Background

The California Air Resources Board (CARB), Ontario Ministry of the Environment and Climate Change (MOECC), and Québec’s ministère du Développement durable, de l’Environnement et de la Lutte contre les changements climatiques (MDDELCC) footnote 1 held a joint auction of greenhouse gas (GHG) allowances on May 15, 2018. The auction included a Current Auction of 2016 and 2018 vintage allowances and an Advance Auction of 2021 vintage allowances. The information provided in this report is a balance between the need for program transparency and protection of information about individual qualified bidders’ market positions.

Prior to the certification of the auction, CARB, MOECC, and MDDELCC staff and the independent Market Monitor carefully evaluated the bids and determined that the auction process and procedures complied with the requirements of the California, Ontario, and Québec Cap-and-Trade Regulations (the Regulations). As provided below, the Market Monitor made the following determination:

The Market Monitor found that the auction was cleared consistent with the auction clearing rules in the Regulations and appropriate economic logic. The Market Monitor confirmed the clearing price and clearing quantities by qualified bidder for the Current Auction of 2016/2018 vintage allowances and for the Advance Auction of 2021 vintage allowances. The auction algorithm correctly applied the requirements of the Regulations covering the bid guarantee. The Market Monitor did not observe any breaches of security or communication protocols.

The Market Monitor recommends that CARB, MOECC, and MDDELCC approve the May Auction results.

Auction proceeds figures are not shown in this report because of the exchange rate process for determining final auction proceeds in a joint auction. Winning bids are submitted in one of two currencies – U.S. dollars (USD) or Canadian dollars (CAD). After receiving payment from the winning bidders, and using instructions from the linked jurisdictions (California, Ontario, and Québec), the Financial Services Administrator will exchange some amount of currency at then-prevailing market rates prior to transferring the auction proceeds to the jurisdictions.

The Financial Services Administrator will distribute auction proceeds to the jurisdictions after all qualified bidder payments are received. The jurisdictions will receive auction proceeds by June 11, 2018. As provided in the California Cap-and-Trade Regulation, sellers who consigned allowances in this auction will be paid the auction settlement price in USD for every consigned allowance sold. Information regarding jurisdiction-specific auction proceeds will be published after the auction is final.

California must receive auction proceeds only in USD. Ontario and Québec must receive auction proceeds only in CAD. Thus, the total amount of auction proceeds received by the jurisdictions from the sale of allowances may be higher or lower than the auction settlement price multiplied by allowances sold depending on the prevailing exchange rates in effect at the time of currency exchange prior to the distribution of auction proceeds. Each jurisdiction will separately post information on June 11, 2018, providing the final amount of proceeds transferred.

Auction Results

The first table below provides key data and information on the results of the auction. The second table provides qualified bid summary statistics from the auction. Please see Explanatory Notes after the list of qualified bidders for descriptions of all summary information.

Table 1: Auction Results for May 2018 Joint Auction #15

  Current Auction
2016 Vintage
Current Auction
2018 Vintage
Current Auction
Total
Advance Auction
2021 Vintage
Total Allowances Available for Sale 13,368,884 77,218,854 90,587,738 12,427,950
CA Entity Consignment - 14,569,443 14,569,443 -
CARB 11,436,180 31,175,277 42,611,457 8,020,000
MOECC - 23,743,316 23,743,316 3,026,450
MDDELCC 1,932,704 7,730,818 9,663,522 1,381,500
Total Allowances Sold at Auction 13,368,884 77,218,854 90,587,738 6,057,000
CA Entity Consignment - 14,569,443 14,569,443 -
CARB 11,436,180 31,175,277 42,611,457 3,908,701
MOECC - 23,743,316 23,743,316 1,474,998
MDDELCC 1,932,704 7,730,818 9,663,522 673,301
Total Qualified Bids Divided by Total Allowances Available for Sale     1.36 0.49
Proportion of Allowances Purchased by Compliance Entities     95.6% 77.7%
Herfindahl-Hirschman Index 668 668   1444

Qualified Bid Summary Statistics

All Qualified Bid Summary Statistics are determined in USD including all bids submitted in USD and CAD. The CAD equivalent of the USD Qualified Bid Summary Statistics is based on the Auction Exchange Rate. USD statistics are converted into CAD in whole cents to be able to compare statistics on a common basis.

Table 2: Qualified Bid Summary Statistics for May 2018 Joint Auction #15

  Current 2016/2018 Vintage
USD
Current 2016/2018 Vintage
CAD
Advance 2021 Vintage
USD
Advance 2021 Vintage
CAD
Auction Reserve Price $14.53 $18.56 $14.53 $18.56
Settlement Price $14.65 $18.72 $14.53 $18.56
Maximum Price $54.27 $69.33 $21.91 $27.99
Minimum Price $14.53 $18.56 $14.53 $18.56
Mean Price $15.51 $19.81 $14.70 $18.78
Median Price $14.66 $18.73 $14.62 $18.68
Median Allowance Price $14.85 $18.97 $14.58 $18.63

Auction Exchange Rate (USD to CAD): 1.2775

List of qualified bidders for the May 2018 Joint Auction #15

A qualified bidder is an entity that completed an auction application, submitted a bid guarantee footnote 2 that was accepted by the Financial Services Administrator, and was approved by CARB, MOECC, or MDDELCC to participate in the auction. Qualified bidders may or may not have participated in the auction.

CITSS Entity ID Entity Legal Name
QC2659 1055585 Ontario Inc
ON2465 1308998 Ontario Ltd.
ON2306 1329606 Ontario Limited
QC2101 1443635 Ontario Inc
ON2147 2089956 Ontario Inc.
CA1185 Aera Energy, LLC
CA1019 Air Liquide Large Industries U.S., LP
CA1561 AltaGas Power Holdings (U.S.), Inc.
CA1913 BP Products North America, Inc.
QC2193 Bridgestone Canada Inc.
CA1108 California Resources Elk Hills, LLC
ON2676 Canadian Pacific Railway Company
ON2532 Centre Lane Trading Limited
CA1075 Chevron U.S.A., Inc.
CA1732 City of Long Beach, Gas and Oil Department
CA1443 City of Los Angeles, Department of Airports
CA1073 City of Roseville
CA1166 City of Vernon, Vernon Public Utilities
QC2631 Compagnie des chemins de fer nationaux du Canada
QC1901 Coopérative de solidarité Carbone
CA2648 CWP Energy, Inc.
CA1417 Direct Energy Business, LLC
ON2509 Econo Petroleum Inc.
ON2414 Elbow River Marketing Ltd
ON2176 Enbridge Gas Distribution Inc.
ON2458 Énergie Valero Inc / Valero Energy Inc
QC1384 Énergie Valero Inc
QC1502 Énergir, s.e.c.
ON2696 Energy Source Natural Gas Inc.
QC1515 Entreprise Indorama PTA Montréal S.E.C.
ON2329 EPCOR Natural Gas Limited Partnership
CA1110 Exelon Generation Company,LLC
ON2402 Factor Gas Liquids Inc.
ON2253 Federated Co-operatives Limited
CA1260 Flyers Energy, LLC
CA1081 Foster Poultry Farms
QC1750 Gazifère Inc.
QC1764 Gestion Énergie Québec Inc.
ON2162 Goodyear Canada Inc
ON2470 Grant’s Transport Limited
ON2330 Great Lakes Greenhouses Inc.
ON2240 Greater Toronto Airports Authority
ON2203 Greenergy Fuels Canada Inc.
ON2388 Greenfield Energy Centre LP
QC2118 Hamel Propane Inc.
ON2361 Hiram Walker & Sons Ltd.
ON2315 Husky Oil Operations Limited
ON2288 Hydro One Networks Inc.
QC1359 Hydro-Québec
CA1807 Idemitsu Apollo
ON2189 Imperial Oil
ON2210 Ivaco Rolling Mills 2004 L.P.
CA1727 Jaco Oil Company
CA1141 Kern Oil & Refining Company
ON2356 Koch Supply & Trading, LP
ON2504 Larry Penner Enterprises Inc.
QC2501 Le Groupe Harnois Inc
QC1770 Les Pétroles Irving Commercial s.e.n.c
QC1730 Les Produits Pétroliers Norcan S.E.N.C
CA1111 Los Angeles Department of Water & Power
CA1830 Luminus Energy Partners, LLC
ON2439 MacEwen Petroleum Inc.
CA1104 Macquarie Energy, LLC
ON2187 Markham District Energy Incorporated
ON2457 McDougall Energy Inc.
CA2645 Mercuria Energy America, Inc.
CA1107 Midway Sunset Cogeneration Company
ON2449 Mighty Flame Canada Inc.
CA1239 Morgan Stanley Capital Group, Inc.
CA1302 Naftex Operating Company
ON2324 Nature Fresh Farms Inc.
CA1672 NextEra Energy Marketing, LLC
QC2107 NGL Supply Co. Ltd.
CA1191 Northern California Power Agency
CA1138 NRG Power Marketing, LLC
ON2304 Ontario Power Generation Inc.
CA1046 Pacific Gas and Electric Company
CA2046 Pacific Gas and Electric Company
CA1034 PacifiCorp
CA2106 PBF Energy Western Region, LLC
ON2345 Pembina Infrastructure and Logistics LP
ON2477 Pétrole Léger Inc.
CA1279 Phillips 66 Company
CA1595 Pixley Cogen Partners, LLC
ON2190 Plains Midstream Canada ULC
CA1003 Plumas-Sierra Rural Electric Cooperative
CA1304 Portland General Electric Company
CA1505 Powerex Corporation
ON2348 Primemax Energy Inc.
QC1731 Propane Québec Inc.
CA1204 Rio Tinto Minerals, Inc.
CA1774 Robinson Oil Supply & Transport, Inc.
ON2445 Royal Bank of Canada
CA1102 Royal Bank of Canada
CA1163 Sacramento Municipal Utility District (SMUD)
CA1085 San Diego Gas & Electric Company
CA1760 San Diego Gas and Electric Company
CA1011 San Joaquin Refining Company, Inc.
CA2175 Sempra Gas & Power Marketing, LLC
CA1366 Seneca Resources Corporation
CA2358 Sentinel Peak Resources California, LLC
CA1251 Shell Energy North America (US), LP
CA1757 Shiralian Enterprises
CA1170 Southern California Gas Company
CA1800 Southern Counties Oil Company, a California Limited Partnership
CA1674 Southwest Gas Corporation
ON2244 St. David’s Hydroponics Ltd
CA1804 Stan Boyett & Son,Inc.
CA1921 Statkraft US, LLC
ON2474 St-Pierre Fuels Inc
ON2151 Suncor Energy Products Partnership
QC1486 TEMBEC
CA1165 Tesoro Refining & Marketing Company, LLC
ON2299 The Corporation of the City of Kingston
ON2381 The Corporation of the City of Kitchener
ON2359 The International Group Inc.
CA1888 The Soco Group, Inc.
CA2100 Tricor Refining, LLC
CA1216 Turlock Irrigation District
ON2165 Union Gas Limited
CA1346 United States Gypsum Company
CA1635 Valero Marketing and Supply Company
CA1135 Vitol, Inc.
ON2514 W. O. Stinson & Son Limited
QC2066 W.R. Grace Canada Corp.
CA1229 Walnut Creek Energy, LLC
CA2056 Wild Goose Storage, LLC

Explanatory Notes: Qualified Bid Summary Statistics

Current Auction

Term Definition
Total Allowances Available for Sale Total allowances available, by vintage, for purchase in the Current Auction, including allowances consigned by consigning entities and allowances offered for sale by the State of California, the Province of Ontario, and the Province of Québec.
Total Allowances Sold at Auction Total allowances purchased, by vintage, in the Current Auction in metric tons.
Total Qualified Bids Divided by Total Allowances Available for Sale Total number of allowances (all vintages) included in all the qualified bids for the Current Auction allowances (regardless of bid price) divided by the total number of Current Auction allowances available in the auction.
Proportion of Allowances Purchased by Compliance Entities The total number of Current Auction allowances (by vintage) purchased in the Current Auction by Compliance Entities divided by the total number of Current Auction allowances sold in the Current Auction. A Compliance Entity is a Covered Entity or Opt-in Covered Entity as defined in California’s Cap-and-Trade Regulation, a Capped Participant as defined in Ontario’s Cap-and-Trade Regulation, or an Emitter as defined in Québec’s Cap-and-Trade Regulation.
Herfindahl–Hirschman Index (HHI) The HHI is a measure of the concentration of allowances purchased by winning bidders relative to the total sale of Current Auction allowances (regardless of vintage) in the auction. The percentage of allowances purchased by each winning bidder is squared and then summed across all winning bidders. The HHI can range up to 10,000, representing 100% of the current vintage allowances purchased by a single bidder (i.e.,100 × 100 = 10,000).
Qualified Bid Price Summary Statistics Statistics are calculated from all the qualified bids for the Current Auction allowances (regardless of bid price). All price statistics are shown in USD and CAD.
Qualified Bids The bids that remain after a qualified bidder’s submitted bids have been evaluated and reduced to meet all bidding limitations.
Auction Reserve Price The minimum acceptable auction bid price for Current Auction allowances shown in both USD and CAD per metric ton.
Settlement Price The Current Auction allowance price that resulted from the auction, in USD and CAD per metric ton.
Maximum Price Highest qualified bid price.
Minimum Price Lowest qualified bid price.
Mean Price Average qualified bid price calculated as the sum of the qualified bid prices times the bid allowances at each qualified bid price divided by the sum of all qualified bid allowances.
Median Price The price per metric ton calculated so that 50% of the qualified bid prices fall above and 50% fall below the median bid price.
Median Allowance Price The price per metric ton calculated so that 50% of the qualified bid allowances fall above and 50% fall below the median allowance price.
Auction Exchange Rate (USD to CAD FX Rate) The exchange rate in effect for the joint auction that is set the business day prior to the joint auction as the most recently available daily average exchange rate for USD and CAD as published by the Bank of Canada the day before the joint auction.

Advance Auction

The statistics presented in the report for the Advance Auction are computed in the same manner as the statistics computed for the Current Auction. No allowances are consigned by consigning entities to the Advance Auction.