Amd 0005 RFI Group 5.pdf

PJM CFE 2024 Amendment 0005 RFP SP0604-24-R-0421 Page 1 of 8

Request for Information – Group 5

1. Electricity Suppliers are licensed by State, Group 1 includes PA, NJ, MD. Suppliers that are not licensed in all 3 states cannot bid on Group 1. Can you please divide Group 1 into three groups by state?

a. Pricing group 1 is combined because of their specific consolidated billing requirements. All 99th RSC locations will remain as a group.

2. The Executive order states 100% CFE’s by 2030. How is the DLA planning to reach that goal in 5 years with the current 65/35 model?

a. The 35% requirement is the difference between what is already forecasted to come online by 2030 and the 100% CFE requirement outlined in EO 14057.

3. Argonne National Laboratory is listed in the 12 Month DLA RFP SPE60424R0408, however, it is not listed in the DLA 20 Year RFP SP060424R0421. Will it be included in RFP SP060424R0421?

a. No.

4. I had a couple questions about how this RFP is going to be coinciding with a similar timeline as the regular DLA PJM non-CFE RFP that is currently out and is being worked on by us. I wanted to see if there was an expectation now or an amendment that is forthcoming that will be pushing out the start date for the CFE opportunity that there is an adjacent PJM opportunity currently in flight for the DLA.

a. The Government intends that the CFE contract to be awarded as a follow-on contract to the Retail Electricity. SPE60424R0421 period of performance is target for meter read date of Dec 2024 expiring 12 months later.

5. We anticipate an amendment then that is going to be updating the new dates for the CFE opportunity?

a. The dates were taken out in Amendment 0002 to deconflict the requirements and allow publication for

SPE60424R0408. The targeted CFE/Retail Electricity SP060424R0421 period of performance is intended to commence at the contract expiration for SPE60424R0408. It will be the follow-on to the Retail Electricity, upon expiration of the retail electricity contract.

6. Is there an anticipation now with the future start date of 2025 that the CFE deadlines are going to be pushed back now, given we have more time?

a. Currently, proposal are due 4 November 2024. Proposal extensions maybe requested through the CFE inbox, and they will be routed through leadership.

7. One of the requirements and contingencies of award for the new-build CFE is around a favorable NEPA outcome. I’m trying to wrap my head around, NEPA is a unique requirement at times. If that is a contingency of award, are you expecting anybody that makes an offer to already have a project that is NEPA approved, given that it’s listed as a contingency of award?

a. The Government requires a favorable NEPA decision document prior to construction and contract award. However, NEPA doesn’t need to be complete prior to submitting a proposal.

8. One other administrative observation on the Amendment 0004. I just have started going through it today. I think it mentioned that part of that amendment was another round of Q&A. Of the three documents that I saw posted on September 11th, I didn’t actually see the Q&A. But perhaps I wasn’t looking in the right place. If you could take a look, if I am missing something or not looking in the right place, or maybe the document hadn’t been posted as an oversight.

a. The Q&A is titled “RFI Group 1” or “RFI Group 2” or “RFI Group 3” etc. As of September 23, 2024 all RFI groups are posted on SAM.gov.

9. I noticed that the volume increased, if I read it correctly. Would it be possible to break it down even further, on different pricing groups, to assist suppliers with reducing our exposure, in case we can only do certain pricing groups.

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a. Please propose a breakdown of pricing groups. Pricing groups are intended to be proposed on as individual groups. Exceptions to the RFP terms and conditions can be submitted with proposals in accordance with Section L.4(K).

10. Can you point me to the start date of the CFE contract? Or is it just the overview broadly saying that it’s going to start when the existing retail contracts end? We kind of need a definitive call-out for the contract start date for the CFE piece. Like I said, if it’s going to be December 2025, we would like it to call that out.

a. Contract performance shall commence upon the expiration of the Retail Electricity contract, anticipated Dec 2025.

11. How will the bundled CFE integrate with the retail product. How will the bundled CFE be allocated down to the various accounts within a pricing group?

a. CFE is allocated down to the customer in accordance with Attachment I, Summary and CLIN Structure.

Retail Electricity is in addition to any quantity of CFE supply. The pricing for the Retail Electricity CLIN is separate from the CFE CLINs, but each corresponding CLINs should be offered on as a group

12. The overall requirement is a minimum of 35% bundled CFE, but when it comes down to account level billing, there will have to be some allocation. I wanted to see if you guys had some thoughts as to how you are expecting that to look, when it came down to billing that bundled CFE at the account level.

a. CFE is allocated down to the customer in accordance with Attachment I, Summary and CLIN Structure.

13. Looking at section C on page 8, the new-build CFE discussion and the 35%; when it talks about the CFE should be supplied to the government within the same hour that it was generated, is the expectation that this is 24/7 matched? Or is that more that there is the CFE side of it, and we want to make sure that we are getting what was generated in the hour of the CFE, but that doesn’t necessarily translate to the retail load served? Or is the intention that we are going to match this within the hour all the way down to the meter load which you have identified the CFE goes to?

a. The generation for CFE on an hourly basis is allocated down to each installation. The CFE generation from each facility, a portion is allocated to each customer, that quantity, for each hour should match the amount billed to the customer. For each customer, for that hour of generation, the amount on the retail side will be any additional electricity requirement for that hour, in addition to the CFE that was generated. The intent is to match the generation from the generating facility to the customer’s load.

14. Generally, on these government solicitations, you don’t like to see many exceptions or contingencies when you make a proposal. Given the unique nature here where we are try to merry up an upstream asset with a specific account list of retail load, would you entertain, depending on the sizing, if the sizing of our upstream asset might cover a specific set, say 2 of the 4 buckets, of pricing groups, that we could make our proposal contingent on being awarded both of those, so that the sizing of our upstream asset matched the amount of load we were awarded?

a. Exceptions to the RFP terms and conditions can be submitted with proposals in accordance with Section L.4(K).

15. Regarding, in the latest amendment where you talked about CFE performance requirement and how a shortfall could be cured. The way I’m digesting this is, the 35% requirement is measured on a rolling 12-month basis. If there is a shortfall during a rolling 12-month period, that shortfall can be cured by providing what I would think you are getting at here, which are unbundled EACs. That is a one-time cure. If during a subsequent rolling 12-month period, if there is a CFE shortfall, that may result in a termination for cause. As you guys know, we’re marrying intermittent upstream resources with firm downstream load. As we evaluate the risk, and especially the risk of a termination for cause, it feels a little risky to have that one-time exception. I’m just throwing it out there for discussion. Is that termination for cause sort of like an automatic trigger or does it just kind of open up discussions between the supplier and government, as to what was the reason for the shortfall, maybe try to negotiate a cure?

a. If you have preference or if there is an industry practice that would better suit the situation, we ask that you submit that suggestion. The Government intends to find cures or assist in a cure for a contract before we consider termination.

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16. Understand the 35% CFE that is provided by the new-build projects. That leaves the other 65% provided by retail energy. We would be providing you with the EACs for that amount as well, correct?

a. No. Only the 35% CFE requirement.

17. On the 35% bundled CFE that is “flat” and not load-following: that is an annual requirement, correct? In other words, if you have met the requirement, you’ve honored your contract, if you meet that on an annual basis, the obligation is an annual obligation? No daily, not weekly, not monthly?

a. Yes

18. Regarding the contracting vehicle or the authorization for the CFE portion is somewhat different than the authorization that you guys are using for the retail portion. Is that correct or are those one in the same? The Government is getting approval on a 20-year deal on CFE and then also getting an equivalent term on the retail electricity, but it’s structured as a 5-year competitive process and subsequent 5-year sole-source. Is that just considered on the retail portion, not the CFE portion?

a. Per the Retail Electricity CLINs there is a 5 year limitation in term length in accordance with Federal Acquisition Regulation. Per the CFE CLINs, the purchase authority being used is 2922a that allows the Department of Defense to enter into contracts for up to 30 years. Since both corresponding CLINs have to be delivered by the same entity, the Government will solicit the initial 5 year term of Retail Electricity competitively with the CFE CLIN. When that 5-year term expires, the Government intends to do a sole source procurement to the same Retail Supplier for another 5 years, until the end of the 20-year delivery period. Essentially, it will be four 5-year portions for the Retail Electricity. The Retail Electricity CLIN cannot be purchased under 2922a as that specific authority requires the provision of new generating assists.

19. If we got into year 8 of delivery and government terminated for convenience, what would be the recourse for the asset that has been committed under this order for a full 20 years versus the retail portion that has only received potentially a 5-year extension at that point? When you are calculating termination payments, how would all that work together?

a. There is termination language in the solicitation, reference Section I. The Government will have to evaluate the circumstance at the time when the event occurs, and the costs associated.

20. Per the renewal process, or extension process. So, the initial award, or solicitation award, is for 5 years. How would it work for the subsequent 5 years for the retail electricity and for the CFE? How do you envision that?

a. The Government is soliciting the initial 5-year term of Retail Electricity competitively with the corresponding CFE CLIN. When that 5-year term expires for the Retail Electricity CLIN, the Government intends to do a sole source procurement to the same Retail Supplier for another 5 years, until we reach the end of the 20-year delivery period. We cannot extend past the five-year term for Retail Electricity.

21. How do you envision the pricing for those subsequent years?

a. The Government is using Locational Marginal Price for the initial 5-year Retail Electricity term and anticipates the same strategy for three follow-on procurements.

22. I didn’t know if CFE pricing changes, where it’s not locked in for the full 20 years. Market changes for CFE, is the part I was curious about.

a. The CFE portion will be locked in for the 20-year term and Retail Electricity portion will be procured every 5 years to meet the 20-year term.

23. Is there currently an ongoing solicitation for the same load that would kind of go into 2025? If there is an ongoing solicitation for the same load, the expiration would flange up with the start of this new-build CFE solicitation?

a. There is currently a Retail Electricity procurement (SPE60424R0408) that was just posted very recently to cover the load through 2025. The intent now is that the CFE/Retail Electricity (SP060424R0421) procurement is the follow-on contract to that retail electricity buy.

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24. What’s the criteria that was used to place a facility in one pricing group versus a different group?

a. Pricing groups were developed by location, utility and billing capability (dual versus consolidated). For example, the 99th Reserves are grouped in one pricing group together to accommodate their billing requirements.

25. Do you have a pro tip on how we can make sure we aligned our SAM.gov registrations to receive any competitive retail solicitations or CFE solicitation? I hadn’t received any notification on the concurrent PJM solicitation, either. I’m wondering if there are any C-codes that we need to have in our registration, so we don’t miss those? Do you have a list of the ones you will always use for these types of solicitations, that you could share? So that we can make sure we have got all our registrations to have those codes on them.

a. Each Contractor can be identified as an interested party under specific criteria in Sam.gov to be notified on published opportunities. The codes currently offered within CFE program are listed under NAICS 221100 Electric Power Generation, Transmission and Distribution. Reference:

https://www.bls.gov/oes/2023/may/naics4_221100.htm

26. The contractor shouldn’t provide, and the government won’t pay for, any bundled CFE in any hour where the bundled CFE exceeds the government’s load. I guess Is the billing structure for this product to be envisioned as, sort of, an hourly allocation of bundled CFE overlaid over the government’s hourly load? And then the bundled CFE would be billed at the fixed price of the bundled CFE, capped in any hour with the quantity capped at any hour at the government’s hourly load. And any excess between an hour where there is an excess of load over bundled CFE, that would be billed at the real time LMP? As I try to wrap my head around how the bundled CFE will be integrated with the underlying retail load.

a. Yes, that is consistent with the solicitation. There is the annual requirement for the amount of CFE provided, and that follows the Executive Order and the implementation instructions. When it comes to hourly settlement period, the Government will not pay for CFE generation beyond what the Government’s requirement is in that same hour. Generally, that would be around 35%, but in those hours where the CFE is underneath what the government’s hourly requirement is, that difference will be made up by Retail Electricity. The CFE quantity would be at a fixed rate for the term of the contract, and the Retail Electricity quantity would be at the real-time LMP.

27. With the clarification at the latest amendment that it would be the fixed CFE rate plus the basis between the settlement point of the bundled CFE and the residual load zone price?

a. Correct, the fixed price for CFE portion would not include congestion. It would be effectively the price for the generation. With regards to Amd. 0004, the Government further defined how that additional congestion charges would be calculated.

28. Within each given hour, we’ve got the 35% CFE we are delivering and then there is a 65% remaining of retail power that is going to be at the real time index. From the way I read this section, if we are over-generating in the hour, or have more than the 35% for a given location that we serving’s load, you are not paying for that. And, if we are under, we have to make it up. The way this reads, in one part of the document it talks about 35% and being made whole on the annual basis, but the way this reads, is that we have to keep you whole on an hourly basis, for the 35%.

a. The 35% requirement is on an annual basis. It is assumed the actual amount that is supplied on an hourly basis, is going to differ based on the size and type and mix of generating assets proposed and defined in the contract. We are not expecting a load following type product where it is 35% every single hour. We would expect that that would differ, again based on what’s proposed. Presumably, there may be some hours where there is very little, if any, CFE supply during that particular hour, but other hours where there is all or the majority of it supplied. The 35% is a figure on an annual basis based on the quantity we set in the table in Section B.

29. If you accept that 35% annually is the goal, and you say that we understand that in some hours you will be under-producing, doesn’t that imply that you have to receive, and you have to pay for more than 35% in some hour?

a. The 35% CFE on annual basis is a minimum requirement. The Government understands that there may need to size slightly above that, just to ensure that throughout the duration of the 20-year term, that production will remain at that minimum 35%. With the 35% the Government in not necessarily https://www.bls.gov/oes/2023/may/naics4_221100.htm

PJM CFE 2024 Amendment 0005 RFP SP0604-24-R-0421 Page 5 of 8 envisioning too many situations where a production would exceed the government’s electricity requirement in individual hours. The intent is to provide vendors a range to size the facilities that each are looking to offer. Sizing in such a way that we are not in situation where the facilities are overproducing on an hourly basis.

30. It seems you can size it however you want to. If it’s a solar facility, at night it is not going to produce at night.

You could easily underproduce at night and overproduce during the day, and on an annual basis easily size it to 35%. But what I heard just a second ago was that in any hour, you would not be willing to pay for more than the 35%. So, I’m having difficulty reconciling that. If I am supposed to hit an annual requirement of 35% at a solar facility that is not producing at night, that does mean that I am going to be producing more than 35% during the day. I’m not going to be producing more than the government’s total requirements, but I will be producing more than 35%. That will be necessary in order to hit 35% per year. If it’s necessary for me to overproduce in certain hours in order to get to 35% per year, I would think the government would have to pay for that overproduction in those hours in order to allow me to hit the 35% target for the annual.

a. Yes, the 35% is the target for the annual quantity. Overproduction in terms of producing more CFE in a given hour than the electricity requirement of the government for that same hour. In a given hour, the Government understands that production may exceed 35% of the government’s electricity requirement in that same hour.

31. Not more than the total requirement?

a. Correct, not more than the total electricity requirement for the government in that particular hour.

32. What section of contract talks about what we are talking about the hourly excess issue?

a. Reference Amd. 0004, Section C, 2, A. CFE Supply.

33. Given the unique nature of this solicitation is for suppliers, when they submit their proposals, to leverage that exception clause in their response as necessary. I guess I’m just trying to envision how the vetting process will work. So, when the government gets the proposals in, various suppliers will be bidding on different groups, different settlement points, they may need to have qualifications or exceptions, as necessary. So, would you kind of envision the vetting process to enter a dialogue phase or would you more envision getting all the proposals in and seeing where everyone landed and then maybe reissuing the RFP based on the feedback you received in the proposals?

a. The Government does intend to enter in discussions with suppliers, but its contingent on the Government's initial evaluation of proposals. Reference FAR 15.306(d).

34. In the solicitation it says we are to price and propose our options. But then it says that we can refresh every 30 days. Is that my understanding?

a. From the date of proposal submission and contract award, pricing maybe refreshed.

35. Proposals can be withdrawn; I assume we can withdraw certain pricing groups, and not the whole proposal, if an asset falls through or something doesn’t work out. Is that correct?

a. Yes, pricing groups are to be proposed on individually.

36. The usage for the DLA Susquehanna account in Group 2 appears to have an extra zero on the most recent chart (usage jumped from 32,000 MWh to 321,000 MWh) – please confirm. The usage for the Naval Research Lab appears to be too high by 100,000 MWh on the most recent chart – please confirm.

a. Please refer to Amd 0005

37. Due to the ongoing non-CFE RFP, our assumption is the new start date for this opportunity should be December 2025. With this new start date, can the DLA offer an extension for the submission of proposals and pricing for this opportunity?

a. Please make a recommendation of how long an extension would be required.

38. Regarding Section 3.a: By “firm” price – does the DLA mean the volume is firm, or that the price is firm and not escalating?

a. Price

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39. Regarding Section 3.d.ii: Is the DLA taking into consideration significant increases to the capacity market pricing (is there enough budget set aside to both pay for CFE/EACs and any other significant costs, such as capacity, that may occur over the course of the contract)?

a. The Government is aware of the increase in capacity pricing starting in 2025.

40. Regarding Section 2.C: In light of the DLA’s parallel RFP to solicit supply through mid-2025 as a bridge contract, are these terms still active? Or will the DLA look for a 19-year agreement?

a. DLA intends to award a 20-year agreement following the expiration of the Retail Electricity contract (Solicitation # SPE604-24-R-0408) anticipated for Dec 2025.

41. Regarding Section C.2.a: Since the CFE supply the RFP is looking to solicit for is “new build”, would the DLA be open to buying the energy only from a new build project? This would be in-line with other forms of additionality claims where the EACs and the energy are sold to different parties, yet both are required for the asset to be financed and eventually be built. If yes, the assumption would still require that the supplier provide an equal amount of EACs that qualify under the CFE definition. Can you confirm this would be an acceptable alternative?

a. DLA Energy is soliciting offers for CFE requirement to come from new build projects. In accordance with 10 U.S.C. § 2922a, the Government requires the provision of a new generating asset (preconstruction). Using 10 U.S.C. § 2922a fir an unaltered facility that already exists is contrary to its purpose.

42. Regarding hourly matched CFE, assuming no standard exists by 2040 on how this is measured, does the DLA expect that it and the supplier will mutually agree on how this is measured?

a. If an industry standard does not exist, then the answer would be yes, we would need to mutually agree on a method to measure.

43. Regarding CFE, the assumption is that this is going to be “as-generated” with the anticipation of providing ~35% coverage on a 24/7 basis. Since this will be “as-generated,” is the DLA looking to procure whatever is delivered above/below the 35% coverage? Additionally, is the 35% coverage a goal or a guarantee?

a. Please reference Amd. 0004

44. Please confirm that the DLA understands that regarding subaccounts, there may be instances where more than one subaccount per pricing group is needed. These instances include current or future state instances where state-level regulatory requirements override the DLA requirements. For example, some states require certain PJM billing line items be sent back to the utility; therefore, load in those states needs to be carved out into its own state/utility level subaccount.

a. Confirmed

45. If the PPA is between the developer and the retail supplier, how does 2922a authority work?

a. 10 U.S.C. § 2922a, Contracts for the provision and operation of energy production facilities on real property under the Secretary’s jurisdiction or on private property and the purchase of energy produced from such facilities.

46. If the PPA is between the developer and the retail supplier, how does NEPA come into play? Contractor understands NEPA compliance is required when the Government is building a facility on Government controlled land or is funded by the Government.

a. The National Environmental Policy Act of 1969 requires federal agencies to identify and evaluate impacts of “major federal actions significantly affecting the quality of the human environment”. 42 U.S.C. Sec 4332.

47. Beyond the Government’s right to Terminate for Cause (Section C.2.a), are there other penalties if a Contractor’s planned CFE Production fails to materialize prior to January 1, 2030?

a. Please reference FAR 52.212-4