FirstEnergy concludes emission allowance auction
The November 17, 2011, auction, which was managed by CRA International, involved emission allowances from the U.S. Environmental Protection Agency's recently enacted Cross State Air Pollution Rule
Akron, Ohio, November 18, 2011 — FirstEnergy Solutions, a unit of FirstEnergy Corp., has concluded its competitive bidding auction for sulfur dioxide and nitrogen oxides emission allowances for 2012 and 2013.
The November 17, 2011, auction, which was managed by CRA International, involved emission allowances from the U.S. Environmental Protection Agency's recently enacted Cross State Air Pollution Rule.
"The auction allowed us to take advantage of the excess CSAPR SO2 and NOx emission allowances we had as a result of the previous environmental control investments we have made across our generating fleet," said Donald Schneider, President of FirstEnergy Solutions. "We are pleased with the results of our first emission allowance auction and are making plans to hold a second auction no later than April 30, 2012."
An ascending-price clock auction format was used, with various amounts of each of the following products offered for sale:
* CSAPR SO2 Allowances for 2012
* CSAPR SO2 Allowances for 2013
* CSAPR Annual NOx Allowances for 2012
* CSAPR Annual NOx Allowances for 2013
* CSAPR Seasonal NOx Allowances for 2012
* CSAPR Seasonal NOx Allowances for 2013
Four of the six products offered cleared above our minimum prices. This demonstrates the effectiveness of the auction process and the liquidity of the CSAPR market.
Beginning in 2012, the EPA set an annual limit for SO2 and NOx for each of the 28 states covered by CSAPR. As part of the program, all generating units above 25 megawatts are allocated a set amount of emission allowances for SO2 and NOx beginning in 2012. Each allowance awarded to a company allows it to emit one ton of SO2 or NOx.
Similar cap and trade allowance programs have been used successfully over the years to reduce power plant emissions in the U.S. Units that reduce their emissions below the allocated number of allowances may trade with other units in their generating system or sell the allowances to other power plant operators on the open market.