WASHINGTON - Prices for utility permits to emit the greenhouse gas carbon dioxide in the U.S. East fell in the sixth quarterly auction of the allowances, states in the regional market said on Friday.

It was the third auction running that prices have fallen in the Regional Greenhouse Gas Initiative cap-and-trade market, a group of 10 states in the U.S. East that regulate the greenhouse gas from power plants.

Emissions prices for 2009 allowances in the auction, held by RGGI earlier in the week, cleared at $2.05 per ton, down 14 cents from the previous auction.

The auction rose nearly $62 million for the states, bringing the total amount from the six auctions to $494 million. The states intend that auction proceeds go to programs to increase energy efficiency, such as replacing drafty doors and windows in homes and buildings and upgrading inefficient heating equipment.

RGGI is showing that cap-and-trade works, said David Littell, the commissioner of the Department of Environmental Protection in Maine, one of the 10 RGGI states.

Traders have said delays in the federal government forming an emissions market have hit prices for allowances. In addition, the weak economy has reduced output of greenhouse gases as demand for electricity wanes.

Increased utility demand for natural gas, which emits about half the carbon dioxide as coal does, has also helped cut output of carbon dioxide.

Allowances for 2012, which may be sold in future auctions according to each state's regulations, sold for $1.86 a ton, down a penny from the previous auction.

The states in the RGGI pact are: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.

(Reporting by Timothy Gardner, Editing by Marguerita Choy)