Frequently Asked Questions 3/15/2012

Do I need to have a PJM-GATS account set up to enter a bid?

No.  While existing systems will already be in a PJM-GATS account, all systems that win a solicitation slot will be moved to the SEU PJM-GATS aggregate.  Systems not yet built will be enrolled in the SEU PJM-GATS aggregate when they are completed.  All owner representative duties will be completed on the SRECDelaware.com website and owner representatives will not require a PJM-GATS account.

When does the bid deposit need to be received?

The bid deposit must be received by the day the bidding tier closes.

The solicitation lists conditions of recovering the bid deposit in the event certain factors out of a system owner’s control prevent an accepted project from being built, such as permitting issues and other Force Majeure events.  The RFP stipulates that bid deposit will be returned if a utility imposes an interconnection fee or charge, but it does not address unforeseen permitting issues such as sensitive species, historic or cultural resource mitigation, wetlands delineation and other such permitting factors that may impact the viability of the project.

Any risk that a project will not be completed as required should be carefully considered by the bidder and taken into account when placing their bid.  The existing language covering situations where bid deposits are returned is clear and cannot be altered for this solicitation.

How does the use of DE sourced labor and material impact Tier 2B/3 bids?

DE labor/material only comes into play if there are multiple bids at the same price that would cause a pending Tier 2B or 3 solicitation to be oversubscribed as described in section 7.2 of the PSC filing.  If this happens, there is first a 5 day period where all of the bidding tie applicants have the opportunity to resubmit reduced bids.  If, after this process there is still a tie, a lottery is held among those bidding tie applicants who have both DE equipment and labor.  If, after this step is complete there is still a bidding tie, a lottery is held among the remaining applicants that have either DE labor or equipment, and if after this there is still a tie a third lottery is held for systems with neither DE labor or equipment.  For example, assume the following bid stack for tier 3, which needs 4,500 SRECs:

bidder 1 – 3000 @ $175
bidder 2 – 500 @ $190
bidder 3 – 500 @ $200 Delaware equip/labor
bidder 4 – 400 @ $200 Delaware labor
bidder 5 – 1000 @ $200 Neither
bidder 6 – 500 @ $210 Neither

In this case there is a tie between bidders 3, 4, and 5.  If, during the 5 day rebid period bidder 5 reduces their price to $195 and the others remained at $200, then bidder 5 wins.  If they all stay at $200 (or drop to the same price), then bidder 3 wins his full 500 allocation in the first bidding tie round, bidder 4 wins their full allocation, and bidder 5 has the option to fill out the solicitation with 100 SRECs.

What happens if we submit a bid for 1000 SRECs but only a partial bid is accepted? 

Sections 7.1 and 7.3 detail how partial bids are handled.  In the example above, bidder 5 is in this situation.  He bids 1000, there is no tie, but there is only room for 100 SRECs in the tranche.  He is presented with the option to provide 100, or withdraw his offer, in which case the offer for 100 goes to bidder 6.  If he agrees to only provide 100 SRECs, then he is free to sell all other SRECs from that system as he wishes./p

Can SRECs produced on X date be accepted into the program?

The SEU will purchase all SRECs produced after June 1, 2011.  Keep in mind that if a system owner opts to sell SRECs from June 1, 2011, then the 20 years of the 20 year contract begins on that date.

What type of penalties would a bidder face for underproduction or if the system was destroyed or sold?

The general requirement of section 6.2 require that Tier 3 systems provide a Minimum Annual Quantity which is 80% of the contracted quantity. This is also discussed in section 4.1 of the transfer agreement.  Section 6.9 details the Performance Credit Support required to secure this performance, which is 5% of the value of the first year estimated SREC quantity.  Section 6.11 discusses excused performance for force majeure issues, with a limit of 1 year of excused performance for any singe force majeure event.  Force majeure events are further defined in the transfer agreement, section 2.9.  Section 6.13 of the filing and section 2.8 of the transfer agreement discuss remedies, which include, among other remedies, recovering damages based on the difference between the contract price and the current market price of SRECs.

How are bids entered if more than 1 account is already set up in GATS?

All systems with a winning bid in the solicitation will be required to move their system into the SEU PJM-GATS account.  If an owner wants to bid more than one system, then they should be bid as separate systems.  The bidding platform will allow one owner to bid an unlimited number of systems, each of which could have a different GATS account or come from the same GATS account.

The transfer agreement section 2.6.1(l) contains conflicting information from the filing on required interconnection date.  This is an error in the filing.  All systems with an interconnection dated Dec 1, 2010 or later are eligible per section 4.3 of the PSC filing.

Are there any other buyers besides Delmarva Power?

The SEU will be the only buyer in this solicitation.

Will there be a bid schedule created going forward? What is the frequency of the auctions?

This is a pilot program with only 1 firm solicitation.  Further solicitations will depend on the success of the pilot and the agreement of DPL, the PSC, and the SEU to hold further solicitations.  If further solicitations are held, it is anticipated that they would occur annually.