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Auction Information

The auction includes simultaneous day-ahead energy auctions for firm-LD energy and recallable energy, along with an hour-ahead energy auction for non-firm energy.

General Background Information

On Oct. 17, 2008, Southern Company filed with the Federal Energy Regulatory Commission (FERC) amendments to its Market-Based Rate Tariff to incorporate a must-offer, energy auction. The proposal includes simultaneous day-ahead energy auctions for firm-LD energy and recallable energy, along with an hour-ahead energy auction for non-firm energy.

The purpose of the energy auction is to resolve perceptions that Southern Company could exercise horizontal market power through the physical or economic withholding of generation. The proposal was conditionally accepted by FERC on Dec. 18, 2008, and Southern Company filed their Compliance Filing accepting all conditions on Jan. 21, 2009. This Compliance Filing was accepted by FERC on March 25, 2009. The implementation subsequently began on April 23, 2009. The governing terms and conditions are set forth in Southern Company's Market-Based Rate Tariff, which is on file with FERC and accessible at www.ferc.gov.

One of the conditions set forth by FERC in their Dec. 18, 2008 acceptance order required the expansion of the energy auction to include third party sellers within one year. On October 19, 2009 Southern Company submitted a Compliance Filing to FERC that contained tariff revisions necessary to incorporate third party sellers per that acceptance order. This "Phase II" compliance filing was accepted by FERC on December 17, 2009. Phase II of the energy auction was subsequently implemented on January 4, 2010.

Participation in the auction as either a buyer or a seller is open to any entity that is qualified to transact in the wholesale markets of the Southern Balancing Authority Area. All prospective participants must execute a Participation Agreement before participating in the energy auction.

The following describes the particulars of the Phase II Energy Auction.
 

Day-Ahead Energy Auctions

The day-ahead energy auction consists of two simultaneous auctions - one for firm-LD energy and one for recallable energy. Both involve 50-megawatt blocks of energy for delivery "into Southern" during the 16-hour period from 6 a.m. to 10 p.m. The primary difference between these day-ahead products is the right, but not the obligation, of the seller to curtail recallable energy in the event of a supply-side disruption. The bid period for these two auctions will open at 12:00 p.m., two days prior to delivery and will close at 6:45 a.m., one day prior to the delivery day. These auctions will be run for each business day, Monday through Friday, excluding NERC holidays. Participants may submit offers to sell or bids to purchase into either or both of these day-ahead auctions. The outcome of each of these two auctions will include an auction clearing price, expressed in $/MWH, and a list of indicative "transactions" (i.e., sellers and buyers matched at the auction clearing price). It will be the responsibility of the buyers and sellers to confirm and finalize the transaction in accordance with their own enabling agreements.
 

Hour-Ahead Energy Auction

The hour-ahead energy auction will take place each hour of the day, 24 hours a day, seven days a week, including NERC holidays. This auction will be for one-megawatt increments of non-firm energy for delivery "into Southern" for the upcoming hour. The bid period will open at 75 minutes prior to the delivery hour and will close at 60 minutes prior to the delivery hour. Participants may submit offers to sell or bids to purchase into this auction. The outcome of each auction includes an auction clearing price, expressed in $/MWH, and a list of indicative "transactions" (i.e., sellers and buyers matched at the auction clearing price). It will be the responsibility of the buyers and sellers to confirm and finalize the transaction in accordance with their own enabling agreements.
 

Independent Monitoring of the Energy Auction

The energy auction will be monitored by an Independent Auction Monitor (IAM) that is approved by FERC. The IAM shall be responsible for ensuring that the energy auction is administered in accordance with the "Rules of the Energy Auction" and that Southern Company participates in accordance with the "Rules on Southern Companies' Energy Auction Participation." The Brattle Group currently serves as the IAM for the energy auction.
 

Independent Administration of the Energy Auction

In accordance with provision in the tariff, certain of the day to day aspects of the administration of the energy auction are permitted to be performed by an Independent Auction Administrator (IAA). TranServ International, Inc. currently serves as the IAA for the energy auction.
 

More Information

For general questions regarding the Southern Company Energy Auction, please see Frequently Asked Questions

For detailed information regarding the rules and regulatory framework of the Southern Company Energy Auction, please see Auction Rules and Compliance.

For information regarding participating in the bid-based energy auction, please see Auction Registration Process.
 

Information about Phase I of the Energy Auction

For information pertaining to Phase I of the Energy Auction (i.e., the period of the energy auction prior to Phase II whereby Southern Company was the only authorized seller), please see Phase I Energy Auction Information.

Business Practices

  1. Independent Auction Admin (IAA)

    The Independent Auction Administrator will serve as the first point of contact for Energy Auction questions and needs. Click the following link for Contact Information.

  2. Registration Process

    Auction Participants can download the necessary registration documents from the Auction Registration Process section of the Energy Auction website. The Phase II Participant Agreement must be executed by all Participants, and the OATI Non Disclosure Agreement (Annex B of Participant Agreement) must be executed by those who did not execute during Phase I.

  3. Accessing the Southern Company Energy Auction software

    Southern Company has contracted with OATI to develop and host the webMarket software being used for the Southern Company Energy Auction. After completing the registration process, auction participants will be assigned webMarket user logins by the Independent Auction Administrator. The webMarket software can be accessed directly at https://www.socowmkt.oati.com/socowmkt/sys-login.wml.

  4. User login IDs and security certificates

    The cost and number of webMarket administrator and user login IDs allowed for each auction participant is determined by the Participation Agreement. Each login ID requires the use of an OATI digital certificate. Auction participants are responsible for obtaining and managing these OATI digital certificates to the auction software. The auction participants may use their existing certificates or may obtain them directly from OATI. Southern Company currently is providing auction participants free of charge one (1) administrator login ID and up to three (3) user login IDs.

  5. Programmatic Access

    Within the Auction System, "Web Services" are available to facilitate automated uploading and downloading of various data. These Web Services are approved by the Auction Provider for programmatic access to the Auction System, and user manuals related to Web Services will be available in the auction system. Any additional questions regarding programmatic access should be addressed to the IAA.

  6. Submission of Auction Bids

    To make a request to purchase energy offered through the day-ahead energy (DAE) Auction or hour-ahead energy (HAE) Auction, auction participants must submit a bid in the appropriate auction. A bid contains any number of requested bid blocks. Bid blocks consist of a desired megawatt amount - in 50-MW increments for the DAE Auction; and in single, 1-MW increments for the HAE Auction - at a specified bid price. Bids also must indicate whether the bid block can be partially cleared or must be cleared "full" (i.e., all or nothing). Once an auction participant has entered a bid, that bid may be changed at any point during the auction period (e.g., changing previously submitted bid blocks, adding or removing bid blocks, or removing the entire bid). However, in accordance with the limitations in the energy auction software, each auction participant company is limited to one bid per DAE auction and one bid per HAE auction.

  7. Submission of Auction Offers

    To make a request to sell energy through the day-ahead energy (DAE) Auction or hour-ahead energy (HAE) Auction, auction participants must submit an offer in the appropriate auction. An offer contains any number of offer blocks. Offer blocks consist of a desired megawatt amount - in 50-MW increments for the DAE Auction; and in single, 1-MW increments for the HAE Auction - at a specified offer price. Offers also must indicate whether the offer block can be partially cleared or must be cleared "full" (i.e., all or nothing). Once an auction participant has entered an offer, that offer may be changed at any point during the auction period (e.g., changing previously submitted offer blocks, adding or removing offer blocks, or removing the entire offer). However, in accordance with the limitations in the energy auction software, each auction participant company is limited to one offer per DAE auction and one offer per HAE auction.

  8. Reasons for bid blocks being rejected

    Bid blocks will be rejected where the bid price is lower than seller offer prices. Bid blocks also may be rejected for any of the following reasons: Submission of the bid block results in a potential credit violation; Clearing of the bid block results in a potential credit violation; and a bid block submitted as full clearing cannot be resolved as part of an auction clearing.

  9. Reasons for offer blocks being rejected

    Offer blocks will be rejected where the offer price is higher than all bid prices. Offer blocks also may be rejected for any of the following reasons: the bid blocks available violate credit if matched with the offer block; and an offer block submitted as full clearing cannot be resolved as part of an auction clearing.

  10. Establishing & maintaining credit limits and company blocking

    The credit limit that each auction participant company has with Southern Company will be modeled within webMarket. This limit within the software will be synchronized to the company's official credit limit, as maintained by Southern Company, on a regular basis (numerous times daily). Credit limits within webMarket also will be updated after the close of each DAE Auction and HAE Auction.

    Participants wishing to participate as sellers must set up Counterparty Authorizations. In the webMarket system, this is referred to as "Match Blocking", and it disables Trading with counterparties for which Seller Participants specify. Likewise, Seller Participants must set up credit limits for all companies - these credit limits must be kept reasonably up to date because the webMarket system decrements credit for matched transactions - the default credit limit is zero.

  11. Methodology for evaluation of credit

    See clearing methodology.

  12. Notification of Potential Transactions

    Participants with matching bid blocks and offer blocks will be notified by webMarket after clearing.

  13. Scheduling

    As per the Auction Rules, unless otherwise agreed to between the buyer and seller, the buyer is responsible for obtaining necessary transmission for taking delivery of the transaction. The buyer is also responsible for submitting NERC tags for all HAE auction transactions and for DAE auction firm-LD transactions.

    As per the Auction Rules, the buyer is responsible for ensuring that the scheduling source that appears on the NERC tag is the same as that assigned by the auction software. If the auction software does not assign the scheduling source, then the scheduling source will be provided by the seller so as to allow timely submission of the NERC tag. Seller retains the right to reject without consequence to itself any tag that does not contain the proper scheduling source.

    As per the Auction Rules, the buyer is responsible for ensuring that the NERC tag contains the EnergyID number as assigned by the auction software. This EnergyID shall be located in the contract field of the physical path generator line. Seller retains the right to reject without consequence to itself any tag that does not contain the proper EnergyID.

  14. Scheduling Sources

    Seller Participants have the option to set up resource plans so that scheduling sources are automatically provided when a transaction match is created. This is not required, but a failure to provide this results in a "TBD" scheduling source (i.e., the seller must manually notify buyer of scheduling source).

  15. Failure to properly take delivery of energy

    For recallable energy and hourly transactions in which Southern Company is the seller and the buyer does not properly take delivery of the purchased energy, Southern Company will buy back the energy at 90 percent of the transaction price. If the buyer has netting in place with Southern Company, the buy back will correspond to a net payment to Southern Company in the amount of 10 percent of the total dollar value of the transaction as shown in the Transaction Summary.

    For recallable energy and hourly transactions in which the seller is not Southern Company and the buyer does not properly take delivery of the purchased energy, buyer and seller will mutually agree to appropriate compensation.

    Failure to take delivery includes, but is not limited to, the following reasons:

    Failure to obtain proper transmission service for the transaction.

    Failure to properly submit a NERC tag for the transaction by the scheduling deadline, including:

    1. An improperly formatted tag that is rejected for any reason by any Balancing Authority or Transmission Provider on the contract path.
    2. A NERC tag that is rejected by Southern Company because it contained a scheduling source other than that assigned via the auction software.
    3. A NERC tag that is rejected by Southern Company because it did not contain the assigned EnergyID (see Business Practice #9 below); and

    Failure to get a NERC Tag implemented because of a pre-existing TLR (the TLR was already in place when the auction opened).

    Note that a buyer may continue to attempt to submit properly formatted tags up to the tagging deadline.

    With respect to hourly non-firm transactions (i.e., the product sold in the HAE auction), both buyer and seller will have been deemed to have met their obligations with respect to delivery and receipt once the tag is implemented. The same is true for recallable energy transactions (i.e., one of the two products sold in the DAE auction) that have not been recalled. Transactions that are not fully delivered as a result of a TLR initiated after the tag has been implemented will be prorated based upon the actual MW delivered (i.e., neither party will be held responsible for the undelivered MW). Recallable energy transactions that are not fully delivered because they were recalled will be prorated based upon the actual MW delivered (i.e., neither party will be held responsible for the undelivered MW). For the firm-LD transactions (the other product sold in the DAE auction), standard rules and practices for the delivery and receipt of firm-LD products apply.

  16. Treatment of recallable energy

    Seller has the right, but not the obligation, to curtail recallable energy transactions for a qualifying supply disruption. A qualifying supply disruption may include the de-ration or unplanned outage of a seller-owned or controlled generating unit, the curtailment of a prescheduled purchase or the curtailment of a power purchase agreement.

    For an independent power producer, recallable energy is equivalent to a unit contingent transaction. As such, the seller would have the right to recall due to the loss or de-ration of that generating unit.

    For a marketer who does not own the supplying generation asset, the upstream should be a unit contingent or firmer product. In that event, the loss of the upstream supply will give the seller the right to recall. If the upstream product is nonfarm, loss of supply would be considered a failure to deliver.

    The following paragraphs describe how Southern Company will treat recallable energy:

    For Southern Company, a supply disruption includes the de-ration or unplanned outage of a Southern Company-owned or controlled generating unit that was included in the DAE available capacity calculation, as well as the curtailment of a DAE prescheduled purchase or power purchase agreement that was included in the DAE available capacity calculation. In the event of a supply disruption that affects the available capacity offered into the DAE auction, the fleet coordinator (Real Time Operations) shall determine if recallable energy transactions must be curtailed for reliability. If such transactions must be curtailed for reliability, the fleet coordinator shall instruct the energy coordinator (Hourly Trading) how many MWs to curtail and when to curtail them (e.g., 400 MWs beginning HE 12). Transactions equaling this amount of energy shall be curtailed for the remainder of the schedule in accordance with the curtailment priority established by the webMarket software.

    If the recallable energy transactions do not need to be curtailed for reliability, the energy coordinator shall determine if the transactions should be curtailed for non-reliability reasons. The energy coordinator shall determine how many of the eligible MWs should be curtailed and what time the curtailment should begin. Transactions equaling this amount of energy shall be curtailed for the remainder of the schedule in accordance with the curtailment priority established by the webMarket software.

    The energy coordinator or hourly scheduler will notify all counterparties with tags that must be curtailed. The counterparties have the right to buy through the full curtailment at the HAE auction price for recallable energy transactions curtailed for non-reliability purposes. If a counterparty does not choose to buy through the curtailment, the tag shall be curtailed. If a counterparty chooses to buy through the curtailment, the tag shall not be curtailed and the price for each hour thereafter shall be changed to reflect the hourly market clearing price. A counterparty that has chosen to buy-through a non-reliability curtailment shall have the right to terminate its buy-through by notifying the seller with one-hour's notice. The counterparty must terminate its buy-through for the remainder of the schedule. If the counterparty terminates the buy-through, the tag shall be curtailed.

    If Southern Company authored the tags that must be curtailed, the energy coordinator or hourly scheduler shall initiate the necessary tag market adjustments within the business practice constraints of the Balancing authorities and transmission providers who are in the physical path of the tags. If Southern Company is not the tag author, the energy coordinator or hourly scheduler will contact the tag author and request that entity to initiate a tag market adjustment.

  17. Financial bookouts

    Recallable energy transaction shall not be booked out with a firm-LD transaction unless otherwise agreed to by the buyer and seller

  18. Failure to consummate a transaction:

    If for any reason, the buyer and seller fail to consummate a transaction that was cleared through the Auction, the buyer and seller must notify the IAA within 1 business day.

  19. Invoicing of Auction Fees

    User fees and transaction fees per Annex C of the Participant Agreement will be invoiced by and payable to the IAA on a monthly basis so long as the balance owed is at least $100.00 or such amount has been owed for longer than 6 months. When total fees exceed the threshold or time limit, the IAA will provide Participant with an invoice that states the amount owed by Participant, which will be due and payable in accordance with invoice instructions on or before the tenth (10th) day after receipt of the invoice or if such day is not a business day then on the next business day.

  20. User Mistakes/Errors/Etc

    Any actions taken through the use of Participant Passwords (except through the fault or negligence of the Auction Provider) whether or not such actions were authorized are binding on Participant.

Announcement

February 21, 2017

Good afternoon.  Southern Company is excited to announce new changes to the Energy Auction and your interaction with it.  As you may be aware, the Federal Energy Regulatory Commission (FERC) recently accepted a number of changes to the Energy Auction that Southern Company proposed in December of 2016.  Three of these changes had been in effect for some time on a voluntary basis, but they are now part of the filed tariff:

  • The cost-based cap for all offers submitted by Southern in the Energy Auction does not include a demand charge.
  • The Southern Auction Administrator cannot access third-party data, except upon express permission of the Independent Auction Monitor (IAM).
  • The IAM will continue to provide annual reports to FERC regarding the Energy Auction.

Two changes are new, however, and one will directly affect how you interact with the Energy Auction.

  • Timing of the Hour-Ahead Auction:  Currently, the Hour-Ahead Auction opens at 75 minutes prior to the beginning of the Delivery Hour and closes 60 minutes prior to the beginning of the Delivery Hour.  As revised, the Hour-Ahead Auction will now open 85 minutes prior to the beginning of the Delivery Hour and close 70 minutes prior to the beginning of the Delivery Hour.  This change will take effect for all Hour-Ahead Auctions beginning on February 23, 2017, for power flow HE 13 (Central).  This means that the new timing window will first be used for the February 23 Hour-Ahead Auction that runs from 10:35 – 10:50 AM (Central).
  • Historical Bid/Offer Posting:  Currently, historical bids and offers by Auction participants are posted on a six-month delay.  As changed, this information will now be posted on a four-month delay beginning with the next monthly posting.  The information will continue to be available at http://www.southerncompany.com/about-us/energy-auction/historical-bids-and-offers.html

In addition to these changes, the following additional steps are being taken:

  • Into GTC Auctions:  In response to requests from participants, an auction system for the HourAhead Non-firm product and the Day-Ahead Firm Liquidated Damages (Firm LD) product deliverable into the Georgia Transmission Company (i.e., Into GTC) is now under development.  Further details regarding the mechanics of these auctions and the planned commencement date will be forthcoming; however, the goal is to have the Into GTC auctions up and running by early June.   
  • Bid/Offer Spread:  The criteria applicable to the posting of Energy Auction bid/offer spreads are being revised.  Recall that the current criteria for spread posting require at least three unique bidders and at least three unique offerors in a particular auction (with a participant able to be both a bidder and offeror).  Under the new criteria, a spread value will post when an auction has at least one unique buyer and one unique seller.  The new bid/offer spread calculator will be operational beginning with the change in the Hour-Ahead Bid Period on February 23, 2017.   
  • Hour-Ahead Price Posting System:  In an effort to further enhance transparency in the hour-ahead market, an electronic bulletin board is being implemented that reflects the average price of both purchases and sales by Southern of the hour-ahead “Into Southern” product.  Postings will be made the day after the transactions occur (e.g., averages for all hour-ahead purchases and sales for each hour (124) of February 2 would be posted on February 3 by 2 PM Central.  The price posting system will be operational beginning with the change in the Hour-Ahead Bid Period on February 23, 2017.

Southern Company looks forward to implementing these changes and additions.  It is hoped that they will enhance market activity in the Southeast and the utilization of the Energy Auction and its electronic platform.  As always, we value your input and appreciate your participation in the Southern Company Energy Auction.

Should you have any questions about these changes or about the Southern Company Energy Auction in general, please call or email the Southern Auction Administrator, April Gurley, at 205-257-2172 or algurley@southernco.com.

Phase I Energy Auction Information

On Oct. 17, 2008, Southern Company filed with the Federal Energy Regulatory Commission (FERC) amendments to its Market-Based Rate Tariff to incorporate a must-offer, bid-based energy auction. The proposal includes simultaneous day-ahead energy auctions for firm-LD energy and recallable energy, along with an hour-ahead energy auction for non-firm energy.

The purpose of the energy auction is to resolve perceptions that Southern Company could exercise horizontal market power through the physical or economic withholding of generation. The energy auction will supplement existing bi-lateral markets. The proposal was conditionally accepted by FERC on Dec. 18, 2008, and Southern Company filed their Compliance Filing accepting all conditions on Jan. 21, 2009. This Compliance Filing was accepted by FERC on March 25, 2009. The implementation of the energy auction will begin on April 23, 2009. The governing terms and conditions are set forth in Southern Company's Market-Based Rate Tariff, which is on file with FERC and accessible at www.ferc.gov.

Participation in the auction is open to any entity that is qualified to transact with Southern Company pursuant to their Market-Based Rate Tariff. All prospective bidders must be in good standing with Southern Company credit requirements consistent with the master power purchase/sale agreement between buyer and seller. An executed Participation Agreement is also required.
 

Day-Ahead Energy Auctions

There will be two simultaneous day-ahead energy auctions – one for firm-LD energy and one for recallable energy. Both involve 50-megawatt blocks of energy for delivery "into Southern" during the 16-hour period from 6 a.m. to 10 p.m. The primary difference between these day-ahead products is the right of Southern Company to curtail recallable energy in the event of a supply-side disruption. The bid period for these two auctions will open at 12:00 p.m., two days prior to delivery and will close at 6:30 a.m., one day prior to the delivery day. All winning bidders will pay the same market clearing price, expressed as an implied heat rate to be applied to the Henry Hub midpoint price published by Platts Megawatt Daily. These auctions will be run for each business day, Monday through Friday, excluding NERC holidays. All transmission-related arrangements and costs, including tagging, are the responsibility of the winning bidders.
 

Hour-Ahead Energy Auction

There will be an hour-ahead energy auction each hour of the day, 24 hours a day, seven days a week, including NERC holidays. This auction will be for one-megawatt increments of non-firm energy for delivery "into Southern" in the upcoming hour. The bid period will open at 60 minutes prior to the delivery hour and will close at 45 minutes prior to the delivery hour. Winning bidders will all pay the same market clearing price ($/MWh), and each is responsible for the transmission-related arrangements and costs, including tagging, associated with its transaction.
 

More Information

For detailed information regarding the rules and regulatory framework of the Southern Company Energy Auction, please see Auction Rules and Compliance.

For information regarding participating in the bid-based energy auction, please see Auction Registration Process.