PJM_Navy_RFI_Group_3.pdf

RFI Group 3

1. Does the Early Termination Fee specified in FAR 52.212-4(l) (RFP page 49) apply to both the renewable generation and Conventional Energy? A liquidated amount for Conventional Energy doesn’t necessarily protect the supplier of Conventional Energy from forward losses, because the amount of potential losses depends on the market price of energy at the time of termination. Will the Government agree that for Conventional Energy, the termination payment will be based on the difference between the contract price and the market price (at the time of termination), multiplied by the anticipated usage of Conventional Energy for the remainder of the contract term for Conventional Energy?

Response: Updated termination language is being drafted and will be posted in a future amendment.

2. During the Energy Industry day, the Government indicated that they would only be able to award these solicitations to an entire proposal, implying that the Government could not award a contract to a subset of the CLINS/UDCs within a single proposal. For example if a bidder’s proposal provides pricing for ComEd and PPL, the Navy would not able to award the contract for only the ComEd portion of the proposal.

If this is correct, each bidder would be compelled to provide a proposal for each combination of CLINS/UDCs in order to ensure that the Government could award contracts to the most cost effective combination of bidders, even if the pricing to serve all UDCs versus only a single UDC does not change. In a simple example, if a bidder were going to propose pricing for the CLINs associated with two UDCs, the bidder would have to submit three proposals to ensure the Government could select the single most effective option.

If we assume that this is the Navy’s contract award requirement, the bidder might hypothetically need to submit up to 24 full proposals in order to cover all combinations of the four UDCs for the MIDLANT RFP and ensure that the Government could award the most cost effective solution from the bidders.

Alternatively, if the Government can select a subset of CLINs/UDCs from a bidders proposal to serve multiple UDCs then each bidder could submit a single proposal for servicing all of the UDCs. The benefit to the Government to this approach would be fewer proposals to track and evaluate, especially when much of the content would be duplicated in each proposal.

Will the Government be able to select a subset of CLINs/UDCs from a bidders proposal to service multiple UDCs?

Response: The Government will be awarding the solicitation on a UDC basis to the offeror(s) that provides the best overall value to the Government. Offerors can submit more than one proposal showing different pricing approaches if they choose.

3. In Section L.5.2.1 the Government asks bidders to “provide information about its past performance regarding renewable projects”.

Next in Section L.5.2.2 the government asks bidders to “provide references for up to five of its largest projects of similar scope to this project”.

In Sub-Section L.5.2.2.2 the government states “If this is a first time joint effort with this partner, each party to the arrangement must also provide references as described in Section L.5.2.2”

Does the government expect each of the partners in a first time joint effort to provide 5 reference projects? (10 Total?)

Response: Yes.

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4. Could DLA please provide a table of values specifying the Government’s minimum purchase guarantee in kWh for contract years 1-20 for each UDC as well as a table of values specifying the Contractor’s expected production in kWh for contract years 1-20 for each UDC? Alternately, if the Government’s minimum purchase guarantee and Contractor’s Expected Production Guarantees (in kWh for each UDC and each year of the 20 year service contract) should be calculated as a percentage of the Projected Annual Changes documented in Attachment 1, please clarify the above discrepancies and provide guidance, for each UDC served and each contract year, for the percentages that should apply.

Response: The Government’s Minimum Purchase Guarantee is outlined in the solicitation in kWh under section C.3. The Minimum Purchase Guarantee is the same for years 1-20. The Contractor’s Minimum Annual Production is outlined in C.4.1 and is expected for years 1-20 of the contract. Minimum Annual Production is calculated in kWh and will vary by offeror so it cannot be expressed in a table.

5. Section L.5.2.2: In Attachment 5 "past performance", what if we cannot disclose the original contract $ value due to confidentiality of that customer contract?

Response: If an offeror cannot disclose information on the past performance questionnaire due to confidentiality they should indicate that when filling out the form.

6. Section L.4.2.9.c: What can we provide as "evidence" of agent's authority?

Response: Completing and submitting provision K33.01 with the offer will satisfy this requirement.

7. Section L.5.1.1.c: Holistic regulatory approach, how much detail needed?

Response: As stated in L.4.1.2 the offeror should provide sufficient detail to meet the stated requirements. The burden is on the offeror to provide the amount of detail needed to provide the Government with a clear and concise understanding of what the offeror is proposing and how the proposed approach complies with all applicable rules and regulations with regard to retail electricity supply.

8. Section L.5.1.1: As per Section C.13, we need to include all Environmental permits. Do these count towards the 50 page maximum limit?

Response: No, any studies submitted in your proposal should be included in the appendix and will not be part of the proposal page count.

9. Does the following count toward the 50-page maximum limit for Volume 1: All items listed under Section

F.2 (Performance Deliverables) of the pre-award submission list (for example, if you have a 39-page environmental final bat study report)?

Response: No, any studies submitted in your proposal should be included in the appendix and will not be part of the proposal page count.

10. I have not seen a definitive answer yet on the question of REC swapping, for example MD SRECs for PJM Tier I or National Voluntary. Have I missed it?

Response: RECs will remain with the project as outlined in the solicitation.

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11. As I read it, any excess energy not supplied by the renewable plant on an hourly basis is to be supplied from the PJM spot market and the cost of that additional brown power purchased on the spot market is passed through to the Navy at cost with no mark up. Is that correct? Does that begin in year 3 or is that pass through allowed for years 1 and 2?

Response: Yes, conventional electricity will be provided at a Real Time-Locational Marginal Price (RT- LMP) starting in year 1 to supplement the renewable energy generation because of the intermittent nature of renewable resources.

12. If excess energy is produced in a given hour, it is sold into the PJM spot market. Is the project/supplier retaining all proceeds of the sale of excess generation in a given hour? Or is the Navy collecting that revenue?

Response: As stated in C.4.2 any renewable energy in excess of the Navy’s total requirement can be sold into the marketplace. The supplier may retain all proceeds of the sale of excess generation that is sold into the market.

13. In RFI Group 2, question 7 the Government states that they would like copies of all environmental studies completed included as an appendix. The Environmental Studies for our project site are more than 650 pages.

Will the Government accept electronic versions on the proposal CD rather than hard copies as an appendix to Volume I?

Response: Yes, in cases where the appendix will exceed a reasonable size you can provide a CD.

14. In RFI Group 1, question 26, the Government requests proof of right of access for the property.

Our project site has Grants of Easements that total 2000 pages. Would the Government accept a listing of the easements, all of which are public documents rather than the actual Grant Memos? If the Government requires the actual documents, would the Government accept electronic versions on the proposal CD rather than hard copies as an appendix to Volume I?

Response: Yes, in cases where the appendix will exceed a reasonable size you can provide a CD.

15. Contractors are allowed to bid by UDC and not the required to reach the minimums for the entire solicitation

Response: Yes, an offeror may bid on a UDC basis. For each UDC an offeror bids they are required to meet the minimum production quantity for that UDC.

16. The conventional energy supply charge is not included in the Maximum Contract Unit Price.

Response: Correct.

17. Given that Transmission Congestion and PJM Losses are passed through to the Navy beginning in year 3, how does the Navy plan to evaluate the anticipated difference in Transmission Congestion and PJM Losses that may be seen from different projects at different locations in the grid and factor those expectations into their evaluation of proposals?

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Response: As stated in Attachment 1, Note 3, for evaluation purposes only, beginning in Year 3, the Government has escalated the CLIN 0003 rate by 2.0% annually thereafter.

18. The U.S. EPA defines electricity generated from power plants utilizing Tire Derived Fuel (TDF) as renewable. Please confirm that electricity generated from TDF will qualify as renewable for the purposes of this Navy Solicitation.

Response: No, as stated in the solicitation “Renewable Energy” has the meaning set forth in the Energy Policy Act 2005, Section 203(b)(2).

19. Would the Navy permit the offerors to propose revisions to Section H.4, Force Majeure?

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

20. Would the Navy permit the offerors to propose revisions to the termination for convenience provision in Section I.1.2(l)?

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

21. Would the Navy permit the offerors to propose revisions to the termination for default provision in Section I.1.2(m)?

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

22. Would the Navy consider bi-furcating the contract into a renewable supply contract and conventional generation contract, which would be awarded in tandem? There is a uncertainty within the tax equity markets on how a transaction of this nature would be treated where there is the potential for cross default between the conventional energy portion and the renewable energy portion. All renewable projects that have been financed to-date in the US have been standalone contracts and introducing a conventional component may affect the financability of the project.

Response: No, one supplier shall be responsible for both renewable and conventional electricity.

23. It was clarified in Question 1 of the RFI Group 2 that the Maximum Contract Unit Price was “the highest annual per kWh rate that Government will consider in a given from the REGS”. Can you confirm the kWh rate from the REGS should be entered into CLIN 00001 (column E) of Attachment 2, which is labeled “Firmed Fixed Commodity Price RESA ($/kWh)? Furthermore, can you confirm the Expected Annual Production (kWh) in Attachment 2 is the expected output from the REGS?

Response: Yes

24. Could the regulatory changes cited as potential cause for price adjustments to the transaction fee in the 2nd, 3rd, and 4th 5 year conventional energy contracts also be considered as cause for periodic renegotiation of the transaction fee in the 20 year renewable energy contract?

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Response: No, as stated in C.17.4 Electricity Regulatory Changes are as a result of “new” ISO/RTO charges that were not present at the time of contract agreement.

25. Could the price of the transaction fee be adjusted at 5 year intervals during the 20 year renewable energy contract term?

Response: No, the transaction fee is fixed for the entire term.

26. Given pricing a transaction fee for a 5 year term is more customary and lower risk for an LSE than pricing a transaction fee for a 20 year term, the Government would benefit from a lower Blended Contract Unit price on the renewable energy contract as well as conventional energy contract by allowing these adjustments.

Response: No, the solicitation will remain as currently written.

27. Will the Navy accept financials prepared in accordance with IFRS as opposed to US GAAP per the RFP?

Response: No, as stated in H.6 (c), provide a quarterly sources and uses of funds statement for the construction period, prepared in accordance with US GAAP, showing the timing and amount of expected equity and debt funding.

28. Minimum Production and Purchase. The “Minimum Annual Production” as defined in the Solicitation represents the kWh amount the Contractor is obligated to provide each year in order to avoid risk of default (for example, 187 million kWh for PEPCO). To mitigate risk of default, Contractors will of course size our projects to produce an “Expected Annual Production” comfortably in excess of the Minimum Annual Production (for example, 249 million kWh for PEPCO).

However, according to Section C.4.2, the Government is only obligated to purchase more than the Minimum Annual Production IF it has the load. This means that the Contractor is taking risk for potential reductions in future loads at each Naval Base, since we cannot be assured of the rate we will receive for production between the Minimum Annual Production and the Expected Annual Production. Even though such potential excess could be sold to the marketplace, that marketplace rate could be considerably below the RESA rate over the next 20 years.

This term will render these projects non-financeable. We respectfully request that the Minimum Purchase Guarantee by the Government in Section C.3 be defined as the Expected Annual Production proposed by the Contractor.

Response: No, the Minimum Purchase Guarantees will remain as currently defined.

29. Won’t the Government evaluate proposals more favorably if they provide greater amounts of renewable power above the minimum requirement?

Response: Yes

30. Is the rate for REGS and commodity “brown” power supposed to be the same?

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Response: No

31. Won’t there be different “Other Market Charges” for each?

Response: All “Other Market Charges” that will be considered have been identified as stated in B.1.3.

32. Is Attachment 2 only for REGS power?

Response: Attachment 2 is for Firm Fixed Commodity price, Firm Fixed Price Transaction Fee, and Other Market Charges.

33. NEPA Study. The Solicitation currently has the Government executing the NEPA study. The Government has projected that the NOITA would be issued in May 2015, with the goal of executing contracts by December 2015. This leaves only seven months for execution of the NEPA study. Our experience is that the Government procurement process required to initiate this study could eat up much of that precious time. We respectfully request that the Government allow Contractors to provide the NEPA study as an alternative. We are confident that if the Government leaves the NEPA process in the Contractor’s hands, it will dramatically improve predictability and control over the schedule. This will allow Contractors to be more confident in our schedule and pricing and will ultimately benefit the Government.

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.

34. Definition of Renewable Energy. The FEMP Guidance to EPACT 2005 and EO 13423 dated January 28, 2008 includes “refuse-derived fuels” in the definition of renewable energy (Section 2.2.4). This would seem to clearly qualify power generated from tire-derived fuel (TDF) as renewable. Please confirm.

Response: No, as stated in the solicitation “Renewable Energy” has the meaning set forth in the Energy Policy Act 2005, Section 203(b)(2).

35. To assist with project planning it would very helpful to have a known date for when “New Generation” is determined such as December 19, 2014 the date when the solicitations were issued.

Response: “New Renewable Generation” as defined in the solicitation, means a renewable generation resource must not be or ever have been previously placed in service at the time that the Notice of Intent to Award is issued. In the case where the proposed facility is part of a larger facility, only the new capacity generation would qualify and the proposed facility must be sub-metered such that the energy produced and delivered to the Government can be verified.

36. We have noticed a difference in historical quantities utilized at the installations vs. those in the installation data sheets. What is more representative? Are there changes going on at the individual installations such as efficiency or conservation measures?

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Response: The installation data sheets represent the official historical usage of the installations. As stated in B.1.2 CLIN DESRIPTION, Special Notes (2) the Government reserves the right to pursue and implement energy conservation measures which has the potential to reduce electricity consumption at the seven Department of Navy installations in this solicitation by 10% by 2020. These reductions do not reflect the removal of building or facilities from the Installation load, but instead would result from successful energy efficiency and energy use programs.

37. Would the Government consider an all or nothing bid? This would present better pricing to the Government as the Contractor could construct assets to meet the entire load. If the awards are broken down, this would significantly change the prices due to the economies of scale from one large bid.

Response: Yes, if an offeror chooses this pricing approach the Government will consider it. But the solicitation will be evaluated by best value to the Government on a UDC basis.

38. The Government would like the contract to begin on 1/1/17 – this would be feasible from the asset perspective, but load is based on meter read dates designated by the local utility. For example, an account may have its January 2017 meter read on January 12, 2017. We suggest changing the wording to match financial settlement allow for meter read days.

Response: The Government understands and would like to clarify that 1/1/17 was to be consider an estimated start date.

39. There have been commitments within the state of Maryland that some RECs generated within Maryland cannot be sold in that state (MD PSC Order No. 84698). As the Government intends to retain all environmental attributes, we would like to ensure that those RECs are not subsequently marketed to satisfy Maryland PSC regulations.

Response: The Government will retire the RECs.

40. Would the DLA accept a 20 year energy supply contract with 5 year mutually agreeable price adjustments, or must it be structured as 5 year terms with the expectation of renewal? If a 20 year contract is acceptable, would the DLA want the firm fixed transaction fee to be fixed for the full term?

Response: No, the solicitation requirements are as written. With regard to the 5-year renewal, that is for the conventional portion only and it will be priced at the RT-LMP rate. The fixed transaction fee shall remain unchanged for the term of the contract.

41. Could you please clarify if the definition of “other market charges” should include or exclude the price of electricity?

Response: Other Market Charges should exclude the price of electricity as stated in the definitions section of the solicitation “Other Market Charges” means all retail electricity supply costs, as identified in B.1.3 Other Market Charges, exclusive of the transaction fee and the price of electricity.

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