PacifiCorp. Transferred Frequency Response Request for Proposals (2017 TFR RFP) ISSUED: Thursday, January 12, 2017 DUE DATE: Tuesday, January 24, 2017

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1 PacifiCorp Transferred Frequency Response Request for Proposals (2017 TFR RFP) ISSUED: Thursday, January 12, 2017 DUE DATE: Tuesday, January 24, 2017 RFP Page 1 of 9

2 This Transferred Frequency Response Request for Proposals ("TFR RFP") constitutes a PacifiCorp ( Company ) requests for proposals to purchase of transferred frequency response from qualified third parties ( Bidders ). Transferred Frequency Response are compliance instruments that allows one Balancing Authority to increase its frequency response obligation and another Balancing Authority to reduce its frequency response obligation for purposes of reporting compliance with North American Electric Reliability Corporation ( NERC ) standard BAL This standard requires each Balancing Authority or reserve sharing group to demonstrate that it meets the required provision of primary frequency response through the submission of a compliance form each year after the conclusion of the compliance year to NERC/Western Electricity Coordinating Council ( WECC ). PacifiCorp is seeking to purchase up to 20 MW/0.1 Hz Transferred Frequency Response ( TFR ) capability to meet its western control area ( PACW ) frequency response obligation for the partial compliance period starting on March 1, 2017 (or as soon as contracting is complete) and continuing up to and including November 30, This TFR RFP may be found at: SECTION 2. TRANSFERRED FREQUENCY RESPONSE NEED Under the BAL-003 standard, each April after the conclusion of the performance period, NERC will determine frequency response obligation of each Balancing Authority in the WECC. PacifiCorp has determined it anticipates a need TFR of up to 20 MW/0.1Hz. SECTION 3. TERMS Product Transferred Frequency Response Eligible Counterparties Balancing Authority in the WECC Contract Quantity up to 20MW/0.1Hz (can be bid in smaller blocks) Contract Term March 1, November 30, 2017 Price Offers should be quoted in $/MW/0.1Hz for Contract Term Underlying agreement bilateral agreement to be developed between parties Section 4. BUYER AND SELLER OBLIGATIONS Buyer Obligations For each identified Transferred Frequency Response event during the partial performance compliance period ( Contract Term ), Buyer shall report the Contract Quantity, on Buyer s NERC annual Form 1 as required by the Standard (i.e., Form 1.10 and Form 2.10 or equivalent, which may be updated or modified by NERC from time to time). Buyer agrees that once the static purchase of Transferred Frequency Response has been made, Buyer must independently pass Transferred Frequency Response events based on its own performance. RFP Page 2 of 9

3 Seller Obligations Seller shall provide Buyer with MW/0.1 Hz ( Quantity ) of Transferred Frequency Response in accordance with terms of the BAL Standard during the Contract Term. For each identified Transferred Frequency Response event during the Contract Term, Seller shall report the Contract Quantity, on Seller s NERC annual Form 1 as required by the Standard (i.e., Form 1.10 and Form 2.10 or equivalent, which may be updated or modified by NERC from time to time). Seller agrees to provide Buyer with documentation demonstrating Seller has met the Transferred Frequency Response obligation(s) for the NERC-identified potential frequency response events as well as status of Seller s compliance with its own annual Frequency Response Obligation. In the event that either party is subject to NERC regulatory inquiry or audit in connection with the frequency response service that is the subject of executed underlying agreement Seller and Buyer agree to reasonably cooperate with one another. Seller and Buyer retain their independent responsibilities to comply with applicable reliability and regulatory requirements. Sellers Balancing Authority shall be responsible for all fines or penalties assessed by NERC or FERC for non-compliance with BAL based on evaluation of the Sellers Balancing Authority s adjusted Frequency Obligation including the Contract Amount during the Contract Term relative to Sellers Balancing Authority s Frequency Response Obligation. Seller agrees that once static sale of Transferred Frequency Response has been made, Seller must independently pass Transferred Frequency Response events based on their own performance inclusive of the sale obligation. SECTION 5. BIDDING INSTRUCTIONS Bidder must provide the following in writing: A bidding template provided in Appendix A, and Credit information outlined in Appendix B Submit bids by 5:00 pm PPT on January 24, 2017 to: Jim Schroeder, Senior Power Marketer, Origination, Jim.Schroeder@pacificorp.com SECTION 6. SCHEDULE Table 1 identifies a schedule for the 2017 TFR RFP, which is subject to change by PacifiCorp. PacifiCorp accepts no liability to the extent the actual schedule is different from the anticipated schedule. Any updates to the schedule will be posted online at RFP Page 3 of 9

4 Table TFR RFP Schedule Event Date PacifiCorp 2017 TFR RFP issuance Thursday, January 12, 2017 Offers due to PacifiCorp Tuesday, January 24, 2017, 5:00PM PPT PacifiCorp notifies successful short listed bidders Tuesday February 7, 2017, 5:00PM PPT Transferred Frequency Response Agreement tendered to successful bidders Wednesday, February 8, 2017 Contract Execution No later than Tuesday, February 28, 2017 PacifiCorp files executed agreements with relevant regulatory bodies As soon as practicable for an effective date of March 1, 2017 Transferred Frequency Response Compliance effective date March 1, 2017 or as of date of executed contract Interested parties and Bidders may submit questions, which will be addressed in a timely fashion. All information, questions and answers will be posted at: Any questions on the 2017 TFR RFP or related documents should be sent to the Company via at TFR-RFP@pacificorp.com SECTION 7. EVALUATION PROCESS PacifiCorp will assess the merits of proposals with regard to demonstrated ability to meet its compliance need at the lowest cost for PacifiCorp s customers. Evaluation will be on the basis of projected net present value revenue requirement (net PVRR) per MW/0.1 Hz. The net PVRR views the value of transferred frequency response as a positive, and the offsetting costs as negative. The more positive the net PVRR, the more beneficial a given proposal is to PacifiCorp s customers. The process is intended to screen and rank individual proposals. SECTION 8. CREDIT REQUIREMENTS PacifiCorp will not accept collateral thresholds, credit ratings triggers, general adequate assurances language or similar obligations that might require the Company to provide performance assurances to the Bidder. However, PacifiCorp may require performance assurances of the Bidder, including requiring as a condition to accepting a Bidder s bid that the Bidder provide a commitment letter(s) from its proposed guarantor(s) and/or from a financial institution(s) that would be issuing a letter of credit as performance assurances on behalf of the Bidder. PacifiCorp will require each Bidder to provide an acceptable commitment letter(s) (if applicable) twenty (20) business days after the Bidder has been selected for the shortlist. The amount of performance assurances to be provided will be determined based upon factors which include the following: a) The Credit Rating of the Bidder and the credit assurance provider on behalf of the Bidder, if applicable. b) Terms of the underlying contract. c) The volume to be delivered. d) Expected start date. RFP Page 4 of 9

5 In order for PacifiCorp to perform a credit evaluation on the Bidder or the entity providing credit assurances on its behalf, audited financial statements (including balance sheet, income statement, and cash flow statement) for the three (3) most recent fiscal years must be provided to the Company. The Credit Rating is defined as the lower of: x) the most recently published senior, unsecured long term debt rating (or corporate rating if a debt rating is unavailable) from Standard & Poor s (S&P) and/or y) the most recently published senior, unsecured debt rating (or corporate rating if a debt rating is unavailable) from Moody s Investor Services. If option x) and y) are not available, the Credit Rating will be determined by the Company through an internal process review utilizing a proprietary credit scoring model developed in conjunction with a third party. All Bidders will receive a Credit Rating which will be used in determining the amount of any credit assurances to be posted. Please note that a financial institution providing a letter of credit as performance assurances on behalf of the Bidder must have at all times a Credit Rating of at least A and A2 from S&P and Moody s, respectively, and have assets (net of reserves) of at least $10,000,000,000, and be a United States financial institution. Should the financial institution providing credit assurances on behalf of the Bidder fail to meet these minimum requirements PacifiCorp will require credit assurances from a replacement financial institution that does meet the requirements. COMPANY RESERVATION OF RIGHTS AND DISCLAMERS PacifiCorp has no obligation to enter into definitive agreements with any Bidder to this 2017 TFR RFP and may terminate or modify the 2017 TFR RFP at any time without liability or obligation to any Bidder. This 2017 TFR RFP shall not be construed as preventing the Company from entering into any agreement that it deems appropriate at any time before, during, or after the 2017 TFR RFP process is complete. The Company reserves the right, without qualification and in its sole discretion, to reject any or all proposals, and to terminate this 2017 TFR RFP in whole or in part at any time. Without limiting the foregoing, PacifiCorp may in its sole discretion do any one or more of the following: 1. Determine which proposals are eligible for consideration in response to this RFP. 2. Issue additional subsequent solicitations for information, and conduct investigations with respect to the qualifications of each Bidder. 3. Supplement, amend, or otherwise modify this RFP, or cancel this RFP with or without the substitution of another RFP. 4. Negotiate with Bidders to amend any proposal. 5. Waive any irregularity or informality on any proposal to the extent not prohibited by law. 6. Vary any timetable. 7. Conduct any briefing session or further RFP process on any terms and conditions. 8. Withdraw any invitation to submit a response. RFP Page 5 of 9

6 Appendix A BID PROPOSAL Please provide the following BID PROPOSAL to TFR-RFP@pacificorp.com no later than Tuesday, January 24, 2017, 5:00 pm PPT. PacifiCorp will notify successful shortlisted bidders no later than Tuesday, February 7, For any questions, please submit to TFR-RFP@pacificorp.com or contact Jim Schroeder at (503) or jim.schroeder@pacificorp.com. Seller: Buyer: PacifiCorp Compliance Term: March 1, 2017 to November 30, 2017 Bid Quantity: (MW/0.1Hz) Bid Price: ($/compliance term) Credit Requirements: Credit requirements will be evaluated based on the Bidders credit rating Seller Contact Name: Seller Phone number: Seller RFP Page 6 of 9

7 Appendix B Please provide the following Credit Support with your BID PROPOSAL to TFR-RFP@pacificorp.com no later than Tuesday, January 24, 2017, 5:00 pm PPT. For any questions, please submit to TFR-RFP@pacificorp.com or contact Jim Schroeder at (503) or jim.schroeder@pacificorp.com. The following information is required to enable PacifiCorp to evaluate the financial viability of the Bidder and any entity(ies) providing credit assurances on behalf of the Bidder, if applicable. Bidder s Credit Information 1. Credit information for Bidder A. Exact legal name and address of Bidder: B. Debt Ratings from S&P and/or Moody s (please provide senior unsecured long term debt rating (or corporate rating if a debt rating is unavailable). Please indicate type of rating, rating, and source: C. Please attach copies of audited financial statements (including balance sheet, income statement, and cash flow statement) for the three most recent fiscal years. Fiscal Year End: D. Identify pending legal disputes (describe): E. Please state whether Bidder is or has within the past five (5) years been the debtor in any bankruptcy proceeding. RFP Page 7 of 9

8 F. If Bidder is unable to provide audited financial statements or is relying upon another entity to provide credit assurances on its behalf, Bidder must indicate so here and complete the following section. Is Bidder unable to provide audited financial statements? Is Bidder relying upon another entity(ies) to provide credit assurances on Bidder s behalf? G. Bidder should demonstrate its ability and/or the ability of its credit support provider to provide the required security, including its plan for doing so (including type of security, sources of security, and a description of its credit support provider). H. Bidder should provide a reasonable demonstration of its ability to finance the proposed transaction based on past experience. 2. Credit information for entity(ies) providing credit assurances on behalf of Bidder (if applicable) A. Exact legal name and address of entity(ies) providing credit assurances on behalf of Bidder: B. Describe relationship to Bidder and describe type of credit assurances to be provided (e.g., parental guaranty, letter of credit, etc.). Bidder must provide to Company a letter(s) of commitment acceptable to Company from the entity(ies) providing the credit assurances on behalf of the Bidder executed by an authorized signatory and indicating the amount and form of credit assurances it will provide. It should be noted that more than one commitment letter, or more than one form of commitment letter, may be necessary. C. Debt Ratings from S&P and/or Moody s (please provide senior unsecured long term debt rating (or corporate rating if a debt rating is unavailable). Please indicate type of rating, rating, and source: D. Please attach copies of audited financial statements (including balance sheet, income statement, and cash flow statement) for the three most recent fiscal years. RFP Page 8 of 9

9 Fiscal Year End: E. Pending legal disputes (describe): F. Please state whether entity(ies) providing credit assurances on behalf of the Bidder is or has within the past five (5) years been the debtor in any bankruptcy proceeding. RFP Page 9 of 9