Remember that time you went to an auction and you bid on 21 times as many items as you intended to? No, of course not. Who would do that?
Power company Edison International is who.
Edison, owner of the state’s second-biggest power utility, submitted a proposal in the wrong format and offered to buy 21 times more allowances than it wanted on Nov. 14, documents obtained by Bloomberg show.
When the state Air Resources Board said last month that it had received three bids for every available permit, it failed to mention that Edison accounted for nearly 72 percent of the offers. Had the company submitted its proposals in the right format, about 225,000 permits would have gone unsold at auction, Bloomberg calculations based on data from the report show.
Ha ha. Oops! If Edison had bought 72 percent of the 28.7 million credits offered, which sold at the unexpectedly low price of $10.09, that would have been an investment of about $208 million.
It wasn’t though.
Most of Edison’s bids were eventually disqualified after exceeding auction limits, and the company ended up buying 4.05 million allowances, still 1.61 million permits more than it had intended to, according to an Edison report presented to company executives. Permits sold for $10.09 each, 9 cents above the state’s lowest allowable price, known as the “floor,” the air board said. …
On Dec. 6, California’s air board released a second set of results from its auction, saying there were just 1.06 bids for every permit offered in the Nov. 14 sale once it disqualified bids from a “very small number of auction participants” who exceeded purchasing, holding or bid guarantee limits. Permits still sold out at 9 cents above the floor, it said.
So Edison spent about $40 million — $16 million more than anticipated. Be on the lookout for a new line item on your bill next month, Edison customers.
And if you happen to know any executives at Edison International, you might kindly suggest that they stay away from eBay.
An Edison International executive, circa 1959.