Common use of CLARITY AND CONCISION OF SOLICITATION MATERIALS Clause in Contracts

CLARITY AND CONCISION OF SOLICITATION MATERIALS. PG&E’s 2012 RPS solicitation protocol is modestly sized for a document of its type (it totals 33 pages excluding attachments, vs. SDG&E’s 30 pages), and is more concise than protocols PG&E used in prior years. This is part because some of the bulky text specifying detailed requirements for Offers’ contents has been shifted into Attachment J from the main body of the protocol. Xxxxxx regards this as an improvement over prior years. Xxxxxx believes that the contents of PG&E’s 2012 RPS RFO solicitation protocol generally provided clear and comprehensible direction to Participants on how to prepare and submit complete Offer packages that could be accepted and evaluated. Here are a few observations about the clarity of the guidance provided in the protocol: • Nearly all Offers were submitted as complete and conforming packages. The most common deficiency that needed to be remedied was a failure to include interconnection studies. This requirement was stated in two points within the solicitation protocol, so the fact that about a dozen Offers were submitted that failed to include the studies suggests that some Participants were inattentive. Perhaps greater emphasis needs to be placed on this specific requirement in future pre-offer conference presentations. Xxxxxx does not see how PG&E could have edited the solicitation protocol to make it plainer to see that this was a requirement. The proportion of Offers that needed to be corrected for deficiencies in the offer packages was fairly modest and lower than in some prior years’ renewable RFOs. This suggests that PG&E’s solicitation materials were clear enough for the majority of Participants to understand and follow. • The 2012 solicitation protocol stated some preferences of the utility: 1. Offers that begin delivery in 2019 or 2020 (when the utility currently forecasts an RPS compliance need, in contrast to earlier years); 2. Projects considered bundled, in-state resources or out-of-state resources scheduled into a California balancing authority without substituting electricity from another source, or using a dynamic transfer agreement (“Category 1”), over projects whose output will be considered renewable energy credits (RECs) for RPS compliance purposes (“Category 3”) and over out-of-state resources whose output is shaped and firmed using substitute electricity and scheduled into a CAISO interface point (“Category 2”); 3. Among Category 2 Offers, a delivery pattern that is flat in all hours except with no off-peak delivery in the second quarter of each year; 4. Projects within the PG&E service territory, as opposed to sites within the territories of other utilities (CAISO participating members or otherwise); 5. Offers with a delivery term of ten to fifteen years, as opposed to longer or shorter delivery periods; 6. Projects that offer flexibility in scheduling generation, such as Offers that provide for buyer curtailment beyond the minimum requirements of PG&E’s Form Agreement. Based on comments provided in feedback sessions after the RFO, it appeared that most Participants were aware of these stated preferences, with a small minority of developers having missed, for example, the preference for projects in PG&E’s service territory, or PG&E’s disinclination to select Offers with 25-year delivery terms. One exception was that it appeared that many Participants did not appreciate the fact, stated clearly in the public description of the evaluation methodology, that offering more than the minimum number of hours of buyer curtailment would increase their Offer’s valuation. This may be due to the novelty of the Portfolio- Adjusted Valuation methodology; repeated emphasis on this component of valuation may attract future Participants’ notice. When the utility solicited feedback from non-shortlisted Participants after closing the solicitation, the sense of the commentary about the clarity of RFO materials was neutral to quite positive. Some developers indicated that PG&E’s written requirements were “fairly easy to follow” and that PG&E “did a great job in communications with Participants before, during, and after” the due date. The solicitation materials were characterized as “complete – we were not shooting in the dark”. There were far fewer complaints about the burdensome nature of preparing Offer packages than in PG&E’s prior RFOs, perhaps because some of the requirements have been pared down in the 2012 solicitation. Also, while some Participants struggled with entering their project data into the MS Excel offer form and had to seek guidance before the due date, this affected fewer developers than in prior years. Overall, Xxxxxx believes that PG&E’s solicitation materials were clear and concise.

CLARITY AND CONCISION OF SOLICITATION MATERIALS. PG&E’s 2012 RPS solicitation protocol is modestly sized for While not a document particularly concise set of its type (it totals 33 pages excluding attachmentsmaterials, vs. SDG&E’s 30 pages), and is more concise than protocols PG&E used in prior years. This is part because some of the bulky text specifying detailed requirements for Offers’ contents has been shifted into Attachment J from the main body of the protocol. Xxxxxx regards this as an improvement over prior years. Xxxxxx believes that the contents of PG&E’s 2012 2009 RPS RFO solicitation protocol generally provided clear and comprehensible direction to Participants on how to prepare and submit complete Offer packages that could be accepted and evaluated. Here are Xxxxxx has a few observations about the clarity of the guidance provided in the protocolprotocol and issues created when Participants failed to understand or follow that guidance: • Nearly all The great majority of Offers were submitted as complete and conforming packages. The most common deficiency that needed deficiencies in other Offers were (1) failures to be remedied was a failure submit the offer form (Attachment D) for all Offer variants or project phases; (2) errors in filling in the offer form such as missing data; (3) failures to include interconnection studiesprovide the electronic version of the Offer; (4) discrepancies between the text of the Offer and the offer form; and (5) in the case of buyout options, failures to specify the buyout price in the offer form. This requirement was stated Since the requirements for the offer form were clearly addressed in two points within the solicitation protocol, so in the fact instruction sheet for the offer form, and in the bidders’ workshop presentation that about PG&E provided, Xxxxxx can only surmise that many Participants neglected to pay attention to these small but important details. The process of sending deficiency letters to the 2009 RFO Participants who did not provide necessary information and obtaining corrected Offers was time-consuming. Xxxxxx cannot identify any improvements to the clarity of the RFO materials that would have reduced the incidence of such Participant errors. • The 2009 solicitation protocol specifically and clearly stated that Offers that propose to deliver renewable power at a dozen point outside the CAISO grid should also specify a price premium to deliver into the CAISO or to an interface point with the CAISO. Several Participants failed to do so.4 Other Participants specified premiums that lacked any detailed backup on how the power would be delivered. This created an issue regarding how best to treat Participants fairly and consistently, given that some Offers were submitted only offered with pricing at busbars outside the CAISO, some Offers offered what appeared to be unrealistic premiums for delivery into the CAISO as eligible renewable resources,5 and others provided the full information that failed to include the studies suggests protocol requested in a credible and detailed way. It appears that some Participants were inattentiveprefer to avoid any risk associated with moving their facilities’ output to California and to shift that risk to PG&E’s ratepayers, by ignoring the protocol’s directions to provide a price premium to do so and offering only delivery at their project busbar. Perhaps greater emphasis needs While this does not appear to be placed on this specific requirement a real issue with the clarity of the RFO materials, Xxxxxx suggests that in future pre-offer conference presentations. Xxxxxx does not see how PG&E could have edited solicitations the solicitation protocol be drafted to make it plainer emphasize the mandatory nature of proposing a price premium for CAISO delivery as part of the Offer, and to see clarify the solicitations existing language that this was a requirement. The proportion of Offers the premium must be sufficient to ensure that needed to be corrected for deficiencies in the offer packages was fairly modest and lower than in some prior years’ power deliveries fully qualify as eligible renewable RFOs. This suggests that PG&Eresources under the California Energy Commission’s solicitation materials were clear enough for the majority of Participants to understand and follow(CEC’s) guidelines. • The 2012 2009 solicitation protocol clearly stated some two preferences of the utility: utility that are not among the evaluation criteria: (1. Offers ) a preference for projects that begin delivery in 2019 or 2020 (when the utility currently forecasts an RPS compliance need, in contrast interconnect to earlier years); 2. Projects considered bundled, in-state resources or out-of-state resources scheduled into a California balancing authority without substituting electricity from another source, or using a dynamic transfer agreement (“Category 1”), over projects whose output will be considered renewable energy credits (RECs) for RPS compliance purposes (“Category 3”) and over out-of-state resources whose output is shaped and firmed using substitute electricity and scheduled into a CAISO interface point (“Category 2”); 3. Among Category 2 Offers, a delivery pattern that is flat in all hours except with no off-peak delivery in the second quarter of each year; 4. Projects nodes within the PG&E service territory, as opposed to sites within the territories of other utilities (CAISO participating members or otherwise); 5) or to an interface point at the boundary of the CAISO, and (2) a preference for projects with earlier on-line dates vs. later. These stated preferences played an important role in decisions about which Offers with a delivery term the utility selected for its short list. In the course of ten to fifteen years, as opposed to longer or shorter delivery periods; 6. Projects that offer flexibility in scheduling generation, such as Offers that provide for buyer curtailment beyond the minimum requirements of PG&E’s Form Agreement. Based on comments provided in feedback sessions after the RFOdebriefing non-shortlisted Participants, it appeared that most Participants several of the parties were not aware of these stated preferences, with a small minority of developers having missed, for example, perhaps because the preference for projects in PG&E’s service territory, or PG&E’s disinclination to select Offers with 25-year delivery terms. One exception was that it appeared that many Participants did not appreciate the fact, stated clearly in the public description of the preference fell outside the chapter of the solicitation protocol that describes how Offers were to be evaluated. Xxxxxx recommends that in future solicitations PG&E seek to edit the protocol to help clarify that these specific preferences can play an important role in selection, even though they are not among the evaluation methodology, that offering more than the minimum number of hours of buyer curtailment would increase their Offer’s valuationcriteria. This may be due to would improve the novelty transparency of the Portfolio- Adjusted Valuation methodology; repeated emphasis on this component of valuation may attract future Offer selection process to Participants’ notice. When • The discussions that took place while debriefing the utility solicited feedback from non-shortlisted Participants after closing suggest that several developers did not clearly understand the solicitation, the sense importance of the commentary about Project Viability Calculator as a tool for assessing the clarity of RFO materials was neutral to quite positive. Some developers indicated likelihood that PG&E’s written requirements were a proposed 4 At one point in the protocol, it states that the Participant “fairly easy to follow” and that PG&E “did a great job in communications with Participants before, during, and aftermust also specify” the due datepremium; elsewhere the protocols states that the Participant “may also present” the premium. The solicitation materials were characterized as “complete – we were not shooting in It may be helpful to strengthen the dark”. There were far fewer complaints about language to emphasize the burdensome mandatory nature of preparing Offer packages than in PG&E’s prior RFOs, perhaps because some of the requirements have been pared down in the 2012 solicitation. Also, while some Participants struggled with entering their project data into the MS Excel offer form and had to seek guidance before the due date, this affected fewer developers than in prior years. Overall, Xxxxxx believes that PG&E’s solicitation materials were clear and concisepremium.