Annual Reconciliation aka True Up

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Annual Reconciliationaka True Up

• June 10, 2004
• Mary Shellabarger, EPA

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NOx Allowance Tracking System(NATS)

• Maintains information on
• accounts
• the issuance of all allowances
• the holdings of allowances in accounts
• the deduction of allowances for compliance
  purposes
• the transfer of allowances between accounts

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Compliance Accounts

• Unit Accounts
• established for each affected unit via Account
  Certificate of Representation
• populated with initial allocation
• Overdraft accounts
• automatically established for each plant with two
  or more units

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Compliance Accounts, cont.

• Account Numbers
• 12 digits (but leading zeroes may be dropped)
• first six digits are ORIS/facility code
• second six digits are unit ID or OVERDF
• example 004567000CT1 004567000CT2 004567O
  VERDF

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General Accounts

• Available for any individual or organization
• Established by submitting form
• name and contact information for AAR
• signature
• list of all persons with ownership interest in
  the allowances held in the account
• Account number always starts 9999

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Allowances

• Identified by 12 digit serial number
• first four digits are the compliance use date
  (aka vintage)
• cannot use an allowance for compliance prior to
  its vintage year
• Reported in blocks
• example 200300123400 - 200300123499
• represents block of 100 allowances

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Compliance 2004

• Ozone season ends Sept. 30
• EDRs due Oct. 30
• Allowance transfer deadline Nov. 30
• eligible allowances 2003, 2004
• no flow control
• Compliance certification due Nov. 30

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Eligible Allowances

• Allowances used for compliance
• only allowances of a vintage for the current year
  or an earlier year may be used
• Allowance transfer freeze
• the date after which allowances that may be used
  for compliance cannot be transferred into or out
  of a unit or overdraft account

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Compliance Certification

• One form (may be submitted electronically) for
  each AAR to EPA
• ID for each affected unit
• common-stack apportionment
• compliance certification statement
• signature of AAR
• Option to identify serial numbers of allowances
  to be deducted

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Process at EPA

• Final allowance transfers received from sources
  and processed
• Emissions data received from sources and
  quality-assured
• Compliance certification information processed
• assure complete reports received from all sources

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Process, cont.

• serial number specification recorded
• common-stack apportionment recorded
• Emissions and allowances compared by NATS
• Deductions processed
• Flow control calculated

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New Unit Procedures

• Reminder for new units that receive an allocation
  from a new unit set-aside
• Check your states allocation rule for the
  end-of-ozone season take-back procedure
• Make sure that its understood by allowance
  managers before allowance transfer deadline

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New Units, cont.

• Allocation adjusted to account for actual
  utiltization
• allocation based on lowest permitted emissions
  rate times maximum design heat input
• units only allowed to keep allowances equivalent
  to lowest permitted emissions rate times actual
  utilization
• excess allowances deducted as part of compliance

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Deduction Process

• One unit at a time, in numerical order
• Fulfill obligations of first unit before moving
  on to next unit
• AAR-specified allowances first
• flow control, if applicable, is used if AAR
  specifies banked allowances
• other allowances second
• current year allowances, then banked
• flow control, if applicable, is used

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Deduction Process, cont.

• If a unit doesnt have enough allowances, go to
  overdraft account
• no serial number specification
• current year allowances first
• no specification of serial numbers
• banked allowances second
• no specification of serial numbers
• flow control, if applicable, is used

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Deduction Process, cont.

• If there still arent enough allowances, excess
  emission penalty deduction
• dont make us go there!
• Move on to next unit at the plant
• Same steps, as necessary

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Excess Emissions

• When there are not enough allowances to cover
  emissions in the unit account or overdraft
  account
• Allowances are deducted from following years
  allocation at 31 rate
• 3 allowances for each ton of excess
• Other enforcement action possible

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Future Reference Flow Control

• No flow control for 2004 compliance, possible for
  2005 compliance
• Compare number of banked allowances to regional
  budget
• If total number of banked allowances exceeds 10
  of regional budget, PFC is calculated for
  following year

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Remember in 2004

• When does your compliance season start?
• May 1 or May 31
• Will you have a new unit take back?
• Allowance transfer deadline Nov. 30
• Create a buffer!
• Flexibility of overdraft accounts
• Use the CAMD Business System!