How do credit limit checks work in incremental auctions?

Modified on:: Wed, 19 May, 2021 at 8:23 AM

Print

Overview


For incremental auctions, PRISMA also runs a credit limit check. However, since you can bid in multiple offer levels, the platform only subtracts the highest value from each yearly group. In other words, the values of each bid are not subtracted together.


Explanation


Imagine you have a credit limit of 150 cents (used 0). You then participates in the incremental auction below:


i. Offer Level 0


  • Bundled: FZK/FIRM - 100


ii. Offer Level 1


  • Bundled: Offer Level 1 / Offer level 1 - 120


In both auctions you request the total amount of bundled capacity for a total of 220 cents. If these were normal auctions, you would not be able to place both bids. For, you only have a credit limit of 150, which is not enough to cover the total costs: 220 > 150.


Yet, in incremental auctions, you would be able to bid in both auctions because only the highest price is considered with a yearly group - in this case, 120 < 150.


After the economic test is performed, the credit limit is automatically amended to reflect the used credit of the successful offer level. For instance, in the case above, if the successful offer level is number 0, then the initial subtraction of 120 would be cancelled and 100 would be deducted from the static limit of 150.

S
Sabrina is the author of this solution article.

Did you find it helpful? Yes No

Send feedback
Sorry we couldn't be helpful. Help us improve this article with your feedback.