Bid Data Exposure: Friend Or Foe Of Collusion

Michael Giberson

Does immediate access to bid data in electricity markets aid collusion or aid in the detection of collusion and other market abuses?

FERC, in a recent order on the Midwest ISO’s energy market filing, said:

“We agree with Wisconsin Retail and the Midwest TDUs that transparency is an important feature of market design. Accordingly, we agree with these parties that market participants need access to bid and offer data; however, we find that such data should not be available immediately after bidding because of the potential it offers for collusion. Instead, as in PJM, NYISO and ISO-NE, the data should be made available only after a six-month delay and should have participants names’ masked, as they are in NYISO.” (Link to order on FERC website, See paragraph 559.)

Contrast that policy to the practice in Australia’s NEM, where as of about 4 AM each morning all bid data from the previous day is posted online. Find the data at: http://www.nemweb.com.au/REPORTS/CURRENT/YESTERDAYS_BIDS_REPORTS/

The FERC favors release only of limited data after a significant dely. In Australia, the NEM releases bid data the day after it is submitted. So which do we see, collusive behavior aided by limited data distribution in the USA, or collusive behavior fostered by the wide availability of data in Australia?

ERCOT, the Texas transmission system and power market operator not subject to FERC oversight, takes a slightly different tack: Selective disclosure (subject to specific rules) in an effort to expose possibly manipulative bids to the “sunshine.”

“Sunshine has already worked in ERCOT. In July 2002, ERCOT began identifying all balancing energy suppliers who submit offers priced above $300. ERCOT posts the list on its Web site the next operating day. Once this policy began, the number of auction participants offering balancing energy above $300 dropped by two-thirds.”

(from a Hurlbut, Rogas, and Oren article on “hockey stick” bid mitigation in the Electricity Journal).