US power companies regulated under RGGI increased their holdings of carbon allowances in 2014 despite a significant increase in secondary market activity, according to an annual review by the market’s official monitor published on Tuesday.

The review by Potomac Economics found that compliance entities held 85% of the allowances in circulation at the end of 2014, up from 81% a year earlier.

The numbers could mean a decline in speculative activity or that companies shifted trading activity to futures from spot.

The report added that while RGGI’s quarterly auctions were still the primary means the firms acquired allowances, futures trading volume rose 38% year-on-year and peaked during the fourth quarter of 2014.

Some 95 million allowances changed hands on ICE during Q4, ahead of RGGI’s Mar. 2 compliance deadline when power plants across the nine north-eastern states had to surrender enough allowances to match their emissions over the 2012-2014 period.

The Potomac report found no evidence of anti-competitive behaviour and raised no material concerns about RGGI’s auction practices.

It said the average 2014 auction clearing price was $4.72, a 62% increase from $2.92 in 2013, while secondary market prices were “generally consistent with auction prices” at an average price of $4.82.

The number of auction participants remained steady at an average of 45 bidders per sale.

By Ben Garside – ben@carbon-pulse.com