Entergy Corporation · NYSE:ETR
Entergy — Summer 2009 Long-Term RFP Bidders' Conference
58 slides from Entergy's conference presentation, Aug 6, 2009
Slide 1: Summer 2009 Long-Term RFP – ESI's Bidders' Conference
Summer 2009 Long-Term RFP ESI’s Bidders’ Conference ENTERGY SERVICES, INC. August 6, 2009 This presentation summarizes certain matters related to ESI’s Summer 2009 Long-Term Request for Proposals (as it may be amended or modified, the “Summer 2009 RFP”). 1
Slide 2: Agenda Items
Agenda Items • Introductions • Overview of the Summer 2009 RFP • Key Objectives of the RFP • Independent Monitor and Process Safeguards • Previous RFP Update • Representative Schedule • Product Solicitation Overview • Credit/Collateral Requirements • Special Considerations for CCGT Developmental Res
Slide 3: Introductions
Introductions Entergy Services, Inc. – Patrick Cicio Director, Supply Procurement & Asset Management – Charles DeGeorge Manager, Supply Planning & Analysis – Lee Kellough Manager, Asset Management & Planning – Andrew O’Brien Manager, Supply Procurement – Seth Cureington Wholesale Executive, Supply P
Slide 4: Overview of the Summer 2009 RFP
Overview of the Summer 2009 RFP 4
Slide 5: Key Objectives of the RFP
= = Entergy Key Objectives of the RFP
Slide 6: Key Objectives
Summer 2009 RFP – Key Objectives The primary objective of this RFP is to solicit competitive proposals to provide Entergy Operating Companies with flexible and cost-effective load-following generating resources to meet customers’ needs in a reliable and economical manner This RFP seeks incremental b
Slide 7: Participant Process Highlights
Summer 2009 RFP – Participant Process Highlights The final RFP will be issued on or about September 24, 2009 Prior to that, ESI will accept written feedback from market participants and other interested parties on the draft RFP Comments must be provided to the RFP Administrator by August 20, 2009 Co
Slide 8: Participating Entergy Operating Companies / Eligible RFP Participants
Summer 2009 RFP – Participating Entergy Operating Companies / Eligible RFP Participants The Summer 2009 RFP will be on behalf of all the Entergy Operating Companies – Entergy Arkansas, Inc. (“EAI”) – Entergy Gulf States Louisiana, L.L.C. (“EGSL”) – Entergy Louisiana, LLC (“ELL”) – Entergy Mississipp
Slide 9: Independent Monitor and RFP Process Safeguards
Independent Monitor and RFP Process Safeguards 9
Slide 10: Process Safeguards – Role of Independent Monitor
Summer 2009 RFP Process Safeguards – Role of Independent Monitor ESI has retained Potomac Economics, an independent consulting firm, to act as Independent Monitor to assist in the development of the RFP solicitation, evaluation and selection process in support of ESI’s efforts to ensure that the RFP
Slide 11: Process Safeguards – Additional Protocol
Summer 2009 RFP Process Safeguards – Additional Protocol Code of Conduct – All employees of ESI, any Entergy Operating Company, or any Entergy Competitive Affiliate, must adhere to the appropriate Affiliate Rules and Codes of Conduct as applicable and further outlined in the RFP – Link provided on E
Slide 12: Previous RFP Update
Previous RFP Update 12
Slide 13: Summary of Contracts Resulting From Previous RFPs
Summary of Contracts Resulting From Previous RFPs RFP Short- term Limited- term Limited-term Long-term Long-term Total 3rd Party Affiliate 3rd Party Affiliate 3rd Party Fall 2002 0 MW 185-206 MW 231 MW 101-121 MW 718 MW 1,235- Note 1 Note 2 1,276 MW January 2003 222 MW n/a n/a n/a n/a 222 MW Supplem
Slide 14: Representative Schedule
Representative Schedule 14
Slide 15: Representative Schedule
Summer 2009 RFP – Representative Schedule The following represents the target RFP schedule*: Milestone Date Issue Final RFP On or about Sep 24, 2009 Respond and Post Q&A to Website Through Oct 30, 2009 Bidder Registration Nov 2 – 5, 2009 Proposal Fees Due Nov 12, 2009 Proposal Submission Period Nov
Slide 16: Product Solicitation Overview
Product Solicitation Overview 16
Slide 17: Product Solicitation Overview
Summer 2009 RFP – Product Solicitation Overview In this RFP, ESI is seeking long-term resources as follows: Purchase Power Agreements Products are structured with delivery terms of ten (10) up to and including Life-of-Unit Preference for minimum 20 year delivery term Ownership Acquisitions Interim a
Slide 18: Product Solicitation Overview
Summer 2009 RFP – Product Solicitation Overview ESI is soliciting the following range of products in this RFP Baseload Product (Product Package A) Long-Term Tolling PPA – Load-Following CCGT (Product Package B) Low Heat Rate MUCCO (Product Package C) Peaking MUCPA (Product Package D) Ownership Acqui
Slide 19: Baseload Product (Product Package A)
Summer 2009 RFP – Baseload Product (Product Package A)* Long-Term Delivery - June 1, 2011 Term Start Date - Unit contingent capacity, energy, and Other Associated Electric Products - CCGT or solid fuel technology expected to run in all hours of the Delivery Term subject to availability - 98% availab
Slide 20: Long-Term Tolling PPA (Product Package B)
Summer 2009 RFP – Long-Term Tolling PPA (Product Package B)* Long-Term Delivery Term Start - Existing CCGT resources located outside of AMS – 6/1/2011 Date - CCGT developmental resources planned for AMS – 6/1/2015 - Unit contingent capacity, energy, and Other Associated Electric Products - Tolling a
Slide 21: Low Heat Rate MUCCO (Product Package C)
Summer 2009 RFP – Low Heat Rate MUCCO (Product Package C)* Long-Term Delivery - June 1, 2011 Term Start Date - Unit contingent capacity, energy, and Other Associated Electric Products - Day-ahead and intra-day Call Option with no minimum annual energy dispatch requirements - Seller retains right to
Slide 22: Peaking MUCPA (Product Package D)
Summer 2009 RFP – Peaking MUCPA (Product Package D)* Long-Term Delivery - June 1, 2011 Term Start Date - Unit contingent capacity, energy, and Other Associated Electric Products - Tolling agreement with no minimum annual energy dispatch requirements - 4 hour min run time if dispatched; max of 2 star
Slide 23: Ownership Acquisition (Product Package E)
Summer 2009 RFP – Ownership Acquisition (Product Package E)* Acquisition Delivery - Target start date for any interim arrangement for capacity and energy pending regulatory approvals: Term Start - Existing CCGT, CT and solid fuel – 6/1/2011 Date - Target start date for CCGT developmental resource fo
Slide 24: Environmental Change in Law
Summer 2009 RFP – Environmental Change in Law* Long-Term If Bidder intends to submit a proposal If Bidder intends to submit a proposal Baseload Product regarding Environmental Change in regarding Environmental Change in Law costs Law costs, ESI requires Bidders for Buyer to share in Environmental Ch
Slide 25: Additional Key Considerations
Summer 2009 RFP – Additional Key Considerations Regulatory Approvals All definitive agreements shall be conditioned upon receipt of regulatory approvals, including the recovery of the cost of the resource, acceptable to ESI in its sole discretion Buyer retains termination right if regulatory approva
Slide 26: Credit/Collateral Requirements
Credit/Collateral Requirements 26
Slide 27: Development of Credit Requirements
Summer 2009 RFP – Development of Credit Requirements No Bidder will be excluded or prohibited from participating in this RFP on the basis of credit Historically, market participants have requested flexibility in meeting collateral requirements As in previous RFPs, ESI has agreed to consider alternat
Slide 28: Credit Requirements
Summer 2009 RFP – Credit Requirements None at time of proposal submission None at time of proposal awards $2MM Letter of Credit (“LOC”) at execution of a Letter of Intent (“LOI”) between ESI and Bidder/Seller Acceptable forms of collateral for consideration by ESI may include: – Parental Guaranty, L
Slide 29: Credit Review and Collateral Timeline
Summer 2009 RFP – Credit Review and Collateral Timeline Bidder Credit Rating (or Bidder’s Credit Support Provider’s Credit Rating) will be assigned by the Credit Evaluation Team (“CET”) for all proposals when they are received Based on Bidder Credit Rating, the CET will determine the Maximum Uncolla
Slide 30: Special Considerations for CCGT Developmental Resources
Special Considerations for CCGT Developmental Resources 30
Slide 31: CCGT Developmental Resource Eligibility
Summer 2009 RFP – CCGT Developmental Resource Eligibility 31
Slide 32: Special Considerations for CCGT Developmental Resources
Summer 2009 RFP – Special Considerations for CCGT Developmental Resources Bidders should be aware that, for CCGT developmental resources, ESI will require that certain criteria and/or standards be met as more thoroughly described herein in the main RFP document, and the applicable product package te
Slide 33: Special Considerations for CCGT Developmental Resources
Summer 2009 RFP – Special Considerations for CCGT Developmental Resources Operational, Performance and Design Features for a CCGT Developmental Resource Fuel Supply Considerations The Entergy System requires generating units to provide a range of operational functions and “flexible capacity” to main
Slide 34: Special Considerations for CCGT Developmental Resources
Summer 2009 RFP – Special Considerations for CCGT Developmental Resources The transmission, operational and performance-related criteria described above are key components of a resource’s ability to meet the requirements for products solicited in this RFP and will therefore be part of the quantitati
Slide 35: Entergy System Resource Needs
Entergy System Resource Needs 35
Slide 36: Resource Needs & Supply Objectives
Summer 2009 RFP – Resource Needs & Supply Objectives The supply needs of the Operating Companies are described by the following six basic resource supply objectives: Reliability – The Entergy System should maintain adequate resources to meet customer peak demands with adequate reliability. Base Load
Slide 37: Entergy System Long-term Resource Requirements and Capability for 2011
Summer 2009 RFP – Entergy System Long-term Resource Requirements and Capability for 2011 1,795 22,500 3,493 3,353 20,000 Reserve Peaking/ 4,809 17,500 Reserve Hourly Demand MW Peaking 15,000 1,875 Gas Load- 9,441 Seasonal Load Following 12,500 2,838 Following CCGT Core Load 10,000 Following 7,500 1,
Slide 38: Flexible Capability Requirements
Summer 2009 RFP – Flexible Capability Requirements The Entergy System must commit sufficient dispatchable capacity with adequate fuel supply to ensure ability to respond to changing load levels and Entergy System conditions. Flexible Capacity Requirement Key Drivers of Flexible Capacity Need 12,000
Slide 39: SRP Resource Needs (2009-2017)
Summer 2009 RFP – SRP Resource Needs (2009-2017) Megawatts – Capacity in Excess of Requirements (Requirements in Excess of Capacity) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EGSL 168 268 (7) (537) (554) (552) (564) (571) (1,050) (1,051) ELL 823 583 117 183 125 41 17 31 50 (59) ENO 179 161 1
Slide 40: Proposal Evaluation Process
Proposal Evaluation Process 40
Slide 41: Proposal Evaluation Process Objective
Summer 2009 RFP – Proposal Evaluation Process Objective The primary purpose of the Summer 2009 RFP proposal evaluation process is to identify the proposal(s) that achieve the planning objectives of reliability, cost, and risk mitigation in a balanced manner. The planning objectives are achieved thro
Slide 42: Key Proposal Evaluation Process Improvements
Summer 2009 RFP – Key Proposal Evaluation Process Improvements As a result of recent FERC action, and as part of an ongoing effort to improve the RFP process, ESI has made certain changes to the evaluation process that have been designed to enhance the evaluation of existing and developmental resour
Slide 43: Proposal Evaluation Process Controls
Summer 2009 RFP – Proposal Evaluation Process Controls Prior to submitting proposals, Bidders will receive sufficient information to understand the evaluation factors and general decision criteria. However, detailed inputs and evaluation scenarios will be considered confidential and highly proprieta
Slide 44: Proposal Evaluation Process Flow
Summer 2009 RFP – Proposal Evaluation Process Flow ILLUSTRATIVE All Conforming Proposals Resource Location Analysis Fundamental Economic (TAG) Phase I Analysis ($/MWh) & Net System Benefit ($/MW) Resource Fatal Flaw Analysis (EET) (VAT) Preliminary Shortlist Preliminary Due Diligence Deliverability
Slide 45: Proposal Economic Evaluation Process Methodology
Summer 2009 RFP – Proposal Economic Evaluation Process Methodology Resource Existing CCGT Existing Solid Fuel Existing CT Developmental CCGT Start 2011 2011 2011 2015 Location Non-Amite South Non-Amite South Non-Amite South Amite South Fixed Cost $/kW $/kW $/kW $/kW Variable Cost $/MWh $/MWh $/MWh $
Slide 46: Proposal Economic Evaluation Methods
Summer 2009 RFP – Proposal Economic Evaluation Methods Fundamental Economic Analysis The fundamental economic analysis will utilize an Excel based spreadsheet model to estimate the full-in economic cost for each proposal, based on a consistent set of operating assumptions such as; Option premium, Fi
Slide 47: Proposal Economic Evaluation Methods
Summer 2009 RFP – Proposal Economic Evaluation Methods Net System Benefit Analysis In the Net System Benefit Analysis the primary economic evaluation measure will be a consideration of the net benefit of each proposal on total production cost when included in the supply portfolio. Result is a cost (
Slide 48: Proposal Economic Evaluation Methods
Summer 2009 RFP – Proposal Economic Evaluation Methods Developmental Period Existing CCGT Existing CCGT CCGT (System) (Amite South) (Amite South) 6 Operating 6 Operating 2011-2013 Company System Company System N/A 4 Operating 4 Operating 4 Operating Company System Company System Company System 2014-
Slide 49: Proposal Economic Evaluation
Summer 2009 RFP – Proposal Economic Evaluation If following the Net System Benefit Analysis and ranking of individual proposals the Economic Evaluation Team (EET) chooses to consider more than one proposal it will combine the selections into a portfolio. The EET will evaluate the portfolio to determ
Slide 50: Resource Portfolio Design
Summer 2009 RFP – Resource Portfolio Design Identify the proposal(s) that achieve the planning objectives of reliability, cost, and risk mitigation in a balanced manner Portfolios will be constructed first with proposals that provide the potential to produce net savings and contribute to meeting cap
Slide 51: Proposal Deliverability Evaluation Process
Summer 2009 RFP – Proposal Deliverability Evaluation Process Entergy’s Technical System Planning (TSP) and Transmission Analysis Group (TAG) will perform the Transmission Evaluation – TSP will simulate the formal System Impact Study process performed by the ICT – All simulations and costs will be us
Slide 52: Deliverability Analysis for Selected Portfolios
Summer 2009 RFP – Deliverability Analysis for Selected Portfolios The EET will provide TAG and TSP with portfolios to conduct transmission portfolio analysis TAG and TSP will provide the total transmission capability of each portfolio to the EET using the identified mitigation strategies defined in
Slide 53: Viability Assessment Overview
Summer 2009 RFP – Viability Assessment Overview In order to determine the overall viability of proposals for existing and developmental CCGT, and existing CT and Solid Fuel resources received in response to the RFP, the Viability Assessment Team (“VAT”) has been established Appendix E-3 describes in
Slide 54: Bidder Registration and Proposal Submission Process
Bidder Registration and Proposal Submission Process 54
Slide 55: Bidder Registration & Proposal Submission
Summer 2009 RFP – Bidder Registration & Proposal Submission Consistent with previous RFPs, ESI intends to utilize an electronic proposal submission process. The benefits of this process include: Consistent data and formats for required information Elimination of potential transcription errors and re
Slide 56: Bidder Registration & Proposal Submission
Summer 2009 RFP – Bidder Registration & Proposal Submission PHASE 1 ILLUSTRATIVE Bidder registers to Summary of Bidder reviews and gathers Prior to November 2, 2009, Bidder should access RFP Web registration information detailed in review Appendices B Portal and log in to information Appendix C and
Slide 57: Proposal Submission Fees
Summer 2009 RFP – Proposal Submission Fees Proposal Submission Fees Within two (2) Business Days of receiving the executed Bidder Registration Process Signature Page, ESI will invoice Bidder, by Proposal Identification Number, the Proposal Submittal Fee that is due for each registered proposal Bidde
Slide 58: Q&A Session
Q&A Session ESI requests that Bidders submit all questions in writing to the RFP Administrator at ESIRFP1@ENTERGY.COM 58
Entergy — Summer 2009 Long-Term RFP Bidders' Conference on 6ix