September 2017 (auction #3): Auction Notice
Read the notice with information on the September 6, 2017 Ontario cap and trade auction of greenhouse gas allowances. This notice was issued on July 6, 2017.
Auction Summary
This document, the Auction Notice, is the official public notice required under section 60 of The Cap and Trade Program Regulation, O. Reg. 144/16 (“the Regulation”) for the September 6, 2017, greenhouse gas (GHG) allowance auction (September 2017 Ontario Auction #3). The September 2017 Ontario Auction #3 will offer year 2017 vintage allowances in the Current Auction and year 2020 future vintage allowances in the Advance Auction. In the Auction Platform, the September 2017 Ontario Auction #3 is identified by the title “Ontario Auction #3 September 2017”.
Additional background information, detailed instructions, and examples are posted in two supporting guidance documents to this Auction Notice. The Detailed Auction Requirements and Instructions (updated July 2017) document provides background information on the Ontario Cap and Trade Program as well as detailed requirements and instructions for participating in an auction, including:
- eligibility;
- auction applicant requirements;
- submitting a bid guarantee;
- bidding; and
- a description of the process to complete auction financial settlement and transfer allowances to successful bidders’ accounts in the Compliance Instrument Tracking System Service (CITSS).
The Auction Examples document provides information and examples of how to determine the amount of a bid guarantee (financial assurance), how holding and purchase limits are applied, and examples of how auctions are settled.
Disclaimer: Both the Detailed Auction Requirements and Instructions and the Auction Examples should be read in conjunction with the Climate Change Mitigation and Lowcarbon Economy Act, 2016 and the Regulation. A registered participant who is seeking to participate or who is participating in an auction should refer to the Act and the Regulation along with these two documents. Where there is a discrepancy between what is contained in these documents and the Act or Regulation, the Act or Regulation will prevail. If you have any questions about the application or interpretation of the Act or Regulation or have other legal questions, you should consult a lawyer.
Date and Time of Auction
The September 2017 Ontario Auction #3 is scheduled to take place on September 6, 2017 from 1:00 PM Eastern Time (ET) until 4:00 PM ET.
Registered participants in Ontario’s cap and trade program can access the auction platform online.
Allowances Offered for Sale
Allowances offered during an auction are created under the Ontario Cap and Trade Program. Allowances available for this auction are of current vintage budget year (2017) and future vintage budget year (2020), where ‘vintage’ refers to the year for which they are created. The auction of allowances from the current budget year (year of the auction) is known as the Current Auction. The auction of future vintage allowances (i.e. allowances created for a year beyond the year of the auction) is known as the Advance Auction. The Current Auction and Advance Auction will occur simultaneously at the date and time identified in the Auction Notice.
The number of allowances that will be available for sale in the September 6, 2017 Current Auction and Advance Auction are provided below in Table 1 below.
| Auction | Number of Allowances |
|---|---|
| Current Auction (2017 vintage allowances) | 25,296,367 |
| Advance Auction (2020 vintage allowances) | 3,116,700 |
Annual Auction Reserve Prices
The Auction Reserve Price is the minimum price at which allowances offered in the Current Auction and Advance Auction will be sold. Bids submitted with a bid price below the Auction Reserve Price will not be accepted.
The Ontario Auction Reserve Price will be determined as the higher of the most recently published California and Québec Annual Auction Reserve Price after applying the exchange rate established for the auction. The California and Québec Annual Auction Reserve Prices are announced by California and Québec in December of each year to be effective the next calendar year, and are available on the website of the California Air Resources Board.
The exchange rate established for each auction (Auction Exchange Rate) will be the United States dollar to Canadian dollar (USD to CAD) daily average exchange rate as provided by the Bank of Canada for the day before, or a date that is before and as close as possible to, each Ontario auction.
The Auction Reserve Price will be displayed on the Auction Platform prior to the opening of the auction bidding window. Bids in the Ontario auction will only be accepted in Canadian dollars (CAD).
The Annual Auction Reserve Prices for California (CA) and Québec (QC) are provided in Table 2. The CA Annual Auction Reserve Price is presented in United States Dollars (USD). The QC Annual Auction Reserve Price is presented in Canadian Dollars (CAD).
| Auction | CA Annual Auction Reserve Price (USD) | QC Annual Auction Reserve Price (CAD) |
|---|---|---|
| Current Auction | $13.57 | $13.56 |
| Advance Auction | $13.57 | $13.56 |
Auction Application Requirements and Instructions
I - Eligibility
Ontario capped participants (mandatory and voluntary), and market participants that have approved accounts in CITSS are eligible to apply to participate in an auction.
II - Application Requirements
Please note that the Auction Platform and the Compliance Instrument Tracking System Service (CITSS) were updated in June 2017. Starting with the September 2017 Ontario Auction #3, participants will submit auction applications in CITSS. Auction applications can no longer be submitted in the Auction Platform.
CITSS can be accessed at its website or from the Ontario cap and trade webpage.
A participant will be required to complete an auction participant application in CITSS at least 30 days prior to an auction in which it intends to participate. A participant applying for permission to be an auction participant must be registered under the Ontario Cap and Trade Program and have a CITSS General Holding Account that has not been revoked or is not subject to conditions under the Regulation or imposed by the Director that prohibit participating in auctions or otherwise prevent emission allowances or credits from being transferred to the person’s cap and trade accounts.
Auction application requirements are described in further detail in the Detailed Auction Requirements and Instructions (updated July 2017) document.
Auction Schedule
Table 3 presents the schedule for activities associated with the September 2017 Ontario Auction #3 (Auction Schedule). Any changes to the Auction Schedule including estimated timelines for activities following the auction will be communicated through an updated Auction Notice and by email to the active PAR and AARs of cap and trade program registered participants.
| Activities | Due Date | Eastern Time (ET) |
|---|---|---|
| Auction Notice released / Auction application period opens | Thursday, July 6, 2017 | 1:00 PM ET |
| Deadline for participants to make any required changes in CITSS and submit all hard copy documents accompanying the changes |
Friday, July 28, 2017 | |
| Auction application period closes. Deadline for participants to complete an auction application in CITSS |
Tuesday, August 8, 2017 | 11:59 PM ET |
| All bid guarantees due to Financial Services Administrator | Friday, August 25, 2017 | 11:59 PM ET |
| Auction participants approved and account representatives (PAR and AARs) notified | Friday, September 1, 2017 | |
| Auction Exchange Rate (FX Rate) and Auction Reserve Price posted to Auction Platform | Tuesday, September 5, 2017 | 5:00 PM ET |
| Auction held | Wednesday, September 6, 2017 | Bidding window open 1:00 PM to 4:00 PM ET |
| Auction Summary Results Report released to the public / Auction Certified / Auction results available to qualified bidders | Wednesday, September 13, 2017 | 3:00 PM ET |
| Financial settlement in cash due to Financial Services Administrator | Wednesday, September 20, 2017 | 11:59 PM ET |
| Distribution of auction proceeds completed | Thursday, September 28, 2017 | |
| Transfer of allowances into CITSS Accounts | Thursday, September 28, 2017 | |
| Ontario Post-Auction Public Proceeds Report released | Thursday, September 28, 2017 | |
| Earliest date for bid guarantee expiration | Monday, October 2, 2017 (26 days after the auction) |
Procedures for Conducting the Auction
Each auction will be conducted on an electronic, internet-based, Auction Platform. Bidders submit bids in a single-round, sealed-bid auction format.
As described above, each participant must submit an application in CITSS for an auction. Financial Services Delivery Instructions will be available from CITSS, and all final bid guarantees must be received by the Financial Services Administrator by no later than the date and time listed in the Auction Schedule above. Applicants will be approved or denied permission to participate in an auction in CITSS approximately two (2) business days prior to the date the auction is scheduled to take place.
Procedures for conducting the auction are described in further detail in the Detailed Auction Requirements and Instructions (updated July 2017) document with specific examples provided in the Auction Examples document.
Form and Manner for Submitting Bids
Participants will be able to submit bids manually and upload bid schedules in a predefined Excel template in the Auction Platform during the bidding window. Bid quantities can only be submitted in multiples of 1,000 allowances. Bids for both the Current Auction and the Advance Auction will be accepted during the scheduled 3-hour auction bidding window. The form and manner for submitting bids are described in further detail in the Detailed Auction Requirements and Instructions (updated July 2017) document with specific examples provided in the Auction Examples document.
Auction Participant Training Materials
An Auction Participant Training presentation (updated July 2017) is available upon request from the Ontario Ministry of the Environment and Climate Change (MOECC). The presentation includes information on requirements for auction participation, the updated auction application process, bid guarantee submission, bid submission, settlement price determination, and the financial settlement processes for auctions.
Training and reference materials are also available on the Auction Platform, and include dates of upcoming activities, Frequently Asked Questions (FAQs), the Auction Participant Training presentation, and an Auction Platform User Guide.
Additional Information
Additional information on the Ontario Cap and Trade Program is available on the Ontario government webpages as follows:
Ontario Allowance Auction Information
CITSS Registration Information
For questions regarding the Ontario Cap and Trade Program, please contact the Cap and Trade Helpdesk at
Footnotes
- footnote[1] Back to paragraph Under the Regulation a registered participant is required, as a condition of registration, to notify the Director of any changes to certain information that was provided as part of the participant’s application for registration (see sections 26, 34 and 37). The Regulation also requires that a registered participant who is seeking to participate in an auction must provide the updated information (i.e. changes to the registration information) no later than forty (40) days before an auction.