1. Power
Procurement
by
Nick Nichols
PhilRECA Board of directors
October 16, 2008

2. What ECs Pay NPC For
Cor. Agham Rd. Power Out of the
And
and Quezon Ave. Generator
Let’s first put some things in perspective.
We pay for that complex in Diliman, and all the stuff that goes on inside - as well as pay for
the cost of power from the IPPs or the costs of owning and operating the NPC generation
So what goes on inside NPC? ...

3. What ECs Pay NPC For
Planning Procurement
Power Out of the
Generator
Contract Dispatch
Management Services
Well, it’s Planning, Procurement, Contract Management, and Dispatch services (i.e.
participating in WESM).

4. What ECs Pay IPP For
Power Out of the
Generator
The IPPs aren’t going to do your planning and procurement for you ... unless you pay them to
do it.

5. What ECs Have to Do
Planning Procurement
WESM
Contract
Participation
Management
& Dispatch
These are also the things that make sense to do on a joint-action basis. Sharing the costs
and resources is one reason. Achieving market power (having a larger market footprint) is
another. Expanding your portfolio options is yet another (some projects just won’t fit a single
EC).

6. Planning
Prepare Outlooks & Supply Portfolio
Forecasts Determination
Leads to a Procurement
Outlooks & Forecasts go beyond forecasting load. It’s understanding market prices and
supply options. They are required to figure out what you want (i.e. the portfolio
determination). Can’t do procurement unless you know what you want to procure & when.

7. Procurement
Prepare & Manage L
E Evaluate
Solicitations
G
A Regulatory
Negotiations
L Approvals
Procurement involves a lot of things. The Evaluation includes understanding just what
uncertainties (pricing and availability) you are exposing your customers to.

8. But Don’t Forget
Planning Procurement
You have to do all
of these
WESM
Contract
Participation
Management
& Dispatch
Don’t forget “Procurement” is just one aspect of what you will need to be doing in order to
get ... -->

9. ... To Get This
Power Out of the
Generator

10. What We Did on Panay
First
Formed a Consortium via
MOU
To share the costs of consultant. Identify point team (Consortium Board) for addressing
issues, interface with IPPs. (Limited tech assistance from NRECA in preparatory phase.)

11. What We Did on Panay
Assessed aggregated load
requirements
Assessed extent to which existing resources
and contracts would serve those requirements
Determined exposure Estimated impact of
to market that exposure

12. Portfolio Needs
Indicative
Some Peaking. Huge Base load and Intermediate load Exposure to market.

13. What We Did on Panay
Within Consortium, Keep
Transparency High
Get Consensus Every Step
‣RFO Design
‣Schedules
‣Bidder Interactions
‣Evaluations & Short Lists

14. RFO Basis
Used simple, fundamental objectives
to guide bidders:
1. Approximately 90 MW of Base &
Intermediate Requirements
2. Start in January 2011
3. Looking for long-term contract
Pricing structures up to bidder. One requirement is that bidder must be willing stick to
fundamentals of offer during negotiations for ESA. Set up web site for disseminating
information re RFO and handling Q&A.

15. RFO Basis
Estimated each ECs share
of 90 MW
Consortium would
negotiate the ECA as agent
for all ECs
ECA would be a bi-lateral
with each EC

16. RFO Basis
Then ...
Let The Competition
Sort It Out

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

18. Process
* = Items we didn’t do in Panay process.

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

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

21. Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box
for Bidder Communication
* = Items we didn’t do in Panay process.

22. Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box
for Bidder Communication
• Prepare Data CD*
* = Items we didn’t do in Panay process.

23. Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box
for Bidder Communication
• Prepare Data CD*
• Announce & Release RFO
* = Items we didn’t do in Panay process.

24. Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box
for Bidder Communication
• Prepare Data CD*
• Announce & Release RFO
• Hold Bidders Conference
* = Items we didn’t do in Panay process.

25. Process
• Prepare and vet the RFO
• Prepare Your Model ESA*
• Establish Public* Website and eMail Box
for Bidder Communication
• Prepare Data CD*
• Announce & Release RFO
• Hold Bidders Conference
• Respond to Bidder Q&A
* = Items we didn’t do in Panay process.

26. Quantitative
• Market Valuation
• Market Value = Benefits - Costs
‣ Benefits = Capacity, Energy, A/S
‣ Costs Include Credit Enhancements,
Transmission, A/S, as well as Price
• LRAC

27. Qualitative
• Portfolio Fit
• Proponent’s Credit Capability
• Proponent Team Qualifications
• Project Viability
• Technology Reliability
• Non-price Terms & Conditions

28. Procurement
Process
WESM
Contract
Participation
Management
& Dispatch
Don’t forget “Procurement” is just one aspect of what you will need to be doing in order to
get ... -->

29. Also Don’t Forget
You Need To
Planning Procurement
Get Cost
Recovery For
All of This!
WESM
Contract
Participation It’s Not in the
Management
& Dispatch ERC Benchmarks