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Virginia’s Chesapeake BayNutrient Credit Trading
Program
Virginia’s Chesapeake BayNutrient Credit Trading
Program
Glenn HarveyPrince William County Service Authority
ExChange Implementation Committee Chair
Glenn HarveyPrince William County Service Authority
ExChange Implementation Committee Chair
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So, You Want to Trade ?
What are you offering? Do you own it? Why do I need it? Principles Fine Print How much? $$
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What are you offering?
Nutrient credits are -- ??~ Wastewater plants: Flow X Concentration~ Non-point: model defined by land use~ Non-point: removals expected for various
BMP types – midpoint %, range of %, safety factor
~ Time frame: annual, life of BMP~ Difference between credits and offsets~ Need firm legislative definitions
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Do you own it?
Who buys a car or house without Title?~ Must have legal clarity
Touchy subject with environmentalists.~ Can not be cast as ‘right to pollute’.
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Why do I need it?
Must have clear legislative / regulatory driver requiring entity to obtain credits or meet Waste Load Allocations.
Limited number of sources regulated now. MS4, CAFO and other non-point permits
not written around measured, delivered nutrient pounds.
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Guiding Principles
# 1 – Trading is voluntary
# 2 – Benefits for all
# 3 – Compliance first (“safety first”)
# 4 – Never forget the CWA “base case”
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Fine Print
Nutrient Credit Services Agreement Entered among Participants & Exchange Based directly on the Compliance Plan &
Credit Exchange Policy below
Compliance Plan One for each basin Covers all participants Developed together Approved by DEQ
Credit Exchange Policy Sets trading procedures Developed together Issued by Exch Board
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How Much?Cash Flow & The Bucket
Sources of Funds
Class A Buyer$4 P / $2 N
ExChange Buyer$ 6 P / $ 3 NOutside Buyer$ 8 P / $ 4 N
Class A Supply PoolA Pool / Total A Credits
Class B SupplyB Pool / Total B Credits
10%90 %
Class B credit price > Class A? “Excess” reverts to Class A fund
$$ $$ THE BUCKET
Disbursement of Funds
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Legislative Background
Virginia Legislature amended State Water Control Law (S1275, March 2005)
Mandated Watershed General Permit~ Wasteload allocation for significant dischargers~ Basin-wide compliance schedules (2011)~ Provisions for non-significants, new facilities~ Requirements for compliance plans
Authorized Nutrient Credit Exchange Authorized trading
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Trading Principles
Trading is VOLUNTARY~ Non-participants submit individual plans
Trading occurs within 5 river basins~ Inter-basin trades not allowed
Some intra-basin sales restrictions due toregional water quality
Basin # MGDPotomac/Shenandoah 43 405 Rappahannock 22 46 York 11 108 James 39 581 Eastern Shore 5 2
120 1,142
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Credit Price Schedule
Compliance Year
Class A Price
Nitrogen Phosphorus
1 2008 - -
2 2009 - -
3 2010 - -
4 2011 $2.00 $4.00
5 2012 $2.00 $4.00
6 2013 $2.15 $4.30
7 2014 $2.30 $4.60
8 2015 $2.45 $4.90• The prices for Credits generated during and applied to Compliance Years
2011 and 2012 (i.e., prices for next 5 years, 2008-2012) are firm.
• Prices shown for 2013 through 2015 are estimates.
• Price schedule to be updated annually to maintain a firm price for next 5-year period (i.e., in 2008, credit prices for 2013 will be set).
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Saves Ratepayer $$$
Lower taxes/rates, same pollutant control
Comparison of Annual Construction SpendingTrading Case vs. Non-Trading Case
0
50
100
150
200
250
300
350
400
450
500
550
2005 2010 2015 2020 2025 2030YEAR
Mil
lio
ns
of
Do
llar
s (i
n 2
006$
)
Annual Construction $, Non-Trading Case Annual Construction $, Trading Case
Virginia cost savings estimate through 2030: ~~$800 M on $2.2 B
program
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Questions?
Glenn Harvey~ [email protected]~ 703 393 2063
Aqualaw~ Chris Pomeroy~ [email protected]
ExChange Web Site~ http://www.theexchangeassociation.org~ [email protected]