Information Session on CESUR Electricity Auctions in Spain
Madrid, Spain
29 April 2008
Hosted By: NERA Economic Consulting
NERA Senior Consultant Amparo Nieto led an information session, "The Mechanism of the Fifth CESUR Auction," in Madrid on 29 April 2008. The session was open to all firms interested in participating in the next CESUR electricity auction, which is scheduled to take place on 17 June 2008. The purpose of the session was to inform prospective participants about the proposed rules for the auction, the products and contract terms, the key phases of the auction process, and the steps that all interested firms must follow in order to qualify as a Selling Agent.
CESUR Auctions complete the range of possibilities for the distribution companies in Spain and Portugal to acquire energy for those electricity consumers who have not chosen a competitive retailer, for delivery periods of up to one year. In June 2008 two products will be auctioned simultaneously: a three-month base load product and a six-month base load product, both for supply within the second half of 2008. Similarly to the previous auctions, the fifth CESUR Auction will use a multiple-round descending clock auction format. Under this format, the Auction Manager names a price at the beginning of every round and selling agents bid the quantities they are willing to sell at that price. The Auction is called a descending clock auction because prices "tick down" throughout the Auction, starting high and being reduced gradually at every round until the aggregated supply bid is just sufficient to meet the load to be procured. Ms. Nieto explained the particular characteristics of a two-product auction, which allows agents to switch blocks of energy between products to respond to changes in the relative prices throughout the auction.
Since March 2007, NERA has acted as the Auction Manager for all CESUR auctions, under the legal framework of Ministerial Order ITC/400/2007. NERA's role requires proposing the auction rules, managing the auction itself and administering the qualification process. All auctions are held under the direct supervision of the Comisión Nacional de Energía (CNE), the regulatory entity. At the end of every auction the CNE establishes whether the auction has been held in an objective, competitive, and transparent manner.
The Prequalification phase for the fifth auction is now open to all interested agents. The Guide and all information session materials are available at the auction website (www.subasta-cesur.eu). All prequalified agents are allowed to submit comments to the draft auction rules, which are also available at the same website.
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