Pool report for practice auction

Statement on Practice Auction by Mary D. Nichols, Chairman, California Air Resources Board: "We will be combing the record for every minor glitch we can possibly find to fix, but I am delighted that everything so far shows that the practice auction went well, and that the participants found the auction website easy to use."

Pool report for practice auction

Updated at 1:45 p.m.

Pool Report on Aug. 30, California Air Resources Board Cap-and-Trade Allowance Auction Experience

By Carolyn Whetzel, BNA’s Daily Environment Report

More work went into to registering and setting up the account for the allowance auction than the actual bidding process in today’s practice auction. The auction platform (website) was simple to use, and offers resources for users in need of instruction (a user guide and presentations from the webinar held for auction registrants earlier this month).

CARB is using a sealed bid, single round, uniform price format for its allowance auctions, the same type auction the northeastern states participating in the Regional Greenhouse Gas Initiative (RGGI).

Per CARB’s rules all bids are filled from highest to lowest until all allowances are sold or the reserve price is reached. The settlement (final) price is the lowest accepted bid, once all the allowances are sold.

California’s practice session offers two separate auctions: one for 20 million vintage 2013 allowances and another for 40 million vintage2015 (future) allowances. Minimum price is $10 per allowance.

For the practice auction, no money or actual allowances changed hands. The goal was to offer the entities that will be participating in the real auction, Nov. 14, an opportunity to learn how the process and technology will work. Also, the practice session provides CARB a chance to test how the auction process works in real time.

All covered entities were invited to participate in the trial run. CARB spokesman David Clegern said Aug. 29 about 150 entities and individuals had registered for the practice session. ``Most are covered parties, but there are a few financial types and a couple others who have been involved since the initial registration at the beginning of the year,’’ Clegern said.

CARB is NOT identifying any individual participants in the practice auction (except for the names of the two pool reporters).

The practice auction began at 10 a.m. and ran through 1 p.m., PDT.

Bidding Process

After logging on, you only needed to click the “Auction” tab (look for a green light at the top of platform page to ensure the auction is open for bids) and start bidding, either manually where you enter each bid individually or upload multiple bids from a spreadsheet.

Not wanting to hog all the available allowances, I placed six bids manually for a total of 135,000 allowances. It was easy, just add your bid price (minimum was $10), how many lots of 1,000 allowances you want to buy, click on the vintage date (2013 or 2015, click ``submit,’’ and then click ``confirm’’ to save the bid.

Like all the bids submitted in today’s trial auction, mine were invisible to the other 149 (per CARB) participants. But I’ll share my six bids all placed within a 15-minute window: $14 per allowance for 20,000 (20 lots) vintage 2013 allowances; $15/allowance for 15,000 (15 lots) vintage 2013; $19/allowance for 50,000 (50 lots) vintage 2013; $18/allowance for 10,000 (10 lots) vintage 2015; $20/allowance for 18,000 (18 lots) vintage 2015; and $25/allowance for 22,000 (22 lots) vintage 2015.

It’s pretty easy to change bids any time during the three-hour auction - just click on ``edit’’ by the individual bids.

Next steps

According to the information provided to registrants, practice auction participants will receive sample results in an email on Sept. 4, but the practice results will not be available on the auction platform. Also, the practice auction settlement price and data on the number of allowances will not be available to participants. (Participants in the real auction will be able the review the results.

A survey of practice auction participants will be conducted Sept.-5-6.

Before the practice auction

In early August, all participants had to register (provide user name, get a password, etc.) with the Compliance Instrument Tracking System. It was a two-step process and took about five minutes. (Had it been a real auction, participants would have been required to print out and complete a series of form, provide proof of identity and mail to CITSS). Everyone received an email with user ID and registration number.

A day later, a second registration process was required for registration for alternative account representatives. The directions were simple and went smoothly until I tried to complete with the process before receiving an email confirmation for the first step of the process. As I result, I had to call help-desk, which resulted in a manual approval of the second step. The help desk provided prompt assistance.

The week before the practice auction, participants received an email to activate their accounts, indicate their intent to bid in the auction, verify account representative details, provide a bid guarantee, letters of credit and other financial information, etc. (most of the documents/information was not necessary for the trial auction).

With the one exception during the second registration procedure, the process went well.

Pool Report Practice Auction

By Dale Kasler, Sacramento Bee

Bidding for carbon allowances is quick and easy - at least in practice, when you aren't spending real money. It took just a few minutes to complete the process.

After logging into the WCI auction website, I clicked on the Auction tab, and then "Add Bid." I hemmed and hawed for a couple minutes as to what kind of bid to place, but even with fake money I decided to go conservative. I placed a bid at $18 apiece for ten lots (10,000 tons of 2013 carbon emissions). I hit the "confirm" button and my bid showed up on the screen. I put in a second bid at $19, for 15 lots (15,000 tons), repeated the process and I was done.

A little while later, I decided to test the system a little. I went back into the auction. This time I ignored the $10 reserve minimum and placed a bid for five lots at $9 apiece. I expected the system to reject the bid, but it didn't. Turns out that process occurs once the bidding window has closed and the auction is over.

More information:

Practice Auction presentation