Evaluation of a truthful revelation auction in the context of energy markets with nonconcave benefits

We describe a Vickrey-Clarke-Groves auction for supply and demand bidding i n the face of market power and nonconcave benefits in which bidders are mot ivated to bid truthfully, and evaluate its use for power and gas pipeline c apacity auctions. The auction efficiently allocate resources if firms maxim ize profit. Simulations, including an application to the PJM power market, illustrate the procedure. However, the auction has several undesirable prop erties. It risks being revenue deficient, can be gamed by cooperating suppl iers and consumers, and is subject to the information revelation and bid-ta ker cheating concerns that make single item Vickrey auctions rare.