Harrisburg Authority Saves $28 Million With Nutrient Credit Trading

The new permit requires the authority to purchase nutrient credits in combination with construction of facility upgrades to ensure the Advanced Wastewater Treatment Facility plant complies with new Chesapeake Bay nutrient discharge limits.

The limits, known as cap loads, pertain to nitrogen and phosphorus and are required to meet water quality standards that Maryland adopted in 2005.

"Combining construction and nutrient credit trading was the authority's most cost-effective solution for meeting these nutrient cap loads," said DEP South-central Regional Office Director Rachel Diamond.

"We encourage municipalities and authorities to find creative solutions to reduce pollution while limiting the impact on ratepayers," she said.

Nutrient credit trading is a market-based program that provides incentives for dischargers to earn nutrient reduction credits by going beyond legal obligations to remove nutrients from a watershed. The credits can then be sold to help others more cost-effectively meet their nutrient reduction obligations or goals.

The permit approval means the Harrisburg Authority can now proceed with the purchase of nutrient credits and the design of treatment plant upgrades.

"For other treatment plants throughout the state's Chesapeake Bay watershed, using nutrient credit trading as opposed to relying solely on capital upgrades has helped to reduce the costs to ratepayers," Diamond said.

The National Pollution Discharge Elimination System permit calls for the authority to begin purchasing nitrogen and phosphorous credits in 2011. The facility upgrade project that will be part of the authority's overall compliance strategy is estimated to cost $35 million and must be completed by 2014.

By purchasing nutrient credits, the authority estimates that it will save $28 million over the next 20 years, which will save each ratepayer an estimated $48 per year on sewer service charges.

Credit trading as a compliance alternative had not been previously evaluated. The Harrisburg Authority solicited bids for the nutrient credits in the state's first public bidding last fall.

The Susquehanna River at Harrisburg, Pennsylvania (Photo by Peter Philip)

"Our goal when we began investigating nutrient trading options two years ago was to comply with environmental regulations at the lowest possible cost for our customers, and this report shows our efforts have been worthwhile," says Michele Torres, executive director of the Harrisburg Authority.

The Chesapeake Bay and many of its tidal tributaries have been listed as impaired by the federal Clean Water Act. The Susquehanna and Potomac watersheds in Pennsylvania are the largest sources of fresh water flowing into the bay, and carry a significant portion of the nutrients which cause the pollution.

The new permit limits reflect both reductions in the levels of ammonia nitrogen that can be discharged to the Susquehanna River and nutrient reductions necessary to implement DEP's Chesapeake Bay Tributary Strategy.

The strategy was developed by DEP in response to Pennsylvania's participation in the multi-state agreement between the U.S. Environmental Protection Agency and the states of Maryland, Virginia, New York, the District of Columbia and Pennsylvania.

The agreement requires reductions in the number of pounds of nitrogen and phosphorus that each state is allowed to discharge into the Chesapeake Bay to reduce the amount of vegetation growth that is inhibiting the development of aquatic life in the bay.

Over 80 percent of the nitrogen and phosphorus is attributable to run off from agricultural and other nonpoint source activity adjacent to the waterways that empty into the Chesapeake Bay; not the discharges from wastewater treatment facilities, which are considered point sources.

Nutrient credit trading allows farmers to get credit for the establishment of conservation practices that reduce runoff of nutrients. Those credits can be sold to municipal authorities that are required to meet nutrient reduction targets.

But the mechanisms for monitoring discharges and measuring compliance for the nonpoint sources vary widely and are less exact than those for the point sources.

Point sources are regulated and their discharges are closely monitored; therefore, compliance with a requirement to significantly reduce the amounts of nitrogen and phosphorus they discharge can be assured. By intensively treating this smaller portion of the discharge to the bay, the overall levels of nitrogen and phosphorus can be reduced to acceptable levels.

With DEP approval in place, the authority is expected to begin design of its treatment plant modifications in January 2010 with construction to follow in August 2011.

The actual number of credits that must be purchased will vary from year-to-year, but may be less than anticipated since the efficiency of the constructed facilities may be greater than anticipated in treating the wastewater received at the Advanced Wastewater Treatment Facility.

Also, a project is currently under consideration to reuse a portion of the AWTF's effluent at the Resource Recovery Facility as process water. This is a non-discharge alternative that reduces the amount of total nitrogen and total phosphorus being discharged to the river and ultimately to the Chesapeake Bay.

Other Chesapeake Bay states are already engaging in nutrient credit trading. The Virginia Nutrient Credit Exchange Association, Inc. was formed to implement legislation enacted in 2005. Through the Nutrient Exchange, 70 of Virginia's businesses, localities and wastewater authorities have entered an agreement expected to achieve nutrient caps at over 100 facilities.

In January 2008, the Maryland Department of the Environment issued a policy document describing the purpose and form of nutrient trading in Maryland and setting forth the fundamental principles and guidelines for Maryland trading programs. Now, a Internet-based Market Place and Trading Registry has been established for Maryland.

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