2007 APR Table of Contents

ERMS Home ERMS Reports Allocation Reports Annual Performance Review News & Items of Interest ERMS Overview

FAQ ERMS Contacts Average ATU Prices Account Officer Training ERMS Forms Online Transaction Requests

Emissions Reduction Market System

Annual Performance Review Report - 2007

4  Evaluation of Trading Activities

4.1  Account Officers

All sources required to participate in the ERMS program must have at least one account officer designated to represent their transaction account.  Designated account officers are ultimately responsible for all information contained in each transaction account.  Many sources have at least two account officers so that one individual could be the primary and the other could be designated as the alternate.

The ERMS rule specifies all prospective account officers must participate in account officer training sponsored by the Illinois EPA prior to representing a transaction account.  As of the start of the 2008 seasonal allotment period, the Illinois EPA has held 24 account officer training sessions from August 1999 to February 2008.  The training session held in February 2008 trained 11 account officers.  There are now a total of 433 trained account officers.

Each training session was approximately four hours in length and all account officers were given a manual that could be used as a reference tool.  The training agenda included sections covering Title V permitting, ERMS program overview, ATU creation review, seasonal emission reporting, emission compensation process, functioning in the ERMS marketplace, transaction account, ACMA and the ERMS website.

Accessing and working with an assortment of information via the ERMS website is large part of many account officers’ duties.  Not only is the information on the website convenient to access, it also provides the most up-to-date data available in the ERMS program.  Illinois EPA determined that it was important to provide access to a training version of this site during the account officer training to give participants hands-on opportunity to view the website.  Account officers were able to post mock buy/sell postings and enter into mock trades during the session.

4.2  Website Access

There have been no significant problems with the ERMS website.  Issues continue with company firewalls blocking information coming from the ERMS website.  Solutions to this problem have been posted on the website and the Agency continues to work with companies needing guidance.

4.3  Transaction Summary

During the 2007 season, the program generated 19 seasonal trades, 2 new long-term transfer agreements and 23 transfer agreements continuing from the previous years.  These transactions involved a total of 38 sources as sellers and 41 as buyers (including excursion compensation sources).  Six participants (four general and two participating) both bought and sold ATUs in 2007.  Some of the sources that were both buying and selling were shuffling ATUs to account for multiple locations.  Most sources sold to other participating sources or general participants, but one source provided ATUs to a special participant.  Tables 4-1 and 4-2 list the overall selling and buying of each source.  Those sources not listed had no trading activity.

Table 4-1:  ATU Sellers

Table 4-2:  ATU Buyers

Trades (excluding excursion compensation and donations to ACMA and special participants) accounted for 8,278 ATUs.  Trading activity comprised 8.1 percent of the total allotment of 100,363 ATUs and 20.0 percent of the 41,303 ATUs that represent the emissions reported for compliance purposes.

4.4  ATU Availability

There are several indicators of how accessible ATUs are to ERMS participants.  One indicator is the relative number of “buy” and “sell” postings to the ERMS bulletin board.  There were a total of nine “sell” postings which showed 7,322 ATUs and zero “buy” postings.  The fact that there was such a high ratio of ATUs for sale as compared to those attempting to buy indicates ATUs were readily available to those looking for them.

A second indicator is the average price.  If ATUs are difficult to obtain, their price should rise as a function of supply and demand.  If they are readily available, the price should generally decline.  Prices declined in the early years but have steadied in recent years.  Figure 4-1 shows the average ATU prices since ERMS began.

Figure 4-1:  Average ATU Price ($/ATU)

A third indicator is that no source requested regular access to ACMA during the reconciliation period.  Sources would likely request such access if they could not find the ATUs they need on the market.  Thus, it can be concluded sources who were looking to acquire ATUs found the ATUs they needed in the market.

A fourth indicator is the number of sources that went into excursion compensation because they did not have enough ATUs to account for their emissions.  Three sources went into excursion compensation after the 2007 season.  Circumstances regarding this excursion cannot be attributed to unavailability of ATUs.  The source simply did not undertake the necessary actions to obtain required ATUs.  There has been no indication that any source that was actively looking for ATUs was unable to obtain the needed amount.

A final indicator is the number of ATUs that expire.  As discussed above, after the 2007 season, 52,024 ATUs expired without being used.  This represents 51.8 percent of the ATUs allotted in 2007.  If ATUs were in high demand, it is unlikely so many would have expired.

4.5  Average ATU Market Price

The market price of an ATU is determined through trading among the ERMS participants.  The Illinois EPA uses information submitted with each trade to calculate the average market price by dividing the total price of all included transactions by the number of ATUs traded.  Trades may not be included if the participants indicated special considerations were involved – for example, if one branch of a company trades ATUs to another branch without charging a fee.  Long-term transfer agreements are not included in the calculation of the average market price.

Using this method, the average market price for each ATU in the 2007 season was calculated to be $14.86.  ATUs ranged in price from $8 to $22.00 each.  Thirteen of the 19 trades were included in determining this average.

4.6  Findings

• Sources were able to find trading partners
• There was a sufficient supply of available ATUs
• Market prices were conducive to trading