BC Hydro s Clean Power Call November 27, 2007
Housekeeping Details Morning break at 9:45 for 15 minutes Lunch is at 12:30 for 30 minutes Break out groups at 1:30 for 1 hour Meeting ends at 4:00 Washrooms Exits Electronics off or in quiet mode 2
Session Guidelines Facilitator/participants share responsibility to meet the agenda Questions after each speaker General questions before lunch +/- 1 hour Roving microphone for participant questions Equal opportunity to participate 3
Today s Agenda 8:00 8:30 Registration & Coffee All 8:30 8:45 Welcome & Background of the Call Kathy Nguyen 8:45 9:45 Call Process Martin Kincade 9:45 10:00 Break All 10:00 10:45 Evaluation Bill Peterson 10:45 11:30 EPA Judy Baum 11:30 12:30 General Questions All 12:30 1:00 Lunch All 1:00 1:30 Reconvene & Instructions Joanne McKenna 1:30 2:30 Break Out Groups All 2:30 3:30 Reporting Out from Break Out Groups All 3:30 3:35 Wrap up & Next Steps Kathy Nguyen 4:00 4:30 Sample Energy Payment and Adjustment Calculations (Optional Session) Judy Baum 4
Clean Power Call Introduction Kathy Nguyen Director, 5
BC Hydro s Role The government of BC sets the Energy Policy for the entire province The 2007 Energy Plan identifies specific Policy Actions for how this direction is to be achieved BC Hydro s role is to implement Energy Policy
Clean Power Call Objectives The Call is geared towards projects that can align with the Clean Electricity Definition The Call is targeting large projects The Call is competitive, fair & transparent 7
Clean Power Call Activities to Date: Draft terms released on November 14 th, 2007 Prior to designing the draft terms, BC Hydro solicited input from IPPs, First Nations and other stakeholders through: Understanding BC Hydro s System Needs Session held in June 2007 Nine Dialogue Sessions with IPPs held over the summer of 2006 8
Today s Goals Provide information to proponents on the overall Call objectives, design and terms Provide background, information and examples to allow participants to make effective written submissions regarding the draft term sheets of the call Encourage informed, balanced discussion on Call terms Encourage proponents to submit their comments and suggestions on the Call using the forms provided on the website 9
How Your Input Will Be Used Written submissions via website are compiled and considered by the Call Team when revising the terms Engagement on the Standing Offer Program and the F2006 Call led to considerable proponent and stakeholder input into the Program and Call design BC Hydro determines final Call elements using: Comments from diverse perspectives, forums Policy framework Regulatory considerations At the end of this engagement process BC Hydro will report on process and input received 10
For more information.. www.bchydro.com\cleanpowercall
Clean Power Call Call Process Martin Kincade Project Manager 12
Process Overview Procurement Process Objectives Proposed Process Basic Elements & Tendering Options Variation Process Eligibility Interconnections Process Comparison to the F2006 Call Cost of the Call & Other Options 13
Procurement Process Objectives Effective Ensure BC Hydro acquires the volume and type of energy it requires Competitive Ensure a robust competition that leads to the most costeffective projects that offer significant value to BC Hydro winning EPAs Fair & Transparent Ensure the process will be fair and as open as possible to all stakeholders 14
Procurement Process Objectives Regulatory Certainty Ensure that the tender process and the results are likely to be accepted by the regulator Attrition Minimize risk of attrition in the Call Transaction Costs & Timeliness Ensure the transaction costs will be minimized and the process will complete as quickly as possible 15
CFT Principles & Basic Elements Call for Tenders process with basic elements that include: Registration Fee $5000 to register as a bidder in the call Tender Fee $5000 for each tender submitted for evaluation Tender Security $1.25 per MWh of annual firm energy bid into the call Tender Validity Will require tenders to be valid until after the expected award date (180+ days) 16
Tender Options Contract Term 15 40 years from COD Guaranteed COD November 2010 to November 2016 Firmness Election Can bid Seasonal or Hourly Firm Seasonal Definition: Four equal periods built around freshet (May 1 to July 31) 17
Tender Options Non Firm Energy Election Fixed or Floating pricing, or a combination of the two Price Escalation Pre- and Post-COD escalation of bid price Alternate Bid One alternate bid per tender is allowed 18
Variation Process Pre-Tender process 19
Variations Process Intended to add flexibility to the process Will allow bidders to tender additional value Could be used to eliminate barriers to entry in the base EPA to allow BC Hydro to maintain a strong pool of bidders Variations not accepted on tender security, performance security, liquidated damages and liability limitations 20
Variations Process BC Hydro will have the sole discretion to accept or reject variation submissions and to seek clarification and revise variation proposals Bidders whose variations proposals are rejected or those who find the amended EPA unacceptable may still bid the standard EPA 21
Eligibility Projects must be: Clean (definition by MEMPR) Located in BC Able to directly or indirectly connect to the integrated system (with the exception of the Ft. Nelson area which is ineligible) Proven technologies (excluding nuclear) Capable of delivering a minimum of 25 GWh of annual firm energy New, refurbished, incremental or existing generation 22
Eligibility Projects using forest-based biomass as fuel will not be eligible to participate Projects that are participating in a load displacement program are not eligible Projects currently under contract must be able to lawfully terminate to be eligible 23
Interconnections Process Connections 69 kv Connections 35 kv BCTC Market Operations Interconnections BC Hydro Generator Interconnections & Transmission Services Will follow CEAP (Competitive Energy Acquisition Process) Tariff All applicants will be in the same position in the queue Queue position of Clean Power Call projects will be protected during BC Hydro's evaluation 24
Interconnections Process Connections 69 kv Connections 35 kv BCTC Market Operations Interconnections BC Hydro Generator Interconnections & Transmission Services BCTC workshop to assist preparation of interconnection applications Maximum of 210 days from Interconnection Request Submission to EPA Award Appropriate feasibility study required prior to bid submission 25
Interconnections Process Typical CEAP Process IR: Interconnection Request CSA: Combined Study Agreement SGIP: Standard Generation Interconnection Process 26
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Process Call for Tenders Call for Tenders Basic Elements $5k Registration Fee $5k per Tender Tender security of $1.25/MWh times volume of annual firm energy bid $5k Registration Fee No Tender Fee Tender security of $10,000/MW (based on tender annual firm energy) 27
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Tender Options 15 40 year term 6 year COD window Seasonal or Hourly Firm Fixed or Floating nonfirm energy payment Different treatment of price escalation pre- and post-cod All environmental attributes must be tendered No split bids 15,20,25,30,35 or 40 year term 3 year COD window Monthly or Hourly Firm No election on non-firm energy Same price escalation preand post-cod Option to tender environmental attributes or keep them Split bids allowed 28
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Variations Eligibility Allows risk transfer & value adds Clean projects only No forest-based biomass fuel Minimum 25 GWh annual firm energy delivery Project specific no risk transfer All technologies allowed Forest-based biomass eligible 10 MW minimum project for large project stream 29
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Interconnections CEAP Tariff All Interconnection costs to be paid by BC Hydro (factored in evaluation) Grandfathered process (similar to CEAP) Only Network Upgrades portion of interconnection paid by BC Hydro 30
Cost of the Call The Negotiated Settlement Agreement for the F2007/08 Revenue Requirements Application stated: In its next revenue requirement application BC Hydro shall provide its costs of conducting its next energy call at its first workshop for that call. In its 2006 IEP/LTAP decision, the BCUC approved an expenditure of $2,875,000 to undertake and complete the Identification, Definition and Implementation phase work for the Clean Power Call. Budget for F2007-F2009, includes the following: Internal Salaries, Engagement, etc. $2,065,000 External Legal and Other Services $ 810,000 31
Possible Process Options Should BC Hydro allow negotiation in the acquisition process? Is all possible value being captured in the acquisitions process for the CPC? Allowing negotiation may require changing from a Call for Tenders process to a structured Request for Proposals process Similar to current Call For Tenders process with some key exceptions: Replacement of tender security with significant participation fees Limited areas for negotiation BC Hydro would potentially only negotiate with a limited number of bidders 32
Clean Power Call Evaluation Bill Peterson Principal 33
Evaluation Overview What is the process leading to the selection of Tenders for contract award? Risk assessment project development certainty energy delivery certainty Quantitative evaluation convert Bid Price from each Tender into Adjusted Bid Price assemble Tenders into portfolios compute blended Adjusted Bid Prices for each portfolio Selection of optimal cost-effective portfolio, based on blended Adjusted Bid Prices non-price factors including results from risk assessment 34
Risk Assessment Objectives Mitigate supply risk to BC Hydro Provide comfort to serious bidders Areas to be assessed will likely include: Development and operating experience Financial capacity and creditworthiness Project development schedule Site acquisition/control Permits First Nations consultation Community consultation Fuel supply 35
Risk Assessment Any red flags identified during this phase may be considered during the process of creating the optimal portfolio Sources of information include: Project brief submitted as part of the Tender Other parts of the Tender (except price) Information generally available in the public domain Independent third party advisors Government agencies BCTC 36
Quantitative Evaluation Possible differences between Tenders Bid Price structures Product attributes Project locations These differences define the features and hence the value of the product being tendered to BC Hydro Computation of Adjusted Bid Price for each Tender facilitates a fair comparison of Bid Prices between Tenders Adjusted Bid Prices only used for evaluation purposes Payment for actual energy deliveries will be based on the Bid Price, not the Adjusted Bid Price 37
Adjusted Bid Price Tendered Bid Price Price Levelization Bid Price Adjustments Adjusted Bid Price Bid Price structures Product attributes Hourly Firm Wind Integration Approved variations, if any Project locations Interconnection and Transmission Adjustments 38
Price Levelization Bidders can tender the following different pricing features: COD: 1 November 2010 to 1 November 2016 Term: 15 to 40 years Bid Price escalation: Pre-COD: 0% to 200% of the Bid Price escalates at CPI Post-COD: 0% to 100% of the Bid Price escalates at CPI Nominal $ $/MWh 180 160 140 120 100 80 60 40 20 0 2000 2020 2040 2060 25 year bid, 0% CPI 40 year bid, 100% CPI 39
Price Levelization Levelizing the tendered Bid Price is the technique used to compare different Bid Price structures Levelizing = the conversion of a non-uniform stream of cash flows into a present value (PV) equivalent uniform stream of cash flows Levelized Bid Price = PV cash flow (based on Bid Price) divided by the PV of the energy flow 40
Bid Price Adjustments Hourly Firm Hourly Firm Energy Election Levelized Bid Price reduced by a $/MWh amount dependent upon the tendered profile of HLH firm energy over the year Using a recent estimate for BC Hydro s reference price for capacity, the adjustment for a flat profile of HLH firm energy would be approx $3/MWh 41
Bid Price Adjustments Wind Integration Wind Integration Adjustment For wind projects, levelized Bid Price increased by a $/MWh amount, to be determined by BC Hydro Recent review of other jurisdictions shows a range of $5 to $15 per MWh 42
Bid Price Adjustments - Variations Approved variations, if any Levelized Bid Price may be adjusted by a $/MWh amount, assuming additional value/risk being transferred to BC Hydro can be quantified For example, project is able to provide dispatchable capacity 43
Bid Price Adjustments - Location Tenders likely to be located all across the Province Levelized Bid Prices will be adjusted to reflect the costs borne by BC Hydro associated with taking delivery of the energy and moving it through the Distribution (if D-connected) and Transmission systems to the Lower Mainland 44
Bid Price Adjustments - Location Costs borne by BC Hydro include: Direct Assignment (DA) and Network Upgrade (NU) costs associated with the interconnection of the Project to the BC Hydro system NU costs associated with the transmission of the energy from the Project through the BC Hydro system to the Lower Mainland Includes Cost of Incremental Firm Transmission (CIFT) on the 500 kv system, and may also include regional cut-planes or other specific system reinforcements Energy losses associated with the transmission of the energy from the Project through the BC Hydro system to the Lower Mainland 45
Bid Price Adjustments - Location Project-specific DA and NU costs will be converted to a $/MWh amount, then added to the levelized Bid Price Levelized over tendered EPA Term, then divided by annual firm energy Project-specific energy losses will be converted to a $/MWh amount, then added to the levelized Bid Prices $/MWh adjustment = [ levelized Bid Price +/- other adj ] x [ L / (1 - L) ] Losses are normally positive, but could be negative if there are net line loss savings 46
Bid Price Adjustments - Location Estimates for DAs, NUs and losses for each project will come from BCTC (T-system) and BC Hydro (D-system, if applicable) Location adjustments initially done on a standalone basis BC Hydro may request BCTC to conduct special studies of two or more Tenders, to assess impacts on DAs, NUs, and/or losses at a portfolio level BC Hydro may also request BCTC to conduct special studies for Tenders that could be affected by a change to the base case 47
Adjusted Bid Price End result is a levelized Bid Price for a clean, seasonal Firm Energy product, adjusted for delivery to the Lower Mainland The following example illustrates how tendered Bid Prices are converted into corresponding Adjusted Bid Prices, for three hypothetical Tenders 48
Example Calculation of ABP Assumptions: Tender A Tender B Tender C Bid Price (2008$) $80/MWh $80/MWh $80/MWh Escalation 50% 25% 100% Term 40 years 30 years 20 years Hourly firm No No Yes HLH FE profile N/A N/A Flat Wind No Yes No COD Jan 1, 2011 Jan 1, 2011 Jan 1, 2011 Annual firm 1000 GWh 1000 GWh 1000 GWh Location Central Interior Vancouver Island Peace River DA and NU (BCTC) $2 million/yr $2 million/yr $2 million/yr Losses (BCTC) 10% 5% 15% 49
Example Calculation of ABP BP Adjustments: Tender A Tender B Tender C Levelized BP 1 $68.4/MWh $64.8/MWh $80.0/MWh Hourly firm 0 0 -$3 Wind integration 0 +$10 (assumed) 0 DA/NU +$2 +$2 +$2 ABP before losses $70.4 $76.8 $79.0 Losses +$7.8 +$4.0 +$13.9 ABP $78.2/MWh $80.8/MWh $92.9/MWh 1. Assumes nominal discount rate of 6.9%, inflation rate of 2.1%, base year of January 2008. 50
Portfolio Assembly Once all the Adjusted Bid Prices have been calculated, the evaluation moves to the portfolio assembly phase Assemble combinations of Tenders into portfolios, satisfying: Volume target for firm energy, e.g., 5000 GWh/yr System freshet limitation on total energy, e.g., freshet volume not to exceed X% of annual volume Why do we need a limitation on freshet energy? 51
Portfolio Assembly BC Hydro has limited ability to absorb non-discretionary energy during the freshet Two potential impacts at the system level: Displacement of cheap import energy (if load exceeds min-generation), or Surplus energy exported at any price (if min-generation exceeds load) One approach is to link the system freshet limitation to the load growth profile, which essentially maintains the status-quo This would correspond to a 23% limitation 52
Portfolio Assembly 7,000 Average Year BC Hydro Supply and Demand 2015 6,000 BC Hydro Load GWh/month 5,000 4,000 3,000 2,000 Supply from Non Discretionary BCH Hydro Generation Gap to be filled with BC Hydro Discretionary Generation and 1,000 Supply from IPPs and Resource Smart 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Portfolio Assembly A blended Adjusted Bid Price is calculated for each portfolio that satisfies the portfolio targets BC Hydro may provide a limited number of portfolios to BCTC for further study the blended Adjusted Bid Prices are re-computed for these portfolios, as necessary 54
Selection of Optimal Portfolio Selection of optimal cost-effective portfolio based on the blended Adjusted Bid Prices, and non-price factors, including results from the risk assessment 55
Non-price Factors Why do we have non-price factors? Intent is to have the ability to incorporate into the selection process certain factors not captured in the quantitative evaluation Allows BC Hydro to make a fully informed decision on the selection of the optimal portfolio having regard to all the facts from all the Tenders at the time of the evaluation Selection of optimal portfolio still based on preference for low cost power Any application of non-price factors will be disclosed in Section 71 filing 56
Non-price Factors Some examples of non-price factors include the following: Risk assessment Project development certainty Energy delivery certainty Approved variations not accounted for in the bid price adjustments BC Hydro load resource balance at time of evaluation System impacts at the portfolio level not accounted for in the bid price adjustments Generation technology diversity Regional diversity 57
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call GHG Green Attributes Hourly Firm Energy No GHG bid price adjuster, any GHG offset risk remains with IPP No bid price adjuster for Green Attributes Bid price adjusted if IPP elects hourly firm energy Magnitude of adjuster depends on profile of monthly HLH firm energy Bidders allowed to pass GHG offset risk to BC Hydro, with a corresponding bid price adjuster If Green Attributes passed to BC Hydro, then Bidder receives a $3/MWh bid price adjuster Bid price adjusted by $3/MWh if Bidder elects hourly firm energy $3/MWh adjuster did not depend on profile of monthly HLH firm energy 58
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Wind Integration Adjustment Clean target at portfolio level Freshet limitation at portfolio level DA costs Wind Integration adjustment, to be determined by BC Hydro No target necessary, as all projects must be clean to be eligible Limitation on volume of freshet total energy at portfolio level BC Hydro pays for DA costs No Wind Integration adjustment 50% clean target at portfolio level No limitation on volume of freshet energy at portfolio level IPP pays for DA costs 59
Clean Power Call Electricity Purchase Agreement (EPA) Judy Baum Technical Lead 60
EPA Term Sheet Energy pricing for firm and non-firm energy deliveries Time of delivery factors Allocation of firm and non-firm energy for seasonal firm energy projects Calculation of liquidated damages Adjustments to tendered firm energy Other EPA terms Comparison of the Clean Power Call and F2006 Call for Large Projects 61
Firm Energy Pricing Firm Energy Pricing Seller to bid in firm energy price (Jan 1, 2008 dollars) Price Escalation Pre-COD: 0% to 200% of bid price to be escalated by CPI Post-COD: 0% to 100% of bid price to be escalated by CPI 62
Firm Energy Pricing Firm Energy Pricing (cont d.) Time of Delivery Adjustment Escalated bid price is adjusted by the time of delivery factors (2 x 12 table) Variations in the time of delivery factors during the HLH are more accentuated in the CPC when compared to those of the F2006 Call Potential Option for Time of Delivery Adjustment BC Hydro is considering a 3 x 12 table to reflect the value of energy during the super-peak hours, i.e., 4:00 p.m. to 8:00 p.m. 63
Time of Delivery Adjustment for Value of Energy CPC Time of Delivery Factors Time of Delivery Table for CPC 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% HLH LLH Jan 125% 106% Feb 126% 110% Mar 114% 106% Apr 103% 95% May 92% 76% Jun 90% 72% Jul 91% 72% Aug 95% 81% Sep 96% 88% 40% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Oct 108% 97% Nov 109% 102% HLH LLH Dec 122% 102% 64
Time of Delivery with Potential Super Peak Adjustments Time of Delivery with Super Peak pricing Time of Delivery Table with Super Peak Pricing 160% 140% 120% 100% 80% 60% SP HLH LLH Jan 137% 123% 106% Feb 134% 123% 110% Mar 125% 113% 106% Apr 106% 102% 95% May 97% 90% 76% Jun 93% 88% 72% Jul 95% 89% 72% Aug 96% 94% 81% Sep 99% 95% 88% 40% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Super Peak HLH LLH Oct 111% 107% 97% Nov 114% 108% 102% Dec 131% 117% 102% 65
Non-Firm Energy Pricing Non-Firm Energy Pricing Option A: Fixed Price Non-Firm Fixed Price is dependent on COD and contract term Annual Escalation of price at CPI commencing January 1, 2008 Expected price range is $50/MWh to $80/MWh (Jan 1, 2008) Escalated price is adjusted by time of delivery factors Further adjustment for transmission losses from the Point of Interconnection (POI) to Lower Mainland 66
Non-Firm Energy Pricing Non-Firm Energy Pricing (cont d.) Option B: Floating Price Monthly non-firm Mid-C Price less wheeling charges and transmission losses back to the BC border Further adjustment for transmission losses from the POI to Lower Mainland Seller to elect 0%, 50% or 100% of non-firm energy priced according to Option A Percentage applied to Option B is the difference between 100% and the percentage applied to Option A 67
Allocation of Firm and Non-Firm Energy for Seasonal Firm Projects (Monthly Payments) The following approach will be used to calculate initial monthly payments for the seasonal firm projects: Monthly firm energy is the lesser of actual energy delivered during the month and 1/3 of contractual seasonal firm energy volume When actual energy delivered is greater than 1/3 of the contractual seasonal firm energy, energy paid at the firm energy price will be 1/3 of the contractual seasonal firm energy volume with remainder being paid at the non-firm energy price When actual energy delivered is less than 1/3 of the contractual seasonal firm energy, all energy will be paid at the firm energy price Energy delivered during the HLH (and LLH) will be divided into firm and non-firm on a pro-rata basis using the firm and non-firm volumes established for the month At the end of a season, the sum of the initial monthly payments will be trued-up to the seasonal payment which will be based on the actual firm and non-firm volumes for the season 68
Seasonal Firm Energy Delivery Shortfall Liquidated Damages Liquidated Damages (LDs) are incurred for delivery shortfall of contractual firm energy by a season or hour LD amount is $25/MWh, escalated annual at CPI from Jan 1, 2008 Payment for LDs = escalated LD amount x seasonal time of delivery adjustment factor x seasonal firm energy delivery shortfall Seasonal time of delivery factor is the time-weighted average of the time of delivery factors applicable to the season Annual LD limit = 2 x performance security amount 69
Seasonal Firm Energy Delivery Shortfall Liquidated Damages Example: Calculate LD payment for actual energy delivery of 95 GWh during the Fall Season of 2011 Parameters: Seasonal Contractual Firm Energy = 100 GWh Seasonal Time of Delivery Factor = 95% LD amount = $25/MWh (Jan 1, 2008) Escalation Rate = 2% per annum Calculations: Escalated LD amount = $25/MWh x (1.02)^3 = $26.5/MWh Seasonal firm energy delivery shortfall = 100 GWh 95 GWh = 5 GWh LD payment = $26.5/MWh x 95% x 5 GWh x 1000 MWh/GWh = $125,875 70
Adjustment of Tendered Firm Energy Seasonal Firm Projects Commencing year 4 following COD, the seasonal firm energy volume used for invoicing purposes will be the seasonal tender firm energy volume less the average firm energy delivery shortfall for that season in each of the previous 3 years Forced outages caused by mechanical breakdown will be backed out of the delivery shortfall calculation 71
Adjustment of Tendered Firm Energy Hourly Firm Projects Commencing year 3 after COD, the hourly firm energy volume used for invoicing purposes will be the hourly tendered firm energy less the average hourly firm energy delivery shortfall in the corresponding month in the previous year Average HLH firm energy delivery shortfall is calculated by adding the energy shortfalls in the non-exempt HLH in a month and dividing this value by the number of non-exempt HLH in the same month Non-exempt hours are those hours where LDs are payable for energy shortfalls, but exclude those hours when forced outages are in effect due to a mechanical breakdown 72
Other EPA Terms Commercial Operation Date Seller or BC Hydro may adjust guaranteed COD based on results of detailed interconnection studies Additional time for Seller to achieve COD where Seller has completed construction of 80% of Seller s plant at time of BC Hydro s right to terminate for late COD COD Operating Test Seasonal firm projects 72 continuous hours at the greater of 90% of the applicable seasonal firm energy delivery rate, and 20% of plant capacity Hourly firm projects 72 continuous hours at 90% of plant capacity 73
Other EPA Terms Commercial Operation Date (cont d.) Staged COD Intended for projects with multiple generators BC Hydro will pay for energy associated with the completion of each phase First phase must be capable of generating at a minimum of 20% of plant capacity Maximum of 4 subsequent phases would be allowed after the completion of the first phase 74
Other EPA Terms Environmental Attributes Mandatory transfer of environmental attributes EcoLogo certification is not required Freshet Energy At a project level, total energy delivered during freshet period can not exceed volume of total energy tendered during freshet Firm Energy/Plant Capacity Adjustments One-time right to adjust plant capacity prior to COD by the greater of 5 MW and 10%, but not to exceed 10 MW in any case One-time right to adjust firm energy amount by 5% prior to the first anniversary of COD 75
Other EPA Terms Performance Security Amount of performance security to be $3/MWh x annual firm energy at the time of EPA signing Amount increases to $6/MWh x annual firm energy within 15 days after Seller s right to terminate for failure to obtain material permits expires Performance security amount increases every 5 years by CPI Separate interconnection security with amount based on estimated costs set out in the preliminary interconnection study Turn-Down Right BC Hydro has right to require Seller to cease generating if Seller exceeds total energy tendered for the freshet period BC Hydro to have discretionary turn-down right subject to payment of full energy price to Seller less avoidable costs 76
Other EPA Terms Wind Energy Projects BC Hydro to have right to specify data collection system requirements Seller to provide real-time data access to meteorological data from the collection system Incremental costs for the system to be borne by BC Hydro Renewal/Buyout Rights BC Hydro to have right to acquire project site, permits and related assets on the expiry or earlier termination of the EPA 77
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Regulatory Conditions Right of termination after 120 days if BCUC has not approved EPA without conditions or with conditions that do not materially alter the EPA Right of termination is extended to include conditions that could have an adverse impact on the party seeking the termination Right of termination after 120 days if BCUC has not approved EPA without conditions or with conditions that do not materially alter the EPA COD Delay Liquidated Damages Guaranteed COD Adjustment COD delay LDs determined on the same basis as delivery shortfall LDs Either party may adjust guaranteed COD based on results of detailed interconnection studies Amount equal to performance security divided by 180 for each day COD is delayed up to a maximum of 180 days None 78
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Staged COD Intended for projects with multiple generators BC Hydro to pay for energy associated with the completion of each phase. First phase must be capable of generating at a minimum of 20% of plant capacity. Following the completion of the first phase, a maximum of 4 subsequent phases would be allowed None COD Operating Test Seasonal firm projects 72 continuous hours at the greater of 90% of the applicable seasonal firm energy delivery rate and 20% of plant capacity Hourly firm projects 72 continuous hours at 90% of plant capacity 72 continuous hours at the greater of 90% of the applicable monthly firm energy delivery rate and 20% of plant capacity 79
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Environmental Attributes Firm Energy/Plant Capacity Adjustments Mandatory transfer of Environmental Attributes with price for those attributes to be included in the bid price One-time right to adjust plant capacity prior to COD by the greater of [5] MW and 10%, but not to exceed 10 MW in any case One-time right to adjust firm energy amount by 5% prior to the first anniversary of COD Seller could elect retention of the Environmental Attributes or transfer to BC Hydro One-time right to adjust plant capacity prior to COD by up to 10% One-time right to adjust firm energy amount by up to 10% prior to the first anniversary of COD Freshet Energy At a project level, total energy delivered during freshet period can not exceed volume of total energy tendered during freshet At a portfolio level, total energy delivered during the freshet period cannot exceed 20% to 25% At a project level, firm energy delivered during the freshet period can not exceed 1/3 of the annual firm energy tendered 80
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Liquidated Damages Firm energy Pricing Shortfall liquidated damages payable at a rate of $25/MWh subject to escalation and time of delivery adjustments Bid price, adjusted by the time of delivery table For seasonal firm, contractual firm energy for a season commencing the 4th year following COD will be adjusted by subtracting any shortfalls averaged over the same season from the previous 3 years For hourly firm, contractual firm HLH and LLH energy for a month commencing the 3rd year following COD will be adjusted by subtracting any shortfalls averaged over the non-exempt hours for the same HLH or LLH for the same month in the previous year Shortfall liquidated damages are based on mark to market with market price capped at $100/MWh, escalated Bid price, adjusted by the time of delivery table 81
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Time of Delivery Table Non-firm Energy Pricing Similar to 2 x12 table from F2006 Call but the variations in the adjustment factors are more extreme in comparison 3 x 12 time of delivery table is under consideration All non-firm energy is paid at the same rate Two non-firm energy pricing options: A. Fixed price based on COD and EPA term, adjusted by the time of delivery table and escalated with CPI; and B. Spot Mid-C market price Seller to elect 0%, 50% or 100% of non-firm energy priced according to Option A, with the remainder priced according to Option B 2 x 12 table reflecting the energy value during the HLH and LLH for each month of a calendar year Tier 1 non-firm energy price is firm energy price less $8/MWh multiplied by the applicable discount weighting factor Tier 2 non-firm energy price is the lesser of 70% of Mid-C price during LLH and the Tier 1 non-firm energy price 82
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Turn-Down Right BC Hydro to have right to require Seller to cease generating if Seller exceeds total energy tendered for the freshet period BC Hydro turn-down right subject to payment of full energy price to Seller less avoided or avoidable costs Not specified Renewal/Buyout Rights Wind Energy Projects BC Hydro to have right to acquire project site, permits and related assets on the expiry or earlier termination of the EPA BC Hydro to have right to specify data collection system requirements for wind projects with BC Hydro bearing an incremental costs for the system Not specified Not specified 83
Clean Power / F2006 Call Comparison Terms Clean Power Call F2006 Open Call Performance Security Annual firm energy x $6/MWh Increased every 5 years by CPI Separate interconnection security with amount based on estimated interconnection costs as set out in the Feasibility or Preliminary Study Plant capacity x $60,000/MW prior to first anniversary of COD Annual firm energy x $4.57/MWh after first anniversary of COD 84
Clean Power Call Conclusion 85
Next Steps Action Stakeholder Engagement Target Timing November 2007 January 2008 Deadline for stakeholder comments December 14, 2007 Section 45 submission Q1 2008 Issue Clean Power Call Spring 2008 86
Comment Submission & Questions Comment Submission: Clean Power Call website www.bchydro.com/cleanpowercall Questions can be emailed to: cleanpower.call@bchydro.com 87