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Frequently Asked Questions - #61

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Energy marketer A is a Registered Bidder in the BGS-RSCP Auction.  Before the auction starts, its parent company merges or combines with another company that also has subsidiaries active in trading and marketing power in PJM.  However, energy marketer A continues to stand alone and is not merged or otherwise combined with any of the subsidiaries of the company merging with its parent.   Will energy marketer A be considered to have substituted, assigned or transferred its rights as a Qualified or Registered Bidder, or be considered to have failed to uphold any of the certifications of the Association and Confidential Information Rules? 

If energy marketer A continues to stand alone and conduct its business independently, and has not legally or effectively combined with any subsidiaries of the company with which its parent has merged, it would not be considered to have substituted, assigned or transferred its rights.  The Auction Manager may ask energy marketer A to certify that procedures are in place to keep its business separate from other affiliates including through corporate personnel who may communicate across affiliates.  Furthermore, the Auction Manager may require additional information or additional undertakings to ensure continued compliance with the Association and Confidential Information Rules, such as ensuring that no confidential information (relative to its bidding strategy or regarding the Auction Process) would be exchanged with its soon-to-be affiliates.  Under these conditions, it is expected that energy marketer A would remain eligible to continue participation in the auction.  Please note that these are high hurdles that would most likely require careful advance planning on the part of energy marketer A.  Further, energy marketer A would be required to continue upholding all certifications that it made in the Part 2 Application, including the certification that it will not disclose confidential information relative to its bidding strategy; there is no exception that would permit disclosure to affiliates or parents.

We have assumed in this answer that no other subsidiary of the merging parents is participating in the auction (see, for instance, FAQ-60).  If, on the contrary, a subsidiary of the company with which energy marketer A’s parent has merged is a Qualified Bidder, then an additional and immediate issue arises with respect to the Association and Confidential Information Rules.  Energy marketer A certified in its Part 2 Application that energy marketer A is not associated with any other Qualified Bidder.  Energy marketer A would violate this certification of the Part 2 Application upon the merger of its parent.  Indeed, if a merger of energy marketer A’s parent and another Qualified Bidder’s parent were to occur after the Part 2 Application, but prior to the auction, energy marketer A and the other Qualified Bidder would become sister companies and thereby associated with each other.  Bidders who are known to be associated or to have become associated and have not declared an association in the Part 2 Application, and have not declared in the Part 1 Application a bidding agreement, joint venture for the purpose of bidding in the auction, bidding consortium, or other arrangement pertaining to bidding in the auction, are subject to sanctions, including forfeiting the right to any further participation in the auction.

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

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