2014 CHP RFO OFFERORS CONFERENCE CALL

Transcription

1 2014 CHP RFO OFFERORS CONFERENCE CALL December 4, 2014 at 9:00 am, Pacific Prevailing Time Webex: Meeting Number: Access Code: chp3 Conference: Call-in toll-free number: Participant code:

2 Overview Overview (Max Carpenter) 9:00 Part 1: RFO Materials (Benny Wu) 9:20 Part 2: Offer Template (Allison Galvan) 9:40 Part 3: Offer Evaluation (John McNamara) 10:00 Questions 10:20 Conclude Conference 10:30 This conference call is being recorded and will be made available at: On.sce.com/chprfo or Questions: We will accept your questions at the conclusion of each part. Please indicate that you have a question by submitting your question in Webex or by notifying the operator Page: 2

3 Scope of the Offerors Conference The purpose of this conference is to assist potential participants in SCE s 2014 CHP RFO Per D , SCE has a need for all resource types located in the western L.A. Basin and Moorpark sub-areas, including CHP projects, to meet local capacity requirements. We encourage projects meeting those requirements to participate in this CHP RFO We will not be discussing other SCE programs in this conference call We will not be discussing specific modifications to any of the documents or pro forma agreements This WebEx will be posted on the CHP website for review Page: 3

4 Independent Evaluator Merrimack Energy has been retained as the Independent Evaluator (IE) for this solicitation Wayne Oliver Barry Sheingold Primary role of the IE is to: Monitor SCE s solicitation and negotiation processes to ensure reasonable, fair and equal treatment of all potential counterparties Monitor SCE s valuation methodologies and selection processes to ensure reasonable, fair and equal treatment of all offers The IE is privy to all offer data, invited to participate in all negotiations and should be copied on all correspondence between SCE and Offerors KEY POINT: Offerors must copy the IE on all s and other correspondence sent to SCE at CHPRFO@sce.com Page: 4

5 CHP Settlement Agreement & Targets CHP Settlement Agreement set two key targets for SCE: Procure 1,402 MW from CHP resources by 2015 with intermediate targets corresponding to each of 3 CHP RFOs Obtain 2.17 MMT GHG savings from CHP resources by 2020 SCE Target Target Approved Estimated RFO Close Dates MW Target A 630 MW 616 MW 1 RFO 1 Jul 2012 (Track 1) MW Target B 378 MW (348 MW) 2 RFO 2 Mar 27, 2014 MW Target C 394 MW - RFO 3 Nov 2015 Total MW Target (by 2015) 1,402 MW 616 MW Total GHG Target (by 2020) 2.17 MMT 0.24 MMT KEY POINT: SCE will target a minimum of 53 MW (1402 MW 616 MW MW MW 3 ) and endeavor to make progress toward our GHG target in CHP RFO 3 SCE has entered into a bilateral agreement with a CHP resource for 385 MW 3, which is why the target procurement amount has been reduced Notes: 1. CPUC approved 542 MW of the 832 MW procured in CHP RFO 1; SCE procured an additional 74 MW through other Settlement-approved channels MW were subject to regulatory approval. Dry Creek (48 MW) was terminated; 348 MW still awaiting regulatory approval from CPUC MW was procured bilaterally and will count toward Target C. Contract is still awaiting regulatory approval from CPUC Page: 5

6 Keys to a Successful Offer Submit complete offer package(s) Incomplete offer packages may be disqualified Use the RFO Offer Structure Letter to clearly articulate your offer and any unique considerations Submit competitively priced offers SCE expects a robust solicitation response to this CHP RFO Offer multiple configurations/packages for consideration SCE prefers offers that can meet both CHP MW & GHG Targets Offer optionality, as appropriate Term can be varied up to the maximum (7 years for existing and expanded w/out collateral; 12 years for new, expanded w/ collateral, and repowered) SCE is seeking curtailment provisions when the CAISO prices are negative Page: 6

7 Keys to a Successful Offer(cont.) SCE has a stated preference to execute pro forma agreements CHP PPA (attachment C-1)was negotiated as part of the Settlement Agreement Utility Pre-scheduled Facility (UPF) Documents have been public and used extensively in SCE s All Source RFOs If you require modifications to the CHP PPA pro forma, begin with the SCEspecific PPA (attachment C-2) SCE seeks well developed projects. For new, expanded and repowered CHP Facilities, Offerors must show: Progress in the interconnection process or plan to obtain interconnection Projects requiring an Interconnection Study are eligible to participate in this RFO SCE will use the network upgrade cost contained in the project s Interconnection Study, if Interconnection Study exists, otherwise we will include a termination option based on negotiated upgrade cost Other demonstrated signs of a viable project: Site control and project development plans Permitting and interconnection status Strong financial backing Realistic on-line dates and forecasted operating performance Page: 7

8 Supplier Diversity SCE encourages small business entities as well as Women-Owned, Minority-Owned, and Disabled Veteran-Owned Business Enterprises ( WMDVBE ) to participate in the CHP RFO CPUC General Order 156 sets the rules governing the development of programs to increase participation of WMDVBEs in procurement of contracts from utilities as required by CPUC Code For additional information, please visit SCE s website, Guidance is also available at under the heading Help & Guidance Please contact Cristina Radu for question regarding Supplier Diversity Cristina.radu@sce.com Page: 8

9 Questions Page: 9

10 Part 1 RFO Materials Presented By Benny Wu Page: 10

11 QF and CHP Settlement Programs CHP Program Settlement Effective Date (11/23/2011) CHP RFO 1 12/15/11 Target A 630 MW Completed CHP RFO 2 9/12/13 Target B 378 MW Completed CHP RFO 3 ~ 11/2014 Target C 394 MW Upcoming Nov 14 Four Years After Settlement Effective Date (11/23/2015) 12/31/2020 RFO As determined in SCE LTPP Initial Program Period Second Program Period SCE CHP MW Target: 1402 MW CHP RFO Process SCE Launch CHP RFO (11/13/14) RFO Process Track 1 (~160 days) Negotiate PPA SCE Executes Track 1 PPAs (5/28/15) SCE Shortlist Offerors for Negotiations Offerors Qualification Date SCE Submit PPAs to CPUC for Approval Offerors Submit Indicative Offer Offerors Submit Final Offer SCE GHG Target: 2.17 MMT reduction Offerors Conference Call Time-line not drawn to scale Page: 11

12 Changes in this 3 rd CHP RFO No changes to the process of this CHP RFO. SCE has updated the documents to reflect latest pro-forma positions. Counterparties must use the new forms and not submit older forms used in prior CHP RFOs CHP Facility must be located in California Interconnected to the CAISO Controlled Grid and certified by the CAISO as a Participating Generator or must have firm transmission rights and deliver to a CAISO controlled interconnect Single track process for expanded, existing, new and repowered CHP facilities For those that require and have an Interconnection Study, SCE will use the upgrade cost from the study to evaluate the CHP Facility For those that require an Interconnection Study but do not have one, SCE will require a termination option in the PPA that will be triggered if upgrade costs exceed a specified amount SCE will not accept RA-only product from a CHP facility in this CHP RFO Page: 12

13 RFO Materials 2014 CHP RFO Instructions Attachment A Non-Binding Notice of Intent to Offer Attachment B Offer Template (please download latest revision) Attachment C1 Pro Forma CHP PPA (Settlement Agreement) Attachment C2 Pro Forma CHP PPA (SCE Specific) Attachment D1 EEI Master PP&S Agreement Cover Sheet Attachment D2 EEI Paragraph 10 to the Collateral Annex Attachment D3 UC Tolling Confirmation Attachment D4 RA Confirmation 2014 CHP RFO Materials are available at: On.sce.com/chprfo or Page: 13

14 Eligibility Requirements Eligible CHP Resources Existing, New, Expanded and Repowered CHP Facilities Nameplate capacity larger than 5 MW Meet the definition of cogeneration under California Public Utilities Code Meet the Emissions Performance Standard established by Public Utilities Code 8341 (Senate Bill 1368) Meet the federal definition of a qualifying cogeneration facility under 18 CFR implementing PURPA New CHP Resources must meet the FERC Fundamental Use Test (per guidance from the CPUC in Resolution E-4554) Utility Prescheduled Facility CHP Facility that met the PURPA efficiency requirements (18 C.F.R ) as of September 2007 and converts to a Utility Prescheduled Facility Refer to Settlement Agreement Section Page: 14

15 Product and Document Generating Facility Baseload CHP Facility UPF/ Dispatchable CHP Facility PPA Type CHP PPA (Attachments C-1 or C-2) EEI Master PPSA Cover Sheet (Attachment D-1); EEI P10 to the Collateral Annex (Attachment D-2); UC Tolling Confirmation (Attachment D-3); RA Confirmation (Attachment D-4) (collectively, Dispatchable Documents ) Product Power Product and Related Products Capacity, Energy, Ancillary Services, (each as defined in the UC Tolling Confirmation) and Capacity Attributes (as defined in the RA Confirmation), and any other product derived from or associated with each generating unit Delivery Point Scheduling Coordinator ( SC )/ Fuel Manager Economic Curtailment SCE prefers to be the SC, but Offeror may select another SC. Offeror may bid in an Economic Curtailment Option (see Exhibit U of the CHP PPA) CAISO SCE is the SC. SCE is not the fuel manager. N/A Pricing Capacity ($/kw-year) As bid As bid; shaped, as set forth in 2.06 of the RFO Instructions Heat Rate for Energy Pricing (Btu/kWh) As bid plus Variable Charge ($/kwh) Note: 1. For CHP facilities that offer both baseload and dispatchable products, Offeror should use the Dispatchable Documents with provisions added to include the baseload portion. If an Offeror desires to use another document for dispatch, it should contact SCE as soon as possible in order to provide information regarding its offer(s) and to obtain SCE s consent to use such document. 2. SCE will not accept RA-only product from a CHP facility in this CHP RFO. Page: 15

16 Term and Start Date* Facility Type Existing Expanded (w/o collateral) Expanded (w/ collateral) Repowered New Term Length No more than 7 years No more than 12 years Earliest Term Start Date Tier 2 Advice Letter Tier 3 Advice Letter Ninety (90) days after CPUC approval (expected approximately 3 months after Effective Date), February 1, 2016* N/A Ninety (90) days after CPUC approval (expected approximately 14 months after Effective Date), November 1, 2016* Latest Term Start Date No later than 2 years after the Effective Date No later than 3 years after CPUC Approval No later than 5 years after CPUC Approval * Based on executing RFO PPA on June 1, 2015 Page: 16

17 RFO Schedule CHP RFO 3 Schedule Date* Milestone 11/13/2014 Launch CHP RFO 3 12/11/2014 Offerors Submit Non binding Notice of Intent 1/8/2015 SCE reserves the right to modify the RFO schedule in its sole discretion Offerors Submit Indicative Offers Offerors who fail to submit these materials by the stated time may be disqualified by SCE in its sole discretion from further participation in this RFO. 2/19/2015 SCE notifies Short Listed Offerors Begin Negotiations 4/23/2015 Finalize All Agreements Offerors who fail to meet this negotiation deadline may be disqualified by SCE in its sole discretion from further participation in this RFO. Offerors Submit Final Binding Offers 4/30/2015 SCE will only consider Final Binding Offers from Offerors who have satisfied all the requirements set forth in the RFO Instructions. 5/21/2015 SCE notifies Selected Offerors 6/1/2015 Execution of Final Agreements ~7/31/2015 SCE Files Awarded PPA with CPUC for Approval Refer to CHP RFO Instructions Section 1.03 Page: 17

18 Key Dates and Submittal Information December 11 Submit Non-Binding Notice of Intent (Attachment A) January 8 Submit Complete Offer Submittal Package (CHP RFO Instructions Sections 3.01 to 3.03) the Offer Structure Letter (Exhibit A, last page in RFO Instructions) Submit two Offer e-binders, each on a USB flash drive by physical mail. For each project, the Offer e-binder must contain: Offer Structure Letter Offer Template (Attachment B) Applicable PPA document (Attachment C1, C2 or Attachments D1-D4) Generating facility description and applicable documents Site description and applicable documents Regulatory filings substantiating the offer data April 30, 2015 Submit Final Binding Offer Please get necessary approvals early to submit binding offer Offers need to be binding until we execute PPAs on June 1, 2015 Key Point: Submit Competitively Priced Offers Page: 18

19 Regulatory Approval of CHP Agreement CPUC and FERC Approval (Section 6.01 of RFO Instructions) SCE s obligations to purchase any product under a final agreement will only become effective upon receipt of CPUC Approval and the approval of FERC (when applicable) SCE will submit all PPAs awarded in this CHP RFO for CPUC Approval SCE will submit a Tier 2 Advice Letter for Existing CHP Facilities that execute the CHP PPA without material modification SCE will submit a Tier 3 Advice Letter for all other final agreements PPAs between SCE and any SCE affiliate require approval by FERC Emissions Performance Standard (EPS) Approvals For PPAs with term length equal to or greater than five (5) years, the CPUC must make a specific finding that the PPA is in compliance with the EPS Offeror must provide information to SCE on the Offer Template, on a confidential basis as necessary, to allow SCE to make a sufficient showing of compliance with the EPS Page: 19

20 Existing CHP w/ppa Wanting to Participate Early Termination of Existing PPA (Section 2.10 of RFO Instructions) SCE encourages counterparties with an existing PPA to participate in this CHP RFO If an Offer is based upon early termination of an existing PPA, please state in the Offer Structure Letter if the existing PPA contains an early termination right and, if SCE is the buyer, what the capacity recapture payment would be Page: 20

21 Document Conflicts This presentation is intended to be a summary level discussion of the information and requirements established in the RFO Materials and does not include all of the detailed information in the RFO Materials To the extent that there are any inconsistencies between the information provided in this presentation and the requirements established in the RFO Materials, the RFO Materials will govern To the extent that there are any inconsistencies in the RFO Materials, the hierarchy established in the RFO Instructions will govern Page: 21

22 RFO Communications 2014 CHP RFO website On.sce.com/chprfo or All RFO-related communications should be sent to: and to Wayne Oliver Page: 22

23 Questions Page: 23

24 Part 2 Offer Template Presented By Allison Galvan Page: 24

25 Questions Page: 25

26 Part 3 Offer Evaluation Presented By John McNamara Page: 26

27 CHP RFO Selection Process Receive indicative offers and run initial eligibility screen Quantitative review - Rank eligible offers based on NPV CHP Premium/MW and GHG reduction and remove outliers Qualitative review Ensure that all eligible indicative offers (including outliers) are added to or removed from short-list based on qualitative factors Create short-list and notify counterparties Negotiate agreements and receive final offers Re-run Quantitative and Qualitative review based on latest forecasts and information Select final offers and notify counterparties Page: 27

28 Quantitative Review NPV CHP Premium per MW & GHG Reduction Analysis Costs Contract Payments Based on the contract heat rates, variable charge, and capacity prices, expected generation and contract term Transmission Cost Cost adders for required network upgrades based on the best information available (e.g., completed Facilities Study, Phase 1 Interconnection Study (or equivalent), or better, etc.) Debt Equivalence Cost Cost of contract commitments on SCE s balance sheet GHG Cost Dependent on Seller s allocation of GHG Compliance Costs Congestion and Losses Location cost resulting from certain resource locations Benefits Energy Value Captures market value of the energy including a forecast for GHG while taking into account dispatchability* of resource Capacity Value** The value of the countable Resource Adequacy capacity (see next slide for details) Ancillary Services and Real Time Flexibility Value Some level of benefit may be attributed to projects bid as a Utility Prescheduled Facility Credit/Collateral Dependent on Seller s selection of various levels of Performance Assurance Congestion and Losses Locational benefit resulting from certain resource locations Proposals are ranked based on an NPV premium per MW & GHG*** basis that weighs costs and benefits to SCE s resource portfolio: [{$PV Costs} {$PV Benefits}] / MW = $ NPV CHP Premium per MW & [{$PV Costs} {$PV Benefits}] / GHG reduction = $ NPV CHP Premium per GHG reduction *UPF s energy production will be determined using a production simulation model and internal energy forecasts. CHP s generation will be determined using the expected generation information provided by each counterparty **As-available offers will not receive a RA benefit ***SCE is seeking cost effective GHG reduction consistent with the goals and objectives of the CHP Settlement Agreement Page: 28

29 Deriving Countable Resource Adequacy Capacity Existing CHP Resources: RA MWs equal current Net Qualifying Capacity (NQC) For calendar year 2018 and beyond RA NQC calculated as the minimum of (average peak period energy deliveries, 100% of Firm capacity offered) New or repowered CHP Resources: For the first two years RA NQC is based on Firm capacity offered and NQC profile derived from fleet Technology* Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec BIOMASS 71% 72% 71% 62% 66% 74% 76% 75% 75% 72% 71% 74% COGENERATION 64% 63% 60% 59% 61% 67% 68% 69% 65% 57% 57% 58% GEOTHERMAL 85% 85% 82% 80% 82% 79% 79% 78% 79% 79% 81% 83% After the first two years RA NQC calculated as the minimum of (average peak period energy deliveries, 100% of Firm capacity offered) UPF Offers RA MW: RA NQC based on submitted and validated RA capacity offered *Source: 2015 Technology Factors at Page: 29

30 Qualitative Review SCE may consider qualitative characteristics to determine inclusion in or exclusion from the short-list or tiebreakers, if any. These additional characteristics may include: Permitting and Interconnection (Environmental & Permitting Status, Electrical Interconnection, Fuel Interconnection & Source, Water Interconnection & Source) Pre-development Milestones (Project Financing Status, Project Development Experience, Thermal Host, FERC & CA QF Standards, Emissions Performance Standard) Development Milestones (Site Control, Large Equipment Status, Reasonableness of Commercial Operation Date) Transmission area Congestion, negative price, and curtailment considerations not captured in the quantitative valuation Portfolio fit of energy, capacity, & term Offeror concentration Dispatchability & curtailability Modifications to Pro Forma Offer price in excess of public or independent data Page: 30

31 Questions Page: 31

32 Additional Questions? and to Wayne Oliver Access the recording of this conference call at: Page: 32