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EPA's SO2 acid rain allowance auction proceeds drop to $10,372

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EPA's SO2 acid rain allowance auction proceeds drop to $10,372

DJT and Mt. Carmel Cogen were active buyers in the U.S. EPA's2016 Acid Rain Allowance Auction held March 29, with the sale generating ratherpaltry proceeds, according to results released by the agency.

The weighted average of winning bids in the 2016 spotauction was 6 cents per credit, down from 11 cents per credit in and 45 cents per credit in2014.

In the spot auction, DJT purchased 123,200 SO2 allowancesfor $7,392, while Mt. Carmel Cogen scooped up 1,800 SO2 allowances for $480.

SNL Image

Each year, the EPA holds the SO2 allowance auction, dividingthe bidding into two categories: a spot auction for allowances that can be usedin that same year for compliance purposes and an advance auction for allowancesthat will become usable for compliance seven years after the transaction date,though they can be traded earlier. The agency sells 125,000 of each type ofallowance during the sealed-bid auction.

In the spot auction, the clearing price, or the lowest pricein which a successful bid was made, was also 6 cents per credit.In the seven-year advance auction, the weighted average of winning bids was 2cents per credit, and the clearing price was also 2 cents per credit. DJTpurchased 125,000 SO2 allowances for a total of $2,500 in the advance auction.

The EPA's 2016 SO2 allowance auction generated totalproceeds of $10,372.00, down from $17,685.13 and $61,657 in 2014.

In the over-the-counter market, 2016 SO2 allowance pricesunder the Acid Rain Allowance Program are below $1.00, pegged at about 15 centsto 75 cents as of April 1, according to SNL Energy.

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