INDEPENDENT OFFER ANALYSES. Xxxxxx conducted its own rather simplified valuation process. The two sets of valuations generally correlated well, with a fair amount of noise in the comparison, as shown in Figure 3 that compares the two sets of valuations. LCBF valuation, $/MWh IE valuation, $/MWh Xxxxxx did not use its simplified model to construct a separate short list. Instead, the simplified model was useful in quality control to identify errors in PG&E’s or the IE’s inputs, parameters, or assumptions for specific Offers. Also, the comparison helped identify what specific factors caused specific Offers to be ranked high or low in PG&E’s short-listing process, such as the impact of the discount rate assumption, the on-line date, the choice of which transmission cluster to assign to an Offer, and the size of TRCR or transmission wheeling adders. Xxxxxx also scored each Offer for viability independently of PG&E’s analysis, using the original Energy Division version of the Project Viability Calculator. This was useful to get an estimate of what the standard error of the Calculator is, and a sense of whether differences in score reflect significant differences in the viability of projects or are within the noise of the method for assessing viability. Xxxxxx emerged from the comparison (shown in Figure 4) with a view that differences of a dozen or fewer points in viability score may not reflect true differences in the likelihood that one project is significantly likelier than another to achieve successful completion, given the roughness of the tool and the subjectivity of its use. PG&E viability score IE viability score The correlation of the IE and PG&E team’s scores using the Project Viability Calculator is poorer than that between valuation models. Xxxxxx ascribes this to the gray areas in the scoring guidelines, to differences in the subjective judgments of individual scorers, and to PG&E’s use of an additional evaluation criterion in its modified Calculator. The comparison between the sets of scores helped reveal specific errors that Xxxxxx acknowledged in its draft scores and corrected, but no doubt there are other errors in Xxxxxx’x viability scoring that have not yet been identified.
INDEPENDENT OFFER ANALYSES. Xxxxxx conducted its own rather simplified valuation analysis. Xxxxxx’x valuations generally correlated well with PG&E’s Net Market Value analysis for many Offers, but with a fair amount of noise in the comparison, as shown in Figure 9 that compares the two sets of valuations. The mediocre quality of the correlation is less interesting than the outliers and the underlying reasons for some of the divergences:
