Credit auctions: Hunter River Salinity Trading Scheme

Bidders must comply with the following rules:

1. Anyone that wishes to bid on the day of the auction must first register as a bidder with the EPA by completing and submitting a bidder registration form.
2. A person cannot register to bid for credits for more than one person or legal entity. Each person may only bid for credits for themselves or the company they have registered to represent.
3. Auction participants who do not hold a NSW Environment Protection Licence must provide the original of a bank guarantee for the amount of their intended maximum bid price. Bank guarantees are to be made out to the EPA and have an expiry date of 31 July of the year of the auction.
4. Successful bidders must pay the value of the highest losing bid. A bidder who wins five credits, for example, will pay the value of the five highest losing bids. Losing bids submitted by this bidder are excluded from this calculation.
5. The minimum starting bid is $250.00.
6. Each bidder may lodge one bid only for multiple numbers of credits according to the following rules:
   1. Bids must be lodged on the auction website within the auction period.
   2. All bids must state the number of credits the bidder wants and the maximum price they will pay for each credit, also known as a ‘bid schedule’ (for example, 10 credits at $500 each, 5 credits at $300 each, 2 credits at $250 each), noting that a total of 200 credits are available at auction.
   3. Bids must be in whole credits and may range from 1 to 200 credits. There is no cap on the number of credits a single bidder can purchase, again noting that only 200 credits are available.
   4. If the EPA has required a bank guarantee or bond at the registration stage, then bidders cannot bid beyond this amount. In the case of tied bids, the winner will be determined randomly.
   5. Bids must be in whole dollars.
   6. All bids must be genuine and cannot be withdrawn or changed once submitted on the website.
7. The auction will have a time limit of nine hours, running from 09:00 hours to 18:00 hours (EST).

The EPA will give each registered bidder a log-in identification number and secure password following successful registration.

After the auction the EPA issues a tax invoice to successful bidders, who will have 30 days to settle their accounts. All successful bids must be paid. All credit prices will include Goods and Services Tax (GST). The EPA will remit the appropriate amount of GST to the Australian Taxation Office.

After the auction, all successful bidders must ensure that they are registered on the scheme's credit register as credit traders. Under the Regulation, credits may only be transferred from the NSW Government to a registered credit trader. The EPA will adjust the credit register once all successful bidders have settled their accounts.

Potential bidders should note that anyone who purchases credits at these auctions will be obliged to contribute to the costs of running the scheme in accordance with the Regulation.

The EPA will prepare a report after each auction and place it on the EPA website. As a minimum the report will include:

• the allocation of the 200 new credits at the end of the auction and on settlement
• the name of any defaulters
• the auction-related costs, and
• any recommendations for the next auction, including auction design amendments.

The EPA uses the auction proceeds to pay the auction costs. Any additional funds are used to offset the costs of the scheme. This reduces the annual contributions paid by scheme participants. If the auction proceeds are less than the auction costs, the shortfall is added to the scheme costs and recovered from participants via their biannual contribution.

If a successful bidder does not settle their account by the due date, the EPA has the following courses of action available to it:

• pursue the default through legal processes
• publish the defaulter’s name in the auction report, which will be published on the scheme website, and/or
• require a bond or bank guarantee for the next auction.

The EPA will offer any residual credits for sale (any credits that are not sold after successful bids have been settled), at the highest settled price from the auction. This will ensure that credits cannot be undervalued by subsequent sales. The EPA will sell residual credits at this price on a first-come-first-served basis up until 6 months before the next auction.

Any credits that the EPA still holds at that time will be auctioned at the next auction with the next batch of 200 new credits. It should be noted that the life of the credit is 10-years starting 1 July from the year it is first offered at auction and is not affected by when the credit is transferred from the EPA to the new owner.