Entergy Corporation · NYSE:ETR
Entergy — 2011 Western Region RFP ESI's Bidders' Teleconference
56 slides from Entergy's conference presentation, Oct 25, 2011
Slide 1: 2011 Western Region RFP ESI's Bidders' Teleconference
2011 Western Region RFP ESI’s Bidders’ Teleconference ENTERGY SERVICES, INC. October 25, 2011 1
Slide 2: Teleconference Introduction
Teleconference Introduction z Purpose of the Teleconference – To give participants a high level overview of, and other information concerning, the RFP and related processes – In the event of an inconsistency between the presentation and the draft RFP documents, the draft documents will control z Que
Slide 3: Agenda Items
Agenda Items z Introductions z Independent p Monitor Presentation – Potomac Economics z Overview of 2011 Western Region RFP (RFP) – Representative RFP Schedule – Key Elements and Objectives of RFP – Product Solicitation Overview – Additional Considerations – Bidder Registration and Proposal Submissi
Slide 4: Introduction
Introduction z ESI Presenters – April Phelps Project Manager – Stuart Barrett Director, Commercial Operations – Seth Cureington Wholesale Executive, Supply Procurement – Mary DeCuir RFP Administrator – Anthony Walz Director, Supply Planning Analysis – Mark Maddux Project Manager, Power Delivery & Te
Slide 5: Independent Monitor Presentation
Independent Monitor Presentation Potomac Economics 5
Slide 6: Overview of 2011 Western Region RFP
Overview of 2011 Western Region RFP 6
Slide 7: Representative RFP Schedule
Representative RFP Schedule (A il Phelps) (April Ph l ) 7
Slide 8: Representative Schedule
Representative Schedule Target RFP Schedule* Milestone Date ¾ Issue Draft Western Region RFP September 30, 2011 ¾ Bidders’ Teleconference October 25, 2011 ¾ Final RFP Issued December 2, 2011 ¾ ESI Responds to Bidder Questions/Posts Answers to RFP Website January 31, 2012 ¾ Bidder Registration Februa
Slide 9: Key Objectives and Elements of RFP
Key Objectives and Elements of RFP (St (Stuart t Barrett) B tt) 9
Slide 10: Key Objectives and Elements of RFP
Key Objectives and Elements of RFP z Primary objective – Solicit competitive proposals g » ~300 MW of long-term ((10 or more years), y ) reliable capacity, p y energy gy and other electric products » Cost-effective pricing » For 2017 and beyond p » Resource capable of meeting g Western Region g need
Slide 11: Key Objectives and Elements of RFP: Map of Western Region
Key Objectives and Elements of RFP Map of Western Region 11
Slide 12: Key Objectives and Elements of RFP: Other Basic Elements
Key Objectives and Elements of RFP Other Basic Elements z Solicitation open to resources located inside or outside the Western Region – Resource proposed must be able to meet the reliability and other Western Region needs – Resource proposed may be existing or developmental – Resources Reso rces not
Slide 13: Other Basic Elements (Continued)
Key Objectives and Elements of RFP Other Basic Elements (Continued) z RFP will include a self-build option – An ~ 300 MW combined cycle gas turbine (CCGT) resource – Located at ETI’s “Lewis Creek” pplant site – Will be evaluated and considered as an alternative to any proposal z Unregulated affiliat
Slide 14: Resource Eligibility
Key Objectives and Elements of RFP Resource Eligibility z Each generation resource proposed must be a single resource (or portion thereof) – Generation resources located at separate facilities are not single resources z Developmental resources must be sufficiently developed to satisfy the requiremen
Slide 15: RFP Proposal Requirements
Key Objectives and Elements of RFP RFP Proposal Requirements z Only proposals submitted in accordance with and meeting the requirements of RFP can be assured full consideration z Threshold requirements for proposals – Delivery, Viability, and Credit – Specifics are described in Section 2.3 of the RF
Slide 16: Locational Preference
Key Objectives and Elements of RFP Locational Preference z Expectation: The farther a resource is located outside the Western Region, the less likely it will be able to meet Western Region needs at the lowest reasonable cost – ESI strongly encourages Bidders to locate a resource being developed in r
Slide 17: Product Solicitation Overview
Product Solicitation Overview (S th Cureington) (Seth C i t ) 17
Slide 18: Product Solicitation Overview
Product Solicitation Overview z Four types of products being solicited – Baseload Product (Product Package A) – Tolling g Product ((Product Package g B)) – Flexible PPA Product (Product Package C) – Ownership Acquisition Product (Product Package D) z ESI prefers resources with greater operational fl
Slide 19: General Terms and Conditions
Product Solicitation Overview General Terms and Conditions z General Contract Terms and Conditions (see Section 2.2 of RFP Main Body) – ESI will not p post model contracts – RFP/Term Sheets will contain key terms of purchase – Term Sheet (Appendix C) Terms and Conditions are basis for Bidders’ Bidde
Slide 20: Basic Commercial Terms
Product Solicitation Overview Basic Commercial Terms z Products A, B and C (CCGT resources only)* – Delivery Term » Minimum – 10 consecutive years » Maximum – Not more than the resource’s remaining useful life or 30 consecutive years, whichever if less – Delivery D li T Term C Commencementt » Prefer
Slide 21: Basic Commercial Terms (Continued)
Product Solicitation Basic Commercial Terms (Continued) z Pricing Terms – Pricing for Products A, B, and C generally open for bid p » Option for escalation of certain components p – Pricing for Product D generally open for bid z Regulatory approvals and other conditions precedent – Any transaction u
Slide 22: Additional Considerations
Additional Considerations (S th Cureington/Mark (Seth C i t /M k M Maddux) dd ) 22
Slide 23: Developmental Resources Preferences and Minimum Requirements
Additional Considerations Developmental Resources – Preferences and Minimum Requirements z ESI has established resource design and operational preferences for developmental resources – Described in RFP, with additional detail to be provided by ESI – Preferences based on Entergy Operating Companies’
Slide 24: Interconnection
Additional Considerations Interconnection z Interconnection Risk Allocation – Bidder/Seller assumes all transmission interconnection risk of proposed resource, including » Interconnection cost » Costs of interconnection-related upgrades » Charges associated with reliability requirements » Compliance
Slide 25: Transmission
Additional Considerations Transmission z Transmission Risk Allocation – Bidder/Seller assumes certain transmission risk to specified point of delivery on Entergy transmission system (EPOD) » Resource mustt be R b capablebl off serving i as an EEntergy t network t k resource » Costs of transmission u
Slide 26: Bidder Registration & Proposal Submission Process
Bidder Registration & Proposal Submission Process (M (Mary D DeCuir) C i) 26
Slide 27: Bidder Registration & Proposal Submission Process
Bidder Registration & Proposal Submission Process z Registration and Submission will utilize a secure, electronic web portal – All Bidders must utilize the portal to complete Bidder registration and proposal submission process – Basic framework for Bidder Registration and Proposal Submission Process
Slide 28: Bidder Registration & Proposal Submission Processes
Bidder Registration & Proposal Submission Processes z Proposal Submission Fees – $5,000 for each registered proposal – Bidder invoiced within three business days of ESI’s receipt of executed Bidder registration signature page – ESI must receive the Proposal p Submission Fee for each registered g p p
Slide 29: Process Diagram
Bidder Registration & Proposal Submission Process Process Diagram * The dates shown here are based on the current schedule and subject to change 29
Slide 30: RFP Process Safeguards
RFP Process Safeguards (April Phelps) 30
Slide 31: Independent Monitor
RFP Process Safeguards Independent Monitor z Potomac Economics is the Independent Monitor – Experienced, independent third party – Working with ESI in development of the RFP solicitation, evaluation and selection process – Helping ESI ensure that the RFP and its evaluation process are objective and
Slide 32: Codes of Conduct, Protocols, Design
RFP Process Safeguards Codes of Conduct, Protocols, Design z Code of conduct – All employees of ESI, any Entergy Operating Company, or any Entergy Competitive Affiliate must adhere to the Affiliate Rules and Codes of Conduct – Link provided on ESI RFP Website z Additional protocols – IM oversees the
Slide 33: Proposal Evaluation Process
Proposal Evaluation Process 33
Slide 34: Evaluation Overview
Evaluation Overview (A il Phelps) (April Ph l ) 34
Slide 35: Evaluation Overview
Evaluation Overview z Primary Objective – Identify the proposal(s) that meet the RFP’s supply objectives at the lowest reasonable cost consistent with the provision of reliable service z P Process designed d i d to t be b fair, f i impartial i ti l and d consistently i t tl applied li d z Four RFP P
Slide 36: Primary and Secondary Selection Lists
Evaluation Overview Primary and Secondary Selection Lists z Primary selection list – Bidder with a proposal on primary selection list will be invited to enter into a letter of intent (LOI) to proceed to a definitive agreement – Due diligence/finalization and execution of definitive agreement would f
Slide 37: Evaluation Process Flow
Evaluation Overview Evaluation Process Flow ILLUSTRATIVE All Conforming Proposals Threshold Deliverability Requirements (DAT) Preliminary Shortlist Phase I Thresholds Viability (EET) Preliminary Economic Analysis Requirements (VAT) (Indicative) Deliverability and Interconnection Preliminary Due Dili
Slide 38: Economic Evaluation
Economic Evaluation (A th (Anthony W Walz) l ) 38
Slide 39: Economic Evaluation
Economic Evaluation z Objective – Identify proposals that meet the Western Region needs and other RFP requirements at the lowest reasonable cost, taking into account reliability, risk mitigation and other relevant factors z EET’s (Economic Evaluation Team) ranking of proposals will be based on the r
Slide 40: Methodologies – Fundamental Economic Analysis
Economic Evaluation Methodologies – Fundamental Economic Analysis z Compares the cost of each proposal based on a prescribed set of operating assumptions z Estimates full-in economic cost for each proposal p p z Utilizes an Excel-based spreadsheet model z Estimates based on a consistent set of cost
Slide 41: Methodologies – Net Benefit (Production Cost) Analysis
Economic Evaluation Methodologies – Net Benefit (Production Cost) Analysis z Primary tool for net benefit analysis economic evaluation will be production cost models z Primaryy economic evaluation measure for net benefit analysis; y will model p proposals’ p relative net benefits z Production cost m
Slide 42: Phase I and Phase II
Economic Evaluation Phase I and Phase II z Phase I – With input from DAT and VAT, EET will identify proposals that meet the Preliminary Shortlist Requirements – EET will also develop a high-level, preliminary economic ranking of the proposals – Phase I economic evaluations will exclude, among g othe
Slide 43: Deliverability Evaluation
Deliverability Evaluation (M k M (Mark Maddux) dd ) 43
Slide 44: Deliverability Evaluation
Deliverability Evaluation z DAT (Delivery Assessment Team) is responsible for assessing the issues and costs resulting from delivery of a product offered by Bidder z Phase I – DAT will work with the VAT (Viability Assessment Team) to determine the preliminary viability of proposals – Review focused
Slide 45: Deliverability Evaluation Case
Deliverability Evaluation Deliverability Evaluation Case 2009 Summer RFP Renewable RFP ICT Consideration of recent Construction Case* Plan (New 4-1-1 Transmission EAI RFP Model Configuration) * Public case(s) posted by the ICT on OASIS 45
Slide 46: Deliverability Evaluation: High Level Process
Deliverability Evaluation High Level Process Each Step 1: Determine Location Resource •Off ETR Transmission System •On ETR Transmission System Step 1a: Define AC Point of Interconnection or DC Point of Interconnection •Assess interconnection Step 2: Determine Applicable Transfer Studies •Point-to-Po
Slide 47: High Level Process (Continued)
Deliverability Evaluation High Level Process (Continued) Final Transmission Upgrade Solution (and Local Area est. cost) Problems Delivery (Operations) to System Delivery to Western Resource Delivery to Western includes: Transfer est. $ • Increase Western Region import to match resource capacity • Up
Slide 48: Viability Assessment
Viability Assessment (J h Z (John Zurita) it ) 48
Slide 49: Viability Assessment
Viability Assessment z Review of technical, environmental, fuel supply/transportation, deliverability and commercial merits of resources/proposals submitted in response to RFP z VAT (Viability Assessment Team) will consist of Subject Matter Experts (SME) primarily from the following focus areas – Co
Slide 50: Viability Assessment: Phase I
Viability Assessment z Phase I – VAT will evaluate proposals for compliance with Preliminary Shortlist Requirements’ viability elements » Proposed resource must be an “Eligible Resource” » Bidder must be an “Eligible Participant” » Proposal for Product A, B or C must have a delivery term of at least
Slide 51: Viability Assessment: Phase II
Viability Assessment z Phase II – VAT will conduct a detailed assessment to develop a final viability ranking and recommendation – VAT will develop and evaluate a key list of attributes associated with each identified viability assessment focus area – VAT will develop, and seek the IM’s concurrence
Slide 52: Credit Review/Collateral Requirement
Credit Review/Collateral Requirement (R A (Rae Anne DDodds) dd ) 52
Slide 53: Credit Review/Collateral Requirements
Credit Review/Collateral Requirements z Generally, no Bidder will be excluded or prohibited from participating on the basis of credit z No credit postings required of Bidders prior to LOI execution – Exception p for developmental p p proposals: p if Bidder fails to meet the requirements q of Appendi
Slide 54: Credit Review/Collateral Requirements
Credit Review/Collateral Requirements z The CET will assign a Bidder credit rating (or Bidder’s credit support provider’s credit rating) for all proposals, based on, among other things – S&P and Moody’s ratings – 10K/10Q/8K evaluation – If SEC reports unavailable, two years of audited financial stat
Slide 55: Q&A Session
Q&A Session ESI requests that Bidders submit all questions in writing to the RFP Administrator at esirfp@entergy.com 55
Slide 56: Q&A Session: Participant Questions and/or Feedback
Q&A Session Participant Questions and/or Feedback z Questions received during today’s conference will be posted to the RFP website: https://spofossil.entergy.com/ENTRFP/SEND/2011Western/Index.htm z ESI will accept written questions/feedback about the RFP from market participants and other interested
Entergy — 2011 Western Region RFP ESI's Bidders' Teleconference on 6ix