NERA was retained to develop recommendations for ENMAX Energy Corporation (ENMAX), in Alberta, Canada, for the design and implementation of a competitive bidding process to secure energy supply for its Regulated Rate Option (RRO) customers to be submitted as part of ENMAX’s energy price setting plan application. NERA fully specified the products to be offered in the auction as well as the design of the competitive acquisition process. The team developed all protocols required for implementation of the procurement method in the Alberta market, including the setting of auction starting prices and competitive safeguards to ensure a competitive bidding environment.

NERA also prepared an analysis to determine whether the Alberta market can support the procurement process and filed its recommendation with the Alberta Utility Commission, including detailed rules for the auction process and protocols for ENMAX to implement the procurement method. Using our method, three products are procured simultaneously: load-following energy, blocks of 7x24 energy and blocks of 7x16 energy.

NERA designed a multi-round descending clock auction format that provides bidders with real-time marketplace information and produces the market’s view of the relative prices of the three products. To comply with legislation, the schedule and corresponding protocols enable three auctions to take place in each month and bidding to take place within a fixed window of 1 to 2 minutes to minimize the auction length. The design enables ENMAX to manage the auction using pre-established protocols including an algorithm for price decreases each round based on relative prices as reflected in bidding behavior, without the need to exercise discretion. The auction design also includes competitive safeguards to ensure a competitive environment, including a bidder cap and contingency plan.

The Alberta Utilities Commission approved the competitive acquisition process, and NERA’s analysis of the readiness of the Alberta market proved correct.