 180650 (D.C. Cir. March 3, 2000), the years defining the control periods may change. Should this occur, other dates in this Section will be considered to adjust as necessary.