Published On: 05/11/2022
Question: The RFP Plan Document Section II(A)(4) indicates that in order to submit a bid, a "Facility must have submitted an interconnection request during the 2022 Definitive Interconnection System Impact Study (“DISIS”) enrollment window [01/01/2022 – 06/29/2022] or, alternatively, have a fully executed Interconnection Agreement with DEC or DEP prior to 8/20/2021 and not be in default under such Interconnection Agreement but not also having executed a PPA." But, what about Facilities that are currently participating in the Transition Cluster process? Are there any scenarios under which projects in the Transition Cluster process could bid into this RFP?
Answer: Projects in the Transitional Cluster may participate in the 2022 SP by exiting the Transitional Cluster and re-entering the 2022 DISIS Cluster study process.
Published On: 05/11/2022
Question: The RFP Plan Document Section II indicates "Third-party solar developers (“Third-Party MPs”) may submit project proposals (“Proposals”) for consideration in both the Utility Ownership Track and the Controllable PPA Track." Section III then cites that third-party MP Utility Ownership Track Proposals shall be submitted as one of the following: Asset Transfer, Asset Transfer Plus EPC, or BOT.
Can an MP submit Utility Ownership Tack Proposals on more than one basis (i.e., for Asset Transfer, Asset Transfer Plus EPC, and BOT)? At the extreme this would allow an MP to bid a Facility on 4 bases: PPA, Asset Transfer, Asset Transfer Plus EPC, and BOT. This would allow Duke to select the most desirable basis in the context of the PPA price or transfer/sale price bid.
Answer: No. For the 2022 SP, an MP submitting a bid for the Utility Ownership Track may only bid one of the three types of Utility Ownership Track Proposals (Asset Transfer OR Asset Transfer Plus EPC OR Built Own Transfer).
Published On: 05/11/2022
Question: The RFP Plan Document Section V(A) indicates "The costs of transmission/distribution grid improvements and upgrades (“System Upgrade”) should not be incorporated in the MP’s PPA price. System Upgrade costs will be identified in the DISIS cluster process (unless the Proposal has an existing Interconnection Agreement)."
Please clarify, if a Facility already has an LGIA or if a Facility is already part of the Transition Cluster, should they also bid a PPA price that excludes the System Upgrade costs so that they can be compared apples to apples with DISIS projects that bid on that basis?
Answer: A Proposal with a Facility that already has an LGIA should include the Facility’s System Upgrade costs in its bid price. Projects requesting interconnection in the Transitional Cluster are not eligible to participate in the 2022 SP and must exit the Transitional Cluster and enter the 2022 DISIS Cluster study process in order to participate in the 2022 SP. As stated in the RFP document at Section II.A.4.: “MPs participating in the 2022 SP having the aforementioned fully executed Interconnection Agreement shall be solely responsible for the cost of any System Upgrades assigned to it under its Interconnection Agreement and shall bid accordingly as participation in 2022 SP will not alter any contractual obligations included in the MP’s executed Interconnection Agreement."
Published On: 05/11/2022
Question: The RFP Plan Document Section IV(E) first para cites "provided, however, a bidder may disclose Bidder Information to its affiliates’ officers, employees, consultants, attorneys, agents, bankers, accountants, and contracting parties (“Representatives”) as reasonably necessary for such bidder to participate and perform as a bidder in this RFP".
Does the language "contracting parties" as used here allow for disclosure to potential buyers of the Facility? It would seem that MPs need the ability to disclose the particulars of their bids to potential buyers of the Facility.
Answer: The Companies are updating the RFP to clarify that MPs may share confidential information with a prospective investor or purchaser where the prospective investor or purchaser agrees not to disclose such confidential information.
Published On: 05/20/2022
Question: If a project plans to submit an Asset Transfer bid, does the DISIS interconnect request need to reflect only equipment listed in the Approved Vendor list?
Answer: If a bidder submits an Asset Acquisition proposal under the Utility Ownership Track (UOT), then yes, the bidder should use Approved Vendor List (AVL) equipment; otherwise, the bidder will risk having to change their Interconnection Request application at a later date to meet the AVL requirements if they are named a UOT winner.
Published On: 05/27/2022
Question: In the RFP Plan Document - In section III. B - Controllable PPA Track Proposals the lead in says that "Utility Ownership Track" must also meet all of the following and then lists the requirements for PPA Track Proposals. This looks like an errant copy paste because I don't think it is Duke's intent for Utility Ownership Track projects to be sized under 80 MW or register as QF.
Can you please confirm?
Answer: Correct, this is typographical error contained in the draft RFP document that will be corrected in the final RFP document, to be posted next week. Section III.B should instead state: “Proposals in the Controllable PPA Track must also meet all of the following:”
Published On: 06/07/2022
Question: Could you please specify which exact exhibits (Appendix L - EPC Agreement exhibits) apply to the Build Own Transfer approach? The RFP states design criteria approaches but we see roughly 10 articles under A-1-2. Do all of those docs need to be followed under the BOT?
The same question goes for Exhibit A-1-1 Scope of Work. The SOW dictates how the project management should be approached and project execution and these don't seem to apply to a Build Owned Transfer structure. Please advise.
Answer: The Build Transfer Agreement (“BTA”) that will be executed for selected Build Own Transfer (“BOT”) proposals incorporates, as an exhibit, the EPC Agreement between the Seller and its downstream EPC contractor, including all exhibits thereto. The form Build Transfer Agreement contemplates that such EPC Agreement will conform, in form and substance, to the Duke Energy form EPC Agreement provided, inclusive of the exhibits. Duke Energy has the discretion to accept or reject any proposed deviations from its form, including the exhibits, and any project to be acquired, owned and operated by Duke Energy must be constructed to its standards and specifications for it to be accepted. As such, all bidders should presume that all substantive specifications and criteria apply.
Published On: 06/14/2022
Question: Taken together, the APA sections 7.1 and 7.3 contemplate a Closing Deadline at which all closing conditions must have been met and the transaction will have been closed, or else either party has a right to terminate. But, the Closing Deadline date is blank in the definition of "Closing Deadline" in the APA. How much time does Duke intend to allow between the execution of the APA and the Closing Deadline? Our concern is that unless Duke specifies a Closing Deadline ahead of the Parties execution of the LOI, then the Closing Deadline that Duke later desires in the APA may be a Closing Deadline that is unacceptable to the Seller. If the Seller must then withdraw from the RFP because it cannot accept Duke's desired Closing Deadline, the Seller would be exposed to a call on its RFP Security. Can Duke advise now how much time it will allow between the execution of the APA and the Closing Deadline? Or, alternatively, can the form of LOI be revised to include a Closing Deadline so that there is no uncertainty about what the Closing Deadline will be once the Parties execute the LOI?
Answer: The intent is to negotiate and agree to a fair and reasonable Closing Deadline specific to any selected Asset Acquisition Proposal, recognizing that some proposals may have very few closing conditions, due to the mature nature of a project, whereas other projects may have more closing conditions and thus need additional time to complete such items. A Market Participant can provide a redline to the LOI with their Proposal submittal, including a proposed Closing Deadline, and the parties may negotiate the Closing Deadline in the LOI; otherwise the closing deadline will be determined in the definitive agreement negotiations (APA).
Published On: 06/14/2022
Question: As you know, on 6/10/22 the NC Utilities Commission issued an order in Dockets E-2, SUB 1297 and E-7, SUB 1268 related to the 2022 solar procurement directing Duke Energy to not include the Red Zone Transmission Expansion Plan (RZEP) projects in the 2022 DISIS baseline. As such, we respectfully request that you confirm the final grid locational guidance for the 2022 solar procurement, for avoidance of doubt among market participants and consistent with the 22P RFP Plan Document (“For purposes of the 22 SP Program RFP, DEC/DEP will provide grid locational guidance on the IE RFP Website indicating known transmission limitations resulting from the amount of existing or proposed renewable energy facilities in a particular area”).
Our understanding is that the “DEC/DEP Transmission Constrained Area Map” in Attachment 1 of the “Interconnection Requirements and Locational Guidance” RFP Document represents the final grid locational guidance for reliance by market participants for purposes of the 2022 solar procurement. If this is incorrect, or if the IE or Duke anticipate any further update to this locational guidance prior to the RFP bid deadline, we appreciate clarification at your earliest convenience.
Answer: The posted “Interconnection Requirements and Locational Guidance” represents the current final and known constrained areas as of May, 2022 and should be used by Market Participants for purposes of the 2022 SP Program. While the NCTPC local transmission planning process may establish expansion plans that alleviate some of these constraints, the timing of that approval would likely be after the close of the bid window, and perhaps much later. The NCUC’s Order indicates that those proposed expansion plans should not be assumed to be included for 22 SP RFP purposes.
Published On: 06/16/2022
Question: The RFP Plan Document Section III(B) states that "Bidders submitting Controllable PPA Track proposals should submit a state-jurisdictional interconnection request". Will Duke accept PPA track bids for projects that are currently queued for FERC interconnection with the understanding that if project is awarded a PPA in the RFP that project will switch to a state-jurisdictional interconnection request?
Answer: If the Proposal is bidding into the PPA Track then pursuant to the RFP, the interconnection request must be state jurisdictional. The only FERC jurisdictional interconnection requests acceptable for the 22 SP are for Proposals that are only bidding in Utility Ownership Track. If a Proposal is bidding in both tracks, it should submit a state jurisdictional interconnection request.
RFP 00011 (revised 08/24/2022)
Published On: 06/17/2022
Question: Section 7.1 of the APA lists all of the conditions precedent to the obligations of the Buyer to Close. One of those conditions precedent in 7.1(b) is that the Seller shall have obtained all Permits required for the siting and construction of the project. In the context of an asset transfer without EPC, it would seem that permits relating to construction would/should be the responsibility of Duke and not the Seller. Permits relating to construction such as a building permit, electrical permit, and stormwater permit are typically arranged by the EPC contractor or by the party who holds the relationship with the EPC contractor. In an asset transfer without EPC, all the responsibilities for obtaining such construction-related permits will be within Duke's or its EPC contractor's control so it doesn't seem appropriate for such permits to be a condition precedent to the obligations of the Buyer to close. These types of permits are typically not obtained until just before the shovel goes into the ground. Can Duke please clarify the shorter list of permits that would apply as conditions precedent in an asset transfer without EPC context? Alternatively, If Duke really intends in an asset transfer without EPC context for the Seller to be responsible for obtaining such construction-related permits or for the Seller to simply wait to Close until Duke or its EPC contractor obtains such permits, then it would seem that there should be no Closing Deadline as the Seller will be completely at the mercy of Duke or its EPC contractor to determine the timeline for obtaining such permits. The Seller should not be exposed to a Duke termination right if there is a delay in Duke or its EPC contractor obtaining construction-related permits.
Answer: It is critical that the MP and Duke have a full understanding of all permits or approvals required to develop, construct and operate the proposed solar facility, including which party has the responsibility of obtaining each permit. The list of required permits or approvals will be unique to each proposed project, but generally speaking, the MP (aka the Seller) will be responsible for all development related permits, such as zoning, special permits, conditional use permits, environmental permits or other critical approvals and Duke (the Buyer) will be responsible for the construction permits, such as building, electrical, stormwater permits. MP’s are encouraged to provide a detailed list of ALL permits required to develop, construct and operate the proposed solar facility and include the party responsible for obtaining each permit. The list of required permits and responsibility will be evaluated and memorialized in the LOI for each selected Asset Acquisition Proposal.For the avoidance of doubt, Section 7.1(a) of the APA means the applicable state jurisdictional approval associated with acquisition and/or construction of the subject facility by Duke. For facilities sited within North Carolina, this will be the certificate of public convenience and necessity (CPCN) related to Duke’s construction of the facility, as well as any approval necessary to transfer a CPCN already awarded by the North Carolina Utilities Commission authorizing construction of such project to Duke. For facilities sited in South Carolina, this will be the CPCN related to Duke’s construction of the facility, to the extent the proposed facility’s capacity is greater than seventy-five (75) MW, as well as any approval necessary to transfer a CPCN already awarded by the Public Service Commission of South Carolina authorizing construction of the project to Duke. To ensure prompt regulatory approval and satisfaction of the Section 7.1(a) closing condition, the CPCN application for approval(s) to construct the facility is anticipated be made with the MP and acquiring Duke utility as co-applicants following the execution of the APA for the subject facility in advance of closing.With respect to proposed transactions under the build-transfer structure, the approval necessary to transfer the CPCN awarded by the North Carolina Utilities Commission or Public Service Commission of South Carolina (to the extent applicable) authorizing construction of such project to Duke will also be a condition to closing under Section 8.1.3 of the BTA. To ensure prompt regulatory approval and satisfaction of the Section 8.1.3 closing condition, the application for approval(s) to transfer the CPCN authorizing the construction of the facility is anticipated be made with the MP and acquiring Duke utility as co-applicants following the execution of the BTA for the subject facility in advance of closing.
Published On: 06/21/2022
Question: Can a project connected to the distribution system be used for the RFP if the project is bigger than 20 MW?
Answer: No. Pursuant to Duke Energy’s Method of Service Guidelines, projects 20 MW or larger must interconnect to the transmission system. The Method of Service Guidelines are posted on Duke Energy’s Generate Your Own Renewables website at method-of-service-guidelines-20171013.pdf (azureedge.net).
Please also see Section III A for Utility Ownership Track proposals or Section III B for Controllable PPA Track proposals in the 2022 Solar Procurement Program RFP, which provide additional requirements for projects participating in the Program.
RFP 00013 (revised 06/23/2022)
Published On: 06/23/2022
Question: Given that the RFP process will take about a year from Bid Submission to execution of documents (i.e. PPA or LOI FOR APA), what flexibility does a sponsor have to sell a bid project to another party during the RFP process while keeping the bid asset in play till the end? That is: A) From Bid Submission to Shortlisting, can a sponsor sell a bid project and have the new owner step into the RFP process? B) From Shortlisting to Winning, can a sponsor sell a bid project and have the new owner replace the original sponsor Shortlist Security and continue in the RFP process? C) After Winning and before executing a PPA or LOI for APA as the case may be, can a sponsor sell a bid project and have the new owner replace the original sponsor Shortlist Security and continue in the RFP process? D) If a Winning project with MP as its owner executes a PPA or LOI for APA (or the APA itself), what flexibilities will Duke have to consent to change of control to a reputable IPP or financial sponsor?
Answer: For part A) Yes. Nothing in the RFP prevents the sale of a project during the pendency of the bid process, but such a sale would not release the bidder from its outstanding obligations under the RFP.
For part B) Yes. Project security can be exchanged with conforming substitute security, but Duke will not release the existing project security until it receives acceptable substitute security as determined in its reasonable discretion.
For part C) Upon the execution of a definitive contract between Bidder and Duke, the contract will govern the consent and approvals required for either party to assign or transfer, draft forms of all definitive agreements have been provided and are available on the RFP website.
For part D) See responses to A-C.
Published On: 06/23/2022
Question: If a project is planning to connect to a POI on a 230kV line, would the project have to submit a FERC jurisdictional interconnection request or could a state jurisdictional request be filed?
Answer: If a Proposal is bidding in the PPA track of the 2022 Solar Procurement, it should submit a state jurisdictional interconnection request. The voltage does not dictate the jurisdiction of the request. However, the size of a project may limit which voltages it is permitted to interconnect to.
For more information regarding interconnection in DEC’s service territory, please follow the link OATI OASIS, then select the folder named Generator Interconnection Information and review the “Duke Energy Carolinas Facility Connection Requirements”.
For more information regarding interconnection in DEP’s service territory, please follow the link OATI OASIS, then select the folder named Generator Interconnection Information and review the “Facility Interconnection Requirements”.
Published On: 06/29/2022
Question: Thank you for your response to our question (RFP 00008; Published On: 06/14/2022). We apologize for not having been more clear in the way we framed our concern in our original question. To clarify, as we understand it the redlining and negotiation of the LOI would come after Shortlisting and the MP's acceptance of the Step 1 Shortlisting and posting of RFP Step 2 Security. Our concern is that if the MP and Duke cannot then agree on the Closing Deadline in LOI negotiations the only option for the MP will be to withdraw from the RFP which would result in a call on its Security.
How can an MP avoid this risk and have certainty that the parties will/do agree on the Closing Deadline before the MP is required to post RFP Step 2 Security? Once Security is posted it would seem all the leverage in negotiation of the LOI and APA shifts in Duke's favor because if the MP fails to agree to whatever Duke proposes all the MP can do is withdraw and face a call on its Security.
Answer: Duke understands there are risks and that MPs are currently facing market uncertainty. However, Duke is committed to negotiating in good faith with MPs to agree upon a reasonable Closing Deadline. MP’s are encouraged to provide their redline edits to the LOI (including proposed Closing Deadline) and definitive agreements with their Proposal submittal, to enable the MP to begin engaging in a dialog with the Duke Utility Ownership team regarding a proposed Closing Deadline specific to the project at hand.
Published On: 07/13/2022
Question: Thank you for your clarifying response on RFP 00009 above regarding confirmation of grid locational guidance. To confirm, we are proceeding under the assumption that the proposed RZEP projects will not be included in DISIS 1 and that the existing grid locational guidance will not change further for purposes of the 22 SP Program RFP. If Duke intends to pursue further action to attempt to incorporate the RZEP projects into DISIS 1 and change the grid locational guidance, we appreciate the IE notifying market participants as soon as reasonably possible, so that MPs are informed that the locational guidance may be subject to modification.
Answer: The IE will notify market participants as soon as reasonably possible if changes to the grid locational guidance are made.
Published On: 07/14/2022
Question: If a project is located in the constrained area, will it still be considered in the RFP?
Answer: Yes, Proposals in the constrained area will still be considered in the RFP.
RFP 00018 (revised 10/25/2022)
Published On: 10/25/2022
Question: Can you please describe the Step 2 Proposal Security Process?
Answer: Pursuant to Section IV.I.1 of the 2022 RFP, Step 2 Proposal Security can be in the form of (i) cash; (ii) a surety bond; or (iii) a letter of credit (LOC), and must comply with all of the terms set forth in Section IV.I.1. If the MP intends to use cash for Proposal Security, the MP should indicate to the IE by November 15, 2022 that a cash Proposal Security will be provided, such that the Companies can prepare to create invoices for the security. It is recommended that MPs provide draft forms of Proposal Security prior to November 15, 2022 . As required by the RFP, MPs should materially conform to the forms provided in Appendix C and Appendix D (available at https://www.duke2022solarrfpcarolinas.com/RFP-Documents). Please note, any material variance of the Appendices will require advance approval by the Companies.
The Companies will notify the MPs once Step 1 RFP evaluations are completed (on or about November 23, 2022) if they have been invited to formally move into the Step 2 evaluation. At that point, the MP must post the Step 2 Proposal Security within no later than ten (10) business days after the notification date. If an MP does not timely provide the Step 2 Proposal Security, then the Evaluation Team may eliminate the MP’s Proposal from the RFP and identify and invite additional replacement Proposals to be evaluated in Step 2.
The Step 2 Security for successful BOT bids will be released after execution of the definitive agreement (BTA). The amount of the credit support required under the BTA will be specific to the counterparty and project. The Companies will engage the Credit Risk department to determine security amounts for projects that advance into Step 2 if desired.
Published On: 11/14/2022
Question: If the Step 2 Proposal Security is originally paid with Cash, can it then be replaced with LC or Surety Bond?
Answer: Yes, if the Step 2 Proposal Security is paid in cash, it can later be replaced with another form of acceptable security. Acceptable forms of Step 2 Proposal Security are included in Section I Step 2 Proposal Security 1 of the RFP, which states:
Proposal security in the amount of $20/kW minus the M1 security to enter DISIS Phase 1, (based on the Facility’s interconnection request capacity) must be posted by all Third-Party MPs that are selected to move into Step 2 of the evaluation process (“Step 2 Proposal Security”). This Step 2 Proposal Security can be in the form of (i) cash; (ii) a surety bond; or (iii) a letter of credit (“LOC”), in each case, in a form acceptable to the Companies and issued by an entity that meets the Companies’ issuer requirements and naming DEC or DEP (as applicable) as the sole beneficiary. An issuing bank for the LOC must have a minimum credit rating of A- from S&P and A3 from Moody’s and a surety must be rated A.M. Best “A- VII” or higher. Surety bonds must be irrevocable and require payment by the surety within ten calendar days of demand. Interest will not be paid on cash deposits. An example of acceptable LOC is provided in Appendix C and an acceptable surety bond is provided in Appendix D.
It is recommended that MPs provide draft forms of Proposal Security, if not posting cash, to DEP and/or DEC through the IE prior to November 15, 2022, to allow sufficient time for the Companies to review and confirm the Proposal Security materially conforms to the forms provided in Appendix C and Appendix D, respectively. The Companies will notify the MPs once the Step 1 RFP evaluations are completed with Phase 1 interconnection cost estimates (approximately November 28, 2022) if they have been invited to formally move into the Step 2 Evaluation, at which point, the MP must post the Step 2 Proposal Security within and no later than ten (10) business days after the notification date. If a Proposal does not timely provide the Step 2 Proposal Security, then the Evaluation Team may eliminate the Proposal from the RFP and identify and invite additional replacement Proposals to be evaluated in Step 2.
RFP 00020 (revised 11/29/2022)
Published On: 11/29/2022
Question: Thank you for the information on our Proposal shortlisting for Step 2. We respectfully request clarification on the following questions: 1. Our Project was bid under both tracks. Was it shortlisted for PPA track only, Asset Transfer track only, or both? 2. In event a Project gets shortlisted for more than one track, would it need to post security on each track shortlisted (total of two securities) or just one security amount for both (total of one security)?
Answer: 1. Projects invited to Step 2 that bid under both tracks of the RFP are not limited to a track for Step 2. The selection of a track will be conducted during the Step 2 evaluation, and each winning MP will then be notified of the track under which their proposal is considered a Winning Proposal.
2. If the Project was bid under both tracks of the RFP, only one security amount is required.
RFP 00021 (revised 12/14/2022)
Published On: 12/14/2022
Question: For the shortlist awards that were sent out for projects, it was not indicated for projects that bid both into the PPA Tract and Utility Ownership Tract whether they were shortlisted for either or both of the tracts. Can you please advise to the MP if we should assume that they have been shortlisted for either/both tracts and if MP is able to choose the track if the project is eventually awarded?
Answer: Please refer to FAQ RFP 00020 available on this webpage. Projects invited to Step 2 that bid under both tracks of the RFP are not limited to a track for Step 2. The selection of a track will be conducted during the Step 2 evaluation, and each winning MP will then be notified of the track under which their proposal is considered a Winning Proposal.
Published On: 12/14/2022
Question: If the track selected by Duke is not the preferred track for the MP and therefore withdrawn, will the security be returned to the MP?
Answer: For this answer, we assume the selection referred to in the question is the selection of winners in May, 2023. If a Proposal is selected as a winner in May (regardless of which track it wins in), and it chooses not to execute the relevant agreement, then proposal security would be forfeited and not be returned to the MP. A Proposal that has bid both tracks in Step 1, has been invited to Step 2, and does not wish to proceed in one of the two tracks should notify the IE of this change (to only proceed in one track) by December 23, 2022. Please refer to Section I.3 of the RFP for additional information regarding Step 2 Proposal Security.
Published On: 12/14/2022
Question: 1. With respect to a project proposal selected by Duke to continue to RFP Step 2 or selected by Duke as an Early Winner which Market Player nonetheless opts to place into RFP Step 2 (rather than as RFP Early Winner), would the Market Player have the right to choose to place the proposal into only one specific track of RFP Step 2 (either PPA or UOT) rather than into both tracks (PPA and UOT)?
2. With respect to a project proposal selected by Duke to continue to RFP Step 2 or selected by Duke as an Early Winner which Market Player nonetheless opts to place into RFP Step 2 (rather than as RFP Early Winner), would there be any impact on the security release should the Market Player post security and then decide to withdraw their proposal from one of the two tracks before a winner is announced while continuing the proposal on the other track?
Answer: 1. A Proposal that has been invited to Step 2 or invited as an Early Winner must post their proposal security by Dec 12, 2022 at 5 pm ET. However, a Proposal that has bid both tracks may elect to withdraw from one of the tracks and notify the IE of that change on or before December 23, 2022. After that date, whatever tracks the Proposal is participating in are subject to the Proposal Security conditions of drawing or release as stated in Section I.3 of the RFP.
2. No, see the response to question 1 above. Once proposal security is submitted and a Proposal moves forward under one or more tracks into the Step 2 Evaluation, then the proposal security is subject to the Proposal Security conditions of drawing or release as stated in Section I.3 of the RFP. If a Proposal is selected as a winner in either track and does not move forward with the relevant agreement, the Proposal Security would be drawn upon.
Published On: 12/14/2022
Question: Based on the DISIS Phase 1 report received, the COD is now expected to be in 2026, which is later than what we had assumed in our bid. Will we have the opportunity to adjust the COD on our bid?
Answer: This change in COD, or other aspects of a Proposal advanced to Step 2, can be updated in the non-economic bid refresh which will be due in early April 2023.
Published On: 12/14/2022
Question: A question on proposal security. If an MP posts security during Step 2 on the PPA track, but ultimately does not execute a PPA, does Duke have the right to draw on that security? The RFP indicates the security isn't refundable if the project is withdrawn at Step 2 but doesn't clarify what happens if:
1) The project is awarded a PPA but then withdrawn or
2) If the proposal isn't ultimately selected by Duke. Please help clarify if security posted during Step 2 is refundable.
Answer: 1. DEC/DEP will be entitled to draw on the full amount of the Step 2 Proposal Security in the event that (i) the MP withdraws its Proposal during Step 2 of the Evaluation Process; or (ii) the Proposal is selected as a winning Proposal but the MP fails to execute the contract or relevant agreement. In the instance of #1 in the question (the Proposal is awarded a PPA but then withdraws before executing the contract), condition (ii) would apply and the Proposal Security would be drawn upon.
2. The amount of the Step 2 Proposal Security will be released (i) if the Proposal is eliminated by the Companies due to failure to meet any required RFP criteria or action; (ii) if the Proposal is not selected as a winning Proposal; or (iii) if the Proposal is selected as a winning Proposal, upon completion of the contracting phase of the RFP, including execution of the PPA/Asset Acquisition Agreement and posting of security as required in the applicable agreement. In the instance of #2 in the question (the Proposal is not selected as a winner), condition (ii) would apply and the Proposal Security would be released.
Published On: 12/14/2022
Question: The RFP (p.14) states that the “Part B” Price adjuster for PPA-track proposals, if selected by Duke, is denominated on a $/MWh basis for every $1 million in System Upgrades identified in the proposal’s Interconnection Agreement. In the past, when actual interconnection costs have diverged significantly from the cost estimates in the Interconnection Agreement, Duke has invoiced the interconnection customer for additional costs (or provided a refund if appropriate) and has required that the customer execute an amendment to the IA reflecting actual costs. Our assumption is that Duke will take the same approach with respect to projects selected in the RFP – specifically, Duke will:
(a) issue IA Amendments reflecting actual interconnection costs after construction, and
(b) revise the Part B price adder in RFP PPAs to reflect actual costs.
We would appreciate confirmation from Duke, prior to the deadline for posting proposal security for Step 2, that it intends to take this approach in the 2022 RFP. We note that if Duke does not take this approach, and instead bases Part B PPA adders on estimated interconnection costs, this exposes RFP bidders (for which Duke has selected Part B pricing) to a significant risk of interconnection cost overruns, and may result in many of those proposals withdrawing from the RFP and not proceeding to Step 2. Conversely, it would also result in a windfall for any projects for which allocated System Upgrade costs are below initial estimates. Either outcome would not be in the interest of ratepayers.
Answer: Yes. In order to establish the final Part B Contract Price Adder addressed at page 14 of the RFP and in Section 4.5.2 of the pro forma Controllable PPA, Duke Energy will
(a) issue IA Amendments reflecting actual interconnection costs after construction consistent with the generally applicable final accounting process, and
(b) revise the Part B price adder in RFP PPAs to reflect actual costs.
For Controllable PPA winners that have been selected as winners with the Part B of their bid price, a preliminary Contract Price Adder will be incorporated into Exhibit 2 of the PPA within 30 days following the announcement of winners. Exhibit 2 will also address the process for finalizing the Contract Price Adder based upon actual interconnection costs consistent with the final accounting process, as well as any required true up to address differences between the preliminary Contract Price Adder and final Contract Price Adder. As generally recognized in the Question, Market Participants should be aware that the final Contract Price Adder may either increase or decrease relative to the preliminary Contract Price Adder.
Published On: 01/09/2023
Question: The following questions relate to the handling of payment for System Upgrades for Build Transfer Proposals that are selected in the RFP.
1. Under the terms of the RFP, BOT proposal pricing for projects going through DISIS does not include the cost of Network Upgrades. (RFP 15) The RFP states that selected BOT projects will enter into a FERC-jurisdictional Interconnection agreement, and that the proposal may be required to fund the Network Upgrades initially “but will be reimbursed for such upgrades by DEC or DEP in accordance with the Asset Acquisition Agreement.”
However, we are unable to identify any provision of the form BOT agreement or Term Sheet that provides for reimbursement of the Upgrade costs paid by Seller before closing. Rather, the BOT agreement provides that upon closing (which occurs after mechanical completion of the project), the Interconnection Agreement and all rights thereunder (including the right to receive reimbursement for Upgrade costs) will be assigned to Duke, cutting off Seller’s right to receive reimbursement.
Please identify the terms of the BOT agreement providing for reimbursement of upgrade costs.. If there are no such provisions, please explain the intended mechanism for reimbursement of Upgrade costs under the BOT agreements, and confirm that the LOI and BOT agreements will be revised accordingly.
2. The form BOT agreement also provides that any agreements relating to the construction of Affected System Upgrades will be assigned to Duke upon closing. We understand that under the RFP, the bidder is generally responsible for payment of Affected System Upgrade costs. However, to the extent that a (non-Duke) Affected System Operator’s form agreements provide for reimbursement of Affected System Upgrade costs, it is unreasonable for the Seller to pay those costs but for Duke to receive the reimbursement. Please confirm that, in the event a Seller pays Affected System Upgrade costs to a non-Duke system, Seller shall retain any right to receive reimbursement of those costs from the Affected System (or Duke shall compensate Seller for its assignment of any reimbursements).
Answer: 1. The 2022 Solar RFP solicitation document states, “[F]or proposals in DISIS (and not those with an executed Interconnection Agreement), the costs of Network Upgrades should not be incorporated in the MP’s Utility Ownership Track Proposal price. Network Upgrade costs will be identified from DISIS Phase 1 and Phase 2 cost estimates or in the executed Interconnection Agreement, if applicable. However, BOT and certain Asset Transfer Plus EPC proposals (dependent on timing of transfer) may be required to fund the Network Upgrades initially but will be reimbursed for such upgrades by DEC or DEP in accordance with the Asset Acquisition Agreement.” We understand that the LOI and related term sheets reflect a different logistical process (that is applicable to bidders with interconnection agreements already in place), and such documents will be revised to reflect that stated process within the RFP for DISIS projects. For the avoidance of doubt, all costs incurred by the bidder pursuant to the interconnection agreement executed pursuant to the DISIS process (inclusive of deposits, security (that cannot be refunded and/or replaced) and upgrade costs actually paid) shall be reimbursed by Buyer (on a dollar for dollar basis) at the time of Closing and the LOI/Term Sheet and Definitive Agreement will include provisions relating to such reimbursement.
2. If bidder were to make any payments pursuant to an Affected System Upgrade Agreement, reimbursable or not, those payments would be reimbursed to the bidder under the BOT agreement.