Message-ID: <11293090.1075849736158.JavaMail.evans@thyme> Date: Thu, 18 Jan 2001 10:11:00 -0800 (PST) From: slgoza@tva.gov To: slgoza@tva.gov, rogers.herndon@enron.com Subject: RE: TVA' s Bid Cc: kevin.m.presto@enron.com, david.portz@enron.com, elizabeth.sager@enron.com, mitch.robinson@enron.com, eacreel@tva.gov Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: kevin.m.presto@enron.com, david.portz@enron.com, elizabeth.sager@enron.com, mitch.robinson@enron.com, eacreel@tva.gov X-From: "Goza, Stuart L." X-To: "Goza, Stuart L." , "'Rogers.Herndon@enron.com'" X-cc: Kevin.M.Presto@enron.com, David.Portz@enron.com, Elizabeth.Sager@enron.com, Mitch.Robinson@enron.com, "Creel, Elizabeth A." X-bcc: X-Folder: \Kevin_Presto_Nov2001\Notes Folders\Discussion threads X-Origin: PRESTO-K X-FileName: kpresto.nsf For TVA to increase its bid, there must be increased availability. With the low availability of the proposed product, we valued it at $4.75. The main issue is the reliability of the resources. Higher guaranteed availability will increase the value to us. > ---------- > From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] > Sent: Thursday, January 18, 2001 5:55 PM > To: Goza, Stuart L. > Cc: Kevin.M.Presto@enron.com; David.Portz@enron.com; > Elizabeth.Sager@enron.com; Mitch.Robinson@enron.com > Subject: Re: TVA' s Bid > > > Stuart - > > Thanks for your response. At this time EPMI is unable to accept TVA's > bid. > Are the issues raised by TVA significant enough that, if amended, would > allow TVA to provide EPMI with a bid equal to EPMI's original offer? > > EPMI does plan to go forward with an offering to several market > participants on Monday. EPMI will include TVA in the process if you wish. > > Rogers Herndon > > > . > > > > > "Goza, Stuart L." on 01/18/2001 03:20:28 PM > > To: slgoza@tva.gov, "'Rogers.Herndon@enron.com'" > > cc: Kevin.M.Presto@enron.com, David.Portz@enron.com, > Mitch.Robinson@enron.com, Elizabeth.Sager@enron.com, "Creel, > Elizabeth A." > Subject: TVA' s Bid > > > Rogers, > > TVA's current bid is $4.75/kw-month, for the term May 1, 2001, through > December 31, 2003. Enron could call on units not being dispatched by TVA > only if TVA specifically agreed to waive its rights for the specific > period. > If the AAF is equal to or less than 50% for a month, then the Demand > Charge > for that month will be zero instead of $2/kw-month. > > Having the potential of 72 hours of scheduled maintenance per unit each > month significantly reduces the availability of the resources and the low > guaranteed availability during the non-summer also reduces the value to > TVA. > > Should Enron desire to provide a higher level of availability such as not > excluding the maintenance from the availability calculation or different > product such as unit capacity with LD energy, then that would increase the > value to TVA. > > A transaction of this duration is subject to TVA Board approval. > > Please let me know if the bid is acceptable, or if Enron want to offer a > product with higher availability. > > Thanks, > Stuart > > > ---------- > > From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] > > Sent: Tuesday, January 16, 2001 9:03 AM > > To: slgoza@tva.gov > > Cc: Kevin.M.Presto@enron.com; David.Portz@enron.com; > > Mitch.Robinson@enron.com; Elizabeth.Sager@enron.com > > Subject: RE: Tolling Proposal > > > > > > > > Stuart - > > > > The following is our response to question #1: > > > > In situations where a unit is not available due to unexpected > maintenance, > > but the advanced notice time requirements for a Scheduled Outage (24 > > hours) > > have not yet been met, or if the 72 hours for that month have already > been > > used for Scheduled Outages, then EPMI could inform TVA that the unit is > > not > > available, and TVA could not then call on the unit (this would be "D"). > > This prevents TVA from calling on (and counting on) a unit that is not > > available. Note that EPMI would not get credit for availability during > > this period. > > > > Note that this is considered a courtesy opportunity for the Buyer. EPMI > > does not object to removing the term D. > > > > EPMI request an indication of interest from TVA regarding the current > > proposal as soon as possible. EPMI's current plan is to issue a bid > > package no later than Friday am, 1/19/01. > > > > Rogers Herndon > > > > > > > > Rogers > > > > Herndon@ECT To: > > > > cc: > > > > 01/11/2001 Subject: (Document link: > > David Portz) > > 09:29 AM > > > > > > > > > > > > > > > > > > Stuart , > > Thanks for the prompt response. I am having someone address question > #1 > > and will forward as soon as possible. Regarding #2, EPMI is proposing a > > guaranteed heat rate and start up fuel quantities. As long as TVA > > arranges > > for and delivers these fuel quantities, EPMI will manage any actual > > imbalances. However, TVA would be responsible for all imbalances and > > potential penalties associated with under/over deliveries vs. the > > guaranteed quantities. > > > > I hope this response is sufficient. If not, please let me know. > > > > Rogers Herndon > > > > > > > > "Goza, Stuart L." on 01/11/2001 07:23:53 AM > > > > To: slgoza@tva.gov, "'Rogers.Herndon@enron.com'" > > > > cc: Kevin.M.Presto@enron.com, David.Portz@enron.com, > > Elizabeth.Sager@enron.com > > Subject: RE: Tolling Proposal > > > > > > Thanks for your response. I have two initial comments/questions: > > > > 1. I don't understand "D" in the formula shown in # 2 for AAF. What is > > it, > > how it is determined? If D and M exclude MO, SO, and Force Majure, what > > is > > left for "D"? > > > > 2. If TVA only has rights to 4 of the 6 units, how would gas imbalance > > charges be handled if both TVA and Enron are supply gas for the total > > plant? > > Certainly there will be situations were units trip or fail to start, > etc. > > which will lead to imbalances. > > > > > > > > > ---------- > > > From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] > > > Sent: Thursday, January 11, 2001 7:37 AM > > > To: slgoza@tva.gov > > > Cc: Kevin.M.Presto@enron.com; David.Portz@enron.com; > > > Elizabeth.Sager@enron.com > > > Subject: Tolling Proposal > > > > > > Stuart - > > > > > > Below are the responses to TVA's questions. Please let me know if and > > how > > > TVA would like to proceed from here. EPMI remains interested in > > entering > > > into a transaction with TVA. However, as mentioned, EPMI is on track > to > > > release a bid proposal to several market participants early next week. > > At > > > this point, EPMI targets a release date of Wednesday am , 1/17/01. > > > > > > Please contact me at 713-853-7355 to discuss how we proceed from here. > > > > > > Thanks, > > > Rogers Herndon > > > > > > > > > ---------------------- Forwarded by Rogers Herndon/HOU/ECT on > 01/11/2001 > > > 06:26 AM --------------------------- > > > > > > To: Rogers Herndon/HOU/ECT@ect > > > cc: > > > Subject: Tolling Proposal > > > > > > ---------------------- Forwarded by Rogers Herndon/HOU/ECT on > 01/09/2001 > > > 09:26 AM --------------------------- > > > > > > > > > "Goza, Stuart L." on 01/09/2001 09:06:21 AM > > > > > > To: "'Goza, Stuart L.'" , > "'Rogers.Herndon@enron.com'" > > > > > > cc: "'Kevin.M.Presto@enron.com'" , > > > "'Elizabeth.Sager@enron.com'" > > > Subject: RE: EPMI Draft Proposal > > > > > > > > > When do you anticipate a response to these questions? > > > > > > We do have interest, but this information is important! I hope that > you > > > will delay sending your proposal out to others until we have a chance > to > > > fully evaluate your offer. > > > > ---------- > > > > From: Goza, Stuart L. > > > > Sent: Monday, January 08, 2001 7:52 AM > > > > To: Goza, Stuart L.; 'Rogers.Herndon@enron.com' > > > > Cc: Kevin.M.Presto@enron.com; Elizabeth.Sager@enron.com > > > > Subject: RE: EPMI Draft Proposal > > > > > > > > Answers to these questions will assist us in determining our > position > > > > regarding your offer: > > > > > > > Certain of the following information is drawn from historical data as > to > > > the plant. Nothing below is a representation as to the plant's > > operability > > > on a going-forward basis. > > > > > > > (1) Why is the proposed guaranteed availability (75%) so low in the > > > > non-summer months? > > > > > > At the quoted monthly Demand Charge, EPMI feels that the guaranteed > > > availability values are competitive. Please note that 75% represents > a > > > guaranteed availability, and actual availabilty will be targeted at a > > much > > > higher level. Major maintenance would be completed during the > > non-summer > > > months. > > > > > > > > > > (2) How do you propose that availability be calculated? > > > > > > We propose that availability will be calculated using the following > > > formula: > > > > > > AAF = (P*C - D - M)/P*C > > > > > > where: > > > > > > AAF = Actual Availability Factor for a given month > > > P = the number of peak hours in a given month, where peak hours are HE > 7 > > - > > > 22 Sunday through Saturday (i.e. 7 days a week). > > > C = the contracted quantity for that month (in units of MW's). > > > D = The number of unit hours declared by EPMI not available in the > peak > > > hours of that given month times the maximum Contracted Capacity of > that > > > unit. > > > M = The number of MWhs called on by Buyer in the peak hours of that > > given > > > month, but not delivered by Seller for that month. > > > > > > Note: Both D and M would exclude the Major Maintenance Outages (see > > > below), Scheduled Outages (see below), outages due to Force Majeure, > > > Buyer's inability to perform, including but not limited to > > > non-availability > > > of gas and/or gas transport, and EPMI's inability to operate the plant > > due > > > to legal, regulatory or permitting restrictions or other reasons > beyond > > > the > > > reasonable control of EPMI. > > > > > > > > > 1. Major Maintenance Outages (MO). The Seller would be allowed 25 > days > > > per year per unit to conduct major maintenance. MOs would not count > > > against the Actual Availability Factor (see calculation below). > Seller > > > may > > > only schedule MO's with at least a 10 day notice and only during the > > > months > > > of October, November, December, March, and/or April. > > > > > > 2. Scheduled Outages (SO). The Seller would be allowed 72 hrs per > > month > > > per unit to conduct scheduled maintenance. SO's would not count > against > > > the Actual Availability Factor (see calculation below). Seller will > > make > > > commercially reasonable efforts to schedule SOs during non-peak > periods > > > (weekends and nights). Seller may only schedule SOs with at least a > 24 > > > hour notice. > > > > > > > > > Note that the Guaranteed Availability Factor (GAF) would be set at 95% > > for > > > the summer months, and 75% for the other months. The contracted Full > > > Demand Charge (FDC) for any given month would be paid by the Purchaser > > to > > > the Seller as long as the Actual Availability Factor (AAF) is equal to > > or > > > greater than the GAF (95% or 75%) for that month. For any month in > > which > > > AAF falls below the GAF of 95% or 75% depending on the month, the > > > Purchaser > > > (TVA) would pay the Seller (EPMI) a prorated amount of the FDC using > the > > > formula below. This prorated amount is known as the Reduced Demand > > Charge > > > (RDC). Notice that an AAF of 50% or less for any given month would > > result > > > in a floor Reduced Demand Charge of $2/kw-mo for that month. > > > > > > ADC = 2 + ((FDC - 2)/(GAF - 50))*(AAF - 50) as long as AAF is equal to > > or > > > greater than 50% and less than or equal to the GAF (either 95% or 75%) > > > > > > ADC = $2/kw for months in which AAF is equal to or less than 50% > > > > > > ADC = FDC for months in which AAF is equal to or greater than the GAF > > > > > > where: > > > ADC = Actual Demand Charge for a given month > > > FDC = Full Demand Charge for a given month > > > AAF = Actual Availability Factor (as defined below). This number is > > given > > > as a whole number (e.g. 97% is 97) > > > GAF = Guaranteed Availability Factor (95%). > > > > > > All percentages are rounded to the next highest whole number (e.g. > 94.7% > > > becomes 95%; 94.4% becomes 94%). > > > > > > > > > > (2) Is the plant "winterized" -- that is can it run in the cold > > > weather? > > > > > > Significant upgrades were made to the plant after the 1999 calendar > year > > > to > > > aid in winterization. In general, however, even fully winterized > plants > > > tend to be less reliable in extremely cold weather. It would be > Buyer's > > > responsibility to address natural gas availability and delivery > concerns > > > throughout the year, including winter months. > > > > > > > (3) From a manpower standpoint, is the plant available 7x24 for all > > > > months -- or are the certain periods of time when the plant is not > > > > staffed? > > > > > > > > > The plant is staffed or has members on ready recall 7x24. However, in > > > order to have full preparation time, a 3 hour notice is required prior > > to > > > dispatch. Dispatch outside M-F peak hours (5X16, HE 7 - 22) requires > a > > 5 > > > hour dispatch notice. > > > > > > > (4) What has been the historic availability of the plant (by > month)? > > > > > > Using the formula above, the Actual Availability Factor (AAF) for the > > > plant > > > by month for calendar year 2000 is shown below: > > > > > > Jan 100% > > > Feb 99% > > > Mar 100% > > > Apr 100% > > > May 97% > > > Jun 97% > > > Jul 99% > > > Aug 100% > > > Sep 100% > > > Oct 100% > > > Nov 100% > > > Dec 100% > > > > > > Note that approximate average per unit run hours during calendar year > > 2000 > > > was 215 hours. > > > > > > > (5) What type of gas transportation has been historically used -- > > > > interruptible or firm? > > > > > > > > > Historically EPMI has utilized both firm and interruptible gas > > > transportation depending on availability. > > > > > > > (6) Has the plant ever been unavailable due to the inability of > fuel? > > > > > > Only once since plant construction. This occurred during a run-time > > with > > > minimal advance notice. In general, fuel availability is the > > > responsibility of the Buyer and is more readily available with greater > > > advance notice. Note also that the plant was only minimally run > during > > > the > > > most recent winter season due to non-economic dispatch conditions; > > > therefore, the availability of gas this past winter was not tested. > > EPMI > > > is willing to discuss with Buyer making the facility a dual fuel > plant, > > > subject to permitting restrictions and operational parameters, and > > > effected > > > at Buyer's expense. > > > > > > > > > > (7) Am I correct in assuming that in the tolling type arrangement, > > TVA > > > > has exclusive use of the plant --- that is Enron would not have > access > > > to > > > > the output unless TVA specifically waives its rights? > > > > > > EPMI would not have access to specific units of the plant while those > > > units > > > were being dispatched by TVA. The plant has six units and four would > be > > > designated by unit number to TVA for purposes of the tolling > agreement. > > > EPMI could call on units not being dispatched by TVA. > > > > > > > > > > > > > > ---------- > > > > From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] > > > > Sent: Thursday, January 04, 2001 2:22 PM > > > > To: Goza, Stuart L. > > > > Cc: Kevin.M.Presto@enron.com; Elizabeth.Sager@enron.com > > > > Subject: RE: EPMI Draft Proposal > > > > > > > > > > > > Stuart, > > > > > > > > Yes, the 800 hours are annual limits. I apologize for the > > > > confusion. > > > > > > > > EPMI is currently finalizing a bid solicitation for the New > Albany > > > > tolling > > > > service. We anticipate sending this proposal to interested > parties > > > > by the > > > > middle of next week (1/10/01). In the event EPMI and TVA have > not > > > > entered > > > > into exclusive negotiations by the time of the bid offering, EPMI > > > > would > > > > encourage TVA to join the bid process. We anticipate this > process > > > > lasting > > > > two weeks. > > > > > > > > Please feel free to give me a call if you have any further > > > > questions. > > > > > > > > Rogers Herndon > > > > 713-853-7355 > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > >