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Frequently Asked Questions - #54

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Can a Qualified Bidder enter into a unit-contingent or other generator-related transaction with another Qualified Bidder? 

The Association and Confidential Information Rules and the Part 1 and Part 2 Applications ask each Qualified Bidder to make a number of certifications, including that the Qualified Bidder certify that it does not have any knowledge of confidential information relative to the bidding strategy of another bidder; that the Qualified Bidder will not disclose confidential information relative to its own bidding strategy; that the Qualified Bidder is not the purchasing party in any contract for any product that would require the disclosure of any confidential information relative to bidding strategy or confidential information regarding the Auction Process to the counterparty, or that would provide instructions to act in a way determined by the counterparty; and that no entity has agreed to defray the Qualified Bidder’s costs of participating in the auction.

The Association and Confidential Information Rules do not specifically allow or preclude specific types of transactions; see, for instance, FAQ-32, FAQ-33, FAQ-47, FAQ-48, FAQ-49, FAQ-50, FAQ-51, FAQ-52, and FAQ-53.  These questions and answers are intended to help bidders better understand the certifications of the Part 1 and Part 2 Applications so that bidders are better able to reach their own determination as to whether a certification can be made.  A Qualified Bidder considering a unit-contingent transaction or other generator-related transaction with another Qualified Bidder will need to determine in good faith if such a transaction would prevent the Qualified Bidder from making or upholding any of the certifications in the Part 1 and Part 2 Applications.

To the extent that such a transaction is contingent upon you, Qualified Bidder A, winning at the auction, it would reveal Qualified Bidder A’s contractual arrangements for purchasing power to serve BGS load were Qualified Bidder A to be a winner at the auction.  Indeed, a Qualified Bidder’s contractual arrangements for power with a party to serve the BGS load are part of the confidential information relative to the Qualified Bidder’s bidding strategy.  This means that the transaction would disclose such confidential information and that Qualified Bidder A would be unable to make or uphold all its certifications in the Part 2 Application.

To the extent that it is known to the market that Qualified Bidder A is serving default supply service load elsewhere in PJM or that Qualified Bidder A has routinely engaged in unit-contingent or generator-related transactions of the same type for these and other purposes, perhaps even with the same party, it is possible that such a transaction for a term that does not coincide with the BGS supply period would not reveal Qualified Bidder A’s sources of supply were Qualified Bidder A to win at the auction.  To the extent that any of these conditions do not hold, it becomes more difficult to envision how the transaction would not reveal confidential information relative to Qualified Bidder A’s bidding strategy.  Ultimately Qualified Bidder A must make this determination. 

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

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