[Code of Federal Regulations]
[Title 40, Volume 14]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 40CFR73.20]
[Page 146-151]
TITLE 40--PROTECTION OF ENVIRONMENT
CHAPTER I--ENVIRONMENTAL PROTECTION AGENCY (CONTINUED)
PART 73--SULFUR DIOXIDE ALLOWANCE SYSTEM--Table of Contents
Subpart B--Allowance Allocations
Sec. 73.20 Phase II early reduction credits.
(a) Unit eligibility. Units listed in table 2 or 3 of Sec. 73.10 are
eligible for allowances under this section if:
(1) The unit is not a unit subject to emissions limitation
requirements of Phase I and is not a substitution unit (under 40 CFR
72.41) or a compensating unit (under 40 CFR 72.43);
(2) The unit is authorized by the Governor of the State in which the
unit is located;
(3) The unit is part of a utility system (which, for the purposes of
this section only, includes all generators operated by a single utility,
including generators that are not fossil fuel-fired) that has decreased
its total coal-
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fired generation, as a percentage of total system generation, by more
than twenty percent between January 1, 1980, and December 31, 1985; and
(4) The unit is part of a utility system that during calendar years
1985 through 1987 had a weighted capacity factor for all coal-fired
units in the system of less than fifty percent. The weighted capacity
factor is equal to:
[GRAPHIC] [TIFF OMITTED] TC01SE92.073
(b) Emissions reductions eligibility. Sulfur dioxide emissions
reductions eligible for allowance credits at units eligible under
paragraph (a) of this section must meet the following requirements:
(1) Be made no earlier than calendar year 1995 and no later than
calendar year 1999; and
(2) Be due to physical changes to the plant or are a result of a
change in the method of operating the plant including but not limited to
changing the type or quality of fuel being burned.
(c) Initial certification of eligibility. The designated
representative of a unit that seeks allowances under this section shall
apply for certification of unit eligibility prior to or accompanying a
request for allowances under paragraph (d) of this section. A completed
application for this certification shall be submitted according to
Sec. 73.13 and shall include the following:
(1) A letter from the Governor of the State in which the unit is
located authorizing the unit to make reductions in sulfur dioxide
emissions; and
(2) A report listing all units in the utility system, each fossil
fuel-fired unit's fuel consumption and fuel heat content for calendar
year 1980, and each generator's total electrical generation for calendar
years 1980 and 1985 (including all generators, whether fossil fuel-
fired, nuclear, hydroelectric or other).
(d) Request for allowances. (1) The designated representative of the
requesting unit shall submit the request for allowances according to the
procedures of Sec. 73.13 and shall include the following information:
(i) The calendar year for which credits for reductions are requested
and the actual SO2 emissions and fuel consumption in that
year;
(ii) A letter signed by the designated representative stating and
documenting the specific physical changes to the plant or changes in the
method of operating the plant (including but not limited to changing the
type or quality of fuel being burned) which resulted in the reduction of
emissions; and
(iii) A letter signed by the designated representative certifying
that all photocopies are exact copies.
(2) The designated representative shall submit each request for
allowances no later than March 1 of the calendar year following the year
in which the reductions were made.
(e) Allowance allocation. The Administrator will allocate allowances
to the eligible unit upon satisfactory submittal of information under
paragraphs (c) and (d) of this section in the amount calculated by the
following equations. Such allowances will be allocated to the unit's
2000 future year subaccount.
(1) ``Prior year'' means a single calendar year selected by the
eligible unit from 1995 to 1999 inclusive.
(2) One ``credit'' equals one ton of eligible SO2
emissions reductions.
(3) ``ERC units'' are units eligible for early reduction credits,
and ``non-ERC units'' are fossil fuel-fired units that are part of the
same operating system but are not eligible for early reduction credits.
(4) For any unit that did not operate during 1990, the unit's 1990
SO2 emission rate will be equal to the weighted average
emission rate of all of the other units at the same source that did
operate during 1990.
(5) Early reduction credits will be calculated at the unit level,
subject to
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the restrictions in paragraph (e)(6) of this section.
(6) The number of credits for eligible Phase II units will be
calculated as follows:
(i) Comparison of the prior year utilization of ERC units to the
1990 utilization, as a percentage of system utilization. If, as
calculated below, system-wide prior year utilization of ERC units
exceeds systems-wide 1990 utilization of ERC units on a percentage
basis, then paragraphs (e)(6)(ii) and (iii) of this section apply. If
not, the ERC units are eligible to receive early reduction credits as
calculated in paragraph (e)(6)(v)(A) of this section.
[GRAPHIC] [TIFF OMITTED] TC01SE92.074
(ii) Comparison of the prior year average emission rate of all ERC
units to the prior year average emission rate of all non-ERC units. If,
as calculated below, the system-wide average SO2 emission
rate of ERC units exceeds that of non-ERC units, then a unit's prior
year utilization will be restricted in accordance with paragraph
(e)(6)(iv) of this section. If not, then paragraph (iii) of this section
applies.
[GRAPHIC] [TIFF OMITTED] TC01SE92.075
[[Page 149]]
(iii) Comparison of the emission rate of the non-ERC units in the
prior year to the emission rate of the non-ERC units in 1990. If, as
calculated in paragraph (ii) of this section, the prior year system
average non-ERC SO2 emission rate increases above the 1990
system average non-ERC SO2 emission rate, as calculated
below, then a unit's prior year utilization will be restricted in
accordance with paragraph (e)(6)(iv) of this section. If not, the ERC
units are eligible to receive early reduction credits as calculated in
paragraph (e)(6)(v)(A) of this section.
[GRAPHIC] [TIFF OMITTED] TC01SE92.076
(iv) Calculation of the utilization limit for restricted units. The
limit on utilization for each unit eligible for early reduction credits
subject to paragraphs (e)(6) (ii) and (iii) of this section will be
calculated as follows:
[GRAPHIC] [TIFF OMITTED] TC01SE92.077
This result, expressed in million Btus, is the restricted
utilization of the ERC unit to be used in the calculation of early
reduction credits in paragraph (e)(6)(v)(B) of this section.
(v)(A) Calculation of the unit's early reduction credits where the
unit's prior year utilization is not restricted.
[GRAPHIC] [TIFF OMITTED] TC01SE92.078
(B) Calculation of the unit's early reduction credits where the
unit's prior year utilization is restricted.
[[Page 150]]
[GRAPHIC] [TIFF OMITTED] TC01SE92.079
(vi) The Administrator will allocate to the ERC unit allowances
equal to the lesser of the calculated number of credits in paragraphs
(e)(6)(v) (A) or (B) of this section and the following limitation:
[GRAPHIC] [TIFF OMITTED] TC01SE92.080
(f) Allowance loan program. (1) Eligibility. Units eligible for
Phase II early reduction credits under paragraph (a) of this section are
eligible for allowances under this paragraph (f) if the weighted average
emission rate (based on heat input) for the prior year for all of the
affected units in the unit's dispatch system was less than the system-
wide weighted average emission rate for 1990. The weighted average
emission rate shall be calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR24JN97.000
For the purposes of this calculation, the unit's dispatch system
will be the dispatch system as it existed as of November 15, 1990.
(2) Allowance Calculation. Allowances under this paragraph (f) shall
be calculated as follows:
[GRAPHIC] [TIFF OMITTED] TR24JN97.001
(3) Allowance Loan. (i) The number of allowances calculated under
paragraph (f)(2) of this section shall be allocated to the unit's year
2000 subaccount.
(ii) The number of allowances calculated under paragraph (f)(2) of
this section shall be deducted, contemporaneously with the allocation
under paragraph (f)(3)(i) of this section, from the unit's year 2015
subaccount.
(iii) Notwithstanding paragraph (f)(3)(ii) of this section, if the
number of allowances to be deducted exceeds the amount of allowances
allocated to the unit for the year 2015, allowances in the year 2015
subaccount equal to the amount of allowances allocated to the unit for
the year 2015 shall be deducted. In addition to the deduction from the
year 2015 subaccount, a sufficient amount of allowances in the year
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2016 subaccount (up to the amount of allowances allocated to the unit
for the year 2016) shall be deducted contemporaneously, such that the
sum of the allowances deducted from the subaccounts equals the number of
allowances required to be deducted under paragraph (f)(3)(ii) of this
section.
(iv) Notwithstanding paragraph (f)(3)(ii) of this section, the
procedure in paragraph (f)(3)(iii) shall be applied as follows to each
year after 2015 (year-by-year in numerical order) for which the number
of allowances to be deducted from that year's subaccount exceeds the
number allocated to the unit for that year: allowances equal to the
number allocated for that year shall be deducted from that year's
subaccount and the remainder (up to the amount allocated) necessary to
equal the number of allowances required to be deducted under paragraph
(f)(3)(ii) of this section shall be deducted from the next year's
subaccount.
(v) The owners and operators of the unit shall ensure that
sufficient allowances are available to make the full deductions required
under paragraphs (f)(3)(ii), (iii), and (iv) of this section. The
designated representative may specify the serial number of each
allowance to be deducted.
(4) ERC Units. Any unit to which allowances are allocated under
paragraph (f)(3)(i) of this section shall be considered an ERC unit for
purposes of applying the restrictions in paragraph (e)(6) of this
section.
[58 FR 15711, Mar. 23, 1993, as amended at 62 FR 34150, June 24, 1997]