Entergy Corporation · NYSE:ETR
Entergy — Fall 2004 RFP Conference
60 slides from Entergy's conference presentation, November 2004
Slide 1: Fall 2004 RFP
FALL 2004 RFP ENTERGY SERVICES, INC. November 2004 This presentation summarizes certain matters related to ESI’s Fall 2004 Request for Proposals (as it may be amended or modified, the “Fall 2004 RFP”). 1
Slide 2: Agenda Items
Agenda Items Introductions ESI’s RFP Process Overview System Overview/Resource Needs Fall 2003 RFP Results Fall 2004 RFP Overview RFP Process Safeguards Proposal Evaluation Process Proposal Submission Process Question and Answer Session ESI requests that all questions be submitted
Slide 3: Introductions
Introductions Presenters Bill Mohl VP of Commercial Operations, ESI Sue Tierney Principal, Analysis Group – Independent Monitor Charles DeGeorge Manager of Supply Planning & Analysis, ESI Lee Kellough Manager of Transmission Engineering*, ESI Patric Stafshede Manager of Asset Management, E
Slide 4: ESI's RFP Process Overview
intery ESI’s RFP Process Overview
Slide 5: Entergy's Market-Based Resource Procurement Process Overview
Entergy’s Market-Based Resource Procurement Process Overview Designed to support ESI’s resource planning objective to provide a portfolio of low-cost, reliable resources matched to both the near-term and long-term supply needs of our customers. Supply Procurement Process – Formalized RFPs will b
Slide 6: Market-Based Mechanisms (MBM) Overview
Market-Based Mechanisms (MBM) Overview Key Points and LPSC Requirements for RFP process – 60 days notice required prior to filing draft RFP. – 45 days notice required for review/settlement for draft RFP for limited-term products. 75 days for long-term products. – Independent Monitor should be enli
Slide 7: ESI Resource Procurement Options Summary
ESI Resource Procurement Options Summary Formal RFP Products – Limited-term MUCPA/MUCCO, LD (1-3 year) – Asset acquisition or life of resource purchase from existing generation resources (Note: No long-term options to be solicited in Fall 2004 RFP) – Acquisition, ownership position, or life of res
Slide 8: ESI Gas/Oil Generation and Purchases 1999-2004
ESI Gas/Oil Generation and Purchases 1999-2004 6,000 5,000 4,000 GWh 3,000 2,000 1,000 0 Sep-99 Dec-99 Sep-00 Dec-00 Sep-01 Dec-01 Sep-02 Dec-02 Sep-03 Dec-03 Sep-04 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Gas/Oil Generation Purchases Linear (Purchases ) N
Slide 9: System Overview / Resource Needs
FALL 2004 RFP System Overview / Resource Needs 9
Slide 10: Entergy 2005 Load and Resources by Region
Entergy 2005 Load and Resources by Region Assumptions: No. Ark. • Regional loads are Regional Peak Firm Load 4,665 MW ETR Controlled based on coincident Generation 4,057 peaks of OpCos within regions. • Regional generation numbers do not include internal or external transmission import Tranmission A
Slide 11: Resource Plan – Needs Assessment
Resource Plan – Needs Assessment System Peak Period Reliability Requirements (MW) 2005 2006 2007 Forecast of Firm Planning Requirement 25,378 25,740 26,109 Existing System Resource Capability Total Controlled Resources 21,378 21,178 21,178 Nuclear 4,512 4,656 4,512 2,209 Coal 2,265 2,209 Gas/Oil 14,
Slide 12: Resource Planning Objective and Planning Principles
Resource Planning Objective and Planning Principles Primary Objective – Provide for both the limited-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 the lowest reasonable t
Slide 13: ESI Supply Procurement Objectives
ESI Supply Procurement Objectives Resource Procurement Objective – Retains long-standing objectives for Entergy Operating Companies. – To ensure that newly acquired resources, together with existing resources, have the necessary characteristics to satisfy customer needs efficiently, effectively an
Slide 14: ESI Supply Procurement Objectives: Load vs. Existing Resources
ESI Supply Procurement Objectives ESI 2005 Forecasted System Load vs. Existing Resources Load Shape Ex cludes Curtailable Demand 30,000 25,000 20,000 MWs 15,000 10,000 5,000 - Load Duration Curve vs De s irable Long- Exis ting Capability from Long Te rm Te rm Re s ource M ix Re s ource M ix Base Int
Slide 15: Fall 2003 RFP Results
2 rntergy Fall 2003 RFP Results 15
Slide 16: ESI has Received Strong and Distributed Market Response
ESI has Received Strong and Distributed Market Response Prior ESI RFPs for Supply Side Resources - # of Proposals Fall 2002 Supplemental Spring 2003 Fall 2003 PROPOSALS 1-3 Years 68 24 44 137 Long-Term 23 n/a 30 n/a Other 42 n/a n/a n/a Total 133 24 74 137 BIDDERS 30 11 22 12 RESOURCES 45 13 40 18 C
Slide 17: Summary of Contracts Resulting From Previous RFPs
Summary of Contracts Resulting From Previous RFPs RFP Short- Limited- Limited- Long- Long- Total term term term term term 3 Party rd Affiliate 3 Party rd Affiliate 3 Party rd Fall 2002 0 MW 185-206 MW 231 MW 101-121 MW 718 MW 1235-1276 Note 1 Note 2 MW January 2003 222 MW n/a n/a n/a n/a 222 MW Supp
Slide 18: Fall 2004 RFP Overview
intery FALL 2004 RFP Overview 18
Slide 19: Fall 2004 RFP - Highlights
Fall 2004 RFP - Highlights ESI will accept written feedback from market participants and other interested parties on the draft RFP, provided that such comments are provided to the RFP Administrator by no later than December 10, 2004. Final RFP will be issued on or about January 5, 2005. Final
Slide 20: Fall 2004 RFP - Adjustments from Previous RFPs
Fall 2004 RFP - Adjustments from Previous RFPs Consistent with practice in some previous RFPs, the process will now formally lead to a primary award list and secondary award short-list. As in the Fall 2003 RFP Factor Evaluation process, the formal scorecards for each proposal are eliminated. Del
Slide 21: RFP Participants – Fall 2004
RFP Participants – Fall 2004 Potential RFP Participants – Electric Utilities – Marketers – Wholesale Generators – Independent Power Producers – Qualifying Facilities Entergy Competitive Affiliates and Entergy Operating Companies will not be allowed to participate in this Fall 2004 RFP 21
Slide 22: Fall 2004 RFP Process Timeline
Fall 2004 RFP Process Timeline Evaluation & Negotiation Tech. Conf. Bidder’s Final w/ LPSC & Conf. RFP 1/28/05 2/25/05 LD Proposals MUCCO and Interested Open to Issued MUCPA Proposals Parties all parties Bidders Notified of On or Bidders Decision Baton Rouge Houston about Notified of 11/15/04 11/16/
Slide 23: Fall 2004 RFP Products
Fall 2004 RFP Products Limited-term product proposals being sought in the Fall 2004 RFP: Day-Ahead Multiple-Year Unit Capacity Call Option Product (Day Ahead MUCCO) Intra-Day Peaking Multiple-Year Unit Capacity Call Option Product (Intra-Day Peaking MUCCO) Three-Year Reserve Capacity Multiple-
Slide 24: Day-Ahead Multiple-Year Unit Capacity Call Option (MUCCO)
Day-Ahead Multiple-Year Unit Capacity Call Option (MUCCO) Product – Unit-contingent call option rights to Capacity and associated energy from a specifically designated generating unit, with the ability for ESI to preschedule energy from the unit for a minimum of 8 hours on a day-ahead basis. Del
Slide 25: Intra-Day Multiple-Year Unit Capacity Call Option (MUCCO)
Intra-Day Multiple-Year Unit Capacity Call Option (MUCCO) Product – Unit-contingent call option rights to Capacity and associated energy from a specifically designated generating unit, with the ability for ESI to preschedule energy from the unit for a minimum of 4 hours on a day-ahead or intra-day
Slide 26: Three-Year Reserve Capacity MUCCO
Three-Year Reserve Capacity Multiple-Year Unit Capacity Call Option (MUCCO) Product – Unit-contingent call option rights to Capacity and associated energy from a specifically designated generating unit exercisable on a three-day notice Delivery Term – Full-year proposals for three (3) years – St
Slide 27: Dispatchable Multiple-Year Unit Capacity Purchase Agreement (MUCPA)
Dispatchable Multiple-Year Unit Capacity Purchase Agreement (MUCPA) Product – Unit-contingent tolling product which include rights to Capacity and energy from a specifically designated generating unit on an hour-ahead basis under a Gas Tolling Agreement Delivery Term – Full-year proposals for on
Slide 28: "Into Entergy" Liquidated Damages (LD) Product
“Into Entergy” Liquidated Damages (LD) Product Products – Firm Capacity and energy delivered into the Entergy System with liquidated damages as provided in the WSPP Agreement » a 5x16 “Into Entergy” LD Product » a 7x16 “Into Entergy” LD Product » a 7x8 “Into Entergy” LD Product Delivery Term – F
Slide 29: Deliverability Evaluation
Deliverability Evaluation For non-LD Products: – ESI will conduct a transmission deliverability evaluation to identify and characterize transmission issues that could affect ESI’s utilization of a proposal and its total delivered cost to ESI. – ESI will agree to an initial one year Delivery Term f
Slide 30: Other Key Considerations
Other Key Considerations Regulatory Approvals – All definitive agreements greater than one year in term shall be conditioned upon receipt of regulatory approvals , acceptable to ESI (Does not apply to LD Product) Contract Terms – Draft model contracts detailing terms and conditions have been pro
Slide 31: FALL 2004 RFP Process Safeguards
FALL 2004 RFP Process Safeguards 31
Slide 32: RFP Process Safeguards
RFP Process Safeguards Code of Conduct Independent Monitor RFP Process Design and Implementation Confidentiality Protections 32
Slide 33: RFP Process Safeguards
RFP Process Safeguards Code of Conduct – All employees of ESI, any Entergy Operating Company, or any Entergy Competitive Affiliate, including those involved in the RFP process, must adhere to the appropriate Affiliate Rules and Codes of Conduct as applicable and further outlined in the Fall 2004 R
Slide 34: RFP Process Safeguards: Role of Independent Monitor
RFP Process Safeguards Role of Independent Monitor ESI has retained Sue Tierney of the Analysis Group (an independent consulting firm) to serve as the “Independent Monitor” (“IM”) and to assist in the development of the RFP solicitation, evaluation and selection process in support of ESI’s efforts
Slide 35: RFP Process Safeguards: Communications with ESI before Proposal Submission
RFP Process Safeguards Communications with ESI before Proposal Submission For all issues related to the RFP, there is only ONE contact – Laura Berryman, the RFP Administrator. Any inquiries about the Entergy Transmission System should be directed to the Transmission Organization through the OASI
Slide 36: RFP Process Safeguards: Data Segregation
RFP Process Safeguards Data Segregation The objective of the proposal segregation process is to limit data distribution on a “need-to-know basis” within the ESI organization, and to reduce to the extent possible the distribution of confidential information. Segregation of information obtained fr
Slide 37: RFP Process Safeguards: Communication with Bidders During Evaluation
RFP Process Safeguards Communication with Bidders During Evaluation No communication with Bidders is expected during evaluation. Bidders should direct questions to ESI according to the same protocol as prior to the Proposal Submission. ESI retains the right to contact Bidders for clarification
Slide 38: RFP Process Safeguards: Q&A Process
RFP Process Safeguards Q&A Process 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 ESI or Bidders to
Slide 39: RFP Process Safeguards: Q&A Process at today's Conference
RFP Process Safeguards 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. – Written answers will be posted on the RFP website. – Written answers may contain information different from, or in addit
Slide 40: FALL 2004 RFP Proposal Evaluation
FALL 2004 RFP Proposal Evaluation 40
Slide 41: Proposal Evaluation Process - Objective
Proposal Evaluation Process - Objective The primary objective of the proposal evaluation is to identify the proposals that result in the highest benefit to Entergy’s customers The highest benefit is realized through proposals that: – Result in lower total system production costs; – Meet incremental
Slide 42: Proposal Evaluation Process – Overview
Proposal Evaluation Process – Overview (Does not apply to LD’s) ILLUSTRATIVE Independent Limited Decision by Monitor Shortlist Factor Operating Evaluation Evaluations Committee Proposal Submission Specific Proposal Portfolio Proposal Data Economic Credit Factor Segregation Points Evaluation Evaluati
Slide 43: Proposal Evaluation Process – Key Evaluation Drivers
Proposal Evaluation Process – Key Evaluation Drivers The Economic Evaluation is the primary determinant in the selection of proposals for the primary award list and the secondary award short-list. Key drivers for the Economic Evaluation: – Option Premium – Heat Rate – Operational flexibility – opera
Slide 44: Proposal Evaluation Process – Limited Factor Evaluation
Proposal Evaluation Process – Limited Factor Evaluation No scoring or ranking of proposals based on Factor Evaluation A limited amount of specific information is required from the Factor Evaluation in order to perform the Economic Evaluation. The Economic Evaluation requires two inputs from the Fact
Slide 45: Proposal Evaluation Process – Economic Evaluation
Proposal Evaluation Process – Economic Evaluation The Initial Economic Evaluation of individual proposals results in the ranking of proposals within product categories based upon the incremental economic impact of each proposal on the total Entergy system production cost, verified by a fundamental e
Slide 46: Proposal Evaluation Process – Deliverability Evaluation
Proposal Evaluation Process – Deliverability Evaluation Overview Primary objective: – to assess the potential for being able to fully utilize proposals based on transmission deliverability, and – to put proposal benefits on a comparable basis such that all proposals have consistent deliverability pr
Slide 47: Proposal Evaluation Process – Deliverability Evaluation
Proposal Evaluation Process – Deliverability Evaluation The cost of mitigation strategies will be assessed as “transmission economic adders” as follows: – Uses the Entergy OASIS Available Flowgate Capacity (AFC) analyzer to identify potential constraints that may limit all or a portion of their outp
Slide 48: Proposal Evaluation Process – Deliverability Evaluation
Proposal Evaluation Process – Deliverability Evaluation After review of the ‘threshold criteria’, a Delivery Cost Adder will be determined through the consideration of the following mitigation strategies: – Delisting and/or displacement of existing network resources – Active transmission service man
Slide 49: Proposal Evaluation Process – Deliverability Evaluation
Proposal Evaluation Process – Deliverability Evaluation – Delisting and/or displacement option » If flowgate constraint can be alleviated by the delisting/displacement of existing resources, a delivery cost adder will be developed which estimates the required cost to replace the delisted/displaced u
Slide 50: Proposal Evaluation Process – Portfolio Evaluation
Proposal Evaluation Process – Portfolio Evaluation Using the results of the deliverability evaluation, potential portfolios of proposals will be selected for the portfolio economic evaluation. The Portfolio Economic Evaluation adds selected Candidate Proposals to the Proposal Evaluation Model. – Uti
Slide 51: Proposal Evaluation Process - Selection
Proposal Evaluation Process - Selection Entergy’s Operating Committee will make the final decision with regards to the selection of limited-term proposals, which will proceed to negotiations for a transaction. The Operating Committee is the group of decision makers responsible for administrating the
Slide 52: Next Steps
Next Steps Carry out Credit Evaluation Verification of proposal parameters Carry out negotiations – Address potential Credit Collateral Requirements Execute definitive agreements – Contingent on successful resolution of the issues arising during the negotiations Submit requests for network transmiss
Slide 53: Credit Evaluation
Credit Evaluation The primary objective of ESI’s credit evaluation is to ensure the ESI receives sufficient credit risk protection from a supplier who is awarded a proposal. ESI’s credit evaluation procedures provide for a two-step calculation of potential required collateral. – First, a calculation
Slide 54: Network Transmission Service Non-LD Products
Network Transmission Service Non-LD Products ILLUSTRATIVE Definitive PPA commences for Agreement Initial 1-year initial one-year Executed Delivery Term period regardless of results from TBU 2nd and 3rd Year of Primary NetworkAward Delivery Term Shortlist Transmission Requests Results ESI Results ESI
Slide 55: FALL 2004 RFP Proposal Submission Process
FALL 2004 RFP Proposal Submission Process 55
Slide 56: Benefits of Electronic Proposal Submission
Benefits of Electronic Proposal Submission Why ESI uses a process with only electronic submission of proposals: Process worked very well in Fall 2003 RFP Consistent data and formats for required information Elimination of potential transcription errors and reduction of need to interpret inform
Slide 57: Proposal Submission Sequence
Proposal Submission Sequence ILLUSTRATIVE Bidder Return Final RFP electronically ESI’s automated email sent Posted to submits Bidder data review to Bidder by Registration Website Registration rejected ESI (incomplete) Form to ESI Registration confirmed Bidder ID provided Bidders Return Bidder electr
Slide 58: Electronic Bidder Registration
Electronic Bidder Registration Bidder Registration is required of all Bidders and must be successfully completed before 6:00 p.m. CT on January 14, 2005. Bidders must properly complete all required fields of Bidder Registration Form. Proposals from plants which have not been registered will no
Slide 59: Electronic Proposal Submission
Electronic Proposal Submission All proposals must be properly submitted via electronic submission only (email) by 6:00 p.m. CPT on January 20, 2005. Bidders should: Properly complete all required fields of the Proposal Submission Form. Provide a correct e-mail address. Submit proposals well
Slide 60: Question & Answer Session
Question & Answer Session 60