Subject: Re: examples of auction processes in Canada
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Sun, 1 Oct 2000 03:46:00 -0700 (PDT)

Steve, Rob Hemstock  will give you the details of the Alberta PPA auction.
The only other auction type mechansims of which I am aware in Canada  with
respect to power supply are the following:
a) Ontario electricity
distributors have the  choice of purchasing power  for their default
service customers ( called "standard supply customers" here) either
directly from the IMO real-time market or from a third party supplier.  If
the distributor chooses to secure power from a third party supplier the
distributor must employ a formal, transparent and auditible RFP process.
Many Ontario distributors may opt for third party supply precisely because
they want to avoid  cash flow problems comparable to those facing the
California IOUs - that is, if an Ontario distributor chooses to buy
directly from the real time spot market, it must supply that power to
default customers at a  rate fixed by the provincial regulator - the
Ontario Energy Board ("OEB") -  and record the difference between the
purchase cost and the rates charged in a deferral account.  The amount in
the deferral account will be debited or credited to customers periodically.
However,   the  OEB has fixed the default service rate too low and,
accordingly, distributors opting for supply  directly from the IMO real
time spot market may face very serious cash flow problems.  The term of the
third party supply that may be secured in this fashion is unclear, but as
matters stand in Ontario there may be significant regulatory risk in
securing supply more than 1 year out.  (This was the first issue in respect
of which Enron retained Seabron Adamson and Seab knows the issue well);

b) An auction/RFP  process is also included in the
"restructuring" plan recently adopted by the Quebec National Assembly in
respect of Hydro Quebec.  The key features of that plan are the following:
1) a  long term vesting contract between HQ Generation and HQ Distribution
under which HQ Generation is obliged to supply HQ Distribution up to 165
twh annually;  and 2) the requirement that HQ Generation secure any supply
it needs over and above the vested amount  through an RFP process to be
approved by le Regie ( the provincial regulator).

Aleck