20180226Link Exhibit 61 - Redacted.pdf

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Case No.PAC-E-17-07
Exhibit No.61 -CORRECTED
Witness:Rick T.Link
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
REDACTED
Exhibit Accompanying Second Supplemental Direct Testimony of Rick T.Link
February 2018
Rocky Mountain Power
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Case No PAC-E-17-07
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BATES
WHITE
ECONOMICCONSULTING
THE INDEPENDENT EVALUATOR'S
ASSESSMENT OF
PACIFICORP'S
FINAL DRAFT 2017R REQUEST FOR
PROPOSALS
Presented to:
OREGON PUBLIC UTILITY COMMISSION
Prepamdby
Frank Mossburg
Vincent Musco
Karen Morgan
August 10,2017
1300 Eye Street NW,Suite 600
Washington,DC 20005
202-408-6110
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TABLE OF CONTENTS
I.INTRODUCTION AND SUMMARY .............................................................................1
A.Background............................................................................................................1
B.Three Unique Risks Present in the RFP..................................................................2
C.Summary..................................................................................................................5
II.DETAILED DISCUSSION OF THE RFP ......................................................................8
A.Fairness and Transparency....................................................................................8
B.Risk Measurement and Assignment.....................................................................12
C.Producing a Positive Result ...................................................................................17
D.Compliance with Commission Guidelines............................................................19
APPENDIX A:KEY CRITERIA OF RFP EVALUATION....................................................22
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I.INTRODUCTION AND SUMMARY
Bates White,LLC ("Bates White")was chosen by the Public UtilityCommission of
Oregon ("Commission")to serve as the Independent Evaluator ("Oregon IE"or "IE")for
PacifiCorp's ("the Company's")Renewable Request for Proposals ("2017R RFP"or "RFP").'
This report represents Bates White's analysis of the Final Draft of the RFP as filed with the
Commission on August 4,2017.
The purpose of this report is to identify areas of concern regarding the RFP design and to
recommend areas where the Company could improve the RFP to achieve a better outcome.This
report complies with the requirements of the Competitive Bidding Guidelines ("Guidelines"),2
which state:
The utilitywill consult with the IE in preparing the RFPs,and the IE will submit its
assessment of the final draft RFP to the Commission when the utility files for RFPapproval.3
A.Background
As a matter of record,we note that this RFP process is taking place under an accelerated
schedule.PacifiCorp has requested this accelerated schedule in order to achieve the following:
1.Issue the RFP in time to allow for winning bidders to capture the full value of the
Production Tax Credit ("PTC")by placing their projects into service prior to December
31,2020,4 and
2.Align with the Company's Certificate of Public Convenience and Necessity ("CPCN")
process to expand its transmission system in Wyoming in order to accommodate projects
selected in this RFP.
Specifically,we received the initial draft of the RFP from the Company after close of
business on Friday,July 21.We provided comments on the initial draft RFP to the Company on
Wednesday,July 26.The final draft RFP was filed on Friday August 4.This report is being
provided less than a week after that filing.Typically,the review period for a final draft RFP is
'Bates White has significant experience as an Independent Evaluator representing state public utility commissions.
We previously monitored PacifiCorp's,2008 All Source,2008R-l,2009R,201l All Source,and 2012 Baseload
RFPs on behalf of the Oregon Commission.All this work was performed under the name of Boston Pacific
Company,Inc.In November of2016 Boston Pacific entered into a strategic combination with Bates White.
2 Oregon's Competitive Bidding Guidelines Modified,Public Utility Commission of Oregon,Order No.14-149,
Appendix A,April 30,2014 ("Competitive Bidding Guidelines").
3 Competitive Bidding Guidelines,item 6.
4 RFP,page 1.
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more lengthy.For example,in PacifiCorp's 2011 All Source RFP the Final Draft was filed on
October 27,2011 and our assessment of that draft was filed on November 17,2011.6 That
represents three calendar weeks,as opposed to the one business week afforded here.
The typical concern with such a rushed process,particularly one in which affiliate bids
are involved,is that the process is set up for the selection of the affiliate offer and competition
will be less than optimal as bidders either cannot or will not offer supply.This is an
understandable concern here,particularly since the Company's preferred wind and transmission
additions were announced late in the IRP process and the debate over that solution is ongoing.
In this report we make several suggestions to improve participation in the RFP process
and make the process more open and fair.In addition,during the process itself,we will
independently monitor the process and evaluate all offers,including affiliate bids,to ensure the
process is fair.However,we do not address,and take no position on,two larger questions raised
by this RFP,which are:1)is Wyoming wind (paired with transmission)the "correct"resource to
acquire?and 2)does this acquisition represent a "time-limited"opportunity of unique value to
customers?To us,the first question will be answered in the IRP process and,if that process
produces a "no"answer,then this RFP will be moot.The second question would require a much
more detailed and time-consuming analysis which would weigh the loss (or partial loss)of the
Production Tax Credit ("PTC")against various alternate dispatch scenarios created by a delay in
the process and require consideration of schedule delays in not justthis process but also the
CPCN process in Wyoming.Such an analysis is not possible within this time frame.
The Company has been responsive to our questions and we believe we have been able to
make an adequate assessment of the RFP design.We note that PacifiCorp did make several
productive changes in responseto our initial comments.6 However,due to this accelerated
schedule we will focus this report mainly on suggestedchanges to the final draft RFP rather than
providing a more thorough explanation of the positive aspects of the RFP design.'If the
Commission feels that more time is needed for consideration of this RFP we do recommend
giving more time for stakeholder feedback.
B.Three Unique Risks Present in the RFP
This RFP raises standard concerns regarding any procurement with affiliate offers and
PPAs versus utility-owned resources;we make suggestions to address these concerns in this
document.However,the timing of this RFP also creates unique risks that are not typically
present in an RFP.Three unique risks are as follows:
(1)The Company's 2017 Integrated Resource Plan ("IRP")has not yet been
acknowledged by the Commission.As a result,there is a risk that the IRP will not
acknowledge the RFP or that the action items driving this RFP may be modified or
6 See Docket UM-1540.This RFP was also known as the All Source RFP -Resource 2016.
6 Changes included:a)removing the requirement for bidders to qualify for 100%ofthe PTC (allowing bidders with
2017 capital purchases to compete),b)moving back the notice of intent to bid due date,and c)removing the
requirement for a bidder to have a completed system impact study at bid submission.
7 BeyOnd these changes we also have noted additional typographical errors which we will inform the Company of
directly.
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cancelled;
(2)It cannot be known whether winning projects in this RFP will receive the Production
Tax Credit either in part or in full;and
(3)It cannot be known whether or not the Company's proposed transmission project -
the 500-kV Gateway Segment D2 Aeolus to Bridger Anticline substation and
transmission system (the "Transmission Project"or "Gateway Segment D2")-will
be built,and if so,whether it will be built on time.
We address each issue below.
1.Unique Risk #1:Pending IRP
This RFP is based on action items identified in the Company's 2017 IRP.In the
Introduction section of the RFP,the Company states:
As stated in its 2017 Integrated Resource Plan (IRP),PacifiCorp has identified plans to
add at least 1,100 megawatts (MW)of new wind resources that will qualify for full
federal production tax credits (PTC)and achieve commercial operation by December 31,
2020,in conjunction with implementation of certain Wyoming transmission
infrastructure projects within that same timeframe.
Throughout the RFP,the Company explains that it will use the same model and similar
evaluation methods to evaluate bids in this RFP as it used in developingits preferred portfolio in
the IRP process.
This approach is as reasonable one,and generally consistent with the Commission's
Competitive Bidding Guidelines.The IRP is meant to identify needs and to develop an optimal
portfolio to address those needs.Interested parties can provide comments on the utility's IRP
process and results,and regulators can review and either approve or reject the IRP,depending on
its merits.If accepted,RFPs are then used to competitively procure that optimal resource
portfolio to meet those needs.
The issue in this case is that the IRP,while filed in Oregon,has not been acknowledged
by the Commission.'°Without an acknowledged IRP,neither the Company nor bidders can
know that this RFP is seeking the optimal resource portfolio for the Company's needs.Should
the IRP be rejected or substantively modified,this RFP could become moot.
In their filing,PacifiCorp recognizes this issue and states that they have timed the RFP
such that the Final Shortlist of bids will be approved after the acknowledgement of the IRP.We
would recommend that the Company note this in the RFP document itself so that bidders are
more aware of the risk.Our assessment in this RFP design report,by necessity,presumes that
the relevant action items from the IRP are acknowledged as proposed.As discussed above,for
*RFP,page 1.
9 See,for example,RFP,page 24.
10 See Docket No.LC 67.
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purposes of this report,we have not conducted an analysis of the IRP,including its identification
of resources sought in this RFP as part of its optimal portfolio.We take as given the Company's
position that these resources are desirable,per results of the IRP process.
2.UniqueRisk #2:Winning Projects'Realization of the PTC
One of the drivers for the accelerated time frame of this RFP is the expiration of the
Federal PTC.However,several factors could prevent a winning supplier from realizing the PTC
ranging from failure to use equipment that qualifies for a specific vintage of PTC to failure to
place a project in service within the required time frame.
Generally,the draft contracts properly commit bidders to their claims regarding PTC
qualification.In the case of a Build Transfer Agreement ("BTA"),the bidder pledges that the
project will qualifyfor a given year of PTC treatment and in the Power PurchaseAgreement
("PPA"),the bidder will be held to their price offered and cannot increase their price due to
failure to claim the PTC.
While we find the language in the BTA and PPA above comforting,there is one
additional scenario in which failure to capture the PTC worth noting.That is,a project may be
prevented from capturing the PTC if it is delayed by the fact that the Company fails to build and
bring online the Gateway Segment D2 Project on time,which,as we explainbelow,is likely
needed by new wind projects to deliver power pursuant to this RFP.In this case,ratepayers must
not bear the risk for a project's failure to qualify for the PTC due to PacifiCorp's failure to bring
Gateway Segment D2 on line at the pledged time.Bidders -presuming they have held up their
other obligations -must also not be at risk for this cost increase.
3.Unique Risk #3:Pending Transmission Project
A third unique risk present in this RFP is its reliance on the Gateway Segment D2
Project.In the RFP,the Company requires eligible projects to be:
capable of directly interconnecting and delivering energy to PacifiCorp's network
transmission system in Wyoming inclusive of the proposed 500-kV Gateway Segment
D2 Aeolus to Bridger Anticline substation and transmission system,or capable of
delivering energy into PacifiCorp's transmission system in Wyoming with the use of
third-party firm transmission service.11
It is our understanding that it would be difficult,if not impossible,for new projects to
interconnect to the Company's Wyoming system in the absence of the Gateway Segment D2
Project.Should the Wyoming Commission reject Rocky Mountain Power's CPCN proposal,it
would create considerable uncertainty with respect to the continued viability of this RFP.
Moreover,besides this regulatory risk,there is the risk noted above that,even if approved,the
Company may fail to deliver the transmission facilities on time (or at all),which could have
i RFP,page 1.
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serious implications for winning projects that need to be online by the end of 2020 in order to
capture the PTC.
Given this risk,bidders should be allowed to terminate any contractual agreements
without penalty should their project fail to become deliverable as the result of the failure of the
Gateway Segment D2 Project to be constructed.Again,as noted above,ratepayers should not
bear the risk of any project not being able to claim the PTC.
C.Summary
When appraising the design of any competitive procurement process,we begin with the
goal of the procurement,which is to get the best deal possible for ratepayers in terms of price,
risk,and reliabilitygiven market and regulatoryconditions.To know if a process will satisfy
this goal we look to answer four key questions.These are:
(1)Is the process fair and transparent?
(2)Does the process properly measure and assign risk?
(3)Will the process likely lead to a positive result?And,
(4)Is the process compliant with the Commission's regulatory rules and Bidding
Guidelines?
These topics each serve an important function.First,fairness and transparency attract
bidders and encourage them to bid aggressively.One cannot have competition without
competitors,and the more competitors,the more likely that ratepayers will get a "good deal".
Second,effective risk measurement and assignment assure that the winning bids will mitigate
ratepayer risk and perform the best under a variety of possible future scenarios.Third,if the
procurement does not produce positive results (i.e.,signed contracts for new supply)then the
entire process will be of marginal value,as the whole purpose of the RFP is to secure the lowest
cost supply for ratepayers,when accounting for risk.Fourth,the process must be in line with
Commission rules and Competitive Bidding Guidelines as those Guidelines represent the
Commission's goals in terms of the type of supply procured and the method by which it is to be
procured;goals which have been vetted extensively with all stakeholders.For further discussion
on these topics,please see Appendix A.
Our key suggestions can be broken down into several points.We group them below by
(a)Fairness and Transparency,(b)Risk Measurement and Assignment,(c)Producing a Positive
Result and (d)Compliance with Commission Guidelines.All are discussed more thoroughly in
Section II.
1.Fairness and Transparency
Our suggestions on this topic include:
The RFP should not be limited to new projects;"repowered"and uncommitted
existing projects should also qualify providedthey are "new"to the PacifiCorp
system and can meet the other requirements to participate in this RFP,e.g.
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interconnection to the Wyoming system.
Credit requirements should be clearly defined and account for step-in rights.
More information should be provided regarding QF contracts which would claim a
share of the transmission capacity created by the Gateway Segment D2 Project.
Clarification should be provided regarding the calculation of the Success Fee.
The penalties in the PPA for failing to meet a project's Guaranteed Availability
should be adjusted,as explained in detail below.
2.Addressing Uncertaintyand Assigning Risk
We make six recommendations on this topic;
PacifiCorp's self-build "benchmark"bids should be held to their assumptions
regarding cost and performance.
Bidders should not bear the risk of PacifiCorp failing to construct the Gateway
Segment D2 Transmission Project.
If PacifiCorp receives approval to complete the Gateway Segment D2 Project,but
misses the Commercial Operations Date ("COD")of the project,ratepayers and
bidders should be held harmless.
Price scoring should not be "force ranked,as explained further below.
The impact of cost overruns on the Gateway Segment D2 Project should be
assessed in the RFP evaluation process.
"Change Orders"which increase the cost of the project should not be paid for by
ratepayers.
3.Producing a Positive Result
We make three recommendations on this topic:
Projects should be required to provide only one year of wind data,not two.
Stakeholders should provide comment regarding offers on Company's benchmark
bid sites and PacifiCorp should provide comment regarding the impact of RFP
schedule delays.
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Qualification language regarding litigation against the Company should be
limited,as explained further below.
4.Compliance with Commission Competitive Bidding Guidelines
The Commission's Guidelines lay out the rules for a competitive bidding process in
Oregon.All qualifying RFPs must meet the standards put forth in those guidelines.We believe
the draft RFP meets most of the Guidelines.The exception,as noted above,is that the IRP
which produced this procurement plan has yet to be acknowledged by the Commission.
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II.DETAILED DISCUSSION OF THE RFP
The following section contains our complete review of the RFP.The review is focused
on our four evaluationcriteria:(a)fairness and transparency,(b)risk measurement and
assignment,(c)producing a positive result,and (d)compliance with appropriate Commission
Guidelines.Again,due to the limited review window we focus mainly on changes that would
improve the RFP design.
A.Fairness and Transparency
Fairness,in our definition,means that all bidders are treated the same.All bidders want
to know that they are competing on a "level playing field,"and that they can win the RFP by
offering the best deal in terms of price and risk allocation.Transparency means that all parties
can clearly understand the RFP requirements,products solicited and evaluation methods.
An important part of ensuring a fair and transparent RFP is making sure that the
evaluation is based on objective criteria and that the evaluation method and criteria to be used are
clearly explainedto bidders.This is why "price only"procurements,where bidders all agreeto
sign an identical contract and price is the only deciding factor in choosing winners,are
considered to be the most transparent form of procurement.
With a long-term,unit contingent procurement,a strict price-only offer is oftentimes not
realistic.The procurement must account for the fact that different transaction types and
technologies require different contracts and that each bidder has their own preferences and limits
on terms such as liquidateddamages and force majeure language.
In light of these challenges,the RFP attempts to use a "price mostly"evaluation
methodology.The initial shortlist is comprised of price and non-price scores which are given
weights of 80%and 20%,respectively.This means that bids with good prices will,generally
speaking,be at the top of the bid ranking.The analyses applied to the final shortlist are all
focused on determiningwhich portfolios serve ratepayers at the lowest cost under a variety of
different scenarios.While there is not a strict standard contract,a draft contract is presented in
the RFP and bidders that propose major changes from the draft contract are penalized.In
addition,the Company reserves the right to reject any bid after consultation with the IE,which
could include bids with contract changes that shift excessive risk onto the ratepayer.
1.The RFP should not be limited to new projects;"repowered"and
uncommitted existing projects should also qualify
The RFP currently limits participation to new wind projects only.12 To enhance fairness,
we would recommend expanding participationto uncommitted wind resources,both
"repowered"wind projects and existing wind resources.Both such resources would meet
PacifiCorp's definition of "new"in the sense that these types of resources should represent an
expansion of the Company's wind portfolio.Bidders would need to substantiate the fact that
they are uncommitted and meet all the other requirements of the RFP.
12
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Given that the Company is interested in using repowered wind resources as part of its
portfolio going forward it would seem to be reasonable to allow them here as well as long as they
can meet the other requirements for projects in this RFP.On June 30,2017,the Company's
Wyoming affiliate,Rocky Mountain Power,filed for approval of its own proposal to repower
twelve of its own wind resources,located in Wyoming,Oregon,and Washington.That portfolio
-which currently has a nameplate capacity of 999.1 MW -would be increased by the
repowering to 1,096.8 MW,an increase of 97.7 MW.
2.Credit requirements should be clearly described and account for
contractual rights
One important issue for bidders in any RFP is the amount of credit they will have to post
as performance assurance for their contract.The draft RFP provides some description of the
basic methodologyPacifiCorp will use to determine the bidder's credit requirements,however,
they have not provided a "credit matrix"which spells out specific amounts due based on project
size and transaction type.Based on conversations with the Company,we understand that the
Company is currently creating the credit matrix.The Company must distribute this as soon as
possible so that other parties can perform their own assessment of the requirements.At a
minimum,the credit matrix (as we describe it)must be part of the final RFP that is issued at the
end of August.
While we cannot,at this time,provide a thorough assessment of the credit requirements,
we do take note of one phrase in the RFP which causes some concern.PacifiCorp states that it
views the credit exposure of PPAs as "the cost [it]would incur in the event the resource failed to
reach commercial operation by December 31,2020 or the bidder failed at any time during the
life of the contract."l4 Our concern is that PacifiCorp would calculate exposure (and,therefore,
the credit requirement)for a PPA over the life of the entire 20-year contract.This would be,to
our knowledge,at odds with past practices,which assumed that the Company could use their
step-in rights laid out in the pro forma PPA to bring the project to proper commercial operation,
limiting its exposure to a much smaller time frame-typically12-18 months.We recommend
the Company stay consistent with this practice in order to avoid creating a disincentive to bidders
offering PPAs.
3.The Company should provide updates regarding potential QF contracts
In its June 28,2017 IRP Update filing PacifiCorp states that the Gateway Segment D2
Project will allow for an additional 320 MW of new qualifying facility ("QF")resources to be
imported into the system.is PacifiCorp also mentioned this at the RFP stakeholder workshop.
"Rocky Mountain Power,"Application of Rocky Mountain Power for an Order Approving Nontraditional
Ratemaking Related to Wind Repowering,"June 30,2017 ("Repowering Proposal"),Exhibit RMP (RTL-1)Page
1 of 1.
14 RFP Appendix D -page 5.
"PacifiCorp 2017 Integrated Resource Plan Energy Vision 2020 Update,July 28,2017,page 4.
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Our understanding is that these new contracts -if signed -would reduce the amount of new
supply the Company would take in this RFP.Assuming this is the case,we would recommend
that the Company both (1)state this fact clearly in the RFP and (2)provide updates to bidders
if/when these contracts are finalized.This will ensure that bidders are fully aware of a key
factor in the bid selection for this RFP.
We presume here that,should these contracts be signed,PacifiCorp will simply reduce its
quantity selected in this RFP by a commensurate amount.If this is not the case,then the
Company should also make this clear in the RFP document.
4.The calculation of the Success Fee should be clarified and included with
the Benchmark Resources
PacifiCorp claims that the winning bidders in this RFP will also pay a "Success Fee"to
cover the costs of the Oregon and Utah IEs.The only guidance that the Company provides
regarding this fee is that "in no event shall the success fee exceed $300,000 dollars per
successful winning bid."l6 We would recommend that the Company provide additional
information regarding the calculation of this fee so that bidders can properly price it into their
bids.
If this is not possible prior to price submission,for example,because the fee depends on
the number of winning offers,we would then recommend that,during the evaluationprocess,
$300,000 be added as a line item to each the Benchmark resource bid in order to be on equal
footing with other bidders.
5.The PPA should adjust penalties for failing to meet the GuaranteedAvailability
Both the PPA and the BTA provide for performance incentives to deliver projects on time
and within certain performance specifications.However,two clauses of the PPA -taken
together -give us cause for concern.First,in section 11.1.2 of the PPA,covering "Defaults by
Seller",the contract states that the seller will be in default if "Seller fails to meet the Guaranteed
Availabilityfor two (2)consecutive years.""Second,the PPA defines "Guaranteed
Availability"as follows:
Seller guarantees that the annual Availabilityof the Facility shall be at least ninety five
percent (95%)of the calculated Availability...
Together,these two clauses impose potentially onerous requirements on third-party
suppliers and could serve to discourage participationor to force bidders to offer BTA agreements
instead.For comparison,the PPA included with the 2008R-1 Renewables RFP featured
guaranteed availability levels of 70%in year 1,85%in year 2 and 93%thereafter,and did not
terminate for failure to meet these levels.
16 RFP page 9.
17 PPA,section ll.l.2(h).
'PPA,section 6.12.1.
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Our recommendation would be to remove failure on this issue as a reason for termination.
As additional protection,we recommend that the bidder be required to guarantee a level of
availability each year,with a potential "ramp-up"in the early years,and provide liquidated
damages if they fall short in any given year.
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B.Risk Measurement and Assignment
Risk measurement and assignment is essential in any RFP.As a guiding principle,risks
should be put on the party best equipped to handle them.Moreover,the evaluationshould give
credit to bidders who assume more risk than others.In this area,we have several suggested
changes.
1.PacifiCorp's self-build "Benchmark"bids should be held to their assumptions
regarding cost and operating performance
This RFP features four self-build or "Benchmark"resources that the Company will offer.
As the IE,in accordance with Oregon Guidelines,we will review each offer to ensure that all
cost estimates are reasonable and that no costs have been omitted from the estimates.We will
also score the offers prior to the opening of market bids.
Beyond these protections,we would recommend that the Benchmark offers be held to
their cost and performance assumptions as offered,the same as any third-party bidder would.
This will help ensure a level playing field for all offers.
2.Bidders should not be penalized if PacifiCorp fails to construct the Gateway
Segment D2 Transmission Project
A unique risk of this RFP is that any bids will likely be dependent on the Gateway
Segment D2 Project to interconnect to the grid.Should this project not be approved,or fail to be
constructed for another reason,bidders (or the Company)could be at risk of having a project that
cannot operate.This could place the bidder in defaultof their contracts.For example,the BTA
Agreement has a condition precedent that "PacifiCorp Transmission shall have demonstrated to
PacifiCorp,in PacifiCorp's satisfaction,such satisfaction in its discretion,that the Project can be
integrated with PacifiCorp Transmission's system as a network resource."'*If the Transmission
Project is not present the bidder could be in violation of this clause and pay a termination
payment of $50/kW.To avoid this problem,both the BTA and the PPA should make clear that
the contracts may be terminated without penalty if the Gateway Segment D2 Project fails to be
constructed.
3.If PacifiCorp receives approval to complete the Gateway Segment D2 Project,
but misses the Commercial Operations Date ("COD")of the project,ratepayers
and bidders should be held harmless for any cost impacts
To realize the full PTC,winning suppliers will need to come online by the end of 2020.
However,as is made clear in the Rocky Mountain Power Wyoming Transmission Application,
winning projects in this RFP are likely to be reliant upon the Transmission Project to deliver
power.Should the Transmission Project's COD slip beyond the date by which winning projects
must come online to recover the PTC,PacifiCorp should hold ratepayers harmless by not passing
any increased costs through to ratepayers.Bidders,provided they have done everythingelse to
19 BTA Agreement,section 2.7(m)
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properly qualifyfor the PTC level they have pledged,should likewise not be held accountable
for this risk.20
4.PacifiCorp employs a complex,multi-stepapproach to select a portfolio of bids;
however,the Price Scoring should not be "force ranked"
The RFP details a method for ranking qualifying proposals by a combined price and non-
price score.For the price score PacifiCorp will first calculate the "net benefits"of the bid.This
equals the levelized benefits of the project (in $/MWh)less the levelized cost of the project.In
this case,the benefits are the value of the energy and capacity produced by the project.The
Company would then stack the bids from lowest to highest net benefit.The most beneficial bid
would be "force ranked"by assigning the maximum price score of 80 points to that bid while the
least beneficial bid would be assigned a score of zero.Bids in between would be scored via a
linear interpolation.
Our concern with this method is that bids which are relatively similar in net benefits
could receive vastly different price scores.Take,for example,the followingset of six bids,
where the most beneficial bid has a net benefit of $20/MWh and the least beneficial bid has a net
benefit of $14/MWh.
Net Benefit Price
$/MWh Score
$20.00 80.00
$18.50 60.00
$16.50 33.33
$15.50 20.00
$15.00 13.33
$14.00 -
Here the difference between the top two bids is small,$1.50/MWh,but the score
difference is large,equal to the entire non-price score.As noted earlier,the structure of this RFP
requires a "price mostly"evaluation -i.e.,an evaluation with greater weight on the price score;
however,the manner in which this evaluation is proposed would render the non-price factors
irrelevant.
To avoid this outcome,we would recommend that the Company score the bids as it has in
past RFPs,by looking at the ratio of benefits to costs.For example,in the 20l 1 All Source RFP,
the price score was calculated by dividing the bid benefits by its costs.If costs were equal to or
less than 60%of the benefits the full price score was awarded,while if benefits were equal to or
more than 140%of costs a score of zero was awarded,with anythingin between being linearly
20 We welcome comment from stakeholders on the best way to contractually mitigate this risk.Solutions may range
from a set level of liquidated damages to a more specific replacement cost calculation.
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interpolated.During the actual scoring these endpoints (60%and 140%)can be adjusted to
provide a proper balance between price and non-price scores.
Beyond the "force ranking"issue noted above,the RFP features a strong plan for
assessing risk and selecting bids that perform well given an uncertain future.Bids will be
evaluated in a multi-step process based on the same analytical methods used in the Company's
IRP.For the initial shortlist evaluation a price score will be determined as noted above.Bids
will then be evaluated for non-price characteristics.The non-price factors attempt to quantify
some factors that are not included in the bid price.They are grouped into three categories;
Conformity to RFP Requirements -This category assesses the completeness of
the information provided regarding the project location and technical
specifications as well as the bidder's experience related to wind projects.
Project Deliverability -This category assesses the likelihood that the project can
be successfully developed,as proposed,meeting the December 2020 in-service
date and qualifying for PTCs as promised.
Transmission Progression -This category examines the bidder's likelihood of
obtaininginterconnection service to support their in-service date.
The first category will be worth 4 points while the next two will be worth 8 points each,
for a total of 20 points.Each category will be scored at 0,50%or 100%of the points available.
The scores from the price and non-price evaluations will be added together to establish
the initial shortlist.PacifiCorp suggests a target threshold for the shortlist of 2,000 MW,
recognizing the fact that the threshold is only a guideline,not an absolute limit.This works out
to almost twice the targeted amount of 1,270 MW.
The final shortlist analysis will evaluate the bids using the System Optimizer and
Planning and Risk (PaR)models to assess risks using both "stochastic"and "scenario"analyses.
Scenario analyses examine a single path of a variable or variables while stochastic analyses
examine multiple paths for key variables.This approach is appropriate as proposed and is
described below.
The final shortlist analysis has three distinct steps.In the first step,the System Optimizer
model will determine,for a given assumed path of certain variables (i.e.natural gas prices,
carbon emission costs),the least-cost portfolio of resources that can be used to achieve a given
reserve margin.PacifiCorp calls these "policy-price"scenarios.The model looks at a given
"group"of resources (in this case,the bids from the initial shortlist)and tests each potential
combination of resources to see which combination satisfies the Company's need for the lowest
cost.
PacifiCorp will "stress test"the selection by looking at multiple policy-price scenarios.
The cases will be consistent with the latest approved IRP,but may be updated to reflect more
recent data.PacifiCorp will also look at the optimal portfolio without the Gateway Segment D2
Project and new bids,to establish a baseline of additional benefit or cost in each scenario.This
analysis will also be valuable in the event that any bids are provided which can interconnect to
the system without the Gateway Segment D2 Project.
The key output from the System Optimizer model will be the portfolio of bids that is
selected under each scenario.In the second step of the final shortlist analysis each portfolio will
be further evaluated in the Planning and Risk (PaR)model via a stochastic analysis.The
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stochastic analysis assesses five variables.Those five variables are (a)retail loads;(b)natural
gas prices;(c)wholesale electricity prices;(d)hydroelectric generation;and (e)thermal unit
availability.A possible range for each of these risks is determined based on historical
experience.The output will be a range of prices which provide an assessment of the riskiness of
the portfolio.
In the third step of the final shortlist analysis selected portfolios will also be re-run as a
fixed selection in all the System Optimizer cases.In other words,the model will be configured
to use a given portfolio instead of picking the best portfolio from a group of resources.The
PVRR of the portfolio will be counted and ranked versus other portfolios.The purpose of this
step is to look for portfolios which perform particularly well or badly under a given scenario.
This helps evaluators better understand the strengths and weaknesses of each portfolio and avoid
making a selection that could put undue risks on ratepayers.
5.PacifiCorp should assess the impact of cost overruns for the Gateway Segment
D2 Project.
As noted above,during the final shortlist evaluation PacifiCorp will look at resource
choices both with and without the Gateway Segment D2 Project.This is an important step
because it will allow the Commission to see the total net benefit (or cost)that the new bids and
transmission project provide in a given scenario.
One additionalpiece of information that we believe would be useful for the Commission
is an assessment of the impact of cost overruns for the Transmission Project.This is important
since the Company views these two items (new wind and transmission)as linked.While this
RFP can be run in a clear and transparent manner resulting in the selection of wind generation
projects which provide net benefits to the Company and its ratepayers,these benefits could be
wiped away by cost overruns on the transmission side.
Such an assessment is not necessary if the Company agrees to be held to its cost
projections regarding the Transmission Project.Absent such assurances,we will be happy to
work with the Company to determine the exact form this assessment could take.Possible
assessments could include additionalproduction cost modeling or a more simple "breakeven"
analysis for each scenario calculating the percentage of cost overrun required to wipe out the
benefits of the new projects.
6.The Company should make clear that "Change Orders"which increase the cost
of the project will not be allowed and will not be recovered from ratepayers
The draft Pro Forma BTA includes a section regarding Change Orders.21 While a major
construction project typicallyneeds some process for change orders,their presence in the BTA
agreement suggests that a BTA bidder can adjust their price as necessary during construction
while a PPA bidder cannot.This could serve to bias bidders into offering a less-risky (from their
perspective)BTA project.
21 BTA Agreement -Article 13.
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We would recommend that the Company,in the RFP or the contracts,state that no
increases in offer prices will be allowed after contract signing.If PacifiCorp wishes,they could
allow this option for BTA bidders,provided that ratepayers are not liable for any cost increases.
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C.Producing a Positive Result
Beyond fairness and transparency,we still must consider whether there are any other
requirements that could keep the RFP from producing a positive result for ratepayers.In other
words,are there any barriers to entry or other requirements that would prevent the Company
from contracting with resources that would form the lowest cost portfolio when adjusted for risk?
This is especially important in this case where the RFP already has a tightlydefined product
(new Wyoming wind)and that product is dependent on a yet-to-be-builttransmission.
1.Projects should have to provide only one year of wind data,not two
As one of its minimum requirements for participation,the RFP requires bidders "to
provide two years of wind resource data for a proposed wind project,as validatedby a third party
engineering firm.9922 Typically,it has been our experience that bidders are required to provide
just one year of wind data.23 That requirement demonstrates that the bidder has developed a
credible,serious proposal worth evaluating.To the extent that the project is less developed than
other projects,it would be appropriatelyrated in the non-price evaluation.
2.Stakeholders should provide comment regarding offers on Company sites and
the Company should provide feedback on the impact of schedule delays
During the August 2nd stakeholder conference several questions were raised regarding the
ability of third-party bidders to make an offer utilizingthe Benchmark sites.While this has,to
our knowledge,not been the practice in PacifiCorp renewable RFPs,third party bidders have
been able to make offers using company sites for conventional resources.For example,in past
RFPs bidders could either offer an EPC agreement on a PacifiCorp site or an Asset Purchase and
Sale Agreement ("APSA")on a PacifiCorp site.
The benefits of this action are (a)potentially a stronger offer from the benchmark sites
and (b)a more transparent process for benchmark development.In the 2011 All Source RFP
PacifiCorp essentially moved an internal competitive process for finding an EPC contractor into
the RFP itself,providing more transparency to the process.
While offering this transaction type could result in a more robust pool of responses,it is
also true that it would likely require a delay in the RFP as the Company would need to prepare
site-specific information for bidders to review.A further complicating factor is that PacifiCorp
claims they do not have the right to extend such an offer on three of the four sites.They also
claim that it is "expected"that the developer of these three sites will submit their own proposal.24
22 RFP,page 10.
23 See,for example,Public Service Company of Oklahoma 2013 Wind RFP,issued June 10,2013,page A-3;Public
Service Company of Oklahoma 2016 Wind Energy Resources RFP,issued September 28,2016,page A-4.
24 Another factor is that the conventional-site RFPs included Company sites of unique and specific value (e.g.a site
with existing generation facilities that other bidders could not acquire)that were paid for by ratepayers.That,to our
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Given that the Company has stated that this RFP is time-sensitive,we would recommend
that,as part of this proceeding,any bidders interested in offering these types of transactions
describe the type of information they would need to prepare a viable,firm offer.In response,
PacifiCorp should provide an estimate of the time it would take them to gather and provide the
information,and the potential impact that would have on the RFP process along with any
roadblocks they see in offering the sites for bid.
3.The minimum qualificationrequirements regarding litigation against the
Company should be modified
The RFP provides a lengthy list of reasons a bidder may find its proposal rejected.One
specific reason is that "[t]he bidder,or an affiliate of bidder,is in current litigation with
PacifiCorp or has,in writing,threatened litigation against PacifiCorp,respecting an amount in
dispute in excess of one hundred thousand dollars."26
Our concern with this requirement is that there is no time limit regarding the latter clause
and the dollar amount mentioned is quite small,especially in the context of utility projects.
Therefore,a bidder could in theory find themselves removed from the process over a small-
dollar issue raised years ago by an affiliate.For this reason we would suggest that PacifiCorp
modify the definition to match the one used in its 2011 All Source RFP.It read:
"Bidder is in current material litigation or has threatened material litigation against
PacifiCorp.The Company will work with the IE to determine if the Bidder should be
excluded from the RFP in the event the Bidder is threatening or in litigation with theCompany."26
Another,more precise possibility would use the definition from the final draft version of
the same RFP which adds that "Material litigation"for purposes of this provision includes:
a dispute in excess of five (5)million dollars under circumstances in which the Bidder
has issued a demand letter to PacifiCorp,the Bidder and PacifiCorp are currently in
dispute resolution,the Bidder and PacifiCorp have an unresolved dispute pending or the
Bidder has noticed a pending legal action against PacifiCorp.27
knowledge,does not apply to the sites in question,meaning the Company would likely not have any unique
advantage over another developer.
25 RFP,page 10.
26 PacifiCorp Oregon All Source Request for Proposa12016 Resource,issued April 4,2012.Page 34.
27 PacifiCorp Final Draft Request for Proposals,Docket UM-1540,October 27,2011.Page 33.
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D.Compliance with Commission Guidelines
The final standard we examine is whether the RFP is in compliance with regulatoryrules
and guidelines.In Oregon,this means that the RFP is in conformance with the Commission's
Competitive Bidding Guidelines,which were developed in 2006 and revised in 2014.These
Guidelines are important because they were vetted with multiple stakeholders and lay out exactly
how the Commission wants a procurement to operate.
Overall,we find the RFP to be in compliance with most of the Guidelines.In this
section,we elaborate on each relevant Guideline and how the RFP attempts to meet that
Guideline.There are a total of thirteen Guidelines,some of them,for example,the requirement
for a closing report,will be complied with at a later date.Below we discuss all relevant
Guidelines.
1.Guideline #1 -Need for an RFP
Guideline #1 requires that an RFP be issued for all major resource acquisitions identified
within an acknowledged IRP.28 This RFP is based on the preferred portfolio in the Company's
2017 IRP.29 That IRP was submitted to the Commission in April and includes an action item for
the procurement of 1,100 MW of new wind located in Wyoming paired with the Gateway
Segment D2 Project.30 This was later updated in July to 1,180 MW of new Wyoming windcapacity.31
The issue in complying with this Guideline is that the Company's 2017 IRP has not been
officially acknowledged by the Commission.PacifiCorp anticipates,based on the procedural
schedule in the case,that the IRP will be considered for acknowledgment prior to the
Commission consideration of any final shortlist of bids from this RFP in March of 2018.
We believe the RFP can be compliant with this guideline so long as it reflects any
Commission ordered alterations required as part of the IRP acknowledgement.This may result
in the complete abandonment of the RFP process should the Commission not approve the
relevant action items or reject the IRP altogether.We recommend that the Company note this
risk in the RFP document so that bidders are aware of the issue.32
28 There are some exceptions,which are covered in Guideline #2.
29 PacifiCorp 2017 Integrated Resource Plan ("April IRP"),April 1,2017,page 2,and confirmed in PacifiCorp 2017
Integrated Resource Plan Energy Vision 2020 Update ("July IRP"),July 28,2017,page 1.
30 April IRP,pages 16 to 17.
31 July IRP,page 12,Table 2.2
32 As noted above,at this point we will not opine on whether the RFP represents a "time-limited resource
opportunity of unique value to customers."
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2.Guideline #3 and #4 -Affiliate bidding and self-build option
Guideline #3 is not relevant because here are no affiliate bids being offered.Guideline
#4 allows for the utility to provide a site-specific self-build option,known as the Benchmark
resource.In this case,the Company plans to submit four self-build bids totaling 860 MW.
The RFP calls for an identical evaluation of the Company's self-build benchmark bids
and third-party bids.33 We will work to ensure these bids are held to the same standards as third-
party offers.
3.Guideline #5 -Independent Evaluator
Guideline #5 requires the use of an Independent Evaluator to ensure that all offers are
treated fairly.The RFP has called for an appropriate role for the IE and IEs are retained by both
the Oregon and Utah Commissions.We will work going forward to ensure that all offers are
treated fairly.
4.Guideline #6 -RFP design
Guideline #6 requests that the Company provide a draft RFP to all parties and interested
persons in the utility's most recent general rate case,IRP and RFP dockets and conduct a
stakeholder and bidder workshop on the draft RFP.The utility will then submit the final draft
RFP for approval.The IE must be consulted when preparing the RFPs and will submit a report
assessing the fmal draft RFP.
The Company submitted a draft RFP to the IE at the close of business on July 21.We
provided comments and asked questions regarding the draft on July 25.In response,the
Company made several productive changes including:(1)removing the requirement for bidders
to qualify for 100%of the PTC,(2)moving back the notice of intent to bid due date,(3)
removing the requirement for a bidder to have a completed system impact study at bid
submission.PacifiCorp submitted this revised initial draft RFP to stakeholders and held
workshops with interested parties,including bidders,on August 2,2017 prior to submitting the
final draft RFP on August 4.
This Guideline also requires that the RFP set forth minimum bidding requirements and
scoring criteria,which this draft RFP does.These are reasonable,subject to the changes noted
above.The RFP must also have standard form contracts but allow bidders to negotiate mutually
agreeable terms.The RFP does have these contracts and does contemplate this negotiation.34
5.Guideline #7 -RFP approval
Guideline #7 states that Commission approval of the RFP will focus on three items:(1)
the alignment of the RFP with the latest acknowledged IRP,(2)whether the RFP satisfies the
Guidelines,and (3)the overall fairness of the bidding process.We presume that the Commission
33 RFP,page 20.
34 RFP,page 26.
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will request comment on this RFP.PacifiCorp has built in a comment period in their schedule
and has requested RFP approval at the end of August.As noted above,the comment period in
this case is very brief and the Commission may wish to extend the period to obtain additional
feedback from stakeholders.
6.Guideline #8 and #9 -Bid scoring
Guideline #8 requires the Company to submit a detailed score for the benchmark bids to
the IE prior to opening market bids.PacifiCorp has stated that they will follow this process.We
will review each offer to ensure that it is reasonable and has no omitted costs.We will work
with the Company to score the bids prior to reviewing third-party offers.
Guideline #9 requires that the initial shortlist selection be based on price and non-price
factors,with price scores representing a comparison of the levelized bid cost to forward market
prices,and provide resource diversity.Final shortlist selection is to be based on modeling
consistent with the IRP.Finally,debt imputation (also known as "debt equivalence")is reserved
for the selection of final bids.
The RFP successfully meets each of these standards.As noted above,the initial shortlist
features a price and non-price score.The price score is determined by the levelized net benefit of
the bid.The non-price score is based on an assessment of project development and compliance
with RFP requirements.The final shortlist modeling will use current IRP inputs (in some cases,
updated to the most current assumptions)and the models,process and scenarios are the same as
used in the latest IRP.Diversity is provided by the fact that (1)multiple sources are allowed to
offer and (2)the initial shortlist will be organized by product category,assuring that selections
from each category will be considered for the final shortlist.
Finally,the debt equivalence issue is left out of the evaluation process and is instead
contemplated as a potential part of the post final-shortlist considerations.Debt imputation,or
debt equivalence is a controversial topic driven by the fact that some credit rating agencies view
PPAs and TollingAgreements as the functional equivalent of debt,treating a portion of the
payments under these agreements as hypotheticaldebt to the Company's balance sheet.The
Commission has the power to request PacifiCorp to obtain an advisory opinion from a credit
rating agency if it wishes to substantiate claims of harm from debt equivalence issues.This is a
fair solution because the question of possible harm to ratepayers via this debt equivalence issue
requires a broader discussion of possible balance sheet effects from self-build options and
offsetting risk mitigation with third-party bids.
7.Guideline #10 through 13 -Roles and Responsibilities
The final guidelines involve items that will be addressedas we move through the RFP
process.The roles of the IE and Company are laid out in the RFP similar to Guideline#10 and
we will hold to these going forward.We will submit a Final Closing Report (Guideline #1l)
when the Company requests acknowledgement of the Final Short List (Guideline #13)and will
keep information confidential (Guideline #12).If there are any issues,we will bring those to the
Commission's attention in our Final Closing Report.
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APPENDIX A:KEY CRITERIA OF RFP EVALUATION
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KEY CRITERIA OF RFP EVALUATION
Our starting point in reviewing any RFP is the basic premise that the purpose of any
competitive solicitation should be to get the best deal possible for ratepayers in terms of price,
risk,reliability,and environmental performance,given current market and regulatory conditions.
In evaluatingwhether or not the RFP will lead to this goal,we have found it helpful to focus on
four key questions:(1)Is the process fair and transparent?(2)Does the process properly measure
and assign risk?(3)Will the process likely lead to a positive result?and (4)Is the process
compliant with the Commission's regulatory rules and guidelines?
Following is a brief primer as to why these questions are important and some ways in
which to achieve positive answers to these questions.
A.FAIRNESS AND TRANSPARENCY
Why is it important?
To achieve a positive outcome for ratepayers the methods of bid evaluationmust be fair
and transparent to all.Fairness means that all parties are treated equally.This includes not only
third party bids,but also utility Benchmark or self-build options.Transparency means that all
parties can understand the RFP requirements and evaluation methods.Only if fairness and
transparency are present will a large number of competing power suppliers participate and bid
aggressively.
Fairness and transparency attract bidders for several reasons.First,if a solicitation is
"fair,"bidders know that their bid will be considered on equal footing with other bids,and they
do not have to worry about their bid losing out to an inferior offer.Second,if a process is
transparent,bidders know exactly what is being solicited and how bids will be evaluated.When
bidders know that no special privilege will be granted to any bidder and evaluationcriteria are
laid out clearly,they know that aggressive bidding is the only way to ensure that they win the
RFP.
Fairness and transparency also benefit ratepayers.The more bidders,bidding
aggressively,that participate in the RFP,the better chance the ratepayers have of receiving a
quality offer.Transparency also has the added benefit of letting the ratepayers know just how
the winning bids were chosen.
How do we achieve it?
There is no single right way to solicit power and,therefore,there is no single right way to
achieve fairness and transparency.In general,a fair and transparent process would involve;(a)
all parties bidding under the same terms,(b)a precisely defined product,and (c)a price only or
"price mostly"evaluation.The point of these conditions is to make sure that all bidders
understand what they are bidding for and how they will be evaluated and that the winner will
simply be the bidder who offers the best deal for ratepayers.
An example of these principles in action can be seen in the full requirements solicitations
for Standard Offer or Basic Generation Service in PJM.The product for these solicitations is
23
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precisely defined as full requirements supply which,in essence,makes each supplier responsible
for serving a percentage share of the energy,capacity,and ancillary service needs of a ratepayer
class.Bidders offer an amount of supply at a stated price.The winners are simply the bidders
who offer to supply at the lowest cost.All bidders,including the utility affiliate,are treated in
the same manner and sign the same contracts.
This is not meant to suggest that PacifiCorp must conduct a full-requirementstype
solicitation,onlyto provide a real-world demonstration of fairness and transparency.We feel
that it is important for parties to understand that these are more than just "principles"but
standards that are achievable in the real world.
B.MEASURING AND ASSIGNING RISK
Why is it important?
In reviewing RFPs we look for an evaluation process which,to the best extent possible,
recognizes the uncertain nature of the future,that the only thing certain is uncertainty.Today,
future values of variables such as gas prices,emissions regulations,and construction cost
escalations are unknown.Yet these variables will have a great impact on future ratepayer costs.
The impact of new technology could also greatly affect the choice and cost of future supply.
If the exact paths of these variables were known,the selection of new resources would be
relatively easy.In reality,there are no certainties about the future,which makes the evaluation
process much more complex.The best evaluation process is one which acknowledges the risks
that ratepayers face,and incorporates an analysis of those risks into the selection of bids which
perform well under many different future scenarios.
The RFP,then,must do two things to take account of risk.First,the evaluationmethods
must recognize and measure risk.Second,bids must be credited to the extent that they assign
risk away from the ratepayers and onto parties better equipped to manage risk.
This focus also assists ratepayers because,if the evaluation clearly accounts for risk,then
credit can be given to the bidders who act to shield ratepayers from risk and the lowest-risk bids
can be identified.It also encourages innovativerisk management.If bidders know that they will
stand a greater chance to win,all things being equal,by removing risks from the ratepayer,then
they will be encouraged to come up with ways to remove or hedge risk.
How do we achieve it?
To find the best deal for ratepayers,risks must be accurately measured in the evaluation
process.There are two chief ways to handle this task.One way is to assign each bidder the
same risk profile through a tightlydefined product,process,and a contract which holds all
bidders to the same risk assignment standard.This method is used in the previously-mentioned
full requirements solicitations in areas like New Jersey and Maryland,where all bidders,
including utility affiliates,bid by the same rules for the same product and sign standardized
contracts.
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The second way to measure risk is to review the key risks inherent in each bid and
attempt to value each of them separately.This requires sophisticated modeling techniques which
model what costs would be incurred for each bid based on changes in key variables.This sort of
modeling can take two basic forms,"scenario"modeling or "stochastic"modeling.Scenario
modeling examines a single "path"for a given variable and reports what ratepayers would pay
given that scenario.Stochastic modeling involves essentially creating multiple "paths"for each
variable,basically hundreds of scenario runs at once,which give both an average or expected
value of the bid as well as a risk metric such as standard deviation.
The ultimate goal of these exercises is to compare bids with different risk profiles.This
comparison is key because the nature and extent of risk varies across technologies and
transaction types.For example,for coal-fired technologies the greater risks are linked to capital
costs and environmental regulations.In contrast,for natural gas,fuel price risk is the more
prominent risk.Similarly,a fixed price pay-for-performance power purchase agreement puts all
risks on the bidder,while a cost-plus transaction puts the risk burden on the ratepayer.
C.LEADING TO A POSITIVE RESULT
In reviewing and conducting an RFP,it is always important to keep the end goal in mind,
the acquisition of the best deal for ratepayers in terms of risk,reliability,price,and
environmental performance,given market conditions.The above prescriptions should aid in that
goal,but they do not guarantee it.If,for example,a bidding requirement,say,a credit threshold,
disqualifies a wide selection of potential participants,then the likelihood of a good result is
lower.With this in mind we also review an RFP with an eye toward items which could affect the
participation levels in the RFP.
We note that there are times when the goal of a positive result could come into conflict
with the other goals mentioned above.For example,a bidder could present an offer that is
attractive,but features a non-fixed (or indicative)price.At this point,it is up to the evaluators to
decide whether allowing this bid to be evaluated is appropriate given the fact that other bidders
have conformed to the requirement to submit a binding bid.In these cases Bates White views
part of the IE's job as providing advice on moving forward in the best interests of ratepayers.
D.COMPLYING WITH COMMISSION RULES AND GUIDELINES
A fmal topic that we review is compliance with appropriate Commission
regulatory rules and guidelines.While these are usually in line with the goals of fairness and
transparency and,of course,are geared toward producing a positive result we cannot simply
ignore rules and guidelines because they represent the will of regulators and the ratepayers,
having been vetted through a public comment process.
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Witness:Rick T.LinkBATESWHITE
ECO ICWICCOMilLIING 1300 Eye Street NW,Suite 600,Washington,DC 20005 main 202.408.6110 fax [phone]
September 26,2017
Bruce Griswold
Resource &Commercial Strategy
PacifiCorp
825 N.E.Multnomah St
Portland,OR 97232
Dear Mr.Griswold:
This letter is to confirm that Bates White,as the Independent Evaluator for the Oregon
Public UtilityCommission,has reviewed the proposed changesto PacifiCorp's 2017R RFP
from the version filed in Docket UM-1845 on August 23,2017 and approved with conditions
by Commission Order 17-345.These changeswere made in responseto that Order,an Order
from the Utah Public Service Commission,and comments from Bates White and the Utah IE.
After review,we have no objections to the changes made.
Please feel free to contact me if you have further questions.
Sincerely,
Frank Mossburg
ManagingDirector
Bates White,LLC
Washington,DC 20005
Phone:[phone]
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THIS EXHIBIT IS HIGHLY CONFIDENTIAL
PAGES 29-163 ARE HIGHLY CONFIDENTIAL
The highly confidential exhibit contains commerciallysensitive information which
is considered business confidential information.The Companyrequests special
handling.Please contact Ted Weston at [phone] to make arrangementsto
review.