1. Market Trading Forum Update Ira Domsky and Colleen Delaney, Co-chairs

2. Current Issues Annex Approval Work for 308/309 Decision Additional materials needed for 309 SIPs

3. May 21-22 Workshop in Salt Lake Roll out of MTF material to support this decision –Greater Reasonable Progress than BART for other Class I areas –Critical Mass –Allocations Draft WRAP comments on proposed Annex approval

4. Greater RP than BART modeling Should be completed around end of April MTF will need to review the results and incorporate into existing analysis for 16 Class I areas Plan to use the same modeling approach – should meet EPA’s requirements for all areas

5. Critical Mass Analysis ICF presented draft results to MTF on Tuesday Limited analysis – results need to be viewed in context; i.e. comparison of scenarios Results are not easily understood and further work is needed to translate and present the results

6. Critical Mass Analysis Relied on same assumptions as prior analysis Only source compliance costs were taken into consideration – not income or economic impacts Command and control assumed for all states/tribes not participating

7. Initial Conclusions Critical mass is a misnomer, there are cost savings due to trading in all cases –Transaction costs not addressed –Actual trading may differ from model –Intrastate/tribe trades not identified –Effects on benefits not addressed 308 states are affected – regional power market

8. Initial Conclusions Regional costs primarily affected: – By relative program stringency for states and tribes remaining in program –Cost of producing power for CA Biggest impacts on CA and WY Without WY, greater costs for scrubbing, more fuel switching and new natural gas

9. Initial Conclusions Tribal allocations are an important source of credits for trading NM, UT and OR are primary purchasers of credits under all scenarios AZ, CO and WY are not as dependent on trading partners that have allowances to sell; i.e. intrastate market is functional

10. Allocations Pechan has been contracted to develop estimates for non-utility floor allocations Should have draft results by beginning of May Utility allocations will then be estimated based on results of non-utility floor Plan to have draft allocation estimates for May workshop

11. WESTAR – Attribution Guidelines NAM contract –Recommended tools –Criteria –Focused on attribution WESTAR is in the process of compiling the report – July deadline Overview of what will be in the report was presented to MTF to get feedback

12. Model Rule/MOU Need for in depth review by states and tribes Education about trading Recommend that Air Managers Committee address this implementation issue

13. Model Rule/MOU Workshop –State and tribal rule writers –Trading experts (EPA, states with programs) MOU needs review – no precedent for regional program –What needs to be included? –How will differences be resolved? –Interstate Compact required?

14. Monitoring Protocols Focus on bigger source categories –Copper smelters –Refineries –Lime and Cement plants –Gas Processing Explore different approaches for addressing smaller sources

15. NOx and PM Modeling forum will do two sensitivity runs for stationary sources –50% decrease in NOx –50% decrease in PM10 Need to analyze current inventory data Identify data gaps WRAP Policy Analyst will coordinate the work

16. Tribal Outreach NTEC is working with EPA to develop a consultation process –Will provide feedback to MTF regarding the best way to work with tribes, especially the 4 tribes with major SO2 sources Need to involve tribes in model rule/MOU isses –What is needed in state SIPs in 2003 –What is needed in interstate/tribe agreements

17. Other Issues 2000 inventory completed – 27% reduction from 1990. –13% reduction requirement has been met –Request feedback from EPA – is Pechan report adequate