RFP 2003B Bidders Conference

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RFP 2003-BBidders Conference
February 11, 2004 Portland
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Agenda

• RFP Objectives
• Timeline
• Process
• PacifiCorp Roles and responsibilities
• Bidder Roles and Responsibility
• Bid Requirements
• Products
• Definition of Renewable Resources
• Pricing
• Credit Security
• Points of Delivery Transmission
• Bid Evaluation Factors
• Post-Bid Negotiations
• Issues Discussion
• QA

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RFP 2003-B ObjectivesProcurement Goals

• PacifiCorps Objective is to
• Administer a solicitation process that is
  understandable, objective and unbiased
• Solicit a wide number of responses
• Ensure prudent credit assurances
• Maintain confidentiality as appropriate
• Develop a flexible process that helps us obtain
  the best cost/risk balance for new resources
• Minimize the solicitation cycle time

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RFP 2003-B Objectives, cont.Key Features of the
Process
PacifiCorps process is consistent in spirit with
recognized Regulatory guidelines and offers
additional enhancements

• No blinding, no outside consultant
• Affiliate bids not accepted, no self-build
  option.
• Adequate credit assurances are required.
• Pre-determined screening criteria to make
  short-list
• Post-bid price negotiations
• Limited negotiation on non-price issues.
• Summary Report to be made public.
• No bid fee will be required

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Target TimelineSchedule of RFP Actions
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ProcessPacifiCorp Roles/Responsibilities

• Short List Screening
• Evaluate bidder responses.
• Rank responses by price and non-price factors
• Avoided Cost Test
• Basis adjusted forward price curve
• Includes expected future emissions costs
• Value for environmental attributes.
• Negotiate
• Bi-laterally negotiate with entities on
  short-list.

Bids
Short List Initially pursue top 5 bids.
Negotiation, Signed PPAs.
Screening to rank bids based on product adjusted
forward price curves.
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ProcessBid Requirements

• Bids to conform closely to generic PPA supplied
  with RFP
• stream line short list negotiations.
• Benign or positive changes will not be penalized.
• Project Description
• Pro Forma Financial Analysis
• Data support for energy supply
• Minimum 1 year on-site meteorological tower data
  collection for wind projects.
• Plan and costs for interconnection and
  transmission delivery
• Characterization of Environmental Impacts and
  Study Status
• Permitting Requirements and Status
• Price Proposal
• Bidders whose costs are affected by the PTC are
  asked to submit two sets of prices, with and
  without the PTC.
• Timeline and Expected Commercial Operation Date
• Credit Support-consistent with PPW corporate
  requirements
• Specific credit support requirements contained in
  Appendix E
• Developer Experience and Qualifications

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Products,Eligible Resources

• Comply with goal of established legislation to
  procure resources with marketable environmental
  attributes.
• Requested Resources (energy with tags)
• Wind
• Solar
• Geothermal
• Hydro (outside of protected areas)
• Biomass (digester, landfill, agricultural waste)
• Projects capable of producing 70,000 MWh per year
  on average.
• Smaller projects encouraged to apply through QF
  process

As defined in OAR 757.600
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Products,Pricing Options

• Fixed energy prices preferred.
• Indexed energy prices will be considered.
• Fixed (e.g., capacity) payments discouraged.

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Products,Security

• PacifiCorp reserves the right to require
  Adequate Credit Assurances which may include
• Investment grade credit rating,
• parental guarantee,
• acceptable letter of credit,
• the amount may include the value of
• market-based liquidated damages for failure to
  perform,
• construction delays,
• failure to meet minimum production and/or
  availability,
• and other forms of defaults

Cost of credit must be included in the bid price.
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Points of Delivery

• In or to PacifiCorps Western Control Area.
• If deliveries are scheduled from an adjacent
  control area, BPA or PGE are preferred.
• Directly connected to PacifiCorps Eastern
  Control Area.
• Import into the Eastern Control Area is severely
  constrained during certain hours and parts of the
  year-- deliveries will only be accepted to the
  extent that import capability exists to accept
  the power.
• In or to PacifiCorps Wyoming System
• Analysis will reflect the relatively lower value
  of energy delivered in or to Wyoming due to
  transmission export constraints.

It is the bidders responsibility to ensure that
energy from their project can be delivered into
PacifiCorps system. Bidders are urged to
contact transmission providers to assess the cost
and availability of transmission to reach the
PacifiCorp system.
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Points of Delivery TransmissionPacifiCorps
West System
BPA
Yakima Area
PACW in Willamette Valley and Southern
Oregon Alvey Meridian Fry Chiloquin Dixonville
Reston
Midway Wanapum (Limited ability to take power)
X
Central Oregon Deschutes Valley
X
Southern Oregon Coast
Malin (Constrained)
Note Physical and contractual constraints are
unique to delivery points and may require
individual study.
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Points of Delivery Transmission,
cont.Preferred Points of Delivery

• Willamette Valley
• Alvey 500 kV
• Fry 230 kV
• Dixonville 230 kV
• Central Oregon- Deschutes Valley (limited to area
  minimum loads)
• Ponderosa 230 kV
• Bend/Pilot Butte 69/230 kV
• Redmond 69 kV
• Yakima Area-- Mid Columbia
• Wanapum 230 kV
• Midway 230 kV
• Oregon Coast (limited to area minimum loads)
• Astoria - Tillamook 115 kV
• Boyer (Lincoln City) 115 kV
• Fairview (Coos Bay) 115/230 kV

• Meridian 230 kV
• Chiloquin 230 kV
• Reston 230 kV

Note All incremental delivery costs will be
based on reasonably available information.
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Points of Delivery TransmissionPacifiCorps
East System
SE ID
WY
X
X
Gonder
PACE in Utah
Mona
X
X
NUB
4C 345 kV
Glen Canyon
Note Material import constraints exist into
PACE in Utah.
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Points of Delivery Transmission,
cont.Preferred Points of Delivery

• Mona 345 kV
• Gonder 230 kV
• NUB on Sigurd-Harry Allen 345 kV
• Within PACE in Utah

Note All incremental delivery costs will be
based on reasonably available information.
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Points of Delivery Transmission, cont.Other
Points of Delivery

• Wyoming - POD must be electrically South of
  Naughton-Monument to be considered in PACE-Utah.
• SE Idaho - POD must be interconnected to SE Idaho
  electric system and respect LR balance.

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Points of Delivery Transmission,
cont.Transmission Department Interaction

• Transmission/Bidder - Bidder to work directly
  with Transmission on interconnection requirements
  and system impact studies related to system
  interconnection.
• Transmission/PPW Commercial - PPW Commercial is
  the transmission customer for network resources
  procured and must ultimately request that the
  resource be studied for acceptance by the
  Transmission function as a network resource.

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Points of Delivery Transmission, cont.Study
and System Upgrade Cost Responsibility

• Interconnection Studies - bidders
  responsibility.
• System Upgrades
• Due to Interconnection Study - bidders
  responsibility,
• Due to inclusion as a Network Resource -
  PacifiCorps responsibility. However, expected
  cost will be included in the economic evaluation
  of each bid (note may require estimates of these
  costs to be made during screening process).

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Making the Short-ListBid Evaluation

• Screening criteria to make short-list,
• Delivered and integrated price up to 60
• Non price factors up to 40
• Conformance to PacifiCorp-supplied PPA up to 15
• Performance Guarantee up to 10
• Minimum guaranteed energy up to 10
• Mechanical availability up to 5
• Resource firmness up to 5
• Environmental Impacts up to 10
• No price adjustments prior to short-list,
• Post bid negotiations on price issues,
• Limited post bid negotiations on non-price issues
• goal to achieve best cost/risk balance

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Making the Short-List, cont.Price Evaluation
(60 max)

• Bids will be screened against PacifiCorps
  forward price curves
• Basis adjusted for
• Value of environmental attributes
• consistent with IRP and market value
• Point of delivery
• Product type
• Integration cost consistent with IRP
• Transmission cost(s)
• Other
• Score to be interpolated between 80 and 125 of
  FPC.
• 0 awarded for 125 (or more) of forward price
  curve PV
• 60 awarded for 80 of forward price curve PV
• E.g., Bids equal to 100 of FPC would get a score
  of
• (100-80)/(125-80) X 60 20/45 X 60 26.67

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Post Bid NegotiationsAnticipated Activities

• Post bid negotiations/clarification expected
  relative to
• price and non-price issues,
• key economic drivers,
• overall structure,
• Bidder-specific credit issues,
• transmission issues,
• any other resource-specific issues that may
  impact price and/or performance.
• Metrics for post bid negotiations will be
• Cost analysis (updated for changing market
  conditions)
• Overall risk assessment of deal terms/conditions

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Confidentiality

• PacifiCorp will attempt to maintain
  confidentiality
• to the extent allowed by law or order,
• bidder to clearly mark confidential information,
• Information held for 5-years or more,
• proprietary curves and evaluations will not be
  released.

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Summary Report

• List characteristics of winning bids,
• Analyze participation of smaller bids,
• Summarize key points of losing bids,
• Maintain confidentiality of bidder information,
• Will be made public.

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Questions/Comments Information Sources
PacifiCorp Web Site www.pacificorp.com (go to
News Info and select Request for Proposal,
then choose 2003-B) for RFP, bidder
workshop conference slides, Questions and
Answers
PacifiCorp Transmission Attention Larry
Soderquist, Manager of Interconnection
Services 700 N.E. Multnomah, Suite 700 Portland,
Oregon 97232 larry.soderquist_at_pacificorp.com 503
-813-6102