General Auction Information

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.