26.09.02.06

.06 Limited Industrial Exemption Set-aside Account.

A. The Department shall administer the Limited Industrial Exemption Set-aside Account in accordance with the procedures of this regulation.

B. A CO2 budget source is exempt from the requirements of Regulation .03E of this chapter if it meets the following criteria:

(1) Obtains from the Department a condition in its CO2 budget permit that limits the CO2 budget source's annual electrical output to the electric grid in the PJM region to not more than 10 percent of its annual gross generation;

(2) Submits a request for and receives the Department's approval of a climate action plan which requires reduction of CO2e emissions through reasonably available reduction practices not limited to the following:

(a) Energy efficiency;

(b) Fuel switching;

(c) Alternative transportation options; and

(d) Modification to manufacturing processes; and

(3) Receives written notice of the Department's approval of the exemption based on the criteria in §B(1) and (2) of this regulation.

C. Once the Department approves the CO2 budget source's exemption and notifies the CO2 budget source of its approval, the exemption shall become effective as follows:

(1) For a CO2 budget source that commenced operation before January 1, 2009, retroactively on the January 1 that began a control period; or

(2) For a CO2 budget source that commenced operation after January 1, 2009, the January 1 of the calendar year that the CO2 budget source commenced operation.

D. An exempt CO2 budget source shall:

(1) Comply with the CO2 budget permit condition issued pursuant to §B(1) of this regulation;

(2) Comply with the terms of the climate action plan approved pursuant to §B(2) of this regulation;

(3) Beginning the April 1 of the year after the Department approved the CO2 budget source's exemption, report annually to the Department the following:

(a) Its annual gross electricity generation; and

(b) The amount of electricity that it supplied to the electric grid in the PJM region during the calendar year;

(4) Report reductions achieved by the approved climate action plan; and

(5) Retain all reports required by this regulation at the CO2 budget source for a period of 10 years from the date the reports are created.

E. A CO2 budget source's exemption pursuant to §B of this regulation shall no longer apply if the CO2 budget source fails to comply with any of the requirements of §D of this regulation.

F. On the January 1 following the date that the Department granted an exemption to a CO2 budget source and on January 1 each year after that, the Department shall retire the number of CO2 allowances in the Limited Industrial Exemption Set-aside Account equal to the average number of CO2 tons emitted by the exempt CO2 budget source over the most recent 3 calendar years for which data are available. The Department shall retire CO2 allowances from the Limited Industrial Exemption Set-aside Account to the CO2 Allowance Retirement Account.

G. After the Department has retired CO2 allowances from the Limited Industrial Exemption Set-aside Account for the preceding calendar year, the Department shall supplement the remaining allowances in the account by transferring from the Consumer Energy Efficiency Account the number of allowances needed to restore the balance of the Limited Industrial Exemption Set-aside Account to the amount described in Regulation .03J(3)(a) of this chapter for that calendar year.