The Situation

• A utility customer was running a routine auction process for prompt month firm supply natural gas at a liquid point in the Midwest.

World Energy Action

• World Energy held the auction in which 19 bids were entered from 11 different suppliers. An experienced supplier, knowing the competitive nature of the event, waited until the last 15 seconds of the auction to place his best and final offer. Sealing the victory, his offer was 3 times below the previous low bid.

Result

• The low bid was significantly lower than both the offer and bid side of the market being subsequently traded on ICE. A participant in the auction commented, “They could get in trouble for selling gas that cheap”.