Re: examples of auction processes that worked

Steve,
I'm not sure this is on point, but perhaps some parallels can be drawn. In
between working at the PUCO, Kerry worked at NRRI. He has a call in to them
on this issue and will respond to you directly since I will be travelling
this afternoon.
Janine
---------------------- Forwarded by Janine Migden/DUB/EES on 10/02/2000 09:16
AM ---------------------------

Roy Boston
10/02/2000 09:10 AM
To: Janine Migden/DUB/EES@EES
cc: Kerry Stroup/DUB/EES@EES
Subject: Re: examples of auction processes that worked

Janine -- I do not have a good example of this for electricity but in the gas
industry the manner in which FERC allowed existing LDC customers of
interstate pipelines to retain the capacity they needed while permitting
unneeded capacity to be bid out may be helpful. Several parallels are
manifest between the two industries: 1) they are both wholesale markets ; 2)
cpacity contracts can be long-dated (exceed 10 years in some instances); 3)
LDCs were able to retain capacity on a evergreen basis; 4)temporarily unused
capacity became released in to the secondary market and was available for
recall upon terms imposed by the releasing entity; and 5) this mechanism
amounted to an auction with a "max rate" ceiling but resulted in reliable
wholesale servioce to those who needed it the most. We may not want to use
this example because it did not represent a true dutch auction scenario that
would permit us to maximize the benefit of long-dated contracts. However,
the gas industry may provide some example of how bidding can effectively
reallocate scarce resources over numerous competing interests and result in a
reliable system that provides wholesale capacity growth.

Janine Migden
09/29/2000 03:57 PM
To: Kerry Stroup/DUB/EES@EES, Roy Boston/HOU/EES@EES
cc:
Subject: examples of auction processes that worked

Any ideas? the only thing that strikes me is when some regulators proposed
competitive bidding of wholesale power as a precursor to retail access.
---------------------- Forwarded by Janine Migden/DUB/EES on 09/29/2000 03:54
PM ---------------------------
From: Steven J Kean@ENRON on 09/29/2000 03:47 PM
Sent by: Steven J Kean@ENRON
To: Mark Schroeder/LON/ECT@ECT, Tom Briggs/NA/Enron@Enron, Robert
Hemstock/CAL/ECT@ECT, Peter Styles/LON/ECT@ECT, Daniel
Allegretti/HOU/EES@EES, Steve Montovano/DUB/EES@EES, Janine
Migden/DUB/EES@EES, Aleck Dadson/TOR/ECT@ECT, Paul Dawson/Govt.
Affairs/LON/ECT@ECT
cc:
Subject: examples of auction processes that worked

Jeff Skilling proposed a solution to Gov Davis to solve the supply and
pricing problems in the California market. In summary, the proposal would
have a neutral party conduct an auction wherein the utilities would seek bids
for 5-10 year packages of power from suppliers. The gov asked if anyone had
successfully conducted such an auction in the industry already.

I need your help to identify and describe any such examples (European or
North American) by mid day Monday. Jeff and I will have a follow up call with
the governor on Monday.

Thanks