Various approaches to distributing emissions allowances spark a heated debate over costs and fairness, but the allocation methodology doesn’t determine whether a regulatory scheme will reduce...
Ohio Proposes Emission Allowance Regs
The Ohio Public Utilities Commission (PUC) has proposed regulations to allow electric utilities to use fuel-cost clauses to recover gains or losses from trading Clean Air Act emission allowances. The PUC emphasized that utilities should use the allowance market to maximize trading while making the use of coal produced in the state part of a least-cost power-supply strategy. Re Amendment of Chapter 4901:1-11 of the Ohio Administrative Code, Case No. 94-1792-EL-ORD, Nov. 23, 1994 (Ohio P.U.C.).
In a separate case, the PUC ruled that Dayton Power & Light Co. should include proceeds from the 1993 federal auction of emission allowances in two parts during its 1995 adjustment-clause billing cycle. It rejected a proposal to require the utility to pass the proceeds through based on the vintage year of the allowances. The PUC said that vintaging ignores the fact that allowances are fungible, much like commodities or stock. It added that utilities can use their allowances in years subsequent to the vintage year, and that strict vintaging in the trading and sale of allowances might inhibit market growth and create the potential for gaming by utilities. Re Dayton Power & Light Co., Case No. 93-105-EL-EFC, Nov. 23, 1994 (Ohio P.U.C.).
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