Washington Has Fixed Its Utilities’ Free Allowances Through 2030

Washington’s Department of Ecology completed its free-allocation schedule for the second compliance period this month. It published the no-cost allowances for electric utilities on 1 October and for natural gas utilities on 21 October. Together they give the state’s utilities 19.4 million allowances for 2027, falling to 12.3 million in 2030.

Utilities receive about 40% of each year’s allowance budget from 2023 to 2029 and 35% in 2030. Their allocation falls 37% between 2027 and 2030, against a 26% fall in the budget, and the gap opens almost entirely in 2030.

The schedules also decide how many of those allowances reach the auction. Gas utilities must consign a share that rises to 100% in 2030, and electric utilities face a consignment requirement from vintage 2027. At Washington’s three auctions in 2026, allowances consigned by utilities made up 49% of the current-vintage allowances on offer, up from 22% in 2023.

Ecology Pub 23-02-031 (rev. 1 Oct 2026) and 23-02-074 (rev. 21 Oct 2026); RCW 70A.65.130(2)(a); Ecology auction summary reports #1 to #15; Climate Decode calculations.

Washington gives no-cost allowances to utilities on behalf of their customers. Electric utilities subject to the Clean Energy Transformation Act (CETA) receive allowances to offset the program’s cost burden on their retail load (WAC 173-446-230). Natural gas utilities receive allowances on a fixed path from their 2015–2019 emissions (WAC 173-446-240). Energy-intensive, trade-exposed manufacturers have a separate schedule and are not covered here.

Exhibit 1 · No-cost allowances to Washington utilities and the annual budget, 2023–2030

Ecology Pub 23-02-031 (rev. 1 Oct 2026) and 23-02-074 (rev. 21 Oct 2026); WAC 173-446-210 Table 210-1 as adopted; Climate Decode.

In the first compliance period, 2023 to 2026, the two groups received between 38% and 40% of each year’s budget. The final schedules keep that share near 40% through 2029. In 2030 the utilities receive 12.3 million allowances, 35% of a 34.8 million budget (Table 1).

Table 1 · Budget and utility allocation, 2026–2030 (million allowances)

Budget: WAC 173-446-210 Table 210-1 as adopted. Allocation: Ecology Pub 23-02-031 and 23-02-074 as revised in October 2026. Electric utilities include 231,500 allowances for administrative costs in 2027.

Puget Sound Energy is the largest recipient in both schedules, with 4.58 million electric and 3.48 million gas allowances for 2027, 42% of the utility total.

The two schedules come from different formulas.

• Electric utilities. Ecology prices each utility’s forecast retail load by the resource expected to serve it, at 0.4354 tonnes per MWh for natural gas, 0.428 for unspecified market purchases and zero for coal from 2027 and for non-emitting and renewable resources (Eq. 230-1). The forecasts are those approved by the Utilities and Transportation Commission or the utility’s own board, consistent with its CETA clean energy implementation plan. A utility that is not a load-following customer of a federal power marketer has its emitting load set at no less than 5% of retail load. The 2027 figures also carry 231,500 allowances for administrative costs, of which 117,000 may only be consigned or transferred to a federal power marketer (WAC 173-446-230(5)).
• Gas utilities. Each of the six utilities has a baseline equal to its average covered emissions over 2015–2019, 8.67 million tonnes in total and unchanged since 2023. Allocation started at 93% of baseline in 2023 and fell 7 points a year to 72% in 2026. Under the amendments that take effect on 24 October 2026, it falls 6.1 points a year to 47.6% in 2030, then 2.3 points a year from 2031 to 2050 (WAC 173-446-240(2)).

Ecology publishes the electric schedule by 7 October of the year before each compliance period and may update it every year (WAC 173-446-230(3)). The gas schedule rounds each utility to whole allowances on the previous year’s rounded figure, which leaves the 2026–2030 totals 1 to 3 allowances a year below Ecology’s June forecast (Publication 26-14-066).

Electric utility allocation falls from 11.43 million allowances in 2029 to 8.14 million in 2030, a drop of 3.29 million. Grant County PUD falls from 2.76 million to 0.68 million, Douglas County PUD from 0.68 million to 0.12 million and Pend Oreille County PUD from 0.32 million to under 4,000. Together the three account for 2.95 million allowances, or 90% of the drop. Puget Sound Energy, the largest recipient, falls by 0.24 million.

2030 is the first year of CETA’s greenhouse gas neutral standard, which requires each utility to cover its retail sales with non-emitting and renewable electricity, with up to 20% met through alternative compliance (RCW 19.405.040). Eq. 230-1 converts each utility’s own resource forecast into allowances, so when a forecast drops emitting purchases in 2030, the allocation drops with it. Ecology’s June forecast put 2030 electric allocation at 10.96 million; the final schedule is 2.82 million lower.

Gas utilities could not hold all of their allowances even in the first compliance period. They had to consign at least 65% to auction in 2023, and the minimum rises 5 points a year to 100% in 2030 (RCW 70A.65.130(2)(a)). Because the share rises while the allocation falls, the minimum consigned volume declines slowly, from 5.24 million allowances in 2023 to 4.85 million in 2027 and 4.13 million in 2030, when every gas utility allowance has to be sold. The proceeds must benefit customers, prioritizing low-income customers (RCW 70A.65.130(2)).

Electric utilities face a consignment rule from vintage 2027. Unless exempt, a utility must consign the smallest of four amounts, each its no-cost allocation less a measure of its own compliance need or less 100,000 (Eq. 230-2 to 230-5). It is exempt if its allocation is below 100,000 allowances, below twice its compliance obligation as a first jurisdictional deliverer of electricity, or below twice the emissions of the power it buys from a federal power marketer (WAC 173-446-230(6)). Ecology’s determinations for vintage 2027 exempt 50 of the 56 electric utilities, 43 of them because they receive fewer than 100,000 allowances. The other six, the Chelan, Douglas, Grant, Okanogan and Pend Oreille PUDs and Tacoma Public Utilities, stay open until their 2027 obligations are known. Ecology publishes the volumes they must consign by 31 December 2028, and the allowances are due at auction by 31 December 2029.

Utilities have consigned more each year. Consigned allowances, gas and electric together, made up 22% of the current-vintage allowances offered at Washington’s auctions in 2023, 32% in 2024, 35% in 2025 and 49% at the three auctions held so far in 2026 (Exhibit 2). In September, utilities supplied 3.48 million of the 6.28 million allowances offered, 55%. Over the same period the state-owned allowances Ecology offers at each auction fell from about 5.3 million in 2024 to 2.8 million in 2026.

Exhibit 2 · Current-vintage allowances offered at Washington’s quarterly auctions, 2023–2026

Ecology auction summary reports, auctions #1 to #15; Climate Decode.

As Ecology’s own offering shrinks, consignment decides a growing part of each auction’s size. When a utility consigns, and how much, now changes the supply that bidders see from one quarter to the next.

• 7 October each year. Ecology updates the electric schedule and the consignment exemptions for the coming vintage; the vintage-2028 determinations are due by 7 October 2027 (WAC 173-446-230(3), (6)(c)).
• 31 December 2028. The first published consignment volumes for electric utilities, for vintage 2027, due at auction by 31 December 2029.
• 1 October 2030. Ecology’s deadline to adopt the electric utility allocation for 2031–2045 (RCW 70A.65.120(2)(d)). No electric utility receives free allowances after 2045.

Climate Decode · Advisory

Which of your utility allowances must be consigned, and when?

We track every allocation schedule, consignment rule and auction record across the Washington and California–Québec markets.

Sources

• Ecology, Allowance Allocation to Electric Utilities for 2023–2030, Publication 23-02-031, revised 1 October 2026, and allocation workbook
• Ecology, Allowance Allocation to Natural Gas Utilities for 2023–2030, Publication 23-02-074, revised 21 October 2026, and allocation workbook
• Ecology, Publication 26-14-066 (June 2026), allocation forecast Tables 13 and 14
• WAC 173-446-210 (Table 210-1), -230 and -240, as adopted by the CR-103 order filed 23 September 2026, effective 24 October 2026
• RCW 70A.65.120 and 70A.65.130 (Climate Commitment Act); RCW 19.405.040 (Clean Energy Transformation Act)
• Ecology, auction summary reports, auctions #1 (28 February 2023) to #15 (2 September 2026)
• Climate Decode WCI analysis, October 2026

This article is market analysis provided for information only and is not investment advice.