20040209Lafferty Exhibits Part II.pdf

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Exh. 6/ Schedule 3
R. Lafferty
A vista Corporation
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Pg. 1 of 6
September 15, 2000
A VISTA EV ALVA TION GUIDANCE FOR ELECTRIC RFP BID PROPOSALS
(Power Supply Resources)
August 14 2000 RFP available to potential bidders
Avista s 2000 RFP indicated various characteristics or factors against which bid
proposals would be evaluated (see 2000 RFP). Many of these evaluation factors can be
assigned monetary values that can be used in the evaluation process. Therefore,
economics will be the significant component of the company s bid evaluation process.
Described below is an outline of the evaluation process that Avista plans to generally
follow in the bid evaluation process. This outline is intended as a guide. Modifications
may be made in order to more appropriately compare and evaluate the bid proposals.
September 2000 Bids due date to A vista and opening of bids
Initial Review:
A copy of the bid proposals will be distributed to each member of the Screening Work
Group. Their task will be to become familiar with the bids and then make sure they meet
the minimum resource evaluation performance. In general the Screening Work Group
will look at the performance track record of the bidders , environmental requirements
whether the technology is proven, and the financial and performance capability of the
bidder.
In addition the bid proposals must include all necessary information for evaluation in
order to pass the initial screening criteria. In the initial review of the bid proposals, if
deficiencies are not material, A vista may, at its option, grant a limited extension to cure
such deficiencies.
September 2000 Initial review completed by A vista
Preliminary Short List:
All power supply resource bids that pass the Initial Screening will go through both a
production modeling process and an economic modeling and comparative evaluation
process. The resource bids will be ranked as to their relative value provided to the
company and its customers using a weighted matrix. From this ranking a preliminary
short list will be developed. Company projects will follow the same evaluation course as
resource bids submitted to the company under the RFP.
Exh. 6 / Schedule 3
R. Lafferty
A vista Corporation
Pg. 2 of 6
1) Production Modeling - PROSYM:
The chronological production modeling system, PROSYM, will be used for the purpose
of producing near and long-term forecasts of electric system variable operating and
production cost. Because of its ability to handle detailed information in a chronological
fashion, planning studies performed with PROSYM closely reflect actual operations. In
each hour of a study period, PROSYM considers a complex set of operating constraints
to simulate the least-cost operation of the utility. This hour-by hour simulation
respecting chronological , operational, and other constraints in the case of cost-based
dispatch, is the essence of the model.
As the company contemplates the addition of one or more resources to its portfolio it will
be faced with a different resource stack and fuel mix. The new resources will have an
impact on the resource dispatch sequence because of the potential fuel supply and
marginal costs. A vista uses PROSYM to model its resources, to meet its system
requirements, and to assess the dispatch requirements and compatibility of new resources
used in conjunction with existing resources, both hydro and thermal.
Some of the information used in the model includes 20 years of projected on and off peak
monthly loads and 20-year forecast of electric and gas prices. All resources and contracts
are modeled on an hourly basis. Average hydro is a input into the model and then the
hydro is optimized according to Avista s native load.
The PROSYM model will be run with and without the bid proposal to determine the
change in system variable cost. This delta in operating costs will allow the company to
compare the impacts on its system variable operating costs for each of these bid
proposals. Specifically, PROSYM results for variable O&M, fuel costs , portfolio
operation costs delta, and generation for each new resource will be provided for use in
Step 2.
2) Economic Modeling:
The variable cost information from PROSYM, plus other information, such as the
proposed resource fixed or capital cost, will be input to the company s economic models.
The economic (or revenue requirements) model incJudes basic financial assumptions
from the corporation , including inflation assumptions. Costs for fixed O&M , capital
taxes, insurance, property taxes, wheeling, and gas transport are also included. The output
from these economic models will provide the overall cost or benefit of adding a bid
resource to the system compared to a base case. The resources will be evaluated over the
life of the resource up to 20 years.
Exh. 6/ Schedule 3
R. Lafferty
Avista Corporation
Pg. 3 of6
The output from these economic models will be economic indicators that can be
compared to determine the most cost-effective resource for the company s system. Unit
net project benefit per MWh is one such indicator, which will help rank the different
resources as to their added value. An estimate of relative gas and electric price scenarios
will be developed and applied to models. Model results from these analyses will be
considered when evaluating price risk.
3) Weighted Matrix Evaluation:
The Work Group will then take the bid proposals and using the results from Step 2 above
will evaluate them against each other. A comparison will be made of both price and non-
price factors to get an overall view of each bid proposal. This will determine which
resource bides) provides the greatest relative value to the company and its customers in
helping A vista meet its power supply needs.
Weighting of Evaluation Factors - The weighting of factors used to rank bid proposals is
split between price (65%) and non-price (35%) factors. Each factor used in the selection
process will be assigned a weight shown below that represents its contribution toward
meeting Avista s least cost planning goals.
The range of the rating values may be from one to ten (with ten being best) if the number
of bids submitted to A vista is small. A larger point spread will be used if the number of
bids is larger.
The weighting of bid proposals will be in three characteristics as discussed in the body of
the 2000 RFP. However, these three characteristics or factors are combined into two
categories. The first category will be Financial/Price Factors and the second will be
Electric Power and SociallEnvironmental Factors.
Under the FinanciallPrice Factors (65%) are the following:
The economic benefit of the resource to the company and its customers
(35%).
The long-term financial capability and performance capability of the
bidder/developer (15%).
Fuel price risk (15%).
Under the Electric Power and SociallEnvironmental Factors (35%) are the following:
Fuel Availability Risk (5%)
Fuel security of supply risk
Fuel transportation security/expected performance
Electric Factors (20%)
Exh. 6 / Schedule 3
R. Lafferty
A vista Corporation
Pg. 4 of6
Ramp rates
Dispatchability (number of times per month it can be shut down)
Reactive capability
Supply source (market, unit, system, etc.
System integration (transmission availability, cost, etc.
Exposure to transmission contingencies
Other characteristics
Environmental Factors (10%)
Permits- demonstration of permit plans, stage of completion and complexity
of obstacles and local impact issues.
Complies or demonstrates an acceptable plan for compliance for all applicable
environmental laws and regulations.
Technology proven to meet environmental laws and regulations.
Each bid proposal will be rated based upon the bid proposal's relative comparison to
other bids. Bid proposals will not be rated on a forced ranking basis. The rating of eachbid resource will be multiplied by the weight of the factor. A total weighted calculation
will be made for each bid proposal under consideration by summing its weighted rating.
This total value will be used to rank bids. Within a narrow range, bid proposals may beviewed as essentially equal in valuelbenefits. The highest ranked bid proposals will
move to the next phase of evaluation as a preliminary short list.
October 2000 Determination of preliminary short list
Sponsors' Meetings:
All bid sponsors will be notified regarding the preliminary short list. Meetings will be
scheduled with those project sponsors that made the preliminary short list. A vista hasfound that what the bidders perceive and submit is sometimes different than what the
company reads and interprets from the formal bid. These differences have to be resolved.
If new information is found as part of this discovery process, steps 1 through 3 under the
Preliminary Short-List section may be re-evaluated. Bid proposals may change relative
ranking position as a result. This will be iterative if new information at any phase of the
evaluation is revealed. Once the meetings have been completed, the Work Group willselect those resource bid options that are the best out of those submitted under the 2000
RFP. Again, a close ranking may indicate that more than one project should be
considered essentially equal.
October 20, 2000 Complete meetings with project sponsors
Selection of Short List for Negotiation:
Exh. 6 / Schedule 3
R. Lafferty
A vista Corporation
Pg. 5 of6
At this point the company enters into the final discovery and evaluation phase. Any
additional information will be acquired and the refinement of this information will be
used to re-evaluate and fe-compare the relative benefits of the bid proposals.
Once the differences are resolved and the final short list is completed, then thenegotiation phase begins. If A vista finds that the terms and conditions of the submitted
bids are significantly different from what the bidders are discussing in thl;: meetings_thenthe company will re-evaluate the bids by going through the evaluation process again.
the ranking is different then the new ranking will be used in selecting the best of the bids
for further consideration. All terms and conditions are open for negotiation. The final
selection will be the conclusion of the RFP process. The result is a final list of most
beneficial bid proposals.
October 2000 Selection of short listfor negotiation
Final Negotiation/Selection:
Any bids that have made the short list for negotiation will begin the negotiation phase
with the company. All terms and conditions are open for negotiation, including price. A
decision to select or not select resources from the RFP will be the conclusion of the RFP
process and the final decision will. be announced.
November 2000 Final selection (RFP decision)
December 2000 Debriefing
January 2001 Final evaluation report submitted to Commissions
Exh. 6 / Schedule 3
R. Lafferty
A vista Corporation
Pg. 6 of 6
CONFIDENTIAL
Resource Selection Process - 2nd Round Screening
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEPARATELY FILED
Exhibit No., Schedule 4 Pages 1 - 12
R. Lafferty
A vista Corporation
REQUEST FOR PROPOSALS
Evaluation of Resources
from Electric Energy Efficiency and/or
Power Supply Resources
A vista Corporation
August 2000
Introduction
Avista Corp. is seeking to identify resources that can become part of Avista s resource
portfolio to meet its system requirements while at the same time minimize the cost of
meeting those needs. Resources bid to A vista will be considered for purchase as part of
the company s long-term resource portfolio for meeting customer needs. The company
has identified a power need of approximately 300 megawatts (MW) of both capacity and
corresponding energy. Resource availability in the year 2004 would fit A vista
requirements best. However, A vista does have significant resource needs in advance of
this time frame. Bidders wanting more details regarding the timing of Avista s resource
needs may request a copy of its " 1997 Integrated Resource Plan Update
The goal of the 2000 Request For Proposals (RFP) will be to identify low cost and
environmentally sound resource options that best satisfy Avista s resource needs. This
process will support the company s ongoing assessment of the cost and availability of
new resources, and may provide input for Avista s 2000 Integrated Resource Plan (IRP).
Resources bid to the company in response to this RFP must be competitive with other
resource options available to A vista, including resources available at cost from affiliates
in order to be considered for purchase.
Page 1 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 1 of 39
This RFP is an all-source process and bidders are encouraged to make proposals for
energy efficiency resources or power supply resources. A vista encourages bidders with
competitive renewable resource projects to consider bidding as a power supply resource.
Proposals from energy efficiency measures will be competing against each other and
power supply resources will be competing against other power supply resources. The
most favorable resources bid to the company will also be compared with Avista s own
potential or existing resource acquisition programs for either energy efficiency or power
supply resources respectively. A vista has included information on its energy efficiency
programs and on general power resource needs and costs in its "1997 Integrated Resource
Plan Update
A voided Cost
The following table represents costs that A vista might incur were it to construct a large
combined-cycle combustion turbine. The avoided costs shown below for the next 20
years (excluding 2001) are based upon this resource assumption.
Avista Utilities Avoided Cost Schedule
nominal dollars
Year $/MWh Year $/MWh Year $/MWh Year $/MWh
2001 60.2006 39.2011 44.2016 51.2
2002 37.2007 39.2012 45.2017 52.
2003 37.2008 40.2013 46.2018 54.
2004 38.2009 41.8 2014 48.2019 56.3
2005 38.2010 43.2015 49.2020 58.
For 2001 the avoided cost value is based on actual broker quotes obtained July 24 2000.
Between 2002 and 2020, the figures are generated using a spreadsheet analysis prepared
by the Northwest Power Planning Council (NWPPC). The spreadsheet was adjusted to
reflect the NWPPC'250 MW CC - Eastside Blk Base case, and one hundred percent
investor-owned utility ownership. As shown, the avoided cost rises from $37.8 in 2002
to $58.1 in 2020.
Page 2 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
Avista Corporation
Page 2 of 39
The figures shown generally are representative of the costs that the Company might
expect associated with the construction and operation of a combined-cycle combustion
turbine. However, it is important to recognize that a number of variables might change
such as where the project ultimately is constructed.
Gas price assumptions can vary the project economics substantially. Natural gas prices
were input into the NWPPC model using data from the Company s natural gas 2000
Integrated Resource Plan. These values are higher than the NWPPC's assumptions and
. drive costs up by about 5 percent in the first year.
Another important consideration is environmental compliance. Permitting processes and
requirements for air quality, water and mitigation of other environmental impacts will
also vary depending on the specific project location.
While the avoided cost figures shown above meet the requirements of WAC 480-170-
050, the company expects the RFP results to provide a better measure of avoided costs
going forward. As such, a given proposal that provides a cost stream below the costs
shown above might not be selected. Similarly, where the RFP shows that general market
conditions are higher than the above schedule, A vista may select a project with costs
above the avoided cost schedule.
General Considerations
The Company states certain resource preferences that would fit well into in its resource
portfolio. However, bidders may submit proposals for projects of varying types or sizes
or at alternative sites. Timing of resources may vary from what is suggested as well.
Each variation may have distinct pricing characteristics.
Potential resources will be considered.for acquisition as part of the company s long term
resource portfolio for meeting retail customer needs. The company will consider all
relev~~ factors (including but not limited to price, dispatchability, transmission impacts,
Page 3 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 3 of 39
other bids, company-sponsored options, business and operating history of the project
developer, and financial and rate impacts) in the bid resource evaluation. Resource
proposals will be evaluated on the basis of the most current information available.
Evaluation is discussed in more detail under both the energy efficiency and power supply
sections.
A vista retains the right to reject any and all project proposals, at any time before
execution of a written contract. Executed contracts may be submitted to the IPUC or
WUTC for approval, as appropriate in Avista sjudgement.
The bid term, or the length of time the electrical savings or electrical generation is being
bid, shall be set forth in each proposal. However parties are advised that A vista is
interested in long-term arrangements that will meet resource requirements for twenty
years or more.
Aspects of the sponsor s proposal may be subject to negotiation to specifically define the
operation of the proposed project, to insure adequate credit support for the prospective
seller, and to insure that the delivered services will be consistent with Avista s needs.
These negotiations will be important in shaping the quality of the bid services to ensure
that they add value for the company. Negotiation with a given sponsor does not
necessarily imply that such sponsor s proposal will be selected.
To review each proposal fairly and to determine which projects are likely to provide the
best value to Avista s customers , Avista requires specific infonnation regarding each
proposed project.
Proposal Preparation and Evaluation
Project sponsors interested in responding to A vista s RFP must complete the appropriate
forms and submit them according to the RFP schedule. A vista will commence its
Page 4 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
A vi~ta romnration
Page 4 of 39
evaluation of the RFP submittal at the time of the bidding deadline as outlined in the
Evaluation and Ranking sections under the Request for Energy Efficiency Resource
Proposals and the Request for Power Supply Resources respectively. To assure full
consideration of the bid, as well as to expedite the review process, please adhere to the
RFP instructions and response format. It is important that all information requested in
the RFP be complete and submitted by the bidding deadline. In the initial review of the
bid proposals , if deficiencies are not material, Avista may, at its option, grant a limited
extension to cure such deficiencies. Late or incomplete forms or proposals will result in
the proposed project being eliminated from further consideration. All bids will be
retained by A vista and will not be returned to project sponsors.
After completion of its initial evaluation process, A vista will notify those on a short list
of bidders that their projects have been selected for further review and potential
negotiation. A vista may meet with the short listed bidders. Bidders of those projects
that are not selected will be so notified.
A vista may elect to negotiate certain aspects of the bidder s proposal. The bidder will be
expected to remain prepared to deliver the services indicated in the proposal, subject to
any changes mutually agreed to as part of the negotiation process. Failure to adhere to
the original RFP will be justification for A vista to cease negotiations and to reject the
proposal. Contracts may be subject to the approval of the IPUC and the WUTC, as
appropriate.
Another key consideration is operating flexibility. Operating flexibility is represented by
the project's compatibility with Avista s electric system and power supply. Timing of
energy deliveries on a seasonal and daily basis is a measure of this criterion. Avista
ability to control project output levels is also important. These evaluation elements are
further discussed in the Evaluation and Ranking sections under the Request for Energy
Efficiency Resource Proposals and the Request for Power Supply Resources respectively
Page 5 A vista Corp - Auf,ust 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Avista Corporation
Page 5 of 39
Avista retains sole discretion to determine which proposal best meets Avista s system
requirements, and which will be selected for negotiation and further review. Avista will
evaluate all proposals in the context of meeting overall least-cost objectives, which may
take into account many factors, including but not limited to cost, risk, operating
flexibility, diversity of supply, and any other relevant factors. Environmentally sound
resources must meet all local, state, and federal agency requirements and, in the case of
dedicated plant construction, the ability to handle local impact issues. The company will
also be comparing bid proposals against its own programs and other proposed generation
and energy efficiency resources.
A vista reserves the right to modify the RFP process to comply with any WUTC or IPUC
orders, rules, regulations or guidelines.
, upon review of the RFP, there are questions regarding completion of the RFP, please
contact:
A vista Corp.
O. Box 3727
Spokane, W A 99220-3727
ATTN:2000 Competitive Bid Proposal
c/o Doug Young
MSC-
Schedule and Procedure
A. Milestone Schedule
August 14, 2000
September 18, 2000
September 22, 2000
RFP available to potential bidders
Submittal to A vista of resource proposals
Initial review completed by A vista
Page 6 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
A v;"t" rnrnnr"t;nn
Page 6 of 39
October 6, 2000 Determination of preliminary short list
Notify project sponsors
October 20, 2000
October 24, 2000
November 3, 2000
Complete meetings with project sponsors
Selection of short list for negotiation
Final selection (RFP decision)
B. Submittal of Proposals. All project proposals must contain the information requested
in this RFP and ten (10) copies must be submitted so as to be received by Avista no
later than noon on September 18, 2000 at the following address:
A vista Corp.
E. 1411 Mission Avenue
Spokane, W A 99202
ATTN:2000 Competitive Bid Proposal
c/o Doug Young
MSC- 7
In accordance with WAC 480-107-070 (4), project proposals shall remain sealed until
expiration of the solicitation period.
The preparation and submission of a project proposal will be at the expense of the
project sponsor.
C. Modification or Withdrawal of Project Proposals
A sponsor of a project proposal may modify its project proposal by written request
provided that the request is received by Avista prior to September 18 2000.
D. Initial Review of Project Proposals
A vista will perform an initial review of project proposals to determine if all required
information has been provided. A vista expects to complete this initial review by
September 22 , 2000. Project sponsors who are not selected because of deficiencies in
the response to the RFP will be so notified. Where such deficiencies are not material
Page 7 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Page 7 of 39
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A vista may, at its option, grant an extension of seven (7) days to cure such
deficiencies. Material deficiencies will disqualify a proposal from further
consideration.
E. Confidentiality of Infonnation
A vista may agree to keep confidential any document so designated by the participants
in the bidding process. Inasmuch as project proposals are subject to examination by
the WUTC pursuant to the WAC 480-107-070 (4), and by the IPUC, refusal to release
confidential information to the WUTC or IPUC may adversely affect consideration of
the project proposal.
A vista will take reasonable precautions and use reasonable efforts to protect
confidential information , which is clearly identified as such on the page on which
confidential material appears.
LIMIT A nONS
THERE SHALL BE NO BINDING CONTRACT UNTil.. A VISTA AND THE
PROJECT DEVELOPER HA VB EXECUTED A FINAL WRITTEN PURCHASE AND
SALE AGREEMENT. TIllS RFP DOES NOT CONSTITUTE AN OFFER BY
A VISTA, AND SUBMITTAL OF A PROJECT PROPOSAL SHALL NOT BE
DEEMED AN ACCEPTANCE. A VISTA RETAINS THE RIGHT IN ITS SOLE
DISCRETION TO REJECT ANY AND ALL PROJECT PROPOSALS AT ANY TIME
BEFORE EXECUTION OF A FINAL WRITTEN PURCHASE AND SALE
AGREEMENT AND TO REVISE THE Mll..ESTONE SCHEDULE SET FORTH
HEREIN. AGREEMENTS MAYBE SUBMITTED TO THE IPUC AND/OR WUTC
FOR APPROVAL, AS APPROPRIATE.
Page 8 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Page 8 of 39
A ";cot,, r~~~.~+;~-
Request for Energy Efficiency Resource Proposals
General Overview
Avista currently provides a variety of energy efficiency services to the Company s retail
electric customers in all market segments. These services are currently funded through a
special Tariff Rider approved by both the Washington and Idaho State Commissions. As
the Company prepares to enter a period of potential energy deficiency, A vista is assessing
the addition of energy efficiency activity, incremental to the current acquisition goal of 3
aMW per year, through a bidding process.
Avista s interest is in the acquisition of cost-effective energy efficiency and system
capacity resources that positively contribute to our existing portfolio attributes. As such,
the Company is seeking programs that incur the least amount of utility and total resource
cost to acquire a desired level of electric efficiency or system capacity resources.
General Biddin2 Guidelines
All energy efficiency proposals shall, at a minimum, satisfy the requirements of WAC
480-107-030. A bidder must either be an Avista retail electric customer or a contractor
proposing one or more projects at the site of an A vista retail electric customer. Project
proposals must yield annual electricity savings of at least 2 190,000 kWh (250 aKW).
The energy saving measures must be installed over a period of not more than three years.
Savings from installed measures must persist for a period of at least five years. Project
proposals selected under this RFP are not eligible for grants, loans, or other payments
under any other A vista sponsored energy efficiency program during the life of the
proposed project.
Bids may include electric efficiency projects or fuel conversion projects involving the
replacement of electric end-use equipment with equipment using natural gas (natural gas
Page 9 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Avista Corporation
Page 9 of 39
equipment must be at least 45 percent efficient). Bids may not include the substitution of
alternative supplies of electricity or provide savings through the curtailment or cessation
of end-uses. Electric energy savings must not result in significant reduction to the quality
of end-use processes or products.
A vista will view some measures more favorably than others in the selection process.
Unfavorable reviews would result from questionable assurance of savings, lack of
savings persistence, degradation of savings, or concentration of measures at a single or
small number of host facilities.
It is also required that all emissions credits accrued through electric energy savings
resulting from the implementation of proposed energy efficiency measures become the
sole property of A vista Corporation unless other arrangements are explicitly included in
the final contract.
Proposal Contents
Following is a list of general topics that each proposal should address. Within each area
are specific requests for information about each proposal. A written response to each
specific request should be provided. If a request does not apply to a proposal, a written
response is required which sets forth which requests are not applicable and a brief
explanation as to why.
Description of Proposal1. Describe the proposed energy efficiency measure(s) and the specific
customer or customer type(s) and building type(s) where the measures will
be located.
Provide an estimate of the projected annual electric energy savings and
system capacity savings of the project when completed. Provide a detail
of unit savings used to derive the total savings estimates, and the basis for
those estimates. Provide a monthly distribution of those savings. If
Page 10 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 10 of 39
system capacity savings are proposed, provide a description of what hour
those savings are available or alternatively an hourly shape of savings.
Provide an estimate of the monthly and annual load factors of savings for
all measures.
Provide a description of dispatchability (or similar utility control), if any,
of the project savings. This will probably apply only to measures
incorporating system capacity savings.
Provide an estimate of the physical life and useful life each measure in the
project proposal. Describe any maintenance and replacement
requirements or savings of the measure(s).
Provide a timeline for project completion, with an estimate of savings
achieved for each month until project completion.
Describe who is to own and operate the energy efficiency or system
capacity efficiency measure(s) after they are installed.
List and describe who is to install the measure(s), including any
installation subcontractors.
To the extent possible, describe and support any reasons that the bid
proposal may better benefit A vista and its customers than the Company
existing energy efficiency programs if that proposal is partially or entirely
mutually exclusive with an existing program.
. Price and Payment Structure. The price bid, the requested pricing configuration
and terms of the proposed services are subject to negotiation.
Provide a detailed description of the price of the proposal, including
amount per unit and timing of payments. Bid price can be based upon
annual payments, or initial payment per kWh or kW saved, or initial
payment per measure installed.
Detail any portion of the payment to be based on measured performance.
Detail any portion of the payment to be based on other criteria.
Performance-based pricing structures are preferred but not rigidly
required.
Page 11 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
Page 11 of 39
. '
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----:_--
Describe the proposed payment plan, including when payment for savings
will be made, the conditions that must be met before payment is made, and
how payments may be adjusted following any verification of savings
procedures.
Provide an estimate and description of fees, shared savings arrangements
or any other contribution the customer or third party will be obligated to
pay for the installation of any portion of the proposed measure(s).
Provide a calculation showing the utility costs of the proposal.
Savings Verification Plan.1. Describe the procedures that will be used to estimate and measure savings
from the installed measures. For estimates that are to be made, describe
how they are derived and the assumptions and sources used to develop the
estimates. For savings that are to be measured, describe the proposed
measurement procedures. Provide sufficient detail on the measurement
procedures, including the type of measurement (i., billing analysis or
end-use metering) and the participants included in the measurement. The
savings verification plan should address both first year annual savings and
savings persistent over the proposed life of the measure. Describe any
plans to verify estimated savings. Describe any procedures that will be in
place to measure the persistence of the energy savings.
Describe Avista s role in the proposed verification plans. Describe any
information, data, or support that A vista will need to provide to the
verification plan.
Describe the timeline for savings verification. Specifically describe the
links between measure installation, verification of savings and payment.
Provide a proposal for assessing the level of free-ridership resulting from
the proposal. Free-riders are generally defined as program participants
who would have adopted the measure(s) in the absence of the proposed
program.
Page 12 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Page 12 of 39
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Marketing and Customer Service Plan.
Provide a description of the marketing plan that will be used to recruit
participants, if appropriate. Describe how customers will be contacted and
how eligibility for participation will be determined.
Describe how your proposal is designed to minimize the level of free-
ridership. This may include a description of how participants will be
recruited and the expected simple payback for participants with and
without financial incentives. (Simple payback is to be calculated as the
participant's cost divided by the annual energy bill savings.
Describe how participant complaints will be addressed.
Describe any general marketing assistance the bidder expects A vista to
provide. This may include customer lists, customer billing records, letters
of introduction, or support by the Company s customer service
representati ves.
Describe written or implied warranties that will be provided to customers
regarding quality of materials and installation.
Any bidders currently operating programs will be required to provide
A vista with information on participants, measures installed, estimated
energy savings, system capacity impact, and participant costs. Describe
the intention to track and provide that information to A vista.
List complaints received from participants regarding the conduct of past
energy or capacity efficiency programs by the bidder and the disposition
of each complaint.
E. Financial Capability
Provide a description of plans for financing the energy efficiency
project(s).
If your proposal requires liquidated damages, describe the proposed
security arrangements (i., bank letter of credit, payment bond, corporate
guarantee, or other security).
Page 13 Avista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
A vista Corporation
Page 13 of 39
Be prepared to provide , if the proposal is selected for negotiation, a
demonstration of the ability to obtain a level of insurance, such as general
business and liability insurance, sufficient to cover major project
contingencies.
F. General Qualifications
Please be prepared to provide three or more references from the last five
jobs where the bidder has performed similar services to those proposed to
A vista if the proposal is selected for negotiation. These references can be
a contact person at another utility to whom the bidder has provided
services, or electric customers for whom the bidder has provided energy
efficiency services, preferably similar to those included in the bidder
proposal. Provide telephone numbers for these references.
Provide a general description of the your organizations background and
experience in projects similar to your proposal.
Be prepared to list and describe, if the proposal is selected for negotiation,
any licenses that you or your subcontractors have or will be required to
obtain to perform the type of work described in your proposal.
Be prepared to describe, if the proposal is selected for negotiation, how
your proposal complies with all applicable codes, permits and licenses
legally required for the measure installations proposed. A list of the
necessary permits will also be required during negotiation.
Provide form of business classification (Le., sole proprietorship,
partnership, or corporation).
Be prepared to list, if the proposal is selected for negotiation, all affiliated
companies, including holding companies, subsidiaries, and predecessor
companies presently or in the past engaged in delivering the types of
services included in the proposal.
Provide a list of prior organizations for which key management team
members have worked if such organizations have provided services
similar to those in the proposal.
Page 14 A vista Corp - August 20v0 RFP
Exh. 6 / Schedule 5
R. Lafferty
Avista Corporation
Page 14 of 39
Be prepared to list all lawsuits, regulatory proceedings, or arbitration in
which the bidder or its affiliates or predecessors have been engaged
related to the types of services proposed if the proposal is selected for
negotiation. Identify the parties involved in such lawsuits, proceedings , or
arbitration, and the final resolution or present status of such matters.
Detail the disposal of waste to be removed from customer facilities as part
of energy efficiency projects, including the disposal of toxic and
10.
contaminated waste. Describe any recycling strategies to be incorporated
into disposing of removed materials from the project.
Detail specific environmental aspects of the project, including-any planned
utilization of recycled materials in equipment supplied to the project.
Evaluation and Rankin!! of Ener2V Efficiencv Proposals
All energy efficiency and system capacity proposals will be evaluated and ranked against
the other proposals submitted. The review and possible selection of projects will be
based on which proposal(s) provide the optimum value to Avista s customers. Proposals
will first be screened to ensure that they meet required criteria as stated in this RFP and
have completed the "Checklist For Energy Efficiency and System Capacity Resources
A preliminary evaluation will follow the initial screening to narrow the list. The
evaluation will be based upon both price and non-price criteria. The pricing evaluation
will consider measure persistence, timing and flexibility of capacity delivery, degradation
of savings, program free-ridership and market transformation. Evaluation of non-price
factors will include, but will not be limited to, the economic value to participating
customers and the compatibility of the program with A vista s overall energy efficiency
portfolio.
Next, a detailed evaluation of selected proposals will take place and could include
meetings with bidders. Following the detailed evaluation will be the selection of
proposals for negotiation. Negotiation does not guarantee an award of a written contract.
Page 15 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 15 of 39
Due to the individual and unique nature of each bid, evaluation and ranking will include
the balancing the various impacts of the criteria bid. The six categories that will be used
in the proposal ranking will be the description of proposal, price and payment structure
savings verification plan, marketing and customer service plan, financial capability, and
general qualifications and references.
If any proposal.receives an unacceptable rating in any category, Avista may, at its sole
discretion, eliminate that proposal from further review. However A vista, at the discretion
of reviewers, may request a bidder to correct minor deficiencies in order for the bid to
receive an overall acceptable rating.
Pal!e 16 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 16 of 39
CHECK LIST FOR ENERGY EFFICIENCY AND SYSTEM CAPACITY RESOURCES
To be completed for all bid proposals. Please check in the space provided if the applicable exhibit is
attached.
GENERAL INFORMATION
Project Sponsor s Name:
Address:
Phone Number:
PROJECT INFORMA nON
Project Location:
Annual Energy Capability (MWh):
Term of Sale:
Date of First Installation:
DESCRIPTION OF PROPOSAL
Description of Measures
Estimated Savings
Physical & Useful Life
Dispatchability
Timeline
Owner & Operator
Subcontractors
Why Use Your Proposal
PRICE AND PAYMENT STRUCTURE
Description of Price
Measured Performance
Payment Plan
Fee or Shared Savings
Utility Cost
SAVINGS VERIFICATION PLAN
Description of Plan
Avista's Role
Timeline
Free-ridership
AI.
A2.
A3.
A4.
AS.
A6.
A7.
AS.
B.4.
c.I.
c.2.
C.3.
CA.
MARKETING AND CUSTOMER SERVICE PLAN
Description of Marketing Plan D.Free Riders D.Complaints Procedure D.
Avista's Role D.Warranties D.Data Gathering D.List of Complaints D.
FINANCIAL CAP ABll..ITY
Description of Plan
Liquidated Damages
Insurance
GENERAL QUALIFICATIONS
References
Experience
F.I.
Page 17 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
A vista Corporation
Page 17 of 39
Licenses
Codes and Permits
Business Classification
Affiliated Companies
Key Individuals
Lawsuits
Waste Disposal
Environmental Aspects
E3.
FA.
E6.
E7.
E8.
E9.
EI0.
Page 18 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
A vista Corporation
Page 18 of 39
Request for Power Supply Resources
General Discussion
A vista has identified the need for 300 MW of capacity and 300 MW of average energy.
Resource availability in the year 2004 would fit Avista s requirements best. However,
A vista does have significant resource needs in advance of this time frame and will
evaluate proposals with different starting dates. Each proposal shall set forth a term.
However, A vista is interested in long-term arrangements that will meet resource
requirements of twenty years or more. A vista desires to acquire operating flexibility in
this power supply. Therefore, additional value will be placed on power supplies with the
following attributes:
Firm delivery backed by a generating resource or a composite of resources preferably
within the Northwest Region.
Price capped to emulate the cost from a generating resource.
Curtailment capability to allow Avista an opportunity to stop deliveries. If deliveries
from a project may be curtained at Avista s option, Avista would have the
opportunity to purchase power from the wholesale electric market when the market
price is less expensive than the firm purchased power supply.
The ability to quickly make changes in delivery (ramp-up and ramp-down) in order to
follow variable load obligations.
Avista s objective is to find the most economical option to fulfill this resource
requirement. All bids will be evaluated based on their cost, flexibility service provided
and overall usefulness to A vista. A vista invites proposals on the various options
described under "Bids Requested". Avista has listed a separate option under "Bids
Requested" in order encourage bids for cost-effective renewable resource proposals.
A vista also welcomes your ideas that you may feel better meet the objective of this RFP.
Page 19 Avista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
A vista Corporation
Page 19 of 39
Point of Delivery
Specify the point of delivery for each product offered. If the point of delivery is at a
point other than Avista s system, Avista will add transmission costs to deliver the product
to its system. If A vista is not the holder of the contract for third party transmission
A vista will place additional value on options to move the delivery point within the
Northwest Region on a non-firm or as available firm basis. However, A vista prefers to
hold the contract for third party transmission, if required to deliver the power. Direct
delivery to Avista s system can be made at the following points:
1. Wanapum - interconnection with multiple parties at mid-Columbia
2. Westside - BPA interconnection
3. Bell- BPA interconnection
4. Hatwai - BP A interconnection
5. Hot Springs - BPA and Montana interconnection
6. Lolo - Idaho interconnection
7. Other points will be considered
For purposes of responding to this RFP, assume that adequate transmission capacity
exists at Avista s points of delivery listed above. Transmission limitations (if any) will
be considered in subsequent steps of the selection process.
General Ouali!Jcations List
Please provide three or more references from the last five projects where the
bidder, or its affiliates, if appropriate, have implemented a power supply proposal
similar to those proposed to A vista. These references can be a contact person
with whom the bidder has transacted business. Provide telephone numbers for
these references.
Page 20 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Avista Corporation
Page 20 of 39
Provide a general description of the bidder s background and experience in power
supply proposals similar to its proposal.
Provide form of business classification (i., sole proprietorship, partnership, or
corporation).
List all affiliated companies, including holding companies, subsidiaries, and
predecessor companies presently or in Jhe past engaged in developing and/or
imple:nenting power supply proposals.
Provide a list of prior organizations for which key management team members
have worked if such organizations have developed and/or implemented power
supply proposals.
List all lawsuits, regulatory proceedings, or arbitr~tion in which the bidder or its
affiliates or predecessors have been engaged related to the types of power supply
proposals proposed. Identify the parties involved in such lawsuits, proceedings
or arbitration, and the final resolution or present status of such matters.
Detail specific environmental aspects of the power supply proposal.
Provide a statement of responding companies financial status and ability to obtain
financing.
Provide a list of any current credit issues raised by rating agencies, banks, or
accounting firms. Provide credit rating if available.
Evaluation and Rankin!! of Power Supply Proposals
All power supply proposals will be evaluated and ranked against the other power supply
proposals submitted. The review and possible selection of power supply will be based on
which proposals can provide optimum value to Avista s customers.
Proposals will first be screened to ensure they meet required criteria as stated in this RFP
and have completed the applicable sections of the "Checklist For Power Supply
Resources . General Qualifications must be provided as outlined above plus the project
specific information requested for each proposal submitted under the respective section
of "Bids Requested". A preliminary evaluation will follow the initial screening to narrow
Page 21 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Avista Corporation
Page 21 of 39
the list. Evaluation will be based upon both price and non-price criteria. Renewable
Energy projects will receive a 10% credit on price to account for reduced air quality
impact and other environmental impacts. The evaluation will be split into the following
three principle areas for evaluation: Electric Power Characteristics including ability of
the project to meet size, dispatchability, fuel supply, timeline and other characteristics of
Avista s need described in this RFP and in its "1997 Integrated Resource Plan Update
and the ability of the operator to meet construction and operational commitments;
Financial! Price Characteristics including demonstrated adequacy of financial capability
to construct and maintain projects; SociallEnvironmental Characteristics including using
reasonably current available environmental mitigation technology and ability to meet
local, state, and federal agency requirements and, in the case of dedicated plant
construction, the ability to handle local impact issues. Next, a detailed evaluation of
selected proposals will take place. Following the detailed evaluation will be the selection
of proposals for negotiation. Negotiation does not guarantee an award of a written
contract.
Due to the individual and unique nature of each bid, the evaluation and ranking will
include balancing the various impacts of the criteria bid including but not limited to price
and payment structure, financial capability, and general qualifications and references.
If any proposal receives an unacceptable rating in any category Avista may, at its sole
discretion, eliminate that proposal from further review. However Avista, at the discretion
of reviewers, may request a bidder to correct minor deficiencies in order for the bid to
receive an overall acceptable rating.
Bids ReQuested
A vista will consider all power supply proposals. In particular it is interested in receiving
proposals of the types described below:
Capacity Energy Purchase.
Page 22 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Avista Corporation
Page 22 of 39
A vista will evaluate a purchase of a finD capacity and energy product. A power sale to
A vista should be a firm product with interruption rights only for force-majeure
conditions. This product may be purchased in increments that total up to 300 MW of
capacity and energy.
Items to include in bid relating to "Capacity & Energy Purchase1. The source of the energy suppl y, for example, a generating plant dedicated
solely to this sale, a composite or system of generating plants, the market.
Supplier curtailment rights.
Avista s curtailment rights, for example; right to purchase lower cost
alternatives, to follow load reductions.
Flexibility that allows A vista to make quick changes in delivery to follow
variable load obligations.
Control area of origin.
Sale scenarios may include:
January 1 , 2004 - December 31 , 2023 300 MW all hours - flat;
January 1 , 2004 - December 31, 2023
rights.
300 MW, but A vista has dispatch
II. Qualifying Facilities with a generating capacity of less than one megawatt.
Sponsors of Qualifying Facilities under the Public Utilities Regulatory Policies Act of
1978 (PURPA) with a generating capacity of less than one (1) MW of installed capacity
are eligible to enter into long-run or short-run (energy only) contracts without submitting
a bid pursuant to the RFP. Sponsors should contact Avista to obtain a copy of Avista
long-run or short-run prototype contracts.
Page 23 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Av;"t" rnrnnr"t;rm
Page 23 of 39
III.Qualifying Facilities with a generating capacity of more than one megawatt.
Sponsors of Qualifying Facilities under PURP A with a generating capacity of more than
one megawatt are eligible to enter into short-run contracts (energy only) without
submitting a bid pursuant to the RFP. Sponsors should contact Avista to obtain a copy
Avfsta s short-run prototype contract. Sponsors of Qualifying Facilities under PURPA
with a generating capacity of more than one megawatt that desire to enter into long-run
contracts are invited to submit bids in accordance with this RFP.
IV.Renewable Power Supplies.
Renewable project developers are invited to make bids from competitive renewable
resource projects. A vista is looking for competitive proven technology based proposals.
Avista would like to evaluate both proposals for power delivery from renewable power
projects and proposals for A vista ownership of a portion of or all of a renewable power
project. Bidders should provide at a minimum, the following information about their
project.
Description of Proposal
Describe the proposed specific renewable resource project. Describe the nature
and characteristics of that project including location and power interconnection
and transmission arrangements. Provide information regarding project ownership
and operation.
Provide an estimate of the projected capacity and energy from the project.
Provide information regarding when specific amounts of capacity and energy will
be available. Provide a monthly distribution of energy production. If capacity
will be provided, provide a description of what hours that capacity will be
available firm or alternatively an hourly shape of available firm capacity. Provide
an estimate of the monthly and annual plant factors.
Provide a description of dispatch ability (or similar utility control), if any, of the
project energy output. This will probably apply only to projects with capacity.
Page 24 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Page 24 of 39
A ,,;~'n rn~n~n';n~
Describe when project power will be made available including any project
timelines that may be applicable. Describe any variables that could affect those
timelines.
Power Plant Site.
Combined Cycle Combustion Turbine
A vista would like to evaluate the construction of a 260 MW (nominal) natural gas fired
Combined Cycle Combustion Turbine power plant. A vista would like to have parties bid
sites for this construction in the Northwest region. A site offer should include all electric
transmission necessary to connect the plant with the main power grid and all natural gas
transmission necessary to interconnect the plant with interstate natural gas transmission
facilities. In addition, information regarding each of the following must be included in
the proposal:
Water supply characteristics, including: source; quality; and quantity.
Waste disposal characteristics, including: requirements; and treatment
facility.
Work force characteristics, including:
where it originates from to support construction;
where it originates from to support operation;
community infrastructure;
what the surrounding community offers to support construction;
and operation.
Community support, including political environment.
Transportation infrastructure, including, highways, railroads and airports.
Permits in General. The proposed site should have a complete description
and listing of all permits acquired, pending and permits that must be
acquired before the 260 MW (nominal) combined cycle combustion
turbine can be built.
Page 25 Avista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
A vista Corporation
Page 25 of 39
Air Permit. The air permit should be included with the RFP or described
in detail. An itemized listing of the conditions under which the project is
subject to operate must be attached. This assumes construction of a
combined cycle combustion turbine with a output of 260 MW (nominal).
The list must include but not be limited to the maximum each pollutant
can emit by-hour, year, etc.
A legal description of the proposed site.
Documentation of support for the project from local residents, state, local
10.
and federal agencies, and local political groups.
Documentation describing all opposition to the proposed development
whether it is formal or informal.
11.Land and resource use considerations including, existing land use, cultural
resources, earth resources and critical habitat.
12.All other attributes your site possesses that would make siting a combined
cycle combustion turbine a positive decision.
13.Demonstration that the combined cycle combustion turbine project is
licensable and operational under applicable site constraints.
Simple Cycle Combustion Turbine
A vista would like to evaluate the construction of up to 172 MW (nominal) of natural gas
fired Simple Cycle Combustion Turbine power plants. A vista would like to have parties
bid sites for this construction in the Northwest region. A site offer should include all
electric transmission necessary to connect the plant with the main power grid and all
natural gas transmission necessary to interconnect the plant with interstate natural gas
transmission facilities. In addition, information regarding each of the following must be
included in the proposal:
Water supply characteristics, including: source; quality; and quantity.
Waste disposal characteristics, including: requirements; and treatment
facility.
. "
Page 26 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 26 of 39
10.
11.
12.
13.
Work force characteristics, including:
where it originates from to support construction;
where it originates from to support operation;
community infrastructure;
what the surrounding community offers to support construction;
and operation.
Community support, including political environment.
Transportation infrastructure, including, highways, railroads and airports.
Permits in General. The proposed site should have a complete description
and listing of all permits acquired or pending and permits that must be
acquired before the 172 MW (nominal) simple cycle combustion turbines
can be built.
Air Permits. The air permit should be included with the RFP or described
in detail. An itemized listing of the conditions under which the project is
subject to operate must be attached, this assumes construction of simple
cycle combustion turbines with a output of 172 MW (nominal) must be
included. The list must include but not be limited to the maximum each
pollutant can emit by hour, year, etc.
A legal description of the proposed site.
Documentation of support for the project from local residents, state, local
and federal agencies, and local political groups.
Documentation describing all opposition to the proposed development.
Land and resource use considerations including, existing land use, cultural
resources, earth resources and critical habitat.
All other attributes your site possesses that would make siting a simple
combustion turbine a positive decision.
Demonstration that the ~ycle combustion turbine project is
licensable and operational under applicable site constraints.
Page 27 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vi~t~ rnrnnr~tinn
Page 27 of 39
VI.Turnkey Power Plants On Avista s Site.
Combined Cycle Combustion Turbine
A vista would like to evaluate the purchase of a turnkey 260 MW (nominal) natural gas
fired Combined Cycle Combustion Turbine power plant located on a site provided by
Avista. Please describe any variables that would change the ultimate cost to Avista
which are dependent on the location of the plant. (Sales tax is an example.
1.5
1.6
1.7
1.8
1.9
1.10
General Description. The following is a general description of the facility that is
to be built and does not intend to describe all materials, equipment, facilities and
manpower necessary for a completed facility to operate as described:
One advanced technology combustion turbine and generator (CTG) based
upon GE 7FA or equal. Unit should have inlet-cooling capabilities.
One heat recovery steam generator (HRSG). Unit should have duct firing1.2
1.3
1.4
capabilities.
One steam turbine and generator (STG).
Associated balance of plant equipment.
CTG will have only natural gas capabilities.
The gas turbine will be equipped with a dry 10 Nox combustion system.a) Nox limits will be 9 ppm at 15% 02 on natural gas for the CTGb) CO limits will be 9 ppm at 15% 02 on Natural gas for the CTG
SCR will be added if required to meet additional pennit requirements for
Nox emissions.
CO catalyst will be added if required to meet additional permit
requirements for CO emissions.
The CTG will be coupled to a synchronous hydrogen cooled or TEW
(totally enclosed water to air cooled) generator.
Plant shall also include a control system, inlet air system, lubrication oil
system, hydraulic oil system and any other miscellan(,ous equipment
necessary to support Its operation.
Page 28 Avista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
Avista Corporation
Page 28 of 39
1.11 Exhaust gas from the CTG shall be ducted into the HRSG to effectively
recover the waste heat.
1.12 Transformers to step up the generation to 230 kv (configuration to be
evaluated).
1.13 Other supporting equipment to provide safe and efficient operation shall
include but not be limited to:
A demin system to meet the plant requirements
Cranes to perform required maintenance
Buildings to protect equipment
ADCS
Main surface condenser
Mechanical draft cooling tower
Boiler feed water pumps
Generator circuit breakers
Power centers
Motor control centers
Spare parts
Specifics of Site. It may be assumed that A vista will provide electric transmission
to the property line and gas transmission to the property line. Also, it may be
assumed that A vista will provide a suitable piece of property. The following site
conditions will be assumed for the installation and design of a combined cycle
combustion turbine on Avista s site:
Soil bearing 4000 psf
Wind velocity 100 mph
Snow load 50 psf
Rainfall in a 24 hour period 1 inch
Maximum temperature plus 100 degrees F
Minimum temperature minus 30 degrees F
Approximate site elevation 2000 feet above sea level
Approximate humidity 60%
Page 29 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
Page 29 of 39
A ..
+- ,....~----+:~-
This power plant should have inlet cooling and duct firing capabilities. A vista
would plan to start and stop this plant 50 to 100 times per year. The majority
these starts would be considered hot starts, since the plant may be run for 16 hours
during the day and shutdown to no load for 8 hours each night. The duct fired
option may be used up to 8000 hours per year. A vista also prefers to have the
ability to operate this plant on load control to follow variable load obligations.
A vista will require input and review during design and construction of the project.
Items of importance will include design and construction timelines, online date
heat rate curves, peak output, ramp rates, var capability, maintenance schedules
and costs, recommended operation and maintenance staff, spare parts inventory
and cost, type and availability of equipment and training programs. The design of
the plant from an aesthetic point of view will be considered.
Sponsors should describe the number and qualifications of employees required to
operate proposed facilities.
Simple Cycle Combustion Turbine
A vista would like to evaluate the purchase of turnkey natural gas fired Simple Cycle
Combustion Turbine power plants of up to 172 MW sited on a site provided by A vista.
The type and number of simple cycle combustion turbines will be evaluated. Please
describe any variables that would change the ultimate cost to A vista which are dependent
on the location of the plant. (Sales tax is an example.
General Description. The following is a general description of the facility that is
to be built and does not intend to describe all materials , equipment and facilities
necessary for a completed facility to operate as described:
1.1
1.2
Advanced technology combustion turbines and generators (CTG).
Assor.iated balance of plant equipment.
Page 30 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Avista Corporation
Page 30 of 39
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
CTG will have only natural gas capabilities.
The gas turbine will be equipped with a dry 10 Nox combustion systema) Nox limits will be 25 ppm at 15% 02 on natural gas for the CTGb) CO limits will be 9 ppm at 15% 02 on Natural gas for the CTG
SCR or equal will be added if required to meet additional permit
requirements for Nox emissions.
CO catalyst will be added if required to meet additional permit
requirements for CO emissions.
The CTG will be coupled to a generator (type to be evaluated).
Plant shall also include a control system, inlet air system, lubrication oil
system, hydraulic oil system and any other miscellaneous equipment
necessary to support its operation.
Transformers to step up the generation (configuration to be evaluated).
Other supporting equipment to provide safe and efficient operation shall
include but not be limited to:
A demin system to meet the plant requirements if required
Cranes to perform required maintenance
Buildings to protect equipment
ADCS
Generator circuit breakers
Power centers
Motor control centers
Spare parts
Specifics of Site. It may be assumed that A vista will provide electric transmission
to the property line and gas transmission to the property line. Also, it may be
assumed that A vista will provide a suitable piece of property. The following site
conditions will be assumed for the installation and design of a simple cycle
combustion turbine on Avista s site:
Page 31 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 31 of 39
VII.
Soil bearing 4000 psf
Wind velocity 100 mph
Snow load 50 psf
Rainfall in a 24 hour period 1 inch
Maximum temperature plus 100 degrees F
Minimum temperature minus 30 degrees F
Approximate site elevation 2000 feet above sea level
Approximate humidity 60%
This power plant should have inlet cooling and duct firing capabilities. A vista
may plan to start and stop this plant 200 times per year. The majority of these
starts would be after a 16 hour run with a 4 to 8 hour cool-down period before
starting again. Avista also prefers to have the ability to operate this plant on load
control to follow variable load obligations. A vista will require input and review
during design and construction of the project. Items of importance will include
design and construction timelines, online date, heat rate curves, peak output, ramp
rates, var capability, maintenance schedules and costs, recommended operation
and maintenance staff, spare parts inventory and cost, type and availability of
equipment and training programs. The design of the plant from an aesthetic point
of view will be considered.
Sponsors should describe the number and qualification of employees required to
operate proposed facilities.
Turnkey Power Plant Including Site.
Combined Cycle Combustion Turbine
A vista would like to evaluate the purchase of a turnkey 260 MW (nominal) Combined
Cycle Combustion Turbine power plant including the site. The proposal should describe
Pa~e 32 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Cornoration
Page 32 of 39
the general site characteristics as set forth in Section above. The power plant should
have the same general characteristics as set forth in Section above.
Simple Cycle Combustion Turbine
A vista will evaluate the purchase of turnkey Simple Cycle Combustion Turbine power
plants including the site for up to 172 MW (nominal). The proposal should describe the
general site characteristics as set forth in Section Iv, above. The power plant should
have the same general characteristics as set forth in Section above.
Page 33 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 33 of 39
CHECK LIST FOR POWER SUPPLY RESOURCES
To be completed for all bid proposals. Please check in the space provided if the applicable exhibit is
attached.
GENERAL INFORMATION
Project Sponsor s Name:
Address:
Phone Number:
PROJECT INFORMATION
Project Location:
Nameplate Rating (MW):
Annual Energy Capability (MWh):
Tenn of Sale:
Date of First Delivery (Commercial Operation):
Major Fuel Type:
Ownership:
DESCRIPTION OF PROPOSALI. Capacity & Energy Purchase
A.l.
A.3.
A.4.
A.5.
B3.
B.4.
II.Qualifying Facilities with a generating capacity of less than one megawatt
ill.Qualifying Facilities with a generating capacity of more than one mega watt
IV.Renewable Power Supplies
A.2.
A.3.
A.4.
Power Plant Including Site
A. Combined Cycle Combustion Turbine
A.I.
A.2.
A.3.
A.4.
A.5.
A.6.
A.7.
A.9.
A.lO,
A.II.
12.
A.B. B. Simple Cycle Combustion Turbine
Page 34 Avista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 34 of 39
B.4.
B.IO.
ll.
12.
B.13.
VI.Turnkey Power Plants On Avista s Site
Combined Cycle Combustion Turbine
ALL
A 1.2.
A 1.3.
Al.4.
AL5.
A 1.6.
A 1.7.
A 1.8.
L9.
A 1.10.
Al.1L
A1.12.
A 1.13.
A3.
A4.B. Simple Cycle Combustion Turbine
LL
L2.
L3.
L4.
L5.
L6.
L7.
L8.
L9.
1.10.
B.4.
Page 35 A vista Corp - August 2000 RFP
Exh, 6/ Schedule 5
R. Lafferty
A vista Corporation
Page 35 of 39
VII.Turnkey Power Plant Including Site
A. Combined Cycle Combustion Turbine
I. Same as Section IV.
A.2. Same as Section V.A.
B. Simple Cycle Combustion Turbine
1. Same as Section IV.
2. Same as Section V.B.
Page 36 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
. - ..- ,..,-
Page 36 of 39
APPENDIX A
WUTC BIDDING RULE
Bidders participating in Avista s 2000 RFP that would like a copy of the WUTC bidding
rule WAC 480-107 can receive a copy by contacting Doug Young at [phone] at
Avista s general office in Spokane, Washington.
Page 37 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
";~t,, rr"'nnr,,t;rm
Page 37 of 39
APPENDIX B
MODEL CONTRACTS
The following 1994 model contrac!s are included in this appendix
1. DEMAND SIDE MANAGEMENT PURCHASE AGREEMENT
2. FIRM POWER PURCHASE AGREEMENT
3. PARALLEL OPERATING AND POWER PURCHASE AND SALE AGREEl\ffiNT
These model contracts provide a basis for negotiation of a purchase agreement with
A vista Corporation. Bidders should expect that a final agreement will have many
changes in terms and conditions through the negotiation process.
Bidders participating in A vista s 2000 RFP that would like a copy of these model
contracts can receive a copy by contacting Doug Young at [phone] at Avista
general office in Spokane, Washington.
Page 38 A vista Corp - August 2000 RFP
Exh. 6/ Schedule 5
R. Lafferty
Page 38 of 39
A ..
.-
r"-----
.:--
APPENDIX C
RET All.. TARIFFS
Bidders participating in Avista s 2000 RFP that would like a copy of Avista s retail
service tariffs can receive a copy by contacting Doug Young at [phone] at
Avista s general office in Spokane, Washington.
Page 39 A vista Corp - August 2000 RFP
Exh. 6 / Schedule 5
R. Lafferty
Avi~t::l ('ornnr::ltion
Page 39 of 39
:RFP Bid Analysis Review
.J.~JiI'STA.
CorpM
Avista. Corporation
. Spokane, Washington
. .
Decem ber 2000
R'wBECK
Exh. 6 / Schedule 6
R. Lafferty
Avista Corporation
Pg. 1 of 10
December 7, 2000
R,w'llrCK
~.
RobertI. Laffe~
Manager, Electric Resources
Avista Corporation
1411 East Mission, MSC-
Spokane, Washington 99220-3727
Dear Mr. Lafferty:
Subject:Review of A vista Corporation s RFP Bid Analysis
R. W. Beck, Inc., was retained by Avista Corporation (Avista) in October 2000 to conduct an
independent review of the methodology and assumptions used by Avista to review the
bids received from its August 2000 Request for Proposals titled "Evaluation of Resources
from Electric Energy Efficiency and/or Power Supply Resources." The goal of R. W. Beck's
independent review was to assure that the economic analysis of the alternative resource
bids was conducted in a fair, reasonable, and appropriate manner. Avista s analysis of
certain other factors (such as transmission accessibility, environmental factors, etc.) was not
reviewed. This report summarizes our review of Avista's analysis conducted through
November 28, 2000. Changed conditions occurring after such date were not considered in
our review.
BACKGROUND
Avista Utilities, a division of Avista Corporation, is a private investor-owned electric utility
with headquarters in Spokane, Washington. In August 2000, Avista issued a Request for
Proposals (RFP) seeking potential resources to meet its system requirements of energy and
capacity. According to the RFP:
..
The company has identified a power need of approximately 300 MW of both
capacity and corresponding energy. Resource availability in the year 2004 would
fit Avista s requirements best.
. ..
The goal of the 2000 RFP will be to identify low cost and environmentally
sound resource options that best satisfy Avista s resource needs.
In response to the RFP, Avista received numerous proposals from resource sponsors (the
bids). As part of the bid review process, Avista attempted to calculate the economic and
financial benefit of each of the bids using A vista-developed methodology and
assumptions. Avista also studied the potential benefits and costs of enhancing an existing
generation facility, which we will refer to as the "self-build option" in this report.
To assure the fairness and reasonabless of their economic analysis, Avista retained
R. W. Beck to conduct an independent review of their methodology and assumptions; to
1001 Fourth Avenue, Suite 2500 Seattle, WA 98154-1004 Phone [phone] Fax [phone]
Exh. 6/ Schedule 6
R. Lafferty
A vista Corporation
Pg. 2 of 10
Mr. Robert J. Lafferty
December 7, 2000
Page 2 R,wlllECK
assure that significant economic risks, benefits, and costs were identified; and to make note
of, and suggest corrections for, any deficiencies found. R. W. Beck has completed an
independent review of the economic analysis of the bids and our findings and conclusions
are presented in this report.
SCOPE OF SERVICES
Avista identified the following tasks as part of the scope of services for a third-party review
of A vista s evaluation methodology and input assumptions.
1. Review the Prosym
TII dispatch model inputs and assumptions on six to eight
representative bids. Make recommendations. for any modifications aimed at
achieving A vista s RFP goals.
2. Review the Avista economic model inputs and assumptions on six to eight
representative bids. Make recommendations for any modifications aimed at
achieving A vista's RFP goals.
3. Be available to discuss with Avista representatives the recommended
modifications under Tasks 1 and 2 above.
4. Prepare a final letter report summarizing recommended modifications for
dispatch model and economic model inputs and assumptions aimed at achieving
A vista s RFP goals.
5. Present a review of the recommendations for analysis inputs and assumptions to
Avista management, staff, and commission staff from Washington and Idaho
Spokane, Washington.
This letter report constitutes completion of Task 4 above. The Task 5 presentation was
provided on November 29 2000 at Avista s headquarters building in Spokane.
INFORMATION PROVIDED AND REVIEWED
Avista provided several reports, analyses, and other information for use in the
independent review. In addition, numerous group discussions were held with Avista stafffor clarification and further insight. The information reviewed is summarized as follows:
1. August 2000 RFP from Avista.
2. "Evaluation Guidance for Electric RFP Bid Proposals" from Avista.
3. "WSCC Regional Electricity Market Price Forecast 2001-2012, September WOO"prepared by Henwood Energy Services, Inc., for Avista.
Exh. 6 / Schedule 6
R. Lafferty
A vista Corporation
Pg. 3 of 10
Mr. Robert J. Lafferty
December 7, 2000
Page 3 R'W'BrCI(
. Submitted proposals from six bidding resource sponsors, including:
a. Calpine Corporation
b. Enron North America Corporation
c. Newport Northwest, LLC
d. Pacific Winds Inc.
e. Regional Power Inc.
f. Williams Energy Marketing & Trading Company
Prosym T" model input files representing the Avista system for each of seven proposed
resource options and the enhancement of the existing Rathdrum generation facility
(self-build option). The eight various resource bids/options given to R. W. Beck for
review were identified by Avista as follows:
a. Calpine
b. Enron Monthly Toll
c. Newport Northwest
d. Pacific Winds
e. Rathdrum
f. Regional Power
g. Williams Energy Flat Purchase
h. Williams Energy Toll
Prosym
TM model results contained in electronic spreadsheets for each of the eight
resource options.
Economic analysis spreadsheets for each of the eight resource options, used to
calculate each resource option s projected revenues, costs, and net project benefit to
the A vista system.
OVERVIEW OF AVISTA'S APPROACH, METHODOLOGY, AND ASSUMPTIONS
Avista used the production costing and market simulation model Prosym to determine
certain costs and benefits of each of the bids as well as the self-build option. Prosym T" is
generally considered within the electricity industry to be an acceptable model for such
purposes, capable of modeling both expansive, interconnected markets and smaller utility
systems in detail and with a high degree of accuracy. Avista staff created a detailed model
of Avista s system, representing on-peak and off-peak loads, hydroelectric and thermal
generathlg resources, contractual sales and purchases, and spot-market sales and
purchases.
Exh. 6 / Schedule 6
R. Lafferty
A vista Corporation
Pg. 4 of 10
Mr. Robert J. Lafferty
December 7, 2000
Page 4 R,w'llECK
The spot-market sales and purchase prices used in the model were based on market price
forecasts provided by R. W. Beck staff. A price forecast was provided for a base case
scenario and various sensitivity scenarios, developed primarily to provide a range of prices
and to illustrate the change in market prices resulting from a change in key input
assumptions, such as a change in natural gas prices. A detailed discussion of the market
prices used in the analysis is provided below under the heading "Market Price Forecast"
For each pricing scenario (base case and sensitivities) the model was run once based on
existing resources, and then a second time with each resource proposal individually added
to the model. The difference in A vista s total system cost between the various model
simulations was used to determine which projects are most beneficial or most costly.
Because the results from model simulations are fundamental to Avista s economic
decisions, the accuracy and completeness of input variables is very important.
Avista s economic analysis of the bids and the self-build option was primarily presented in
the form of a spreadsheet model that compared Avista s total system cost with and
without each of the resource options and the potential cost and revenue requirements of
each of the proposed resource alternatives. These economic analysis spreadsheets
provided detailed data for each of the resource options for the total Avista system for years
2001 to 2025. Included in the economic analysis spreadsheets are:
Financial assumptions
Sample of Avista s most critical assumptions:
State Income Tax Rate 00% (None)
Federal Income Tax Rate 35.00%
Discount Factor 7.77%
Tax Life (years)
Book Life (years)
Property Tax Rate 4099%
Levelize Period (years)
Cost of Capital:
Capital
Source
Weighted
Average
61%
73%
69%
03%
After-tax
Weighted Average
35%
73%
69%
77%
Debt
Preferred Stock
Common Stock
Percent
of Total
49.00%
00%
42.00%
100.00%
Percent
Rate
36%
11%
11.16%
Projections of annual energy produced from the various resocrce options to supply
Avista s system, calculated through the ProsymT" simulation model where applicable.
Exh. 6 / Schedule 6
R. Lafferty
A vista Corporation
Pg. 5 of 10
Mr. RobertJ. Lafferty
December 7, 2000
Page 5 R'W'BtCK
Projected resource costs-including any applicable fuel costs, fuel transportation costs, '
variable operations and maintenance costs (variable O&M), transmission costs, and
fiXed costs. These costs, if not explicitly set forth as an exact amount in the bids, are
projected using the Prosym
T.. simulation model, where appropriate.
Projected operating margin-defined by A vista as the added benefit or cost savings to
the total system cost when the resource is included as compared with the A vista base
case (the case where no resource options are included and all required energy is
purchased from the market at projected market prices). The projected operating
margin is calculated using the Prosym
TM simulation model.
Projected net project benefit-calculated by subtracting fixed and outside variable
costs, not included in the Prosym
TM simulation model, from the projected operating
margin.
MARKET PRICE FORECAST
Initially, Avista staff used a market price forecast supplied by Henwood Energy Services,
Inc. (HESI) to represent market prices in the Prosym TII model. This forecast supplied
reasonable monthly on-peak and off-peak market prices for the Pacific Northwest market
area. However, the HESI forecast did not provide disaggregated hourly prices and the
accompanying report did not provide a detailed description of the assumptions and
conditions used in their analysis. As a result, the Avista analysis initially contained
24 market prices per year, an on-peak price and an off-peak price for each month. HESI
also provided Avista with a copy of its monthly gas price forecast which it used
developing the market price projections.
After the initial review of Avista s bid analysis, it was determined that the market price
forecast needed a higher level of detail in order to improve confidence in the results. The
R. W. Beck team suggested several recommendations related to market price projections
including, (i) use of an hourly prices and hourly dispatch, (ii) use of monthly gas prices
instead of annual average prices, and (ill) forecasting of both energy and capacity prices
instead of forecasting all-in prices. R. W. Beck also recommended the use of an additional
set of sensitivities in order to create a wider band of market prices to be used in the bid
evaluations.
Through discussions with A vista staff, it was decided that a new market price forecast
supplied by the R. W. Beck Market Pricing Group would be used in a revised bid analysis.
This market price forecast supplied an increased level of detail for the bid review process
and also provided Avista staff with an understanding of all the key input assumptions
used in the forecast of the long-term prices. Three additional sensitivity price forecasts
were created: one using 25 percent higher natural gas prices, one using 25 percent lower
natural gas prices, and one with an increase in load by 1.5 percent.
Exh. 6/ Schedule 6
R. Lafferty
A vista Corporation
Pg.6oflO
Mr. Robert J. Lafferty
December 7 2000
Page 6 R'W'~E(I(
R. W. BECK'S REVIEW OF THE AVISTA ANALYSIS
R. W. Beck's independent review of Avista's economic analysis of the bids and the self-
build option focused on the methodology and key assumptions used in the analysis. The
R. W. Beck review team carefully reviewed all of the necessary documents, including the
August 2000 RFP, the HESI Market Price Forecast, the model input files, and the initial
economic analysis spreadsheets. Numerous conversations between Avista staff and the
R. W. Beck review team took place, discussing issues such as model input variables,
spreadsheet calculations, the market price forecast, and the meaning of certain terms used
in A vista's analysis. The following two subsections summarize our comments on A vista'
methodology and the key assumptions used in the analysis.
AVISTA'S ANALYTICAL ApPROACH AND METHODOLOGY
Based on our review, R. W. Beck believes the approach taken by Avista in its analysis of the
alternative resource proposals provides a fair comparison of the resource options including
in the bid proposals or the self-build option. We believe that comparing Avista's total
system cost with and without each of the resource options, and the net project benefit of
each proposed resource, is a reasonable way to determine which options are most
financially and economically viable for A vista.
Avista has used an adequate level of care to include the necessary assumptions and
methodology in both the Prosym
TIC modeling of the bids and in the economic analysis
spreadsheets. R. W. Beck did not find any material deficiencies (such as miscalculation of
formulas or omission of essential data) in either the input files or the electronic
spreadsheet analyses.
REVIEW OF KEY AsSUMPTIONS USED IN THE AVISTA ANALYSIS
The following comments focus on a number of the key input assumptions used by Avista
in its analysis:
Market Prices: The annual average market prices used in the initial analysis were
within a reasonable range based on recent economic trends and market data. Overall
price levels for the Pacific Northwest market were not unreasonable. The use of
projected hourly prices in the dispatching analysis allowed for a potentially more fair
evaluation of each bid resource and technology type.
Fuel Prices: We believe the price of gas forecast used was reasonable and based on
reputable sources. Monthly price variations follow an expected pattern. Fuel price
projections were used appropriately in the model input files.
Exh. 6 / Schedule 6
R. Lafferty
A vista Corporation
Pg. 7 of 10
Mr. Robert J. Lafferty
December 7, 2000
Page 7 R'W'lltCK
Avista's Resources and Loads: Avista's existing resources and loads were modeled in a
reasonable manner based on the data that was provided for review. Operating
characteristics of the individual generating units, purchases, and sales were modeled
with a reasonable level of accuracy.
Bids and Self-Build Option: Based on the information contained in each reviewed
proposal and information provided on the self-build option, A vista modeled the
operational characteristics and costs of each of the resources bid and the self-build
option fairly and without bias.
Inflation, Cost of Capital, and Other Financial Assumptions: Financial and economic
parameters used in the evaluation were reasonable and based on recent economic
trends.
Sensitivity Cases: The gas prices used to create the high fuel price and low fuel price
sensitivity cases provide for a reasonable range of prices around the base case.
Historical market prices for natural gas show a 20 to 25 percent range of volatility. The
gas prices used in the sensitivity cases were 25 percent higher and 25 percent lower
than the base case scenario, which used market prices.
The high load sensitivity gives a good indication of how increases in load affect market
prices. Although the load sensitivity case, which entails an annual average
compounded rate of 1.5 percent increase in loads for all WSCC market areas, does not
capture the short-duration load spikes, the sensitivity does provide a reasonable
increase in market prices for yearly, weekly, and hourly prices. Short-duration load
spikes, such as those occurring during only a few hours each year are captured well in
the capacity portion of the market pricing forecast.
CONSIDERATIONS AND ASSUMPTIONS
In the preparation of this letter report and the conclusions that follow, we have made
certain assumptions with respect to conditions, which may occur in the future. In
addition, we have used and relied upon certain information and assumptions provided to
us by sources which we believe to be reliable. We believe the use of such information and
assumptions is reasonable for the purpose? of this report. However, some assumptions
will invariably not materialize as stated herein or may vary significantly due to
unanticipated events and circumstances. Therefore, actual results can be expected to vary
from those projected to the extent that actual future conditions differ from those assumed
by us or provided to us by others.
This independent review included consideration of materials and analyses provided to us
by Avista staff. Avista indicated that a representative sample of the various types of bids
was provided for our review. Therefore, we did not review all of the bids submitted to
Exh. 6 / Schedule 6
R. Lafferty
A vista Corporation
Pg. 8 of 10
Mr. Robert J. Lafferty
December 7, 2000
Page 8 R'w'llECK
Avista by resource sponsors and we are unaware of those other proposals that Avista may
have received, in terms of resource capacity, cost, location, and technology type.R. W. Beck accepted Avista s assumptions, without review, regarding the accessibility ofAvistas transmission system for each of the proposed resource options. We did notconduct an independent review of Avista s system import and export capability or Avista'assumptions regarding its ability to purchase from and sell into the regional electricitymarket.
R. W. Beck was retained to conduct an independent review of the economic analysis of thebids and the self-build option. According to Avista staff, in addition to the economicanalysis, other non-economic and non-financial factors will also be used to determine the
merit of the submitted bids (including items such as credit-worthiness of resourcesponsors, environmental factors, etc.). Avista's economic analysis will comprise only aportion of the evaluation process used to judge each of the bids and the self-
build option.R. W. Beck did not review any of these non-economic factors nor the final process fordetermining the winning resource option.
CONCLUSIONS
Based on the review summarized in this letter report and the considerations andassumptions set forth above, R. W. Beck concludes that:
. A vista s bid evaluation methodology and assumptions were sound. A vista staffincluded all the necessary input variables into the Prosym TM model and the economicanalysis spreadsheets.
R. W. Beck's recommended modifications to forecasted market prices were addressed
in order to improve the bid review analysis. Avista was committed to creating a fairand accurate bid-review process and invested the required time and resources to doso.
Avista s approach provided a fair and reasonable methodology to determine whichbid option is most viable for A vista. The bid review process was based on soundfinancial and economic assumptions and the analysis used appropriate information tomake decisions regarding future markets and Avista s system needs.
The approach taken by Avista provided for a fair comparison of the resource options
bid as well as the self-build option. The market prices used in the analysis provide areasonable level of detail and a wide enough range of prices so that bids may beassessed fairly under a variety of market circumstances. All bids reviewed wererepresented fairly in the Prosym TM model and the financial analysis spreadsheets.
Exh. 6/ Schedule 6
R. Lafferty
A vista Corporation
Pg. 9 of 10
Mr. Robert J. Lafferty
December 7, 2000
Page 9 WIBr(K
We appreciate the opportunity to be of service to Avista Corporation in its evaluation of its
future resource options, and we hope to have the opportunity to work with you again in
the near future.
Sincerely,
R. W. BECK, INC
R~ C~LiT
Richard W. Cuthbert
Project Manager
f;J
Client Services Director
Pacific Northwest
RWC:bb
. .
File: 011129/11-oo669-101O1-:J10l
Exh. 6 / Schedule 6
R. Lafferty
Avista Corporation
Pg. 10 of 10
CO NFID ENTIAL
Resource Selection Process - 3rd Round Screening
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEPARATELY FILED
Exhibit No., Schedule 7 Pages 1 - 18
R. Lafferty
A vista Corporation
Resource Selection Process - Additional Explanation
Please explain how the Company demonstrated that a new resource
was necessary?
The Company updated its 1997 Integrated Resource Plan in spring of 2000
(1997 IRP Update, or as referred to in this testimony, 2000 IRP) and reviewed that plan
with the IRP Technical Advisory Committee. The 2000 IRP showed a need for 300 MW
of capacity and energy beginning in 2004. The Company subsequently filed the 2000
IRP with the Commission on July 13, 2000. The loads and resources contained in the
plan showed a need for power beginning in 2004.
Please explain how the Company demonstrated that the resources
selected filled the resource need in a cost-effective manner including available
purchases compared against what it would cost to self-build the resource?
The Company compared the variety of resource bid proposals, including
market purchases, tolling proposals and turnkey power generation project proposals
which were received in the 2000 RFP both against one another and against Company-
build options. A consistent evaluation process was used to evaluate the dispatch value
and costs of each resource option over a 25-year period in conjunction with the
Company s existing resources. The Company rated each project across a consistent set of
price and non-price factors to come up with a weighted matrix evaluation and ranking for
each resource proposal.Factors included in the weighted matrix evaluation were:
economic benefit of the resource (35%); long-term financial performance capability of
the bidder (15%); fuel price risk (15%); fuel availability risk (5%); electric factors such
as dispatchability, ramping, reactive capability, transmission contingency exposure, etc.
(20%); and environmental factors including permits, plan for compliance with applicable
Exh. 6 / Schedule 8
R. Lafferty
A vista Corporation
Page 1 of 5
Resource Selection Process - Additional Explanation
regulations, and proven technology (10%).The Evaluation Guidance attached as
Schedule No.3 of Exhibit No.6 provides further detailed explanation of the resource
evaluation process. The 2000 Resource Selection Process Report, on page 7 of Schedule
No.1 of Exhibit No.6, explains the development of the weighted matrix evaluation. This
evaluation matrix and the write-up describing the various weightings and the ranking
process were reviewed with Commission Staff members on September 13, 2000, prior to
opening of the RFP bid proposals.
Please explain how the Company evaluated resource dispatchability?
The Company used Prosym as the tool to perform an hourly dispatch
evaluation of the resource options considered for selection under the resource selection
process. This dispatch model showed how each resource alternative would operate in
conjunction with Avista s existing resources under different hydroelectric generation
conditions and different electric and natural gas price scenarios. The model calculated
the energy generated by the proposed power supply option and the differential variable
system costs for each of the different resource options compared to a base case which
used market purchases to meet resource deficits. The variable costs of operation and the
energy generated by the resource were the inputs into the economic modeling step.
Please explain how the Company evaluated the transmission impacts
of resource alternatives?
Incremental electric transmission costs were included in the economic
modeling step for resource alternatives. In addition, transmission considerations, such as
exposure to transmission contingencies, were included in the non-price "electric factors
ranking in the weighted Evaluation Matrix.
Exh. 6 / Schedule 8
R. Lafferty
Avista Corporation
Page 2 of 5
Resource Selection Process - Additional Explanation
Please explain how other bids were considered as part of the resource
selection?
The Company evaluated 32 third-party supply-side and demand-side
proposals submitted through the 2000 RFP process.Supply-side resources were
compared to one another in a weighted Evaluation Matrix that considered both price and
non-price factors. Demand-side resource options were compared against any mutually
exclusive DSM opportunities, both internal and external. Demand-side resource options
were also measured against the avoided costs of supply-side options.
Please explain how build options were considered as part of the
resource selection?
The Company investigated over thirty sites for a potential combined cycle
combustion turbine project.Site options were screened to five sites by a cross-
department team of A vista employees. An outside engineering firm was then hired to
prepare a detailed site analysis on those sites.The Company obtained third-party
budgetary costs to upgrade the existing Rathdrum project to combined cycle.The
Company-build options were evaluated using the same modeling and evaluation process
as bid options under the 2000 RFP.
Please explain how fmandal rate impacts were considered in the
evaluation?
The Company performed twenty-five year economIC benefit analyses
based on the variable O&M costs, fuel costs, portfolio operational costs delta (benefit as
compared to a base case without the resource), fixed costs and generation output which
are the results of the Prosym dispatch model output for the particular resource. This
Exh. 6 / Schedule 8
R. Lafferty
A vista Corporation
Page 3 of 5
Resource Selection Process - Additional Explanation
analysis was performed for the base case electric and natural gas price forecasts as well
as each of the three pricing scenarios. The financial analyses of these scenarios were
reflected in the comparative price ranking of different resource options. Base case and
pricing scenario analyses results are presented in attached Confidential Schedule No.7 of
Exhibit No.6. The Company also performed a projection of revenue requirements for the
top three projects in the evaluation process. The CS2 and Rathdrum build projects were
deemed equivalent on a 25-year levelized basis.A flat energy market option was
approximately $2.8 million higher cost on a 25-year levelized basis for the base case.
The revenue requirements analysis is attached as Confidential of Exhibit No.6 No. 10.
How did the Company incorporate a range of views about an
uncertain future in its comparison of resources?
The Company performed hourly Prosym dispatch modeling analysis using
electric and natural gas pricing scenarios for high natural gas prices, low natural gas
prices and high northwest region demand for the short listed projects. The financial
analyses of these scenarios were reflected in the comparative price ranking of different
resource options.
What other factors were incorporated by the Company in its
evaluation of resource alternatives?
In the third screening analysis, the Company included a salvage value for
physical resource projects at the end of their projected life. This value, though small
represents the end-effects of the physical project. Also included in the modeling of
physical generation projects were maintenance cycles, random outages, start costs
minimum up-times , and minimum down-times.
Exh. 6 / Schedule 8
R. Lafferty
A vista Corporation
Page 4 of 5
Resource Selection Process - Additional Explanation
Please give an overview of the evaluation process used for demand-
side resource bids.
Proposals involving acquisition of resources on the customer side of the
meter, whether energy-efficiency or customer-owned generation, were initially screened
for compliance with minimum RFP requirements. Proposals that were deemed to not
meet minimum requirements were given an option to correct deficiencies. One proposal
failed to correct these deficiencies. The remaining seven proposals were advanced to the
evaluation stage.
A six-person team was created to perform evaluation on each of the remaining
seven proposals. Two individuals were common to evaluation of both the supply-side
and the demand-side proposals.The evaluation teams reviewed and scored each
proposal. All evaluation team members collectively performed a ranking and developed
a short-list of the proposals.Three proposals were short-listed and proceeded to
negotiations. A vista executed agreements for two proposals representing 3 aMW in
energy savings acquired over a three year period.The Company has extensive
documentation of the evaluation and selection of the demand-side RFP proposals
available at the Company s offices.
Exh. 6 / Schedule 8
R. Lafferty
A vista Corporation
Page 5 of 5
CO NFID E NTIAL
Resource Planning & Acquisition Documentation Index
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEPARATELY FILED
Exhibit No., Schedule 9 Pages 1 - 8
R. Lafferty
A vista Corporation
CO NFID ENTIAL
Revenue Requirement Analysis - Top Projects
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEP ARATEL Y FILED
Exhibit No., Schedule 10 Pages 1 - 5
R. Lafferty
A vista Corporation
CONFIDENTIAL
Coyote Springs 2 - Re-evaluation
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEPARATELY FILED
Exhibit No., Schedule 11 Pages 1 - 6
R. Lafferty
A vista Corporation
CO NFID ENTIAL
CS2 GSU Failure - Steps Taken By The CS2 Partners
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEP ARA TEL Y FILED
Exhibit No., Schedule 12 Pages 1 - 6
R. Lafferty
A vista Corporation
MITSUBISHI ELECTRIC POWER PRODUCTS, INC.
US Transformer Supply Record as of 8/28/02
(eaeh winding)(each winding)Cooling
Customer Installed at Qty.Phase Capaelty (MVAI Voltage (kV)Class Year Type Tap Changers Scope
Tucson Electric Tortolila 672 672 525 138 13.OFAF Mfg.AUTO DETC +OLTC
Cogenlrix Southaven 400 400 500 230 13.ONAF Mfg,AUTO DETC Tum-key
PEPCO Palmers Comer 224 224 220 13.OFAF Mfg.AUTO DETC+OL TC
BG&E Calvert Cliffs 810 810 500 OFAF Mfg,GSU DETC
NEPCO Caledonia 225 225 525 OFAF Mfg.GSU DETC Tum-key
NEPCO Caledonia 155 155 525 13,OFAF Mfg.GSU DETC Tum-key
FP&L Sanford 460 460 236 OFAF 2002 GSU DETC
LADWP Receiving Station E 336 336 58.525 230 13.ONAF 2001 AUTO DETC+OL TC
SDG&E Talega 19.25 138 3.2 ONAF 2001 POWER DETC Tum-key
BG&E Calvert Cliffs 810 810 500 OFAF 2001 GSU DETC
FP&L Sanford 460 460 236 OFAF 2001 GSU DETC
NEPCO Sterlington 225 225 525 OFAF 2001 GSU DETC Tum'key
NEPCO Sterlington 155 155 525 13.8 OFAF 2001 GSU DETC Tum-key
PEPCO System Spare 224 224 224 220 115 OFAF 2001 AUTO DETC+OTLC
SCE Mira Loma 373 373 112 525 230 13.OFAF 2001 AUTO DETC+Ol. TC Tum-key
PG&E Tesla 374 374 525 230 13.OFAF 2001 AUTO 2 x DETC
VELCO Essex 115 3.2 OFAF 2001 POWER DETC Tum-key
TMPA Gibbons Creek 525 525 345 OFAF 2001 GSU DErC Tum-key
Ameren Spencer Creek 362 ONAF 2001 SHUNT none
Boston Edison N. Cambrigde 118 ONAN 2000 SHUNT none
PEPCO System Spare 224 224 224 220 115 OFAF 2000 AUTO DETC+Ol. TC
PG&E Moss Landing 120 ONAN 2000 SHUNT none
SCE Mira Lorna 280 280 230 70.ONAF 2000 AUTO DETC+Ol. TC Tum-key
SCE Serrano 373 373 112 500 230 13.OFAF 2000 AUTO DETC+OLTC Tum-key
Consumers Energy Battle Creek 500 500 150 345 140 13.ONAF 2000 AUTO DETC
Entergy Pleasant Hill 200 200 46.525 169 13.ONAF 2000 AUTO DETC
OPPD Nebraska City 760 760 345 17.OFAF 2000 GSU DErC Tum-key
GSU : Generator Step-Up Transformer, AUTO '" Autotransformer; SHUNT '" Shunt Reactor. POWER: Power Transformer
DETC: De-Energized Tap Changer, OLTC=On-Load Tap Changer
Total Units:
Exh. 6 / Schedule 13
R. Lafferty
Avista Corporation
Page 1 of 1
CO NFID E NTIAL
Coyote Springs 2 GSU Alternatives
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEPARATELY FILED
Exhibit No., Schedule 14 Pages 1 - 15
R. Lafferty
A vista Corporation
CO NFID E NTIAL
Coyote Springs 2 - Budget to Actual Cost Consumption
THIS PAGE CONTAINS CONFIDENTIAL MATERIALS AND IS SEP ARA TEL Y FILED
Exhibit No., Schedule 15 Pages 1 - 3
R. Lafferty
A vista Corporation