procurement presentation
TRANSCRIPT
Power Procurement
by
Nick Nichols
PhilRECA Board of directorsOctober 16, 2008
What ECs Pay NPC For
Power Out of the Generator
Cor. Agham Rd. and Quezon Ave. And
Let’s first put some things in perspective.We pay for that complex in Diliman, and all the stuff that goes on inside - as well as pay for the cost of power from the IPPs or the costs of owning and operating the NPC generationSo what goes on inside NPC? ...
What ECs Pay NPC For
Planning Procurement
ContractManagement
Dispatch Services
Power Out of the Generator
Well, it’s Planning, Procurement, Contract Management, and Dispatch services (i.e. participating in WESM).
What ECs Pay IPP For
Power Out of the Generator
The IPPs aren’t going to do your planning and procurement for you ... unless you pay them to do it.
What ECs Have to Do
Planning Procurement
ContractManagement
WESM Participation & Dispatch
These are also the things that make sense to do on a joint-action basis. Sharing the costs and resources is one reason. Achieving market power (having a larger market footprint) is another. Expanding your portfolio options is yet another (some projects just won’t fit a single EC).
Planning
Prepare Outlooks & Forecasts
Supply Portfolio Determination
Leads to a Procurement
Outlooks & Forecasts go beyond forecasting load. It’s understanding market prices and supply options. They are required to figure out what you want (i.e. the portfolio determination). Can’t do procurement unless you know what you want to procure & when.
Procurement
Prepare & Manage Solicitations Evaluate
Negotiations Regulatory Approvals
LEGAL
Procurement involves a lot of things. The Evaluation includes understanding just what uncertainties (pricing and availability) you are exposing your customers to.
But Don’t Forget
Planning Procurement
ContractManagement
WESM Participation & Dispatch
You have to do all of these
Don’t forget “Procurement” is just one aspect of what you will need to be doing in order to get ... -->
... To Get This
Power Out of the Generator
What We Did on Panay
Formed a Consortium via MOU
First
To share the costs of consultant. Identify point team (Consortium Board) for addressing issues, interface with IPPs. (Limited tech assistance from NRECA in preparatory phase.)
What We Did on Panay
Assessed aggregated load requirements
Assessed extent to which existing resources and contracts would serve those requirements
Determined exposure to market
Estimated impact of that exposure
Portfolio Needs
Indicative
Some Peaking. Huge Base load and Intermediate load Exposure to market.
What We Did on Panay
Within Consortium, Keep Transparency High
Get Consensus Every Step
‣RFO Design‣Schedules‣Bidder Interactions‣Evaluations & Short Lists
Used simple, fundamental objectives to guide bidders:
1. Approximately 90 MW of Base & Intermediate Requirements
2. Start in January 20113. Looking for long-term contract
RFO Basis
Pricing structures up to bidder. One requirement is that bidder must be willing stick to fundamentals of offer during negotiations for ESA. Set up web site for disseminating information re RFO and handling Q&A.
RFO Basis
Estimated each ECs share of 90 MW
Consortium would negotiate the ECA as agent
for all ECs
ECA would be a bi-lateral with each EC
RFO Basis
Let The Competition Sort It Out
Then ...
Process
• Do the Planning
‣ Identify market exposure
‣ Identify what you want to procure
First ...
Process
* = Items we didn’t do in Panay process.
Process
• Prepare and vet the RFO
* = Items we didn’t do in Panay process.
Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
* = Items we didn’t do in Panay process.
Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box for Bidder Communication
* = Items we didn’t do in Panay process.
Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box for Bidder Communication
• Prepare Data CD*
* = Items we didn’t do in Panay process.
Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box for Bidder Communication
• Prepare Data CD*
• Announce & Release RFO
* = Items we didn’t do in Panay process.
Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box for Bidder Communication
• Prepare Data CD*
• Announce & Release RFO
• Hold Bidders Conference
* = Items we didn’t do in Panay process.
Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box for Bidder Communication
• Prepare Data CD*
• Announce & Release RFO
• Hold Bidders Conference
• Respond to Bidder Q&A* = Items we didn’t do in Panay process.
• Market Valuation
• Market Value = Benefits - Costs
‣ Benefits = Capacity, Energy, A/S
‣ Costs Include Credit Enhancements, Transmission, A/S, as well as Price
• LRAC
Quantitative
• Portfolio Fit
• Proponent’s Credit Capability
• Proponent Team Qualifications
• Project Viability
• Technology Reliability
• Non-price Terms & Conditions
Qualitative
ContractManagement
WESM Participation & Dispatch
Procurement Process
Don’t forget “Procurement” is just one aspect of what you will need to be doing in order to get ... -->
Also Don’t Forget
Planning Procurement
ContractManagement
WESM Participation & Dispatch
You Need To Get Cost
Recovery For All of This!
It’s Not in the ERC Benchmarks