fall 2003 rfp

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SYSTEM PLANNING

FALL 2003 RFP

ENTERGY SERVICES, INC.

October 2003

This presentation summarizes certain matters related to ESI’s Fall 2003 Request for Proposals (as it may be amended or modified, the “Fall 2003 RFP”). This presentation (which has been updated since the presentations at the LPSC Technical Conference on October 21, 2003 and the Bidder’s Conference on October 23, 2003 for various typographical errors and other edits), as well as any oral answers to the questions of any interested parties provided during or following this presentation, are qualified in their entirety by reference to the Fall 2003 RFP, including the Reservation of Rights set forth in the Fall 2003 RFP and the terms and acknowledgments set forth in the Proposal Submission Agreement, and any verbal answers shall be superceded by any written answers subsequently posted on the RFP web-site, https://emo-web.no.entergy.com/ENTRFP/index.htm.

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SYSTEM PLANNING

Agenda Items

• Introductions

• RFP Process Overview - Background

• Fall 2003 RFP

• RFP – Process Safeguards

• System Overview/Resource Needs

• Proposal Evaluation Process

• Proposal Submission Process

• Question and Answer Session

ESI requests that all questions be submitted in writing so as to allow ESI the ability to provide written responses which will be made accessible to all parties on the RFP web site. ESI will respond orally to some questions during the Question and Answer Session today.

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Introductions

Presenters

• Bill Mohl Director of Asset Management, ESI

• Sue Tierney Principal, The Analysis Group

• Bob Cooper Manager of Generation Planning, ESI

• Patric Stafshede Manager of Asset Management, ESI

• Kristin Dalrymple Senior Analyst, ESI

Other

• Dave Harlan Sr. Vice President, ESI

• Laura Berryman RFP Administrator, ESI

• Julie Ell ESI Legal

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SYSTEM PLANNING

ESI’S RFP

PROCESS OVERVIEW


October 2003

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Entergy’s Market-Based Resource Procurement Process - Overview

• Designed to support ESI’s resource planning objective to provide a portfolio of low-cost, reliable resources matched to both the near-term and long-term supply needs of our customers

• Cyclical Procurement Process– Formalized RFPs will be issued in accordance with regulatory requirements and

policies, including the LPSC’s Market-Based-Mechanism order

– Will seek limited-term (1-3 year) and long-term resources on an as-needed basis

– Seeks to limit exposure to fuel and market risks and uncertainties

• Types of Resource Supply Roles– Baseload

– Dispatchable/load-following

– Peaking

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ESI Resource Procurement Options - Overview

• Formal RFP Products– MUCPA/MUCCO (1-3 yrs.) Limited-Term– Asset acquisition or life of resource purchase from existing generation resources– Acquisition, ownership position, or life of resource purchase from new generation

resources

• Ongoing short-term purchase process– Annual Plan Products (e.g., call options, 5x16 block energy purchases, etc.)– Weekly and monthly RFP Products– Supplemental RFP Products

• Self Build/Self Supply Options– Identify and execute when and, if appropriate, “Real Options” for self build

opportunities including:• New Opportunities• Repowering• Upgrades of existing facilities

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ESI has Received Strong and Distributed Market Response

Fall 2002 Supplemental Spring 2003

PROPOSALS

1-3 Years 68 24 44

Long-Term 23 30

Other 42

Total 133 24 74

BIDDERS 30 11 22

RESOURCES 45 13 40

CAPACITY (MW) 17,856 2,828 17,950

Note: Non-conforming proposals are not included in the summary

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SYSTEM PLANNING

Summary Results from Previous RFPs

RFP Short- term –

3rd Party

Limited- term -

Affiliate

Limited- term – 3rd

Party

Long- term -

Affiliate

Long- term –

3rd Party

Total

Fall 2002 0 MW 185-206 MW

231 MW 101-121 MW

725 MW Note 1

1242-1283 MW

Supplemental RFP

222 MW 0 MW 0 MW 0 MW 0 MW 222 MW

Spring 2003 0 MW 0 MW 381 MW Note 2 381 MW (to date)

Total 222 MW 206 MW 612 MW 101 MW (to date)

Note 3

725 MW (to date)

1845-1886 MW(to date)

Note 1: ESI continues to be in discussions with one Bidder for one resource resulting from the Fall 2002 RFP process. On May 2, 2003, ESI signed a letter of intent to purchase a 725 MW generating plant located in Monroe, Louisiana. ESI did not execute a purchase agreement before the letter of intent expired, but continues to be in discussions regarding the purchase of the plant.Note 2: Currently ESI is evaluating proposals representing over 2000 MW for various long-term resources which were shortlisted resulting from the Spring 2003 RFP process or identified as Self Build Options.Note 3: It should be noted that this table does not reflect the River Bend 30% life-of-unit power purchase agreements totaling approximately 300 MW between Entergy Gulf States, Inc. (“EGS”) and Entergy Louisiana, Inc. (“ELI”) and between EGS and Entergy New Orleans, Inc. (“ENO”) related to EGS’s unregulated portion of the River Bend nuclear station which portion was formerly owned by Cajun Electric Power Cooperative, Inc. or the Entergy Arkansas Inc. (“EAI”) wholesale baseload capacity life-of-unit power purchase agreements totaling approximately 220 MW between EAI and ELI and between EAI and ENO related to a portion of EAI’s coal and nuclear baseload resources (which were not included in retail rates) to ELI and ENO executed earlier this year.

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SYSTEM PLANNING

FALL 2003 RFP

- OVERVIEW


October 2003

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Upcoming Fall 2003 RFP - Highlights

• Final proposals will be due by 6:00 p.m. CPT on November 20, 2003.

• ESI has developed an electronic proposal submission process which is being implemented to simplify the proposal submission process for Bidders and to help streamline and make more efficient ESI’s RFP process in support of its effort to ensure that all proposals are consistently, accurately and thoroughly evaluated by ESI.

• ESI will have an RFP “Hotline” available during November 10th through 20th to assist Bidders only with respect to technical questions regarding the electronic registration or proposal submission process.

• No short-term or long-term resource proposals are being requested in the Fall 2003 RFP, only limited- term (1-3 year) unit contingent products are being solicited.

• ESI has added several new limited-term products in this RFP in an effort to provide Bidders additional opportunities to participate in this RFP process and in an attempt to standardize some products and to support ESI’s effort to achieve more transparency in the evaluation and comparison of proposals to standard market products.

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Fall 2003 RFP – Adjustments from Previous RFPs

• Based on feedback from several market participants, ESI will require all limited-term proposals to be the Bidder’s best and final offer, but has changed the requirement that a proposal be “binding” to a requirement that the proposal should be “irrevocable” unless otherwise specified by the Bidder.

• A change in the Factor Evaluation process, where the scorecards for each proposal have been eliminated reflecting the reliance on the economic evaluation consistent with previous RFPs. Factor Evaluators will only highlight issues of concern on shortlisted proposals and these issues will be addressed in any negotiations with short-listed Bidders.

• Consistent with practice in some previous RFPs the process will now formally lead to a primary award short-list, and a secondary short-list

• A clarification as it relates to the requirement for Firm Network Resource designation in which ESI will purchase a limited amount of resources which do not qualify as a Firm Network Resource.

• ESI has more clearly identified the possibility for Bidders to add unit contingent capacity from more than one plant together, and provide a “combined proposal” for evaluation. (Each unit will still provide unit contingent capacity, not the equivalent of a system sale.)

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SYSTEM PLANNING

RFP Participants – Fall 2003

• Potential RFP Participants– Electric Utilities

– Marketers

– Wholesale Generators

– Independent Power Producers

– Qualifying Facilities

– Entergy Competitive Affiliates

• Entergy Competitive Affiliates– Entergy Competitive Affiliates will be allowed to bid in this process

– Entergy Competitive Affiliates will be required to meet the same bid requirements and evaluation criteria as any third party

– Entergy Competitive Affiliates will be allowed to bid only during the formal RFP process

– All interactions with affiliates are subject to FERC, state, and local affiliate rules

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Proposals Due

11/20/03

Bidder RegistrationProcesscompleted

11/17/03

Final RFP Issued

On or about11/10/03

12/12/03

Decision onLimited-termProposals

Bidder’sConf. Open to all parties

Houston10/23/03

Fall 2003 RFP Process Timeline

Evaluation & Negotiation

Fall 2003 Formal RFP Solicitation Process

Tech. Conf.w/ LPSC &InterestedParties

Baton Rouge10/21/03

1/30/04

Execution of DefinitiveAgreements

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Fall 2003 RFP Products

Limited-term product proposals being sought in the Fall 2003 RFP:

• MUCCO Product – CCGT, Cogeneration or Other - a call option on the purchase of capacity, energy and all Other Associated Electric Products from a specific CCGT, cogeneration facility, or other type of generating resource;

• MUCCO Product – CT/Quick response - a call option on the purchase of capacity, energy and all Other Associated Electric Products from a specific CT;

• MUCPA Dispatchable Product – CCGT, Cogeneration or Other - a dispatchable unit contingent MUCPA Product (purchase or tolling) from a specific CCGT, cogeneration facility, or other type of generating resource;

• MUCPA Dispatchable Product – CT/Quick Response Capacity - a dispatchable unit contingent CT/Quick Response MUCPA Product (purchase or tolling) from a specific CT;

• MUCPA Must-take On-Peak Product – a “must take” on-peak unit contingent MUCPA product (5x16 with ramp energy – purchase only) from a specific CCGT or cogeneration facility; and/or

• MUCPA Must-take Standard Baseload Product – a “must take” baseload unit contingent MUCPA product (7x24 – purchase only) from a specific CCGT, cogeneration facility, or other type of generating resource.

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Multiple-Year Unit Capacity Call Option (MUCCO)• Products

– Unit contingent capacity and associated energy from a• Combined cycle gas turbine (“CCGT”), Cogeneration, or other generating resource; or• Simple cycle gas turbine (“CT”)

• Term– Full year proposals for one (1), two (2) and three (3) years

• Beginning May 1, June 1, or July 1, 2004

• Quantity– Up to 200 MW (in 50 MW increments) per proposal (although other amounts will be considered)– May offer entire capacity of unit

• Pricing– Premium ($/kW-year)

• Shaped monthly and paid monthly in arrears subject to an adjustment based on actual capacity availability

– Guaranteed heat rate multiplied by gas price index, or guaranteed heat rate curve (if for entire unit)

• Other– Bidder has the option of combining two or more separate unit contingent proposals and requesting these to

be considered as a “combined proposal” for evaluation purposes. This provides Bidders the opportunity to combine unit contingent resources but the capacity committed from each plant will continue to be considered as unit contingent (in other words, this does not provide Bidder the option to provide capacity from any or all of the plants specified in the package at their discretion).

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Dispatchable Multiple-Year Unit Capacity Purchase Agreement (MUCPA)

• Products– Proposals for unit contingent gas purchase or tolling products which include rights to capacity and energy

• Combined cycle gas turbine (“CCGT”), Cogeneration, or other; or• Simple cycle gas turbine (“CT”)



• Quantity– All amounts will be considered and Bidder may offer entire capacity of a unit

• Pricing– Capacity Payment ($/kW-year) as proposed by Bidder

• Shaped monthly and paid monthly in arrears subject to an adjustment based on actual capacity availability– Guaranteed heat rate, or (if for entire unit) guaranteed heat rate curve as proposed by Bidder

• Fuel– Buyer may provide fuel pursuant to a gas tolling agreement or Bidder may provide fuel through a purchase power

agreement

• Other– Bidder has the option of combining two or more separate unit contingent proposals and requesting these to be

considered as a “combined proposal” for evaluation purposes. This provides Bidders the opportunity to combine unit contingent resources but the capacity committed from each plant will continue to be considered as unit contingent (in other words, this does not provide Bidder the option to provide capacity from any or all of the plants specified in the package at its discretion).

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SYSTEM PLANNING

“Must Take” Multiple-Year Unit Capacity Purchase Agreement (MUCPA)• Products

– Proposals for unit contingent purchase products which include rights to capacity and energy• Combined cycle gas turbine (“CCGT”), Cogeneration or other resource type• On-Peak Product (5x16); or• Standard Baseload Product (7x24)



• Quantity– 225 MW block only

• Pricing– Capacity Payment - $12.00 per/kW-year

• Shaped monthly and paid monthly in arrears subject to an adjustment based on actual capacity availability

– Guaranteed heat rate as proposed by Bidder

• Fuel– Bidder must provide fuel through a purchase power agreement

• Other– Bidder has the option of combining two or more separate unit contingent proposals and requesting these to

be considered as a “combined proposal” for evaluation purposes. This provides Bidders the opportunity to combine unit contingent resources but the capacity committed from each plant will continue to be considered as unit contingent (in other words, this does not provide Bidder the option to provide capacity from any or all of the plants specified in the package at its discretion).

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SYSTEM PLANNING

Transmission Service for Limited-Term Products

1 Year 2-3 Year Total

Maximum Unconditional Awards

Per Single Proposal

≤ 300 MW ≤ 300 MW1000 MW

maximum for total portfolio

Per Planning Region

(WOTAB, Amite South, Central, and North)

≤ 550MW ≤ 550MW

≤ 550MW

per Planning Region

Review Deadline

90 days from date of

contract*

45 days from receipt of SIS

from ETO*

Accepted as FNRA. FNR designation received from ETO

Rejected as FNRA. ESI waives requirement based on business

judgmentB. ESI accepts a 1-year unconditional agreement

based on limits as specified above

*ESI will submit request for System Impact Study upon execution of a definitive agreement

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SYSTEM PLANNING

Other Key Considerations

• Regulatory Approvals– All definitive agreements greater than one year in term be conditioned upon

receipt of regulatory approval, acceptable to ESI

• Contract Terms– Draft model contracts detailing terms and conditions have been provided and

are expected to be utilized for final contract execution without any material changes. Bidders should take the terms and conditions specified in these agreements into consideration in the pricing of their proposals

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SYSTEM PLANNING

FALL 2003 RFP

- PROCESS SAFEGUARDS


October 2003

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RFP Process Safeguards

• Code of Conduct

• Independent Monitor

• RFP Process Design and Implementation

– e.g., question/answer process, communications with ESI

• Confidentiality Protections

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SYSTEM PLANNING

RFP Process Safeguards

• Code of Conduct – All employees of ESI, any Entergy Operating Company, or any Entergy

Competitive Affiliate, including those involved in the RFP process, must adhere to the appropriate Affiliate Rules and Codes of Conduct as applicable and further outlined in the Fall 2003 RFP.

• RFP Process Design and Implementation – Various elements of the RFP process have been designed to assure fair

treatment of all Bidders (as described in the following slides)

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SYSTEM PLANNING

RFP Process Safeguards – Role of Independent Monitor

• ESI has retained an independent consulting firm (the “Independent Monitor”) to assist in the development of the RFP solicitation, evaluation and selection process in support of ESI’s efforts to ensure that the RFP and evaluation process will be objective and impartial.

• The Independent Monitor also will monitor the design of the RFP and the conduct of the RFP solicitation, evaluation, selection and contract negotiation processes to provide an objective third-party perspective in support of ESI’s efforts to ensure that all proposals are treated in a consistent fashion and that no preference is provided to Entergy Competitive Affiliates participating in the RFP process.

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RFP Process Safeguards – Role of Independent Monitor (continued)

• Seeks to ensure objectivity and impartiality of the RFP process through the oversight and monitoring of the following:

– RFP Design• Review of design of RFP process, products and documents

– Solicitation Process• Review of Bidder registration information from prospective Bidders• Oversight of receipt of all proposals• Classification and distribution of proposal information

– Evaluation Process• Review of evaluation processes and criteria prior to receipt of proposals• Monitoring of actual evaluation process

– Selection Process• Monitoring and review of final portfolio selections

– Due Diligence and Contract Negotiation• Direct oversight of all interactions with any Entergy Competitive Affiliates• Ability to oversee any due diligence and contract negotiations with third parties

– Interaction with Regulatory Staff• Available for any discussions or inquiries by any regulatory staff personnel

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RFP Process Safeguards Communications with ESI regarding RFP issues before Proposal Submission

• For all purposes related to the RFP, except the submission of questions relating to the Entergy Transmission System, there is only ONE contact – Laura Berryman, the RFP Administrator.

• Any inquiries about the Entergy Transmission System should be directed to the Transmission Organization through the OASIS web site http://oasis.e-terrasolutions.com/OASIS/EES.

• Unapproved contact with ANY other ESI Employee for ANY purpose in connection with the RFP is prohibited, and may, depending on the circumstances, constitute grounds for disqualification.

• All questions from market participants relating to the RFP should be submitted through the question and answer process outlined in Section 2.6 of the RFP. The procedure for issuing questions regarding the transmission system is outlined in Section 2.7 of the RFP.

• ESI will have an RFP “Hotline” available during November 10th through 20th to assist Bidders only with respect to technical questions regarding the electronic registration or proposal submission process.

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SYSTEM PLANNING

RFP Process Safeguards - Q&A Process The objectives of the Question and Answer Process include the following:

• To ensure to the extent practicable that all Bidders have equal access to information that may be potentially relevant to their proposals.

• To minimize the need for either ESI or Bidders to disclose confidential information.

• To maintain to the maximum extent practicable the confidentiality of proprietary information that is disclosed in Bidders’ proposals or otherwise in connection with the RFP.

• To ensure compliance with all applicable affiliate rules and codes of conduct and other information sharing rules.

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SYSTEM PLANNING

RFP Process Safeguards Q&A Process at today’s Conference

• At today’s conference, all questions will be submitted in writing

– Oral responses will be provided where practicable at the technical conference

– Written answers will be posted on the RFP website

– Written answers may contain information different from or in addition to information provided orally at the technical conference, in which case the written answer will supercede the oral response

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FALL 2003 RFP

SYSTEM OVERVIEW / RESOURCE NEEDS


October 2003

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Resource Planning Process

• Resource Planning in Recent Years– Supply needs met through a variety of short-term supply resources

– Limited procurement of mid- to long-term supply resources

• Resource Planning in Future Years– Broaden range of supply resources while meeting both short- and longer-term

reliability needs

• Overall Resource Planning Process– Retains long-standing elements of the planning process

• Forecast of System Load

• Determination of existing resource capability

• Determination of additional resources needed to reliably meet System load

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SYSTEM PLANNING

Resource Planning Objective and Planning Principles

• Primary Objective

– Provide for both the short-term and long-term capacity and energy needs of the Operating Companies’ regulated retail customers through the selection of a supply portfolio that is expected to result in the lowest reasonable total production costs consistent with operational constraints.

• Planning Principles

– Planning for Uncertainty• Load• Market Structure• Fuel Prices

– Minimum Criteria for Resource Supply Planning• Adequacy of Resources for Peak Period Reliability• Security of Long-Term Supply Through Long-Term Controlled Capacity Resources• Adequacy of Base-Load Resources• Supply Technology Efficiency• Diversity of Supply• Price Stability• Financial Integrity Risk Management

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SYSTEM PLANNING

Resource Plan – Needs Assessment

0-2,000 0-2,000 Potential Long-Term Resources (2)

2,394 1,999 729 Forecast Need for Firm Load

(21,669)(21,854)(22,567)Total Resources

0 (185)(966)Acquired Short-Term Resources

(621)(621)(621)Acquired Long-Term Resources

(21,048)(21,048)(20,980)Total Controlled Resources

24,06223,85323,295Firm Load Plus Reserves

3,4703,4403,359Reserve Margin

20,59220,41319,936Firm Load (Excl. Interruptible)

200620052004

Peak Period Reliability Requirements (MW)

Forecast of System Load

Existing Resource Capability

Additional Resources Needed to Reliably Meet System Load (1)

(1) Does not include resources which may be procured for economic reasons

(2) Potential Long-term resources resulting from the Fall 2002 and Spring 2003 RFP Processes

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SYSTEM PLANNINGComparison of ESI Regional Load Requirements and Supply

WOTAB's Profile

0

1,000

2,000

3,000

4,000

5,000

6,000

ESI Load ESI Capacity

North Arkansas Region

Central Region

WOTAB Region

ESI Peak Load

ESI Peak Load

ESI Peak Load

Base Load

L-F

Amite South Region

ESI Base Load Capacity

ESI L-F/Peaking Capacity

Intra-System Import Capability

Off-System Import Capability

Supply Sources Legend

Note: Import Capability, Load & Capacity are forecast estimates for 2004

ESI Base Load

ESI L-F/Peaking Load

Load Type Legend

Supply decisions must consider regional supply needs and supply alternatives, including transmission availability. Some regions require existing ESI generation for reliability and operating flexibility.

Central's Profile

0

5,000

10,000

15,000

20,000

25,000

30,000

ESI Load2 ESI Capacity

ESI Peak Load

Base

L-F

Amite South's Profile

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000


North Arkansas' Profile

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000


L-F

Base Load

Base Load

L-F

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New Merchant Generation by Region

CCGT (Complete)

CCGT (Under Const.)

Cogen/CCGT (Complete)

Cogen/CCGT (Under Const.)

Cogen (Complete)

CT (Complete)

CT (Under Const.)

Note: Map not drawn to scale

Dell Power

(Suspended)

Southaven (Cogentrix)

Southaven (Duke)

Batesville

Wrightsville

Pine Bluff Energy Center

Crossroads Energy

Hot Springs (Duke)

Hot Springs (Trac tebel)

Union Power Reliant Choctaw

McAdams Power

(Suspended)

Attala

Hinds County

Warren Power

Perryville

(CCGT & CT)Ouchita Power

NRG Sterlington

Holmesville (Suspended)

Washington Parish (Suspended)

Oxy Taft

Frontier

Cottonwood

EvangelineBig Cajun I

CT

EXXON Baton Rouge

Shell Geismar

Carville Energy

CenterAEP-Dow

AcadiaCalcasieu

Bayou Cove

RS COGENSRW

Sabine Cogen

Port Arthur

Goodyear

Complete 12,060

Active Construction 2,489

Suspended Construction 4,100

Total Merchant 18,649

Complete 770

Active Construction 0



Complete 3,234

Active Construction 0



Hempstead

Smith County

Silver Creek

LSU

Complete 774

Active Construc tion 0

Suspended Construc tion 5,663


ANO

EAI WBL:

GGN

RIVER BEND

EPI ISES

WHITEBLUFF

•Load forecast estimates for 2004

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SYSTEM PLANNING

ESI Supply Procurement Objectives

• Resource Procurement Objective

– Retains long-standing objectives for Entergy Operating Companies

– To ensure that newly acquired resources, together with existing resources, have the necessary characteristics to satisfy customer needs efficiently, effectively and appropriately

• Determination of Type of Capacity Needed

– Identify generation supply role:

• Base-load

• Intermediate dispatchable load-following

• Peaking/reserve

• Assess Operating Company Resources versus Load Shape requirements

– Evaluate how existing resources compare to the approximate level for each supply role category that is typically desirable over a long-term planning horizon

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SYSTEM PLANNING

ESI Supply Procurement Objectives

ETR 2004 Forecasted System Load vs. Existing Resources

0

5000

10000

15000

20000

25000

30000

MW

Base Intermediate Peaking & Reserves

Load Shape Includes Curtailable Demand

Load Duration Curve vs. Desirable Long-term

Resource Mix

Existing Capability from Long-Term

Resources

ESI 2004 Forecasted System Load vs. Existing Resources

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SYSTEM PLANNING

FALL 2003 RFP

- PROPOSAL EVALUATION


October 2003

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Proposal Evaluation Process - Objective

The primary objective of the proposal evaluation is to identify the proposals that result in the highest benefit to its customers

The highest benefit is realized through proposals that:– Result in lower total system production costs;

– Can be acquired at reasonable costs;

– Meet incremental capacity needs;

– Match ESI’s planning objectives and constraints, and

– Can be controlled by ESI System’s dispatchers.

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SYSTEM PLANNING

Proposal Evaluation Process - Overview

Proposal Segregation

Individual Economic Evaluation

Limited Factor

Evaluation

Portfolio Economic Evaluation

Complete Factor

Evaluation

Decision by Operating Committee

Proposal Data

Reports

Specific Proposal

Data Points

Primary Award

Shortlist

Primary Award

Shortlist

Shortlist Evaluations

ILLUSTRATIVE

• Due Diligence, • Negotiations (incorporating issues

from Factor Evaluation),• Execution of Definitive Agreement,• Regulatory Approvals

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SYSTEM PLANNING

Proposal Evaluation Process – Data Segregation

The objective of the Proposal Segregation Process is to limit data distribution on a “need-to-know basis” within the ESI organization, and to reduce to the extent the possible distribution of confidential information.

• Proposal Segregation is performed automatically by electronic processing of all proposals.

– Pre-formatted proposal data reports for particular factor evaluators are prepared by the automated process

• The proposal data reports are reviewed by the Independent Monitor before distribution to the Proposal Evaluation Team.

– This process supports the effort to keep the Bidder identity unknown to the Proposal Evaluation Team

– This process captures relevant information submitted in “Special Considerations” fields

• Proposal data reports are limited to the data necessary for each sub-team to perform its specific analysis.

– Economic Evaluation required details regarding dispatch flexibility, pricing, availability, and mutual exclusivity of the proposals

– Factor Evaluation requires details regarding the specific area of evaluation (i.e., Fuel, Transmission, Credit, Operations)

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SYSTEM PLANNING

Proposal Evaluation Process – Key Evaluation Drivers

The Economic Evaluation is the primary determinant in the selection of proposals for the primary award shortlist and the secondary shortlist.

Key drivers for the Economic Evaluation:– Energy price – heat rate and basis adder, or fixed price

– Operational flexibility – ramp rate, minimum up- and down-time, minimum generation level

– Availability – required annual maintenance days

– Proximity to load centers – transmission zone

After the shortlists have been determined, subject matter experts “Factor Evaluators” will review the shortlisted proposals to provide a comprehensive evaluation and identify specific issues or concerns, if any, to be considered in negotiations.

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SYSTEM PLANNING

Proposal Evaluation Process – Limited Factor Evaluation

• A limited amount of specific information is required from the Factor Evaluation in order to perform the Economic Evaluation.

– No scoring or ranking of proposals based on Factor Evaluation

• The Economic Evaluation requires two inputs from the Factor Evaluation.– Transmission Factors - Transmission zonal location is determined based on the

location of the facility. All proposals are required to be unit contingent and therefore tied to a specific location.

– Fuel Factors - Estimated fuel transportation cost and basis adder are determined for proposals with tolling arrangements.

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SYSTEM PLANNING

System Benefit (Cost) per Proposal

ILLUSTRATIVE

Fuel priceEconomy energy

Load forecastEtc.

Proposal Evaluation Model

Existing Units and Contracts

System Production Cost2004 2005 2006 2007

Fuel priceEconomy energy

Load forecastEtc.

Proposal Evaluation Model

Existing Units and Contracts + Proposal

+

System+Proposal Production Cost2004 2005 2006 2007

Proposal Evaluation Process – Economic Evaluation

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SYSTEM PLANNING

Proposal Evaluation Process – Factor Evaluation

The Factor Evaluations capture additional information regarding each of the shortlisted proposals.

– The Factor Evaluations do not change the ranking of the proposals; no specific scores are assigned

– The issues identified in the Factor Evaluations will be addressed in the negotiations, which will follow the selection by the Operating Committee

• Credit Factor Evaluation– Identifies whether the proposal will require collateral from the Bidder

• Fuel Factor Evaluation– Highlights fuel-related issues such as known delivery problems, lack of swing capacity

available, or high concentration of selected proposals on the same pipeline

• Transmission Factor Evaluation– EMO’s evaluation of potential transmission issues (e.g., deliverability to the Entergy

system, deliverability within different subregions of the Entergy System).

• Operations Factor Evaluation– Considerations of limitations on dispatchability, operator experience, environmental

limits and other operational issues

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SYSTEM PLANNING

Proposal Evaluation Process – Portfolio Evaluation

• Subsequent to the selection of the primary award shortlist, an economic evaluation will be performed on the entire portfolio.

• The Portfolio Economic Evaluation adds all selected proposals on the primary award shortlist to the Proposal Evaluation Model.

– Utilizes the same proposal evaluation model as the evaluation of the individual proposals

– The result will verify that the combination of selected proposal is beneficial to ESI’s customers

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SYSTEM PLANNING

Proposal Evaluation Process - Selection

• Entergy’s Operating Committee will make the final decision with regards to the selection of limited-term proposals, which will proceed to negotiations for a transaction.

• The Operating Committee is the group of decision makers responsible for administrating the System Operating Agreement.

– The Entergy System includes five Operating Companies

– The Operating Committee decides on certain issues affecting all the Operating Companies

• The Operating Committee will only see selected parts of the evaluation.– The Bidders will not be revealed to the Operating Committee until negotiations

have started with the counterparty

– All presentations will reveal only necessary information

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SYSTEM PLANNING

Completion of Evaluation Process – Next Steps

• Perform Due Diligence– Verification of proposal parameters

• Carry out negotiations– Address potential issues identified in Factor Evaluations

– Address potential issues discovered in due diligence

• Execute definitive agreements– Contingent on successful resolution of the negotiations

• Submit proposals for appropriate regulatory approvals

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SYSTEM PLANNING

FALL 2003 RFP

- PROPOSAL SUBMISSION PROCESS


October 2003

48

SYSTEM PLANNING

Benefits of Electronic Proposal Submission

Why ESI has changed to a process with only electronic submission of proposals:

• Consistent data and formats for required information

• Elimination of potential transcription errors and reduction of need to interpret information

• Enhanced security and segregation of data (less human intervention)

• Improved ability to store and retrieve electronic files (with information removed from view, as appropriate)

• Pre-formatted reports and pre-determined access to information

49

SYSTEM PLANNING

Proposal Submission Sequence

Final RFP Posted to Website

Bidder prepares proposals

ESI’s automated data review

After conclusion of Proposal Submission period, segregated data

reports generated for evaluation by ESI evaluation teams

ESI’s automated data review

Bidder electronically

submits Bidder Registration Form to ESI

Return email sent

to Bidder by ESI

Bidders electronically

submits proposals to

ESI

ILLUSTRATIVE

Return email sent

to Bidder by ESI

These data reports are reviewed by Independent Monitor and RFP

Administrator prior to distribution to RFP Proposal Evaluation Team

Registration confirmed

Registrationrejected(incomplete)

Proposal confirmed

Proposalrejected(incompleteor invalid)

50

SYSTEM PLANNING

Electronic Bidder Registration

• Bidder Registration is required of all Bidders and must be successfully completed before 6:00 p.m. CPT on November 17, 2003.

• Bidders must complete the Form properly, including completing all required fields.

• Proposals from plants which have not been registered will not be accepted by ESI. It is recommended that Bidders submit Forms to register plants even if a Bidder is uncertain about whether to submit a proposal for a particular plant, and even if that plant is not ultimately proposed.

• Bidder must provide a correct email address; a confirmation of receipt of Bidder registration will be received only if a correct e-mail address has been provided.

• Bidders must submit the Bidder Registration form first via email; upon receiving confirmation of receipt of Bidder Registration, Bidders must fax an executed Bidder Registration Form to ESI’s RFP Administrator. BIDDER REGISTRATION IS NOT COMPETE UNTIL A FAXED, EXECUTED BIDDER REGISTRATION FORM IS RECEIVED BY ESI’S RFP ADMINISTRATOR.

• Bidders must submit the Bidder Registration Forms well in advance of the deadline in order to provide adequate time to correct any errors which may be identified in the electronic registration process, and in order to provide ample time to correct any errors and resubmit a valid registration form by the specified deadline.

• Bidder Registration Forms submitted after the deadline will automatically be rejected.

• Bidders should keep a record of its Bidder ID, Plant ID(s) and Signature ID. This information will be required during proposal submission and for other correspondence.

• All Bidders should periodically check the RFP Website for additional information.

51

SYSTEM PLANNING

Electronic Proposal Submission

• All proposals must be properly submitted via electronic submission only (email) by 6:00 p.m. CPT on November 20, 2003. Bidders should:

• Complete the Form properly, including completing all required fields.

• Provide a correct email address.

• Submit proposals well in advance of the deadline in order to provide adequate time to correct any errors which may be identified by ESI in the electronic proposal submission process and in order to provide ample time for the Bidder to submit a valid proposal by the specified deadline.

• Periodically check the RFP Website for additional information.

fall 2003 rfp

Documents