Progressive Flow Control (PFC) 
Restrictions on seasonal allowance withdrawal in the OTR NOx market have been put in place through the establishment of PFC. This structure allows for unlimited banking of allowances. However, if the amount of banked allowances in any year exceeds 10 percent of the total regional emissions cap, any emission withdrawals in the subsequent period in excess of 10 percent of the cap must be withdrawn on a two-for-one basis; two allowances must therefore be withdrawn to offset one ton of NOX emitted. 
Implementation of PFC is through a ratio which defines the percentage of each entity's bank available at 1:1. The ratio equals 10 percent of the next year's budget divided by the total bank. The ratio is applied evenly to all, regardless of whether their bank exceeds 10 percent of their own budget. 
Progressive flow control, if triggered, has a large impact because it discourages allowance banking due to the possibility that allowances will be de-rated by 50 percent. In addition, withdrawals are more costly if they occur at 2:1. As a result, PFC leads to more dramatic NOX price spikes and valleys. 

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Rajneesh Salhotra
Coal and Emissions Trading
Enron Global Markets
713.853.6764