BIDDERS CONFERENCE March 17, 2008 2008 SOLICITATION RENEWABLES PORTFOLIO STANDARD.

BIDDERS CONFERENCE

March 17, 2008

2008 SOLICITATION

RENEWABLESPORTFOLIOSTANDARD

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Agenda

Introduction Commercial Overview Shortlisting Evaluation Methodology Transmission Ranking Costs Interconnection Process Solicitation Documents Q & A

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Commercial Overview

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New for 2008 Short-term solicitation—offers as short as 1 month Minimum size increased from 1 MW to 1.5 MW Reduced delivery term security Single contract price: Eliminate SEPs Updated Non-Modifiable Terms Option for PG&E as Scheduling Coordinator Eliminate debt equivalence New process for small generator interconnection <=20

mw

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Highlights Eligible resources Target volumes Products Delivery profiles Delivery term Project location & delivery point Independent Evaluator

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RFO ScheduleDATE EVENT

March 17, 2008 Bidders Conference

TBD in April, 2008 Bidder workshop – forms, Q&A

May 12, 2008 5 p.m. Deadline to submit Offer(s)

July 1, 2008 Shortlist notification

July 9, 2008 Offer deposits due from shortlisted bidders

July 15, 2008 PG&E submits Shortlist to PRG and CPUC

TBD CPUC issues Market Price Referent (“MPR”)

By December 31, 2008

Negotiate and execute Agreements; PG&E submits Agreements for Regulatory Approval

See Section II of the Solicitation Protocol

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Power Purchase and Sale Agreement (PPA) Offer Variations Up to six discrete Offers for a PPA for each Project.

Offers may vary by: Size Commercial Operation Date Delivery Term Generation Profile Credit Terms

Pricing variations With and without PTC/ITC If not already in price, premium for delivery to CAISO

See Section VIII of the Solicitation Protocol

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Ownership Offers

PPA with Buyout Option Turnkey Ownership - Participants may propose

to develop, permit, and construct a facility for

purchase by PG&E upon commercial operation Site Offers

For development or expansion by PG&E

See Section III and Attachments I and J of the Solicitation Protocol

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PPA Contracts

Three Forms of PPA As-Available (Whether or not eligible to

participate in EIRP) Baseload, Peaking, or Dispatchable Short-term contract less than 5 years from

existing ERR

EIRP is Eligible Intermittent Resource Program

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PPA Key Commercial Terms

Contract Price is $/MWh (all-in) for all products except: Dispatchable - $/kW-year for capacity, $/MWh for energy

Delivery Point is NP15, SP15, ZP26, anywhere else in California, or

out-of-state Minimum performance criteria apply to all products Seller receives Contract Price as adjusted by TOD Factors Certain non-modifiable terms (highlighted in PPAs) Seller is or hires its own Scheduling Coordinator or equivalent, or can

ask PG&E to be SC

See Attachments G and H of the Solicitation Protocol

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Time of Delivery (TOD) Factors

As-Available Payment = Contract Price * TOD Factor * MWh

Baseload, Peaking Payment = Contract Price * TOD Factor * MWh

Reductions for not meeting minimum performance

Short-term ERRs may price without TOD

Monthly Period Super-Peak Shoulder NightJun – Sep 2.01 1.14 0.72

Oct.- Dec., Jan. & Feb. 1.09 0.96 0.78Mar. – May 1.13 0.86 0.63

See Section IX of the Solicitation Protocol

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Short-Term PPA Key Commercial Terms(offers less than 5 years from existing resources)

Contract Price is $/MWh (all-in) Price may be fixed $/mwh or Index price (e.g. NP15, COB) + $/mwh adjustment

Seller may propose price with or without TOD

factors No bid deposit or exclusive negotiations required Relaxed performance requirements

See Attachment M of the Solicitation Protocol

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Credit Offer Deposit of $3/kW upon Shortlisting Following CPUC Approval, Project Development Security

of $20/kW * capacity factor (minimum of $10/kW) Upon commercial operation, Delivery Term Security:

Offer Deposit and Project Development Security – cash or Letter of Credit

Delivery Term Security – cash, Letter of Credit, or acceptable guaranty

Term 10 years 15 years 20 years

Months Revenue 6 9 12

See Sections V and VII of the Solicitation Protocol

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Credit—Short Term Offers

See Sections XX of the Solicitation Protocol

Term New ERRs Existing ERRs

Less than 1 year Project Development Security: None

Delivery Term Security: None

Pre-Delivery Term Security: None

Delivery Term Security: None

One year or greater, but less than 5 years

Project Development Security: $5/kw

Delivery Term Security: 3 months revenue

Pre-Delivery Term Security: $3/kw


5 years or greater, but less than 8 years





8 years or greater, but less than 10 years





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CEC Requirements

RPS Eligible Renewable Energy Resources (ERR) must be CEC Certified CEC Pre-Certification should be obtained prior to

construction start ERRs must participate in CEC Generation Tracking

System (WREGIS) See updated guidebooks at:

http://www.energy.ca.gov/renewables/documents/

See Section IV of the Solicitation Protocol

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Resources less than 1.5 MW

Not part of RPS solicitation Standard tariff available to all eligible renewable

resources at http://www.pge.com/b2b/energysupply/wholesaleelectricsuppliersolicitation/standardcontractsforpurchase

Term up to 20 years Price set at Market Price Referent

Based on combined cycle cost Determined by CPUC on an annual basis Levelized price depends on contract term and online date

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ShortlistingEvaluation Methodology

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Evaluation Criteria Ranking based on combination of Quantitative and

Qualitative factors

Quantitative Evaluation Market Valuation Transmission Adders

Qualitative Evaluation Portfolio Fit Credit Project Viability Consistency with RPS Goals Modifications to Form Agreements

See Section XI and Attachment K of the Solicitation Protocol

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Market Valuation Market-Based Valuation

Value of contract is capacity plus the net of the energy benefit and cost.

The energy benefit is computed using market prices, volatilities, and correlations.

Capacity value is based on: the net economic carrying cost of a new combustion turbine contribution to PG&E’s Resource Adequacy requirements.

As-Available Contracts Contract benefit is evaluated based on (deterministic)

market forward prices, but with variable quantity, and the value of capacity.

Cost is calculated as energy generation times offer price times TOD factors for each period.

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Market Valuation (continued)

Baseload, Peaking Contracts Contract benefit is evaluated based on (deterministic)

market forward prices and the value of capacity. Cost is calculated as energy generation times offer

price times TOD factors for each period. Dispatchable Contracts

Contract is evaluated as call option on energy. Benefit is the value of capacity and the expected value of energy.

Cost is the energy generation times the expected offer price, plus a capacity charge distributed monthly by a Time of Availability factor.

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Portfolio Fit

Differentiates offers by the firmness of their energy delivery and by their energy delivery patterns

Firmness (predictability) is preferred Delivery when PG&E is short is preferred Dispatchability is preferred

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Credit

Performance Assurance Project Development Security Delivery Term Security

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Project Viability

Project Status Permits Site Control Equipment

Technology Viability and Participant Experience Resource Risk Historical Commercial Data Participant Experience

Transmission Studies Financing Design/Construction

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Consistency with RPS Goals

CPUC-stated Goals Legislative Findings Governor’s Order on biomass Impact on Water Quality PG&E’s Supplier Diversity (WMDVBe)

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First Ranking

Shortlist rankings are relative No fixed cut-off price No fixed procurement limit Based on quantitative and qualitative factors

First ranking done on the basis of market value with adjustments for qualitative criteria

Then, introduce transmission adders

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Transmission Adder - “the lower of”

Use “the lower of” the result of the Transmission Ranking Cost Report or Alternative Commercial Arrangements (remarketing, swaps, or as-available transmission)

When no Alternative Commercial Arrangement is feasible, and no transmission study results are available, use the TRCR

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Second Ranking

Market Valuation is adjusted for Transmission Adders, resulting in a Net Value

Offers are re-ranked, just like first ranking, but using the new Net Value instead of Market Value

Ranking is a relative one Offers strong relative to others will be near the top Offers weak relative to others will be closer to the

bottom Shortlist will err on side of greater inclusion

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Consultation with PRG and IE

Discuss proposed shortlist and evaluation methodology

Solicit feedback on whether certain offers should be included and whether certain offers should be excluded

Incorporate feedback and finalize shortlist

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Transmission Ranking Costs

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Pursuant to D.04-06-013 and D. 05-07-040

Generator Cost responsibility - Include in bid price Direct Assignment Facilities (Gen-tie)

Identify if desire PG&E to evaluate potential for sharing Wheeling Charges to Delivery Point

Customer Cost Responsibility – Considered in bid evaluation Network Upgrades

Costs estimates from CAISO Interconnection Process (ISIS/IFAS) Transmission Ranking Cost Report

Consideration of Transmission Cost in Bid Ranking

See Section X of the Solicitation Protocol

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Transmission Ranking Cost

For Projects that have not completed the ISIS/IFAS

Solely for bid ranking in this solicitation Based on proxy transmission facilities Successful bidders must complete the ISO

Interconnection Process

Alternative Commercial Arrangements covered in Shortlist Evaluation Methodology – not part of Transmission Section

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Clusters for Bid Evaluation Purposes only

Clusters do not have to be Points of Interconnection

Out of area resources: North:Round Mountain South:Midway East: Summit

PG&E Substations Associated with Renewable Resource Clusters

Oregon California

MalinCaptain Jack

Gates

Diablo Canyon

Tracy

Southern California Edison (SCE)

VincentSylmar

TeslaNewark

Vaca-Dixon

Round Mt.

Metcalf

Olinda

Pacific Gas and Electric Co. (PG&E)

Cottonwood

Fulton

Panoche

Midway

Bellota

Wilson

Gregg

Helm

SummitTable Mt.

Rio Oso

Los Banos

CaribouDelta Metering

Station

Pit 1

Morro Bay

Renewable resource cluster

Stagg

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Ways to avoid triggering Next Level of Transmission Ranking Cost

Attachment D to the Protocol

Energy Pricing Sheet Optional “Dispatch Down Provision” *

Specify the MW of curtailable capacity Gen Profile Sheet

Generation profile that does not trigger transmission upgrades

Forecast of average-day net output energy production, in MW by hour, by month and by year

* This provision is optional and is supplemental to the standard Dispatch Down provision.

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Table X.1 Transmission Ranking Cost Where PG&E is the Purchaser

Substation Associated

With Cluster of Potential

Generation Level

Peak and Shoulder Night Base Load and As Available

Year Round Year Round Year Round

Maximum MW of

Potential Generation

In each Level

Cost of Proxy Network Upgrades to accommodate

MW Level of Potential Generation ($ millions in 2007

dollars)

Maximum MW of


In each Level

Cost of Proxy Network Upgrades to accommodate

MW Level of Potential Generation ($ millions in 2007

dollars)

Maximum MW of


In each Level

Cost of Proxy Network Upgrades to accommodate MW Level of Potential

Generation ($ millions in 2007

dollars)

Proxy Voltage Support Devices*

Other Proxy Transmission

upgrades


Other Proxy Transmission upgrades


Other Proxy Transmission

upgrades

Fulton 230 kV

1 750 49 0 300 20 0 300 20 0

2 200 13 16 200 13 16

* Cost of Proxy Voltage Support Devices are to be prorated in proportion to the size of the project.

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Example Two Offers received:

A: 250 MW (base load) B: 250 MW (base load)

Offer A ranks higher than Offer B

Transmission Ranking Cost to be used in Evaluation

“In ranking RPS bids, PG&E, SCE, and SDG&E shall each allocate costs of transmission upgrades that would be used by more than one RPS project on a pro rata basis, based on the percentage of transfer capacity added by the proposed upgrade that would be used by the RPS project: This pro rata allocation of upgrade costs shall be applied only if sufficient renewables potential exists, as identified by the California Energy Commission, to fully utilize the transmission facility sometime in the future."

Offer Level Gen Capacity (MW)

Proxy VAR Support ($Million/MW)

Other ProxyNetwork Upgrades ($Million)

A 1 250 0.065 0

B 1 50 0.065 0

B 2 200 0.065 16

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Interconnection Process

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Generation Interconnection Study Process Interconnection process must be complete in order for

generator to deliver power to the grid and meet obligations of RPS contract

Generator responsible for all generation interconnection costs

Generator responsible for timely applications with CAISO and timely completion of the process Not part of RPS Solicitation Process should be started early

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Generation Interconnection Study Process Transmission Interconnections

All Applications must be submitted with the CAISO Generators less than or equal to 20 MW, Small Generator

Interconnection Procedures (SGIP) Generators greater than 20 MW, follow Large Generator

Interconnection Procedures (LGIP) Information on the SGIP and LGIP found on CAISO Website,

http://www.caiso.com/docs/2002/06/11/2002061110300427214.html

Distribution Interconnections Follow Attachment E of WDT

http://www.pge.com/mybusiness/customerservice/nonpgeutility/generateownpower/wholesaleinterconn/

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Small Generator Interconnection Procedures (SGIP)

Interconnection Request

(IR)

Interconnection Feasibility

Study (IFS)

Interconnection System Impact Study

(ISIS)

Interconnection Facilities Study

(IFAS)

Interconnection Agreement

(SGIA)

Study Process (30 BD)



Negotiation (30 BD)

Cumulative time >= 6 months

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Large Generator Interconnection Procedures (LGIP)

Interconnection Request

(IR)

Interconnection Feasibility

Study (IFS)

Interconnection System Impact Study

(ISIS)

Interconnection Facilities Study

(IFAS)

Interconnection Agreement

(LGIA)

Study Process (60 CD)

Study Process

(120 CD)

Study Process

(120 CD)

Negotiation (60 CD)

Cumulative time >= 1 Year

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Solicitation Documents

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Offer Submittal

Offers must be received by PG&E by Thursday, May 12, 2008 at 5 p.m. (PDT)

Both Electronic and Hard Copies Electronic copies - two (2) compact discs (CDs) Hard copies (5 Bound & 1 Unbound) delivered to:

RPS SolicitationElectric Supply DepartmentPacific Gas & Electric Company245 Market Street, 13th floorSan Francisco, CA 94105

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Information due May 12

Signed RPS Solicitation Protocol Agreement (Attachment A)

Fully Completed Offer Form (Attachment D) FERC Order 2004 Waiver (Attachment F) Applicable Form of PPA (Attachments G, H or M),

including proposed modifications Buyout Offers must also include a fully completed

term sheet (Attachment I) in addition to PPA Ownership Offers must include a fully completed term

sheet (Attachment J) instead of a PPA

See Section VIII.C. of the Solicitation Protocol

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Information due May 12 Project Description (includes, but is not limited to):

Technology and equipment type Environmental issues and permit status Project Viability Community Development Plans Contribution to RPS Goals

Site Control Milestone Schedule Transmission/Interconnection Experience and Qualifications Supplemental CEC Funding Support of RPS Goals

See Section VIII.C. of the Solicitation Protocol

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Additional forms if Shortlisted

Within 5 business days Offer Deposit Confidentiality Agreement (Attachment L) Credit and Finance Information Form

(Attachment E)

See Section XIV of the Solicitation Protocol

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Communications and Website All RFO documents are available on PG&E’s website

at: www.pge.com/rfo and click on 2008 Renewable RFO,

or paste and bookmark the following in your browser: http://www.pge.com/b2b/energysupply/wholesaleelectricsuppliersolicitation/renewables2008.html

All announcements, updates and Q&As will also be posted on the website

Communications should be directed to: [email protected]

See Section I of the Solicitation Protocol

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Q & A

BIDDERS CONFERENCE March 17, 2008 2008 SOLICITATION RENEWABLES PORTFOLIO STANDARD.

Documents

Transcript of BIDDERS CONFERENCE March 17, 2008 2008 SOLICITATION RENEWABLES PORTFOLIO STANDARD.