Entergy Corporation · NYSE:ETR
Entergy — Fall 2003 RFP Bidder's Conference
51 slides from Entergy's conference presentation, October 2003
Slide 1: Fall 2003 RFP
SYSTEM PLANNING FALL 2003 RFP ENTERGY SERVICES, INC. October 2003 This presentation summarizes certain matters related to ESI’s Fall 2003 Request for Proposals (as it may be amended or modified, the “Fall 2003 RFP”). This presentation (which has been updated since the presentations at the LPSC Techn
Slide 2: Agenda Items
SYSTEM PLANNING Agenda Items • Introductions • RFP Process Overview - Background • Fall 2003 RFP • RFP – Process Safeguards • System Overview/Resource Needs • Proposal Evaluation Process • Proposal Submission Process • Question and Answer Session ESI requests that all questions be submitted in writi
Slide 3: Introductions
SYSTEM PLANNING Introductions Presenters • Bill Mohl Director of Asset Management, ESI • Sue Tierney Principal, The Analysis Group • Bob Cooper Manager of Generation Planning, ESI • Patric Stafshede Manager of Asset Management, ESI • Kristin Dalrymple Senior Analyst, ESI Other • Dave Harlan Sr. Vice
Slide 4: ESI's RFP Process Overview
SYSTEM PLANNING ESI’S RFP PROCESS OVERVIEW ENTERGY SERVICES, INC. October 2003 4
Slide 5: Entergy's Market-Based Resource Procurement Process - Overview
SYSTEM PLANNING 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 • Cyclical Procurement Process – For
Slide 6: ESI Resource Procurement Options - Overview
SYSTEM PLANNING ESI Resource Procurement Options - Overview • Formal RFP Products – MUCPA/MUCCO (1-3 yrs.) Limited-Term – Asset acquisition or life of resource purchase from existing generation resources – Acquisition, ownership position, or life of resource purchase from new generation resources •
Slide 7: ESI has Received Strong and Distributed Market Response
SYSTEM PLANNING ESI has Received Strong and Distributed Market Response Fall 2002 Supplemental Spring 2003 PROPOSALS 1-3 Years 68 24 44 Long-Term 23 30 Other 42 Total 133 24 74 BIDDERS 30 11 22 RESOURCES 45 13 40 CAPACITY (MW) 17,856 2,828 17,950 Note: Non-conforming proposals are not included in th
Slide 8: Summary Results from Previous RFPs
SYSTEM PLANNING Summary Results from Previous RFPs RFP Short- Limited- Limited- Long- Long- Total term – term - term – 3rd term - term – 3rd Party Affiliate Party Affiliate 3rd Party Fall 2002 0 MW 185-206 231 MW 101-121 725 MW 1242-1283 MW MW MW Note 1 Supplemental 222 MW 0 MW 0 MW 0 MW 0 MW 222 MW
Slide 9: Fall 2003 RFP - Overview
SYSTEM PLANNING FALL 2003 RFP - OVERVIEW ENTERGY SERVICES, INC. October 2003 9
Slide 10: Upcoming Fall 2003 RFP - Highlights
SYSTEM PLANNING Upcoming Fall 2003 RFP - Highlights • Final proposals will be due by 6:00 p.m. CPT on November 20, 2003. • ESI has developed an electronic proposal submission process which is being implemented to simplify the proposal submission process for Bidders and to help streamline and make mo
Slide 11: Fall 2003 RFP – Adjustments from Previous RFPs
SYSTEM PLANNING Fall 2003 RFP – Adjustments from Previous RFPs • Based on feedback from several market participants, ESI will require all limited-term proposals to be the Bidder’s best and final offer, but has changed the requirement that a proposal be “binding” to a requirement that the proposal sh
Slide 12: RFP Participants – Fall 2003
SYSTEM PLANNING RFP Participants – Fall 2003 • Potential RFP Participants – Electric Utilities – Marketers – Wholesale Generators – Independent Power Producers – Qualifying Facilities – Entergy Competitive Affiliates • Entergy Competitive Affiliates – Entergy Competitive Affiliates will be allowed t
Slide 13: Fall 2003 RFP Process Timeline
SYSTEM PLANNING Fall 2003 RFP Process Timeline Tech. Conf. Final Proposals w/ LPSC & RFP Due Interested Issued Parties On or Baton Rouge about 11/20/03 Evaluation & Negotiation 10/21/03 11/10/03 Bidder’s Bidder 12/12/03 1/30/04 Conf. Registration Open to Process Decision on Execution of all parties
Slide 14: Fall 2003 RFP Products
SYSTEM PLANNING Fall 2003 RFP Products Limited-term product proposals being sought in the Fall 2003 RFP : • MUCCO Product – CCGT, Cogeneration or Other - a call option on the purchase of capacity, energy and all Other Associated Electric Products from a specific CCGT, cogeneration facility, or other
Slide 15: 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”), Cogeneration, or other generating resource; or • Simple cycle gas turbine (“CT”) • Term – Full year proposals for one (1), two (2)
Slide 16: Dispatchable Multiple-Year Unit Capacity Purchase Agreement (MUCPA)
SYSTEM PLANNING Dispatchable Multiple-Year Unit Capacity Purchase Agreement (MUCPA) • Products – Proposals for unit contingent gas purchase or tolling products which include rights to capacity and energy • Combined cycle gas turbine (“CCGT”), Cogeneration, or other; or • Simple cycle gas turbine (“C
Slide 17: "Must Take" Multiple-Year Unit Capacity Purchase Agreement (MUCPA)
SYSTEM PLANNING “Must Take” Multiple-Year Unit Capacity Purchase Agreement (MUCPA) • Products – Proposals for unit contingent purchase products which include rights to capacity and energy • Combined cycle gas turbine (“CCGT”), Cogeneration or other resource type • On-Peak Product (5x16); or • Standa
Slide 18: Transmission Service for Limited-Term Products
SYSTEM PLANNING Transmission Service for Limited-Term Products 1 Year 2-3 Year Total 1000 MW Per Single ≤ 300 MW ≤ 300 MW maximum for Proposal total portfolio Maximum Unconditional Per Planning Region ≤ 550MW Awards (WOTAB, Amite ≤ 550MW ≤ 550MW per Planning South, Central, Region and North) 90 days
Slide 19: Other Key Considerations
SYSTEM PLANNING Other Key Considerations • Regulatory Approvals – All definitive agreements greater than one year in term be conditioned upon receipt of regulatory approval, acceptable to ESI • Contract Terms – Draft model contracts detailing terms and conditions have been provided and are expected
Slide 20: Fall 2003 RFP - Process Safeguards
SYSTEM PLANNING FALL 2003 RFP - PROCESS SAFEGUARDS ENTERGY SERVICES, INC. October 2003 20
Slide 21: RFP Process Safeguards
SYSTEM PLANNING RFP Process Safeguards • Code of Conduct • Independent Monitor • RFP Process Design and Implementation – e.g., question/answer process, communications with ESI • Confidentiality Protections 21
Slide 22: RFP Process Safeguards
SYSTEM PLANNING 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
Slide 23: RFP Process Safeguards – Role of Independent Monitor
SYSTEM PLANNING RFP Process Safeguards – Role of Independent Monitor • ESI has retained an independent consulting firm (the “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 and evaluation
Slide 24: Role of Independent Monitor (continued)
SYSTEM PLANNING RFP Process Safeguards – Role of Independent Monitor (continued) • Seeks to ensure objectivity and impartiality of the RFP process through the oversight and monitoring of the following: – RFP Design • Review of design of RFP process, products and documents – Solicitation Process • Re
Slide 25: RFP Process Safeguards
SYSTEM PLANNING RFP Process Safeguards 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 – Laura Berryman, the RFP Administrator. • A
Slide 26: RFP Process Safeguards - Q&A Process
SYSTEM PLANNING 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
Slide 27: Q&A Process at today's Conference
SYSTEM PLANNING 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 at the technical conference – Written answers will be posted on the RFP website – Written answers may conta
Slide 28: Fall 2003 RFP System Overview / Resource Needs
SYSTEM PLANNING FALL 2003 RFP SYSTEM OVERVIEW / RESOURCE NEEDS ENTERGY SERVICES, INC. October 2003 28
Slide 29: 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 30: Resource Planning Objective and Planning Principles
SYSTEM PLANNING 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 the lowes
Slide 31: Resource Plan – Needs Assessment
SYSTEM PLANNING Resource Plan – Needs Assessment Peak Period Reliability Requirements (MW) 2004 2005 2006 Firm Load (Excl. Interruptible) 19,936 20,413 20,592 Forecast of System Load Reserve Margin 3,359 3,440 3,470 Firm Load Plus Reserves 23,295 23,853 24,062 Total Controlled Resources (20,980) (21
Slide 32: Comparison of ESI Regional Load Requirements and Supply
Comparison of ESI Regional Load RequirementsSYSTEM andPLANNING Supply Supply decisions must consider regional supply needs and supply alternatives, including transmission availability. Some regions require existing ESI generation for reliability and operating flexibility. Supply Sources Legend Off-S
Slide 33: New Merchant Generation by Region
SYSTEM PLANNING New Merchant Generation by Region EPI ISES Dell Pow er CCGT (Complete) Complete 774 AN O (Suspended) CCGT (U nder Const.) Ac tive Construc tion 0 Cogen/CCGT (Complete) Suspended Construc tion 5,663 WH ITEBL U F F Southaven (Cogentrix) Cogen/CCGT (U nder Const.) Total Merc hant 6,473
Slide 34: ESI Supply Procurement Objectives
SYSTEM PLANNING 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,
Slide 35: ESI Supply Procurement Objectives
SYSTEM PLANNING ESI Supply Procurement Objectives ET R 2004 Forec ESI 2004 asted System Forecasted L oad System vs.vs. Load Existing ExistingResourc es Resources Load Shape Inc ludes Curtailable Demand 30000 25000 20000 MW 15000 10000 5000 0 L oad Duration Curve vs. Desirable L ong-term Existing Cap
Slide 36: Fall 2003 RFP - Proposal Evaluation
SYSTEM PLANNING FALL 2003 RFP - PROPOSAL EVALUATION ENTERGY SERVICES, INC. October 2003 36
Slide 37: Proposal Evaluation Process - Objective
SYSTEM PLANNING Proposal Evaluation Process - Objective The primary objective of the proposal evaluation is to identify the proposals that result in the highest benefit to its customers The highest benefit is realized through proposals that: – Result in lower total system production costs; – Can be
Slide 38: Proposal Evaluation Process - Overview
SYSTEM PLANNING Proposal Evaluation Process - Overview ILLUSTRATIVE Limited Complete Factor Factor Evaluation Evaluation Specific Proposal Shortlist Decision by Proposal Data Evaluations Operating Segregation Points Committee Individual Portfolio Proposal Economic Economic Data Reports Evaluation Ev
Slide 39: Proposal Evaluation Process – Data Segregation
SYSTEM PLANNING Proposal Evaluation Process – 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 the possible distribution of confidential information. • Proposal Segregat
Slide 40: Proposal Evaluation Process – Key Evaluation Drivers
SYSTEM PLANNING Proposal Evaluation Process – Key Evaluation Drivers The Economic Evaluation is the primary determinant in the selection of proposals for the primary award shortlist and the secondary shortlist. Key drivers for the Economic Evaluation: – Energy price – heat rate and basis adder, or f
Slide 41: Proposal Evaluation Process – Limited Factor Evaluation
SYSTEM PLANNING Proposal Evaluation Process – Limited Factor Evaluation • A limited amount of specific information is required from the Factor Evaluation in order to perform the Economic Evaluation. – No scoring or ranking of proposals based on Factor Evaluation • The Economic Evaluation requires tw
Slide 42: Proposal Evaluation Process – Economic Evaluation
SYSTEM PLANNING ILLUSTRATIVE Proposal Evaluation Process – Economic Evaluation Existing Units and Contracts Existing Units and Contracts + Proposal + Proposal Proposal Evaluation Model Evaluation Model Fuel price Fuel price Economy energy Economy energy Load forecast Load forecast Etc. Etc. System P
Slide 43: Proposal Evaluation Process – Factor Evaluation
SYSTEM PLANNING Proposal Evaluation Process – Factor Evaluation The Factor Evaluations capture additional information regarding each of the shortlisted proposals. – The Factor Evaluations do not change the ranking of the proposals; no specific scores are assigned – The issues identified in the Facto
Slide 44: Proposal Evaluation Process – Portfolio Evaluation
SYSTEM PLANNING Proposal Evaluation Process – Portfolio Evaluation • Subsequent to the selection of the primary award shortlist, an economic evaluation will be performed on the entire portfolio. • The Portfolio Economic Evaluation adds all selected proposals on the primary award shortlist to the Pro
Slide 45: Proposal Evaluation Process - Selection
SYSTEM PLANNING 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 fo
Slide 46: Completion of Evaluation Process – Next Steps
SYSTEM PLANNING Completion of Evaluation Process – Next Steps • Perform Due Diligence – Verification of proposal parameters • Carry out negotiations – Address potential issues identified in Factor Evaluations – Address potential issues discovered in due diligence • Execute definitive agreements – Co
Slide 47: Fall 2003 RFP - Proposal Submission Process
SYSTEM PLANNING FALL 2003 RFP - PROPOSAL SUBMISSION PROCESS ENTERGY SERVICES, INC. October 2003 47
Slide 48: Benefits of Electronic Proposal Submission
SYSTEM PLANNING Benefits of Electronic Proposal Submission Why ESI has changed to a process with only electronic submission of proposals: • Consistent data and formats for required information • Elimination of potential transcription errors and reduction of need to interpret information • Enhanced s
Slide 49: Proposal Submission Sequence
SYSTEM PLANNING Proposal Submission Sequence ILLUSTRATIVE Bidder Return Final RFP Posted electronically ESI’s automated email sent to Website submits Bidder data review to Bidder by Registration Registration ESI rejected Form to ESI (incomplete) Registration confirmed Bidders Return Bidder prepares
Slide 50: Electronic Bidder Registration
SYSTEM PLANNING Electronic Bidder Registration • Bidder Registration is required of all Bidders and must be successfully completed before 6:00 p.m. CPT on November 17, 2003. • Bidders must complete the Form properly, including completing all required fields. • Proposals from plants which have not be
Slide 51: Electronic Proposal Submission
SYSTEM PLANNING Electronic Proposal Submission • All proposals must be properly submitted via electronic submission only (email) by 6:00 p.m. CPT on November 20, 2003. Bidders should: • Complete the Form properly, including completing all required fields. • Provide a correct email address. • Submit