Administrative Code

Virginia Administrative Code
Title 20. Public Utilities and Telecommunications
Agency 5. State Corporation Commission
1/25/2020

Chapter 301. Rules Governing the Use of Bidding Programs to Purchase Electricity from Other Power Suppliers

20VAC5-301-10. Purpose and scope.

The purpose of these rules is to establish minimum requirements for any electric utility bidding program that is used to purchase electric capacity and energy from other power suppliers. The rules apply to any investor-owned electric utility or cooperative operating in Virginia that chooses to establish a bidding program. Although these rules are equally applicable to cooperatives, the differences between investor-owned electric utilities and cooperatives are recognized. Those differences, including size, needs, control and the relationship with Old Dominion Electric Cooperative for centralized planning and power acquisition functions, can be readily accommodated within the parameters of these rules.

Electric utilities maintain the right to establish a bidding program or secure electric capacity and energy through other means. If a bidding program is developed, the responsibilities of developing requests for proposals, evaluating bids and negotiating and enforcing contracts lies with the utility.

A utility may file for exemptions from any or all of these bidding program requirements. In making its decision regarding exemptions, the Commission will consider the size of the utility's operations in Virginia and the requirements of other regulatory bodies having jurisdiction over the utility.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-20. Sources of capacity.

With the exception noted below, a utility may allow all sources of capacity to submit offers in a bidding program. This could include other electric utilities, independent power producers, cogenerators and small power producers.

A host utility may not allow directly affiliated companies to participate in its capacity solicitation. Parties offering capacity reductions through load management may participate at the discretion of the host utility.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-30. Development of resource plan.

If a utility chooses to establish a bidding program, that program must be an integral part of the utility's long-term resource plan. The information in a utility's resource plan should determine the size of solicitations, the timing of the need and many of the evaluation criteria.

An electric utility's need for capacity as identified in its Request for Proposal (RFP) should be consistent with its long-term resource plans. The capacity need identified by an investor-owned electric utility should be consistent with the resource plans filed most recently with the Commission. If the RFP is not consistent with the resource plan, the company must justify any differences before an RFP is issued.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-40. Request for proposal.

The utility's request for proposals should provide accurate information about the company's need for capacity. Such information should, at a minimum, include the following:

1. The size, type and timing of capacity for which the company anticipates contracting;

2. Any minimum thresholds that must be met by respondents;

3. Major assumptions to be used by the utility in the bid evaluation process, including environmental emission standards;

4. Explicit instructions for preparing bids so that bids can be evaluated on a consistent basis;

5. Preferred general location of additional capacity;

6. A standard power purchase and operating agreement; and

7. Specific information concerning the factors involved in determining price and non-price criteria used for selecting winning bids.

The electric utility should provide all information that would reasonably be expected to have a bearing on the viability of a proposed project. Potential bidders should have the opportunity to meet with the utility to discuss the RFP and the utility's capacity needs. Advance notice of the issuance of an RFP must be provided to the Commission staff.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-50. Evaluation of bids.

The evaluation of bids submitted in a bidding program must be based on the criteria identified in the utility's request for proposal. Bids should compete not only with other bids but also with the company's own build options, including plant life extensions.

While a company's build option need not be treated as a sealed bid, the utility must be able to demonstrate that it has objectively evaluated its build option against the bids received.

It should be recognized that the utility's evaluation will be under close scrutiny by the Commission staff and other interested parties. Unsuccessful bidders should have an opportunity to meet with the utility to discuss the evaluation of their bids.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-60. Company cost benchmark.

An electric utility conducting a bidding program must develop detailed cost estimates of its own build options. Those options may include units jointly planned with other companies. Cost estimates must be current and based on the prices likely to be actually quoted by manufacturers and vendors of power plant equipment. These estimates need not be divulged to potential bidders. However, if detailed cost estimates are not identified in the company's RFP such estimates must be submitted to the Commission prior to the company receiving competitive bids. The Commission will treat utility cost estimates as confidential during the bid evaluation and contracting period.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-70. Price and non-price factors.

The price and non-price factors selected for evaluation and the weightings attached to each can reasonably vary from utility to utility. However, the following factors must be considered for each project.

1. Level and schedule of required capacity and energy payments;

2. Status of project development;

3. Demonstrated financial viability of the project and the developer;

4. A developer's prior experience in the field;

5. System fuel diversity;

6. Dispatchability;

7. Project location and effect on the transmission grid;

8. Efficiencies of joint production of electricity and steam inherent in the cogeneration process;

9. Use of Virginia fuels, manpower and other state resources;

10. Benefits to be derived by the industries and communities associated with particular projects; and

11. Environmental impact.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-80. Contract negotiations.

Any contract negotiations between the utility and a potential supplier of electricity should be in strict accordance with what is stated in the company's RFP. In fairness to all bidding participants, contract negotiations should not be extensive. Fundamental changes in the nature of the project or capacity and purchase payments must not be negotiated. Any contract signed must include provisions that assure a facility's performance and continued availability under the agreement.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-90. Purchases outside of the bidding process.

A utility with an active competitive bid program may refuse offers of capacity that have been received outside of a bidding process. Energy, however, must be purchased from an offering Qualifying Facility (QF) in accordance with PURPA (Public Utilities Regulatory Policies Act of 1978, 16 USCS §§ 824a-3 et seq.) requirements.

Electricity purchases outside of the bidding process could include purchases under tariffs from small power producers and cogenerators, short term, economy and emergency purchases. The extension of an existing contract could also normally be accomplished outside of the bidding process. If a utility and a potential provider of capacity want to negotiate a purchased power contract outside of the bidding process under other circumstances, they must jointly file a petition with the Commission. The parties must demonstrate that the opportunity cannot be accommodated in a bidding process and that the terms of the purchase are favorable from both a cost and reliability standpoint.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-100. Commission role in complaint resolution.

The Commission will provide a forum to resolve disputes between a utility and a bidder that may arise as a result of implementation of the bidding process. If a utility does not elect to implement an exclusive bidding process, the Commission will continue its traditional role of arbitrating price, terms, and conditions of purchased power contracts when the parties reach an impasse.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.

20VAC5-301-110. Utility reporting requirements.

An electric utility conducting a competitive bid solicitation must submit a written report to the Commission staff within 45 days of the completion of its evaluation of bids. This report shall describe in detail the evaluation of bids and the company's comparison of the bids received to its own construction options. A second report, similar to the report submitted to the staff but without information considered to be proprietary, must be prepared as a public document. The company shall cooperate fully with the staff in its review of the solicitation and evaluation process.

Statutory Authority

§§ 56-234.3, 56-234.4, 56-235.1 and 56-249 of the Code of Virginia.

Historical Notes

Derived from Case No. PUE900029, eff. November 28, 1990.



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