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Power
Procurement
           by
    Nick Nichols

PhilRECA Board of directors
     October 16, 2008
What ECs Pay NPC For



          Cor. Agham Rd.                                    Power Out of the
                     ...
What ECs Pay NPC For

      Planning                Procurement


                                                        ...
What ECs Pay IPP For



                                                             Power Out of the
                    ...
What ECs Have to Do


        Planning                  Procurement




                                    WESM
         ...
Planning




     Prepare Outlooks &                                Supply Portfolio
          Forecasts                  ...
Procurement




    Prepare & Manage                        L
                                            E               ...
But Don’t Forget


        Planning                  Procurement


                                                       ...
... To Get This



             Power Out of the
               Generator
What We Did on Panay

                                        First


                      Formed a Consortium via
      ...
What We Did on Panay
Assessed aggregated load
      requirements

 Assessed extent to which existing resources
and contrac...
Portfolio Needs


                  Indicative




Some Peaking. Huge Base load and Intermediate load Exposure to market.
What We Did on Panay
   Within Consortium, Keep
      Transparency High


   Get Consensus Every Step


     ‣RFO Design
 ...
RFO Basis

                Used simple, fundamental objectives
                        to guide bidders:

                ...
RFO Basis
Estimated each ECs share
       of 90 MW

   Consortium would
negotiate the ECA as agent
        for all ECs

EC...
RFO Basis
      Then ...



Let The Competition
     Sort It Out
Process

               First ...


• Do the Planning
 ‣ Identify market exposure
 ‣ Identify what you want to procure
Process




* = Items we didn’t do in Panay process.
Process
           • Prepare and vet the RFO




* = Items we didn’t do in Panay process.
Process
           • Prepare and vet the RFO
           • Prepare Your Model ESA*




* = Items we didn’t do in Panay proc...
Process
           • Prepare and vet the RFO
           • Prepare Your Model ESA*
           • Establish Public* Website a...
Process
           • Prepare and vet the RFO
           • Prepare Your Model ESA*
           • Establish Public* Website a...
Process
           • Prepare and vet the RFO
           • Prepare Your Model ESA*
           • Establish Public* Website a...
Process
           • Prepare and vet the RFO
           • Prepare Your Model ESA*
           • Establish Public* Website a...
Process
           • Prepare and vet the RFO
           • Prepare Your Model ESA*
           • Establish Public* Website a...
Quantitative

• Market Valuation
 • Market Value = Benefits - Costs
   ‣ Benefits = Capacity, Energy, A/S
   ‣ Costs Include...
Qualitative

• Portfolio Fit
• Proponent’s Credit Capability
• Proponent Team Qualifications
• Project Viability
• Technolo...
Procurement
      Process




                                                                WESM
               Contract...
Also Don’t Forget

                             You Need To
Planning     Procurement
                               Get Co...
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Transcript of "Procurement Presentation"

  1. 1. Power Procurement by Nick Nichols PhilRECA Board of directors October 16, 2008
  2. 2. What ECs Pay NPC For Cor. Agham Rd. Power Out of the And and Quezon Ave. Generator Let’s first put some things in perspective. We pay for that complex in Diliman, and all the stuff that goes on inside - as well as pay for the cost of power from the IPPs or the costs of owning and operating the NPC generation So what goes on inside NPC? ...
  3. 3. What ECs Pay NPC For Planning Procurement Power Out of the Generator Contract Dispatch Management Services Well, it’s Planning, Procurement, Contract Management, and Dispatch services (i.e. participating in WESM).
  4. 4. What ECs Pay IPP For Power Out of the Generator The IPPs aren’t going to do your planning and procurement for you ... unless you pay them to do it.
  5. 5. What ECs Have to Do Planning Procurement WESM Contract Participation Management & Dispatch These are also the things that make sense to do on a joint-action basis. Sharing the costs and resources is one reason. Achieving market power (having a larger market footprint) is another. Expanding your portfolio options is yet another (some projects just won’t fit a single EC).
  6. 6. Planning Prepare Outlooks & Supply Portfolio Forecasts Determination Leads to a Procurement Outlooks & Forecasts go beyond forecasting load. It’s understanding market prices and supply options. They are required to figure out what you want (i.e. the portfolio determination). Can’t do procurement unless you know what you want to procure & when.
  7. 7. Procurement Prepare & Manage L E Evaluate Solicitations G A Regulatory Negotiations L Approvals Procurement involves a lot of things. The Evaluation includes understanding just what uncertainties (pricing and availability) you are exposing your customers to.
  8. 8. But Don’t Forget Planning Procurement You have to do all of these WESM Contract Participation Management & Dispatch Don’t forget “Procurement” is just one aspect of what you will need to be doing in order to get ... -->
  9. 9. ... To Get This Power Out of the Generator
  10. 10. What We Did on Panay First Formed a Consortium via MOU To share the costs of consultant. Identify point team (Consortium Board) for addressing issues, interface with IPPs. (Limited tech assistance from NRECA in preparatory phase.)
  11. 11. What We Did on Panay Assessed aggregated load requirements Assessed extent to which existing resources and contracts would serve those requirements Determined exposure Estimated impact of to market that exposure
  12. 12. Portfolio Needs Indicative Some Peaking. Huge Base load and Intermediate load Exposure to market.
  13. 13. What We Did on Panay Within Consortium, Keep Transparency High Get Consensus Every Step ‣RFO Design ‣Schedules ‣Bidder Interactions ‣Evaluations & Short Lists
  14. 14. RFO Basis Used simple, fundamental objectives to guide bidders: 1. Approximately 90 MW of Base & Intermediate Requirements 2. Start in January 2011 3. Looking for long-term contract Pricing structures up to bidder. One requirement is that bidder must be willing stick to fundamentals of offer during negotiations for ESA. Set up web site for disseminating information re RFO and handling Q&A.
  15. 15. RFO Basis Estimated each ECs share of 90 MW Consortium would negotiate the ECA as agent for all ECs ECA would be a bi-lateral with each EC
  16. 16. RFO Basis Then ... Let The Competition Sort It Out
  17. 17. Process First ... • Do the Planning ‣ Identify market exposure ‣ Identify what you want to procure
  18. 18. Process * = Items we didn’t do in Panay process.
  19. 19. Process • Prepare and vet the RFO * = Items we didn’t do in Panay process.
  20. 20. Process • Prepare and vet the RFO • Prepare Your Model ESA* * = Items we didn’t do in Panay process.
  21. 21. Process • Prepare and vet the RFO • Prepare Your Model ESA* • Establish Public* Website and eMail Box for Bidder Communication * = Items we didn’t do in Panay process.
  22. 22. Process • Prepare and vet the RFO • Prepare Your Model ESA* • Establish Public* Website and eMail Box for Bidder Communication • Prepare Data CD* * = Items we didn’t do in Panay process.
  23. 23. Process • Prepare and vet the RFO • Prepare Your Model ESA* • Establish Public* Website and eMail Box for Bidder Communication • Prepare Data CD* • Announce & Release RFO * = Items we didn’t do in Panay process.
  24. 24. Process • Prepare and vet the RFO • Prepare Your Model ESA* • Establish Public* Website and eMail Box for Bidder Communication • Prepare Data CD* • Announce & Release RFO • Hold Bidders Conference * = Items we didn’t do in Panay process.
  25. 25. Process • Prepare and vet the RFO • Prepare Your Model ESA* • Establish Public* Website and eMail Box for Bidder Communication • Prepare Data CD* • Announce & Release RFO • Hold Bidders Conference • Respond to Bidder Q&A * = Items we didn’t do in Panay process.
  26. 26. Quantitative • Market Valuation • Market Value = Benefits - Costs ‣ Benefits = Capacity, Energy, A/S ‣ Costs Include Credit Enhancements, Transmission, A/S, as well as Price • LRAC
  27. 27. Qualitative • Portfolio Fit • Proponent’s Credit Capability • Proponent Team Qualifications • Project Viability • Technology Reliability • Non-price Terms & Conditions
  28. 28. Procurement Process WESM Contract Participation Management & Dispatch Don’t forget “Procurement” is just one aspect of what you will need to be doing in order to get ... -->
  29. 29. Also Don’t Forget You Need To Planning Procurement Get Cost Recovery For All of This! WESM Contract Participation It’s Not in the Management & Dispatch ERC Benchmarks
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