Request for Offers for Natural Gas Physical and Financial Products
RFO Instructions
April 7, 2006
TABLE OF CONTENTS
A. INTRODUCTION 4
B. GAS RFO SOLICITATION AND OFFER SUBMITTAL PROCESS 5
B.1. SCE AND DWR RESPONSIBILITIES 5
B.2. RFO SCHEDULE 5
B.3. GAS RFO NOTICE OF INTENT TO OFFER 6
B.4. OFFER SUBMISSION PROCESS 6
B.5. RESERVATION OF RIGHTS 7
C. PRODUCTS SOLICITED FOR SCE 8
C.1. PRODUCT DETAILS 8
C.2. PHYSICAL GAS DELIVERY POINTS 9
C.3. GAS QUALITY 10
C.4. INFRASTRUCTURE PROJECTS 10
C.5. ENABLING AGREEMENT REQUIREMENTS FOR PHYSICAL OFFERS 10
C.6. ENABLING AGREEMENT REQUIREMENTS FOR FINANCIAL OFFERS 11
C.7. CREDIT TERMS 12
C.8. SCE INDICATIVE OFFER SUBMITTAL PACKAGE 12
C.9. SCE FINAL OFFER SUBMITTAL PACKAGE 14
D. PRODUCTS SOLICITED FOR DWR 15
D.1. PRODUCT DETAILS 15
D.2. INFRASTRUCTURE PROJECTS AND VALUATION 16
D.3. ENABLING AGREEMENT REQUIREMENTS FOR FINANCIAL OFFERS 16
D.4. CREDIT TERMS 17
D.5. DWR INDICATIVE OFFER SUBMITTAL PACKAGE 18
D.6. DWR FINAL OFFER SUBMITTAL PACKAGE 19
E. GAS RFO CONTACT INFORMATION 20
Appendix A 21
APPENDICES
SCE and DWR Common Appendices:
Appendix A: Definitions
Appendix B: Notice of Intent to Offer
SCE Specific Appendices:
Appendix SCE-1: Gas RFO Confidentiality Agreement
Appendix SCE-2: SCE Indicative Offer Cover Letter
Attachment 1: Respondent Information
Attachment 2: SCE Offer Submittal Spreadsheet
Attachment 3: Infrastructure Project Information
Appendix SCE-3: SCE NAESB Elections and Special Provisions
Appendix SCE-4: SCE Elections and Special Provisions to NAESB Credit Support Addendum (including form of Letter of Credit)
Appendix SCE-5: SCE ISDA Schedule Elections
Appendix SCE-6: SCE, paragraph 13 Elections to the ISDA CSA (including form of Letter of Credit)
Appendix SCE-7: SCE Fixed Price Physical Gas Confirmation
Appendix SCE-8: SCE Indexed Price Physical Gas Confirmation
Appendix SCE-9: SCE Fixed/Floating Swap Confirmation
Appendix SCE-10: SCE Call Option Confirmation
Appendix SCE-11: SCE Call Spread Confirmation
Appendix SCE-12: SCE Final Offer Cover Letter
DWR Specific Appendices:
Appendix DWR-1: Gas RFO Confidentiality Agreement
Appendix DWR-2: DWR Indicative Offer Cover Letter
Attachment 1: Respondent Information
Attachment 2: DWR Offer Submittal Spreadsheet
Attachment 3: Infrastructure Project Information
Appendix DWR-3: Standard DWR Terms and Conditions for ISDA Agreements
Appendix DWR-4: DWR Final Offer Cover Letter
A. INTRODUCTION
This is a Request For Offers (“RFO”) by Southern California Edison Company (“SCE”) and the California Department of Water Resources (“DWR”), for whom SCE serves as a limited agent.
SCE is seeking Offers for physical natural gas and for financial natural gas hedging products in order to manage the risks faced by SCE arising from the operation of SCE-owned natural gas fired power plants, SCE tolling agreements, and from that portion of SCE’s qualifying facility portfolio where the power purchase price is dependent upon the price of natural gas.
DWR is seeking Offers for financial natural gas hedging products in order to hedge the risk associated with DWR tolling contracts allocated to SCE.
These products requested by SCE and DWR are summarized in Section C and Section D of these RFO Instructions.
As specified in Section C.4. and Section D.2. herein, SCE and DWR have a preference for Offers that enhance the natural gas supply infrastructure.
These RFO Instructions describe the products solicited by SCE and DWR, and the RFO process and timeline, including the documents and information that will be required for the submittal of Offers.
This RFO is not a binding offer by SCE or DWR to purchase natural gas or any other product.
SCE and DWR will not entertain Offers from any affiliate of SCE for this RFO.
Capitalized terms used in this RFO that are not otherwise defined herein are used with the meanings ascribed to them in Appendix A.
B. GAS RFO SOLICITATION AND OFFER SUBMITTAL PROCESS
B.1. SCE AND DWR RESPONSIBILITIES
Although this is a single RFO, SCE and DWR will be shortlisting, negotiating and accepting Offers separately. Respondents must submit Offers separately to SCE and to DWR in accordance with the instructions herein. Respondents should note that SCE will be assisting DWR in its evaluation of the Offers it receives pursuant to this RFO, and SCE will review and evaluate DWR’s Offers on DWR’s behalf. Furthermore, SCE may disclose to DWR, in order to provide DWR with assistance in evaluating DWR’s Offers, certain components of the Offers SCE receives and its analysis of those Offers. DWR and SCE can exchange information related to their respective Offers in accordance with the terms of the confidentiality provisions contained in the Operating Order between SCE and DWR approved by the California Public Utilities Commission in Decision 02-12-069 on December 19, 2002.
B.2. RFO SCHEDULE
Gas RFO TimelineApril 7, 2006 / Gas RFO documentation will be posted on http://www.sce.com/GASRFO
April 14, 2006 at 5:00 PM PPT / Notice of Intent to Offer is due.
April 18, 2006 at 10:00 AM – 11:00 AM PPT / Bidder’s Conference Call. Call-in number is (866) 858-1283.
April 21, 2006 / Strike prices for Indicative Offers for financial products will be posted on SCE’s Gas RFO website.
April 28, 2006 at 5:00 PM PPT / Respondent’s complete Indicative Offer Submittal Package to SCE is due and complete Indicative Offer Submittal Package to DWR is due.
May 12, 2006 / SCE and DWR will notify Respondents whether or not they are included in SCE’s or DWR’s shortlist.
June 30, 2006 at 5:00 PM PPT / Applicable and mutually agreed Confirmations with the exception of the Final Offer prices are due (“Lockdown Date”).
July 12, 2006 at 5:00 PM PPT / Applicable, mutually agreed and executed Enabling Agreements are due.
July 14, 2006 at 12:00 PM PPT / SCE and DWR will notify Shortlisted Respondents if their Confirmations and Enabling Agreements are acceptable and they are therefore eligible to supply final pricing for this RFO.
Eligible Respondents will be sent SCE Offer Submittal Spreadsheet or DWR Offer Submittal Spreadsheet including final strike prices. This form must be used for final offers.
July 17, 2006 at 12:00 PM PPT / Respondent’s complete Final Offer Submittal Package to SCE is due and complete Final Offer Submittal Package to DWR is due. Respondent shall (1) email an executed PDF or scanned signed Final Offer Cover Letter, (2) a PDF or scanned and Excel version of SCE Offer Submittal Spreadsheet or DWR Offer Submittal Spreadsheet with final pricing, and (3) PDF or scanned applicable mutually agreed Confirmations and Enabling Agreements.
July 18, 2006 prior to 11:00 AM PPT / Award notifications via recorded phone call to Respondent’s representative indicated in the applicable Final Offer Submittal Spreadsheet (“Award Date”).
B.3. GAS RFO NOTICE OF INTENT TO OFFER
Respondent must provide a non-binding Notice of Intent to Offer by emailing the form shown in Appendix B by the date shown in Section B.2. to .
B.4. OFFER SUBMISSION PROCESS
Respondents must provide a complete Indicative Offer Submittal Package as described in C.8. for SCE Offers and Section D.5. for DWR Offers. Indicative Offer prices are non-binding. All Respondents must use the applicable Offer Submittal Spreadsheet to submit both their Indicative and Final Offers. SCE offers must use the SCE Offer Submittal Spreadsheet and DWR Offers must use the DWR Offer Submittal Spreadsheet. SCE and DWR reserve the right to reject any or all Offers from a Respondent if the Respondent has changed or tampered with any protected area within the applicable Offer Submittal Spread Sheet. Respondents can only modify the light blue highlighted sections of these spread sheets. Pull down menus are used where possible to aid the bidding process.
Two weeks after receipt of Indicative Offer Submittal Packages, SCE and DWR will notify Respondents if they are included on SCE’s or DWR’s shortlist, at which time SCE or DWR will continue to negotiate Enabling Agreements and Confirmations with those Shortlisted Respondents.
Approximately two weeks before Final Offers are due, all terms and conditions of the Offer as described in the Confirmations must be finalized with the exception of the Final Offer price. No additional changes to the Confirmation will be accepted after the Lockdown Date.
Two months after Shortlist notification, an applicable mutually agreed Enabling Agreement must be executed and delivered to SCE. Two days after the Enabling Agreement due date, SCE and DWR will notify Shortlisted Respondents of their eligibility to submit a Final Offer. At this time SCE will email a unique SCE Final Offer Submittal Spreadsheet to each eligible Respondent. The unique SCE Final Offer Submittal Spreadsheet will contain only the products for which the Respondent is eligible. For the eligible Respondents, the unique SCE Final Offer Submittal Spreadsheets will contain strike price data for call options and call spreads. The Final Offers must be received by the date shown in Section B.2. In order for Final Offers to SCE or DWR to be eligible for award, Respondents must deliver all requisite documents in the appropriate formats to SCE before 12:00 PM PPT the day before the Award Date. The requisite documents and formats are described for SCE in Sections C.5. through C.6. and for DWR in Section D.3.
Binding Final Offer prices must remain open until 11:00am PPT on the Award Date. SCE and DWR will award contracts to successful Respondents via a recorded telephone call prior to 11:00am PPT.
The terms, conditions, and representations in the Indicative Offer Submittal Package attached as Appendix SCE-2 and applicable Confirmations will serve as a basis for a potential future agreement between SCE and/or DWR and Respondent and are not intended to and do not constitute a binding agreement of, or establish any obligation of, SCE or Respondent. Respondent must state on the Offer Submittal Spreadsheet all Offer limitations and constraints including limitations on total award quantity and note to which specific Offers Respondent’s limitations apply.
Respondents should note that SCE and DWR expect that Respondent, in submitting its Offers, will be able to make certain representations, warranties, and covenants to SCE or to DWR; therefore, Respondents should read the contents of the Indicative Offer Cover Letter as applicable prior to preparing any of its Offers. It is expected that Respondent will not engage in any communications with any other actual or potential participant in the RFO concerning either the RFO process, price terms in Respondent’s Offer or related matters, and Respondent has not engaged in collusion or any other unlawful or unfair business practices in connection with the RFO.
B.5. RESERVATION OF RIGHTS
SCE and DWR reserve the right at any time, in their sole discretion, to abandon this solicitation process, to change any dates specified in this RFO, to change the basis for evaluation of Offers, to terminate further participation in this process by any party, to accept any Offer or to enter into any definitive agreement, to evaluate the qualifications of any Respondent or the terms and conditions of any Offer, to reject any or all proposals or Offers, to change any form used in this RFO at any time during the RFO process, or waive any irregularities, all without notice and without assigning any reasons and without liability of Edison International, SCE, DWR or any of their respective subsidiaries, affiliates or representatives to any Respondent. SCE and DWR shall have no obligation to consider any Offer submitted. SCE and DWR will not reimburse any Respondent for its expenses under any circumstances, regardless of whether the bidding process proceeds to a successful conclusion or is abandoned. SCE and DWR shall not be deemed to have accepted any Offer, and shall not be bound by any term thereof, unless and until it signs applicable Confirmations and, if appropriate, any related Enabling Agreement with the Respondent.
Page 6
Southern California Edison
RFO for Natural Gas Physical and Financial Product
April 7, 2006
C. PRODUCTS SOLICITED FOR SCE
C.1. PRODUCT DETAILS
In this RFO, SCE will not consider Offers for products other than those specifically set forth on this list. The maximum total award per Respondent under this RFO for SCE is limited to 60,000 MMBtu/day of physical products and 60,000 MMBtu/day of financial products. All physical or financial product Offers must quote fixed and/or indexed prices in dollars per MMBtu.
Physical Products
SCE is seeking Firm fixed and Firm indexed physical products delivered to the SoCalGas system with contract durations of one year, two years, three years, four years, or 59 months. (SCE is limited by its CPUC-approved Procurement Plan to contract durations of less than 5 years without explicit CPUC pre-approval). The earliest start date is November 1, 2006. All contracts must start on November 1 of the offered year and no contract shall extend beyond October 31, 2013. Offers can be submitted in any of these quantities: 10,000, 20,000, 30,000, 40,000, 50,000 or 60,000 MMBtu/day.
Physical products are summarized in the following table.
PHYSICAL TRANSACTION TYPES / OFFER QUANTITY / CONTRACT TERMStart Date / Latest End Date / Durations
Fixed Price / 10,000, 20,000, 30,000, 40,000, 50,000 or 60,000 MMBtu/day / November 1, 2006
November 1, 2007
November 1, 2008
November 1, 2009
November 1, 2010
November 1, 2011
November 1, 2012 / September 30, 2011
September 30, 2012
September 30, 2013
October 31, 2013
October 31, 2013
October 31, 2013
October 31, 2013 / 12, 24, 36, 48 or 59 months
12, 24, 36, 48 or 59 months
12, 24, 36, 48 or 59 months
12, 24, 36, or 48 months
12, 24, or 36 months
12 or 24 months
12 months
Indexed Price / 10,000, 20,000, 30,000, 40,000, 50,000 or 60,000 MMBtu/day / November 1, 2006
November 1, 2007
November 1, 2008
November 1, 2009
November 1, 2010
November 1, 2011
November 1, 2012 / September 30, 2011
September 30, 2012
September 30, 2013
October 31, 2013
October 31, 2013
October 31, 2013
October 31, 2013 / 12, 24, 36, 48 or 59 months
12, 24, 36, 48 or 59 months
12, 24, 36, 48 or 59 months
12, 24, 36, or 48 months
12, 24, or 36 months
12 or 24 months
12 months
Financial Products
For financial products, SCE is seeking Offers for fixed/floating price swaps, call options, and call spreads. The Gas Index is the only index that can be used for settlement of financial Offers. Requested contract durations are one year, two years, three years, four years, or 59 months. (SCE is limited by its CPUC-approved Procurement Plan to contract durations of less than 5 years without explicit CPUC pre-approval.) The earliest start date is November 1, 2006. All contracts must start on November 1 of the year offered and no contract shall extend beyond October 31, 2013. Offers can be submitted in any of these quantities: 10,000, 20,000, 30,000, 40,000, 50,000 or 60,000 MMBtu/day.