The Basic Generation Service (BGS) auction process is used to set competitive market prices for customers who have not opted to use Third Party Suppliers. This process was authorized by the NJ Board of Public Utilities (BPU) in 2001.

Below is some general information that will be helpful in understanding the BGS auction process.

How does the auction work?

Auctions are conducted over the Internet using a "descending-clock" method. Suppliers bid on how much energy they will supply at the starting prices. In this simultaneous descending-clock auction, prices are adjusted over a series of rounds until there is just enough power to fill BGS needs, resulting in a competitive market price.

Who's involved in the auction? Why is it conducted this way?

Through a competitive procurement plan, New Jersey Electric Distribution Companies (EDCs) buy power for their BGS customers from June 1 through May 31 of the following year. The NJ EDCs (PSE&G, Jersey Central Power & Light Co., Atlantic City Electric Co., and Rockland Electric Co. [RECO]) believe that a single auction is the most efficient way to buy approximately 18,000 megawatts (MW) of power needed for all the state's BGS customers. This method provides the greatest opportunity for electric supply at the lowest cost to consumers.

Who is in charge of the auction process?

The NJ BPU oversees the auction process. Local EDCs are responsible for the delivery of the BGS power to customers and for the operation and maintenance of the delivery system, metering, billing and customer inquiry.

Want to know more? Go to the BGS Auction Website