# Ascending Clock Algorithm

Modified on: Thu, 27 Oct, 2022 at 9:02 AM

Introduction

The Ascending Clock Algorithm applies to all long-term auctions (monthly, quarterly and yearly). Through this mechanism, the price and allocation of capacity are determined in an open competition among shippers through successive rounds. If the demand for capacity is higher than its supply, a new round is triggered and the price increases. If the demand for capacity is lower than its supply, the auction ends.

General Rules

a. In auctions, a given amount of capacity is offered with predefined price steps.

b. A bid can be placed for a certain amount of capacity at a given price.

c. All auctions start at the regulated tariff (RT) in the first bidding round.

d. If necessary, additional price steps are applied in the following bidding rounds.

e. Any fees applied by the TSO(s) will have to be paid on top of the total price.

Price Calculation

a. The regulated tariff and additional fees (billing, measuring, conversion, etc.) are provided by the respective TSO

b. In case of a bundled auction, the regulated tariffs of both TSOs are summed up (the starting price is the sum of the RTs of both TSOs. In the same way, the price steps are the sum of the price steps of the unbundled products.)

c. The auction surcharge depends on the number of price steps

d. The auction surcharge is divided between the TSOs with a pre-defined split factor

NOTE: PRICE in subsequent rounds will always be RT+Surcharge

Case Studies

1. Undersell In First Round: If the sum of all placed bids in the first bidding round is lower (undersell) than the available capacity, the auction closes after the first bidding round and the capacity is allocated according to the bids.

2. Clearance in the First Round: If the sum of all placed bids in the first bidding round is equal (clearance) to the available capacity, the auction closes and the capacity is allocated according to the bids.

3. Oversell: If the sum of all placed bids is higher than the supply of capacity, then the auction goes to another round and a large price step is added.

a. First Round

b. Second Round

4. Undersell After the First Round: If the sum of all placed bids is lower than the supply of capacity in any round after the first, then the current round is reversed and a small price step is added. Now, when there is a clearance or undersell as the bidding proceeds in small price steps, the auction closes and capacity is allocated.

a. Undersell at Large Price Steps: reverse the previous round and proceed with small price steps in new rounds

b. Oversell at Small Price Steps: continue with small price steps to the next round

c. Undersell or Clearance: Auction ends.

Bundled Products

Situation 1: Available Capacity at A > Sum of Available Capacity at B and C

• Bundled products are created
• Unbundled products might be created

Situation 2: Available Capacity at A < Sum of Available Capacity at B and C

• Bundled products are created
• Competition: Allocated capacity must not exceed the available capacity at A.

Competing auctions

a. When the available capacity at A is lower than the sum of B and C, the two auctions at the bundle AB and AC take place in the competition on the PRISMA platform.

b. After each bidding round the results are analyzed and it is checked whether the competition constraint - in the above example, available capacity at A (100) - is resolved.

c. In case the competition constraint is solved, the competition is removed and the auctions continue independently until the capacity is allocated.

1. Round One

2. Round Two

3. Round Three

4. Round Four

5. Round Five

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