November 14, 2008
Q&A from the Intermediate-term RFO Mailbox
1)How should we think about and calculate collateral requirements?
The Seller’s Collateral Requirement is equal to the Mark to Market Value of the transaction less the sum of the Collateral previously provided by the Seller and the Collateral Threshold Amount (see Section 8.2(d)(i) of the PPA). Appendix VI of the PPAprovides details on the Mark to Market Value calculation. At any given point in the Services Term, the Mark to Market Value represents the change in market value through the remainder of the Services Term from the market value on the Effective Date. The market value is the sum of the monthly intrinsic values which represent the monthly positive difference between the value of generation at the forward electric price and the cost of the generation at the Guaranteed Heat Rate and Variable O&M Rate.
2)Will PG&E accept a fixed Collateral Requirement amount in place of the Mark to Market amount as specified in Appendix VI of the PPA?
PG&E’s preference is to utilize the Collateral Requirements as specified in the PPA. Any changes to the PPA credit provisions will be consider in the offer evaluation process and may negatively impact an offer's evaluation. Discussion of specific credit arrangements is premature at this time. PG&E will negotiate specific terms of the PPA with shortlisted Participants after March 26, 2009.
3)Is the QF Standard Offer Contract referenced in Section II.E.II of the RFO available for review? If not, what is the status of this contract?
The CPUC has not yet approved a QF Standard Offer Contract but is leading efforts to resolve outstanding issues with the contract.
4)I currently have a tolling contract with PG&E. Can I use this contract as a form of contract for an offer in this RFO?
No. PG&E has provided a form PPA for use in this RFO. Modification to the form PPA is discouraged unless necessary based on the product and resource offered. An offer’s conformance with the PPA’s non-price terms and conditions will be considered as part of the evaluation process.
5)My unit can provide hour-ahead dispatchability but is not as operationally flexible as the characteristics described in Section II.D of the RFO Protocols. Can I still offer my unit in the RFO.
Yes. PG&E believes that Section II.D of the RFO Protocols generally describes the operational flexibility characteristics of existing units that can provide hour-ahead dispatch rights. As specified in the protocols, the ability to meet these characteristics will be given significant weight in the offer evaluation process. Participants with units that are not able to meet all of the described characteristics but can provide hour-ahead dispatch rights are encouraged to provide offers in the RFO. Participants should clearly highlight the limitations of their unit with regard to the desired operational flexibility characteristics provided in the protocols.
6)Can I provide separate offers for both RA capacity only and a toll (including RA capacity) from a single unit?
Yes. Participants may provide mutually exclusive offers for a single unit. Mutually exclusive offers should be clearly identified. Separate Generation Facility Information Forms (Appendix E of the RFO Protocols) should be submitted for each offer. Note that for a toll to be eligible for the operational flexibility product it must provide hour-ahead dispatch rights.
Participants are also encouraged to submit separate offers for each of the three delivery periods described in Section II.B of the RFO Protocols. Since PG&E’s needs vary over the period covered by the RFO, a submission limited to only one of the three desired periods may limit the chance of its acceptance. Participants submitting offers for multiple units need only submit one copy of the marked-up PPA or RA confirmation but should include separate Generation Facility Information Forms (Appendix E of the RFO Protocols) for each unit.
7)My unit can provide both day-ahead and hour-ahead dispatch. Is it still eligible for this RFO?
Yes. Hour-ahead dispatch rights are the minimum dispatch requirement for an offer for the operational flexibility product in this RFO. Typically PG&E would expect an offer that provided hour-ahead dispatch to also include day-ahead dispatch rights. Under the form PPA, as described in Section 3.5(b), PG&E’s dispatch rights include day-ahead, hour-ahead and real-time dispatch.
8)Will PG&E consider offers for resources located in SP15? What about for the operational flexibility product?
Yes. While PG&E has a preference for resources that deliver to NP15, PG&E will consider offers for all RFO products from resources located anywhere within the CAISO control area.
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