Southern California Edison

Southern CaliforniaEdison

2008 Independent Evaluator Request for Proposals

Independent Evaluator RFP Instructions

July 2008

1)Background

The California Public Utilities Commission (CPUC) requires investor-owned utilities (IOUs) to use an independent evaluator (IE) to monitor:

• Competitive solicitations for power procurement involving affiliate transactions and IOU-built or IOU-turnkey bidders;
• Energy auctions;
• Renewables Portfolio Standard (RPS) solicitations;
• Competitive solicitations that seek energy products of more than three months in duration.

(See CPUC Decisions D.04-12-048, D.06-07-029, D.07-09-044, and D.07-12-052).

Pursuant to D.07-12-052, the CPUC has directed each IOU, in conjunction with the CPUC’s Energy Division (ED) and its respective Procurement Review Group (PRG), to develop a pre-qualified pool of at least three (but preferably more) IEs. Beginning on January 1, 2009, the IOUs will use this pool to select an IE for all future procurement activity that requires an IE. This Work Scope is intended to fulfill the CPUC’s requirements set forth in the above-referenced decisions concerning the roles and responsibilities of the IE.

Southern California Edison Company (SCE) intends to create an approved pool of IEs by the end of 2008 for use in SCE’s procurement activities in 2009 and beyond. These potential procurement activities may include Request for Offers (RFO) for new generation (New Gen RFO), All-Source Request for Offers (All-Sources RFO), RPS Requests for Proposals (RFP), energy commodity RFOs, Request for Bids (RFB), affiliate bilateral negotiation (Bilateral Negotiations), and energy auctions (each, a Procurement Activity).

In New Gen RFOs, SCE seeks to acquire the rights to schedule and dispatch, pursuant to enabling agreements, electrical capacity, associated energy, resource adequacy benefits, and ancillary services from new or repowered, clean, and efficient resources for terms up to 10 years.

In All-Source RFOs, SCE seeksto contract for electrical capacity, resource adequacy benefits, associated energy, ancillary services, and other power market financial derivatives from any resource capable of supplying these products for terms up to 5 years.

In RPS RFPs, SCE seeks proposals from sellers for electric energy, capacity attributes, environmental and green attributes, and resource adequacy benefits produced by generating facilities that qualify as eligible renewable energy resources.

In energy auctions, SCE will seek offers for the energy rights from generating resources being built or repowered under a contract entered into as a result of a New Gen RFO.

2)IE Pool

As stated above, in accordance with D.07-12-052, SCE seeks in this solicitation, IEs for its IE pool. SCE’s PRG and the ED will be involved in the evaluation and selection process. ED’s final approval is required for inclusion of an IE in the pool.

The inclusion of an IE in SCE’s IE pool does not require the IE to sign a contract with SCE. Nor does inclusion in the IE pool require SCE to use the IE in any of its Procurement Activities.If, and when, SCE selects an IE to participate in a Procurement Activity, then SCE and the IE will enter into a contract at that time, which will incorporate the Work Scope below and will include the following documents:

• Purchase Order
• Declaration Regarding Conflict of Interest[1] (Appendix A)
• Terms and Conditions (Appendix B)

An IE may remain in the IE pool for a maximum of two years, after which time the IE must go through the reevaluation process based upon the inclusion criteria set forth in D.07-12-052.

3)Independent Evaluator Work Scope

When an IE is selected for a Procurement Activity, the IE’s function will include consultation with SCE on the design, administration and evaluation of the competitive procurement solicitation process to ensure that no SCE affiliate has an undue advantage over non-affiliates in the solicitation. The IE also ensures that the solicitation process is open, transparent and free from anti-competitive behavior. The IE will be required to make a determination as to whether SCE’s final selection was fair and was not unfairly influenced by its affiliate relationships. The IE must report its findings to SCE’s PRG and the ED, and may testify in CPUC proceedings as required or requested by SCE or the CPUC. The IE must also complete the CPUC’s Independent Evaluator Report Template upon completion of the bid process to a solicitation, with updates based on completion of the solicitation itself, for review by the CPUC and SCE’s PRG (a copy of the current template is attached hereto as Appendix C and D).

When IE’s oversight is required for Bilateral Negotiations, the IE will consult with SCE to ensure that such affiliate has no undue advantage over any other counterparty seeking similar position with SCE and that the negotiation process is fair and free from anti-competitive behavior. Upon conclusion of any such Bilateral Negotiations, the IE will make a determination whether or not any contract extension or contract amendment ultimately agreed to was unfairly influenced by the affiliate relationship. The IE will report this determination to SCE’s PRG and the ED and may testify in CPUC proceedings to approve any contract resulting from a Bilateral Negotiation.

Any IE selected for a Procurement Activity is expected to make recommendations to SCE during the course of any RFO, RFP, energy auction, RFB, or Bilateral Negotiation process. The IE, however, does not have the authority to mandate SCE to make any changes to the RFO process. In addition, the IE may not negotiate with any bidder or counterparty on SCE’s behalf, serve as a single point of contact between SCE and bidders or counterparties, nor make binding decisions on behalf of SCE. SCE, not the IE, will conduct and administer the RFO/RFP solicitation and evaluation process or Bilateral Negotiation.

The extent of an IE’s engagement may vary depending on the Procurement Activity. On-site visits to SCE headquarters in Rosemead, CA could be required on a weekly, bi-weekly, or monthly basis, depending on the phase of the Procurement Activity for which SCE has engaged the IE. The IE may be called upon to provide testimony at the CPUC and Federal Energy Regulatory Commission (FERC) at the conclusion of the Procurement Activity.

The IE will be given reasonable access to information, negotiations, meetings, and communications related to offers submitted by all bidders or counterparties, including SCE affiliates. SCE will provide the IE with the contact information for SCE’s Chief Ethics and Compliance Officer, Director of Regulatory Compliance, and General Auditor. The IE will be encouraged to contact these individuals when appropriate.

The IE position requires multiple skill sets; thus, partnering or the use of project team members for support is permitted and encouraged. But all personnel providing material support must be well qualified and have the proper level of experience (senior level).

The IE will immediately report to the PRG and SCE management (including specifically SCE’s Chief of Ethics and Compliance Officer) any perceived attempt by any party involved in the solicitation or negotiation process to improperly influence any findings determined by the IE or to challenge or interfere with their independent role in the solicitation or negotiation process.

4)Responsibilities and Tasks

The IE will perform the following tasks:

a)Assist in the development and review of SCE’s existing RFO and RFP protocols and design of the solicitation processes. Promptly submit to SCE management any recommendations consistent with the objective of ensuring a competitive, open and transparent process, and to ensure that the overall scope of the RFO process is not unnecessarily broad or too narrow.

b)Provide recommendations concerning the precise definition of products sought and price and non-price evaluation criteria, so that all aspects of the products are clearly understood and all bidders may effectively respond to the solicitations, as applicable.

c)Review the comprehensive quantitative and qualitative bid evaluation criteria and methodologies and assess whether these are applied to all bids in a fair and non-discriminatory manner. The IE will be provided reasonable access to SCE personnel, modeling tools, and meeting documentation in order to credibly evaluate SCE’s bid valuation and selection processes.

d)Report on the outcome of a RFO or RFP to CPUC using the appropriate CPUC Independent Evaluator Report Template. A “short form” template (Appendix C) is required for transactions that do not require submission of an application for CPUC approvals, including those transactions that are documented in the IOU’s Quarterly Compliances Report and/or are submitted to the Commission for approval via advice letter. A “long form” template (Appendix D) should be used for transactions that require submission of an application for CPUC approval.

e)Assist the development and review of SCE’s energy auction protocols and design of the auction process. Promptly submit to SCE management any recommendations consistent with the objective of ensuring a competitive, open and transparent process, and to ensure that the overall scope of the energy auction is reasonable.

f)Provide recommendations concerning the methodology that will be used to determine the Market Value Assessment (as defined in Appendix A of D.07-09-044) for energy auctions.

g)If required, calculate the minimum bid price necessary for an energy auction to be considered successful and publicly release this minimum price bid within three (3) business days of receipt of the final auction bids.

h)Monitor the RFO or RFP solicitation process, energy auction, or Bilateral Negotiation and promptly submit recommendations to SCE management to ensure that no bidder has an information advantage and that all bidders or counterparties if applicable, receive access to relevant communications in a non-discriminatory manner.

i)Provide periodic presentations as requested to SCE management and to the PRG concerning the IE’s findings. Communicate periodically with the ED as a check on the RFO process.

j)Provide a final written assessment on whether or not SCE’s final contract selection was unfairly influenced by its affiliate relationship.

k)Provide final written assessment on whether or not the solicitation or auction process was open, transparent and fair and whether any bidder received material information that gave them a competitive advantage or disadvantage relative to other bidders.

l)Provide a final written assessment on whether or not the Bilateral Negotiations were fair and whether any SCE affiliate counterparty received material information that gave such counterparty a competitive advantage or disadvantage relative to other counterparties seeking to extend a QF contract with SCE.

m)Provide a final written assessment on whether or not SCE’s evaluation criteria and methodologies were reasonable and appropriate and were applied in a fair and non-discriminatory manner to all offers received.

n)Prepare and deliver direct and rebuttal testimony as required to the CPUC and FERC in any associated proceedings related to theProcurement Activity.

o)Other duties as may be further defined in subsequent relevant regulatory proceedings.

5)IE RFP Solicitation and Proposal Submittal Process

a)IE RFP Schedule (2008)

Timeline / Event
August7 / IE RFP documents issued.
August 14
(11:00 a.m. PPT) / Bidders’ conference call
August 28
(Close of Business) / Deadline to submit complete proposal package.
September 8 - September 17 / SCE to review and rank IE proposals and conduct first round interviews with top IE candidates.
September 17 – 18 / SCE’s IE recommendations to the PRG. SCE will arrange PRG interviews with the IE candidates.
September 19 – October 8 / PRG interviews with IE candidates
October 20 / PRG and SCE recommendations to ED
End of October – December / Inclusion of the IE in the IE pool after ED’s final approval.

b)Complete Proposal Submittal Package

SCE must receive the complete proposal package before close of business,Thursday August 28, 2008. SCE must receive 2 hard copies and one (1) electronic copy of the proposal package. In the case of any conflict between the written documents and electronic versions, the written documents shall prevail. SCE will not be responsible for proposals received after the submittal deadline due to unsuccessful delivery of the complete proposal package.

SCE will only consider proposals that are complete. A complete proposalfor each IE includes the documents listed below:

i)Detailed Answers to the Technical IE Questioner attached to this document. (Appendix E)

ii)Bidder shall provide hourly billing rates for all personnel (by name and classification) which bidder anticipates using to perform the IE task for any particular Procurement Activity for 2009 and 2010. Rates must be precise. Ranges of rates or average rates will not be accepted. Before each Procurement Activity, SCE will ask the IEs in SCE’s IE pool to provide aspecific bid for the particular Procurement Activity. At that time, the interested IE shall provide an estimate for the total cost for the Procurement Activity as well as a breakdown of their total estimated hours and cost by task.

iii)Signed Confidentiality Agreement (Appendix F)

iv)IE Resume (for the entire team if applicable)

v)All proposals must be signed and dated

c)Contact Information

The website address for the IE RFP is:

Questions relating to this RFP should be addressed to SCE via e-mail at or by phone call to Kelly Chen at (626) 302-3554 or Amir Angha at (626) 302-1413Katie Brower at (562) 491-3615.

Overnight courier, U.S. mail, or hand delivered proposals shall be sent to:

Amir Angha, Independent Evaluator RFP

Southern California Edison Company

G.O. 1, Quad 1-C

2244 Walnut Grove Avenue

Rosemead, California 91770Southern California Edison Company

c/o Edison Material Supply

Attention: Katie Brower

125 Elm Avenue

Long Beach, CA 90802

d)Qualification Review

This Proposal Request is being issued to your company on a conditional basis. Your proposal will be accepted for evaluation contingent upon successful completion of Edison's qualification review of commercial and technical factors.

e)Decline to Bid

If you are unable to submit a bid for this Work, but are still interested in bidding future work, please complete the information below, and return it to the above address.

Signed ______Date ______

Bidder ______

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[1]An IE may sign this document again before a Procurement Activityassignment.