RFP Rules/Information

On May 2, 2016, Duquesne Light Company filed a petition for approval of the Default Service Plan, DSP-VIII – Docket Nos. P-2016-2544140. The Default Service Plan was approved per the December 22, 2016 Pennsylvania Public Utility Commission Order.
Duquesne Light Company will implement a competitive RFP process to acquire Full Requirements Service for the Company’s Default Supply Service. The DSP-VIII covers the delivery period of June 1, 2017 through May 31, 2021. Contracts will be awarded to winning bidders, as defined in the Default Supply Master Agreement. The Default Supply Master Agreement (“SMA”), is the Agreement that will be executed between Duquesne Light and the winning supplier(s). The Default SMA contains all governing terms and conditions. This Agreement cannot be changed.
Importantly, just as with the SMA the non-disclosure agreement was approved by the Public Utility Commission and cannot be changed or negotiated.

Differences between POLR VIII and previous POLR Plans

The principal procurement features of DSP VIII include the use of fixed-price full requirements supply contracts for Residential, Small C&I, and Medium C&I default service customers, and procurement of supply for Large C&I default service customers through the PJM Interconnection, LLC ("PJM") hourly spot markets.
DSP VIII also includes tailored contract lengths for each customer class. Solicitations for the full-requirements contracts occur within three months before the commencement of their delivery periods.

Solicitation Dates, Procurement Types, Size and Number of Blocks

Residential

Residential default service customers will have supply rates that adjust every six months based on twelve-month and twenty-four-month, laddered, fixed-price full requirements contracts.

Small C&I

Small C&I customers are identified with monthly metered demands less than 25 kW. Small C&I default service customers will have supply rates that adjust every six months based on twelve-month and twenty-four-month, laddered, fixed-price full requirements contracts.

Medium C&I

Medium C&I customers are those customers with monthly metered demands equal to or greater than 25 kW and less than 300 kW. Medium C&I default service customers will have supply rates that adjust quarterly based on three-month, non-laddered, fixed-price full requirements contracts.

The Residential, Small C&I and Medium C&I contracts will be procured within three months before the commencement of their delivery periods. Default service supply for these customers will be obtained through competitive RFPs, with winning bidders selected on the basis of lowest price.

Large C&I

Large C&I customers have monthly metered demands greater than 300 kW. Large C&I default service customers will continue to have supply rates that are based on hourly day-head market energy prices. Customers also will be charged a pass through of PJM capacity and ancillary services costs as well as the administrative costs of providing hourly price service ("HPS"). The contracts will procure the supply for this service supply in the form of non-laddered 12-month supply through a competitive Request for Proposals ("RFP") process.

Default Supply Load Cap and Full Requirements Issues

No more than 37.5% of the tranches available for the Residential & Lighting and Small C&I procurement classes can be awarded to any single supplier in any 12 month RFP and no more than 12.5% in any 24 month RFP. Duquesne Light proposed these load caps in these classes to ensure a diversity of default service suppliers and to reduce the impact of any single supplier‘s default. There is no load cap for the Medium C&I and Large C&I procurement class.

A full requirements contract requires a supplier to provide energy, capacity, ancillary services, and any other services or products necessary to serve a specified percentage of default service load 24 hours a day, for the term of the contract. Because the contract is load-following, the amount of energy and other services and products a supplier must provide will vary depending upon Duquesne Light‘s actual default service load.

An important clarification is that the entity that submits a bid must be the same legal entity that will both sign the SMA and serve the load in PJM. This will ensure that the bidder is qualified to serve load in PJM and is responsible for all legal obligations under the SMA as a wholesale supplier of default service load.

PJM Residual Metered Load Pricing went into effect June 1, 2015. The Residual Metered Load aggregate represents all load buses in the fully metered EDC territory, minus all load that has been designated to be priced at a specific non-zonal (or nodal) location. Effective June 1, 2015, the non-nodal Real Time Load switched to the use of the Residual Metered Load aggregate LMP rather than the physical zone LMP.

Load contracts priced at the Duquesne Zone has changed to the following:

Pricing Point	Residual Metered Load Aggregate Equivalent Contract Term	Pnode ID
DUQ	DUQ_RESID_AGG	116472943

PJM has implemented a change to the PJM Meter Correction billing with Duquesne Light since the previous auction. Winning suppliers of the default supply auctions going forward will be invoiced directly from PJM for any residual PJM charges/credits that result from meter corrections through their monthly PJM billing.

Management of RFP Solicitation

Duquesne Light must engage an independent third party market monitor to conduct and monitor the RFP process and bidding.
All questions and correspondence should be sent via email to the independent market monitor engaged for each solicitation; contact information for the independent market monitor will be provided in advance of each solicitation. The independent market monitor will be the liaison between the potential bidders and Duquesne Light Company.
Prior to the actual solicitation day, Duquesne Light and the market monitor will conduct a pre-bid meeting, approximately two weeks prior to the bid date. Potential bidders are given the opportunity to submit practice bids to ensure that the system is working properly.
All bids and associated paperwork will be reviewed by the third party monitor and Duquesne for compliance and conformity.
Duquesne will not see bid results until after close of bidding. Only the independent market monitor and the Public Utility Commission have discretion to reject bids.

The current independent market monitor is Charles Rivers Associates. For more information on the auction process, please visit the Information Website at www.duquesnedsp.com.

While Duquesne Light is not involved in receiving and evaluating the bids, it does have certain responsibilities throughout the process. Duquesne Light will: sign the non-disclosure agreement; review and approve all financial qualifications; answer all questions and return such answers to the independent market monitor to be posted on the website and sent to bidders; cooperate with bidders as much as possible to provide relevant information; verify that bidders are qualified with PJM to provide the services; sign the SMA; work with the independent market monitor to address any conflicts or disputes; and manage the contracts in accordance with the SMA.

Supplier Eligibility Requirements

Qualification Process

An eligible bidder must be a qualified market supplier in good standing with PJM, and must have FERC authorization to make sales of energy, capacity and ancillary services at market based rates.
All eligible suppliers must express interest by submitting a Part 1 Application to the market monitor from a person with the power to bind the bidder and agree to comply with all rules of the auction and if they become winning bidder;
Execute the Supply Master Agreement with the company.
Execute the non-disclosure agreement.
Submit financial information through the credit application.
Credit will be evaluated by Duquesne Light’s Credit Department for creditworthiness based on investment rating, financial statements, and other factors. Appropriate credit will be determined at the sole judgment of Duquesne Light.
An eligible bidder must be the same legal entity that submits the credit application, signs the non-disclosure agreement, signs the SMA and serves the load in PJM.
Qualified Bidders from the Part 1 Application process submit Part 2 Applications to become Registered Bidders.
Information for the Part 2 Application process can be found on the Information Website for the Default Service Program auction process at www.duquesnedsp.com.

Non-Disclosure Agreement

Any Company wishing to participate in the POLR VII solicitation is required to complete an NDA with the Part 1 Application. The verbiage in the NDA is non-negotiable.

Bid Submission Process

A set date and time period will be determined for submittal of bids for each solicitation.
Bids will be submitted by accessing the independent market monitor’s web site and following instructions. All bids must be submitted using the appropriate Bid Form on the secure website. All fields within the Bid Form require that the supplier’s input must be completed in order for the bid to be conforming.
All bids will go to the secure web site and will not be provided to Duquesne Light until after the close of bidding.
An email will be automatically sent to the bidder indicating that the bid has been received.
A detailed description of the Bidding Format can be found on the Information Website www.duquesnedsp.com.

Financial Qualification Process

Required Credit and Financial Information for bidder or bidder’s Guarantor:

Financial statements (most recently issued SEC Form 10-K, 10-Q, 8-K).
A statement of rulings or judgments relating to financial status that have had a material impact on financial status.
A debt rating from at least two of the following rating agencies: S&P, Fitch, or Moody’s (with supporting documentation).
Contact information for the Bidder’s/Guarantor’s credit representative to answer questions on the documentation provided.

Pre-Bid Security – 2 Options 1. Use Pre-Bid Letter of CreditUse Pre-Bid Letter of Credit

Part 1: Submit a Draft Pre-Bid Letter of Credit (LOC) (optional)
Part 2: Submit an executed Pre-Bid LOC ($250,000/tranche)

2. Make a cash deposit

Part 1: Request wiring instructions
Part 2:
- Submit cash deposit ($250,000/tranche)
- Attach a copy of W9 (tax ID) and a copy of banking information on company's letterhead, signed and dated
- Provide wiring instructions for returning your cash deposit

Key Elements of Credit Provisions Security posted during the term of the Default Supply delivery period will depend upon a creditworthiness evaluation.

Unsecured credit may be granted based on the Supplier’s (or its Guarantor’s) Tangible Net Worth and credit rating (see Supplier Master Agreement)
Total Exposure Amount less any unsecured credit (Margin) must be met with cash or Letter of Credit (Appendix F of Supplier Master Agreement)

The credit exposure methodology is explained in Section 6.3 of Supplier Master Agreement Letter of Credit (Exhibit 4 of Supplier Master Agreement)
Guaranty (Exhibit 5 of the Supplier Master Agreement)

Evaluation of Bids

All bids and associated paperwork will be reviewed and evaluated by the independent market monitor.
Security at the bid site will be maintained by the independent market monitor. Duquesne Light will not see bid results until after the close of the bidding.
The results will be summarized and sent to the Commission, along with a certification of compliance with all requirements and security.

Post Bid Process

Independent Market Monitor provides to the Company and the Commission the identity of winning bidders, the number of tranches won by each winning bidder, and the prices for the tranches won.
Independent Market Monitor notifies:
- Each winning bidder of how many tranches the bidder has won and at what prices
- Each unsuccessful bidder that the bidder has not won any tranches
The Commission will determine if there has been a violation of the auction rules in such a manner as to invalidate the auction based upon an assessment from the Independent Market Monitor.
Once PUC approval is received, Duquesne will be in contact to execute the SMA.
After the SMA is signed, Duquesne and winning bidders will coordinate to establish PJM accounts and establish Wholesale Load Reliability contracts and Billing Line Item transfers in PJM.

The Companies and winning bidders will execute the Supplier Master Agreement

Additional Relevant Questions and Answers

Q&As raised session will be posted on the Information Website www.duquesnedsp.com.