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FirstEnergy — Maryland Utilities — Maryland Utilities' Pre-Bid Webinar (September 2022)
62 slides from FirstEnergy's conference presentation, Sep 20, 2022
Slide 1: Maryland Utilities' Request For Proposals for Full Requirements Wholesale Electric Power
Maryland Utilities’ Request For Proposals for Full Requirements Wholesale Electric Power Pre-Bid Webinar September 20, 2022
Slide 2: Please Remember
2 Please Remember • Phones are Muted: In order to help this webinar run smoothly, your phones are muted. • Questions: If you have a question, first select the message icon, then type your question in the “Meeting chat” box and click the arrow under the box or hit enter to send. We will address it as
Slide 3: Utility Panel
Utility Panel Potomac Edison Robert Reeping – Manager, Regulated Commodity Sourcing Melanie Grant – Senior Business Analyst Baltimore Gas and Electric Company David Bloom - Manager, Energy Acquisition Brian Schuppert – Senior Energy Acquisition Analyst Jasmin Kakar – Principal Energy Acquisition Ana
Slide 4: Webinar Objectives
Webinar Objectives We are here to: • Review the bid structure within each utility’s RFP • Highlight substantive changes to the RFP and FSA from the process conducted last year • Answer questions on RFP related topics Maryland Utilities' Pre-Bid Webinar 4 September 20, 2022
Slide 5: Webinar Disclaimer
Webinar Disclaimer This presentation is not meant to be a fully comprehensive description of every aspect related to all of the Maryland Public Service Commission (PSC) orders and settlements related to the RFP process, but rather a summary of the key features. No statements made in this presentatio
Slide 6: Summary Agenda
Summary Agenda • 2023 RFP Changes • Utility Bid Plans • 2023 Full Requirements Service Agreement Changes Maryland Utilities' Pre-Bid Webinar 6 September 20, 2022
Slide 7: Overview
Overview Maryland Utilities' Pre-Bid Webinar September 20, 2022 7
Slide 8: 2023 Procurement Improvement Process (PIP)
2023 Procurement Improvement Process (PIP) • Bidding expiration time changed to 7pm EPT on the scheduled day of awarding bids for each procurement (RFP § 4.5) • Continued use of Proxy Price for Capacity due to PJM Base Residual Auction Delays (RFP § 2.1 and FSA § 7.1) • Elimination of Contingency Bi
Slide 9: Important Dates
Important Dates Important Procurement Qualification Notes • In order to be qualified to bid in the October 2022, January 2023, April 2023 and June 2023 auctions – Suppliers must qualify under the 2023 RFP/FSA documents – Eligibility documents need to be submitted only once for RFP – Eligibility docu
Slide 10: 2023 Request for Proposals (RFP)
2023 Request for Proposals(RFP) Maryland Utilities' Pre-Bid Webinar 10 September 20, 2022
Slide 11: Request for Proposals: Supply Requirement Overview
Request for Proposals (RFP) Supply Requirement Overview • Full requirements service, including energy, capacity, ancillary services, losses and renewables; excluding network transmission or renewable energy obligations related to offshore wind pursuant to Senate Bill 526 passed during the 2022 sessi
Slide 12: Request for Proposals: Procurement Process Overview
Request for Proposals Procurement Process Overview • Scope of the RFP includes the October 2022, January 2023, April 2023 and June 2023 auctions • Suppliers will have to qualify only once for this multi-procurement process, however if changes occur that materially affect supplier’s financial conditi
Slide 13: Procurement Process Overview (continued)
Request for Proposals Procurement Process Overview (continued) • For BGE and Delmarva Residential and Type I supply, load will be procured in October 2022 for June 1, 2023 delivery and in April 2023 for October 1, 2023 delivery • For Pepco Residential and Type I contracts, load will be procured in O
Slide 14: Procurement Process Overview (continued)
Request for Proposals Procurement Process Overview (continued) • The typical bid week will look like the following: – Monday: Bid assurance collateral due no later than 10:00 am EPT – Monday: Bids due between the hours of 10:30 am and 11:30 am EPT – Monday: Bids awarded by 3:00 pm EPT – Tuesday: Uti
Slide 15: Utility Bid Plans
Utility Bid Plans Maryland Utilities' Pre-Bid Webinar 15 September 20, 2022
Slide 16: Utility Bid Plans
Utility Bid Plans In total, Maryland utilities are requesting electric supply proposals totaling approximately 3,805 MW of Standard Offer Service load PE 677 www.firstenergycorp.com/mdsosrfp BGE 1,879 https://rfp.bge.com/ Delmarva Power 314 www.delmarva.com/mdrfp Pepco 935 www.pepco.com/mdrfp Total
Slide 17: PE Bid Plan
PE Bid Plan PE’s SOS Load Overview Preliminary Capacity PLC, MW Service Type Eligible SOS RFP • Residential 742 682 591 • Type II Non-Residential SOS 311 86 86 – PH (< 600 kW PLC) C, C-A, CSH, G ( ≥ 25 kW) Notes: • Numerical values contained herein are accurate as of August 9, 2022, and will be upda
Slide 18: BGE Bid Plan
BGE Bid Plan BGE’s SOS Load Overview Preliminary Capacity PLC, MW Service Type Eligible SOS RFP Residential 3,369 2,703 1,351 Type I 297 207 104 Type II 1,542 424 424 Notes: • Numerical Values contained herein are accurate as of August 9, 2022, and will be updated prior to each procurement • PLCs ar
Slide 19: Delmarva Bid Plan
Delmarva Bid Plan Delmarva’s SOS Load Overview Preliminary Capacity PLC, MW Service Type Eligible SOS RFP Residential 515 462 231 Type I 60 38 19 Type II 216 64 64 Notes: • Numerical Values contained herein are accurate as of August 9, 2022 • PLCs are for 2022-2023 Planning Year • MW values are unsc
Slide 20: Pepco Bid Plan
Pepco Bid Plan Pepco’s SOS Load Overview Preliminary Capacity PLC, MW Service Type Eligible SOS RFP Residential 1,573 1,326 663 Type I 73 48 24 Type II 821 248 248 Notes: • Numerical Values contained herein are accurate as of August 9, 2022 • PLCs are for 2022-2023 Planning Year • MW values are unsc
Slide 21: Full Requirements Service Agreement (FSA)
Full Requirements Service Agreement (FSA) Maryland Utilities' Pre-Bid Webinar 21 September 20, 2022
Slide 22: FSA: What's New?
Full Requirements Service Agreement (FSA) What’s New? • OREC legislation update with carve-out (FSA § Exhibit B) • Update definition of “Pricing Agent” to reference correct section 14.7 Maryland Utilities' Pre-Bid Webinar 22 September 20, 2022
Slide 23: Renewable Energy Obligation
Full Requirements Service Agreement Renewable Energy Obligation Seller’s obligation for 2022-25 Renewable Sources Year Tier 1 Solar Component Tier 2 Post-2022 of Tier 1 Geothermal Systems 2022 30.100% 5.500% 2.5% N/A 2023 31.900% 6.000% 2.5% 0.05% 2024 33.700% 6.500% 2.5% 0.15% 2025 35.500% 7.000% 2
Slide 24: Transaction Confirmation
Full Requirements Service Agreement Transaction Confirmation • Master FSA will be executed under which multiple transactions will be executed • Each awarded bid for a specific service type and contract term will be a transaction • A transaction confirmation will specify, among other details, the fol
Slide 25: Questions
Questions Maryland Utilities' Pre-Bid Webinar 25 September 20, 2022
Slide 26: Appendix
Appendix Maryland Utilities' Pre-Bid Webinar 26 September 20, 2022
Slide 27: Background of Maryland PSC SOS Structure
Background of Maryland PSC SOS Structure Maryland Utilities' Pre-Bid Webinar September 20, 2022 27
Slide 28: Background
Background • The PSC has conducted Case Nos. 8908, 9037, 9056 and 9064 to establish how Standard Offer Service will be provided. – The most recent review occurred in Case No. 9117 • Stakeholder process has led to settlements and/or orders of: – policy for initial implementation (8908 Phase I) – init
Slide 29: 2023 Request for Proposals (RFP)
2023 Request for Proposals(RFP) Maryland Utilities' Pre-Bid Webinar 29 September 20, 2022
Slide 30: Schedule Overview
Request for Proposals Schedule Overview • October 17, 2022 – Procurement for Type II December 2022 contracts, BGE, PHI and PE Residential June 2023 and June 2024 (PE only) contracts, BGE and PHI Type I June 2023 contracts • January 23, 2023 - Procurement for Type II March 2023 contracts and PE Resid
Slide 31: Supplier Eligibility Criteria
Request for Proposals Supplier Eligibility Criteria • Submittal of the Expression of Interest Form • Execution of the Confidentiality Agreement • Submittal of PJM qualification and FERC authorization – Qualified market buyer and seller in good standing with PJM – FERC authorization to make sales of
Slide 32: Supplier Eligibility Criteria (continued)
Request for Proposals Supplier Eligibility Criteria (continued) • Suppliers not receiving eligibility status for the first procurement on October 17th may participate in subsequent procurements if they cure any deficiency in their eligibility no later than ten business days prior to the due date of
Slide 33: Bid Assurance Collateral
Request for Proposals Bid Assurance Collateral • $300,000 per bid block is required from suppliers who are rated or have a rated guarantor unless a rated bidder is granted an Unsecured Credit Cap of $0.00 and has credit ratings (i) below BB- for S&P, (ii) below Ba3 for Moody’s or (iii) below BB- for
Slide 34: Bid Assurance Collateral (continued)
Request for Proposals Bid Assurance Collateral (continued) • A Bid Assurance LC form acceptable to the utilities has been provided as Appendix 6 in the RFP • Bid assurance collateral will be returned to the supplier upon execution of contract(s) or rejection of bid(s) • Bid assurance collateral will
Slide 35: Alternate Forms of Bid Assurance Letter of Credit
Request for Proposals Alternate Forms of Bid Assurance Letter of Credit • Suppliers that wish to propose an alternative Bid Assurance LC form or some other form of security may do so by the September 23rd eligibility requirements due date, or at least two weeks prior to a future procurement date • A
Slide 36: Bid Form Spreadsheets
Request for Proposals Bid Form Spreadsheets • All bids must be submitted using the appropriate Bid Form Spreadsheet • Bid Form Spreadsheets are unique for: – each utility; – each service type; – each contract term; and – each procurement • The format of a bid is specified within each Bid Form Spread
Slide 37: Bid Form Spreadsheets (continued)
Request for Proposals Bid Form Spreadsheets (continued) • Contained within the Bid Form Spreadsheet, and fully transparent to the supplier, is the transformation of the supplier’s price offer into a “Discounted Average Term Price” to be used as the only parameter to rank bids • All of the fields wit
Slide 38: Sample Bid Form Spreadsheet
Request for Proposals BGE Request For Proposals UPDATED: 04/12/2012 SAMPLE Bid Form Spreadsheet April 23, 2012 Procurement Proposal Due Date: April 23, 2012, 4:30 pm EPT Service Type: Residential SOS - R, ES & RL Classes 24-Month Term : October 01, 2012 - Septem ber 30, 2014 Bidder Inform ation Comp
Slide 39: Bid Validation
Request for Proposals Bid Validation • Conforming Bids Must Be: – Accompanied by the appropriate amount of bid assurance collateral – Submitted using the Bid Form Spreadsheet(s), completed in full and without modification – Submitted by the due date and due time – Submitted by an eligible supplier M
Slide 40: Evaluation of Bids
Request for Proposals Evaluation of Bids • Discounted Average Term Price calculated on each Bid Form Spreadsheet will be the single parameter used to compare all offers within the same service type and the same contract term • Winning suppliers will be paid their offer prices, not the Discounted Ave
Slide 41: Price Anomaly Procedure
Request for Proposals Price Anomaly Procedure • On the bid due date in each procurement, a Price Anomaly Threshold (PAT) will be developed for each utility soliciting for Residential and/or Type I supply. Each Residential and Type I service type and each contract term will have a PAT developed • The
Slide 42: Price Anomaly Procedure (continued)
Request for Proposals Price Anomaly Procedure (continued) • If the average price of the portfolio of winning bids exceeds the PAT, the highest priced bids will be removed until the average price is at or less than the PAT • If bids are rejected due to the application of a PAT, such deficiency in sup
Slide 43: Full Requirements Service Agreement (FSA)
Full Requirements Service Agreement (FSA) Maryland Utilities' Pre-Bid Webinar 43 September 20, 2022
Slide 44: Sample Transaction Confirmation
Full Requirements Service Agreement Sample Transaction Confirmation Maryland Utilities' Pre-Bid Webinar 44 September 20, 2022
Slide 45: FSA Obligations
Full Requirements Service Agreement Full Requirements Service Obligations • Seller must provide all services (other than network transmission) to meet its share of the load obligation at the wholesale level, as accounted for by PJM • Seller’s obligations include, but are not limited to the following
Slide 46: Obligations (continued)
Full Requirements Service Agreement Full Requirements Service Obligations (continued) • Buyer’s obligations include the following: – Accept service from Seller for resale to retail customers, i.e., Buyer is the Load Serving Entity – Network Integration Transmission Service – Future PJM charges asses
Slide 47: Scheduling & Forecasting
Full Requirements Service Agreement Scheduling & Forecasting • Utilities’ load settlement processes will establish the daily load obligations for Sellers and post such obligations to the Sellers’ PJM accounts • Seller is responsible for all scheduling with PJM to meet the obligation • Seller is resp
Slide 48: Congestion Management
Full Requirements Service Agreement Congestion Management • Seller is responsible for all congestion management costs • Buyer will transfer to Seller its congestion revenue rights in proportion to the Seller’s share of the load, i.e., revenue rights will follow the load • The nominations for congest
Slide 49: Buyer's Load Response Programs
Full Requirements Service Agreement Buyer’s Load Response Programs • Buyer will manage all aspects of its programs • Buyer will retain all benefits associated with its programs • In real-time market, Seller’s load obligation will reflect the load reduction due to activation of programs Maryland Util
Slide 50: Determination of Delivered Quantities
Full Requirements Service Agreement Determination of Delivered Quantities • Delivered quantities on an energy (MWh) basis will be as reported by Buyer to PJM for Seller’s obligation, reduced for losses to reflect load at the retail meter – Includes unaccounted-for-energy – In accordance with PJM’s i
Slide 51: Risk Mitigation Measures for Sellers
Full Requirements Service Agreement Risk Mitigation Measures for Sellers • Elimination of Network Transmission obligation • Increment/Decrement provisions for mitigation of volume risk due to customer migration • New Renewable Resource Requirements – If requirements are changed by law, Buyer will pa
Slide 52: Base Load and Increment Load
Full Requirements Service Agreement Base Load and Increment Load • An “increment/decrement” concept to mitigate volume risk associated with customer migration for Type I and Residential service: – The Base Bid Block Size is established on the first day of power flow – Thresholds for the difference b
Slide 53: Base Load and Increment Load Example
Full Requirements Service Agreement Base Load and Increment Load Example 55 MW Condition Seller’s Price dead • Load anywhere All load @ bid price 50 MW base load band within dead band 47 MW • Load above 55 MW @ bid price dead band 2 MW @ Buyer’s obligation (e.g. 57 MW) • Load reaches All load @ bid
Slide 54: Billing and Settlement
Full Requirements Service Agreement Billing and Settlement • Buyer will develop and deliver incremental weekly and monthly invoices to the Seller consistent with PJM settlement dates • Buyer will pay Seller by electronic funds transfer by 12:00 p.m. on the PJM settlement date • Seller is responsible
Slide 55: Performance Assurance
Full Requirements Service Agreement Performance Assurance • Security against Seller’s default • Nominally represents Buyer’s exposure above Seller’s unsecured credit limit • Formulaic and transparent methodology for determining Buyer’s exposure • A Buyer’s call on performance assurance cannot be dis
Slide 56: Performance Assurance (continued)
Full Requirements Service Agreement Performance Assurance (continued) • Calculation done every business day: – Each transaction with a Seller is marked to market (MtM) & the exposures are summed – If Buyer is exposed, the exposure is reduced by the value of the amount delivered but not yet paid – If
Slide 57: Performance Assurance (continued)
Full Requirements Service Agreement Performance Assurance (continued) • Estimated forward energy quantities will be derived from the quantities stated on each Transaction Confirmation associated with 50 MWs of PLC. The quantities will be scaled for the current size of each contract • The forward pri
Slide 58: Unsecured Credit
Full Requirements Service Agreement Unsecured Credit • Initially determined from financial data provided by supplier in the pre-bid qualification process • Reviewed daily for changes in credit rating • Based on Seller’s financial parameters, or Seller’s guarantor’s financial parameters – Form of gua
Slide 59: Unsecured Credit (continued)
Full Requirements Service Agreement Unsecured Credit (continued) • Seller’s unsecured credit cap will be based on seller’s lowest credit rating Maryland Utilities' Pre-Bid Webinar 59 September 20, 2022
Slide 60: Foreign Entities and Unrated Entities
Full Requirements Service Agreement Foreign Entities • A Seller or Seller’s guarantor that has not been incorporated in the United States has a predefined way to participate in the Maryland Auction • See FSA Section 14.6 for details Unrated Entities • An entity that is unrated and who does not have
Slide 61: Default & Termination
Full Requirements Service Agreement Default & Termination • Default conditions provided in FSA Section 12.1 • Remedies – If Seller defaults but continues to perform, Buyer may create a special remedy subject to PSC approval – Non-defaulting party may suspend performance up to 10 days – Non-defaultin
Slide 62: Settlement Upon Early Termination
Full Requirements Service Agreement Settlement Upon Early Termination • For any part of a terminated contract that is not covered by suppliers exercising their step-up rights, a termination payment will be determined • Non-defaulting party will determine default damages and settlement amount in a co
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