Bilateral cochlear implantation is becoming the standard of care for patients with sensorineural hearing loss with demonstrated improvements over unilateral use in everyday tasks, such as sound localization ability. However, even with bilateral implantation, performance in these tasks is still poorer than that of normal hearing listeners. The gap in performance has often been attributed to the poor encoding of fine structure interaural time differences (ITDs) by clinical processor. However, in theory, the signal processing employed in clinical processors should still encode envelope ITDs with some degree of fidelity. In this work, we quantitatively measured the ability of Cochlear CP910 processors to encode envelope ITDs, while running the Advanced Combinational Encoder (ACE) strategy. Results suggest that while the processors are able to support relatively good envelope encoding, the peak-picking approach of the ACE strategy degrades the computation of ITDs by encoding spectral information in different frequency regions in the two ears. Our results may explain the poorer sound localization performance observed in cochlear implant users who use the ACE strategy, but cannot account for the poorer sound localization performance observed in cochlear implant users in general.