20180126Avista to Staff_DR_219(H1).DOCX

HYDRO ONE LIMITED
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:OREGONDATE PREPARED:11/20/2017
CASE NO.:UM 1897WITNESS:Mayo Schmidt
REQUESTER:PUC StaffRESPONDER:Adele PantusaTYPE:Data RequestDEPT:Law
REQUEST NO.:Staff – 219(H1)TELEPHONE:[phone]EMAIL:[e-mail]:Regarding TWS 021, is it correct that after January 1, 2018, California, Ontario and Quebec will jointly participate in a cap-and-trade program in which there will be commonly bid and valued permits? If so, please describe further the background from January of 2016, the target goals Ontario is trying to achieve, and what the market mechanisms are from Hydro One’s perspective. In this explanation, please identify the resources and where applicable the hyperlinks where Hydro One gets pricing information for tradeable elements of the cap-and-trade program.RESPONSE:Amendments to regulation (Staff_DR_219(H1) Attachment A), taking effect on January 1, 2018 propose to recognize compliance instruments from California and Quebec, formally linking the Ontario Cap and Trade Program through joint auctions of emission allowances with California and Quebec. Emission allowances and credits from all three jurisdictions will be fully interchangeable and will be available via joint auctions. A single common price will be used by all jurisdictions participating in the joint auctions.Ontario has set caps on total emissions from 2017 to 2020. The initial cap is set at 143,332,000 to align and will decline annually to support the province in achieving its 2020 greenhouse gas pollution reduction target. Staff_DR_219(H1) Attachment B provides the legal foundation for the cap and trade program that will help reduce greenhouse gas emissions across the Ontario economy, directs all cap and trade auction proceeds to a new Greenhouse Reduction Account to fund green initiatives, and establishes into law Ontario greenhouse reduction targets of 15% below 1990 levels by 2020.There are two market mechanisms in which Ontario hopes to achieve the targets set: a) quarterly auctions administered by the Western Climate Initiative (WCI), and b) secondary market in which companies can negotiate and purchase allowances directly from another company and/or through a financial instrument (e.g. futures contract) that is typically bought and sold on a financial exchange. Information on the auction and reserve sale platform for pricing and additional resources can be found at https://www.wci-auction.org/on. Additional information related to the Cap and Trade Program in Ontario can be found at https://www.ontario.ca/page/cap-and-trade-program-overview#section-5.