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Frequently Asked Questions - #38

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FAQ-38

Suppose that an entity submits a Part 1 Application for the BGS-RSCP Auction, qualifies as a bidder, and then changes its status to a supplier by not filing the Part 2 Application.  Can you confirm that the entity in question is then no longer in the ambit of the Association and Confidential Information Rules, and that this scenario presents no issues of compliance with the Association and Confidential Information Rules?  


No, your view is incorrect.  This scenario presents important issues of compliance with the Association and Confidential Information Rules.

Please note that an entity that submits a Part 1 Application in the BGS-RSCP Auction, if successful, becomes a Qualified Bidder.  Status as a Qualified Bidder cannot be rescinded or changed after the Auction Manager has provided the entity with the Notification of Qualification and has provided the entity with the confidential information that is available only to Qualified Bidders in the BGS-RSCP Auction.  There is no such thing as a "supplier" status, no possibility to change status from a Qualified Bidder to a supplier, and no possibility to rescind status as a Qualified Bidder (see, for instance, FAQ-39). 

If an entity – call it Party A – submits a Part 1 Application for the BGS-RSCP Auction, qualifies as a bidder, and does not subsequently submit a Part 2 Application, Party A need not make certifications in the Part 2 Application, including certifications from the Association and Confidential Information Rules. But this does not mean that Party A is not in the ambit of the Association and Confidential Information Rules.  Party A must continue to abide by its certifications made in the Part 1 Application.

Furthermore, other Qualified Bidders in the BGS-RSCP Auction that do submit a Part 2 Application are also asked to make certifications, including certifications from the Association and Confidential Information Rules.  In making these certifications, other Qualified Bidders must consider the list of all Qualified Bidders, and this list of Qualified Bidders includes Party A.  This means that any Qualified Bidder in the BGS-RSCP Auction that has negotiated or negotiates supply arrangements specific to BGS-RSCP supply with Party A and that submits a Part 2 Application will most likely be unable to attest that it does not have any knowledge of confidential information relative to the bidding strategy of another Qualified Bidder (namely, Party A).  Furthermore, a Qualified Bidder that submits a Part 2 Application may, as a result of interactions with Party A, be unable to attest to any one of the following:

  • it is not associated with another Qualified Bidder;
  • it has not entered into any agreement with another Qualified Bidder regarding bids at the auction;
  • it is not a party to any contract for the purchase of power that might be used as source of supply for BGS-RSCP, and that (i) would require the disclosure of any confidential information (confidential information relative to the bidding strategy or confidential information regarding the Auction Process) to the counterparty under such a contract; or (ii) that would require the disclosure of any confidential information (confidential information relative to the bidding strategy or confidential information regarding the Auction Process) to any other party; or (iii) that would provide instructions, direct financial incentives, or other inducements for the bidder to act in a way determined by the counterparty in the agreement and/or in concert with any other bidder in the auction;
  • it does not have any knowledge of confidential information relative to the bidding strategy of any other Qualified Bidder;
  • it has not disclosed confidential information relative to its bidding strategy;
  • no party has agreed to defray any of its costs of participating in the auction; and
  • it will not disclose any confidential information regarding the Auction Process.

Every Qualified Bidder with which Party A wants to negotiate a supply arrangement is faced with not being able to make all certifications, with the need to make information disclosures, and with the possibility of being subject to any remedies as determined by the Auction Manager, which include not being able to participate in the BGS-RSCP Auction.  The potential problem is not avoided by negotiating after the Part 2 Application has been submitted.  If such an arrangement is negotiated after the Part 2 Application is submitted, a Qualified Bidder with which Party A negotiates a supply arrangement is faced with being unable to uphold the certifications made in the Part 2 Application and is subject to sanctions (see, for instance, FAQ-32, FAQ-33, and FAQ-36).

The scenario you present therefore raises a number of important issues with respect to compliance with the Association and Confidential Information Rules for any BGS-RSCP Bidder negotiating with Party A.  If Party A did not submit a Part 1 Application and did not become a Qualified Bidder, although each Qualified Bidder must take due care to uphold certifications in the Part 1 and Part 2 Applications (see, for instance, the discussion in FAQ-33), the same issues may not arise. 



11/15/2021, in Association and Confidential Information Rules.

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