Auction purchase limit definition
The auction purchase limit is the maximum number of allowances offered at each quarterly auction which can be purchased by any entity or group of entities with a direct corporate association.
The auction purchase limit will apply to auctions conducted from January 1, 2012 through December 31, 2014.
Quantitative limitations
The purchase limits for the California auction of 2013 vintage allowances (current vintage) are as follows:
- the purchase limit for covered entities and opt-in covered entities is 15 percent of the allowances offered for auction;
- the purchase for electrical distribution utilities is 40 percent of the allowances offered for auction; and
- the purchase limit for all other auction participants is 4 percent of the allowances offered for auction.
For the advance auction of future vintage allowances, the purchase limit is 25 percent of the allowances offered for auction for all participants.
Sharing of the auction purchase limit among entities that are part of a direct corporate association
Entities that are part of a direct corporate association that choose to opt out of account consolidation must allocate shares of the purchase limit amongst themselves. Each entity will then have a specified percentage share of the association's purchase limit.
The sum of the shares allocated among the entities must sum to one.
Each associated entity's allocated purchase limit share multiplied by the auction purchase limit assigned to the association becomes the purchase limit for that entity. These purchase limits will be used to limit the quantity of accepted GHG allowances bid by each of the bidders with a direct corporate association.
The procedure for the application of the auction purchase limit
ARB will transmit a file to the Auction Administrator prior to the auction that contains the purchase limit cap for each auction participant. These caps will indicate how many allowances an auction participant may acquire before exceeding their purchase limit.
Submitted bids that contain bid quantities in excess of the purchase limit will be rejected, in bundles of 1,000 allowances, until the limit is met.
Only that portion of the bid quantity that exceeds the limit will be rejected, not the entire bid quantity.
This determination occurs after the bid window has been closed and before the settlement price is determined.