Contract selection and performance in competitive bidding for electricity generation

Third parties bidding to supply utilities with electric generation facilities is a new and increasingly important practice. Six states have either establishes bidding programmes or are considering doing so. The paper uses data from Maine, the first state to use electric generation bidding, to examine which bids are awarded contracts, and which contracts fail to fulfill their provisions. Results show that bid price plays a very small role, if any, in the selection process.