Brattle experts in auction theory assist clients by serving as auction valuation and bidding advisors and auction managers in a variety of settings in the electric power industry. We are also involved in optimal auction design and have been retained by bidders around the world to advise on auction strategies in other industries, including telecommunications, providing support on all aspects of the auction process.
- Definition of items sold (spectrum block, power supply tranche size, size of emission right)
- Restrictions on items that can be won (spectrum cap, capacity cap)
- Rules of the auction, including:
- Auction format (single v. multiple round, open v. closed information)
- Activity rules
- Stopping rules
- Auction evaluation criteria
- Sourcing specialized software (auction programs, web interfaces)
- Preparing auction documentation
- Publicizing the auction to potential bidders and responding to their inquiries
- Qualifying bidders
- Training qualified bidders
- Running the auction or procurement
- Disseminating auction information, such as round results, including reports to regulators
For three utilities in Pennsylvania, Brattle designed and managed the procurement of solar photovoltaic alternative energy credits (SPAECs) on multiple occasions and submitted testimony describing the procurement process and benchmarking the results against expected market prices. Responsibilities included: (1) designing the auction rules and bid forms; (2) overseeing the provision of auction-related information on the procurement website; (3) corresponding with interested bidders; (4) interacting with company personnel regarding bidder credit issues; (5) hosting bidder information sessions; (6) evaluating bid materials and determining the winning bidders; (7) building a financial model to determine the likely value of the solar energy credits; (8) providing a benchmarking study to determine if the bids were reflective of market fundamentals; and (9) drafting a report to the Pennsylvania Public Utility Commission to secure approval of the procurements.
For utilities in Ohio and Pennsylvania, a Brattle principal submitted testimony on multiple occasions that described the design, management, and implementation of an auction process to serve Standard Offer Service customers. We also participated in the process for developing software to implement the auction and identify the winning bidders.
For an unregulated trading affiliate of a regulated utility, Brattle provided strategic bidding advice and financial analysis in a multi-round ascending clock auction to acquire purchase power agreements (PPAs) for virtually divested generation assets. We assisted in the development of financial models to value the various PPAs, and in formulating between-round bidding strategies, including helping with algorithms to estimate the remaining amount of eligibility of competing bidders.
Brattle serves as the Independent Auction Monitor (IAM) for the Southern Company energy auction. Southern Company must supply its excess power resources under specified terms and conditions into a day-ahead and hour-ahead energy auction that is overseen by an external monitor. Our role is to: (1) verify Southern's calculations of available capacity to offer into the auctions; (2) confirm that any transmission service necessary to accommodate a purchase under the auction is not unreasonably withheld; (3) verify that the auction has cleared properly; (4) ensure that internal data control restrictions are maintained to protect bidder information; (5) report complaints to the Federal Energy Regulatory Commission (FERC); and (6) independently file reports with the FERC regarding the auction.
For several different transmission lines owned by different clients, Brattle has designed and managed open season processes to sell transmission scheduling rights. Brattle’s responsibilities have included: designing the auction, its rules, and the bid forms; developing marketing materials and conducting market analyses to assist bidders in understanding the value of the transmission rights; hosting a website and overseeing its provision of auction-related information; responding to bidder questions; developing software to determine the combination of bids that maximizes seller revenue and identifying the winning bidders; and preparing a report for the Federal Energy Regulatory Commission (FERC).
Complex business and legal matters require intellectually honest and analytically rigorous solutions that are thoughtfully developed and clearly communicated. We apply economic and finance principles with uncompromising quality to achieve clarity in the face of complexity. Independent analysis, responsive execution, and compelling presentation. That’s Brattle. That’s the Power of Economics.