Navy_PJM_RFI_Group_2.pdf

RFI Group 2

1. How does the Maximum Contract Unit Price, given in the spreadsheet on an annual basis, apply to the hourly settlement? Is it only applicable on average by billing period or by year?

Response: The Maximum Contract Unit Price is the highest annual per kWh rate the Government will consider in a given year from the REGS. Any Conventional Energy that is necessary to meet the Navy load is not subject to the Maximum Contract Price. The Maximum Contract Unit Price is applicable for each billing period. Depending on when the COD will commence, the Contractor Blended Contract Unit Price will be in effect for twelve months at a time.

2. How will the Other Market Charges (which are passed through at unknown rates) be assessed by the Navy in regards to determining if the Blended Contract Unit Price is below the Maximum Contract Unit Price?

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. The Government is aware that starting in year 3 that the Blended Contract Unit Price may exceed the Maximum Contract Unit Price as a result of the unknown Other Market Charges rates that will be passed through.

3. Is the Point of Delivery defined as any bus within the UDC transmission or distribution system for the listed UDC’s?

Or is there a specific PJM node where delivery will take place?

Response: “Point of Delivery” is defined as an interconnect with the UDC owned or controlled transmission or distribution systems. As reference refer to Definitions, page 8.

4. Given the Navy’s response at Industry Day that a retailer must be involved in the proposal, how does the Navy propose contracting will work? Does the Navy anticipate a project selling an offtake to a retailer and the retailer reselling the product to the Navy? Or does the Navy anticipate it will have separate contracts with the retailer and project?

Response: There will not be separate awards for the retailer and the project developer. 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.

5. If the passed through cost of Other Market Charges in year three or beyond causes the Total Blended Contract Price to be greater than the Maximum Contract Unit Price, what happens?

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. The Government is aware that starting in year 3 that the Blended Contract Unit Price may exceed the Maximum Contract Unit Price as a result of the unknown Other Market Charges rates that will be passed through.

6. Will the Navy be able to award offerings in individual UDCs out of a proposal that contains pricing for multiple UDCs (similar to “A la Carte” style)? Or do bidders need to submit multiple proposals for different combinations of UDCs if the pricing does not change.

Response: A Contractor may bid on a UDC basis.

7. In section “C.13 – National Environmental Policy Act (NEPA) and Environmental Requirements for Construction, Operations and Maintenance” that government request that contractors provide copies of all studies/reports/potential

SPE600-15-R-0409 Navy NDW RESA Page 1 actions related to environmental considerations. Does the government want complete copies of all studies completed? Will these studies be part of the proposal page count? Can these studies be included as an appendix?

Response: Yes, the Government would like complete copies of all studies completed. Any studies submitted in your proposal should be included in the appendix and will not be part of the proposal page count.

8. Section L.4.2.3 Proposal Organization/Limits states Past Performance shall have a maximum page limit of 20 pages, excluding Attachment 5. However, Section L.5.2.3 states “the offeror shall provide a well-articulated narrative, no more than ten pages…” Please clarify the page limit for Volume II, Past Performance.

Response: Offerors have a 20 page limitation on pages for Volume II Past Performance per section L.4.2.3. Please see Amendment 0003 for updates to section L.5.2.3.

9. Please clarify whether the Firm Fixed Transaction Fee is a component of the contract price for both the renewable generation and Conventional Energy, or Conventional Energy only.

Response: The Firm Fixed Transaction fee is for both renewable generation and conventional energy.

(a) If the answer is both, then does the Fixed Firm Price Transaction Fee included in the definition of Blended Contract Unit Price mean only the Fixed Firm Price Transaction Fee that applies to renewable generation?

Response: Yes, the Firm Fixed Price Transaction fee is included only for the renewable generation under the Blended Contract Unit Price and is also calculated for conventional energy under the Blended Contract Extended Price.

(b) Is the Fixed Firm Price Transaction Fee supposed to be the same number for renewable generation and Conventional Energy?

Response: Yes

(c) Is the Fixed Firm Price Transaction Fee intended to cover all ancillary, capacity, transmission, miscellaneous costs, etc. that are not included in Other Market Charges, as described in Section B.1.3 (RFP page 14).

Response: The Transaction Fee is established as the Contractor’s cost of doing business. Ancillary, capacity, and transmission are included in the Other Market Charges and should not be included in the Transaction Fee CLIN.

10. The term section of the Summary of Requirements (RFP pages 3) states that the term for the Conventional Energy Component will be for a series of 5 year periods. This is also addressed in Section C.2.2 (RFP page 16), what will be the mechanism for pricing Conventional Energy for the 2nd, 3rd, and 4th five-year terms. What is the mechanism for renewal? Is it the Government’s intent that our bid response include a bid for each of the five-year terms or the first one only? Or does the 2% escalator apply to these successive 5 year terms? If so, will the contractor be given the opportunity to bid if regulatory changes occur that have an impact of the contractors costs?

What happens to the power purchase agreement for renewable generation if the parties do not agree on pricing for renewal of the Conventional Energy Component?

Response: Throughout the term of the contract the conventional energy will be priced at the Real Time Location Marginal Price. Prior to the end of a 5-year conventional energy term, the Government will issue a sole source modification for the next 5-year term. In accordance with the terms of the contract, Section I.1.2 (k), as regulatory changes occur the Contractor will adjust the price, upwards or downwards, given the situation. In the event an agreement can’t be made, a contract termination will result.

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11. The pricing section for CLINs (RFP page 12) states that “…only the awardee for the full requirements of each CLIN will be capable of satisfying the requirement.” Since this CLIN is for Conventional Energy only, how do you reconcile this statement about ”full requirements”. Should we read this to mean full requirements in excess of the power supplied by renewable generation?

Response: The Contractor shall be responsible for 100% of the requirements based on renewable generation and any conventional energy that will be necessary to satisfy the load.

12. Regarding the Contract Unit Price for Other Market Charges CLINs 0003 and 0007 (RFP page 12), the RFP states that all Other Market Charges will be fixed for the first two years of the contract term, and goes on to state that the Offeror must cooperate to fix certain market based pass-through costs. Does the requirement to fix certain (as opposed to all) apply to any period after the initial two years of the contract term?

Response: Yes.

13. Does the substantiation requirement apply to Other Market Charges that are fixed, or only those that are passed through.

Response: Substantiation applies to all Other Market Charges.

14. Will fixed Other Market Charges be subject to adjustment for changes in rates and regulations?

Response: No, Other Market Charges will be fixed for the first two years and a pass-through after that.

15. Regarding Optional CLINs for Other Market Charges Less State Renewable Portfolio Standard (RPS) Obligations (RFP page 12), is the Government willing to relinquish the RECs from the renewable generation, if the they are used to satisfy RPS requirements? We believe that delivering or retiring “voluntary” RECs to the Government and counting them toward the state RPS requirements would be considered double counting the RECs.

Response: The intent is to allow the Contractor to utilize the project RECs to satisfy RPS charges.

16. Regarding Optional CLINs 0004 and 0008 (RFP page 8), what size blocks does the Government anticipate using for conversion of pricing of Conventional Energy, and for what time period(s) would these blocks apply? If the intention is for a block purchase, what types (On-Peak, Off-Peak, Around-the-clock) is the Government requesting?

Response: That is unknown at this time. It will be dependent upon the amount of renewable energy generation being offered.

17. Please confirm that if the parties do not agree on a fixed block price, pricing for Conventional Energy will remain the Firm Fixed Price Transaction Fee plus real time LMP. (see Section C.17.3, RFP page 23).

Response: CLINs 0004 and 0008 for Fixed Electricity Block per MW are optional. If they do not provide a benefit to the Government the price for Conventional Energy will be the Real Time-Locational Marginal Price plus the Firm Fixed Price Transaction Fee plus Other Market Charges (for the first 2 years).

18. Please confirm that the Maximum Contract Unit Price will not apply to pricing for Conventional Energy, whether it is pricing at the real time LMP or converted to a fixed block price?

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Response: The Maximum Contract Unit Price is not inclusive of any Conventional Energy to be provided.

However, the Government has calculated all potential costs within the Blended Contract Extended Price, for the estimated Contract Value for award.

19. Regarding Section B.1.3 (RFP page 14), Paragraph (1), please note that the RPs requirement applies only to Conventional Energy, and that the supplier will not be permitted to count RECs delivered to or retired for the Government against the RPS requirement. To do so would result in double counting of the environmental attributes represented by the RECs. If it is the Government’s intent to retire RECs produced by the REGS to satisfy state RPS requirement in order to provide a discounted line item for Other Market Charges, then does the Government intend to transfer the title to the RECs to the Contractor so that they can be retired via PJM’s GATS protocol or does the Government intend to retain title and establish an independent account with PJM in order to track REC retirements?

Response: It is the intent of the Government to have the Contractor utilize the RECs on the Government’s behalf for RPS charges, therefore title would not convey to the Government for those RECs utilized for that purpose.

20. Regarding Section B.1.3 Other Market Charges (CLINs 0003/0007 or CLINs 0003a/0007a) (2) Capacity Costs (RFP page 14), paragraph (2) states that the Government may“…direct the Contractor to purchase capacity though an RFP process or other method mutually agreed to, with those costs to be assigned to the applicable accounts on the basis of their respective PLCs..” How often and for what terms does the Government anticipate fixing capacity costs? We propose that the ability to fix capacity costs “through an RFP process or other method mutually agreed to” be limited to a term that corresponds to PJM’s planning year (6/1/20XX – 5/31/20XX).

Response: For purposes of fixing certain components of Other Market Charges, the Government will do so within each PJM planning year.

21. RFP §C.17.2 Real Time-Locational Marginal Pricing states that the monthly energy charge is “For each 15-minute interval of the month, the Government shall pay the Contractor the product of the Real Time-Locational Marginal Price (RT-LMP) for the relevant delivery zone through which the account is metered and should be increased for line losses to the same load zone.” The Contract utilizes hourly data by summing up the 15 min intervals at the meter level and multiplying that sum against the hourly RT-LMP. Since LMPs are at the hourly level and not the 15-min level, the charge should be equivalent. Is this approach is acceptable to the Government.

Response: Refer to Amendment 3 for correction. Intervals are hourly within PJM.

22. Section C.17.1 (RFP page 22) states, “With the exception of any and all transmission and distribution related charges…the Contractor is responsible for all costs associated with deliveries to the Point of Delivery…” This is not consistent with the pricing provisions in Section, which states that Other Market Charges will be passed through to the Government. Will the Government agree to modify the language in Section C.17.1 to read as follows: “With the exception of any and all transmission and distribution related charges…and Other Market Charges…the Contractor is responsible for all costs associated with deliveries to the Point of Delivery…”?

Response: Other Market Charges are fixed for the first two years of the generation and delivery period. Beginning in the third year of generation and delivery, the Other Market Charges shall become a pass-through.

23. In Section C.17.4 (RFP page 23), will the Government agree to change “ISO/RTO” to “ISO/RTO/PUC” and change “new ISO/RTO charges” to “new or modified ISO/RTO/PUC charges”. We would note that there is an imbalance between the treatment of after-imposed charges and after-relieved charges. The provision applicable to after-relieved charges would apply in the case of modifications to regulations whereas the provision applicable to after-imposed charges does not, as written.

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Response: The offeror may submit exception in writing with their proposal in accordance with L.4.2.10.

24. Please confirm that Section G.5.2 (RFP page 28) is applicable to the renewable generation only, and not to Conventional Energy.

Response: Yes, this section only applies to the renewable generation facility.

25. Please clarify whether Section H.4 Force Majeure (RFP page 30) applies only to the renewable generation or both renewable generation and Conventional Energy. If it applies to both please explain whether this Section takes precedence over Section I.1.2 (RFP page 48) 52.212-4 (f) Excusable Delays.

Response: Refer to Amendment 0003. Excusable Delays will be handled in accordance with Section H.4 Force Majeure.

26. Regarding tailored clause (f), Excusable Delays: The second sentence of the Excusable Delays provision states that an excusable delay or similar event suffered by an ISO, utility distribution company, electric distribution company or transmission distribution services provider, constitutes an excusable delay. We believe that any curtailment or interruption of transmission or distribution service should constitute an excusable delay as to Contractor, regardless of whether the transmission or distribution service can claim that the event was itself caused by a force majeure or excusable delay. Curtailments or interruptions of transmission or distribution service can - for example - result from operator error or through the intentional acts taken by the operators to manage system emergencies. We believe that those events should also excuse the Contractor’s performance. Therefore, will the Government agree to revise the second sentence to read:

“An excusable delay or similar event suffered by or caused by an independent service operator (ISO)(or an equivalent of an ISO) or a utility distribution company (or electric distribution company or transmission distribution services provider) shall constitute an excusable delay hereunder.”

This solution was agreed to by the Government in prior DLA Solicitations.

Response: The offeror may submit exception in writing with their proposal in accordance with L.4.2.10.

27. Note that to get the benefit of the after-imposed tax provision (change in law affecting taxes), FAR 52.212-4 (RFP page 49), the contractor must state in writing that the contract price does not include any contingency for such tax.

Should be state that in our bid?].

Response: Yes, the contractor must state in writing that the contract price does not include any contingency for such tax.

28. FAR 52.212-4(m) Termination for cause (RFP page 50) does not provide for notice and right to cure before termination for cause. Please confirm that FAR 52-212.4(m) is subject to FAR 52.249-8, which requires that the Government provide 10 days’ notice of default and a right to cure before the Government will terminate for cause.

Response: The Government intends to abide by 52.249-8(a)(2) to give the Contractor 10 days to cure any failure only if the default is in reference to 52.249-8(a)(1)(ii) or 52.249-8(a)(1)(iii).

29. Will the Government agree to revise FAR 52.212-4(p) (RFP page 50) to read as follows:

“(p) Limitation of Liability. Contractor shall not be liable to Government for any consequential, special, incidental, punitive, exemplary, or indirect damages, or other business interruption damages.”?

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Response: The offeror may submit exception in writing with their proposal in accordance with L.4.2.10.

30. Section L.4.2.9 (RFP page 80) states that all proposals must remain valid for 180 days. Please confirm that the prices submitted with the bid response will be considered indicative pricing which bidders will be permitted to refresh before expiration of that 180 days and final selection of the winning bidder.

Response: Any offeror selected for the competitive range will have an opportunity to submit final pricing proposals subject to the Government’s Maximum Contract Unit Price. However, please refer to Section L.7, which allows the Government to award a contract on initial proposals without discussions. Therefore, the initial proposal should contain the offeror’s best terms and from a price and technical standpoint.

31. Additions and Deletions. How does the Government anticipate handling the addition of future accounts to the awarded contract?

Response: It is not anticipated that future accounts will be added to any resultant contract. In the event there are future accounts, the Government will issue a bilateral modification.

32. If a contractor submitting less than 50% from a REGS is the Government interested in renewable RECs on the conventional piece in order to hit the 51% renewable goal?

Response: Each UDC has a specific minimum renewable requirement that must be met. The Government does not desire to purchase RECS for any conventional energy.

33. In C.4.2 - - what time interval is envisioned for identifying “renewable energy in excess of the Navy’s total requirement”? 15-min, hourly, monthly, annual? Is it contemplated that on an hourly basis, the REGS could generate more than the Navy’s hourly load for that period, but when reviewed daily, monthly, or annually, it is not in excess?

Response: There is an annual true-up on the energy provided from the REGS since it is difficult to meet instantaneous demand from a renewable resource. Contractor’s should review the historical and interval data provided to determine an appropriate size of REGS.

34. In C.17.1 - -please clarify what is meant by “ all quantities ordered by the Government”? Is it envisioned that the Government will provide fixed block quantities or a fixed load shape?

Response: The Contractor will be responsible for securing any conventional energy required by the Installations, over the amount of the renewable energy being provided. The Government will utilize Real-Time LMP to price this energy, however reserves the right to request block purchases to reduce price volatility. The Contractor will be responsible for scheduling and coordinating all energy to be provided to the Installations.

35. PEPCO can price at sub-aggregate levels for MD and DC. What is the proposed Point of Delivery for the PEPCO loads?

Response: The Point of Delivery definition can be found in the Definitions section of the RFP. Delivery is to the Pepco zone and not sub-aggregate state zones.

36. Please confirm if the load data and targets provided are at the retail meter level load (i.e. not grossed up for distribution losses)

Response: The load data represents the retail meter load.

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37. With the submittal date extended to March 6th, will questions be accepted through February 20th?

Response: That is correct. Last day to submit questions regarding the RFP will be 20 February 2015.

38. Is the 20 year RESA contract expected to be a separate contract from the 5 year conventional energy contracts with potentially separate counterparties (i.e. a project and an LSE)? With the 5 year renewal provisions, is it contemplated the Government could procure future conventional retail energy from a different contractor than the provider of the REGS? If so, how is that expected to affect physical delivery from the REGS?

Response: There will be one contract that encompasses 100% of the UDC load to one vendor for the duration of the contract term.

39. Will the contract be awarded in pieces or will an all or nothing award be made. In other words, award by UDC to different vendors or one deal to one vendor?

Response: Awards will be made on a UDC basis.

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