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Gas Pipelines Auctions

Fortnightly Magazine - January 1 1999

shipper wins the capacity auction but can't come up with the "molecules?" And then, what good does it do to win a bid on an upstream segment if another shipper comes away with the downstream rights? Should pieces of capacity be sold sequentially? What about auctioning off receipt and delivery points, as well? Then there's another whole set of problems concerning the sharing of information.

Meanwhile, in early November, the FERC announced a second conference, to be held on Dec. 8, with all issues open for discussion:

How do auctions affect pipeline cost recovery?

Can auctions accommodate pre-arranged deals for capacity release?

How do auctions affect transaction costs?

How would auctions coordinate with risk management through spot and futures commodity markets?

How would the amount of capacity "available" and open to auction be determined?

With these and other questions hanging in the air, we asked two industry experts - each was present at the October conference - to offer some thoughts.

- B.W.R.

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