Washington state on Tuesday will hold its first cap-and-trade auction, which some companies anticipate will raise the cost of energy and manufacturing, according to filings with the Securities Exchange Commission.

Cascade Natural Gas projects cap-and-trade could increase customer bills by about 23% by 2035 and 78% by 2050, the Kennewick-based utility’s parent company, MDU Resources Group, reported Friday in its annual report to the SEC.

Other utilities said it was premature to project rate hikes, but expected to incur costs complying with cap-and-trade and will seek to recover the money through rate increases.

The Department of Ecology will release auction results March 7. After that, utilities will start to respond, Northwest Gas Association executive director Dan Kirschner said Tuesday.

If allowance prices are high, utilities could be encouraged to invest in lower-carbon renewable natural gas, he said.

“It begins to define economic choices,” Kirschner said. “The bottom line is that the whole idea of cap-and-trade is you assign a cost to carbon emissions, and it will increase the cost.”

The Legislature enacted cap-and-trade, the centerpiece of Gov. Jay Inslee’s climate agenda, by passing the Climate Commitment Act.

Oil refineries, natural gas companies and large manufacturers are obligated to acquire one allowance for every ton of greenhouse gases they emit.

The number of allowances will be limited and reduced each year. Ecology will hold four auctions a year, raising billions of dollars for state government.

Unlike a gas tax or sales tax, the impact on consumers will be unclear. For now, it’s apparently unclear to companies how much cap-and-trade will cost the private sector.

HF Sinclair Corp., which has an oil refinery in Anacortes, reported Tuesday to the SEC that it was “too early to predict the financial and operational impact” of cap-and-trade.

Spokane-based utility Avista Corp. reported cap-and-trade will impact its natural gas and electric businesses.

“We intend to seek recovery of costs associated with implementing the CCA through the ratemaking process,” Avista stated in its annual report.

Nearly 6.2 million allowances will be up for bid Tuesday. Companies that must acquire allowances and investors seeking to sell allowances on an unregulated secondary market will type in bids and hope for the best.

Ecology has set a floor price of $22.20 and a ceiling price of $81.47 per allowance. All successful bidders will pay the “settlement bid,” the lowest bid before allowances are taken.

Electric utilities will receive “no-cost allowances,” a feature of cap-and-trade intended to hold down electric rates. 

The free allowances may not cover all costs if cap-and-trade pushes up the market price of electricity, Washington Public Utility Districts Association policy director Nicolas Garcia said.

“I think it will increase costs. The question is whether it’s substantive or not,” he said. “We won’t know for awhile which it is.”

Wood-products company Boise Cascade does not have to acquire allowances, but expects cap-and-trade to affect its Washington mills by increasing the cost of natural gas, transportation fuels and electricity, according to its annual report to the SEC.

Kaiser Aluminum, which has a plant in Spokane, reported that greenhouse gas regulations could restrict the supply and raise the price of natural gas, reducing the company’s competitiveness in the global economy.