THE U.S. TREASURY DEPARTMENT HAS ISSUED RULES that will allow all public power systems to participate in independent system operators without risk of losing the tax-exempt status of their bonds...
of the NRC rulemaking could be irrelevant. On Feb. 28, the Department of Justice's Antitrust Division received from the DOJ-appointed International Competition Advisory Committee a report calling for regulatory agencies to be relieved of antitrust review responsibility in mergers so as to consolidate the federal merger approval process. The report's primary purpose was to address international antitrust and competition policy issues, but it concluded that "federal antitrust authorities" are better able to conduct antitrust reviews than "federal sectoral regulators." A majority of the committee recommended "removing the competition policy oversight duty from the sectoral regulators and vesting such power exclusively in the federal antitrust agencies."
Carl J. Levesque is associate editor at Public Utilities Fortnightly.
Plant Divestiture - No More Winner's Curse?
By Bruce W. Radford
On March 31, with assistance from the energy consulting firm Charles River Associates, the Alberta Department of Resource Development was scheduled to open the season for qualification of bidders for an auction of generating assets that will differ from the typical plant sale conducted in the United States. The Alberta procedure will auction off power purchase agreements (PPAs) rather than the plants themselves.
CAPACITY RIGHTS. Buyers will acquire rights to capacity for up to 20-year terms. They may sell those rights at market prices to marketers, customers, the Alberta Power Pool (APP), or the independent transmission administrator. They accept the risk of a fixed monthly lease payment owed to TransAlta Utilities, which will remain the nominal owner of the generating units and enjoy certain incentives for exceeding target ratios for plant availability. However, bidders may submit a negative bid. If a negative bid should win, the PPA owner would actually receive a monthly payment from APP's balancing pool. A negative price might reflect the bidder's expectation that market revenues from plant output will fall short of lease payments owed to TransAlta to cover operating costs.
ASSETS AVAILABLE . The auction will cover rights to 32 thermal generating units (6,558 MW), grouped into 13 tranches of PPAs, plus a single PPA tranche for hydro facilities. The hydro PPA will be transferred to the Power Pool, with net proceeds allocated to the APP's balancing pool, and TransAlta retaining dispatch control to ensure proper coordination of hydro plant operation with water resource management. No one buyer may acquire more than 20 percent of total PPA capacity, nor an unbalanced combination of rights from plants with low and high marginal costs.
AUCTION FORMAT. The format is called a transparent "simultaneous ascending auction," opening all 13 thermal PPAs for bidding at the same time (and all remain open as long as bidding continues on any one PPA). Bidders are informed of the standing high bid and required minimum bid to remain active at the end of each round. An activity rule prevents bidders from sitting on the sidelines and then jumping in; bidders lose in successive rounds if they fail to submit valid bids in current rounds.
NO OVERBIDS? According