that could be sold in the auction 2.3 Other elements of the auction Discussion deferred to next product (e.g. meeting. MDQ, MHQ factor) Day 2 6 Auction design 6.1 Primer on Veronika Nemes provided a Circulate slides presentation covering the auction formats, presented by following topics: pricing rules and Veronika Nemes on auction auction design. Market design and algorithms experiments Reverse game theory Why the of the game” “rules matter (rules, strategic behaviour, outcome) The process of market design. Experimental economics Smart markets (where constraints are embedded in the price determination i.e. – NEM vs. DWGM). Veronika that the challenge is to identify the rules that are required to achieve the objective knowing the likely strategic behaviour of the participants. Veronika also noted the importance of testing the auction design. 6.2 Identification of The team discussed the AEMC’s Timing of required, preferred and the auction auction matters (if it suggested recommendations in is before or after as designs for the the East Coast Review final auction available capacity). report. and consideration of The team were also reminded interrelationship that we are not starting with a with product blank sheet of paper, and that the design AEMC did a lot of thinking on the auction design. Veronika and the team discussed: The price that shippers are likely to bid in the auction, with Veronika noting that the price parties will bid is likely to depend on their assessment of the probability of being the successful bidder (which will depend on who has nominated and been scheduled capacity),
that could be sold in the auction 2.3 Other elements of the auction product (e.g. MDQ, MHQ factor) Discussion deferred to next meeting. Day 2 6 Auction design 6.1 Primer on auction formats, pricing rules and auction algorithms Veronika Nemes provided a presentation covering the following topics: Market design and experiments Reverse game theory Why the “rules of the game” matter (rules, strategic behaviour, outcome) The process of market design. Experimental economics Smart markets (where constraints are embedded in the price determination – i.e. NEM vs. DWGM). Veronika that the challenge is to identify the rules that are required to achieve the objective knowing the likely strategic behaviour of the participants. Veronika also noted the importance of testing the auction design. Circulate slides presented by Veronika Nemes on auction design. 6.2 Identification of the auction designs for the auction and consideration of interrelationship with product design The team discussed the AEMC’s required, preferred and suggested recommendations in the East Coast Review final report. The team were also reminded that we are not starting with a blank sheet of paper, and that the AEMC did a lot of thinking on the auction design. Veronika and the team discussed: The price that shippers are likely to bid in the auction, with Veronika noting that the price parties will bid is likely to depend on their assessment of the probability of being the successful bidder (which will depend on who has nominated and been scheduled capacity), Timing of auction matters (if it is before or after as available capacity).
20170531-day-ahead-auction-project-team-meeting-no-6-minutes.docx