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Enron Mail |
For TVA to increase its bid, there must be increased availability. With the
low availability of the proposed product, we valued it at $4.75. The main issue is the reliability of the resources. Higher guaranteed availability will increase the value to us. < ---------- < From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] < Sent: Thursday, January 18, 2001 5:55 PM < To: Goza, Stuart L. < Cc: Kevin.M.Presto@enron.com; David.Portz@enron.com; < Elizabeth.Sager@enron.com; Mitch.Robinson@enron.com < Subject: Re: TVA' s Bid < < < Stuart - < < Thanks for your response. At this time EPMI is unable to accept TVA's < bid. < Are the issues raised by TVA significant enough that, if amended, would < allow TVA to provide EPMI with a bid equal to EPMI's original offer? < < EPMI does plan to go forward with an offering to several market < participants on Monday. EPMI will include TVA in the process if you wish. < < Rogers Herndon < < < . < < < < < "Goza, Stuart L." <slgoza@tva.gov< on 01/18/2001 03:20:28 PM < < To: slgoza@tva.gov, "'Rogers.Herndon@enron.com'" < <Rogers.Herndon@enron.com< < cc: Kevin.M.Presto@enron.com, David.Portz@enron.com, < Mitch.Robinson@enron.com, Elizabeth.Sager@enron.com, "Creel, < Elizabeth A." <eacreel@tva.gov< < Subject: TVA' s Bid < < < Rogers, < < TVA's current bid is $4.75/kw-month, for the term May 1, 2001, through < December 31, 2003. Enron could call on units not being dispatched by TVA < only if TVA specifically agreed to waive its rights for the specific < period. < If the AAF is equal to or less than 50% for a month, then the Demand < Charge < for that month will be zero instead of $2/kw-month. < < Having the potential of 72 hours of scheduled maintenance per unit each < month significantly reduces the availability of the resources and the low < guaranteed availability during the non-summer also reduces the value to < TVA. < < Should Enron desire to provide a higher level of availability such as not < excluding the maintenance from the availability calculation or different < product such as unit capacity with LD energy, then that would increase the < value to TVA. < < A transaction of this duration is subject to TVA Board approval. < < Please let me know if the bid is acceptable, or if Enron want to offer a < product with higher availability. < < Thanks, < Stuart < < < ---------- < < From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] < < Sent: Tuesday, January 16, 2001 9:03 AM < < To: slgoza@tva.gov < < Cc: Kevin.M.Presto@enron.com; David.Portz@enron.com; < < Mitch.Robinson@enron.com; Elizabeth.Sager@enron.com < < Subject: RE: Tolling Proposal < < < < < < < < Stuart - < < < < The following is our response to question #1: < < < < In situations where a unit is not available due to unexpected < maintenance, < < but the advanced notice time requirements for a Scheduled Outage (24 < < hours) < < have not yet been met, or if the 72 hours for that month have already < been < < used for Scheduled Outages, then EPMI could inform TVA that the unit is < < not < < available, and TVA could not then call on the unit (this would be "D"). < < This prevents TVA from calling on (and counting on) a unit that is not < < available. Note that EPMI would not get credit for availability during < < this period. < < < < Note that this is considered a courtesy opportunity for the Buyer. EPMI < < does not object to removing the term D. < < < < EPMI request an indication of interest from TVA regarding the current < < proposal as soon as possible. EPMI's current plan is to issue a bid < < package no later than Friday am, 1/19/01. < < < < Rogers Herndon < < < < < < < < Rogers < < < < Herndon@ECT To: < < < < cc: < < < < 01/11/2001 Subject: (Document link: < < David Portz) < < 09:29 AM < < < < < < < < < < < < < < < < < < Stuart , < < Thanks for the prompt response. I am having someone address question < #1 < < and will forward as soon as possible. Regarding #2, EPMI is proposing a < < guaranteed heat rate and start up fuel quantities. As long as TVA < < arranges < < for and delivers these fuel quantities, EPMI will manage any actual < < imbalances. However, TVA would be responsible for all imbalances and < < potential penalties associated with under/over deliveries vs. the < < guaranteed quantities. < < < < I hope this response is sufficient. If not, please let me know. < < < < Rogers Herndon < < < < < < < < "Goza, Stuart L." <slgoza@tva.gov< on 01/11/2001 07:23:53 AM < < < < To: slgoza@tva.gov, "'Rogers.Herndon@enron.com'" < < <Rogers.Herndon@enron.com< < < cc: Kevin.M.Presto@enron.com, David.Portz@enron.com, < < Elizabeth.Sager@enron.com < < Subject: RE: Tolling Proposal < < < < < < Thanks for your response. I have two initial comments/questions: < < < < 1. I don't understand "D" in the formula shown in # 2 for AAF. What is < < it, < < how it is determined? If D and M exclude MO, SO, and Force Majure, what < < is < < left for "D"? < < < < 2. If TVA only has rights to 4 of the 6 units, how would gas imbalance < < charges be handled if both TVA and Enron are supply gas for the total < < plant? < < Certainly there will be situations were units trip or fail to start, < etc. < < which will lead to imbalances. < < < < < < < < < ---------- < < < From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] < < < Sent: Thursday, January 11, 2001 7:37 AM < < < To: slgoza@tva.gov < < < Cc: Kevin.M.Presto@enron.com; David.Portz@enron.com; < < < Elizabeth.Sager@enron.com < < < Subject: Tolling Proposal < < < < < < Stuart - < < < < < < Below are the responses to TVA's questions. Please let me know if and < < how < < < TVA would like to proceed from here. EPMI remains interested in < < entering < < < into a transaction with TVA. However, as mentioned, EPMI is on track < to < < < release a bid proposal to several market participants early next week. < < At < < < this point, EPMI targets a release date of Wednesday am , 1/17/01. < < < < < < Please contact me at 713-853-7355 to discuss how we proceed from here. < < < < < < Thanks, < < < Rogers Herndon < < < < < < < < < ---------------------- Forwarded by Rogers Herndon/HOU/ECT on < 01/11/2001 < < < 06:26 AM --------------------------- < < < < < < To: Rogers Herndon/HOU/ECT@ect < < < cc: < < < Subject: Tolling Proposal < < < < < < ---------------------- Forwarded by Rogers Herndon/HOU/ECT on < 01/09/2001 < < < 09:26 AM --------------------------- < < < < < < < < < "Goza, Stuart L." <slgoza@tva.gov< on 01/09/2001 09:06:21 AM < < < < < < To: "'Goza, Stuart L.'" <slgoza@tva.gov<, < "'Rogers.Herndon@enron.com'" < < < <Rogers.Herndon@enron.com< < < < cc: "'Kevin.M.Presto@enron.com'" <Kevin.M.Presto@enron.com<, < < < "'Elizabeth.Sager@enron.com'" <Elizabeth.Sager@enron.com< < < < Subject: RE: EPMI Draft Proposal < < < < < < < < < When do you anticipate a response to these questions? < < < < < < We do have interest, but this information is important! I hope that < you < < < will delay sending your proposal out to others until we have a chance < to < < < fully evaluate your offer. < < < < ---------- < < < < From: Goza, Stuart L. < < < < Sent: Monday, January 08, 2001 7:52 AM < < < < To: Goza, Stuart L.; 'Rogers.Herndon@enron.com' < < < < Cc: Kevin.M.Presto@enron.com; Elizabeth.Sager@enron.com < < < < Subject: RE: EPMI Draft Proposal < < < < < < < < Answers to these questions will assist us in determining our < position < < < < regarding your offer: < < < < < < < Certain of the following information is drawn from historical data as < to < < < the plant. Nothing below is a representation as to the plant's < < operability < < < on a going-forward basis. < < < < < < < (1) Why is the proposed guaranteed availability (75%) so low in the < < < < non-summer months? < < < < < < At the quoted monthly Demand Charge, EPMI feels that the guaranteed < < < availability values are competitive. Please note that 75% represents < a < < < guaranteed availability, and actual availabilty will be targeted at a < < much < < < higher level. Major maintenance would be completed during the < < non-summer < < < months. < < < < < < < < < < (2) How do you propose that availability be calculated? < < < < < < We propose that availability will be calculated using the following < < < formula: < < < < < < AAF = (P*C - D - M)/P*C < < < < < < where: < < < < < < AAF = Actual Availability Factor for a given month < < < P = the number of peak hours in a given month, where peak hours are HE < 7 < < - < < < 22 Sunday through Saturday (i.e. 7 days a week). < < < C = the contracted quantity for that month (in units of MW's). < < < D = The number of unit hours declared by EPMI not available in the < peak < < < hours of that given month times the maximum Contracted Capacity of < that < < < unit. < < < M = The number of MWhs called on by Buyer in the peak hours of that < < given < < < month, but not delivered by Seller for that month. < < < < < < Note: Both D and M would exclude the Major Maintenance Outages (see < < < below), Scheduled Outages (see below), outages due to Force Majeure, < < < Buyer's inability to perform, including but not limited to < < < non-availability < < < of gas and/or gas transport, and EPMI's inability to operate the plant < < due < < < to legal, regulatory or permitting restrictions or other reasons < beyond < < < the < < < reasonable control of EPMI. < < < < < < < < < 1. Major Maintenance Outages (MO). The Seller would be allowed 25 < days < < < per year per unit to conduct major maintenance. MOs would not count < < < against the Actual Availability Factor (see calculation below). < Seller < < < may < < < only schedule MO's with at least a 10 day notice and only during the < < < months < < < of October, November, December, March, and/or April. < < < < < < 2. Scheduled Outages (SO). The Seller would be allowed 72 hrs per < < month < < < per unit to conduct scheduled maintenance. SO's would not count < against < < < the Actual Availability Factor (see calculation below). Seller will < < make < < < commercially reasonable efforts to schedule SOs during non-peak < periods < < < (weekends and nights). Seller may only schedule SOs with at least a < 24 < < < hour notice. < < < < < < < < < Note that the Guaranteed Availability Factor (GAF) would be set at 95% < < for < < < the summer months, and 75% for the other months. The contracted Full < < < Demand Charge (FDC) for any given month would be paid by the Purchaser < < to < < < the Seller as long as the Actual Availability Factor (AAF) is equal to < < or < < < greater than the GAF (95% or 75%) for that month. For any month in < < which < < < AAF falls below the GAF of 95% or 75% depending on the month, the < < < Purchaser < < < (TVA) would pay the Seller (EPMI) a prorated amount of the FDC using < the < < < formula below. This prorated amount is known as the Reduced Demand < < Charge < < < (RDC). Notice that an AAF of 50% or less for any given month would < < result < < < in a floor Reduced Demand Charge of $2/kw-mo for that month. < < < < < < ADC = 2 + ((FDC - 2)/(GAF - 50))*(AAF - 50) as long as AAF is equal to < < or < < < greater than 50% and less than or equal to the GAF (either 95% or 75%) < < < < < < ADC = $2/kw for months in which AAF is equal to or less than 50% < < < < < < ADC = FDC for months in which AAF is equal to or greater than the GAF < < < < < < where: < < < ADC = Actual Demand Charge for a given month < < < FDC = Full Demand Charge for a given month < < < AAF = Actual Availability Factor (as defined below). This number is < < given < < < as a whole number (e.g. 97% is 97) < < < GAF = Guaranteed Availability Factor (95%). < < < < < < All percentages are rounded to the next highest whole number (e.g. < 94.7% < < < becomes 95%; 94.4% becomes 94%). < < < < < < < < < < (2) Is the plant "winterized" -- that is can it run in the cold < < < weather? < < < < < < Significant upgrades were made to the plant after the 1999 calendar < year < < < to < < < aid in winterization. In general, however, even fully winterized < plants < < < tend to be less reliable in extremely cold weather. It would be < Buyer's < < < responsibility to address natural gas availability and delivery < concerns < < < throughout the year, including winter months. < < < < < < < (3) From a manpower standpoint, is the plant available 7x24 for all < < < < months -- or are the certain periods of time when the plant is not < < < < staffed? < < < < < < < < < The plant is staffed or has members on ready recall 7x24. However, in < < < order to have full preparation time, a 3 hour notice is required prior < < to < < < dispatch. Dispatch outside M-F peak hours (5X16, HE 7 - 22) requires < a < < 5 < < < hour dispatch notice. < < < < < < < (4) What has been the historic availability of the plant (by < month)? < < < < < < Using the formula above, the Actual Availability Factor (AAF) for the < < < plant < < < by month for calendar year 2000 is shown below: < < < < < < Jan 100% < < < Feb 99% < < < Mar 100% < < < Apr 100% < < < May 97% < < < Jun 97% < < < Jul 99% < < < Aug 100% < < < Sep 100% < < < Oct 100% < < < Nov 100% < < < Dec 100% < < < < < < Note that approximate average per unit run hours during calendar year < < 2000 < < < was 215 hours. < < < < < < < (5) What type of gas transportation has been historically used -- < < < < interruptible or firm? < < < < < < < < < Historically EPMI has utilized both firm and interruptible gas < < < transportation depending on availability. < < < < < < < (6) Has the plant ever been unavailable due to the inability of < fuel? < < < < < < Only once since plant construction. This occurred during a run-time < < with < < < minimal advance notice. In general, fuel availability is the < < < responsibility of the Buyer and is more readily available with greater < < < advance notice. Note also that the plant was only minimally run < during < < < the < < < most recent winter season due to non-economic dispatch conditions; < < < therefore, the availability of gas this past winter was not tested. < < EPMI < < < is willing to discuss with Buyer making the facility a dual fuel < plant, < < < subject to permitting restrictions and operational parameters, and < < < effected < < < at Buyer's expense. < < < < < < < < < < (7) Am I correct in assuming that in the tolling type arrangement, < < TVA < < < < has exclusive use of the plant --- that is Enron would not have < access < < < to < < < < the output unless TVA specifically waives its rights? < < < < < < EPMI would not have access to specific units of the plant while those < < < units < < < were being dispatched by TVA. The plant has six units and four would < be < < < designated by unit number to TVA for purposes of the tolling < agreement. < < < EPMI could call on units not being dispatched by TVA. < < < < < < < < < < < < < < ---------- < < < < From: Rogers.Herndon@enron.com[SMTP:Rogers.Herndon@enron.com] < < < < Sent: Thursday, January 04, 2001 2:22 PM < < < < To: Goza, Stuart L. < < < < Cc: Kevin.M.Presto@enron.com; Elizabeth.Sager@enron.com < < < < Subject: RE: EPMI Draft Proposal < < < < < < < < < < < < Stuart, < < < < < < < < Yes, the 800 hours are annual limits. I apologize for the < < < < confusion. < < < < < < < < EPMI is currently finalizing a bid solicitation for the New < Albany < < < < tolling < < < < service. We anticipate sending this proposal to interested < parties < < < < by the < < < < middle of next week (1/10/01). In the event EPMI and TVA have < not < < < < entered < < < < into exclusive negotiations by the time of the bid offering, EPMI < < < < would < < < < encourage TVA to join the bid process. We anticipate this < process < < < < lasting < < < < two weeks. < < < < < < < < Please feel free to give me a call if you have any further < < < < questions. < < < < < < < < Rogers Herndon < < < < 713-853-7355 < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < < <
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