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the Southwestern Quality District Reclaim Program, since the summer have traded in the $30 to $40 range, whereas 18 months ago they were closer to $2. Could this be a factor in the California wholesale market woes?
"People have pointed to NO x costs as major costs out there, but they haven't taken that next step of [citing] the type of exponential exporting effect when those units are setting the clearing price for everybody in California ...," says Aaron Thomas, manager at AES Pacific. "And to the extent that that market is influencing markets in the West, all of a sudden you're getting these basin units driving costs for 50 million people in the West."
But the high numbers simply may be price signals at work in a competitive market. Carlton Bartels, managing director of environmental brokerage services at Cantor Fitzgerald and chief executive officer of the recently launched CO2e.com, notes that NO x prices last year briefly surged to around $7,600 on the East Coast, but that "price signals were absorbed" and power producers responded to the soaring prices by installing emissions-reduction equipment.
And so should California's emissions credit prices fall into place. "I'm sure [by] this summer there will be a lot of reductions equipment put in place, and I would imagine the market will settle right back down," Bartels says.
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