Navy_PJM_RFI_Group_1_SPE600-15-R-0409.pdf

RFI Group 1

1. In the RFP, page 4 indicates a maximum contract unit price of $0.07765/kWh for PEPCO and $0.07940/kWh for BG&E. Page 8 indicates a maximum contract unit price of $0.0895/kWh for PEPCO and $0.0885/kWh for BG&E. Which are the correct maximum contract unit prices?

Response: Refer to Amendment 0001 for changes. The correct first year maximum price is $0.07765/kWh for PEPCO and $0.07940/kWh for BG&E.

2. The RFP states, “At a minimum, the Contractor’s system must be capable of supplying at least 113,000,000 kWh annually.” However, the RFP also provides minimum kWh that the government will purchase through each UDC (32,000,000 kWh through PP&L, 18,000,000 kWh through PECO, 12,000,000 kWh through JCP&L, and 51,000,000 kWh through ComEd). So I want to clarify: does the project need to be capable of supplying 113,000,000 kWh per year or does the project need only be capable of supplying the minimum kWh per year listed above for the specific UDC that it will be supplying?

Response: Refer to Amendment 0001 for changes. The Contractor shall meet the minimum guarantee for each UDC.

3. Does the government solely seek a power purchase arrangement with no construction of a new renewable energy power source on Government property?

Response: This procurement is not being constructed on Government property. Please refer to Sections C.1.1 and C.1.2.

4. More specifically, DLA's sources sought references new construction of off-site renewable energy generation systems, interconnection, and ultimate supply to the Navy meters. Might the government require design and environmental services associated with the electric distribution line that interconnects with the public electric company and supply to Navy meters? Or would the enlisted third party owner of the new generation facility be responsible for such work?

Response: Refer to Section C.2.

5. Is the solicitation intended to incorporate requirements noted in the NAVFAC NWS Earle Mar. 2014 sources sought N4008514R5512 <https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=e5d69b66982da9ebb78ad5d9d ba8bb51&_cview=0> , or might relevant capital improvement support to the government still be solicited for NWS Earle? The solicitation POC has been unable to verify the status of this procurement.

Response: This procurement is exclusive of any further requirements being sought at Department of Navy Installations.

6. The RFP indicates an entity responding to the RFP would it have become a load serving entity (LSE) licensed to sell retail electricity in the state. Is this true?

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Response: As part of the proposal, a Contractor shall either be a LSE, or as part of a team, an LSE must be included. Refer to Section L.3.

7. A 1 GW renewable energy solicitation with a 5 week close on 2/17 makes it look like you have a winner already in mind? Has this already been determined for a company?

Response: This is a full and open competitively issued procurement and the Government will consider all acceptable proposals. The 1GW goal is a Department of Navy overarching goal and the requirements of this solicitation will contribute to that goal.

8. What is contract start date for the commodity portion of the procurement?

Response: The delivery start date for this effort shall be no later than December 2016.

9. Will a draft RESA be provided?

Response: The RFP as issued is the contract for this procurement. Refer to Section L.4.2.10 for Exceptions to the Terms and Conditions.

10. Can one project be submitted for both solicitations?

Response: It is the responsibility of the Contractor to determine the appropriate project(s) and size(s) to meet the requirements of the solicitation.

11. Can RECs be swapped? Example: More expensive RECs sold in the market and less expensive ones delivered to DoN?

Response: It is the Navy’s current position to keep the project RECs associated with the REGS, with exception of the project RECs that can be used under the OPTIONAL Other Market Charges CLINS to satisfy state RPS obligations. However, the Government is interested in the cost differential between keeping the project RECs and the costs mitigated through a REC swap. If offerors would like to present information related the costs in the event of a REC swap outside of a proposal submission, the Government would consider a potential change in the solicitation requirements. Also, the Government will consider use of the Other Market charges Optional CLINs would use this information internally and would not publish any responses received with this request. Any information submittal shall be sent to the DLA Energy Contacting Officer at dlaenergy.rteam@dla.mil, no later than 27 January 2015 10:00am

EST.

12. Is there a distance maximum? Within PJM?

Response: Refer to Section C.2.1.

13. What is the discount rate the Navy/DCA is assuming in clause M.1.7 when calculating the "average present value"?

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Response: The Government is using the NIST Handbook 135.

14. Can you please clarify the meaning of the 1-year construction period related to the 20-year PPA period? What is the sequence of award date, construction/operation periods and deadlines, and power-purchase onset?

Response: Once a Contractor has been selected, a Notice of Intent to Award (NOITA) will be issued with conditions that will need to be finalized prior to actual contact award execution. After issuance of the NOITA, the selected Contactor will be responsible for the Interconnection process and the Government will initiate NEPA. Once finalized, the Government will submit the proposed award to OSD for approval. Once approval has been granted, the Contracting Officer will execute the award, and the one year construction period begins. Once the requirements in Section E.1.1 are met, the 20-year generation of the REGS for Navy Installation consumption begins.

15. Does RE/conventional mix have any effect whatsoever on consideration other than price?

Response: The Government is looking to maximize its consumption of renewable energy under the procurement up to 100% of the Installation load. Refer to Section C.4.2

16. How many KWH for each state (PA,MD,NJ)?

Response: The Contractor shall supply 100% of the Installation load.

17. Is there a subcontracting plan?

Response: Section L.5.3 requires the submission of a Subcontracting Plan.

18. Who are the subcontractors?

Response: The Contractor shall be responsible for determining whether subcontractors are required with their proposal submission.

19. Can an entity bid on delivering electricity to selected facilities, or is the bid in response to all Navy facilities in aggregate?

Response: A Contractor may bid on a UDC basis.

20. Why is Norfolk naval station not listed as a faculty in the RFP for consideration?

Response: This question has no relevance to the requirements in the solicitation as issued.

21. Does the Navy have plans to add additional facilities for this RFP or issue additional RFPs?

Response: The Installations are identified within the RFP. No additional Installations are contemplated to be added.

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22. Will you entertain offers for CLIN 1 only (renewable supply) and does not incorporate conventional supply?

Response: The Government is looking to maximize its consumption of renewable energy under the procurement up to 100% of the Installation load. Understanding that renewable resources are intermittent, conventional energy shall be provided to supplement the full load requirement for the installations.

23. Would you please confirm, performing NEPA requirements will be required or developed on private land in accordance with clause C.13?

Response: NEPA will be required for the project effort(s) submitted. The Navy will initiate the NEPA process once the Notice of Intent to Award has been issued.

24. Government always reserves right not to award contract. But rarely/never do they state up front on 3rd slide that may not be awarded. How confident are you in this solicitation?

Response: Based on prior acquisition experience the Government is confident in awards for the procurement. Many Contractors are unaware that the Government does not have to award a resultant contract for requirements issued in Requests for Proposals. DLA Energy states this fact up front for full disclosure.

25. Will the government allow the successful contractor to own and sell renewable energy certificates (RECs) where advantages and to provide less expensive, but certified replacement RECs to the Navy?

Response: It is the Navy’s current position to keep the project RECs associated with the REGS.

However, the Government is interested in the cost differential between keeping the project RECs and the costs mitigated through a REC swap. If offerors would like to present information related the costs in the event of a REC swap outside of a proposal submission, the Government would consider a potential change in the solicitation requirements. The Government would use this information internally and would not publish any responses received with this request. Any information submittal shall be sent to the DLA Energy Contacting Officer at dlaenergy.rteam@dla.mil, no later than 27 January 2015 10:00am

EST.

26. On Page 83 (Part IV, Section L) of the Solicitation/Supply Agreement, it is specified that the offeror shall demonstrate “site control of the proposed location” – can you please clarify what type and/or degree of site control will be acceptable, and also please specify if a particular type or degree of site control is either required or preferable, with regard to how a proposal will be evaluated?

Response: The Contractor should prove the right of access for the property being used to support the REGS through a lease or ownership. The Government has no preference on what type of land instrument has been conveyed, only that the Contractor has the right of access.

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27. We would recommend the Minimum Production Guarantee by the Contractor, contemplated in C.4, should be weather-adjusted to follow industry practices—would DLA approve this change?

Response: Contractors already have the flexibility to include any weather related risk to their offer submission through their proposed Production Guarantee. Furthermore, Section 4.1, Minimum Annual Production adds additional flexibility before default occurs.

28. Where did the 2% escalation come from?

Response: The 2% escalation rate is derived from the EIA projections of energy increase over the term of the contract.

29. Does the Navy intend to procure one or more REGS each split out between all the UDC’s or will the Navy consider offers for a subset of UDCs?

Response: A Contractor may bid on a UDC basis.

30. How does the Navy envision retail charges to be “passed through”? Does the facility/seller need to have a retail license or team with a retailer?

Response: As part of the proposal, a Contractor shall either be a LSE, or as part of a team, an LSE must be included. Refer to Section L.3. Refer to Section 1.3 for Other Market Charges applicable.

As indicated in Section B.1.2, these charges shall be fixed for the first two years and then shall be directly passed through to the Navy on the monthly invoices submitted by the Contractor.

31. When does the Navy estimate award notification will take place given timing constraints on tax equity financing?

Response: The Notice of Intent to Award is anticipated to be issued no later than May 2015. The fully executed contract is anticipated to occur no later than December 2015.

32. If the CLIN 1 quantity is over the minimum does the seller have obligation to sell to Navy or can CLIN 2 option be supplied? To clarify, does 100% of all REGS generation have the obligation to the base until Navy maximum is reached?

Response: The Government is looking to maximize its consumption of renewable energy under the procurement up to 100% of the Installation load. Refer to Section C.4.2.

33. Is the price cap a cap on the total blended for renewable and conventional power for the full 20 year contract life? If so, how does that relate to the block and index pass through cost provisions? If not, and the price cap only applies to the renewable portion, is that a cap on energy plus RECs plus any capacity credits?

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Response: The price cap does not apply to the conventional power supplied under the solicitation. In addition, as stated under the OPTIONAL CLINS FOR THE GOVERNMENT:

These CLINs are only applicable if the Government elects to convert a portion of conventionally generated electricity from Real Time Settlement Point Pricing to Firm Fixed Price in accordance with Section C.17.3.

Regarding the application of the price cap, as stated beneath the Other Market Charges CLIN: Other Market Charges, when combined with prices offered for the FFP Renewable Energy CLINs and FFP Transaction Fee CLINs must result in a Blended Contract Unit Price that is at or below the Maximum Contract Unit Price values (reference Attachment 2 – Production and Pricing Worksheet).

34. Are socioeconomic factor considerations limited to the competitive 8a or comparable federal designations or do soft factors, community impact, employment, etc come into play?

Response: The requirements for the Socioeconomic Proposal are found within Section L.5.3.2.

35. Provide clarity as to price evaluations. How are the different CLINs weighed? Is CLIN 1 favored and by how much?

Response: Price evaluations are conducted on the Total Blended Contract Price, not individual CLINs.

36. What is definition of fully operational?

Response: A fully operational project must satisfy the requirements of Section E.1.1.

37. May the developer bundle different RECs within the FFP price of energy to the Government or may they be the specific SRECs generated by their REGS?

Response: It is the Navy’s current position to keep the project RECs associated with the REGS.

However, the Government is interested in the cost differential between keeping the project RECs and the costs mitigated through a REC swap. If offerors would like to present information related the costs in the event of a REC swap outside of a proposal submission, the Government would consider a potential change in the solicitation requirements. The Government would use this information internally and would not publish any responses received with this request. Any information submittal shall be sent to the DLA Energy Contacting Officer at dlaenergy.rteam@dla.mil, no later than 27 January 2015 10:00am

EST.

38. Will the Government allow the developer to provide replacement RECs?

Response: It is the Navy’s current position to keep the project RECs associated with the REGS.

However, the Government is interested in the cost differential between keeping the project RECs and the

SPE600-15-R-0409 Navy NDW RESA Page 6 costs mitigated through a REC swap. If offerors would like to present information related the costs in the event of a REC swap outside of a proposal submission, the Government would consider a potential change in the solicitation requirements. The Government would use this information internally and would not publish any responses received with this request. Any information submittal shall be sent to the DLA Energy Contacting Officer at dlaenergy.rteam@dla.mil, no later than 27 January 2015 10:00am

EST.

39. With respect to CLINs 03/07 and 03a/07a, states that charges need to be firm fixed for the first two years, while B.1.3 number 1-8 state that these charges need to be passed through to the Navy. Does this apply to REGS only? Does this apply also to conventional commodity, or do #’s 1-8 get passed on throughout the entire term?

Response: Other Market Charges CLINs shall be firm fixed price for the first two years. In delivery year 3, these charges will convert to a direct pass-through with no mark-up to the Government.

Section B.1.3 identifies all Other Market Charges applicable to the procurement.

40. How were the Navy facilities selected that are a part of this procurement?

Response: The Installations were grouped by UDC.

41. Does the REPO have a preference for solar over wind?

Response: The Government has no preference for renewable resources so long as it meets the definition in the Energy Policy Act 2005, Section 203(b)(2).

42. What is the purpose of the conventional power assets in the solicitation?

Response: While the Government looks to maximize the procurement of renewable energy up to 100%, we realize that intermittent resources might not be able to accommodate our objective.

Therefore, remaining conventional energy needed to shape the load is being considered.

43. When do you expect solicitations to come out for the Model III projects?

Response: This question has no bearing on the subject procurement.

44. When do you expect solicitations to be launched for overseas bases?

Response: This question has no bearing on the subject procurement.

45. SRECs in PJM/MD/NJ are worth a lot of money. Are there instance when replacement RECs can be used to keep those more expensive SRECs?

Response: It is the Navy’s current position to keep the project RECs associated with the REGS, with exception of the project RECs that can be used under the OPTIONAL Other Market Charges CLINS to satisfy state RPS obligations. However, the Government is interested in the cost differential

SPE600-15-R-0409 Navy NDW RESA Page 7 between keeping the project RECs and the costs mitigated through a REC swap. If offerors would like to present information related the costs in the event of a REC swap outside of a proposal submission, the Government would consider a potential change in the solicitation requirements. The Government would use this information internally and would not publish any responses received with this request. Any information submittal shall be sent to the DLA Energy Contacting Officer at dlaenergy.rteam@dla.mil, no later than 27 January 2015 10:00am EST.

46. How long does DLA expect the time to be between RFP submissions and RFP awards?

Response: The Notice of Intent to Award is anticipated to be issued no later than May 2015. The fully executed contract is anticipated to occur no later than December 2015.

47. Is there a limit to how many MWs a contractor can win?

Response: There are no restrictions on the number of UDC’s a Contractor can receive an award for.

48. How many CLINs can a developer bid on? For example, can a single developer only place a bid on one base or one CLIN?

Response: A Contractor may bid on a UDC basis. All CLINs within that UDC will be awarded and shall be incorporated into the Contractor’s proposal submission.

49. Does the UDC know this project is coming? Will they be willing partners when approached by developers?

Response: These projects are in deregulated market areas, so the Government is not currently contracting directly with the UDC. Through Navy engagements, the utilities are aware of the requirements. DLA Energy currently coordinates all retail electricity procurements for the Navy with 3rd party suppliers. DLA Energy has modified all existing procurements based on the requirements contained within the RFP.

50. When do you expect the Amendment with the Industry Day RFIs to be published?

Response: The Government intends to post the next Amendment within 5 business days after Industry Day.

51. On the surface, the project economics with the RECs bundled with the price it will be difficult to meet the Government’s pricing objectives. Will the Government move forward with a developer if they submit a price over the Government objective?

Response: Price proposals submitted that exceed the first year “Maximum Contract Unit Price”, escalated annually by 2%, will not be considered.

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52. Will the submission of the Early Termination Fee Schedule in Volume 5 be graded or assessed?

Response: The termination fee is not graded as part of the evaluation, but it is considered as part of the Price evaluation and must be deemed reasonable.

53. Items such as turbines have a long lead time of six months or more, so how will procuring these long lead items fit in with the NEPA timeline? Who will be responsible for the NEPA?

Response: Per the solicitation, the Government requests that the developers provide copies of studies that they have completed as part of their project development; however, ultimately the Navy will be responsible for the NEPA action and will manage the overall process. The Navy is aware of the time concerns and has a NEPA team prepared, if necessary, to execute an Environmental Assessment.

Alternately, the process will go even faster if it falls under a Categorical Exclusion. Each project site proposed will have to have its own assessment.

54. The max contract price on the cover page is different than what is in the solicitation. Which price is correct?

Response: Refer to Amendment 0001 for changes.

55. Would the Navy/DLA consider a 25 year term? Why was the term set at 20 years?

Response: The Government is not considering a longer term contract period for this acquisition.

56. There is a large grouping of accounts under Pepco. Are there any opportunities for other facilities in Pepco? If a developer bids on the Pepco CLIN do they have to serve all the facilities listed?

Response: All the facilities the Navy has considered are included in the solicitation. Under the Pepco UDC, the developer must serve all facilities in the group.

57. How many contracts of this type have been approved so far? How long is the approval process?

Response: DLA Energy has experience with one contract that has gone through the approval process and it has moved quickly through OSD. We are collaborating with them on a regular basis and they are aware of the upcoming contract actions. The process has taken approximately two months in the past and we are working with OSD on a regular basis in order to facilitate the process to improve this timeline.

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