January 6, 2009
Q&A from the Intermediate-term RFO Mailbox
1)My resource is under contract through mid-2011. May I offer operational flexibility from the resource for the period mid-2011 through December 2013?
PG&E’s objective in this RFO is to obtain intermediate-term energy and capacity products in the January 2010 through December 2013 period. PG&E realizes however that the delivery periods sought in the RFO might not match exactly with any given resource’s availability. As such PG&E is willing to consider offers for resources that are not able to deliver for the entire portion of one of the three stated RFO delivery periods. A participant should specify the nature of the limitation that prevents making an offer for one of the desired delivery periods.
2)Will PG&E accept offers for RA capacity for individual years? For example, if we wanted to offer RA capacity for just 2012 off of a given unit, is PG&E open to considering such an offer as it would not conform with the delivery periods described in section II.B of your RFO protocols document. However, the language in that section seems to state a willingness on PG&E’s part to consider a 1 year period from the period 2010-2013.
As stated in the answer to question #1 above, PG&E’s objective in this RFO is to obtain intermediate-term energy and capacity products in the January 2010 through December 2013 period. The one year period discussed in Section II.B applies to QFs seeking standard offer contracts. While PG&E is willing to consider offers that deviate to some extent from the stated delivery periods an offer of a single year deviates greatly. While an offer that deviate greatly from the desired delivery terms, for example a one year offer for 2012, will not be rejected outright, it would only be considered on a residual basis and at PG&E’s sole discretion. To the extent possible, participants are encouraged to adhere to one or more of the stated delivery terms.
3)It is our understanding that the rules, bonuses, penalties, etc associated with the RA Capacity are in the process of being revised by the CAISO and may not be approved before the end of January 2009. Given responses to PG&E’s Intermediate-Term RFO are due mid-January 2009, and portions of the RA Confirmation proposed by PG&E may no longer be applicable given CAISO’s proposed changes, what is the plan for PG&E regarding the proposed RA Confirmation in the Intermediate-Term RFO?
The standard RA capacity product process referred to in the question will likely continue for sometime beyond January 2009 and it is possible that contract execution will take place in this RFO before the final direction of that process is clear. However, the RA program has changed many times over the years and PG&E anticipates that program changes will continue to be a factor in RA contracting. As such, PG&E’s proposed RA confirmation is structured to accommodate RA program changes. A key aspect of this is the requirement that the RA supplier adhere to the RA provisions of the ISO tariff as it may change from time to time. Participants should consider this when submitting their offers. Some of the ideas being discussed in the standard RA capacity product process may make some confirm provisions unnecessary if adopted asRA counting rules. For example the requirement to provide outage notices may be unnecessary under rules that require the RA resource owner rather than the LSE to replace RA capacity on a scheduled outage. In such a case, participants might desire to propose that the notice requirement be eliminated upon adoption of such a rule.
4)Please confirm that the posting requirements for the Intermediate RFO are as follows:
$5 per kW bid deposit
$10 per kW upon execution
$85 per kW upon CPUC approval
After CPUC approval, a weekly mark to market calculation is performed. If the mark to market amount less collateral held is positive, then the counterparty will be required to post additional collateral up to the revised mark to market amount. If the mark to market amount less collateral held is negative, then PG&E will refund the difference.
There are no posting requirements prior to the Effective Date for existing resources. Please see question #1 of the November 14, 2008 Q&A for information on calculating collateral requirements after the Effective Date. The offer deposit requirement for new resources was discussed in question #4 of the October 28, 2008 Q&A. Participants planning on submitting an offer from a new construction resource were required to notify PG&E of this intent by October 31, 2008 (see section I.B.I of the RFO protocols).
5)If we are responding with an offer to sell only System RA and have sold RA to PG&E in the past under an existing EEI, can we reference the existing EEI currently in place in our response to this RFO?
Yes. An existing EEI with PG&E can be used with the Resource Adequacy Confirmation Agreement.
6)If we are offering only System RA and have an EEI in place with PG&E, do we need to submit a mark up of the PPA or should we just submit a mark up of the proforma RA Confirmation Agreement?
An offer of system RA only to be transacted under an EEI should include a mark up of the Resource Adequacy Confirmation Agreement. A mark up of the PPA is not required.
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