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News Digest

Fortnightly Magazine - April 1 2000

to Jan Paul Acton and Douglas R. Bohi, each a vice president at Charles River, the unusual auction format was made possible because most generating resources in the province operated at or below market rates, posing no problem with stranded costs and thus giving little incentive to the plant owner to sell the bricks and mortar to guarantee recovery of transition costs.

Acton and Bohi add that under Alberta's transparent format, bidders should be able to discern true market valuations, avoiding the "winner's curse" of bidding more than needed to win the day, or the fear of the winner's curse, which by contrast encourages bidders to underbid and curtail auction proceeds.

For more detail, see www.resdev.gov.ab.ca/electric/index.htm, and www.auctionppa.com.

 

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