Questions Answers GS-00P-BSC-0694 - V1.doc

GSA – NGAP 2010 Solicitation- GS-00P-08-BSC-0694 Questions and Answers From 7/15/09 Teleconference and Written Questions Received Prior to the Deadline of 7/22/2009 (5:00 PM EST) Attendees:

NGAP Director

Linda Collins

GSA NGAP

Dan Morrison

Dave Hague

Richard Corvi

Kristi Dutton

World Energy

Erica Martunas

SAIC

Chris McCall Amerada Hess

David Meisner

Amerada Hess

Katie Guerry Atmos Energy Marketing

Nick DiGiuseppe

Atmos Energy Marketing

Carol Pratho BP Energy

Clint Hilton

BP Energy

Dan Jackson Delta Energy

Sheila Porter

Energy Corporation America

James Flavin

Exelon Energy

Mike Hyman Equitable Energy

Ken Frederick

FPL Energy Services

Richard Feldman Gas South

Denise Dotson IKUN Energy, LLC

Peter Noland

Steve Lowe

Ed Mantz

MX Energy

Robert Cordero Pepco Energy

SueAnne Harrel Promet Energy

Ruth Raimer

Sage Energy

Shelly Hill

Shell Energy

Phil Villagomez Spark Energy

George Ferguson

Stand Energy

Mary Hill

Walden Energy

Kristen Mackey

Yaka Energy

Kristen Mackey

Q: What do suppliers need to do to be approved as bidders under this Solicitation?

A: Suppliers must submit the requirements listed in Section C.3 Evidence of Technical Capability in hard form by or before the due date of 2:00 PM EST, August 14th, 2009. GSA will review the information provided and those suppliers whose technical proposals are approved will be allowed to participate in the auctions.

Q. What date and time are any remaining supplier questions due to GSA?

A. Per page 4 of the Solicitation Procurement Schedule the deadline for questions submitted via email is 5:00 PM EST Wednesday, July 22nd , 2009.

Q: If bidders submit a technical proposal that is deemed acceptable by GSA, can they bid in GSA NGAP natural gas auctions that take place before October 1, 2009?

A: No. GSA released a previous Solicitation in June 2008 and only bidders whose technical proposals were approved under that Solicitation are allowed to bid in the current round of NGAP auctions which will continue until 9/30/2009.

Q: Section 52.212-4 of Section B Federal Acquisition Regulations Clauses addresses invoices. What specifically is GSA looking for regarding invoices and billing?

A: In addition to the terms specified in this section, suppliers should also review the specifications listed in Sections A.7 Metering and Billing and A.17 Payment and Billing for specific invoicing and billing instructions under this Solicitation.

Q: How much is the World Energy fee and does it apply to both baseload and swing volumes delivered?

A: The fee is $.04 cents per dth and it applies to all volumes delivered under the terms of this contract for all facilities served for the entire term of each contract. This includes any volumes delivered above the 10% “swing” tolerance. This fee must be included in the suppliers bid price and is not to be charged as a pass-through.

Q: What section of the Solicitation covers the language and notification process for suppliers not holding their bids if the market moves up or down more than 5.0% between 11:00 AM EST and 2:00 AM EST on the day of each auction?

A: This language can be found in Section C.1 Pricing and Attachment 4 Contractor Acknowledgement Reverse Auction.

Q: Once an award has been made, will GSA allow for supplier price adjustments if the market moves up or down over the term of the contract?

A: Per Section A.4 Contract Pricing, the only changes in price allowed over the term of awarded contracts will be in reference to volumes used outside of the 10% swing volume associated with pricing product Option I or the index portion of pricing product Option III. There will be no price adjustment under Option II.

Q: Are suppliers responsible for line losses and are they to be included in bid prices?

A: Yes. Per Section A.1 General Terms, suppliers will be responsible for the supply of firm or interruptible natural gas supply for delivery to various Federal facilities listed in Exhibit 1 including LDC, interstate and intrastate pipeline losses. Per Section A.9 LDC Line Losses and Section A.30 Definitions both LDC and Pipeline (interstate and intrastate) losses are to be included in bid prices.

Q: How should suppliers bill line losses?

A. GSA is deleting the requirement that line losses be billed separately on invoices, please see Amendment 1 to the Solicitation.

Q: Are line losses to be included as part of the 10% usage variance provision associated with pricing product Option 1 (Full requirements with 10% bandwidth)?

A: Per Section A.9, line losses are not included as part of the 10% variance provision.

Q: Has GSA contracted for Option II (full requirements no bandwidth) in previous natural gas auctions?

A: Yes, a number of Federal accounts on the NGAP program are currently being served under Option II.

Q: If the supplier picks up delivered gas at the Citygate for delivery to the end use customer, does line loss still need to be billed separately?

A: No.

Q: One of the requirements in Section C.3 Evidence of Technical Capability is that the “Offeror must provide a letter of credit or proof they can obtain a letter of credit (performance bonds, etc) which provides assurance that the offeror’s firm has sufficient financial credit to cover the volumes of natural gas they intend to bid on.” Can GSA provide further clarification on this requirement?

A: GSA will be issuing an Amendment to this Solicitation in the coming weeks that updates this requirement to provide that suppliers who can demonstrate they have a Moody’s or Standard and Poor’s rating of A or better will not be required to provide a letter of credit or proof they can obtain one. For suppliers that do not meet this specification, please see Attachment 5 – Frequently Asked Questions. Audited financial statements from the offeror’s guarantor and supply commitment letters from the offeror’s counterparties designating the supplier in good standing could both be submitted as proof of ability to obtain a letter of credit.

Q: Under Section A.3 Gas Supply, will GSA be specifying which publication (Inside FERC, Gas Daily or Natural Gas Intelligence) suppliers should use for each account?

A: No. The contractor will be responsible for choosing the applicable publication.

Q: Can suppliers switch between publications over the term of the contract for a specific account?

A: No. GSA will be issuing an Amendment to this Solicitation in the coming weeks that specifies that once a supplier has submitted paperwork using a specific publication for a specific account then the supplier will be required to use the chosen publication for the duration of the service term for that account.

Q: When would GSA expect to issue the referenced Amendment to this Solicitation?

A: GSA expects to issue the Amendment to this Solicitation shortly after July 29th in order to incorporate any changes that result from additional questions submitted by suppliers by July 22nd and the answers to those questions which will be included in the Questions and Answers document posted on July 29th.

Q: What non-price determinations has GSA used in the past to make awards to bidders who did not submit the lowest bid?

A: Per the Solicitation, this procurement follows a two-step process. The first step is GSA’s evaluation of supplier’s technical proposals. Those suppliers whose technical proposals are deemed acceptable by GSA will be allowed to participate in the auctions. Therefore, on the day of the auctions the only consideration GSA uses to make awards is lowest price.

Q: How are the start and end dates of awarded supply contracts determined and what information will GSA be providing as part of Exhibit 1?

A: Per Section A.5 Term, the initial term of each contract shall be for the number of full billing cycles specified in the Exhibit 1 auction schedule and the service start and end dates shall be established by either the date specified in the auction schedule or the next meter read date immediately following the date specified in the auction schedule.

Q: If suppliers identify any issues regarding transportability or enrollment for accounts included in Exhibit 1, what should they do?

A: Suppliers should notify GSA of these issues as soon as possible. Per Section A.28 Enrollment “The Government will make its best effort to ensure that all accounts included under this Solicitation and the resulting auctions are transportable. However, it is the supplier’s ultimate responsibility to verify that both new and existing accounts are transportable and will continue to be over the life of the term awarded. All costs associated with a supplier not being able to service an account based on non-transportability issues will be borne by the supplier and not the Government.”

EMAIL QUESTIONS RECEIVED PRIOR TO DEADLINE

Q: For the California listed facilities, are these facilities categorized as “core” or “non-core” under the applicable utility tariffs. (If both please specify which are core and which are non-core) A: Yes. In the final Exhibit 1 accounts will be listed as Core or non-core.

Q: Are there any other California core facilities that will be bid separately or at a later date?

A: Potentially; however, none have been identified at this time.

Q: Will the end-user be directly billed by the LDC/utility company for transportation charges incurred or is the subcontractor (aka natural gas supplier) billed?

A: Yes, the end-user will be billed directly by the LDC/utility company for transportation costs incurred within the citygate.

Q: How does the agreement between the LDC/utility and the subcontractor (natural gas supplier) work? The agreement says, "the supplier is expected to deliver the gas to the citygate and manage it to the burnertip" (page 60). Can you please define "manage"? From what I understand, the subcontractor (natural gas supplier) is in charge of getting it to the citygate and then nominating the gas onto the utility's system/electronic bulletin board. The subcontractor (natural gas supplier) no longer has rights to the gas when it hits the LDC. Is this correct?

A: By “manage to the burnertip”, GSA expects suppliers to deliver the required volumes of natural gas to the citygate to meet the full requirements of the end-use customer at the facility burnertip.

Q. Can you please provide a more thorough explanation as to how GSA is going to request pricing under Section A.3 OPTION III. Please explain what components of the price are locked in fully, and which are not and how the price is to be reflected? Will each marketer submit two prices in order to facilitate an apples to apples comparison? One for the transportation component and one for the commodity?

A: Bidders will submit two prices through the auction. One fixed price for the base load gas and one price for the transportation element. Using these bid prices and the volumes associated with each account (i.e 75/25, 60/40, etc) World Energy’s auction platform will calculate one number that shows on the platform for “apples to apples’ bid comparison.

Q: The contract states that the price of gas burned in excess of 110% of historical volumes will be the monthly average midpoint price for the month, plus transportation, a "fixed margin" of $0.10, and procurement fee of $0.04 per MMBTU. Can the contract be amended to change the name from a margin as this is not actually margin? Additionally, the $0.10 fixed margin adder is not in line with the current market standards and risks associated with serving the accounts on this product. Please indicate if GSA is willing to change this adder to be more consistent with industry standards that protect both the marketer and the consumer from market fluctuations. Please also indicate if this section can be amended to specifically indicate that the NGI shall be the citygate of the LDC on which the account is served, or other geographically logical Gas Daily Index.

A: GSA has reviewed each of the above items and based on past experiences will not make changes to any of the above items in the Solicitation.

Q: For Option II, where the customer has the right to the contract price regardless of the amount consumed, is GSA amenable to including a "material deviation" clause to protect the supplier in the event of material deviations from the contracted quantities?

A: Bidders should reference section A.20 Material Change.

Q: Can section A.6 be amended to allow for the point of delivery to be outside the taxing jurisdiction (as opposed to the citygate) when required due to the potential implications of GRT or other taxes?

A: No, GSA will not amend the Solicitation to allow for the point of delivery to be outside the taxing jurisdiction of the end-use account. Per Attachment 5 of the Solicitation (Frequently Asked Questions), Gross Receipt Tax is to be treated as a pass-through cost.

Q: In section A8 there is no reference to penalties incurred as a result of the customer's failure to timely notify the marketer of changes in usage patterns (e.g. switching to an alternate fuel or shutting down operations). Please indicate if GSA is willing to amend to reflect that penalties incurred in this situation shall be passed through to the customer for their failure to timely notify of consumption pattern changes.

A: Regarding changes in usage patterns, bidders should reference the following language in Section A.20 Material Changes, “If the facility fails to notify Contractor of a material change, facility shall pay all penalties imposed by facility’s LDC.

Q: In section A.11 RISK OF LOSS the contract states "Risk of loss of natural gas supplied under this contract shall remain with the Contractor until..." The Contractors risk of loss is covered in the agreements that they have in place each pipeline. Therefore, there is no need to reference it in the agreement. Can that be removed from the contract and replaced with language that simply states the customer does not bear Risk of Loss until title has passed.

A: No.

Q: The solicitation requires line loss to be billed as a separate line item. However line losses are included in the volume billed because the volume billed is at the city gate level. Please indicate if this section can be amended to reflect line losses included in the total billed volume?

A: GSA understands that line loss volumes are included in the volumes delivered to the Citygate. GSA is deleting the requirement that line losses be billed separately on invoices, please see Amendment 1 to the Solicitation.

Q: Please confirm that section A7(d) is not requiring that information to be reflected on the invoice and that it is permissible to be provided separate from the invoice.

A. Confirmed, this can be provided separately.

Q: Is supplier responsible for imbalance cash outs with LDC when imbalance volume is within LDC’s permitted tolerance and there is no premium or discount affecting the monthly cash out?

A: Please see Attachment 5 Frequently Asked Questions and the Q&A referencing LDC cash-out costs which states that If there is any LDC cash out, the gas will need to be trued up to the contract price

Q: When does GSA anticipate an updated Exhibit 1 with facilities’ monthly usage will be available?

A: GSA anticipates releasing Exhibit 1 as soon as possible following the start date for this supply Solicitation which will be October 1, 2009.

Q: What and where is the SC facility served by SCE&G and what is the annual usage – the RFP only shows SCE&G as an LDC, but no more detail?

A: At this time, GSA does not have specific accounts for South Carolina Gas & Electric; however, new accounts within this LDC may be added.

Q: Page 8, under Option III, Index Based Gas, the contract describes pricing as "based upon the monthly average midpoint Henry Hub price as published in Gas Daily or Natural Gas Intelligence (NGI) for the associated month." Can this be clarified for markets not in Louisiana - is this in fact a basis transaction being described, or will the governing index be the local/regional market index rather than Henry Hub?

A. No language will be changed in the Solicitation. Henry Hub will be the index used for pricing Index Based Gas.

5. Can payment of the $0.04 procurement fee be better defined? Is this to be paid on a monthly schedule, mirroring the monthly billing cycle for payment of physical gas deliveries? If so, by what day following the physical flow month is payment due for the $0.04 x monthly volumes?

A: Per Section A.19, payment will be made in accordance with the Payment Instructions Document posted at https://www.wesplatform.com/webportal/Public/Announcement.aspx?ID=pb7Y7ElkRn8%3d.

Q: Section C3 Evidence of Technical Capability - What kind of documentation will you require to show evidence or proof under sub-sections 2,3,4, etc… A: See Attachment 5 Frequently Asked Questions, a list of “Examples of Required Evidence for Section C” is provided.

Q: Section C1 Pricing - Will we have to submit pricing for every pricing option you list or do we have the option of choosing one that better fits us. For example FPLES does not lock in 100% of the volume in FIXED PRICE agreements, Could we submit pricing for 75% and not for 100% of the load?

A: See Attachment 5 Frequently Asked Questions, one of the Q&As addresses this question and states that suppliers are not required to offer bids for all terms requested for accounts. However, realize there is a risk if a supplier chooses to only bid on one term and the Government decides to award a longer or shorter term or a different pricing product to the supplier that offered the lowest price on that term. It is strongly suggested suppliers bid all terms offered for each facility or group of facilities.

Q: What form(s) if any do we have to fill out or submit to register as a supplier for natural gas in Florida.

A: For purposes of this Solicitation, suppliers are required to provide everything required in Section C.3 Evidence of Technical Capability. For purposes of registering with TECO Peoples Gas, GSA encourages prospective bidders to contact the utility directly.

Q: Its typical in some markets that line losses are included in the rate and not billed as a separate line item. This contract calls for these losses to be billed separately. Line losses are seasonal and can be either negative or positive. Can you provide examples of how the line losses have been billed when the line losses create a payment to the GSA? We assume they would simply be a bill credit and would like to confirm that view.

A. GSA is deleting the requirement that line losses be billed separately on invoices, please see Amendment 1 to the Solicitation. Per Section A.9 Line Losses, all costs associated with pipeline and LDC line losses are to be included in bid prices. Therefore, any variances are the supplier’s responsibility and will not be passed through to GSA.

Q: The values of the line losses are calculated by the LDC and pipeline companies. The reports are received by the contractor up to 4 months after the billing for the consumption has been issued. How should the contractor true up these costs in the invoice? We assume that as long as the contractor is reasonably prompt in billing the losses after the final values are received, that the GSA will accept the invoices even if this is after the contract expiration.

A. Per Section A.9 Line Losses, all costs associated with pipeline and LDC line losses are to be included in bid prices. Therefore, any variances are the supplier’s responsibility and will not be passed through to GSA.

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