Entergy Corporation · NYSE:ETR
Entergy — Technical Presentation (March 2003)
55 slides from Entergy's technical presentation, March 2003
Slide 1: Spring 2003 RFP for Supply-Side Resources
SYSTEM PLANNING SPRING 2003 RFP for Supply-Side Resources ENTERGY SERVICES, INC. March 2003 This presentation summarizes certain matters related to ESI’s Spring 2003 Request for Proposals (as it may be amended or modified, the “Spring 2003 RFP”). This presentation, as well as any verbal answers to t
Slide 2: Agenda Items
SYSTEM PLANNING Agenda Items • Introductions • Overview of Fall 2002, Supplemental and Spring 2003 RFP Processes • System Overview/Resource Needs • Product Overview • Proposal Evaluation Process • Question and Answer Session ESI requests that all questions be submitted in writing so as to allow ESI
Slide 3: RFP Overview
SYSTEM PLANNING RFP OVERVIEW Spring 2003 RFP ENTERGY SERVICES, INC. March 2003 This presentation summarizes certain matters related to ESI’s Spring 2003 Request for Proposals (as it may be amended or modified, the “Spring 2003 RFP”). This presentation, as well as any verbal answers to the questions
Slide 4: Overview Of Discussion
SYSTEM PLANNING Overview Of Discussion The principal topics of this discussion are: • RFP Process • Resource Procurement Options • RFP Participants • Fall 2002 RFP Review • Timeline • Role of Lexecon 4
Slide 5: RFP Process
SYSTEM PLANNING RFP Process • Designed to implement the Entergy Operating Companies’ overall resource planning objective to provide a portfolio of low-cost, reliable, and flexible resources matched to both the near-term and long-term supply needs of our retail customers • Cyclical Procurement Proces
Slide 6: Entergy System Load
2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 0 1/1/01 1/15/01 1/29/01 2/12/01 2/26/01 3/12/01 3/26/01 4/9/01 4/23/01 5/7/01 Entergy System Load 5/21/01 6/4/01 6/18/01 Weekly Min 7/2/01 7/16/01 7/30/01 Load Following 8/13/01 8/27/01 9/10/01 9/24/01 Entergy System Hourly Load 2001
Slide 7: Entergy's Resource Procurement Options - Overview
SYSTEM PLANNING Entergy’s Resource Procurement Options - Overview • Semi Annual RFP Products - unit-contingent products – MUCPA/MUCCO (1-3 yrs.) – Acquisition/LOU Purchase • Ongoing short-term purchase process – Annual Plan Products (e.g. call options, 5x16 block energy purchases, etc.) – Weekly and
Slide 8: Entergy's Recent Supply-Side RFP Solicitations
SYSTEM PLANNING Entergy’s Recent Supply-Side RFP Solicitations • Fall 2002 RFP – for delivery starting in 2003 – Annual Plan Products (less than 1 year) – MUCPA/MUCCO (1-3 years) – Acquisition/LOU Purchase – Indicative Renewable Products • Supplemental RFP – for delivery starting in 2003 – STUCPA (3
Slide 9: RFP Participants
SYSTEM PLANNING RFP Participants • Potential RFP Participants – Electric Utilities – Marketers – Wholesale Generators – Independent Power Producers – Qualifying Facilities – Entergy Non-Regulated Affiliates • Entergy Non-Regulated Affiliates – Entergy’s Non-Regulated Affiliates will be allowed to bi
Slide 10: Fall 2002 RFP Initiated a New Long-term Procurement Strategy
SYSTEM PLANNING Fall 2002 RFP Initiated a New Long-term Procurement Strategy • For the summers of 2000 through 2002 Entergy’s summer capacity needs were met primarily by short-term purchases such as 5x16 products and call options • In the Fall of 2002 ESI adopted a new long-term semi-annual procurem
Slide 11: Fall 2002 RFP Results: Strong and Diverse Market Response
SYSTEM PLANNING Fall 2002 RFP Results: ESI Received Strong and Diverse Market Response • 133 Proposals from 30 different Bidders – 37 Annual Proposals (Summer 2003) – 68 MUCPA/MUCCO Proposals (1-3 years) – 23 Life of Unit Proposals – 5 Indicative Renewable Proposals • 45 Different resources offered,
Slide 12: Summary of Results from Fall 2002 RFP
SYSTEM PLANNING Summary of Results from Fall 2002 RFP Total Proposals Total Proposals Total Contracts Total Contracts in Received Awarded/Short Executed/MW Negotiation/MW listed Annual Plan 37 0 0 0 Products (1–3 mo. Summer) MUCCO/MUCPA 68 3/550* MW 2**/425 MW 0 (1-3 years) Life of Unit 23 5 0 2**/8
Slide 13: Fall 2002 RFP Results: Competitiveness of Limited-term Proposals
SYSTEM PLANNING Fall 2002 RFP Results: Competitiveness of Limited-term Proposals Varied Substantially • 37 Short-term Proposals for summer capacity were all priced above other available alternatives Illustrative • 13 CCGT/Cogen resources provided a wide distribution of proposals, see figure MW • 7 C
Slide 14: Common Problems with Limited-term Proposals
SYSTEM PLANNING Fall 2002 RFP Common Problems Encountered with Limited-term Proposals • Proposals submitted in the wrong proposal category ESI did not exclude – Call Options bid as Load-Following and vice versa any proposal in the – In the Spring 2003 RFP ESI has tried to make evaluation of the Fall
Slide 15: Common Problems with Long-term Proposals
SYSTEM PLANNING Fall 2002 RFP Common Problems Encountered with Long-term Proposals • Sufficient information to evaluate economic and operational attributes was not provided – Fuel availability – Transmission capacity and interconnection point – Heat Rate and Capacity specification • Heat rate curves
Slide 16: Supplemental RFP Provided Additional Summer 2003 Capacity
SYSTEM PLANNING The Supplemental RFP Provided Additional Summer 2003 Capacity • The Supplemental RFP intended to meet the remaining 2003 needs by a request for summer term (June-August) or one-year term (May-April) proposals • 24 proposals received for CCGT and CT capacity • Approximately 500 MW of
Slide 17: Spring 2003 RFP Timeline for MUCCO & MUCPA Products
SYSTEM PLANNING Spring 2003 RFP Process Timeline For MUCCO & MUCPA Products (limited-term products) Tech. Final Binding Conf. RFP Proposals w/ LPSC & Issued Due Interested Parties On or Evaluation & Negotiation Baton Rouge about 3/27/03 4/11/03 4/23/03 Fall 2003 Formal RFP Solicitation Process* Bidd
Slide 18: Spring 2003 RFP Timeline for Asset Acquisition & LOU Purchase
SYSTEM PLANNING Spring 2003 RFP Process Timeline for Asset Acquisition & LOU Purchase (long-term products) Tech. Final Indicative Final Conf. RFP Proposals Binding Commercial & Regulatory w/ LPSC & Issued Due Proposals Discussions/Negotiations Interested Due for Spring 2003 Proposals Parties On or O
Slide 19: Role of Lexecon - Background
SYSTEM PLANNING Role of Lexecon - Background • National economics and policy consulting firm with offices in Chicago and Cambridge, MA, established in 1977. • Retained by ESI to assist in the development and oversight of the RFP process and provide an independent third-party perspective • Expertise
Slide 20: Role of Lexecon (cont.)
SYSTEM PLANNING Role of Lexecon (cont.) • Seeks to ensure objectivity and impartiality of the RFP process through the oversight and monitoring of the following: – Solicitation Process • Review of draft RFP documents • Receipt of actual “Notice of Intent to Submit Proposal” from prospective Bidders •
Slide 21: Spring 2003 RFP - Q & A Objectives
SYSTEM PLANNING Spring 2003 RFP - Q & A Objectives The objectives of the Question and Answer Process include the following: • To ensure to the extent practicable that all Bidders have equal access to information that may be potentially relevant to their proposals. • To minimize the need for either E
Slide 22: Communications with ESI before Proposal Submission
SYSTEM PLANNING Communications with ESI regarding RFP issues before Proposal Submission • For all purposes related to the RFP, except the submission of questions relating to the Entergy Transmission System, there is only ONE contact - Julie Ell. • Any inquiries about the Entergy Transmission System
Slide 23: Q & A Process at Today's Conference
SYSTEM PLANNING Q & A Process at today’s Conference • At today’s conference, all questions will be submitted in writing – Oral responses will be provided where practicable today – Written answers in any case will be posted on the Entergy RFP website – Written answers may contain information differen
Slide 24: Question and Answer Process
SYSTEM PLANNING Question and Answer Process • ESI will respond to market participant’s questions and requests for clarification or additional information relating to the RFP. • The Entergy RFP website will be the official information source for accessing information relating to the RFP. All question
Slide 25: Protection of Confidential Information in the Q & A Process
SYSTEM PLANNING Protection of Confidential Information in the Q & A Process • ESI’s preference is to avoid the need for ESI or Bidders to disclose confidential information. • ESI does not expect that Bidders will need to include confidential information in questions relating to the RFP, and urges po
Slide 26: System Overview / Resource Needs
SYSTEM PLANNING SYSTEM OVERVIEW / RESOURCE NEEDS Spring 2003 RFP ENTERGY SERVICES, INC. March 2003 This presentation summarizes certain matters related to ESI’s Spring 2003 Request for Proposals (as it may be amended or modified, the “Spring 2003 RFP”). This presentation, as well as any verbal answe
Slide 27: Overview Of Discussion
SYSTEM PLANNING Overview Of Discussion The principal topics of this discussion are: • Entergy System Resource Planning Process • Long-Term Resource Planning Principles • Supply Procurement Objectives 27
Slide 28: Resource Planning Process
SYSTEM PLANNING Resource Planning Process • Resource Planning In Recent Years – Supply needs met through a variety of short-term supply resources – Limited procurement of mid- to long-term supply resources • Resource Planning in Future Years – Broaden range of supply resources while meeting both sho
Slide 29: Long-Term Resource Planning Objective and Planning Principles
SYSTEM PLANNING Long-Term Resource Planning Objective and Planning Principles • Primary Objective – Provide for both the short-term and long-term capacity and energy needs of the Operating Companies’ regulated retail customers through the selection of a supply portfolio that is expected to result in
Slide 30: Long-Term Resource Planning Objective and Planning Principles
SYSTEM PLANNING Long-Term Resource Planning Objective and Planning Principles • Planning Principles (cont’d) – Minimum Criteria for Resource Supply Planning • Adequacy of Resources for Peak Period Reliability – Based on Loss of Load Probability – Combination of Annual Plan purchases and longer-term
Slide 31: Long-Term Resource Planning Objective and Planning Principles
SYSTEM PLANNING Long-Term Resource Planning Objective and Planning Principles • Planning Principles (cont’d) – Minimum Criteria for Resource Supply Planning • Adequacy of Baseload Resources • Supply Technology Efficiency • Diversity of Supply – By fuel type, resource size, location and supplier • Pr
Slide 32: Long-Term Resource Planning Objectives and Planning Principles
SYSTEM PLANNING Long-Term Resource Planning Objectives and Planning Principles • Planning Principles (cont’d) – Minimum Criteria for Resource Supply Planning • Purchase Power Risk Management – Diversity of Contract Duration – Annual Plan purchases < one year – One, two and three year unit capacity p
Slide 33: Long-Term Resource Plan / Needs Assessment
SYSTEM PLANNING Long-Term Resource Plan / Needs Assessment • Between 2004-2012 ESI’s incremental needs grow from 1,500 to 4,700 MW • Peak Period Reliability Requirements • Forecast of System Load • Determination of existing resource capability (including recently added resources) • Determination of
Slide 34: Supply Procurement Objectives
SYSTEM PLANNING Supply Procurement Objectives – Resource Procurement Objective • Retains long-standing objectives for Entergy Companies • To ensure that newly acquired resources, together with existing resources, have the necessary characteristics to satisfy customer needs efficiently, effectively a
Slide 35: Supply Procurement Objectives
SYSTEM PLANNING Supply Procurement Objectives ET R 2004 Forec asted System L oad vs. Existing Resourc es Load Shape Inc ludes Curtailable Demand 30000 25000 20000 MW 15000 10000 5000 0 L oad Duration Curve vs. Desirable L ong-term Existing Capability from L ong-T erm Resourc e Mix Resourc es Base In
Slide 36: Product Overview Spring 2003 RFP
SYSTEM PLANNING PRODUCT OVERVIEW SPRING 2003 RFP ENTERGY SERVICES, INC. March, 2003 This presentation summarizes certain matters related to ESI’s Spring 2003 Request for Proposals (as it may be amended or modified, the “Spring 2003 RFP”). This presentation, as well as any verbal answers to the quest
Slide 37: Overview Of Discussion
SYSTEM PLANNING Overview Of Discussion The principal topics of this discussion are: • Overview of the product proposals being sought in the Spring 2003 RFP • Describe the three product families (11 term sheets) – Operational Terms & Conditions – Pricing • All products are unit-contingent 37
Slide 38: Multiple-Year Unit Capacity Call Option (MUCCO)
SYSTEM PLANNING Multiple-Year Unit Capacity Call Option (MUCCO) • Products – Unit contingent capacity and associated energy from a • Combined cycle gas turbine (“CCGT”) • Simple cycle gas turbine (“CT”) • Term – Full year proposals for one (1), two (2) and three (3) years • Beginning May 1, 2004 • B
Slide 39: Multiple-Year Unit Capacity Purchase Agreement (MUCPA)
SYSTEM PLANNING Multiple-Year Unit Capacity Purchase Agreement (MUCPA) • Products – Proposals for gas purchase or tolling products which include rights to capacity and energy • Combined cycle gas turbine (“CCGT”) or Cogeneration – Dispatchable MUCPA – Limited dispatch MUCPA • Simple cycle gas turbin
Slide 40: Stable Fuel Price Life of Unit Capacity Purchase
SYSTEM PLANNING Stable Fuel Price Life of Unit (“LOU”) Capacity Purchase • Products – Solid fuel (nuclear, petroleum coke, coal or lignite) – CCGT or Cogeneration with long-term gas contract • Term – Commencing on a date in 2004 or 2005 specified by Bidder through current expected retirement date –
Slide 41: Other Life of Unit (LOU) Purchase
SYSTEM PLANNING Other Life of Unit (LOU) Purchase • Products – Life of unit capacity and energy from a portfolio of specific generating resource units (or individual CCGT or CT units) • scheduled day ahead with the ability to change schedule on a real time basis • Term – Commencing on a date in 2004
Slide 42: Ownership Acquisition
SYSTEM PLANNING Ownership Acquisition • Products – “Stable Fuel Price” Baseload • Solid fuel (nuclear, petroleum coke, coal or lignite) • CCGT or Cogeneration with long-term gas contract – Dispatchable, Load-following • CCGT or Cogeneration • CT/Quick response – Multiple Units • Portfolio of Specifi
Slide 43: Other Key Issues
SYSTEM PLANNING Other Key Issues • Transmission Service – ESI prefers resources that qualify as a firm network resource (prior to initial delivery as determined by the Entergy Transmission Organization) – ESI will manage requests for firm network service for the selected winning resources • Regulato
Slide 44: Proposal Evaluation Process
SYSTEM PLANNING Proposal Evaluation Process Spring 2003 RFP ENTERGY SERVICES, INC. March 2003 This presentation summarizes certain matters related to ESI’s Spring 2003 Request for Proposals (as it may be amended or modified, the “Spring 2003 RFP”). This presentation, as well as any verbal answers to
Slide 45: Overview Of Discussion
SYSTEM PLANNING Overview Of Discussion The principal topics of this discussion are: • Overview of Evaluation Method • Key Evaluation Factors for Product Categories Utilized in the Proposal Evaluation Process • Factor Evaluation of Proposals • Economic Evaluation of Proposals • Development of Supply
Slide 46: Evaluation Method Overview
SYSTEM PLANNING Evaluation Method Overview • The proposal evaluation process will be conducted by the Proposal Evaluation Team, with oversight from the Supply Procurement Executive Team. The Proposal Evaluation Team will evaluate proposals and develop supply portfolio alternatives to be presented to
Slide 47: Evaluation Method Overview
SYSTEM PLANNING Evaluation Method Overview • Key proposal factors that cannot be easily included in the Economic Evaluation (such as credit, gas supply and flexibility, potential transmission issues, etc.) will be evaluated using the same general procedures, criteria, and scoring systems (“Factor Ev
Slide 48: Key Evaluation Factors for Product Categories
SYSTEM PLANNING Key Evaluation Factors for Product Categories Utilized in the Proposal Evaluation Process The key price, cost and performance factors that will influence selection include: • Non-fuel annual revenue requirements • Energy price as a function of heat rate curve and operating level • Ex
Slide 49: Factor Evaluation of Proposals
SYSTEM PLANNING Factor Evaluation of Proposals • The operational performance of proposals will be assessed by factor evaluators using evaluation methodology that will include examination of features of the proposal response that are difficult to translate into economic parameters but which can be us
Slide 50: Economic Evaluation of Proposals
SYSTEM PLANNING Economic Evaluation of Proposals • The Economic Evaluation consists of two steps: – The ranking of individual proposals based upon their individual impact upon Entergy System total production costs; and – The development and evaluation of supply portfolios consisting of a combination
Slide 51: Economic Evaluation of Proposals (cont.)
SYSTEM PLANNING Economic Evaluation of Proposals (cont.) • As in the Fall 2002 RFP process, the primary analytical tool for the product category economic comparison will be a “Proposal Evaluation Model” production costing model that will utilize information provided in the proposal response to exami
Slide 52: Development of Supply Portfolio Alternatives
SYSTEM PLANNING Development of Supply Portfolio Alternatives Consistent with Resource Supply Planning Objectives and Constraints • The proposal evaluation process will produce a set of Supply Plan Alternatives to be presented to the Operating Committee representing combinations of proposal responses
Slide 53: Comprehensive Cost and Operational Analysis
SYSTEM PLANNING Comprehensive Cost and Operational Analysis • Supply Plan Alternatives will be further evaluated to assess the impacts of the entire portfolio of proposals upon Entergy System total production cost, transmission flows, overall credit risk of the portfolio, fuel supply risks, and the
Slide 54: Spring 2003 RFP Questions & Answers
SYSTEM PLANNING SPRING 2003 RFP Questions & Answers ENTERGY SERVICES, INC. March 2003 This presentation summarizes certain matters related to ESI’s Spring 2003 Request for Proposals (as it may be amended or modified, the “Spring 2003 RFP”). This presentation, as well as any verbal answers to the que
Slide 55: Lessons for Spring 2003 RFP
SYSTEM PLANNING Lessons for Spring 2003 RFP In the Fall 2002 RFP, virtually every bid had technical deficiencies. These can be avoided by: • Completing and signing all required forms. • Providing sufficient, accurate information regarding fuel supply and Seller’s ability to ensure fuel can be provid