In preparation for a major workshop on capacity auctions, FERCon Friday issued a staff paper that provides an overview of thesubject – the benefits of auctions, factors to be considered whendesigning auctions, the different types of auctions, the use ofauctions in the pipeline industry today and a glossary of auctionterms.

The 35-page paper, titled “Auctions and Their Use in Natural GasMarkets,” provides mostly “background information” on the auctionprocess, and is intended to “stimulate comment and criticism” fromthose planning to attend FERC’s workshop on Oct. 20th. TheCommission also has indicated that it may hold a follow-up workshopto address the issue.

The paper, which was prepared by FERC’s Office of EconomicPolicy, noted that gas transportation capacity was uniquely suitedfor the auction process because of the fluctuating nature ofsupply, demand and price. In addition, it would give shippers an”equal opportunity” at bidding, limit price discrimination andpromote efficiency, it said.

The staff paper can be downloaded from www.ferc.fed.us. on theCommission’s website. Click on CIPS. The docket number is RM98-10;where it asks for ‘date range’ choose ‘past month.’

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