Entergy Corporation · NYSE:ETR
Entergy — LPSC and Bidders Conference 2006
60 slides from Entergy's conference presentation, February 2006
Slide 1: 2006 Long-Term RFP
2006 Long-Term RFP ENTERGY SERVICES, INC. February 2006 This presentation summarizes certain matters related to ESI’s 2006 Long-Term Request for Proposals (as it may be amended or modified, the “2006 Long- Term RFP”). 1
Slide 2: Agenda Items
Agenda Items Introductions ESI’s RFP Process Overview Fall 2004 RFP Results RFP Process Safeguards Overview of Resource Plan 2006 Long-Term RFP Overview Proposal Evaluation Process Credit Analysis Proposal Submission Process Question and Answer Session ESI requests that all quest
Slide 3: Introductions
Introductions Entergy Services, Inc. – Bill Mohl VP, Commercial Operations – Tony Walz Director, Planning & Analysis – Mark Strength Manager, Supply Procurement – Charles DeGeorge Manager, Supply Planning & Analysis – Lee Kellough Manager, Transmission Engineering – Cory Burton Wholesale Executive
Slide 4: ESI's RFP Process Overview
intery ESI’s RFP Process Overview
Slide 5: ESI's Market-Based Resource Procurement Process Overview
ESI’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 Entergy System customers Supply Procurement Process – Formalized RFPs
Slide 6: ESI Resource Procurement Options Summary
ESI Resource Procurement Options Summary Formal RFP Products – Limited-term MUCPA/MUCCO, LD (1-3 year) – Asset acquisition or long-term purchase from existing generation resources – Acquisition, ownership position, or long-term purchase from new generation resources – ESI also has committed to see
Slide 7: 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 – 75 days notice required for review/settlement for draft RFP for long-term products – Independent Monitor should be enlisted to ensure no undue preference to
Slide 8: Market Collaborative re: Competitive Procurement Processes
Market Collaborative re: Competitive Procurement Processes From June through November 2005, the LPSC Staff conducted “a collaborative to study barriers that may exist to robust competition in the wholesale generation markets in the Entergy region” The following companies participated in the coll
Slide 9: Market Collaborative re: Competitive Procurement Processes
Market Collaborative re: Competitive Procurement Processes Resolutions reached by participants 1. Timing of next RFP – 60-day notice issued 11/30/05; draft posted as planned on 1/31/06 – Issue resolved 2. Selection of IM – Two new IMs were selected for this RFP, including one IM that was suggested b
Slide 10: Market Collaborative re: Competitive Procurement Processes
Market Collaborative re: Competitive Procurement Processes Resolutions reached by participants (cont’d) 4. Credit/collateral requirements – Some merchants urged flexibility with regard to requirements – ESI agreed to consider alternate forms of collateral (Appendix F reflects flexibility regarding c
Slide 11: Market Collaborative re: Competitive Procurement Processes
Market Collaborative re: Competitive Procurement Processes Resolutions reached by participants (cont’d) 7. Power plant retirement – In response to Staff requests, the Draft RFP: » states that ESI will examine the potential for proposed resources to displace existing resources in addition to seeking
Slide 12: Other Key Elements of the 2006 Long-Term RFP
Other Key Elements of the 2006 Long-Term RFP Self-build / self-supply options are being considered in this RFP – Solid Fuel self-build option in the Amite South planning region of the Entergy System ESI is no longer considering a load-following CCGT self-supply project for EAI in this RFP Ente
Slide 13: Fall 2004 RFP Results
intery Fall 2004 RFP Results 13
Slide 14: RFP Response
RFP Response Fall 2002 Supplemental Spring 2003 Fall 2003 Fall 2004 PROPOSALS 1-3 Years 68 24 44 137 83 Long-Term 23 n/a 30 n/a n/a Other 42 n/a n/a n/a n/a Total 133 24 74 137 83 BIDDERS 30 11 22 12 15 RESOURCES 45 13 40 18 18 CAPACITY (MW) 17,856 2,828* 17,950 5,315* 7,409* Note: Non-conforming pr
Slide 15: Summary of Contracts Resulting From Previous RFPs
Summary of Contracts Resulting From Previous RFPs RFP Short- Limited- term Limited- Long- Long- Total term Affiliate term term Affiliate term 3 Party rd 3 Party rd 3 Party rd Fall 2002 0 MW 185-206 MWa 231 MW 101-121 MWb 718 MW 1,235-1,276 MW January 2003 222 MW n/a n/a n/a n/a 222 MW Supplemental S
Slide 16: ESI Gas/Oil Generation and Purchases 1999-2005
ESI Gas/Oil Generation and Purchases 1999-2005 6,000 5,000 4,000 GWh 3,000 2,000 1,000 - Apr-99 Apr-02 Apr-03 Apr-00 Apr-01 Apr-04 Apr-05 Oct-99 Jan-00 Oct-02 Jan-03 Oct-03 Jan-04 Jan-05 Jan-99 Jul-99 Jul-00 Oct-00 Jan-01 Jul-01 Oct-01 Jan-02 Jul-02 Jul-03 Jul-04 Oct-04 Jul-05 Oct-05 Gas/Oil Generat
Slide 17: 2006 Long-Term RFP Process Safeguards
2006 Long-Term RFP Process Safeguards 17
Slide 18: RFP Process Safeguards
RFP Process Safeguards Independent Monitors Code of Conduct RFP Process Design and Implementation Confidentiality Protections 18
Slide 19: Role of Independent Monitors
Role of Independent Monitors ESI has retained two Independent Monitors (IMs) 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 its evaluation process will be objective and impartial – Process IM – Elizabeth
Slide 20: 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 RFP – Link
Slide 21: Communications with ESI before Proposal Submission
RFP Process Safeguards Communications with ESI before Proposal Submission All issues related to the RFP should be directed to Ms. Laura Berryman, the RFP Administrator – Potential bidders wishing to communicate with the IMs may contact Ms. Benson Any inquiries about the Entergy Transmission Syst
Slide 22: 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 RFP evaluation teams, and to reduce to the extent possible the distribution of confidential information Segregation of information obtained
Slide 23: Communication with Bidders During Evaluation
RFP Process Safeguards Communication with Bidders During Evaluation No communication with Bidders is expected during the initial evaluation process – ESI retains the right to contact Bidders via the RFP Administrator to obtain clarification or request additional information Bidders should direct
Slide 24: 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 t
Slide 25: 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 additio
Slide 26: 2006 Long-Term RFP Overview of Resource Plan
2006 Long-Term RFP Overview of Resource Plan 26
Slide 27: Supply Objectives
System Resource Needs Supply Objectives The supply needs that determine the resource requirements of the Operating Companies are driven by six basic resource supply objectives: Provide adequate resources to meet customer peak demands with Reliability adequate reliability Production Cost – Baseload P
Slide 28: Summary of Resource Requirements
System Resource Needs Summary of Resource Requirements Summary System of Resource Needs (MWs) 2007 2009 2011 2013 2015 TOTAL REQUIREMENTS 24,956 25,917 26,760 27,919 28,820 RESOURCES Legacy Resources 20,703 20,917 20,809 20,809 20,809 Long-term Additions 1,811 1,811 1,831 1,831 1,831 Limited-Term Ad
Slide 29: Entergy System 2006 Resource Requirements and Capability
System Resource Needs Entergy System 2006 Resource Requirements and Capability The following chart compares 2006 functional requirements for the Entergy System with long-term controlled resources. Load Shape Requirements (MWs) Capacity (MWs) 25,000 25,000 1,439 3,473 3,681 20,000 20,000 5,006 15,000
Slide 30: Key Considerations in Procurement Design
System Resource Needs Key Considerations in Procurement Design AMOUNT Total resource requirement for 2006 exceeds long-term controlled resources by over 1400 MWs System needs are increasing with load growth (~500 MWs/Year) TYPE The Entergy System determines the type of generation needed to ser
Slide 31: Two Distinct Products
System Resource Needs Two Distinct Products Load-following CCGT and baseload Solid Fuel products respond to distinct planning objectives Gas-Fired CCGT Solid Fuel Primary Planning Objectives In Product Design Production Cost – Load Following Production Cost – Baseload Generation Portfolio En
Slide 32: 2006 Long-Term RFP Overview
2006 LONG-TERM RFP Overview 32
Slide 33: 2006 Long-Term RFP - Highlights
2006 Long-Term 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 March 17, 2006 Final RFP will be issued on or about April 17, 2006 – CCGT pr
Slide 34: RFP Participants - 2006 Long-Term RFP
RFP Participants –2006 Long-Term RFP Potential RFP Participants – Electric Utilities – Marketers – Wholesale Generators – Independent Power Producers – Qualifying Facilities – Entergy Competitive Affiliates 34
Slide 35: 2006 Long-Term RFP Process Timeline
2006 Long-Term RFP Process Timeline Evaluation & Negotiation Tech. Conf. Final CCGT Solid Fuel w/ LPSC & RFP Proposals Proposals CCGT Proposals Solid Fuel Proposals Bidder’s Conf. Issued Due Due Bidders Notified of Bidders Notified of Final Selection Final Selection On or Houston about 2/23/06 4/17/
Slide 36: 2006 Long-Term RFP Products
2006 Long-Term RFP Products ESI is soliciting proposals from Bidders for long-term capacity provided by load-following combined cycle gas turbine (“CCGT”) generation resources and/or baseload Solid Fuel resources – Load-Following CCGT » A load following resource should have scheduling or operation
Slide 37: 2006 Long-Term RFP Products
2006 Long-Term RFP Products Long-Term Non-Tolling PPA – Load-Following CCGT (Product Package A) Long-Term Tolling PPA – Load-Following CCGT (Product Package B) Ownership Acquisition – Load-Following CCGT (Product Package C) Long-Term PPA – Baseload Solid Fuel (Product Package D) Ownership
Slide 38: Long-Term Non-Tolling PPA - Load-Following CCGT (Package A)
Long-Term Non-Tolling PPA – Load-Following CCGT (Product Package A) Product – Scheduling on a Day-Ahead and/or Intra-Day basis – Buyer prefers a minimum Delivery Term of 20 years – Start date of the proposed Delivery Term must occur no later than June 1, 2009; however, ESI prefers proposals with a
Slide 39: Long-Term Tolling PPA - Load-Following CCGT (Package B)
Long-Term Tolling PPA – Load-Following CCGT (Product Package B) Product – Scheduling on a Day-Ahead and/or Intra-Day basis – Buyer prefers a minimum Delivery Term of 20 years – Start date of the proposed Delivery Term must occur no later than June 1, 2009; however, ESI prefers proposals with a Del
Slide 40: Ownership Acquisition - Load-Following CCGT (Package C)
Ownership Acquisition – Load-Following CCGT (Product Package C) Product – Outright acquisition of a combined cycle gas turbine (CCGT) generating unit – Buyer requires 100% ownership of the generating unit and prefers to purchase existing operating assets – The proposed generating unit in this prod
Slide 41: Long-Term PPA - Baseload Solid Fuel (Package D)
Long-Term PPA – Baseload Solid Fuel (Product Package D) Product – Scheduling on a real time basis – Buyer prefers a minimum Delivery Term of 30 years – The start date of the proposed Delivery Term must occur no later than December 31, 2012 Capacity Quantity – Minimum Capacity - 50 MW – For cogen
Slide 42: Ownership Acquisition - Baseload Solid Fuel (Package E)
Ownership Acquisition – Baseload Solid Fuel (Product Package E) Product – Outright acquisition of baseload Solid Fuel generating unit – Buyer will accept partial ownership of the generating unit – Buyer requires a Commercial Operation Date no later than December 31, 2012 Capacity Quantity – Mini
Slide 43: Other Key Considerations
Other 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 – Potential for short-term bridge agreement Contract Terms and Conditi
Slide 44: 2006 Long-Term RFP Proposal Evaluation Process
2006 Long-Term RFP Proposal Evaluation Process 44
Slide 45: 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 System customers The highest benefit is realized through proposals that – Meet the supply objectives of the Entergy System – Minimiz
Slide 46: Proposal Evaluation Process - Overview
Proposal Evaluation Process – Overview ILLUSTRATIVE All Conforming Proposals Screening Analysis ($/MWh) Deliverability Evaluation (TAG) Stage 1 (EET) Preliminary Shortlist Net System Benefit (NPV $/MW) Stage 2 Preliminary Due Diligence (EET) Additional Evaluation Fuel Evaluation (FET) Final Shortlis
Slide 47: Proposal Evaluation Process - Separate Evaluations
Proposal Evaluation Process – Separate Evaluations Evaluation of CCGT and Solid Fuel proposals will be performed separately – Similar but distinct processes – Proceed on different schedules – Tools and assumptions may differ Solid Fuel evaluation process will – Require a longer evaluation period
Slide 48: Proposal Evaluation Process - Stage 1
Proposal Evaluation Process – Stage 1 Stage 1, Screening Analysis Proposals will be ranked based on the levelized cost of each proposal expressed in $/MWh over the relevant planning horizon – 20 years for CCGT proposals – 30 years for Solid Fuel proposals Operating assumptions will reflect the p
Slide 49: Proposal Evaluation Process - Stage 2
Proposal Evaluation Process – Stage 2 Stage 2, Detailed Evaluation Proposals will be ranked based on the net system benefit of each proposal expressed in net present value $/MW added over the relevant planning horizon – 20 years for CCGT proposals – 30 years for Solid Fuel proposals Detailed fue
Slide 50: Proposal Evaluation Process - Deliverability Evaluation Overview
Proposal Evaluation Process – Deliverability Evaluation Overview Proposals ultimately are expected to qualify as Long-Term Network Resources Bidders will have access to the same information that SPO’s Transmission Analysis Group (“TAG”) uses to – Identify whether potential constraints exist – Es
Slide 51: Proposal Evaluation Process - Initial Transmission Analysis
Proposal Evaluation Process – Initial Transmission Analysis Initial Transmission Analysis TAG will identify – Proposals that exhibit relatively fewer potential constraints – In which of the 4 planning regions the proposed resource is located – Any potential benefits that may be derived from a prop
Slide 52: Proposal Evaluation Process - Detailed Transmission Evaluation
Proposal Evaluation Process – Detailed Transmission Evaluation Detailed Transmission Evaluation TAG will identify potential alternatives to alleviate constraints that may prohibit a proposed resource from qualifying as a Long-Term Network Resource – Transmission upgrades (long-term) – Delisting of
Slide 53: 2006 Long-Term RFP Credit Analysis
2006 Long-Term RFP Credit Analysis 53
Slide 54: Development of Credit Requirements
Development of Credit Requirements No Bidder will be excluded or prohibited from participating in this RFP on the basis of credit Through the Market Collaborative process, companies have urged flexibility in collateral types ESI has agreed to consider alternate forms of collateral including li
Slide 55: Credit Requirements
Credit Requirements None at time of Proposal Submission None at time of Preliminary Shortlist $2,000,000 Letter of Credit for all Bidders upon execution of a Letter of Intent Credit support requirements per 100 MW at execution of Definitive Agreement Solid Fuel: Long-Term PPA $20 million per
Slide 56: Credit Review and Collateral Timeline
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, determine the Maximum Uncollateralized Supplier Exposure f
Slide 57: 2006 Long-Term RFP Proposal Submission Process
2006 Long-Term RFP Proposal Submission Process 57
Slide 58: Bidder Registration & Proposal Submission Sequence
Bidder Registration & Proposal Submission Sequence ILLUSTRATIVE Appendix B – Bidder Registration Bidder electronically Final RFP Posted to ESI’s automated Return email submits Bidder Website data review sent to Bidder by Registration Registration Form ESI rejected (Appendix B) to ESI (incomplete) Re
Slide 59: Electronic Bidder Registration Process
Electronic Bidder Registration Process Proposal Submittal Fee – Within two (2) Business Days of receiving the executed Bidder Registration Form, ESI will invoice Bidder, by Proposal Identification Number, the Proposal Submittal Fee that is due for each registered proposal – Bidders will be invoice
Slide 60: Question & Answer Session
Question & Answer Session 60