2002-03 Green Power – Clarification, Q&A
2002/03 GPG CFT: Clarifications
August 27, 2003
Submission of Tender Security and, specifically, Letters of Credit
It has come to BC Hydro's attention that the instructions for correctly submitting Tender Security in the form of a Letter of Credit require clarification.
The 2002/03 GPG CFT states that if the Tender Security is submitted in the form of a Letter of Credit that the Letter of Credit shall be advised through the main branch of the Bank of Montreal, Vancouver. The 2002/03 GPG CFT also states that the Tender Security must be submitted with the Tender Submission. It has since come to BC Hydro's attention that both of these requirements are mutually exclusive and cannot both be fulfilled.
Bidders are advised therefore that the requirement to have Letters of Credit advised as specified in the 2002/03 GPG CFT has been waived. For those bidders that elect to use a Letter of Credit to fulfil their Tender Security requirements, there are now two acceptable means for submission:
- In the case where Letters of Credit have been delivered to the main branch of the Bank of Montreal, Vancouver, before the Tender Submission Deadline of 4:00 PM, 29 August 2003, BC Hydro will consider those Letters of Credit to have been sufficiently delivered to BC Hydro in compliance with the 2002/03 GPG CFT if the Letter of Credit is in the form specified in the 2002/03 GPG CFT and meets all other requirements.
- In the case where Letters of Credit are submitted to BC Hydro's Purchasing Department, the Letter of Credit may be included with the tender documents in the manner specified in the 2002/03 GPG CFT or may be delivered directly from the issuing bank to BC Hydro as long as these security instruments are delivered prior to the Tender Submission Deadline and in the form specified in the 2002/03 GPG CFT and meet all other requirements, except for the requirement that the Letters of Credit be advised through the Bank of Montreal.
If it becomes necessary in the award process to break a tie between competing Tenders at the same adjusted Bid Price, the first Tender submitted that contains all of the required information as evidenced by BC Hydro's time and date stamp – or in the case of a Letter of Credit submitted to meet the Tender Security Requirements, the Bank of Montreal's time and date stamp – on the last element of the Tender, including any amendments, addenda or supplements, to be filed, will be preferred for award of an EPA.
For those bidders who choose to elect to fulfil their Tender Security requirements through a bank draft or certified cheque, these instruments must be physically included with the Tender Submission as per the instructions in the 2002/03 GPG CFT.
2002/03 GPG CFT: Questions & Answers
August 25, 2003
Will BC Hydro accept a bid with the first 10 MW during the winter months as firm capacity, subject to the application of three penalty conditions? The Natural Resource Adjustment would apply to all power delivered in excess of the 10 MW in the winter months and all the power in the summer months in the bid.
No, BC Hydro will not accept the proposed change, as described in the above question. To accept this change for all bidders at this stage in the process would not be fair to the bidders because (1) it would not provide BC Hydro with ample time for adequate consideration regarding the implications of this change, (2) it would likely give the 2002/03 GPG bidders inadequate time to respond to such a significant change in terms, and, most importantly, (3) it constitutes a material change in the CFT terms.
How are the firm and non-firm Bulk Location Adjustments (BLAs) calculated for the Vancouver Island (VI) region?
BLAs account for the line loss reductions and the Capital Plan expenditure deferral that would occur as a result of a generator being connected within the VI region of the province. The difference between the BLA for projects that elect to take the Natural Resource Adjustment (NRA) and the BLA for projects that do not elect to take the NRA stems from the fact that, in the case of non-firm, non-dependable energy, BC Hydro Capital Plan expenditure deferrals cannot take place. Therefore the value of the BLA for NRA energy is lower on VI because no BC Hydro Capital Plan deferrals will be realised, even if the proposed project reaches commercial operation date and injects power into the VI grid.
If a bidder chooses to use a certified cheque as Tender Security, to whom should the cheque be made payable?
Certified cheques should be addressed to "BC Hydro Power & Authority." "BC Hydro" is also acceptable.
BC Hydro has stated that the Brilliant Project, if successful, will be in addition to the 800 GWh/year cap for the 2002/03 GPG CFT. All bidders receive their written notifications on September 29, 2003, in the Tender Award Process. Will the Brilliant Project possibly receive a "Potential acceptance in step 4 of the Award Process," or can it only receive either an Acceptance or a Rejection?
Like other projects that participate in the CFT, the Brilliant Expansion Project could receive notice of their "potential acceptance in step 4 of the award process" if they are not part of the lowest cost supply bundle to make up the 800 GWh/year target, but have an adjusted Bid Price that does not exceed $55.00/MWh.
Can COD be changed from a target date in the RFQ, provided it is no later than September 30, 2006?
If a Bidder is aware of a change to the project target COD prior to submitting a Tender, this should be identified as a Project Change in Attachment A of Tender Form Part I. BC Hydro will evaluate Project Changes as part of the Tender award process in accordance with the provisions of the 2002/03 GPG CFT. If BC Hydro approves the Target COD Project Change and the Bidder is successful in the CFT process, the Target COD date recorded in Tender Form Part I will be entered in Appendix 5 in the project EPA.
Once the EPA has been signed, the Target COD is not subject to change, whether for Force Majeure or otherwise, although the Seller can precede the Target COD and come online earlier than expected.
August 15, 2003
Is the term of the contract accounted for in the System Adjustment? How is the System Adjustment calculated?
The number of years of sale of electricity to BC Hydro from the date of COD is accounted for in the System Adjustment calculation. The System Adjustment is calculated by:
- taking the cost of the System Upgrades required as a result of the proposed project,
- converting this lump sum cost to an annuity over the number of years that electricity will be sold to BC Hydro, based on a discount rate of 8%,
- dividing this annuity by the maximum yearly energy output, to arrive at an adjustment number in units of $/MWh.
August 13, 2003
What amount of electricity output would it take to trigger the "Major Transmission Constraint Threshold" in the Fraser Canyon?
The Major Transmission Constraint Threshold is a function of both the size and location of individual generators and the number, size and location of multiple generators within the constrained area. As such, it can vary significantly, and preliminary studies indicate that it could be triggered if anywhere between 30 MW and 50 MW of new capacity is added.
Is there a constraint threshold on any of the substations connected to the transmission line in the Fraser Canyon area?
There is a constraint at the Wahleach Substation located between Hope and Chilliwack. Preliminary studies indicate that, depending on the size and location of new IPPs, a major upgrade could be triggered at the substation if anywhere between 15 to 30 MW of new capacity is added.
Interconnection
August 25, 2003
Assuming a project is awarded an EPA, will BC Hydro consider contracting out any component of the interconnection if the developer feels they can reduce their Direct Assignment Costs by carrying out this work themselves to BC Hydro's specifications?
For all the projects submitted for the 2002/03 GPG CFT, the Direct Assignment portion of the Interconnection Costs is payable by the interconnection applicant.
BC Hydro does the design, material procurement and installation within BC Hydro owned facilities. Transmission line and new station design and material procurement is done by BC Hydro; installation is contracted out and done under the supervision of BC Hydro.
With respect to others doing this work there are times where, due to resource constraints, or where specific expertise is required, outside consultants/contractors assist in the design, procurement and construction. However, the work is always performed under the direction of BC Hydro.
The revenue meter for our project is 69kV. Where do I find the costing for this? Also, Section 7.11 (a) of the EPA states that the Seller needs to ensure that the revenue meter is capable of being remotely interrogated. What form of interrogation needs to be used and who decides the form of interrogation (radio, Telus hard wire, Telus digital, other) to be used? Also, is there a need for a power quality meter, and is the interrogation method the same for it? Would there be a need for two separate lines?
Typical installed costs for revenue meters at different voltages were provided in the Interconnection Section of 2002/03 GPG CFT Workshop Presentation (slides 112 and 113); Unfortunately the costs for 69 kV was missed. This missing 69 kV costing information was subsequently provided in the Interconnection Section of the 2002/03 GPG CFT Workshop Q&A document. Both the presentation and Q&A documents can be found at in the Call for Tenders section of these web pages.
Operating data requirements are provided in section 12 of the "69 kV to 500 kV Interconnection Requirements for Power Generators" document available at www.bchydro.com/interconnections. BC Hydro may require telemetering equipment for readings such as MW, MVAR, MWh and Volts. The specific requirements depend on the size of the plant, location, strength of system at the Point of Interconnection, other generation in the area, etc. This is determined during the Interconnection Impact study and will be provided as part of the Project Interconnection Requirements.
Typically, revenue metering data can be received using the same communication link used for operating telemetry. Again, this is determined during the Impact study.
August 15, 2003
If BC Hydro amortizes the total cost of the System Upgrades for a project, say for 20 years, but these System Upgrades provide benefits to the BC Hydro (or the BC Transmission Corporation) system beyond these 20 years, it seems unfair to charge these costs to the IPP over the 20-year period, as opposed to over a longer period.
The System Adjustment is applied to the bid price for bid adjustment purposes to ensure that B.C. ratepayers obtain least-cost energy supply, including the cost of delivering that energy through the B.C. transmission grid.
System Upgrade costs are not "charged" to the IPP; they are, however, indirect costs that must be reflected in the bid price, and the adjusted bid price cannot exceed the ceiling price of $55/MWh.
The EPA term is used in the amortization of the System Upgrade costs because the terms of the EPA are no longer applicable past the expiration of the EPA.
2002/03 Standard GPG EPA
August 25, 2003
With respect to Section 5 of the EPA, if a project achieves COD before the target COD, can the developer fulfil the terms for COD at that point in time and begin to be paid at the contracted rate, and not at the rate of power generated pre-COD (maximum $20.00 per MWh)? In other words, if a developer states a conservative target COD, is there incentive to make up time in the construction schedule if conditions allow?
Once a project has declared COD, the project will be subject to sections 7.3 and 7.4 of the EPA (Post-COD Sale and Purchase of Energy), and Part III of Appendix 3. Therefore, there is an incentive to achieve COD as early as possible in that the sooner the Seller successfully declares COD, the sooner the Seller is paid the post-COD price. The $20/MWh only applies to the 72 hour continuous operation period that is a requirement for COD (refer to section 7.1 of the 2002/03 GPG EPA and Appendix 3, Part II, Section 2.2).
With respect to Section 7.6 of the EPA, if the partial recall option is selected at some point in the future, what happens to the ownership of the "Green Credits" associated with the 20% of the power that has been recalled?
Under the EPA, BC Hydro (the Buyer) has ownership of the Green Rights associated with the Eligible Electricity as defined in Appendix 1. Therefore, if the partial recall option is elected, the Seller has ownership of the Green Rights associated with the electricity that has been recalled.
With respect to Appendix 4 of the EPA, under what situations would a proponent who selects the Natural Resource Adjustment be subject to liquidated damages?
A proponent who selects the Natural Resources Adjustment would be subjected to monthly capacity factor liquidated damages in instances where the monthly delivered electricity is less than 90% of monthly contracted electricity, as defined in item 11 of Appendix 11. The proponent would be subject to annual capacity factor liquidated damages in instances where the annual delivered electricity is less than 80% of the annual contracted electricity. Examples where annual LDs or monthly LDs might apply for a project that elected the NRA include instances where poor maintenance or poor operational practices have resulted in sub-optimal utilization of the available resource (e.g., a blockage of penstock that is not promptly removed).
April 30, 2003
Do we have a standard expectation for the call or when fulfilling the Electricity Purchase Agreement of what BC Hydro expects for First Nations consultation? Do we have codified requirements for what BC Hydro believes is adequate consultation? And does BC Hydro run a risk signing Electricity Purchase Agreements with IPPs who have done inadequate consultation?
The 2002/03 GPG Request For Qualifications outlines the process for assessing the proponent’s likelihood of meeting the applicable low impact criteria and the social responsibility criteria. The IPP requirements for communication with the aboriginal community are outlined in the 2002/03 GPG Green Criteria – Socially Responsible Facilities Criteria (Criteria). These Criteria include the types of compliance evidence we would be considering when assessing if a proponent has met the aboriginal community criterion and can be used as a guide by proponents. This assessment and the level of required communication is site and project specific and, therefore, BC Hydro does not have a uniform standard for meeting this criterion. Please refer to the question dated April 30, 2003, for an explanation of the weighting or evaluation process relating to the Criteria and, specifically, First Nations information and participation.
BC Hydro does not have specific requirements for Independent Power Producers (IPPs) consultation with First Nations in our call process or in our current Green Criteria. As BC Hydro’s commercial relationship with IPPs is that of a power purchaser, we believe that our current practices with respect to IPP development are consistent with:
- Obligations to First Nations;
- Our Aboriginal Relations Statement of Principles; and
- The Provincial Policy for Consultation with First Nations (October 2002) as it applies to BC Hydro.
As part of the Crown permitting agencies' approval process for each IPP project, BC Hydro expects that the Crown’s obligations to First Nations will be met, as provided in the Provincial Policy for Consultation with First Nations (October 2002). IPPs applying for authorizations must also meet all statutory obligations with respect to First Nations that relate to those authorizations.
However, as stated in the 2002/03 GPG RFQ, "BC Hydro will give preference to those projects that are the most likely to meet the 2002/03 GPG Green Criteria and that are most likely to achieve commercial operation not later than 30 September, 2006." There are many variables that will affect the project achieving its target COD. Therefore, in evaluating projects against the criteria discussed above, BC Hydro will assess information provided on all of these variables, including the advancement of communications with First Nations, to evaluate a project’s relative level of advancement.
Last Modified: Aug 28, 2003
