Reported issue ID: 01/2022
Modification of the ascending-clock auction algorithm
by MVM CEEnergy Ltd.
Both network operators and network users are interested in the maximization of firm capacity booked, at an effective price. An efficient capacity allocation mechanism ensures on one hand non-discriminative access to capacities, but on the other hand does not hinder unnecessarily the access of system users to long-term capacity products. A modification of the current ascending-clock auction algorithm in the CAM NC is required to ensure that if during an auction capacities once overbooked, after the close of the auction no capacity remains unbooked.
In case of an ascending clock auction as per CAM NC, the auction shall close if the aggregate demand across all network users is less than or equal with the capacity offered, whereas network users shall book the capacity to the amount requested per announced price. The surplus capacity – meaning the capacity equal with the total capacity offered minus the thereby allocated capacity – remains unbooked even if in the previous round(s) network users were ready to overbook capacities.
A supplementary rule should be introduced to ensure that if any time during an auction the aggregate demand across all network users is greater than the capacity offered, the capacity which remains unbooked after the close of the auction, shall be allocated to the network users who once overbooked the capacity, at a price of the last bidding round where overbooking took place. In case of each relevant network user the capacity bid in the bidding round where the overbooking took place should be reduced by the capacity allocated at the close of the auction, which value should be the basis of the – preferably pro rata – allocation of unbooked capacities.
On the other hand the proposed modification prevents price manipulation, while the current system, where previously submitted capacity bids can be fully withdrawn without consequence, provides opportunity to drive up bidding prices.
Network Code on Capacity Allocation Mechanisms, Commission Regulation (EU) 2017/459
- Czech Republic
- Northern Ireland
- United Kingdom
- Other (ACER should initiate the modification of the ascending-clock auction algorithm in the CAM NC.)
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