The Design Recommendations for the WCI Regional Cap-and-Trade Program describe the point of regulation for electricity imported into a WCI jurisdiction as the First Jurisdictional Deliverer (FJD). An FJD is defined as “the first entity that delivers… electricity [imported from non-WCI jurisdictions] over which the consuming partner WCI jurisdiction has regulatory authority.”

The Electricity Committee and Partners from the WCI jurisdictions carefully considered the practical and administrative aspects of both approaches, as well as their enforcement implications. Several problems were identified while continuing to work on this issue. There were serious questions regarding whether the common boundary approach would be workable and enforceable. The electricity could be coming into a WCI jurisdiction but the importer may not have any“presence” in that jurisdiction. The ability of a WCI Partner jurisdiction to require allowances for electricity that is not produced or consumed in its jurisdiction also raised questions of enforceability. It would also be possible that a given Partner could be required to cover the costs of monitoring and enforcing electricity that was generated and consumed outside that jurisdiction.

As a result of these issues, the WCI Partners determined that even with its shortcomings, the individual boundary option will be the approach used in the WCI region. The Partners identified an administrative variation where instead of directly regulating electricity importers, a state or province may directly retire allowances associated with those emissions. This may be a particularly useful approach for those states and provinces that have a small amount of imported power. The details of this approach have yet to be worked out. The WCI Electricity Committee will discuss this option with stakeholders in the following weeks. In addition, the eastern Canadian provinces are examining if it is feasible to have a sub-region with a common boundary by combining their efforts. For all of these approaches, the goal, as recommended by stakeholder feedback, is to apply a consistent price signal that treats imported and domestic electricity on a level playing field.

The WCI Partners appreciate the work that stakeholders and the Electricity Committee have put into developing approaches to including emissions from imported electricity in the cap-and-trade program scope. This has proven to be a particularly difficult issue to resolve, but the lessons we have learned will be useful in our on-going work on WCI and with the U.S. federal proposals. The Partners are committed to continue working with stakeholders to develop strategies that maintain a consistent price signal in the implementation of the individual boundary cap-and-trade program.