Redbud Presentation to Utility Operating Committee

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Independent Evaluator Role and Comments For the
Oklahoma Gas and Electric Company Wind Energy
RFP
Technical Conference Oklahoma City, Oklahoma
Presented by La Capra Associates, Inc. New
Energy Opportunities, Inc.
Presented to
January 9, 2009
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OVERVIEW

• Independent Evaluator (IE) Functions in RFP
  Process
• IE Comments on Draft RFP
• IE for this RFP Who We Are
• Interest in Prospective Bidder Comments

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IE Functions for Wind Energy RFP

• RFP design process
• Advise utility
• Comment on draft RFP
• Assist in consideration of comments from
  interested parties
• Prior to evaluation of bids
• Work with OGE to refine evaluation methodology,
  criteria, assumptions
• QA Review utility draft answers to bidder
  questions
• Bid evaluation
• Independently evaluate bids/review utility bid
  evaluation
• If there is disagreement regarding winning
  bid(s),
• Utility determines winning bidder(s)
• IE submits its evaluation to OCC
• Subject to OCC determination

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Comments on Draft RFP

• IE comments posted on OGE website
• Potential bids
• Power purchase agreements (PPAs)/WEPAs 20-year
  terms sought
• Utility-owned generation (UOG)where OGE may
  recover costs under cost-of-service ratemaking
• Utility acquires wind energy development assets
  from third party, with engineering, procurement
  and construction agreement (EPC) OR
• Utility self-build
• Objective appropriate comparison of WEPA and UOG
  bids
• UOGsaccuracy and reasonableness of estimates
• Differences in risk allocation between
  fixed-price /MWh bids (WEPAs) vs. bids based on
  estimated costs and projected output (UOGs)

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Comments on Draft RFPcontd.

• Issues with Estimates UOG bids
• Estimated output (MWh)
• Actual performance has historically been 10
  below estimated performance
• UOG bids should provide best available estimates,
  with references to analyses and data regarding
  historical underperformance
• IE will adjust estimated performance if necessary
  to assure credible estimates
• Overly optimistic energy projections will result
  in reduced non-price score
• Unscheduled maintenance
• Risk-adjustment of estimated energy prices price
  firmness
• Output
• Capital costs
• Operating costs
• Production tax credit (PTC) risks
• Utilization of PTC
• Loss of federal PTC due to project delay

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Comments on Draft RFPcontd.

• Issue Term of evaluation for assessing levelized
  estimated cost of energy
• 20-year WEPA bids soughtterm of evaluation20
  years
• At time our comments were prepared, with respect
  to UOG bids, OGE had not decided whether to use
• 25-year useful life/book depreciation with
  25-year evaluation term (which IE had concerns
  with) OR
• 20-year book depreciation with 20-year evaluation
  term
• OGE has now decided to use 20-year book
  depreciation with 20-year evaluation term for
  purposes of bid evaluation IE concurs

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Independent Evaluator for this RFP

• La Capra Associates, Inc. (La Capra Associates)
• John Athas, Managing Consultant
• Carrie Gilbert and other La Capra Associates
  employees
• New Energy Opportunities, Inc. (NEO)
• Barry Sheingold, President, NEO
• La Capra Associates/NEO collaborations Similar
  roles or advising on renewable energy RFPs
• Delaware
• Massachusetts
• New York
• Rhode Island
• Other RFP experience CA, OK, HI, UT, OR, AZ

Independent Evaluator
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Interest in Prospective Bidder Comments

• Areas of particular interest
• Reasonableness of requirement that proposed
  projects have a scheduled commercial operation
  date by 12/31/2010
• Impact of current financial environment on RFP
• We are interested in your comments and questions
• Your input is important to the process
• Please send copies of your comments to
• John Athas, La Capra Associates, Inc.
  jathas_at_lacapra.com
• Barry Sheingold, New Energy Opportunities, Inc.
  bjs_at_newenergyopps.com
• This is an update to the names in the draft RFP
  Section 2.1

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