Draft

Fall 2002
Request for Proposals (RFP)
for
Supply-Side Resources 

Entergy Services, Inc.

September 27,October 31, 2002
TABLE OF CONTENTS
1.	GENERAL INFORMATION	1
1.1	Introduction	1
1.2	Overview of the RFP and the Resource Planning and Acquisition Processes	3
1.3	Summary Descriptions of Products Sought	6
1.4	Future Capacity Needs	10
1.5	Entergy Operating Companies Self-Build Options	11
1.6	Model Contracts	12
2.	RFP SOLICITATION AND PROPOSAL SUBMISSION PROCESS	12
2.1	Schedule for Short-Term Proposals	13
2.2	Schedule for Long-Term Proposals	14
2.3	Cancellation, Modification or Withdrawal of the RFP	1516
2.4	Bidder’s Conference	1516
2.5	Final Fall 2002 RFP Issuance	1617
2.6	ESI Contact	1617
2.7	Transmission Contacts	18
2.8	Notice Of Intent to Submit Proposal	18
2.9	Bidder Requirements	1819
2.10	Proposal Submission	1920
3.	PROPOSAL REVIEW AND EVALUATION PROCESS	2225
3.1	Threshold Requirements	25
3.2	Segregation of Proposals	26
3.3	Proposal Evaluation	27
3.4	Notification of Evaluation Results and Negotiations	30
4.	REGULATORY APPROVALS	30
5.	RESERVATION OF RIGHTS	30

APPENDICES		
Appendix A	Glossary of Terms	
Appendix B	Notice of Intent to Submit Proposal	
Appendix C	Proposal Submission Instructions and Product Packages	
Appendix D	Resource Planning Objectives for 2003 Supply Plan Procurement	
Appendix E	Preliminary Targeted Product Mix for “2003 Supply Plan Procurement”	
Appendix F	Proposal Solicitation, Submission and Receipt Process	
Appendix G	Proposal Evaluation Process	
1.	
1.	GENERAL INFORMATION
1.1	Introduction
Entergy Services, Inc. (“ESI”), acting as agent for one or more of the Entergy Operating Companies,1 is issuing this Request for Proposals (this “RFP”)2 to solicit proposals for the delivery of electric capacity and, energy beginning in the summer of 2003.and Other Associated Electric Products.  This RFP (sometimes hereinafter referred to as the “Fall 2002 RFP”) represents the first RFP in a new ongoing, cyclical procurement process (“Procurement Supply Strategy”) that ESI expects to utilize to identify resource options and acquire resources for the 2003-2012 planning horizon.  This process (as described in greater detail below) is designed to capture the benefits of the competitive wholesale market for customers of the Entergy Operating Companies in a way that limits exposure to prevailing fuel, market and regulatory risks and uncertainties.  The process will include semi-annual formalized Requests for Proposals coupled with continuous evaluation of market opportunities to provide ESI with cost-effective resource procurement options and to help efficiently manage ESI’s resource procurement strategy.  
The Entergy Operating Companies need to acquire additional resources to meet the Entergy System’s reliability requirements for the summer of 2003.2003, and for future periods as well.  For the past three summers, the Entergy System’s reliability needs have been met through a variety of short-term supply resources including the acquisition of Annual Plan Capacity Products (e.g., 5x16 block energy products or day-ahead call option products).  In the Procurement Supply Strategy initiated with this RFP, however, ESI is seeking to meet both summer 2003 and longer term reliability needs through the procurement of a 2003 supply plan procurement portfolio consisting of a broader range of wholesale power products intended to satisfy multiple resource planning objectives for 2003 and beyond.  These resource planning objectives and the resulting preliminary targeted product mix plan for the 2003 supply plan procurement portfolio are described in detail in Appendices D and E, and are also are summarized briefly below. 
In acquiring the resources to meet reliability needs, ESI will seek to acquire a 2003 supply plan procurement portfolio consisting of several product types for both short-term and longer-term resource needs.  In addition to acquiring the Annual Plan Capacity Products described above, the Entergy Operating Companies will attempt to meet near term reliability objectives through the acquisition of longer-term resources that satisfy resource planning objectives, if such resources can be acquired at reasonable prices. 
The Entergy Operating Companies seek additional long-term base load capacity to satisfy resource planning objectives to minimize long-term production costs and to provide a significant portion of customer energy requirements from Stable Fuel Price resources whose production costs are not highly sensitive to the uncertainties associated with the future cost and availability of natural gas.  This capacity would consist of solid fuel generation (e.g., coal, lignite, nuclear, petroleum coke) or highly efficient gas-fired capacity (either from Combined Cycle Combustion Turbines (“CCGT”) or cogeneration facilities) with fixed-price long-term gas contracts (i.e., 10 years or more).  The Entergy Operating Companies will seek Life of Unit resources acquired either through a bricks and mortar acquisition, i.e., actual ownership in an existing generating facility or through a Life of Unit purchased power agreement that provides operational control and commercial flexibility similar to ownership. 

	The Entergy Operating Companies also seek Dispatchable Load Following Capacity provided from efficient generation that can be placed under the control of the Entergy System’s dispatchers (both with respect to unit commitment scheduling and real-time economic dispatch), if these resources can be acquired at costs that would result in lower total system production costs than continued use of currently available resources.  This Dispatchable Load Following Capacity is expected to consist primarily of efficient gas-fired capacity from recently constructed CCGT, cogeneration facilities, or peaking Combustion Turbines (“CT”).  It is anticipated that a significant portion of this capacity will be acquired as purchased power under Multiple-Year Unit Capacity Purchase Agreements (“MUCPAs”).  However, some portion of the Entergy Operating Companies’ longer-term needs for such capacity may be satisfied through a bricks and mortar acquisition of actual ownership of an undivided interest in an existing generating facility or through a Life of Unit purchase of capacity from such a facility, if such a resource can be acquired at a price that is attractive relative to the costs of the Entergy Operating Companies’ other options.

In this Fall 2002 RFP, ESI is seeking, among other things, proposals to meet its summer 2003 capacity and energy requirements and intends to acquire a significant portion of these resource requirements through the Fall 2002 RFP process.  The optimum 2003 Supply Plan Portfolio resource mix (i.e., the proportion of needs supplied by each product type) dependswill depend upon the relative prices and other characteristics of the various products.  Assuming reasonably priced proposals are received under the Fall 2002 RFP, ESI will make commitments associated with some portion of its 2003 needs.  The experience gained in the Fall 2002 RFP will be used to adjust the targeted product mix for the 2003 Supply Plan Portfolio (detailed in Appendix E), and revised/new product specifications will be developed for use in the procurement of the remainder of the 2003 requirements.  Although a Spring 2003 RFP will incorporate these changes and may result in the procurement of a share of the 2003 supply requirements, any deficiencies will be satisfied through other short-term capacity and/or energy products.
ESI intends to consider renewable resource alternatives in the development of its longer-term supply plans for the 2003-12 period.  The Fall 2002 RFP will seek to identify options for these resources that could be considered as ESI develops its supply plans for future periods.

1.2	Overview of the RFP and the Resource Planning and Acquisition Processes
This Fall 2002 RFP solicits offers designed to satisfy both short- and long-term resource needs.  The Fall 2002 RFP is part of the Entergy System’s new long-term resource planning and procurement process that intends to rely on semi-annual formal resource solicitations both to identify economical resources that can be acquired immediately for the benefit of the Entergy Operating Companies’ customers and to obtain timely and credible information regarding the availability and costs of market-based resource options that may be incorporated into future resource plans.
The System’s most recent long-term resource plan, presented in March 2002 (which is available electronically at https://emo-web.no.entergy.com/ENTRFP/index.htm in a redacted form), indicates that the Entergy System will need to acquire approximately 2,000 MW of additional resources to satisfy customer needs for 2003.  A revised and updated resource plan for 2003 will be developed prior to the Spring 2003 RFP based upon the latest information regarding projected loads and the availability of existing and planned resources for the Summer of 2003.  Based on current information, the System’s additional resource need is projected to grow over the next decade to approximately 3,600 to 6,800 MW.  Projected resource needs by the end of the decade are expected to change as a result of actual events that will occur in the future, so ESI will continue to update and expects to change its projections of resource needs over time, as part of its normal planning process.  The resources used to satisfy this additional resource requirement will include resources acquired through the ongoing, cyclical supply procurement strategy initiated with this Fall 2002 RFP and other short term purchases. These resources also may include some resources associated with self-build opportunities, proposals from Persons other than Entergy Affiliates made outside of this process, and pre-existing commitments or commitments with third parties not involving any Entergy Affiliates made pursuant to negotiations that began prior to the development of this RFP process.  
Further, in order to preserve ESI’s ability to consider all opportunities that may benefit the retail customers of the Entergy Operating Companies, ESI reserves the right to evaluate and consider resources that are owned by one or more Entergy Operating Companies but that are not reflected in the retail rates of any Entergy Operating Company and opportunities to acquire long-term resources from others, as such opportunities arise, with the understanding that any decision to commit to these resources would be fully subject to any required review and the approval by the appropriate regulatory bodies.  If such opportunities arise during the period of evaluation of proposals submitted for the ownership or life of unit purchases received as a result of a formal RFP, any such opportunity would be evaluated along with proposals under consideration with the latter being given a preference over an otherwise comparable opportunity.  However, during the period of active evaluation of proposals in response to the Fall 2002 RFP or the Spring 2003 RFP, ESI will not consider proposals for purchased power under limited term agreements of one orto morethree years that have not been offered in response to the RFP.  However, the development and implementation of the RFP process does not preclude in any way ESI or the Entergy Operating Companies from considering, evaluating, and/or seeking regulatory approvals for acquiring resources that are owned by one or more Entergy Operating Companies, which resources are not reflected in rates of retail customers of any Entergy Operating Company.  The RFP processprocesses will present the only opportunities for Entergy Affiliates to offer annual any capacity and/or limited term purchased powerenergy products to the Entergy Operating Companies.  
The resource requirements described above reflect the quantity of power ESI needs to meet expected minimum reliability objectives.  After receipt of market responses associated with the Fall 2002 RFP, ESI may conduct further analysis to determine whether the acquisition of additional resources may be justified, based upon production costs or to meet other planning objectives after the effects of the capacity added for reliability purposes is considered.  For example, the Entergy Operating Companies’ fleet of gas-fired units consists almost exclusively of steam units that are 30 or more years old, with heat rates in excess of 10,000 Btu/kWh.  At some point, it may be cost-effective to augment the capacity and/or energy from the Entergy Operating Companies’ existing fossil units with more efficient combined-cycle combustion turbine or solid-fueled capacity that, like Entergy’s existing gas-fired generating units, can be committed and dispatched by the operators of the Entergy System’s generating resources.  A significant amount of new, more efficient, merchant generation has been brought on-line within the Entergy System’s region over the past few years, and even greater amounts of capacity are either under construction or in the planning stages.  The availability of this generation may provide the Entergy Operating Companies the opportunity to gradually displace some of the energy and/or capacity of their existing generating units if and when attractive economic options exist.
A portion of the 2003 requirements will be provided by Annual Plan Capacity Products consisting primarily of short-term (less than one year) firm capacity and/or energy products such as call options, and capacity and/or energy products (with Other Associated Electric Products).  These products may be purchased for various time periods, including seasonal, monthly, weekly, and daily. While the Fall 2002 RFP will offer an opportunity for ESI to receive proposals for these Annual Plan products, the supply procurement for Annual Plan products will incorporate not only this solicitation but other activities throughout the September 2002 - April 2003 period, as opportunities and needs are identified.  However, only during the formal RFP periods may Entergy Affiliates offer products responsive to the needs of the Entergy Operating Companies.
ESI invites proposals from all potential suppliers who are capable of meeting the identified conditions of this RFP, including other electric utilities, marketers, wholesale generators, independent power producers, and qualifying facilities.  ESI also will accept, in this and subsequent RFPs, proposals from Entergy Affiliates.  The RFP process has been designed to ensure that Entergy Affiliate proposals will be evaluated in the same manner as any third-party proposal, and more generally, has been designed to ensure that proposals are evaluated and decisions made in an objective and impartial fashion with the protection of commercially sensitive information. 
During the contract term of purchased power agreements, there is a possibility that changes in the wholesale market structure could occur as a result of the formation of Regional Transmission Organizations (RTOs) or other regulatory actions that may affect the wholesale generation market.  As part of the terms required under any purchased power agreement, ESI will require that its acquisition of capacity and, energy and all Other Associated Electric Products under that agreement include all subsequently developed products that are associated with the resourcesresource, included but not limited toincluding without limitation, capacity designations intended to assure resource adequacy and appropriate ancillary service products and other operational functions, including emissions allowance allocations.  These other current and future attributes and capabilities of a generating unit during the term of an agreement with ESI or any of the Entergy Operating Companies are referred to as “all Other Associated Electric Products” in the RFP.
	All ESI, Entergy Operating Company and Entergy Affiliate employees, including those involved in the RFP process, must adhere to applicable Affiliate Rules and Codes of Conduct.  ESI has retained Lexecon Inc. (“Lexecon”), an independent, nationally-recognized, energy industry consulting firm, to assist in the development of the RFP solicitation, evaluation and selection process to ensure that the RFP and evaluation process will be objective and impartial.  Lexecon will also monitor the conduct of the RFP solicitation, evaluation and, selection and contract negotiation process to provide an objective third-party perspective.

This RFP was developed with the intent of identifying “fully conforming” proposals for resources that can be acquired immediately as a result of the Fall 2002 RFP if they are identified as economically and operationally attractive and financially sound resources in the evaluation process.  The requirements for a proposal to qualify as being fully conforming are described in greater detail in the instructions to Bidders, as well as in the submission forms and term sheets that comprise the individual Product Packages. 
The primary objective of this RFP is to solicit competitive proposals to provide the Entergy Operating Companies with flexible and cost-effective generating resources to meet their customers’ long-term load requirements in a reliable and economical manner.  Therefore, resource cost or proposal price is not the sole criterion for selecting a potential resource as part of the resource portfolio.  While cost minimization is an important criterion, other planning objectives and constraints must be considered to produce a reasonable supply plan.  ESI seeks to procure a resource portfolio that results in the lowest evaluated total production cost consistent with its planning objectives and constraints, which include minimizing risks associated with uncertainties (such as future cost and availability of natural gas, supplier credit issues, and other such factors) that cannot be known and measurable at the time of the decision.  ESI will select those resources which, in its opinion, represent the lowest reasonable cost solution to meeting the resource planning requirements of the Entergy Operating Companies and their customers, consistent with its planning objectives and constraints, based on economic, operational and technical attributes, including factors such as project viability, location and performance factors, and the financial viability of the Bidder.  ESI will evaluate individual options and combinations of options to determine those that satisfy these multiple objectives, which are described in greater detail in below and in Appendices D and E hereto.  While ESI is seeking proposals to satisfy both short- and long-term needs, ESI will not necessarily make commitments to satisfy all of its long-term resource needs through this Fall 2002 RFP.  There will be subsequent RFPs in which additional resource alternatives will be considered, including the Spring 2003 RFP.  The information required to be provided by Bidders in response to this RFP is described in Appendix C with terminology defined in the Glossary, Appendix A.  A description of how proposals will be evaluated based on these price and non-price factors is summarized below, and is described in more detail in Appendix G.

1.3	Summary Descriptions of Products Sought
In this Fall 2002 RFP, ESI, as agent for one or more of the Entergy Operating Companies, is seeking proposals for the following types of products, each of which is described in more detail in the individual Product Packages in Appendix C to this RFP:
1.3.1	Annual Plan Capacity Products
These products are based on the purchase of unit contingent capacity and energy from specific generating assets.  The unit-contingent capacity and associated energy products for the summer 2003 period (June/July/August) could be structured in either of the following ways:
A)	A call option on capacity and associated energy with the ability to schedule energy deliveries on a day-ahead basis for On-Peak hours (1x16).  Pricing for this product will be based on an option premium (expressed in $/kW month) and an energy payment based on a Guaranteed Heat Rate multiplied by a Gas Price, as specified by the Bidder; and/or
B)	A block of energy from a specific generating unit with deliveries of energy for sixteen (16) hours per day, Monday through Friday (excluding NERC holidays).  The pricing for this product will be based on a fixed energy price ($/MWh) or on a guaranteed heat rate multiplied by a first of month Gas Price, as specified by the Bidder.  This product is commonly referred to as “5x16 On-Peak” or “5x16 block energy.”
Term Sheet A in Product Package A of Appendix C contains the specific requirements for both these products, which are generally described herein.
1.3.2	Multiple-Year Unit Capacity Call Option (“MUCCO”) Products
These products include unit-contingent call option rights to capacity and associated energy from designated generation resources, including both CTs and CCGTs, for a one (1), two (2), or three (3) year period with delivery beginning in May 2003, structured as follows:
MUCCO – CCGT or Cogeneration - a call option on the purchase of capacity and, energy and all Other Associated Electric Products from a specific CCGT and/or cogeneration facility; and/or

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

These products would provide ESI the ability to preschedule energy on a day-ahead basis based on the minimum hourly energy requirements specified by the Bidder.  Pricing for these products will be based on a capacity payment (expressed in $/kW-year) and an energy payment based on a Guaranteed Heat Rate for the term of the agreement multiplied by a Gas Price, as specified by the Bidder.  
To the extent that ESI does not dispatch energy from the specified generating resources for the next day, the seller would have the ability to sell this energy to other market participants or utilize it to serve its own load.
A proposal to provide these products must be tied to a specific generating resource.  Term Sheet B in Product Package B of Appendix C contains the specific requirements for both of these products, which are generally described herein.
1.3.3	Multiple-Year Unit Capacity Purchase Agreement (MUCPA) Products
These products include unit-contingent purchase and/or gas tolling products with rights to capacity and, energy and all Other Associated Electric Products from designated generation resources, including CCGT, cogeneration and CT resources, for a one (1), two (2), or three (3) year period with delivery beginning in May 2003, structured as follows:
A)	MUCPA – CCGT or Cogeneration (Dispatchable) - a dispatchable CCGT or Cogeneration MUCPA Product from which ESI has the ability to schedule and dispatch energy from a specific CCGT or Cogeneration facility on an hour-ahead basis with no minimum off-peak energy requirements.  EntergyESI shall have the ability to start-up and shut down the unit at its discretion based on the physical capabilities of the unit specified and subject to other terms and conditions specified herein.  Pricing for this product will be based on a capacity payment (expressed in $/kW-year) and an energy payment based on a Guaranteed Heat Rate multiplied by a Gas Price, as specified by the Bidder.  Term Sheet C of Appendix C contains the specific requirements for this product, which are generally described herein; and/or
B)	MUCPA – CCGT or Cogeneration (Limited Dispatch) - a limited dispatch CCGT or Cogeneration MUCPA product from which ESI has the ability to schedule/dispatch energy from a specific CCGT or Cogeneration unit on an hour ahead basis but requiring minimum energy dispatch during off-peak periods as specified by the Seller.  The minimum energy dispatch requirement must not exceed forty percent (40%) of the total capacity of the product.  Pricing for this product will be based on a capacity payment (expressed in $/kW-year) and an energy payment based on a Guaranteed Heat Rate multiplied by a Gas Price, as specified by the Bidder.  Term Sheet C of Appendix C contains the specific requirements for this product, which are generally described herein; and/or
C)	MUCPA – CT/Quick Response Capacity - a dispatchable CT/Quick Response MUCPA Product from which ESI has the ability to schedule/dispatch energy from a specific CT generating unit on an hour-ahead basis with no minimum off-peak energy requirements.  EntergyESI shall have the ability to start-up and shut down the unit at its discretion based on the physical capabilities of the unit specified and subject to other specified terms and conditions in Term Sheet D.  Pricing for this product will be based on a capacity payment (expressed in $/kW-year) and an energy payment based on a Guaranteed Heat Rate multiplied by a Gas Price, as specified by the Bidder.  Term Sheet D in Product Package D of Appendix C contains the specific requirements for these products, which are generally described herein.
A proposal to provide any of these products will need to be tied to a specific generating unit.  

1.3.4	Life of Unit Purchase Products
These products include capacity procured from new or existing generating units, either through an outright “bricks and mortar” acquisition of an undivided interest in a unit, or through a life of unit purchase agreement.  Beginning in 20032003, 2004 or 2004,2005, these products would be structured as follows:  
A)	Stable Fuel Price Life of Unit (“LOU”) Capacity Purchase – Solid Fuel – a Life of Unit Purchase of capacity and, energy and all Other Associated Electric Products from a “Stable Fuel Price” baseload solid fuel power generating unit (including, but not limited to, coal, lignite, petroleum coke or nuclear generation) delivered to a designated Delivery Point on the Entergy System.  Pricing for this product will be based on a capacity payment (expressed in $/kW-year) and an energy payment based on a fixed price per MWh for the initial ten years of the agreement (specified by year), not to exceed $18/MWh.  The estimated annual capacity factor for this product would be expected to range from seventy percent (70%) to ninety percent (90%).  (Refer to Term Sheet E in Product Package E of Appendix C for the specific requirements for this product); and/or
B)	Ownership Acquisition of “Stable Fuel Price” Baseload Solid Fuel Capacity – acquisition of an undivided ownership interest in a solid fuel power generating unit (including, but not limited to, coal, lignite, petroleum coke or nuclear generation) delivered to a designated Delivery Point on the Entergy System. Pricing will be based on a single fixed payment or a $/kW price. (Refer to Term Sheet F in Product Package F of Appendix C for the specific requirements for this product); and/or
C)	Stable Fuel Price, Life of Unit (“LOU”) Baseload Capacity – CCGT or Cogeneration with Long-Term Gas Contract – a Life of Unit Purchase of capacity and, energy and all Other Associated Electric Products from a “Stable Fuel Price” Baseload CCGT or Cogeneration resource and associated long-term gas supply contract with power delivered to a designated Delivery Point on the Entergy System.  ESI would expect this capacity to be provided from generation capacity with very efficient heat rates, such as those resulting from cogeneration facilities.  Pricing for this product will be based on a capacity payment (expressed in $/kW-year) and an energy payment based on the Heat Rate Curve of the unit multiplied by the gas price and would require a long-term (10 year), fixed-price gas fuel supply agreement.  The estimated annual capacity factor for this product would range from sixty percent (60%) to eighty percent (80%).  To further evaluate proposals offering for ESI to purchase “Stable Fuel Price” CCGT or Cogeneration capacity from owners who cannot, or choose not to, provide a long-term gas supply contract, ESI intends to seek proposals in a separate process from qualified gas suppliers for firm, fixed-price gas supply contracts for terms of at least 10 years.  Term Sheet G in Product Package G of Appendix C contains the specific requirements for this product), which is generally described herein; and/or
D)	Ownership Acquisition of “Stable Fuel Price” Baseload Capacity – CCGT or Cogeneration with Long-Term Gas Contract – acquisition of capacity provided by a CCGT or Cogeneration resource and associated long-term gas supply contract with power delivered to a designated Delivery Point on the Entergy System.  ESI would expect this capacity to be provided from a generation resource with very efficient heat rates, such as those resulting from cogeneration facilities.  The energy pricing for this product would be based on the actual Heat Rate Curve of the unit(s) specified and would require a long-term, fixed-price gas fuel supply agreement.  The estimated annual capacity factor for this product would range from sixty percent (60%) to eighty percent (80%).  To further evaluate proposals offering for ESI to acquire ownership in “Stable Fuel Price” CCGT or Cogeneration capacity from owners who cannot, or choose not to, provide a long-term gas supply contract, ESI intends to seek proposals in a separate process from qualified gas suppliers for firm, fixed-price gas supply contracts for terms of at least 10 years.  Pricing will be based on a single fixed payment or a $/kW price.  Term Sheet H in Product Package H of Appendix C contains the specific requirements for this product, which is generally described herein; and/or
E)	Ownership Acquisition of Dispatchable, Load-Following CCGT or Cogeneration – acquisition of capacity provided by a CCGT or Cogeneration generating resource with the ability to deliver to a designated Delivery Point on the Entergy System. Pricing will be based on a single fixed payment or a $/kW price.  Term Sheet I in Product Package I of Appendix C contains the specific requirements for this product, generally described herein; and/or 
F)	Ownership Acquisition of Dispatchable Load Following CT/Quick Response Capacity – acquisition of capacity from a CT generating resource with the ability to be delivered to a designated Delivery Point on the Entergy System.  Pricing will be based on a single fixed payment or a $/kW price.  Term Sheet J in Product Package J of Appendix C contains the specific requirements for this product, generally described herein.

1.3.5	Indicative Renewable Capacity Products

ESI’s main objective in soliciting renewable resources in this Fall 2002 RFP is to gain more specific information and a better understanding of renewable resource supply options.  ESI intends to solicit and consider indicative proposals for capacity and, energy and all Other Associated Electric Products from renewable resources as part of its long-term resource supply strategy.  Renewable resource proposals that can be practically evaluated and compared on an even footing with other resource alternatives proposed in the Fall 2002 RFP will be selected if those renewable resource proposals are cost effective when compared to other alternatives and if they meet the Entergy System’s operational needs and are consistent with planning objectives and constraints.  During the period prior to the Spring 2003 RFP, ESI will evaluate renewable resource options to identify and address any unique evaluation requirements specific to renewable resources.  ESI also will seek guidance from the Entergy Operating Companies’ retail regulators regarding the appropriate role, if any, for renewable resources in the Entergy System’s overall supply portfolio, in the event that including renewable resources in that supply portfolio would offer benefits (such as fuel-price risk minimization, environmental impacts, and/or locational benefits) but result in a resource cost greater than the lowest reasonable cost associated with a portfolio that does not include renewable resources.
To facilitate this evaluation and in hopes of developing product specifications that can be issued in future RFPs, ESI is seeking indicative proposals in this Fall 2002 RFP for renewable energy products including but not limited to the following product categories:
-	Photovoltaics
-	Solar thermal
-	Biomass/biogas
-	Wind energy
-	Geothermal
-	Low-impact hydro

The Fall 2002 RFP will seek non-binding indicative proposals in order to identify the amount, timing, expected cost, and operational characteristics of renewable resource alternatives. 
While ESI does not specifically intend to procure renewable resources through the Fall 2002 RFP process that do not result in the lowest reasonable production costs, it will evaluate offers from renewable resources if the resource meets the supply role requirements (operating flexibility and capacity and energy sourcing pattern) for a product included in the 2003 Supply Procurement Plan as further detailed in Appendix E.  For informational purposes only, ESI will also accept proposals for renewable resources that provide “as available” energy and do not meet the specific supply roles detailed in Appendix E.  Bidders with renewable capacity and/or energy meeting the product criteria defined in the product specifications should separately offer their resource into each product category that they deem appropriate for the renewable resource.
Term Sheet K in Product Package K of Appendix C discusses the specific requirements for this product.
1.4	Future Capacity Needs  
While the primary purpose of the Fall 2002 RFP procurement is to secure resources that can be available to serve customer requirements in the 2003-2012 period, ESI expects to utilize this and future RFPs to identify additional potential resources that could be considered in future supply planning activities.  For example, as discussed earlier, ESI seeks to gain a greater understanding of the amount, types, and cost of renewable resources that could be considered in its longer term resource planning decisions.  It is currently contemplated that decisions regarding the offers received under the Fall 2002 RFP that ESI intends to pursue will be completed prior to the commencement of the Spring 2003 RFP.  Therefore, as part of the Fall 2002 RFP process, ESI will seek non-binding indicative proposals for renewable capacity, so that steps to develop appropriate product specifications and evaluation criteria can be taken prior to the supply procurement process activities to be conducted in 2003. 
As specified above, ESI is soliciting proposals for a variety of types of resources. This  The preliminary targeted product mix for the Fall 2002 RFP procurement associated with the 2003 Supply Plan Portfolio is described in detail in Appendix E.  Please noteThe capacity acquisition target ranges included in Appendix E do not identify rigid ceilings for any given product, but describe merely conceptual target amounts that this is simply an estimate and is subject to change basedcan be modified depending on the actual responses to this RFPbids received. ESI anticipates fulfilling these resource needs by April 2003 through the supply procurement process described below.  ESI anticipates that a significant share of the total resource needs will be awarded as a result of the Fall 2002 RFP process provided suitable proposals are received.  Based upon market prices and responses to the Fall 2002 RFP, refinements to the preliminary 2003 Supply Plan Portfolioresource needs and targets outlined in this RFP will be made, andwhich refinements will be incorporatedreflected in future planning and procurement activities during the remainder of the 2003 - 2012 period, and future periods, including athe Spring 2003 RFP.
As a result of the Fall 2002 RFP process, some portion of the resource requirements from fully-conforming proposals, may be awarded immediately and a portion of the longer-term resource requirements (the Life of Unit Purchase resources) may be selected (based upon indicative proposals received during the Fall 2002 RFP) for additional negotiations regarding final contractual terms.  The resource portfolio that will be selected for further negotiations will consist of those resources that, in ESI’s opinion, represents the lowest reasonable cost to the Entergy Operating Companies and their customers based on economic, operational and technical attributes as well as project viability and the financial viability of the Bidder.  It is ESI’s intent that decisions regarding which offers received under the Fall 2002 RFP ESI desires to pursue will be completed prior to the commencement of the Spring 2003 RFP.  
ESI intends to use this formal RFP process, including this Fall 2002 RFP solicitation and subsequent semi-annual RFPs for short-term and long-term products, to obtain resources to meet the future needs of the Entergy Operating Companies.  While ESI makes no commitment to accept any proposals provided in response to this Fall 2002 RFP, it is the expectation that the responses received during the Fall 2002 RFP will provide ESI the opportunity to procure between twenty-five (25%) and fifty percent (50%) of the resources required for 2003 including both short-term and long-term supplies.  Depending upon responses to this Fall 2002 RFP, additional requirements may be satisfied through procurements made during the Spring 2003 RFP process.
1.5	Self-Build Options of the Entergy Operating Companies
In order to mitigate the exposure of the Entergy Operating Companies to purchase power supply risks and cost volatility, ESI intends to identify and evaluate real executable resource proposals that would allow for the possibility to construct, if needed and economically justified, new capacity through newself-build options.  ESI will seek to identify real executable options that could be executed within three years.  
As part of its ongoing, cyclical resource planning and procurement processes, ESI will regularly compare options to consider and, in some circumstances, make immediate supply commitments for its long-term needs through purchases or acquisitions of existing capacity with alternative procurement strategies consisting of a combination of short-term procurement followed by longer-term capacity solutions.  For example, new self-build or “life of unit” capacity acquisitions/purchases will be compared to a strategy relying on short- to mid-term purchases followed by construction/ acquisition of new resources with well-defined costs and schedule.  In order to have truly comparable “executable options” for this evaluation, ESI must have well defined self-build or other deferred supply options for the Entergy Operating Companies.
These newself-build options include participation in new CCGT/cogeneration capacity and unit repowering and/or upgrades at existing generation sites.  The “newself-build” opportunities that the Entergy System is currently considering and evaluating are the repowering of Entergy New Orleans’ Michoud Unit 2 and Entergy Louisiana’s Little Gypsy Unit 1.  At this time, no final decision has been made to pursue repowering projects for these units, and such repowering projects cannot be completed in time to provide additional resources for the summer of 2003 in any event, but the Entergy System has taken certain steps, including applying for environmental permits with the Louisiana Department of Environmental Quality, that are necessary to develop these repowering options.  These alternatives may be further considered in the development of future resource plans, but there is no self-build option against which the resources offered in this RFP will be compared.
1.6	Model Contracts
ESI plans to post Model Contracts for the Annual Plan Capacity, MUCCO and MUCPA products on the website https://emo-web.no.entergy.com/ENTRFP/index.htm prior to the Bidder’s Conference.  Bidders are encouraged to confirm in their proposals that they accept all of the terms specified in these Model Contracts.   Bidders should be aware that ESI does not intend to negotiate any terms associated with the Monthly Capacity Payment allocation, the Availability Requirement and related Capacity Payment Discount, or the minimum number of starts to be included in the capacity payment as specified for each product (unless the resource is not physically capable of meeting this criterion, as explained by the Bidder in the Special Considerations section of the Product Package), each of which terms are detailed in the Product Packages and Model Contracts provided in this RFP.  Any Bidder unwilling to accept all of suchother terms without exception is required to specifically note any exceptions or changes to the terms specified in these Model Contracts in the appropriate section of its proposal.  ESI prefers proposals which conform to the terms specified in the Model Contracts and reserves the right to reject any proposals which do not meet the key terms.  ESI does not intend to provide Model Contracts for any Life of Unit Purchase or ownership acquisition products until the short list is defined and will provide Model Contracts to each short listed Bidder upon notification.
2.	RFP SOLICITATION AND PROPOSAL SUBMISSION PROCESS
The RFP process is a multi-phase process consisting of: (1) Solicitation and Pre-Submission; (2) Proposal Receipt and Screening; (3) Review and Evaluation Process; (4) Notification and Contract Negotiations.  Phases 1 & 2 are discussed in more detail in Appendix F, and in this Section of the RFP.  Phase 3 is detailed in Appendix G and, together with Phase 4, is discussed in Section 3 of the RFP.  The individual steps within each phase of the process, and the timing of those steps, will be different for (a) proposals relating to Annual Plan Capacity Products, MUCCO Products or MUCPA Products (“Short-Term Proposals”), on the one hand, and (b) proposals relating to LOU Products or Asset Acquisitions and indicative renewable resource products (“Long-Term Proposals”), on the other hand.  The separate schedules for Short-Term Proposals and for Long-Term Proposals are presented below.
Lexecon will oversee the solicitation and pre-submission, proposal receipt and screening processes, as well as the evaluation and negotiation processes, in an effort to ensure theirthe technical merit, objectivity and impartiality of those processes.

2.1	Schedule for Short-Term Proposals
1.	Solicitation and Pre-Submission
Draft RFP Issued	September 27, 2002	
Draft Model Contracts Issued	On or about October 11, 2002	
Bidder’s Conference	October 16, 2002	
Final RFP Issued	On or about October 31, 2002	
Final Model Contracts Issued	On or about November 4, 2002	
Final Credit Evaluation Parameters Posted	On or about November 8, 2002	
Notices of Intent to Submit Proposal Due	On or before November 8, 2002	
2.	Proposal Receipt and Screening for Conformance
Final, Binding Proposals Due	November 15, 2002	
Proposals opened, reviewed for conformance, and segregated for evaluation of discrete proposal elements (factors)	On or before November 20, 2002	
Bidders notified of receipt of proposals and whether proposal is “Conforming”	On or before November 22, 2002	
3.	Evaluation Process
Evaluation of proposals begins	As early as November 16, 2002 but not prior to completion of the proposal opening, review and segregation process for the specific product as indicated above.	
4.	Notification and Contract Negotiations
Winning Bidders notified that their proposals have been selected for contract negotiations/execution.  All other Bidders notified of the status of their proposal(s).	On or about December 13, 2002	
Initiate Contract Negotiation(s) and, for MUCPA/MUCCO Products, Additional Due Diligence, as appropriate	On or about December 31, 2002 	
Execute and deliver Definitive Agreement(s) 	On or about January 31, 2003	

ESI will require all Short-Term Proposals to be the Bidder’s best and final offer.  Although ESI may contact Bidders if necessary to clarify one or more Short-Term Proposals, Bidders should not assume that they will be given any opportunity to materially revise any terms specified in a Short-Term Proposal following its submission.  In addition, all Short-Term Proposals are required to be (a) final and binding, (b) not conditioned upon the subsequent receipt of the approval of the board of directors or similar governing body of the Bidder, and (c) irrevocable until 5:00 p.m. CST on December 13, 2002.  During the period that final and binding Short-Term Proposals are irrevocable, such Short-Term Proposals may not be modified except as may be set forth in a written instrument that is signed by the Bidder and ESI or the appropriate Entergy Operating Company(ies).
2.2	Schedule for Long-Term Proposals
1.	Solicitation and Pre-Submission
Draft RFP Issued	September 27, 2002	
Bidder’s Conference 	October 16, 2002	
Final RFP Issued	On or about October 31, 2002	
Notices of Intent to Submit Proposal Due	On or before November 8, 2002	
2.	Proposal Receipt and Screening
Indicative Proposals Due	November 15, 2002	
Proposals opened, reviewed for conformance, and segregated for evaluation of discrete proposal elements (factors)	On or about November 20, 2002	
Bidders notified of receipt of proposals and whether proposal is “Conforming”	On or about November 22, 2002	
3.	Evaluation Process
Evaluation process begins	As early as November 16, 2002 but not prior to completion of the opening, review and segregation process for the specific product as indicated above.	
Due Diligence for conforming proposals	Commencing November 22, 2002	
“Short-listed” Bidders identified and invited to submit Final, Binding Proposals, and information on key contract terms and conditions distributed.  All other Bidders notified as to the status of their proposal.	On or about December 13, 2002	
Final, Binding Proposals Due	On or about January 15, 2003	
4.	Notification and Contract Negotiations
Winning Bidders identified and notified that their proposals have been selected for contract negotiations	On or about January 31, 2003	
Initiate Contract Negotiation(s) and Additional Due Diligence	On or about February 3, 2003	
Execute and deliver Definitive Agreement(s) 	On or about March 31, 2003	

ESI will require the Bidder’s final and binding Long-Term Proposal to be the Bidder’s best and final offer.  Upon notifying short-listed Bidders that they have been selected for the short-list of Bidders invited to submit final and binding Long-Term Proposals, ESI also intends to provide to such Bidders detailed term sheets which will contain ESI’s required terms and conditions for each Long-Term Proposal.  Although ESI may contact Bidders if necessary to clarify one or more Long‑Term Proposals, Bidders should not assume that they will be given any opportunity to revise a Long‑Term Proposal after the deadline of 5:00 p.m. CST on January 15, 2003.2003 (or other date specified by ESI).  All Long‑Term Proposals submitted by short-listed Bidders by the required deadline are required to be (a) final and binding, (b) not subject to the approval of the board of directors or similar governing body of the Bidder, and (c) irrevocable for ninety (90) days.  During the period that final and binding Long-Term Proposals are irrevocable, such Long-Term Proposals may not be modified, except as may be set forth in a written instrument that is signed by the Bidder and ESI or the appropriate Entergy Operating Company(ies).
2.3	Cancellation, Modification or Withdrawal of the RFP
ESI reserves the right to cancel, modify or withdraw this RFP and to revise either or both of the schedules specified above in order to meet its identified objectives.  ESI will endeavor to notify all participants who have filed a timely Notice of Intent to Submit Proposal of any such cancellations, modifications or schedule changes that are made prior to the due date for final, binding proposals.  However, ESI will have no responsibility for failing to do so.
2.4	Bidder’s Conference
ESI will host one Bidder’s Conference with all interested parties to clarify any issues surrounding the RFP.  ESI personnel will be available at this Bidder’s Conference to answer specific questions about the solicitation process, evaluation process, technical issues or contract provisions and to respond to other applicable information requests.  All questions regarding the RFP, whether they arise before, during or after this conference, must be submitted in writing.  In order to provide all interested parties with access to information elicited through the submission of questions, ESI intends to provide written responses to all questions, and to post the questions and answers on the website https://emo-web.no.entergy.com/ENTRFP/index.htm.  While ESI personnel may orally address written questions submitted during the conference, the written response may contain information that is different from or in addition to information that has been provided orally, and the written response shall be deemed to supercede the oral response. Bidders are encouraged to submit written questions prior to the Bidder’s Conference.  Please refer to Appendix F for specific information regarding the Proposal Solicitation, Submission and Receipt process.
Bidder’s Conference Meeting	
Time:	12:30 p.m. – 5:00 p.m.	
Date:	Wednesday, October 16, 2002	
Place:	Marriott Intercontinental Airport Hotel, Houston, TX  	

Bidders are encouraged but not required to attend the Bidder’s Conference.  ESI will post on the website  https://emo-web.no.entergy.com/ENTRFP/index.htm the materials presented at the Bidder’s Conference.  Bidders are advised that those materials cannot be expected to provide or explain all of the information that is provided or explained at the Bidder’s Conference.  Bidders are encouraged to notify ESI of the names of all individuals planning to attend the Bidder’s Conference by contacting Ms. Julie Ell (jell@entergy.com) with the company name of the prospective Bidder, as well as names and telephone numbers of all individuals planning to attend the meeting, by no later than October 11, 2002.

2.5	Final Fall 2002 RFP Issuance
ESI will issue a final Fall 2002 RFP after the completion of the Bidder’s Conference and upon consideration of written feedback received from the various market participants, regulatory agencies and other interested parties.  The final Fall 2002 RFP will reflect any changes that ESI, in its sole discretion, determines enhance or improve the proposed supply procurement process described herein.
2.6	ESI Contact
To facilitate the solicitation process, ESI wishes to effectively respond to the various questions and requests for clarification or additional information from potential Bidders.  Except as described in the next Section with respect to transmission matters, all such questions and requests and any other inquiries or contact about the RFP should be directed in writing to:

Ms. Julie Ell
Entergy Services, Inc.
L-ENT-26C
639 Loyola Avenue
New Orleans, LA  70113		
Email: 	jell@entergy.com	
Fax number: 	(504) 576-4150

Unsolicited contact with other personnel or employees of ESI or any of the Entergy Operating Companies concerning the Fall 2002 RFP, without the specific, prior written consent of Ms. Ell, is not allowed and may, depending on the circumstances, constitute grounds for disqualification. 
Subject to the exercise of ESI’s discretion with regard to confidentiality concerns as described in the next paragraph, ESI intends to post all questions submitted by Bidders, as well as ESI’s responses to these questions, on the RFP website   https://emo-web.no.entergy.com/ENTRFP/index.htm.  ESI’s objective in posting these questions and answers is to ensure that all Bidders have equal access to information that may be potentially relevant to their proposals.  Bidders are urged to submit questions as early as possible in order to provide ESI with adequate time to respond to an inquiry prior to the date for submission of proposals (due November 15, 2002).  Questions received after November 8, 2002 will not be answered.
ESI does not expect that it will be required to provide information that is confidential to ESI or any of the Entergy Operating Companies in response to Bidder questions.  If, however, ESI in its sole discretion determines that a Bidder’s question calls for an answer that would contain such confidential information, and that the provision of such confidential information is necessary and appropriate in furtherance of its consideration of the Bidder’s proposal, then such information may be submitted, pursuant to a suitable confidentiality agreement, to all Bidders who execute the confidentiality agreement.  In the event that information confidential to ESI or any of the Entergy Operating Companies is to be provided in response to a Bidder’s question, ESI will respond to that question in writing via certified mail. 
Similarly, ESI does not expect any questions Bidders may submit to contain information that the Bidder considers to be confidential.  If a Bidder believes that certain information contained in a question the Bidder intends to submit should be treated as confidential, the Bidder is strongly urged, first, to attempt to exclude all of the information the Bidder believes to be confidential from the question, by redaction or other means the Bidder believes appropriate, and then, to submit the question.  Alternatively, if the Bidder believes that it is necessary or advisable to submit the question without redacting confidential information, then the Bidder should, without providing any confidential information, notify ESI in writing of the purpose of the question and the nature of the confidential information contained therein, such that ESI can make a determination as to whether the Bidder’s question requires the disclosure, either by the Bidder or by ESI, of confidential information, or whether such disclosure is unnecessary or can be avoided for purposes of the RFP process.  If ESI in its sole discretion determines that the disclosure of information confidential to the Bidder is necessary and appropriate in furtherance of its consideration of the Bidder’s proposal, ESI may provide a suitable confidentiality agreement pursuant to which such question may be submitted, although ESI reserves the right to respond in any manner that ESI determines in its sole discretion to be appropriate in the circumstances.  In the event that a question containing information that the Bidder considers to be confidential is to be answered by ESI, ESI will provide an executed copy of a confidentiality agreement pursuant to which the question may be submitted.  ESI will send a copy of the question and answer to the Bidder by certified mail, return receipt requested.  
2.7	Transmission Contacts
The Entergy Operating Companies’ transmission system is managed and operated by the Transmission Organization, which is functionally separate from the wholesale merchant functions of ESI and the Entergy Operating Companies, as required by Orders 888 and 889 issued by the Federal Energy Regulatory Commission (FERC).  Any inquiries about the Entergy Operating Companies’ transmission system should be directed to the Transmission Organization through the OASIS website http://oasis.e-terrasolutions.com/OASIS/EES.  Employees of ESI and the Entergy Operating Companies will not answer questions about their transmission system through the question and answer procedure outlined in Section 1.12,2.6, above.
Unsolicited contact with personnel or employees of ESI or any of the Entergy Operating Companies, other than those employees within the Transmission Organization, concerning the Entergy Operating Companies’ transmission system in connection with the Fall 2002 RFP, without the specific, prior written consent of Ms. Ell, is not allowed and may, depending on the circumstances, constitute grounds for disqualification. 
2.8	Notice Of Intent to Submit Proposal
For each product they intend to propose Bidders mustare encouraged to submit a Notice of Intent to Submit Proposal on the form attached as Appendix B by no later than November 8, 2002.  Bidders may submit proposals for multiple products, but a notice mustshould be submitted for each.  Submitting a Notice of Intent to Submit Proposal does not commit a prospective Bidder to submit a proposal in response to this RFP.  The purpose of this Notice of Intent to Submit Proposal is to provide ESI with an indication of the number of anticipated responses for each product.
2.9	Bidder Requirements
ESI is making every effort to avoid collusion by any parties in this RFP process.  Bidders aremay be required to meet all the terms and conditions and conform with all of the requirements of this RFP to be eligible to compete in the solicitation process.  Bidders may not act through a partnership, joint venture, consortium, or other association or organization, or otherwise act in concert with any other person, with respect to a proposal or the RFP process without first providing written notification to ESI and disclosing the identities of and background information about the other partners, joint venturers, members of the consortium or other association or organization, or persons acting in concert, and any other requested information with respect to the partnership, joint venture, consortium, other association or organization, or group (any of which may be a potential “Group Bidder”).  Potential Bidders are advised that the Proposal Submission Agreement that is required to be submitted with each proposal may prohibit conversations without ESI’s permission about potential group arrangements unless the required notification is provided to ESI.  Bidders comprising a Group Bidder may enter into contribution or indemnity arrangements or agreements among themselves to allocate their respective obligations, but no such agreements or arrangements will affect the rights of ESI or any of the Entergy Operating Companies without the prior express written agreement of ESI or the affected Entergy Operating CompanyCompanies.  All such contribution, indemnity, allocation, sharing and similar arrangements, agreements and understandings must be fully disclosed to ESI.  Any Entergy Operating Company may agree to be affected by such agreements or arrangements only as to itself, and no such agreement shall be effective as to any other Entergy Operating Company or as to ESI.  ESI may require any Group Bidder to provide in its proposal(s) information that is different from or in addition to the information required of an individual Bidder.
The Proposal Submission Agreement prohibits disclosure of the fact of or the terms and conditions of any proposal to any party without ESI’s priorproviding written consentnotice to ESI pursuant to this Section 2.9 of the RFP.  A Bidder’s failure to comply with the Proposal Submission Agreement willmay be a ground for disqualifying the Bidder from further participation in the RFP process.
Except as among members of a Group Bidder who have complied with the foregoing disclosure requirements of this RFP, Bidders may not disclose (other than by attendance alone at the Bidders Conference described above or any similar meeting to which more than one participant is invited by ESI) to any other or potential Bidders their participation in the RFP process, and Bidders may not disclose, collaborate on or discuss with any other Bidder bidding strategies or the substance of proposals, including without limitation the price or any other terms or conditions of any indicative or final proposal.  Such disclosure, collaboration or discussion would violate this RFP and the Proposal Submission Agreement.
Unless and until ESI announces or otherwise notifies a Bidder that the RFP process is terminated, or concluded, or that its proposal has been rejected, each Bidder who submits a proposal will be expected to make available, upon reasonable notice, its duly authorized officers, representatives, and advisers for the purpose of questions, negotiations, and execution and delivery of Definitive Agreements.  Bidders will be expected to use their best efforts to submit a binding proposal; provided, however, that ESI’s remedy for a Bidder’s failure to use such best efforts will be limited to disqualification of the Bidder from the RFP process.  A Bidder who is invited to finalize one or more Definitive Agreements will be expected to use its best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary or appropriate to finalize, execute, and deliver such Definitive Agreements as promptly as possible.
2.10	Proposal Submission
In Appendix C, ESI has provided forms for the submission of the information that ESI will require in order to evaluate proposals.  These forms include detailed proposal submission instructions.  Most of the forms are grouped in individual Product Packages that correspond to the particular products requested by this RFP.  Bidders may submit a proposal for a single product, an additional proposal for each additional product, and an alternate proposal or proposals for a single product.  In addition to the forms contained in the Product Packages, each Bidder who submits a proposal must also complete and submit one Bidder Evaluation Form and must complete, sign and submit one Proposal Submission Agreement, each in the forms contained in Appendix C.  The Bidder should complete the applicable Product Package for each product that the Bidder intends to offer in response to this RFP.  The forms included in the Product Package should be used, and a complete set of forms should be submitted for each proposal and alternative proposal.  For each product, the Bidder must identify on the appropriate form the type of product the proposal is offering.  Use of the forms is intended to facilitate consistency in proposal submission and accuracy in proposal interpretation by ESI.  Therefore, Bidders are required to use these forms as part of their proposals.  Bidders are also required to complete each form in its entirety.  While some information may seem repetitive, it is critical that all information be provided to permit the appropriate evaluation factor teams to properly assess the proposal in their respective focus areas.
In the event that a Bidder wishes to provide multiple proposals for the same capacity (e.g., a Bidder wants to submit a proposal for a three year Limited Dispatch MUCPA for the entire generating capacity of Unit “A” and also wants to submit a proposal for a Life of Unit sale for the entire generating capacity from the same Unit “A”), the Bidder must clarify in the “Special Consideration” section of the Proposal Package of both proposals that the proposals are mutually exclusive and that it is possible for only one of the proposals to be selected by ESI.  ESI will evaluate both proposals separately and in the event that both proposals are selected for the final portfolio, ESI will select the proposal that, in its sole determination, results in the lowest evaluated total production cost consistent with its planning objectives and constraints and provides the greatest benefits to its customers.
Additional information concerning the capacity and, energy productsand Other Associated Electric Products for which ESI is requesting proposals is provided in the Term Sheets A-K as, which are included in the Product Packages in Appendix C.  
All proposals must be submitted in accordance with the detailed instructions and on the applicable forms provided in Appendix C and must be signed by an officer of the Bidder duly authorized to act on behalf of the Bidder by the Bidder’s board of directors (or similar governing body for an unincorporated Bidder).
Final and binding Short-Term Proposals and indicative Long-Term Proposals will be accepted until 5:00 p.m. CST on November 15, 2002.  Final and binding Long-Term Proposals will be accepted until 5:00 p.m. CST on January 15, 2003.2003 (unless otherwise specified by ESI).  All proposals should be sent to:
Lexecon, Inc.
c/o Entergy Services, Inc.	
10055 Grogans Mill Road	
Suite 300, Mail Unit 3G	
The Woodlands, TX  77380

(phone for overnight mail purposes – 
  (281) 297-3565)	

In order to facilitate an objective and impartial evaluation process for all proposals, ESI is using an independent third party, Lexecon, to monitor the process of opening all proposals, redacting certain information which details the identity of the Bidder, and segregating the information in each proposal (as detailed below) so that it may be reviewed as part of the evaluation process set forth in Appendix G.  
All paper copies of the proposal, with original signatures must be hand delivered or transmitted by express, certified, or registered mail.  ESI will review all proposals that are submitted by the applicable deadline specified above.  Proposals that are received from non-affiliates later than the due date and time may or may not be evaluated as determined by ESI in its sole discretion.  Proposals from Entergy Affiliates in response to this RFP will not be accepted after the date and time specified for submitting such proposals under any circumstances.  
Three (3) bound paper copies of the proposal, with original signatures, as well as one electronic version (on diskette or CD-ROM) must be submitted (whether or not a facsimile or electronic copy was submitted by facsimile or e-mail) with all text portions of the proposal in Microsoft Word or Adobe Acrobat, and any spreadsheets included in the proposal in Microsoft Excel.  
The proposal must be submitted in a sealed package with the following information shown on the exterior of the package:
Entergy Services, Inc.
Fall 2002 RFP
for
Supply-Side Resources
__________________________
(Name(s) of Bidder(s))
	
	Mark the correct statement with
an “X” in only one box below	
For Entergy Affiliates:
The proposal contained in this package is being submitted by an Entergy Affiliate	

	
For Non-Affiliates:
The proposal contained in this package is NOT being submitted by an Entergy Affiliate	

	
Each Bidder’s proposal will be considered to be confidential, and will be treated by ESI as “Confidential” in accordance with the procedures described below.  
A principal objective of ESI in designing the procedures its employees and agents will be required to follow in conducting the RFP process, in particular the Proposal Receipt and Screening and Evaluation phases of the RFP process, is to preserve, to the maximum extent practicable, the confidentiality of any confidential information contained in Bidders’ proposals, including, but not limited to, preventing the disclosure to any other Bidder (or other party outside of ESI) the identity of other Bidders or the price or other terms or conditions of another Bidder’s proposal.  These procedures include:  (a) the opening of sealed proposals by Lexecon, rather than by ESI, (b) requiring Lexecon to redact certain information contained in a proposal regarding the Bidder’s identity and identifying each proposal with a numbering or lettering system before proposals are evaluated by ESI evaluation team members, in an effort to maintain Bidder anonymity, (c) segregating the information contained in each proposal, and providing access by ESI employees to particular discrete information elements contained in the proposal only on a “need to know” basis, so that individual evaluation team members see only those elements which they are responsible for evaluating, and (d) limiting access to the entirety of the information contained in any proposal to only specified members of ESI’s evaluation team.  These procedures are summarized in Section 3 below and described in further detail in Appendices F and G.
These procedures are intended to provide reasonable assurance to Bidders that information contained in their proposals will be disclosed only to the members of ESI’s evaluation team, and select agents and consultants, and then to individual evaluation team members only to the extent necessary for the sole purpose of proposal evaluation, except as noted in the next paragraph with respect to regulatory proceedings.  All members of ESI’s evaluation team and all such agents and consultants will be contractually and/or professionally bound to protect the confidentiality of confidential Bidder information.  ESI and the Entergy Operating Companies, however, disclaim any liability to a Bidder for damages of any kind resulting from disclosure of any Bidder information. 
All information contained in a proposal may be subject to review by one or more of the regulatory commissions having jurisdiction over ESI and/or any of the Entergy Operating Companies, and may be subject to review by their staffs in connection with regulatory proceedings, or may be subject to review by any other governmental authority or judicial body with jurisdiction relating to these matters, and may be subject to legal discovery.  By submitting a proposal, the Bidder agrees to allow ESI to use the results of the RFP as information, testimony or evidence in any proceeding before any such regulatory commissions, or in any proceeding before any other governmental authority or judicial body with jurisdiction relating to these matters; provided, however, that in the event such information is to be so disclosed, ESI will use its best reasonable efforts to attempt to obtain from such authority approval of a confidentiality agreement or protective order or other mechanism to protect the confidentiality of such information and to limit its dissemination.  ESI makes no assurance of the outcome of any such attempt.  
Proposals submitted in response to this RFP will not be returned to Bidders.  At the conclusion of the proposal evaluation process, all proposals will be either destroyed or archived by ESI, subject to the provisions contained in this Section providing for the treatment of such proposals as confidential and subject to any applicable codes of conduct.  
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3.	PROPOSAL REVIEW AND EVALUATION PROCESS
ESI intends to utilize a multi-step evaluation process (graphically depicted on the following two pagesexplained in detail in Appendix G), conducted in a carefully controlled manner, to review proposals and to select the lowest reasonable cost portfolio of resources.  Lexecon will oversee the evaluation process to help ensure its technical merit, objectivity and impartiality. 

The evaluation process will be finalized prior to the issuance of the final RFPend of business on November 8, 2002 with the appropriate changes incorporated at ESI’s sole discretion based on feedback provided by market participants, regulatory commissions and other interested parties.  Certain information and procedures related to the details of the proposal evaluation method will be commercially sensitive and not made publicly available.
ESI reserves the right to have Lexecon contact all Bidders for purposes of clarifying proposal terms or requesting additional information.  In the event that ESILexecon believes that it would be appropriate for ESI  to contact a Bidder to obtain further clarification, the matter will be raised with Lexecon and, if approved, the question will be submitted to Julie Ell (contact information specified in Section 2.6), who will transmit the question in writing to the Bidder.  The Bidder will then submit its written response to Ms. Ell, who will transmit the response to the representatives of ESI and Lexecon who requested such information.  Where such exchanges of information include confidential information, such exchanges will be conducted in accordance with the procedures described in Section 2.6. 

The principal steps in the evaluation process and the allocation of responsibilities for those steps between ESI personnel and consultants is illustrated in the flow chart that appears above.  The evaluation process that will be employed by ESI is summarized in a narrative description below, outlined in the attached Table G-1 and explained in detail in Appendix G.
3.1	Threshold Requirements
Upon receipt of the proposals, ESI representatives, under the oversight of a Lexecon representative, will thoroughly review and assess each proposal to ensure that it meets (i.e., conforms with) the following threshold requirements:
1) 	 All proposal forms are completed in their entirety and separate proposal forms are submitted for each product offered.
2)	The Bidder must meet the minimum threshold requirements specified in Appendix G for credit and risk exposure based upon financial data required to be providedthe RFP.
3)	All information requested is provided by Bidder. 
ESI reserves the right to either (1) reject incomplete or unclear proposals from further consideration or (2) contact Bidders for purposes of clarifying proposal terms or requesting additional information.
Each proposal will be thoroughly reviewed and all information regarding the name, address, telephone number and other pertinent contract information will be redacted from the proposal evaluation packets by Lexecon.  While no process can ensure that the identity of a Bidder remains completely anonymous due to critical information required (such as the name and location of a specific resource and the financial characteristics of particular Bidders), the intention is to provide a reasonable level of assurance of anonymity in order to maintain a fair and consistent evaluation process.

3.2	Segregation of Proposals
After the completion of the initial screening, ESI, and Lexecon will segregate proposals in two ways.  Proposals will be segregated into the following product categories based on the Bidder’s designation of the product category for which the resource is offered, as provided by the Bidder in its proposal:  
-	Annual Plan Capacity Products - (Term Sheet A)
-	Call Option
-	“5x16” Block Energy
-	Multiple-Year Unit Capacity Call Option (MUCCO) - (Term Sheet B)
-	MUCCO – CCGT or Cogeneration
-	MUCCO – CT/Quick Response
-	Multiple-Year Unit Capacity Purchase Agreement (MUCPA) – CCGT or Cogeneration  - (Term Sheet C)
-	Dispatchable
-	Limited Dispatch
-	Multiple-Year Unit Capacity Purchase Agreement (MUCPA) – CT/Quick Response Capacity - (Term Sheet D)
-	Stable Fuel Price Life of Unit (“LOU”) Capacity Purchase – Solid Fuel  - (Term Sheet E)
-	Ownership Acquisition of “Stable Fuel Price” Baseload Solid Fuel Capacity - (Term Sheet F)
-	“Stable Fuel Price” Life of Unit (“LOU”) Baseload Capacity – CCGT or Cogeneration with Long-Term Gas Contract - (Term Sheet G) 
-	Ownership Acquisition of “Stable Fuel Price” Baseload Capacity – CCGT or Cogeneration with Long-Term Gas Contract - (Term Sheet H)
-	Ownership Acquisition of Dispatchable, Load-Following CCGT or Cogeneration - (Term Sheet I)
-	Ownership Acquisition of Dispatchable Load Following CT/Quick Response Capacity -(Term Sheet J)
-	Indicative Renewable Capacity Proposal (Term Sheet K)
The purpose of this process is to categorize proposals for similar products in order to help facilitate a consistent and fair evaluation of proposals, including a comparison of comparable products, and to allow ESI to identify the best proposals for each product.  
Secondly, non-conforming proposals, at ESI’s sole discretion, may or may not be considered for further evaluation.  Each proposal package will also be segregated by ESI representatives and Lexecon into predetermined categories for distribution to Factor Evaluators who will provide specific review and evaluation as detailed below.
3.3	Proposal Evaluation

Using a pre-defined evaluation process, the Proposal Evaluation Team will evaluate proposals and develop “Portfolio Alternatives” (combinations of selected proposals) that are consistent with the Resource Planning Objectives established for the Fall 2002 Supply Procurement Plan.  Each Portfolio Alternative will be developed using the proposal evaluation criteria and methodology established prior to receipt of the proposals.

The primary consideration in the evaluation of individual resource proposals will be an objective evaluation of the economic impacts of a proposal on Entergy systemSystem total production costs (“Economic Evaluation”).  The economic impact of each proposal will be determined using production costing models that reflect the price and operational characteristics of each proposal supply resource alternative, as provided in the proposal materials. The total production cost impact of the proposal will reflect the sum of the fuel and variable cost impact and the incremental fixed costs (including transmission) associated with the proposal.  The analysis will rely on data and assumptions regarding the Entergy' System’s existing resources as used in Entergy'ESI’s long-term resource planning models.

3.3.1	Individual Product Proposal Evaluation

In a process independent of (and to the extent possible preceding) the Economic Evaluation, individuals designated as “Factor Evaluators” will conduct a “Factor Evaluation” process in which key proposal factors such as those specified below are evaluated.  These Factor Evaluations will consider factors that cannot be easily included in the Economic Evaluation, but are deemed to be important characteristics of the product evaluation.  They are as follows:  

•	Credit Issues – Compliance with the corporate risk management processes and limits for exposure to counterparties in transactions.  ESI will determine its credit exposure with respect to a proposal from each prospective Bidder considering the financial risks in the event of supplier bankruptcy or failure to perform under supply contracts.
•	Gas Supply Issues – Issues such as fuel supply flexibility (e.g., number and availability of capacity in pipelines serving facility) and fuel supply flexibility for daily load following.  ESI prefers proposals that have well developed fuel supply and transportation arrangements with minimal operational and delivery risk and the ability to provide fuel flexibility for rapidly changing generation levels.
.
§	Unit Commitment and Dispatching Issues – Issues such as ramp rate for units for load following, start-up times and the availability of AGC for generation control.  ESI prefers proposals which provide maximum flexibility and offer no or very low minimum run time or energy requirements, offer a high ramp rate, provide for short start-up times and allow a high number of starts included in the fixed annual capacity payment associated with the proposal for purchased power
•	Transmission Issues – Issues such as resource location relative to previously-identified transmission constraints, potential limitations on economic dispatch, ability to deliver power into multiple regions, exposure to single contingency event risks, any estimated transmission costs (or avoided transmission costs associated with qualifying the resource for firm network service), etc.  The Factor Evaluation for transmission issues will be conducted independently of the Transmission Organization.  ESI requires all generating resources obtained through this RFP process area to qualify as firm network resourcesFirm Network Resources.

•	Operational Issues –  Issues such as ramp rate for units for load following, start-up times and the availability of AGC for generation control.  ESI prefers proposals which provide maximum flexibility and offer no or very low minimum run time or energy requirements, offer a high ramp rate, provide for short start-up times and allow a high number of starts included in the fixed annual capacity payment associated with the proposal for purchased power.   Issues such as environmental compliance, unit operating and maintenance history, maintenance scheduling requirements, staffing and labor issues, and bidder experience in developing and/or operating projects that are of a comparable size and technology to the resource being proposed.  ESI prefers resources which are in compliance with all regulatory and environmental requirements, have minimal and flexible maintenance requirements, and a successful operating history.  ESI also prefers Bidders that have a history of successfully developing and operating similar projects and prefers resource options with no or very low costs needed to qualify for firm network serviceas Firm Network Resources.

•	Proposal Size – ESI prefers proposals which provide maximum flexibility and encourages Bidders to provide proposals for capacity quantities specified in increments of 50 MW, up to a total of 200 MW, for Annual Plan Capacity Products, and to provide proposals for capacity quantities specified in the amounts of 50 MW, 100 MW, and 200 MW for the MUCCO Products and MUCPA Products.  This preference for the specified quantities of 50 MW, 150 MW, and 200 MW is due to ESI's desire to have a diversified resource portfolio consisting of numerous MUCPA/MUCCO resources across the various geographic planning regions, and helps ensure consistency from an evaluation standpoint.  ESI also may consider proposals for different capacity quantities (as specified by the Bidder) for MUCCO and MUCPA products, or for offers of Life of Unit Capacity.  Proposals for each quantity specified will be handled as separate proposals from an evaluation standpoint.

The Factor Evaluators will assess each proposal using pre-defined procedures, criteria, and scoring systems.  The primary uses of Factor Evaluations will be: 1) to identify attributes of the proposal that may be utilized in the proposal evaluation (e.g., planning region in which the resource is located); 2) to help rank proposals with identical or very similar economic impacts; 3) to identify risks or issues that should be analyzed in sensitivity cases associated with Portfolio Alternatives; and 4) to fully characterize Portfolio Alternatives and the component proposals that are presented to the Operating Committee.

3.3.2	Resource Portfolio Evaluations and Comprehensive Cost and Operational Analysis

Following the economic and factor evaluations, a “Portfolio evaluationSupply Mix Optimization model” will be used to select a portfolio of proposals from all product categories that result in the lowest evaluated total production cost consistent with constraints developed from the Resource Supply Objectives and the targeted product mix requirements for each Portfolio Alternative case.  The Resource Supply Objectives, constraints, and preliminary targeted product mix are described in Appendices D and E.  The Portfolio evaluationSupply Mix Optimization model utilizes an integer programming model (a type of linear programming optimization model appropriate for evaluating discrete proposal packages).  This model uses each proposal’s total production costs impacts as determined in the Economic Evaluation along with constraints based upon the Supply Resource Objectives and the targeted product mix to determine the lowest cost combination of proposals satisfying the constraints.  This model will also be used to evaluate sensitivity cases associated with each Portfolio Alternative considering the impacts of various constraints.  The Supply Mix Optimization model does not change the evaluated economic impact of proposals on the Entergy system’s total production cost, but rather relies on the economic impacts determined in preceding steps. Using the approach with different sets of proposals and planning assumptions regarding such constraints will produce a number of portfolio alternatives.  These alternatives will undergo further evaluation considering a number of planning criteria.

The Proposal Evaluation Team will select a set of the Evaluated Portfolio Alternatives for possible presentation to the Operating Committee for its review and decision (“Supply Plan Alternatives”).  Supply Plan Alternative cases will then be further evaluated to assess the impacts of the entire portfolio of proposals upon total system production costs, transmission issues, and the financial impact upon each of the Operating Companies.  The results of these evaluations will be summarized and included in the documentation for each Supply Plan Alternative.  

The Supply Plan Alternatives, along with associated analyses, sensitivities and recommendations, will be presented first to the Supply Procurement Executive Committee and then to the Operating Committee for its review and decision.

3.4	Notification of Evaluation Results and Negotiations
ESI intends to select a mix of different proposals for each product type for further consideration.  ESI will contact each Bidder to notify it of the status of its proposal and whether additional discussions or negotiations are warranted.    
	DiscussionsESI anticipates that discussions and negotiations for the Annual Plan Capacity Products, MUCCO Products and MUCPA Products (“Short-Term Proposals”) will begin once the evaluation process has been completed.  A short list will be developed for Life of Unit (LOU) products or acquisitions (“Long-Term Proposals”).  ESI will contact each short-listed LOU Bidder to clarify any outstanding issues, update pricing information, provide specific terms and conditions to be required in a definitive agreementdraft Model Contract, and give Bidders the opportunity to submit “best and final offers.”  Major changes to price, terms and conditions from original offers that are adverse to ESI will not be permitted.  A final list then will be developed and negotiations with those Bidders will commence.  Awards for Short-Term Proposals will not be affected by subsequent changes in resource procurement assumptions that are a result of negotiations with Bidders for Long-Term proposals.  Lexecon will monitor all negotiations relating to Short-Term and Long-Term Proposals and in the event that a proposal from an Entergy Affiliate is selected, will participate in the negotiations between ESI and the Entergy Affiliates to ensure that the process is fair and objective.  
  
Placement in the final list of Bidders does not indicate acceptance by ESI of any proposed contract terms.  ESI shall not be bound to any obligations unless and until a Definitive Agreement is executed between the parties.
4.	REGULATORY APPROVALS
Certain of the capacity and/or energy resources selected as a result of this RFP process may require certification or other approval from the retail regulators of one or more of the Entergy Operating Companies, or may require authorization from the FERC under applicable law or regulations.  The Product Term Sheets included in Appendix C present a more complete discussion of the regulatory approvals that may be required for each product.  The Definitive Agreement(s) with the winning Bidder(s) may be conditioned on, or provide a termination right with respect to the failure to obtain, any such regulatory approvals.  Bidders will be responsible for all other necessary permits, licenses and approvals associated with their proposals.  Under current rules, all Entergy Affiliate resources selected will require approval by the FERC.
5.	RESERVATION OF RIGHTS
A Bidder’s proposal will be deemed accepted only when a Definitive Agreement has been executed and delivered by ESI (on behalf of one or more of the Entergy Operating Companies) and the chosen Bidder.  ESI has no obligation to accept any proposal, whether or not the stated price in such proposal is the lowest price offered in the RFP process, and may reject any proposal, in its sole discretion, for any reason without any obligation to disclose the reason(s) for rejection.
By participating in the RFP process, each Bidder agrees that (a) except to the extent of any representations and warranties contained in a Definitive Agreement, any and all information furnished by or on behalf of ESI or any of the Entergy Operating Companies in connection with this RFP is being or will be provided without any representation or warranty, express or implied, as to the accuracy or completeness of such information, and (b) except as otherwise provided in a Definitive Agreement, neither ESI nor any of its representatives shall have any liability to any Bidder or its representatives relating to or arising from the use of or reliance upon any such information or any errors or omissions therein.
This RFP does not commit ESI to pay any costs incurred by the Bidder in the preparation of a proposal in response to this RFP, or to procure or contract for any products or services.  ESI reserves the right to modify or withdraw this RFP, to negotiate with all qualified Bidders to resolve technical or contractual specifications or to reject any or all responses and to terminate negotiations at any time.  ESI, the Entergy Operating Companies and their advisors may, and expressly reserve the right to, and at any time and from time to time, without prior notice and without assigning any reason therefore:
•	cancel, modify or withdraw this RFP, reject any and all responses, and terminate negotiations at any time during the RFP process;
•	discuss with a Bidder and its advisors the terms of any proposal submitted by the Bidder and obtain clarification from the Bidder and its advisors concerning the proposal;
•	consider all proposals to be the property of ESI, subject to the provisions of this RFP relating to confidentiality, and any confidentiality agreement that may be executed in connection with the RFP process, and destroy or archive any information or materials provided in the proposal submission; 
•	request from a Bidder information that is not explicitly detailed in this RFP but which is necessary for evaluation of the proposal;
•	determine which proposals to accept, favor, pursue or reject;
•	accept any proposals submitted outside the formal RFP timeframe from parties who are not Entergy Affiliates (For purposes of this RFP, ESI will not consider any proposals from Entergy Affiliates received subsequent to the date for submitting such proposals);
•	reject any proposals that are not complete or contain irregularities, or waive irregularities in any proposal that is submitted;
•	accept proposals that do not necessarily provide the lowest evaluated cost, based on the criteria and portfolio analysis described in RFP and Appendix G.;
•	determine which Bidders to allow to participate in the RFP process, including disqualifying a Bidder due to a change in the qualifications of the Bidder or in the event that ESI determines or believes that the Bidder has failed to conform with the requirements of this RFP;
•	invite further submissions of proposals from already participating or newly participating Bidders; 
•	negotiate siting of projects to achieve workable configurations of generation and transmission capacity;
•	conduct negotiations with any or all Bidders or other persons; or
•	sign one or more Definitive Agreements with any Bidder who submits a proposal or with any other person or with no one.
If at any time ESI determines that there is a defect in the RFP process or a deviation from the requirements of this RFP, or that collusive or fraudulent bidding has occurred or appears to have occurred, ESI may suspend the RFP process in whole or in part as to any Bidder or Bidders.
Under all circumstances, each Bidder is responsible for all costs and expenses it incurs in connection with the RFP process.  Under no circumstances, including ESI’s termination of the RFP process at any time, will ESI or any of the Entergy Operating Companies be responsible for any costs or expenses of any Bidder incurred in connection with the RFP process. 
TABLE G-1
Overview of Proposal Evaluation Process
	STEP 1:
Threshold Review
Each Proposal	STEP 2:
Economic and Factor Evaluation
All Proposals Within Product	STEP 3:
Selection of Supply Portfolio Options
All Proposals, All Products	STEP 4:
Comprehensive Cost & Operational Analysis
Selected Portfolios	
Overview	Prior to evaluating proposals, each is reviewed for compliance with informational and substantive thresholds.	After Proposals are segregated by product and specific evaluation factors, are scored and ranked by product in consideration of economic impacts, operational characteristics, and other key evaluation Factors.	Several potential supply portfolios are identified through a constrained optimization analysis.	A comprehensive cost and operational assessment is completed for the selected supply portfolio options from Step 3.	
Factors	·	Varies by Product
·	Filing information per proposal specification forms
·	Credit and Risk exposure based upon financial data
·	Minimum information required for Economic Evaluation (price terms, heat rate performance curve, minimum run levels, seasonal ratings, etc.)	·	Economic impact (PROSYM modeling) of proposal's cost and operational performance issues on system total production costs (the primary evaluation factor)

·	 Factor Evaluation (Assign distinguishing attributes and relative scoring of proposals)
- Supplier Credit issues
- Fuel supply issues
-Transmission issues 
- Operational issues
 	·	Results of Economic and Factor evaluations
·	Supply planning objectives and constraints (e.g., location of resources; overall size of resource additions; credit impacts for the portfolio as a whole; fuel supply risks for the portfolio as a whole; revenue requirement impacts)
·	Sensitivity analysis of the impacts on results associated with different planning assumptions	·	Portfolio impact on Entergy system and OPCO Total Production Costs
·	Impact on Overall Planning Objectives
·	Impact upon customer rates and production cost risks	
Evaluation Mechanism	Proposals are reviewed for completeness by ESI and 
Lexecon representatives.	In the economic evaluation, a total production cost impact is calculated for each proposal based on price and operational information provided in the proposal.  

Separately, proposals are individually scored for each key evaluation Factor using a pre-established scoring mechanism.  Economic and Factor evaluations are used to identify a ranking of projects within each product category. 	The “Portfolio evaluation model” combines the economic and factor evaluations (from Step 2) with the Company’s supply planning constraints and objectives to identify several “portfolios,” consisting of the lowest cost combinations of proposals that satisfy the identified constraints and do so across a robust range of planning assumptions.	Portfolios cost impacts are assessed under a transmission-constrained system dispatch analysis (using the PROMOD production costing model).  Local transmission impacts are assessed using an AC transmission model. OPCO rate and financial impacts are evaluated.	
Result	Bidders will be notified of non-conforming proposals, and will have three (3) business days to remedy non-price related deficiencies, or be eliminated from further consideration	Within each Product category, the economic and factor evaluations will lead to rankings of all proposals proposed for that Product.	Step 3 identifies a number of portfolio alternatives for the comprehensive evaluation of cost and operational impacts consistent with resource planning principles and objectives.	Identification of resources to be proposed to Operating Committee as strong candidates for procurement in the current RFP cycle.