Intermediate Term RFO

Intermediate Term RFO Week ending: August 6, 2010

Questions and Answers

1. I received a notice from PG&E that it has issued the 2010 ITRFO. Why did I receive this notice? Should I participate? How can I be removed from the list?

PG&E maintains a mailing list of individuals and companies that have either requested to be added to PG&E’s RFO mailing list or have entered into business transactions with PG&E. Whenever PG&E issues an RFO, the company sends a market notice to this mailing list to inform the market of its RFO.

Receiving an RFO notice does not indicate an eligibility to participate or that the products sought in the RFO are particularly suited to the receiver’s resources, if any. Interested participants need to determine if the RFO is appropriate for their particular situation.

Parties that wish to be removed from the RFO mailing list should send a request to the [email protected].

2. Can you highlight any differences in the RA Confirm under the 2010 RFO versus the 2009 Intermediate-term RFO?

The RA confirm has been updated from the 2008 ITRFO. You can do a comparison with that RFO's RA confirm posted here http://www.pge.com/rfo/itrfo/ITRFO2008/.

3. Is a resource delivering at an intertie an ‘eligible resource’ for this RFO? If the resource has a dynamic scheduling agreement with the CAISO for delivery at an intertie, would this be an ‘eligible resource’ for this RFO?

For this RFO, an eligible resource must be located within the CAISO control area or have a pseudo-tie or similar arrangement with the CAISO during the entire offer delivery term (see ITRFO Protocol section III). A resource delivering at an intertie is not eligible for this RFO, nor is a resource delivering at an intertie with only a dynamic scheduling agreement. To be eligible for the RFO, import resources must have an agreement with the CAISO that makes them effectively within the CAISO control area. Such an arrangement is normally effected through a pseudo-tie agreement.

4. Do I need to submit an alternative offer if we are interested in submitting an offer for Product 1, but we are only available starting 2012 and that is the only characteristic of Product 1 we would like to change. Would we have to submit an Alternative Offer form or a Product 1 form without any data for 2011?

You will have to submit an Alternative Offer starting in 2012. Product 1 is structured as a five month (May through September) level capacity strip from 2011-15 with annual pricing (which translates to monthly pricing per the defined price shape factors). Participants desiring a different structure must submit an Alternative Offer. Similarly, any desired structural changes to Products 2 through 5 should be accomplished with an Alternative Offer. Note that with Alternative Offers, PG&E strongly prefers to select individual months.

5. Does PG&E expect (prefer) bidders to offer individual years. If yes, how would PG&E like individual year offers to be provided

 separate response worksheet for each offer year  indication of multiple-year (take one, take all) offer  note on worksheet that each year offered is mutually exclusive  other

No, individual offers for Products 1 through 5 will be accepted or rejected as a whole. PG&E will not select individual months or years from these products. For example, in accepting an offer for Product 2 (System RA for July-September 2011-15), PG&E is accepting the Q3 strip in each of the years 2011-15. Participants wanting to offer a different structure than available in Products 1 through 5 (such as offering individual years or months) should provide an alternative offer.

With regard to alternative offers: Participants wishing to provide offers for individual years can do so by using a single column on the Alternative Offer tab and noting "full calendar year only" in the "Individual months can be separately selected" cell. PG&E will interpret this as being able to select one or more, not necessarily consecutive, full calendar years. Note that for this purpose, May - Dec 2011 and Jan - Sep 2015 would be considered full calendar years.

6. For clarification, is the information PG&E requesting respondents provide in the Offer Data Form for "5-year Planned Outage Schedule" just the beginning and ending dates of planned outage?

Planned outage schedules can be provided as outage start and end dates or the number of planned outage days in a given month. 7. If a bidder indicates a planned outage resulting in RA capacity not being available for a defined period, will PG&E release bidder of performance obligations for those noted planned outage periods?

The performance obligations relating to planned outage periods are per the RA confirm and are not altered by a planned outage entry on the RA Offer Data Form. For example, Section 7 of the RA Confirm provides that planned outages will not be scheduled during May through September. If a resource requires an outage during this time period, the participant should provide an alternative offer indicating only the available RA capacity in the affected summer months. For example, a 100 MW resource fully out on a planned outage for the month of June can not be offered for Product 1 as that product requires that the resource be uniformly available May through September. This resource could provide an offer similar to Product 1 on the Alternative Offer tab by specifying for the years 2011-15 an Offer Quantity of 100 MW for May and July-September and 0 MW for June and noting "no" in the "Individual months can be separately selected" cell (note that PG&E strongly prefers to pick individual months on alternative offers).

8. What is “Resource Category (1, 2, 3 or 4)” on the RA Offer Data Form?

Resource Category is defined in the RA confirm as “the category attributed to the resource as described in the CPUC’s 2010 Filing Guide for System and Local Resource Adequacy (RA) Compliance Filings, as such may be modified, amended, supplemented or updated from time to time”. The CPUC has issued a draft guide for 2011 which may be found at http://www.cpuc.ca.gov/PUC/energy/Procurement/RA/ra_compliance_materials.h tm. Section 12 of the draft guide states “Resources may be categorized into one of the four categories shown below, according to their planned availability as expressed in hours available to run or operate per month (hours/month).” Category 4 represents a resource that whose planned availability is unrestricted or that will be available all hours of the month. Categories 3, 2 and 1 represent resources with successively fewer hours of planned availability during the month. The resource category is determined without consideration of planned outages, which reduce a resource’s qualifying capacity (see Section 14 of the guide).

9. When will the CPUC finalize the RA filing guide? When will PG&E make its preliminary and year-ahead RA compliance filings?

PG&E understands that the CPUC is in the process of finalizing the 2011 guide and plans to issue it soon. Sections 2 and 5 of the guide provide the RA compliance filing dates: September 17 for the preliminary local RA filing and November 1 for the year-ahead RA filing. 10. What information is PG&E looking for in the “Permit or Other Operating Limitations” on the RA Offer Data Form?

Participants should note any restrictions that would limit the offered resource from full operation during the delivery period. For example, such restrictions could be, in part, emissions permits that limit run hours, water permits that restrict the level of operations during a particular period and lack of remote operations capability which may limit the hours during which a resource is available to run.

11. Which Product 1-5 does PG&E prefer? Or is an Alternative Offer preferred?

PG&E has structured the RA products consistent with its needs and expects to procure a quantity of each in this RFO. For example, for Products 1 through 3, PG&E has a different need for summer RA (Product 1 – May-Sep), Q3 RA (Product 2 – Jul-Sep) and peak summer RA (Product 3 – Jul/Aug). Participants are encouraged to provide an offer for each product to increase their chances of being selected.

PG&E’s preference is to receive offers for Products 1-5 where possible. PG&E has provided the Alternative Offer for when the structure of Products 1-5 does not fit with the participant’s situation, for example a resource that is already under contract for 2011 cannot submit an offer for Products 1-4.

12. Can I submit a separate pricing table with block pricing?

PG&E strongly prefers participants to submit offers using the RA Offer Data Form structure without modification. Block pricing can be accomplished with the existing structure of each Product tab by adding a column for each individual block.

13. Don’t Products 1-4 cover overlapping periods? How will PG&E select among the products if I offer all four from the same unit? This seems impossible. Do I have to split up the unit’s capacity between the four products?

As explained above and the RFO offer document, PG&E structured Products 1 through 4 consistent with its varying monthly need and intends to procure a quantity of each product. Thus it should be to a participant’s advantage to submit an offer for each product their capable of filling. PG&E has provided the Mutually Exclusive Offers tab on the RA Offer Data Form to provide participants a way of showing the maximum capacity that can be selected from all offers for a given unit. For example: assume a given unit (CAISO Resource ID of CT_Units_1 with a NQC equal to 300 MW) is offered as follows: Product 1: 300 MW; Product 2: 200 MW; Product 3: 150 MW; and Product 4: 300 MW. Each of these offers is mutually exclusive. This fact should be noted on the Mutually Exclusive Offer tab by listing 300 MW under the CAISO Resource ID of CT_Units_1 for the years 2011-15. If the Minimum Quantity Offered for each product was the full offered amount then PG&E could only select one of the products. If the Minimum Quantity Offered was 50 MW and Offer Increment Above Minimum was 25 MW, then PG&E could select all four products at 75 MW ( of course other selection possibilities exist in this example).