46334 R egulat ory Formal Report 337/08 R evie w of P ow er Pur chas e A Regulatory Review gr eement of Power Purchase s: A Pr opo Agreements: A sed B enchmarking Proposed Benchmarking Me Methodology thodology October 2008 Formal R epor t 337/08 Energy Sector Management Assistance Program Energy Sector Management Assistance Program (ESMAP) Purpose The Energy Sector Management Assistance Program is a global knowledge and technical assistance partnership administered by the World Bank and sponsored by bilateral official donors since 1983. ESMAP's mission is to assist clients from low-income, emerging, and transition economies to secure energy requirements for equitable economic growth and poverty reduction in an environmentally sustainable way. ESMAP follows a three-pronged approach to achieve its mission: think tank/horizon-scanning, opera- tional leveraging, and knowledge clearinghouse (knowledge generation and dissemination, training and learning events, workshops and seminars, conferences and roundtables, website, newsletter, and publications) functions. ESMAP activities are executed by its clients and/or by World Bank staff. ESMAP's work focuses on three global thematic energy challenges: · Expanding energy access for poverty reduction; · Enhancing energy efficiency for energy secure economic growth, and · Deploying renewable energy systems for a low carbon global economy. Governance and Operations ESMAP is governed and funded by a Consultative Group composed of representatives of Australia, Austria, Denmark, France, Germany, Iceland, the Netherlands, Norway, Sweden, the United Kingdom, the U.N. Foundation, and the World Bank. The ESMAP CG is chaired by a World Bank Vice President and advised by a Technical Advisory Group (TAG) of independent energy experts that reviews the Program's strategic agenda, work plan, and achievements. ESMAP relies on a cadre of engineers, energy planners, and economists from the World Bank, and from the energy and development com- munity at large, to conduct its activities. Further Information For further information or copies of project reports, please visit www.esmap.org. ESMAP can also be reached by email at esmap@worldbank.org or by mail at: ESMAP c/o Energy, Transport and Water Department The World Bank Group 1818 H Street, NW Washington, D.C. 20433, U.S.A. Tel.: 202-473-4594; Fax: 202-522-3018 Formal Report 337/08 Regulatory Review of Power Purchase Agreements: A ProposedBenchmarking Methodology John Besant Jones Bernard Tenenbaum Prasad Tallapragada Energy Sector Management Assistance Program 5311-FM.pdf i 5311-FM.pdf 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM Copyright © 2008 The International Bank for Reconstruction and Development/THE WORLD BANK GROUP 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Produced in the United States of America First Printing October 2008 ESMAP Reports are published to communicate the results of ESMAP's work to the development community with the least possible delay. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this report are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its board of executive directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the ESMAP manager at the address shown in the copyright notice. ESMAP encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. 5311-FM.pdf iiii 5311-FM.pdf 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM Contents Acknowledgments v Abbreviations and Acronyms vii 1. Introduction 1 Other Possible Regulatory Approaches for Power Purchases 3 Suggestions for a Possible Way Forward 5 2. Purpose of Regulatory Review of PPAs 7 Basic Purpose of Regulatory Review of PPAs 7 Importance of Regulatory Review of PPAs 8 3. The Proposed Process for Review of PPAs in Nigeria 9 Legal Authority 9 The Proposed Regulatory Review Process 10 NERC Will Review a PPA, Rather than Approve It 10 NERC Is Proposing a Two-stage Regulatory Process for the Review of Generation Licenses and Associated PPAs 10 The Seller Files the Application for a PPAReview, Accompanied by a Declaration by the Purchaser 11 The Seller and Purchaser Must Use "Plain English" for Their Answers 11 NERC Will Select an Independent Party to Analyze the Seller's Answers, and the Seller and Purchaser Will Pay for This Service 12 NERC Proposes to Make Public the PPA, the Seller's Answers to the Questionnaires and Tables, and NERC's Comments on the PPA 12 NERC Does Not Intend to Review All PPAs 12 Possible Further Development of the Regulatory Process 13 NERC Will Examine the Scope for a More Limited Regulatory Review 13 NERC Will Develop a Database of PPA Terms and Conditions for Benchmarking Future PPAs 13 4. The Proposed Methodology for the Review of PPAs in Nigeria 15 Methodological Issues 15 Approach to Assessment of PPAs 15 Assessment of the Completeness of an Applicant's PPA 17 5. Average Purchase Price Analysis 19 Structure of Power Purchase Price 19 Purchaser's Price versus Seller's Cost 20 Benchmarking the Average Purchase Price of Power 21 Affordability of the PPA for the Purchaser 21 6. Risk Assessment 23 Analysis of Risk Factors 24 Assessment of Risk Exposure 25 iii 5311-FM.pdf iii 5311-FM.pdf iii 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM 7. The Price-Risk Trade-off Approach to Assessing PPAs 27 Annex 1 Questionnaire for Computing the Average Purchase Price of Power Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 29 Annex 2 Summary of Key Factors Affecting a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 35 Annex 3 Purchaser's Declaration About Affordability of Its Payment Obligations Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 37 Annex 4 Questionnaire on Risk Allocation Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 39 Annex 5 Table for Risk Assessment of a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 51 Annex 6 Illustrative Risk Assessment of a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 57 Annex 7 Purchaser's Declaration About Seller's Responses to Questionnaires and Tables Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 63 List of Formal Reports 65 Boxes Box 5.1 General Formula for Calculating the Average Purchase Price Under a PPA 20 Figures Figure 4.1 Overview of NERC's Proposed Approach for Reviewing PPAs 16 Figure 4.2 Links between the Review Approach and the Questionnaires and Tables 17 Figure 7.1 Price-Risk Trade-off Chart for PPAs 27 Tables Table 1.1 Benchmarks Adopted by the Andhra Pradesh Electricity Regulator 3 Table 1.2 Possible Approaches to Regulatory Review of Power Purchase Costs 4 Table 4.1a Typical Main Clauses/Articles in a PPA for a New Fossil-Fueled Power Plant 18 Table 4.1b Typical Main Schedules Annexed to a PPA for a New Fossil-Fueled Power Plant 18 Table 6.1 Methodology for Risk Assessment 26 iv 5311-FM.pdf iv 5311-FM.pdf iv 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM Acknowledgments This paper is an outgrowth of a notice of proposed rulemaking that was issued by the Nigerian Electricity Regulatory Commission (NERC) in December of 2006. That document is now in the public domain and can be downloaded at www.nercng.org. NERC has always viewed this project as simply the first step of ongoing dialogue with regulated entities and their customer on how to acquire future sources of power supply that are efficient and fair to both sellers and buyers. The authors gratefully acknowledge the financial and technical support of the Energy Sector Management Assistance Program (ESMAP). The World Bank's assistance to NERC was made feasible by the active and ongoing support of its chairman, Dr. Ransome Owan, and the project's lead commissioner,Abimbola Odubiyi. Their sustained assistance and encouragement was essential for bringing the project to fruition. The collaboration between NERC and the Bank staff was intense. It was manifested in many hours of video and audio conferences and face-to-face meetings in both Abuja and Washington. The authors are grateful to Chairman Owan and the NERC commissioners and staff for the opportunity to assist them and for their comments and suggestions. We are especially grateful to Commissioner Odubiyi. He brought vision, persistence and intellectual integrity to the project. We believe that NERC's efforts are pioneering and could be used by regulators elsewhere in Africa and other regions of the world. The authors extend their appreciation to the following peer reviewers: Beatriz Arizu de Jablonski, Tonci Bakovic, Pankaj Gupta, and Scot Sinclair. Special thanks to Marjorie K. Araya (ESMAP) for coordinating the editing, production and dissemination of the final report. v 5311-FM.pdf v 5311-FM.pdf 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM 5311-FM.pdf vi 5311-FM.pdf vi 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM Abbreviations and Acronyms AFTEG Africa Region of the World Bank CP Capacity Purchase Charge CPCALC Capacity Purchase Charge Component of the Average Purchase Price CPGEN General Administration Costs for the Facility CPLEV Levelized Average Capacity Purchase Charge CPINSUR Cost of All Forms of Insurance for the Facility CPINV Maximum Declared Capacity/Month CPOF Fixed Operation and Maintenance Cost for the Facility CPOTHER Other Capacity Related Costs Di Annual Interest Rate Percent Per Year Dp Total Investment of Long-Term Debt E Energy Purchase Charge EAV Energy Charge Payable ECALC Estimated Average Energy Purchase EENERGY Amount of Energy Expected to be Sent Out from the Facility EF Fuel EOV Operation and Maintenance--Variable Portion Ep Percentage of the Total Investment EPSR Act Electricity Power Sector Reform Act of 2005 ESMAP Energy Sector Management Assistance Program Fcal Average Calorific Value of Fuel Fconv Average Energy Conversion Efficiency Fcost Unit Cost of the Fuel i Weighted Average Cost of Capital I/CNOMINAL Nominal Capacity IPPs Independent Power Producers MYT Multiyear Tariff NERC Nigeria Electricity Regulatory Commission NOPR Notice of Proposed Rulemaking Paux Proportion of Energy Produced by the Generating Plant PAV Average Purchase Price Pmin Purchaser's Minimum Monthly Payment PLF Plant Load Factor PPAs Power Purchase Agreements PRG Partial Risk Guarantee S Supplemental Charges SAV Average Supplemental Charge Payable by the Purchaser SSA Sub-Saharan Africa vii 5311-FM.pdf vii 5311-FM.pdf vii 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM 5311-FM.pdf viii 5311-FM.pdf viii 10/9/08 8:55:43 AM 10/9/08 8:55:43 AM 1 Introduction Power purchase agreements (PPAs) are central Competitive procurement of bulk power can to the health of power sectors, particularly help to address this situation. But competitive in countries that have opted for single-buyer procurements are still the exception rather than market structure. The capital costs of electricity- the rule in Sub-SaharanAfrica.2 Full competitive generating plants often constitute a large share bidding is generally feasible only when bidders of the final cost of power delivered to retail are bidding on a relatively standardized and customers. In addition, in the case of thermal well-specified commodity and the potential generation fueled by imported oil, input fuel bidders are bidding on a single attribute (i.e., costs have experienced major escalations price) or several attributes that can be scored on because of large increases in world oil prices. If a relatively objective basis. Since the conditions the risk allocation and sale price in the PPA are for this type of bidding do not exist in most one sided, the bulk supply price of power that African countries, the best that may be possible results from the PPA may turn out to be very in the near future is some hybrid form of bidding high and economically unsustainable. that combines elements of competition and There are around 700 electicity-generation negotiation. plants in developing countries that have An additional complication in Africa is been financed, constructed, and operated by that the buyer, usually a state-owned power independent power producers (IPPs), of which enterprise, is rarely commercially viable. As around 28 are in Sub-Saharan Africa (SSA). a consequence, most IPPs are not willing to Almost all the PPAs for these plants have take- sign PPAs unless the PPA is also accompanied or-pay features, and the price of power ranges by a government support package (such as between 4 cents per kWh to around 40 cents sovereign guarantees, tax holidays, escrow per kWh, depending on the fuel used.1 Most accounts, currency conversion, repatriation of the utilities in Sub-Saharan Africa are not of profits, protection against nationalization, able to meet their financial obligations under and expropriation). Given the large amounts these PPAs. As a consequence, governments of money associated with PPAs, it is perhaps are often forced to meet this shortfall from their not surprising that there have been widespread general revenues. This, in turn, often creates allegations of corruption in purchases from IPPs an unsustainable macroeconomic burden. It in Guatemala, Pakistan, Philippines, Tanzania, is therefore very important for developing and Nigeria. It is not unknown for ministers countries in general and SSA countries in and prime ministers to present a PPA as a particular to develop effective mechanisms to fait accompli to utility managers. There have evaluate PPAs. also been reports of utility managers being 1 See Gratwick and Eberhard, "An Analysis of Independent Power Projects in Africa: Understanding Development and Investment Outcomes," University of Cape Town Graduate School of Business, Novemeber 2006, www.gsb.uc.ac.za/mir. 2Idem. 1 5311-CH01.pdf 1 5311-CH01.pdf 9/25/08 8:30:27 AM 9/25/08 8:30:27 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY "instructed" to sign on the dotted line, with the World Bank (AFTEG), with support from the little or no opportunity to analyze the costs or Energy Sector Management Assistance Program risks for the utility created by the PPAs. Given (ESMAP) of the World Bank, collaborated with these ad hoc and nontransparent procurements, it the Nigeria Electricity Regulatory Commission should not be surprising that there is often wide (NERC) as part of the World Bank's Nigeria variation in the costs of PPAs for similar projects country engagement. Chapter 2 presents across different countries. the rationale for regulatory review of PPAs. In this context, Africa's new regulatory Chapter 3 describes the specific process that institutions can play a critical role. Though the was proposed in Nigeria. The substantive PPAs are essentially bilateral contracts between methodology described in this paper was utilities and IPPs, these bilateral contracts formally proposed by NERC in a December 2006 will have major financial implications for the Notice of Proposed Rulemaking (NOPR). This consumers that pay for the power in their retail methodology is described in Chapters 4 through bills or for taxpayers (who may or may not be 7 and Annexes to these chapters. A NOPR is the electricity consumers) who pay for the shortfalls written equivalent of a public consultation by a through higher taxes. regulator.ThispapersupplementsNERC'sNOPR A recent development in Africa is that in two ways. First, it provides NERC and the the new regulatory statutes in a number of federal government of Nigeria with a reference African countries now require the regulator to document that describes the technical details of review the "prudence" and "reasonableness" the methodology proposed in the NOPR. Second, of such purchases, as well as their effect on the since manyAfrican countries besides Nigeria face purchasing utility's finances and retail tariffs. the challenge of getting balanced PPAs, the paper The interpretations of how this review should is intended to familiarize regulators, utilities, and be done vary from country to country. In some other stakeholders with a methodology that may cases, regulators have chosen to approve or be equally useful in their countries. Although the disapprove PPAs. In other cases (such as in methodology was designed for regulatory review, it Nigeria), they have chosen to "advise" the could also be useful for utility managers that have government, the purchasing utility and the to evaluate competing offers of long-term power IPP on the implications of the PPA with issuing supplies. formal approvals or disapprovals. Under both Benchmarking can be performed on a approaches, the regulatory entity has to unpack parameter-by-parameter basis, as has been the PPA into several elements and examine done in the Indian state of Andhra Pradesh, these elements individually. The regulators or on an overall basis, as is proposed by may view the PPA from several perspectives: NERC in its NOPR. Under the first approach the reasonableness of costs, how the costs the benchmarking is highly disaggregated. It compare with other PPAs operating under requires reviewing numerous specific technical similar environments, and the risk allocation and commercial parameters. In Andhra to the various parties to the transaction. Such Pradesh, the regulator has revised proposed reviews have usually been performed on an ad PPAs by mandating specific values for a hoc basis. This paper proposes a systematic approach number of key parameters such as auxiliary to evaluating price and risk allocation in proposed power consumption, open cycle or combined PPAs. cycle stabilization periods, the station heat rate, Thispaperreportsonaproposedmethodology specific oil consumption and the plant load that would facilitate a regulatory review of PPAs factor (PLF). In addition, the regulator has set for fossil-fuel plants by explicitly benchmarking financial norms for initial capital costs of the them for price and risk allocation. As part of this plants and for operating costs. Typically, such exercise, the energy unit of the Africa Region of reviews require reviews of financing charges, 2 5311-CH01.pdf 2 5311-CH01.pdf 9/25/08 8:30:29 AM 9/25/08 8:30:29 AM Introduction related escalation factors, as well as proposed Table 1.1 summarizes the benchmark values formulas for dealing with future changes in mandated by the Andhra Pradesh regulator. 3 the cost of operating and maintaining the plants. The Andhra Pradesh regulator has Other Possible also attempted to take account of inflation and foreign exchange risk by capping their Regulatory Approaches maximum effect on the PPA tariff. With respect for Power Purchases to financing charges, these were reviewed by taking into account the prevailing interest rates Benchmarking, whether performed on a at the time of financial closure. Additionally, the parameter-by-parameter or overall basis, is not wholesale price index and the consumer price the only tool available to regulators when faced index were used to normalize the benchmarked with the need for reviewing power purchase prices. Two criticisms of the Andhra Pradesh costs. As can be seen in Table 1.2, regulators approach, a regulator reviewing a PPA on a around the world have adopted a variety of parameter-by-parameter approach, are that it approaches in reviewing power purchase costs leads to a high level of second guessing and that would affect the retail tariffs paid by captive micromanaging and that it may fail to capture customers. The observed regulatory approaches tradeoffs because of its focus on individual seem to fall into two general categories: those that parameters. But its proponents argue that a relate to regulating conduct of the buyer, seller, or regulator has no other choice when presented both, and those that relate to regulating outcomes. with a PPA that may have been negotiated by The benchmarking approach proposed by NERC an inexperienced buyer or where there are falls into the latter category. It does not examine allegations of corruption. the process by which the PPAwas brought forth. Table 1.1 Benchmarks Adopted by the Andhra Pradesh Electricity Regulator PPA Component Benchmark Auxiliary power 7­9% consumption Coal plant Stabilization period: 1.5% Gas plant (open cycle) Subsequent period: 1.0% Gas plant (combined cycle) Stabilization period: 3.5% Subsequent period: 3.0% Station heat rate Coal based plants: 2050 to 2350 kcal/KWh Gas plants: 1850 Kcal/KWh Specific gas consumption 2.0 ml/KWh Plant load factor (PLF) 85% Wholesale price index 60% Consumer price index 40% Rate of return 16% (subject to prevailing interest rates) Incentive to investors A cap of 0.5% if 85% PLF was achieved (Deemed generation not eligible) Source: Besant Jones et al. (2007). 3Developing regulatory benchmarks-G.P.. Rao-Andhra Pradesh Electricity Regulatory Commission, India. 3 5311-CH01.pdf 3 5311-CH01.pdf 9/25/08 8:30:29 AM 9/25/08 8:30:29 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Instead, it focuses on the proposed outcome there are a number of separate distribution as manifested in the prices and risk allocation companies under the regulator's jurisdiction and embedded in the PPA.And it proposes a specific there is a relatively active and open wholesale methodology for benchmarking these outcomes power market. Some have argued that such against the terms and conditions in other PPAs comparisons are not necessary if a distribution for fossil fuel IPPs (bottom line in Table 1.2).4 company purchases power in competitive The NERC approach is not the only possible wholesale market. However, the regulatory form of benchmarking. For example, regulators presumption is that even if the wholesale inColombiaandtheNetherlandshaveattempted market is competitive, this, by itself, does not to benchmark the overall prices paid by guarantee that different distribution companies distribution companies that arise from all of will all buy with equal skill. Moreover, the their short-, medium- and long-term purchases. competitive wholesale market structures that Unlike NERC, the Dutch and Colombian exist in Colombia and the Netherlands do not regulators do not look at individual PPAs or currently exist in Nigeria or elsewhere in Sub- individual purchases. Instead, they compare Saharan Africa (SSA). In addition, the norm in the overall average power purchase prices of Sub-SaharanAfrica is one distribution company the different distribution companies under their in the country, or a distribution company that jurisdiction. These prices are the end result of a has no control over its power purchases because mix of short-, medium- and long-term purchases. all of its power supplies are acquired from an This type of benchmarking is feasible only if entity that is buying on its behalf. Therefore, the Table 1.2 Possible Approaches to Regulatory Review of Power Purchase Costs Type Regulatory Action Observations Assist in negotiating PPAs Kenya (Second wave of IPPs) Before or after the fact Andhra Pradesh (India) and United States (1980s and regulatory approval of PPAs early 1990s) and Panama T Standardized/model PPA Proposed in Pakistan and India; must allow for exceptions ONDUC C Mandated (competitive) Proposed in Laos and Florida procurement guidelines Independent procurement Issue public reports monitor Southeastern United States: the affiliate problem Administratively specify a Chile: too low maximum price Pakistan: too high initially (did not benefit from competition) Nigeria: proposed as the generation component of the MYTO Tie maximum price to Chile: maximum price in "nonfree" market can be no ORMANCE competitive power sales higher than 15% of "free" market price Benchmarking of overall Colombia and Netherlands; need multiple discos PERF power purchase costs of discos Benchmarking of individual Proposed in Nigeria (12/2006) PPAs Source: Besant Jones et al. (2007). 4 See Arizu, Maurer and Tenenbaum. "Pass Through Power Purchase Costs: Regulatory Challenges and International Practices." World Bank, Energy and Mining Sector Board Discussion Paper No. 10, February 2004, www.worldbank.org/energy. 4 5311-CH01.pdf 4 5311-CH01.pdf 9/25/08 8:30:31 AM 9/25/08 8:30:31 AM Introduction "average price" benchmarking approach used iii. Competitivepowerprocurementguidelines: in Colombia and the Netherlands is simply not Develop guidelines for Competitive Power feasible, at least in the near term, for Nigeria and Procurement for future long-term purchases other countries in SSA. of power by a single buyer (i.e., NELMCO) or Regulators need not be limited to using a other entities (e.g., distribution companies) single approach. For example, NERC stated in serving captive customers. its December 2006 NOPR that it was considering iv. Independent monitoring: Assess the adopting model PPAs (line 3) and mandated feasibility of using one or more "independent competitive procurement guidelines, in addition monitors" for determining compliance with to the PPA benchmarking proposed in the the CPP guidelines. NOPR. NERC's underlying presumption is that a combination of regulatory approaches The NOPR proposed a specific methodology. that examine both conduct and outcomes may But it has yet to be tested on any PPAs actually produce a better result than a single approach used in Nigeria or elsewhere. So a critical that is limited to benchmarking proposed component of any follow-up is the testing of PPAs. the NOPR methodology on actual PPAs to see whether it provides a workable regulatory approach, and, if not, to see how it should be Suggestions for a modified to make it workable (component ii). Possible Way Forward The rationale for the other components is that NERC should not "put all of its eggs in one If the December 2006 NOPR is viewed as Phase I, basket." As seen in Table 1.2, there are a variety we think that it is important for NERC to of regulatory approaches to encourage the consider elements of a possible follow-up in a signing of efficient, fair, and sustainable PPAs. Phase II. Based on our discussions with NERC The three other components of Phase II--a model over the last several months, it appears that there PPA that could be used in vesting contracts, is now a consensus on the following possible competitive power procurement guidelines, and components for a Phase II: independent monitoring of compliance with these guidelines--are techniques that have been i. Model PPA: Develop a model PPA or PPAs tried or are under consideration by electricity that can be used as the basis for vesting regulators in other countries. If NERC concludes contracts and that provides guidance for that these are potentially useful approaches, both buyers and sellers for future long-term AFTEG would be pleased to work with NERC power transactions in Nigeria. funding Phase II technical assistance that would ii. PPA benchmarking: Test the feasiblity of examine how these other approaches might using the PPA price and risk assessment work in the current conditions in the Nigerian methodology proposed in the December power sector. 2006 NOPR. 5 5311-CH01.pdf 5 5311-CH01.pdf 9/25/08 8:30:31 AM 9/25/08 8:30:31 AM 5311-CH01.pdf 6 5311-CH01.pdf 9/25/08 8:30:32 AM 9/25/08 8:30:32 AM 2 Purpose of Regulatory Review of PPAs Basic Purpose of Regulatory component of an annually adjusted multiyear Review of PPAs tariff that establishes the generation component of a maximum nationwide retail price. At The overall purpose of a regulatory review of present, it appears that NERC has adopted the PPAs is to ensure that the terms of the PPAs "advisory" approach with the real regulatory are "fair and balanced" to all parties who will control exercised through a proposed multiyear be directly and indirectly affected by these tariff setting mechanism transactions. In particular, the prices paid by In other countries, such as Guatemala, purchasers of power (typically a distributor Panama, and Nicaragua, the electricity laws or a single buyer) under the PPAs should be mandate competitive procurement for the compatible with fair pricing to consumers distributors, and the power purchase contracts supplied with power procured under the PPAs. have to be approved by the regulator before the In addition, the prices received by sellers of pricescanbepassedthroughinretailtariffs.Once power(typicallyanindependentpowerproducer the contracts are approved, there is a usually a (IPP)) under the PPAs should be sufficient to guarantee of full passthrough as long as no allow the sellers to finance the development and amendments are made to the contracts without construction of their generation facilities and regulatory approval. Mandated competitive to earn reasonable returns on capital invested procurement was the dominant regulatory under efficient operation of these facilities. approach used during the 1980s throughout The regulatory review of PPAs discussed the United States. More than 100 competitive in this chapter covers the individual review procurements of new power supplies took place of a PPA before it is signed by the parties to in the United States between 1984 and 1993. this transaction (ex ante review).5 The Nigerian An ex ante review has the advantage of regulator's current proposal is to evaluate the helping to minimize the level of regulatory reasonableness of the prices, risk allocation, and intervention in market-based transactions, since other contract terms. Based on its assessment, a good review can reduce the need for regulatory the regulator may approve full passthrough of intervention during the term of the PPA. It does payments for power procured under the PPAto not, however, remove the need for the regulator retail customers, especially if its comments are to retain some form of intervention during the properly reflected in the signed PPA. Otherwise, life of the PPA. And both an ex ante review and the regulator may not allow full passthrough an ex post review expose the regulator to the of these payments. Or, in the alternative, the risk of being held responsible by the parties evaluations may be strictly advisory and the real to the PPA for the performance of the PPA, on regulatory control may be a specified generation the grounds that the regulator became more of 5See Arizu, Maurer and Tenenbaum. "Pass Through of Power Purchase Costs: Regulatory Challenges and International Practices," World Bank, Energy and Mining Sector Board Discussion Paper No. 10, February 2004, www.worldbank.org/energy. 7 5311-CH02.pdf 7 5311-CH02.pdf 9/25/08 8:33:21 AM 9/25/08 8:33:21 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY a manager than a regulator when it assumed incentives to procure efficiently and carefully. the role of reviewing contracts and requiring There is evidence that automatic passthrough changes in one or more contract provisions. The mechanisms can lead to generally inefficient and regulator should avoid this risk by following sloppy procurement practices; sweetheart deals clear guidelines for its reviews of PPAs.6 As with affiliated generators; or even corruption. a general rule, it is preferable for a regulator The regulator should presume, therefore, that, to review a PPA before it is signed. Reviews the distributor has some influence over the price that take place after a PPA is signed can cause that it pays for purchased power. major delays that are politically dangerous in When the seller is an IPP that must invest in countries like Nigeria that are facing major new generation capacity to meet its obligations power shortages. under a PPA, the regulator must recognize that the IPP and its financiers will evaluate Importance of Regulatory the possibility that the purchasers will miss payments or make late payments under the Review of PPAs PPA. If there is a high risk that buyer will miss or delay payments, the IPP will inevitably face a A regulator must be concerned about power higher cost of capital. This will lead to a higher purchase costs under PPAs whenever the power price for the power supplied by the IPP and, purchaser sells power directly or indirectly to in turn, a higher retail price of power. Even captive customers (i.e., customers who do not if there is a backup payment guarantee from have the legal right to purchase from alternative the government, an IPP may be concerned suppliers or choose not to exercise this right). that the government will not actually step in The challenge is to create regulatory mechanisms and make payments without involving the IPP to provide purchasers with incentives for in considerable litigation. At the time of this good procurement of bulk power, while also writing, the Federal Government of Nigeria and providing IPPs with financial incentives to the World Bank are exploring the possibility of build and operate the plant efficiently. Hence, an alternative payment guarantee mechanism the regulator has to consider the needs of both that is known as a "partial risk guarantee purchasers and sellers when reviewing PPAs. (PRG)." Under a PRG, the World Bank will When the purchaser is a distributor that guarantee some amount of payments to the IPP supplies captive customers by means of a if the government is willing to issue a counter monopoly franchise, the regulator should be guarantee to the World Bank. concerned that the distributor may not be buying Theregulatorshouldbeconcerned,therefore, or building efficiently and thereby is hurting its that the purchaser can afford to meet its payment captive customers. This is important because the obligations under the PPA in the context of cost of bulk power supply, irrespective of the the policies laid down by government and structure of the power supply industry, typically the regulator for retail power tariffs and pass represents between 50 percent and 70 percent through of bulk supply costs to retail power of the distributor's total costs of supplying tariffs.Distributorswillnotfindwillingsuppliers power to consumers. Distributors argue that if the regulator sets an artificially low cap on these costs should be fully passed through in passthrough of power purchase costs, which the tariff-setting process through automatic would jeopardize the long-term expansion of passthrough mechanisms because the costs power supply. This is particularly the case in are largely beyond their control. In contrast, countries in which bulk power markets are in regulators are generally wary of automatic the early stages of development. passthrough mechanisms, since they blunt the 6 One obvious exception to this rule is when a review is necessitated after a PPAis signed because evidence emerges of corruption connected with the PPA. 8 5311-CH02.pdf 8 5311-CH02.pdf 9/25/08 8:33:21 AM 9/25/08 8:33:21 AM 3 The Proposed Process for Review of PPAs in Nigeria Legal Authority facility must be reasonable. Specifically, NERC must see evidence at a general level NERC is required to perform regulatory reviews thattheentityseekingthelicenseisproposing of PPAs under the Electricity Power Sector an appropriate technology, an appropriate Reform Act of 2005 (EPSR Act). Under this fuel and will locate the plant at a reasonable Act, NERC is obliged "to ensure that the prices location. In addition, the application for a charged by licensees are fair to consumers and license must be consistent with any formally are sufficient to allow the licensees to finance enunciated energy policies of the federal and to allow for reasonable earnings for efficient government of Nigeria. operation." In addition, NERC has authority ii. Areasonable combination of price and risk. under the EPSR Act to specify terms and NERC must see evidence that the proposed conditions in a license to ensure that a licensee combination of price and risk allocation in will "purchase power and other resources the PPA is both fair and efficient. in an economical and transparent manner." iii. Affordable to the buyer. NERC must see NERC also has authority under the EPSR Act evidence that the purchaser will be able to (Section 71) to vary its regulatory requirements afford to purchase the electricity with the by imposing appropriate terms and conditions revenues that it is likely to receive from its depending on the type of entity that is being customers and, if available, government- regulated. provided subsidies or guarantees. In These provisions form the legal basis for particular, NERC will require an assurance the proposals contained in NERC's Notice of from the purchaser that it will be able to Proposed Rulemaking (NOPR) that it published afford its payment obligations under the PPA for public consultation in December 2006.7 The under existing or expected retail tariffs with NOPR proposes that a regulatory review will be the support of subsidies or guarantees. required only for PPAs for which the purchaser will be purchasing power that will resold Overall, NERC considers that the regulatory either directly (e.g., a distribution company) process proposed in the NOPR will produce four or indirectly (e.g., a bulk reseller) to captive major benefits. customers. This requirement applies whether the PPAs for the sale of such power are contracts i. It will allow NERC to fulfill its legal between affiliated or unaffiliated parties. obligation to ensure that its regulatory NERCinterpretsitslegalobligationtoensure actions are "fair and balanced" and that that a purchase is "economical" in three ways: long-term power purchases made on behalf of captive customers are economical. i. Therightplantintherightplace.Thegeneral ii. It will provide a checklist of terms and characteristics of the proposed generation provisions and risks that must be considered 7This NOPR be downloaded from www.nercng.org. 9 5311-CH03.pdf 9 5311-CH03.pdf 9/25/08 8:34:03 AM 9/25/08 8:34:03 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY in developing PPAs. This should ensure users. NERC intends to establish end-user tariffs better-quality PPAs in the future and avoid through a multiyear tariff setting system that is unnecessary and costly disputes. the subject of a separate NOPR. iii. It will provide NERC with better information The seller and purchaser will have the that can be used to develop projections of flexibilitytodecidehowtheyincorporateNERC's the generation costs that constitute a major comments into their PPA when they negotiate a component of future end-use tariffs. final signed version of the PPA.8 However, they iv. Itwillensurethatthegeneralpublicwillhave do so at their own risk. If the parties choose to better knowledge of the basis for NERC's ignore NERC's comments and observations, decisions and will have the opportunity to they are more likely to run the risk of failing to provide NERC with informed comments satisfy the implicit annually adjusted cap on the based on facts rather than hearsay. power purchase costs that distribution entities will be allowed to pass through to their captive As a general rule, NERC considers that the customers under NERC's planned multiyear two parties to a contract should have substantial tariff setting system. discretion in writing the terms and conditions of the contract, subject to any general guidance NERC Is Proposing a Two-stage that NERC decides to give in the future and Regulatory Process for the any overall caps on retail tariffs that may be established as part of a future multiyear tariff Review of Generation Licenses (MYT) setting system. However, NERC's and Associated PPAs fundamental regulatory concern is that such In the first stage, the application for a generation contracts can also have a major impact on the license will be reviewed according to NERC's prices paid by consumers of electricity who standard review of such applications and the are not direct parties to the contract. Therefore, license issued if the application meets all of NERC considers that it has a clear regulatory the requirements of its licensing regulations. responsibility to ensure that the terms and This involves a review of the legal, technical, conditions of such contracts are fair and efficient and financial elements of the applicant and in order to protect those Nigerian consumers its proposed generation facility. NERC issues who will ultimately pay for the electricity but a generation license to an applicant that has who are not signatories to the PPA. shown the legal, financial, and technical capacity to build and operate the proposed The Proposed Regulatory generation facility. However, the granting of a license does not imply that NERC has given Review Process approval to the terms of any PPA that will be NERC Will Review a PPA, Rather used to sell the power produced from this than Approve It generation facility. In the second stage, NERC will review the NERC will not approve or disapprove of a submitted documents to facilitate compliance PPA. Instead, NERC's review will be limited with its legal obligation to ensure that the to providing comments and observations on power is purchased economically and with a the submitted PPA. The ultimate and binding reasonable allocation of risk. It will provide control on the prices to consumers of electricity written comments to the purchaser and seller. that result from a PPAwill be exercised through The process for this stage is described in this NERC's system of setting retail tariffs for end chapter. 8 The seller will also be required to file the final executed version of the PPA with NERC. This final executed version will be a publicly available document. 10 5311-CH03.pdf 10 5311-CH03.pdf 10 9/25/08 8:34:04 AM 9/25/08 8:34:04 AM The Proposed Process for Review of PPAs in Nigeria NERC considers that this two-stage process it can afford its purchase obligations under the has several advantages. First, it avoids the risk of PPA.9 In addition, the purchaser will be required delay to the process of reviewing an application to state whether it agrees or disagrees with the for a generation license. Such delays are likely answers provided by the seller. to occur if NERC required explicit review of NERC will encourage early submission of a PPA as a prerequisite for the issuance of a completed questionnaires and tables with the generation license. Second, a PPA is likely to accompanying PPA so that its review can be be more accurate and complete if it is reviewed giveninatimelymanner.Inallinstances,NERC's some time after a license is issued. Third, by review will be contingent (i.e., conditional) on conducting the review before a PPA is signed, the filing of a final and legally binding version NERC will be able to give timely feedback to the of the PPA with NERC. purchaser and seller of power about price and nonprice provisions in the PPAthat could lead to The Seller and Purchaser Must Use outcomes that are too costly, too risky, or both. "Plain English" for Their Answers To ensure compliance with this two-stage process, NERC will attach conditions to the The answers about prices and risk allocation licenses of entities that will be buying or must be complete, concise, and written in selling power on behalf of captive customers "plain English." If the answers do not meet this (e.g., a bulk supplier, generator, or distributor) standard, NERC will view the application as requiring that these entities provide NERC with being not compliant with these requirements the information needed to conduct its review of and will not consider the application further.All the PPA as presented in the questionnaires and other things being equal, applicants are more tables in the annexes attached to its NOPR (and likely to get a faster and positive evaluation described later in this paper). from NERC if they provide accurate, clear, and complete answers. Completion of the questionnaires and tables The Seller Files the Application about prices and risk allocation will not impose for a PPA Review, Accompanied an undue burden on sellers because sellers by a Declaration by the Purchaser have to provide much of the same information In the second stage, once the PPA has been to equity and debt investors in order for these fully negotiated (though not executed) between investors to conduct a due diligence review prior the purchaser and the seller, the seller will be to making their investment decisions. required to submit the proposed PPA to NERC NERC will combine the appraisal of and also complete the questionnaires and tables both factual information (e.g., charges, plant about prices and risk allocation under the PPA. specification) and subjective evaluations The seller will be required to vouch by means of (e.g., assessments of how risks are allocated a declaration for the accuracy of the information between the purchaser and seller) provided that it submits in the questionnaires and tables. about a PPA by the seller according to the Separately, the purchaser will be formally proposed methodology set out in the NOPR required to vouch by means of a declaration that (and described later in this paper). It reserves 9One reviewer of this report argued that the affordability of the PPA is critical and that NERC's current proposal is inadequate because it "relies on some subjective questions that are posed to the purchaser by way of self-assessment and it is hard to see why he would have incentives to answer these questions truthfully." She recommended that the questionnaire be supplemented with "some basic numbers [that] could be collected that would allow a simple test of affordability that is grounded in objective financial data." The reviewer suggested several possible statistics: (i) the average price of power provided under the PPA compared to the distributor's current average cost of power; and (ii) the average price of power provided by the PPAas a percentage of the current end-user tariff; and (iii) the cost of the PPAas a percentage of the utility's total costs; and (iv) the percentage of the utility's total power distributed that would come from the new PPA. 11 5311-CH03.pdf 11 5311-CH03.pdf 11 9/25/08 8:34:04 AM 9/25/08 8:34:04 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY the right to seek clarifications from an applicant NERC Proposes to Make Public where it finds evidence of inaccuracies and the PPA, the Seller's Answers to misrepresentations. It also reserves the right the Questionnaires and Tables, and to use its own assessment of a particular provision where it considers that the applicant's NERC's Comments on the PPA assessment is not accurate. NERC proposes that the answers to these The accuracy and completeness of questionnaires and the PPAs on which these information supplied about prices and risk answers are based will be public documents, allocation must be vouched for by a designated since it places considerable emphasis on the officer of the companies that are filing the transparency of its regulatory processes. Such application for review. transparency is important, given the large quantities of money involved in transactions NERC Will Select an Independent under PPAs.10 Such participation will be effective Party to Analyze the Seller's (because it will be informed) when the general public has access to the key documents that Answers, and the Seller and affect the prices that they will have to pay over Purchaser Will Pay for This Service the life of the PPA. In addition, the fundamental To ensure that the review is both objective and legitimacy of NERC's new regulatory system informed, NERC will hire one or more experts requires that the general public must have to conduct a written evaluation of the answers confidence in the fairness and impartiality of given by the purchaser and seller. NERC needs both the process that NERC employs and the this help to review a PPA comprehensively decisions that it renders. This confidence can be because a PPA is usually a lengthy document developed when the general public understands with complicated and subtle relationships the logic of NERC's decisions and provides among its many parts. informed inputs to its decisions by having Thecostofthisevaluationwillbebornebythe access to the necessary information. Purchasers seller, or by the purchaser, or shared by the two and sellers will also benefit from the greater parties in whatever way they deem appropriate, sustainability of their transactions over the long and NERC will require the application to specify run when NERC adopts open and transparent the payment arrangements. The written expert processes. evaluation will be made public. NERC will establish a roster of experts and will determine NERC Does Not Intend to Review which expert will be used to evaluate the All PPAs answers provided in an application. NERC will also specify the terms of reference for the NERC will exempt two types of transactions experts' evaluations. NERC anticipates that the involving PPAs from its proposed requirements evaluation will take between 10 to 20 person- for regulatory review. First, NERC will not days, depending on the complexity of the PPA. review PPAs where the purchaser's customers In selecting the roster of experts, NERC will give will have alternative sources of supply and preference to individuals or firms who commit are therefore less vulnerable to the exercise of to training Nigerian citizens in the relevant market power by a seller such as the purchaser evaluation techniques. under the PPA.11 This might occur, for example, 10NERC's previously issued regulations for the review of license applications require that the general public must be able to participate in such regulatory processes. 11These customers are defined as "eligible" customers under Section 27 of the EPSR Act. 12 5311-CH03.pdf 12 5311-CH03.pdf 12 9/25/08 8:34:05 AM 9/25/08 8:34:05 AM The Proposed Process for Review of PPAs in Nigeria if a generator proposes to sell to an industrial review. This is based on the presumption that customer or a group of commercial customers consumer interests can be best protected by that have alternative sources of supply. effective competition and, where competition NERC will also not require generators with exists, regulation can and should be more light- a rated capacity of 100 MW or less to fill out handed. Therefore, NERC intends to initiate a the questionnaire and matrix related to risk consultation that will focus on the necessary allocation, so as to lighten the regulatory burden elements of open and competitive procurements on smaller generators. However, NERC will for new generation capacity, as well as possible require that these smaller generators complete elements of one or more model PPA that will the questionnaire and table about the average be fair and efficient for sellers, purchasers and purchase price, because it will still need to retail customers. Standardized PPAs may be know the prices at which these generators especially beneficial for smaller IPPs.13 will sell power to entities that supply captive customers. The purchasers in these transactions NERC Will Develop a Database will still have to complete the declaration of of PPA Terms and Conditions for affordability. Benchmarking Future PPAs Consistent with its emphasis on the importance Possible Further of transparency, NERC intends to use the Development of the information provided in the questionnaires Regulatory Process and tables to create a reference database of PPA terms and conditions. It will use this database to NERC Will Examine the Scope for derive benchmarks for reviewing the terms and a More Limited Regulatory Review conditions in PPAs submitted in association with applications for generation licenses. NERC will NERC intends to match its regulatory methods periodically update this database and make it and standards of review with the process publicly available. Since many energy regulatory by which the power supply is acquired.12 agencies inAfrica and elsewhere appear to have In the future, if NERC is satisfied that the similar legal obligations to review PPAs, NERC PPA accompanying the generation license also intends to explore how this information can application is the outcome of a competitive be shared with these agencies to develop better process such as has been employed successfully informationthanwouldbeobtainableonasingle in other countries, NERC will employ a "fast country basis.14 track" and more limited form of regulatory 12As noted earlier, Section 71 of the ESPR Act clearly gives NERC the authority to vary its regulatory methods. 13This does not imply that an IPP would have to adopt the standard PPA exactly as given. Instead, it would be a starting point and modifications would be allowed if they are highlighted and explained. For example, binding and nonbinding model PPAs have been developed by government authorities in Pakistan and India. 14In any decision to issue a license, the Ugandan electricity regulator must review "the costs of the project" (Section 38.1.e) and "the price or tariff offered" (Section 38.1.k) (The Electricity Act, 1999). In setting tariffs, the Public Utilities Regulatory Commission of Ghana is required to take account of the "the cost of production of the service" (Section 16) and whether the cost of production is "justified and reasonable." (PURC Act, 1997). In South Africa, the National Energy Regulator "may facilitate the conclusion of an agreement to buy and sell power between a generator and a purchaser of electricity." (Electricity Regulation Act, 2006, Section 46 (3) (b)). In Tanzania, the new electricity law states that a distribution licensee's "obligations pursuant to a power purchase agreement may only influence a licensee's regulated tariffs if the Authority deems that the costs were prudently incurred." (Electricity Act, 2008, Paragraph 25). 13 5311-CH03.pdf 13 5311-CH03.pdf 13 9/25/08 8:34:05 AM 9/25/08 8:34:05 AM 5311-CH03.pdf 14 5311-CH03.pdf 14 9/25/08 8:34:06 AM 9/25/08 8:34:06 AM 4 The Proposed Methodology for the Review of PPAs in Nigeria Methodological Issues generation capacity). Therefore, the prices and risk allocations observed in other countries with The main informational issues for NERC's healthierpowersectorsmaynotbeappropriateto proposed methodology are: (i) what types of Nigeria. In addition, one particular combination cost are reviewed; (ii) what types of risks are of price and risk may not be appropriate at all assessed; and (iii) how these two categories of times and all circumstances (e.g., different fuels information will be assessed jointly. This chapter and technologies) in Nigeria. outlines NERC's proposed methodology for dealing with these issues, and the chapters that follow this one provide a detailed description Approach to of the methodology. Assessment of PPAs NERC's proposed methodology requires that the applicants provide information on both As noted earlier, NERC's assessment will be price and risk allocation between the seller and limited to PPAs where the purchaser will be the purchaser because both factors influence the selling directly (through distribution companies) actual payments made by the purchaser under or indirectly (e.g., as a bulk reseller) reselling a PPA. For example, a PPA may propose low this power to captive customers, and the seller initial prices for capacity and energy but transfer is selling the electricity from a plant with a rated most performance risks (e.g., target availability) capacity of 100 MW or greater. to the purchaser, so that the purchaser may NERCproposestoadoptthefollowingthree- actually pay a lot more for power procured step approach for assessing the reasonableness under the PPA than under another PPA with of PPAs under the second stage of its review higher initial prices but with more risk borne by process: the seller. If a licensee proposes to bear more risk i. Assessment of a PPA's completeness than usual, it will generally incur an additional ii. Performance of the average purchase price cost for bearing this risk and it will expect to analysis, affordability analysis, and risk be compensated for this cost. The proposed assessment of the PPA methodology tries to capture this trade-off iii. Application of the price-risk trade-off between risk and price under a PPA. approach to assessing PPAs The pattern of risk allocations that is feasible in Nigeria at this time may be quite different This approach is depicted in Figure 4.1. from patterns of risk allocation that are feasible The first step in NERC's review of PPAs is and observed in more developed power sectors designed to separate PPAs that are complete (e.g., power sectors where there is better from those that are not. In this step, NERC will quality of service, lower levels of technical and determine whether the PPA satisfies certain commerciallosses,anaveragetariffthatrecovers minimum, or threshold, conditions that justify costs, more extensive metering and sufficient further regulatory review. If the PPA does not 15 5311-CH04.pdf 15 5311-CH04.pdf 15 9/25/08 8:34:36 AM 9/25/08 8:34:36 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Figure 4.1 Overview of NERC's Proposed Approach for Reviewing PPAs Source: Besant Jones et al. (2007). satisfytheminimum,orthreshold,conditions,then The purchaser carries out the affordability NERC cannot justify using its limited regulatory analysis under this stage, for which it provides resources on further review of the PPA. a declaration to NERC. The purchaser must Under the second step in NERC's review, complete and vouch for its responses toAnnex 3 the seller must provide NERC with a completed by attaching a declaration to it. The purchaser copy of the questionnaires and tables shown in must also complete Annex 7 about the extent the NOPR and reproduced herein in Annexes to which it agrees or disagrees with the seller's 1, 2, 4, and 5. The seller must vouch for responses to the questionnaires and tables. its responses to these questionnaires and The purchaser should be able to provide this tables by attaching a declaration to them. The information from its due diligence on the PPA focus of these questionnaires and tables is to and related documentation. abstract basic information from the lengthy In summary, NERC's review of a PPAwill be and complex documents that are typical of carried out by means of the following annexes: PPAs. That information will be used to evaluate systematically the reasonableness of the price · Annex 1: Questionnaire for Computing the and nonprice terms of PPAs. Specifically, the Average Purchase Price of Power under a seller's analysis of the average purchase price Power Purchase Agreement and risk allocation for its PPA provides a set of · Annex 2: Summary of Key FactorsAffecting values for these key variables that is used in the a Power Purchase Agreement third step: the review of the price-risk trade-off. · Annex 3: Purchaser's Declaration about These questionnaires and tables also incorporate Affordability of Its Payment Obligations aconsiderableamountofstandardizationtohelp under a Power Purchase Agreement NERC to benchmark PPAs. · Annex 4: Questionnaire on Risk Allocation Annex 6 is a sample of a completed version under a Power Purchase Agreement of the risk assessment (Annex 5). This version · Annex 5: Table for Risk Assessment of a is entirely illustrative. Power Purchase Agreement 16 5311-CH04.pdf 16 5311-CH04.pdf 16 9/25/08 8:34:37 AM 9/25/08 8:34:37 AM The Proposed Methodology for Review of PPAs in Nigeria Figure 4.2 Links between the Review Approach and the Questionnaires and Tables Source: Besant Jones et al. (2007). · Annex 6: Illustrative Risk Assessment of a A PPA should cover all critical subjects Power Purchase Agreement and not have omissions that might disrupt the · Annex 7: Purchaser's Declaration about operation of the PPA or cause avoidable costs Seller's Responses to Questionnaires and for the seller or purchaser during the life of Tables under a Power Purchase Agreement the agreement. NERC may decide to suspend further analysis of a PPA that is not complete in These annexes apply to the case of a new this respect. fossil-fueled generation plant. The links between NERC will create checklists for PPAs for these annexes and the three-stage review process fossil-fueled and other power generation are depicted in Figure 4.2. technologies.Anillustrativechecklist--excluding standard legal provisions--for a typical PPA for Assessment of the a new fossil-fueled power project is shown in Table 4.1.15 Completeness of an Notes to Tables 4.1a and 4.1b. Clauses/ Applicant's PPA articles form the main part of the PPA. Schedules are attached to the PPA and contain detailed Assessmentofthecompletenessofanapplicant's provisions relating to clauses/articles. Both PPA is the first step of NERC's approach to clauses/articles and schedules are integral parts reviewing a PPA. Once NERC deems the PPA of the PPA, and the PPAis not complete without to have satisfied this minimum standard, it will all of them. evaluate the PPAfor price and the risk exposure to the purchaser under the PPA. 15The terminology used in Table 1.1 to describe these clauses, articles and schedules is not prescriptive since it varies among PPAs. The importance of these terms lies in the substantive content that they cover. 17 5311-CH04.pdf 17 5311-CH04.pdf 17 9/25/08 8:34:38 AM 9/25/08 8:34:38 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Table 4.1a Typical Main Clauses/Articles in a PPA for a New Fossil-Fueled Power Plant Definition of Contract Seller's Responsibilities Purchaser's Terms Responsibilities Construction of the power Compliance with Compliance with the grid plant technical, operational and code environmental standards and regulations Compliance with metering Control, operation, and Interconnection with and telecommunication dispatch of the power transmission system specifications plant and maintenance coordination Supply of fuel Availability commitments Supply of and payment for and capacity testing electricity procedure Fees, pricing and billing Time and place of payment Compliance with laws Liability and Payment guarantee (if any) Contract term indemnification Insurance Force majeure Taxes Liquidated damages Suspension, events of Assignment of rights, default and termination, benefits and obligations and buy-out Dispute resolution Law, jurisdiction; agents for Representations and service warranties Source: Besant Jones et al. (2007). Table 4.1b Typical Main Schedules Annexed to a PPA for a New Fossil-Fueled Power Plant Specifications for Plant Operating Milestone Schedule Electricity Parameters Guaranteed completion Compliance with grid code, Description of site date transmission connection, dispatch, coordination and scheduling, and emergency procedures Delivery point Transmission Line Electricity delivery Specifications procedures Metering and recording of Calculation of Payment Capacity and performance electricity, collection and testing procedures validation procedures Guarantor support Seller and purchaser Governmental approvals provisions insurance requirements Source: Besant Jones et al. (2007). 18 5311-CH04.pdf 18 5311-CH04.pdf 18 9/25/08 8:34:39 AM 9/25/08 8:34:39 AM 5 Average Purchase Price Analysis Analysis of the average price of purchased The energy purchase charge consists of a power under a PPA forms the first component periodic payment for the amount of energy of the second step of NERC's assessment of the produced and purchased under the PPA reasonableness of a long-term PPA. during a specified period. It is usually defined to cover fuel costs and variable operation and Structure of Power maintenance costs. The supplemental charge may cover plant Purchase Price start-upandramp-upcosts,thecostsofproviding ancillary services to the system operator such as The average price of power purchased under reactive power, frequency response, black start a PPA is estimated from the rates payable for and fast start, and miscellaneous costs.17 a specified level of power purchased over the The schedule for the calculation of payments life of the PPA. These rates typically include due under the PPA will typically give a base set the following components under a PPA for a of rates for capacity purchase charge, energy fossil-fueled generation plant that is financed, purchase charge and supplemental charges constructed and operated by an independent and various specified adjustment mechanisms. power developer (IPP): 16 The rates charged will be heavily affected by · Capacity purchase charge the investment cost for the plant, the foreign · Energy purchase charge exchange rate, the foreign inflation rate, the · Supplemental charges domestic inflation rate, and the price of fuel consumed by the plant. The capacity purchase charge consists of a The average purchase price of power purchased periodic--usually monthly--payment that is under the PPA is computed from these charges typically tied to a declaration by the seller that according to a basic general formula given in the plant has available production capacity at a Box 5.1. level that is periodically verified according to There are various formulations that can be a procedure specified in the PPA. This charge used to compute the values of the charges that is usually defined to cover the seller's cost for make up this expression for the average purchase investment in developing and constructing price of power. NERC has selected simple the power plant, as well as the fixed operating formulations to facilitate its review process, costs such as insurance and fixed operating and even though these formulations may not capture maintenance costs for the plant. secondary factors that could influence the 16NERC does not favor a price structure that is based on a single charge for all costs based on the amount of energy sold under the PPA, because payments under this structure do not reflect the actual costs involved in supplying power. Instead, it prefers separation of charges into components that reflect the actual costs, such as the three shown here (capacity charge, energy charge, and supplemental charges). 17NERC encourages sellers to accept obligations to provide ancillary services, so as to improve the overall reliablity of supply in the Nigerian power system. 19 5311-CH05.pdf 19 5311-CH05.pdf 19 9/25/08 8:35:11 AM 9/25/08 8:35:11 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Box 5.1 General Formula for Calculating the Average Purchase Price Under a PPA The main components of the average purchase The energy purchase charge (E) covers the price (P expressed in US$/kWh) are: costs of the following components: AV · Capacity purchase charge (CP) · Fuel (E ) F · Energy purchase charge (E) · Operation and Maintenance--Variable portion · Supplemental charges (S) (E ) OV Thesecomponents areexpressed in US$/month These unit costs are usually expressed in terms (since a month is the usual billing period):1 of US$/kWh. P = (CP + E + S) /E E = (E + E ) x E AV ENERGY F OV ENERGY where E is the amount of net electrical Unless the fuel market that supplies the power ENERGY energy supplied during the month that is metered plant is fully liberalized, the cost of fuel is usually at a delivery point specified in the PPA (expressed indexed to the prevailing market price of this fuel in kWh/month). or a benchmark fuel price, which passes through The capacity purchase charge (CP) covers the the fuel price risk to the purchaser. costs of the following components: Supplemental charges (S, usually expressed in US$/month) cover charges such as plant · Investment for power plant and equipment, start-up and ramp-up costs above a maximum dedicated fuel supply link, and dedicated number of such events per period specified in transmission link (CP ) the PPA (in which case, the monthly charge is the INV · Operation & maintenance ­ Fixed portion charge per event times the chargeable number (CP ) of these events), as well as the costs of providing OF · Insurance (CP ) ancillary services and miscellaneous costs specified INSUR · General and administration (CP ) in the PPA. GEN Note 1: The selection of U.S. dollars in this Theseunitcostsareusuallyexpressedintermsof illustration as the currency for expressing costs US$/kW/month.Thischargeispayableindependently does not preclude the adoption of the naira in of the amount of energy supplied under the PPA: practice, where appropriate. An advantage of CP = (CP + CP + CP + CP ) x C expressing the values in U.S. dollars is that it INV OF INSUR GEN CAPACITY where C is the average available capacity will facilitate comparisons with PPAs in other CAPACITY provided during the month (expressed in kW). countries. Source: Besant Jones et al. (2007). level of charges under the PPA. NERC expects, given in Annex 1, NERC will use the information however, the seller and purchaser to consider all given in Annex 1 for its assessment. the relevant factors in their analysis. Sellers will be required to provide the Purchaser's Price information needed to compute the average versus Seller's Cost purchase price of power under the PPA by completing the questionnaire reproduced in The average purchase price is calculated from the Annex 1. They will also be required to complete purchaser's perspective under the PPA. It depends a summary table shown Annex 2, based on their on the actual costs incurred by the seller in responses to the questionnaire in Annex 1. The developing, constructing, operating, and purpose of Annex 2 is to provide a convenient financing the plant over the life of the plant summaryofthekeycomponentsofoverallaverage (life-cycle cost). purchase price of power and the factors that affect The capacity purchase charge spreads this average price. In the event that information (levelizes) over a period of years specified in giveninAnnex2isnotconsistentwithinformation the PPA the construction and other initial costs 20 5311-CH05.pdf 20 5311-CH05.pdf 20 9/25/08 12:42:15 PM 9/25/08 12:42:15 PM Average Purchase Price Analysis incurred by the seller in developing the power This comparison will complement the risk facility. Usually for new generation facilities, this assessment by indicating any unusual features period is at least as long as the repayment period of the payments to be made under the PPA. It for the seller's long-term debt used to finance will draw on NERC's reference database of PPAs these costs. Hence, the formula for the average as well as other data sources. purchase price given in the box represents a Differences in subsidies received and taxes levelized cost for power under the PPA for the paid--in both their direct and indirect forms-- purchaser. In a PPAwhere the capacity purchase for power projects can strongly influence the charge is reduced after a period of years specified price of purchased power under a PPA. An in the PPA, the average purchase price of power important example in the case of a fossil-fueled over the term of the PPA is a function of both power plant is any subsidies and taxes on fuels levels of capacity purchase charge. used for generating power from the plant. Both the seller and the purchaser enter into The questionnaire on average purchase price long-term financial obligations under the PPA (Annex 1) therefore asks for information about that expose them to financial risks.18 Whereas any subsidies received and taxes payable by the the cost of the seller's risk exposure is normally project company for the generating plant and reflected in the seller's cost of capital that is that will be incorporated into the costs specified recovered in the capacity purchase charge,19 the in the PPA. NERC will adjust the costs for the cost of the purchaser's risk exposure (e.g., the main components of the average purchase price unwillingness or inability of the purchaser's of power to take account of these subsidies and customers to pay the purchaser in full or taxes, and compute an adjusted average purchase promptly for power sold by the purchaser to price of power from these adjusted rates. NERC them) is not reflected in the rates for power will use this cost when comparing average supplied under PPA. purchase prices of power under PPAs. The purchaser's risk exposure is therefore assessed separately in the affordability analysis Affordability of the PPA and the risk assessment. These two key dimensions of any PPA--average price and for the Purchaser risk exposure--are then combined in a way that Affordabilityanalysisformsthesecondcomponent trades off low price with high risk--and vice in the second step of NERC's assessment of the versa-- as a basis for comparing a number of reasonableness of a long-term PPA. PPAs that have various combinations of these NERC recognizes that even if a PPA is fair variables. The underlying assumption is that a and efficient for the parties to the agreement, the full and objective regulatory review requires an PPAmay still not be affordable for the purchaser (or examination of both dimensions of the PPA and to distributors or final consumers of electricity the trade-offs between them. that bear the costs passed through by the purchaser under the terms of the PPA). In other Benchmarking the Average words, the PPAmay create payment obligations Purchase Price of Power that are simply not affordable for the purchaser because the payments cannot be covered with NERC will compare the average purchase price revenues that the purchaser will receive from its of power computed from rates given in a PPA retail customers for power procured under the with a benchmark of prices for other PPAs. PPA. For NERC to make a determination that a 18In the case of a new 500MW plant with combined-cycle gas turbines that burn natural gas, for example, the seller can invest around US$400 million in the plant, and the purchaser may enter into payment obligations of around US$130 million per year for capacity, energy and supplementary charges under the PPA when the plant is operated near to its capacity. 19A basic justification for the long-terms of PPAs is to reduce the seller's cost of capital. 21 5311-CH05.pdf 21 5311-CH05.pdf 21 9/25/08 8:35:12 AM 9/25/08 8:35:12 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY purchase is "economical," therefore, it must be NERC recognizes the seller will probably able to examine the revenues that will be earned not have accurate information about the by the purchaser and the possible impact of this "affordability" of the PPA for the purchaser.21 purchase on regulated electricity tariffs.20 And if Such information is likely to be known only the tariff increase is not affordable to Nigerian by the purchaser. Therefore, NERC will consumers, the Nigerian government is likely require that the purchaser shall complete a to find itself paying for the shortfall under separate questionnaire (Annex 3) that must be guarantee or securitization agreements. But in accompanied by a signed statement from an either case, Nigerian citizens will ultimately pay authorized representative of the purchaser that for the shortfall either as electricity consumers provides answers to the following questions: or as taxpayers. This does not imply that NERC will use its i. Can you afford to make this proposed review of the PPA to conduct a full evaluation purchase under your existing tariff(s) to your of the level and structure of the basis for the own customers? purchaser'srevenues.Thiswillrequireaseparate ii. If the answer is no, what is your current regulatory tariff review that NERC intends estimated revenue shortfall without the to conduct in the context of its proceedings addition of this PPA? dealing with the setting of multiyear tariffs for iii. If nothing else changes, by how much would distribution entities and the establishment of your current expected revenue shortfall regulations for the passthrough of changes in increase on a percentage and absolute basis generation costs to retail tariffs. Nevertheless, as a result of the expected payments under NERC's regulatory review of a PPAwould have the PPA? little point if it had good reason to consider iv. Estimate the required percentage increase that the purchaser cannot afford its payment in your average tariff(s) to eliminate any obligations under the PPA due to the impact of additional shortfall as a result of this PPA. this commitment on regulated tariffs. 20 This is a standard regulatory exercise that is routinely performed by electricity regulatory commissions around the world. For example, BC Hydro (Canada), in seeking approval of 38 PPAs that were selected after a competitive tender, provided a "rate impact analysis" that estimated that the first year rate impact would be an increase of 8.1 percent. The British Columbia Utilities Commission decided not to use the BC Hydro assessment because it found flaws in the underlying assumptions. See British Columbia Utilities Commission, "Electricity Purchase Agreements--Reasons for Decision, Order No. E-7-06, September 21, 2006. Available at http://www .bcuc.com/RecentDecision.aspx. 21The affordability of the PPAfor the purchaser is nevertheless highly important for the seller and its lenders, since it has a major influence of the cost of capital to the seller for its investment in the generation plant. Where the lenders and investors are concerned about the adequacy of the purchaser's tariffs, they will expect to receive a risk premium that raises the cost of capital for developing and constructing the power plant. 22 5311-CH05.pdf 22 5311-CH05.pdf 22 9/25/08 8:35:13 AM 9/25/08 8:35:13 AM 6 Risk Assessment Risk assessment forms the third component in when Government provides other forms of the second step of NERC's assessment of the guarantee for the performance of state-owned reasonableness of a long-term PPA. or controlled parties to the PPA. Failure to take Risk assessment analyses the risk exposure to account of such a guarantee would distort increases in costs for the parties under the PPA. comparisons across PPAs.22 Therefore, NERC NERC's analysis focuses on risk exposure from will require a description of any guarantee the purchaser's perspective. NERC adopts the mechanism, regardless of whether it is recorded purchaser's perspective because of its legal in the PPAor in another legal document, unless mandate to protect the interests of captive the Government of Nigeria formally requests electricity consumers whose demand is served NERC not to make public the details of the with power procured by the purchaser (EPSR guarantee. Act, Section 71(2)(b)). Risk exposure is assessed by means of a two- Since some purchasers may be totally or part formula that is applied to each of a number largely state-owned, the assessment also takes of risk factors: account of the risk implications for the federal government of Nigeria (Government) or any · One part is the relative weighting for each other level of government that owns a power risk factor. enterprise that is purchasing electricity for · The other part is the rating of the purchaser's captive customers under a PPA. For example, risk exposure to each risk factor. if the Government provides the seller with a guarantee that the purchaser will perform its The analysis of how different risks are payments obligations under the PPA, then allocatedwillbebasedoninformationcontained the Government accepts the risk of being the in the PPA and other related documents. This "payer of last resort" if the purchaser fails to information will be provided by the seller do so. Any such guarantee may appear in the through the Questionnaire on Risk Allocation PPA or be recorded in a separate agreement shown in Annex 4. NERC will also require between the Government and the seller to the the seller to use this information to fill out the PPA. If one seller has access to a Government Risk Assessment table shown in Annex 5 in payment guarantee and another seller does order to derive a risk assessment of the PPA, not, the first seller is likely to accept a lower which NERC will then review. The seller will capacity charge, all other things being equal, be required to provide a signed statement from because the payment guarantee lowers its an authorized representative that vouches for cost of the capital invested in the power the accuracy of the information given in their generation facility. A similar advantage occurs assessment. 22The reverse also apples, namely failure to take account of the absence of such a guarantee would distort the comparison of the PPAwith benchmarks with guarantees. 23 5311-CH06.pdf 23 5311-CH06.pdf 23 9/25/08 8:35:31 AM 9/25/08 8:35:31 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Analysis of Risk Factors xi. Control over the seller's rights to assignment of the PPA The analysis of risk factors under the PPAshows xii. Termination of the PPA in case of an which party to the PPA bears the risk exposure event of default to increases in costs and how this party bears it xiii. Resolution of disputes between the for each factor. These risk factors fall into two seller and the purchaser groups: For a new fossil-fueled power generation · Construction Period Risks. Risks during plant, the total risk exposure is allocated among the construction period for the PPA cover these two groups of risks in the following the following six principal risk factors in the proportions: case of a new fossil-fueled power generation plant: · Construction period, 30% i. Increases in construction costs · Operation period, 70% ii. Increases in financing costs iii. Delay in completion of the power plant Each risk factor is assigned a relative iv. Delay in completion of associated weighting. These weightings are shown in the facilities Questionnaire on RiskAllocation (Annex 4). The v. Failure of plant to meet performance sum of the weightings for all risk factors for the specifications at completion tests construction period equals 30 percent, and the vi. Government actions sum of the weightings for all risk factors for the · Operation Period Risks. Risks during the operation period equals 70 percent. The highest operation period for the PPA cover the weightingsaregiventoriskfactorsassociatedwith following thirteen principal risk factors increases in operating costs (15 percent relative in the case of a new fossil-fueled power weighting), forced outage/derating of the plant generation plant. (14percent),delayinconstructioncompletion(11 i. Constraints on plant operation percent), and increase in construction costs and ii. Increases in operating costs financing costs during construction (9 percent), iii. Non availability/non convertibility of which together account for about half of the total foreign exchange weighting for all risk factors. iv. Forced outage/derating or temporary Theallocatedproportionsfortheconstruction shortfall in capacity period and the operation period are assessed v. Deterioration in heat rate below the from the relative exposures to risks of cost rate(s) specified in the PPA increases for the purchaser under the PPA.23 The vi. Increased fuel costs and variable purchaser is exposed both to the risk of increases operation and maintenance costs in the average purchase price of power under vii. Prolonged outage of the plant due to the terms of the PPA such as indexation of cost major damage to equipment components, and of external costs associated viii. Failure of purchaser to perform its with these risks, such as the cost of procuring obligations under the PPA power from alternative sources in the event of ix. Failure of the seller to meet its a prolonged outage of the plant. obligations under the PPA that is These proportions would be considerably caused by the plant operator different for other generation technologies. In x. Environmental incidents caused by the the case of a hydropower project, for example, seller/operator most of the weighting would be associated with 23These proportions do not necessarily reflect the relative proportions of construction costs and operating costs in the life-cycle cost of a typical new fossil-fueled power generation plant, as when the seller carries the risk of increases in construction costs. 24 5311-CH06.pdf 24 5311-CH06.pdf 24 9/25/08 8:35:32 AM 9/25/08 8:35:32 AM Risk Assessment the risks of the construction period. Moreover, generation facilities under long-term power some of the risk factors for a hydropower purchase agreements. scheme would differ from the risk factors for a As noted earlier, NERC recognizes that the fossil-fueled power scheme. For example, risk pattern of risk allocation that is feasible for exposure to hydrological uncertainty would Nigeria is likely to be different from the risk replace risk exposure to fuel price uncertainty, allocations observed in PPAs in countries with and risk exposure to available energy would better economic and technical conditions in probably be higher for a hydropower plant than their power sectors (i.e., full cost recovery, full for a fossil-fueled power plant. Other sources of and accurate metering, sufficient generating renewable but intermittent energy, such as wind capacity, low technical and commercial losses, power, have similar risk exposure features to full electrification). A "good" application is not hydropower. an application where no risk is borne by the purchaser and all risk is borne by the seller. NERC recognizes that there is also a cost to Assessment of Risk bearing risk. The point of this review is not to try Exposure to transfer all risks from the purchaser to the seller, but instead to have each risk borne by the party that The risk assessment rates the purchaser's risk is in the best position to manage this risk. exposure based on the analysis of risk factors. It The assessment of the risk exposure is based assesses the remedies and recourses permissible on a scale of 0 to 5, with 0 representing no risk under the PPA for the main parties to the PPA exposure to the purchaser and 5 representing for managing their risks. full risk exposure for the purchaser. The assessment should take account of any recourse · Remedy. A remedy is a legal means under and remedy available to the party exposed to the PPA for an aggrieved party to be a risk factor. compensated by another party, either by The weighted risk value for a particular risk means of payment, or conversely, by relief factor is computed from the formula: from an obligation to make a payment. For example, under specified events the Weighted rating = (Weighting x Rating) ñ 5 purchaser may be temporarily relieved from The total weighted risk assessment for the obligation to make periodic payments to all the risk factors is the sum of the weighted the seller. risk assessments for individual risk factors. This · Recourse.Arecourse allows a party to take a total would be zero if all risk factors are rated 0 course of action that avoids or mitigates the (i.e., purchaser bears no risk, seller bears all risk), effects of a specific event without necessarily and 100 percent if all risk factors receive a rating having the right to receive compensation of 5 (i.e., purchaser bears all risk, seller has no from another party under the PPA. For risk). This computation is shown in Table 6.1. example, the purchaser may have the right Toassistapplicants,anillustrativebenchmark to withdraw from a PPA if the seller fails to risk assessment for a fossil-fueled power plant meet certain major conditions, and instead developed under a PPA is given in Annex 6. to seek alternative sources of power. NERC considers that this assessment represents the lowest practicable overall risk exposure This approach implies that the party that for a purchaser under PPAs for fossil-fueled is best able to manage these risks should bear generation plants financed, constructed and them and, where appropriate, be compensated operated by foreign developers in developing for so doing. In this regard, the assessment takes countries.Underthisillustrativeriskassessment, account of industry norms for risk allocation, the purchaser bears about 20 percent of the especially norms that protect investors in power overall risk exposure. 25 5311-CH06.pdf 25 5311-CH06.pdf 25 9/25/08 8:35:33 AM 9/25/08 8:35:33 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Table 6.1 Methodology for Risk Assessment Risk Factor Risk Weighting Risk Rating Weighted Rating Construction Period (6 risk factors) Risk factor 1 w r (w x r )/5 1 1 1 1 Risk factor 2 w r (w x r )/ 5 2 2 2 2 Risk factor 6 w r (w x r )/ 5 6 6 6 6 S, Total Construction Period 30% Operation Period (13 risk factors) Risk factor 7 w r (w x r )/ 5 7 7 7 7 Risk factor 8 w r (w x r )/ 5 8 8 8 8 Risk factor 19 w r (w x r )/ 5 19 19 19 19 S, Total Operation Period 70% Total for All Risk Factors 100% Overall risk rating Sum (w x r /5) x x Source: Besant Jones et al. (2007). 26 5311-CH06.pdf 26 5311-CH06.pdf 26 9/25/08 8:35:33 AM 9/25/08 8:35:33 AM 7 The Price-Risk Trade-off Approach to Assessing PPAs The assessment of price-risk trade-off forms the Analysis of this trade-off is important because third step of NERC's approach for assessing the greater risk exposure may cause the purchaser reasonableness of a long-term PPA. It is carried actually to pay more over time than the average out to satisfy the central regulatory goal of purchase price based on the initial rates for ensuringthatalicenseewill"purchasepowerand capacity and energy purchase charges that are other resources in an economical and transparent given in the PPA. manner." (EPSR Act, Section 71(2)(b)). The objective of this analysis is to identify NERC recognizes that a trade-off will the PPAs with the best combinations of purchase usually occur between the average price of price and risk exposure. This approach provides power purchased under a PPAand the amount an indication of the trade-off between risks to of risk to which the purchaser is exposed which the purchaser is exposed under PPAs and under this PPA. For well-developed PPAs, a the actual purchase price. lower purchase price will usually be associated This approach is depicted in Figure 7.1. The with a higher risk exposure, and vice versa. horizontal axis represents the average purchase Figure 7.1 Price-Risk Trade-off Chart for PPAs Source: Besant Jones et al. (2007). 27 5311-CH07.pdf 27 5311-CH07.pdf 27 9/25/08 12:42:40 PM 9/25/08 12:42:40 PM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY price computed according to the formula PPAs that fall into Groups B and C are given in the Box in Chapter 3. The vertical axis candidates to supplement capacity procured represents the risk rating derived from the risk under PPAs that fall into Group A. For PPAs assessment described in Chapter 4.24 that fall into Groups B and C, NERC will NERC intends to classify PPAs into the advise the sellers and purchasers to take note following four categories under the price-risk of NERC's comments with a view to improving trade-off approach: the risk assessments of PPAs in Group B and the purchase prices for PPAs in Group C. · Group A. PPAs offer a combination of For PPAs that fall into Group D, NERC relatively low average purchase price and will strongly urge the sellers and purchasers to relatively low risk exposure, shown inside consider the concerns expressed by NERC with Group A in Figure 1. These PPAs have the a view to substantially improving the price-risk best trade-off for economical purchase of features of these PPAs. power, and therefore should be the first to When PPAs from Groups B and C are be selected by the purchaser. needed to supplement PPAs from Group A, · Group B. PPAs offer a combination of they should be selected on a portfolio basis. relatively low average purchase price and This approach considers the combined average relatively high risk exposure, shown inside price of purchased power and the combined risk Group B in Figure 1. exposure for the purchaser from all the selected · Group C. PPAs offer a combination of PPAs. The objective is to select a group of PPAs relatively high average purchase price and that together offer the best combination of price relatively low risk exposure, shown inside and risk exposure for the purchaser.25 Group C in Figure 1. At this stage, PPAs based on a variety of · Group D. PPAs offer a combination of power generating technologies (diesel, gas relatively high average purchase price and turbine, hydropower, and other technologies for relatively high risk exposure, shown inside using renewable energy forms) can be brought Group D in Figure 1. together for evaluation on this common basis. 24The computed value for the average purchase price of power under a PPA is given at the end of Annex 1, and the risk rating for a PPA is given at the end of Annex 5. 25This approach helps to manage the risk of future increases in the price of bulk power purchased to serve the loads of captive customers. It therefore improves the sustainabilit of regulatory approaches--such as multiyear tariff orders--for passing through the costs of purchasing bulk power to retail power tariffs. 28 5311-CH07.pdf 28 5311-CH07.pdf 28 9/25/08 8:35:56 AM 9/25/08 8:35:56 AM Annex Questionnaire for Computing the Average 1 Purchase Price of Power Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant Seller: ___________________________ Purchaser: __________________ NERC's License Application Number: _________Number of Pages:____ General Instructions to this Questionnaire Note 1 This computation is solely for the purpose of facilitating NERC's assessment of a PPA. It is not intended to form part of or be used for any commercial transaction by the parties to the PPA. Note 2 All the questions should be answered in the shaded areas located at the end of each question. The values of the components of the average purchase price of power should be computed from these answers according to the formulas given herein, which are provided for information. Note 3 Answers to this questionnaire about costs should include any subsidies from Nigerian sources, including the federal government of Nigeria, available to the project. The costs that are reported should include any taxes payable on plant, equipment, fuels and administration costs (including social charges on labor) and any holidays or waivers available on these payments. Note 4 If the charges payable under the PPA are expressed in terms of Naira, responses to this questionnaire should be expressed in naira, instead of in U.S. dollars, and NERC will use the Central Bank of Nigeria's prevailing free exchange rate at the time of its assessment for its computation of the average purchase price of power. In this case, responses should be supplemented with details of the indexation formulas applied to the charges. Note 5 The questions about the components of the capacity purchase charge, the energy purchase charge and supplemental charges are intended to help NERC understand the basis or the actual value of these charges that are payable by the purchaser under the PPA (the purchaser), as well as to enable NERC to develop benchmark values. In the event that any of these computed benchmark values differ significantly from the actual charge that is payable, NERC may seek clarification of the responses from the purchaser. NERC will take account of a significant difference that is not explained to its satisfaction in its risk assessment of the PPA. NERC will use the actual charges that are payable by the purchaser in its computation of the average purchase price. General formula for computing the average purchase price (PAV): PAV = (CP + E + S)/EENERGY where CP = Capacity purchase charge E = Energy purchase charge S = Supplemental charges EENERGY = Amount of energy purchased 29 5311-CHANNEX.pdf 29 5311-CHANNEX.pdf 29 9/25/08 8:36:27 AM 9/25/08 8:36:27 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY The valuation of these variables is described below in this questionnaire. Q1: What type(s) of technology are employed for the plant and main equipment used to generate power in the facility? ____ Q2a: What is the nominal capacity of the facility under the expected ambient operating conditions, expressed in kW (CNOMINAL)? ____ Q2b: What is the maximum declared available capacity of the facility under the expected ambient operating conditions, expressed in kW (CCAPACITY)? ____ Note 6 The amount of capacity (C ) used for this computation is adjusted each month to reflect the CAPACITY declared available capacity resulting from tests and/or level of declared capacity availability of the plant during this period relative to a reference level or target availability defined in the PPA. This charge is payable independently of the amount of energy supplied under the PPA during the period. Q3: What is the duration of the PPA, expressed in years (n)? _________ Capacity Purchase Charge Q4: What is the average capacity purchase charge payable during the first full year of operation of the facility given in the PPA, expressed in US$/kW/month (CPAV)? ____ Q5a: Howdoesthecapacitypurchasecharge--excludingindexationofthevaluesofthecomponents of this charge--vary over time under the PPA? _________ Q5b: What is the levelized value for the capacity purchase charge over the life of the PPA, excluding indexation of the values of the components of this charge (CPLEV )? ______ Note 7 This levelized value for the capacity purchase charge (CP ) should be computed from the LEV following formula: CP = Sum of all capacity purchase charges payable LEV N where N is the number of payments due under the PPA Q5c: Is the capacity purchase charge linked to an index or indexes? _________ Q5d: If the capacity purchase charge is linked to an index or indexes, identify the index or indexes and give the indexation formula(s) here: _________ Q6a: What is the total investment by the seller in developing the facility, expressed in U.S. dollars (I)? _________ Q6b: Which of these categories are included in the seller's total investment: · Land acquisition and development? _________ · Supply and construction of power plant and associated equipment? _________ · Dedicated fuel supply link? _________ · Dedicated transmission link? _________ · Other ancillary infrastructure and facilities? _________ Q6c: What is the investment per kW of nominal capacity (I/CNOMINAL)? _________ Q6d: Will the amount of investment to be recovered under the capacity charge be finalized at the time of signing the PPA? _________ 30 5311-CHANNEX.pdf 30 5311-CHANNEX.pdf 30 9/25/08 8:36:28 AM 9/25/08 8:36:28 AM Questionnaire for Computing the Average Purchase Price of Power Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant Q6e: If the amount of this investment won't be finalized at the time of signing the PPA, describe any formula used to incorporate this amount in the value of the capacity purchase charge: _______ Note 8 The formula may link the value of CP to the ratio of the actual final investment cost to a reference investment cost. If this ratio is unity (1), then all the cost difference is borne by the purchaser. If this ratio is less than unity, then the cost difference is divided between seller and purchaser. Q7a: What proportion of the total investment is financed by the seller through long-term debt (Dp)? _________ Q7b: What is the average annual interest rate payable on this debt by the seller, expressed in percent per year (Di)? _________ Q7c: What proportion of the total investment is financed through equity by the seller, expressed as a percentage of the total investment (Ep)? _________ Q7d: What is the pretax average return on equity sought for this investment, expressed in percent per year (Ei)? _________ Q7e: What is the seller's weighted average cost of capital (i)? _________ Note 9 The seller's weighted average cost of capital (i), expressed in percent per year, should be computed from the following formula: i = (D x D + E x E)/100 p i p i The sum D + E should equal 100 percent. p p Q8: What is the component of the capacity purchase charge that covers the total investment in the facility, expressed in US$/kW maximum declared capacity/month (CPINV)? _________ Note 10 This component is computed from the following formula: CP = I x {i/[1 ­ 1/(1+i) ]}/12/C INV n CAPACITY where I is given in the response to Q6a C is given in the response to Q2b CAPACITY Q9: What is the fixed operation and maintenance cost for the facility, expressed in US$/kW maximum declared capacity/month (CPOF)? _________ Q10: What is the cost of all forms of insurance for the facility, expressed in US$/kW maximum declared capacity/month (CPINSUR)? _________ Q11: What are the general and administration costs for the facility, expressed in US$/kW maximum declared capacity/month (CPGEN)? _________ Q12: What other capacity related costs are recovered under the capacity purchase charge, expressed in US$/kW maximum declared capacity/month (CPOTHER)? _________ Q13a: What is the capacity purchase charge component of the average purchase price, expressed in US$/kW maximum declared capacity/month, that is calculated from the following formula (CPCALC)? _________ Calculated capacity purchase charge CPCALC = (CPINV + CPOF + CPINSUR+ CPGEN + CPOTHER) Q13b: What is the percentage difference between the value of the levelized average capacity purchase charge (CPLEV) of the PPAand the calculated capacity purchase charge (CPCALC)? _________% 31 5311-CHANNEX.pdf 31 5311-CHANNEX.pdf 31 9/25/08 8:36:29 AM 9/25/08 8:36:29 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Note 11 This percentage difference should be calculated as follows: [(CP ­ CP )/CP ] x 100 LEV CALC LEV The levelized value for the capacity purchase charge (CP ) is given in the response to Q5b. LEV If no response is given to Q5b, the average first year value (CP ) given in the response to Q4 AV should be used instead. Energy Purchase Charge Q14: What is the level of the energy charge payable at the expected date of commercial operation given in the PPA, expressed in US$/kWh (EAV)? ____ Note 12 If this energy charge is not explicitly stated in the PPA, write, "Not explicitly stated." If fuel is to be provided for the plant at no cost to the seller, write, "No fuel charge payable." Provide details of the fuel supply arrangements in the response to Q14 of the Questionnaire on Risk Allocation. Q15a: Is the fuel charge linked to an index or indexes? ____ Q15b: If so, identify the index or indexes and give the indexation formula(s) here: ____ Q16: What type of fuel (natural gas, liquid fuels, or coal) will be used principally for generating power in the plant? ____ Q17: What is the average calorific value of this fuel, expressed in joules per unit of fuel--cubic meter for natural gas, liter for liquid fuels, tonne for coal (Fcal)? ____ Q18: What is the average energy conversion efficiency (heat rate) of the power plant that the seller has committed to in the first full year of operation with the principal fuel--taking into account any difference in quality from normal standards--for the planned operating mode of the plant under the PPA in the expected ambient operating conditions, expressed in joules consumed per kWh produced from the generating plant (Fconv)? ____ Q19: What is the unit cost of the fuel in the first full year of operation to be used for generating power in the facility, expressed in US$/unit of fuel--cubic meter for natural gas, liter for liquid fuels, tonne for coal (Fcost)? ____ Q20: What proportion of energy produced by the generating plant is consumed in the facility, expressed as a percentage of energy produced (Paux)? ____ Q21: What is the estimated fuel cost component of the energy purchase charge, expressed in US$/ kWh sent out from the facility (EF)? ____ Note 13 The estimated fuel cost component (E ) of the energy purchase charge is calculated as follows: F Fuel cost E = [F x (F /F )]/[100­P ]/100 F cost conv cal aux Q22: What is the variable operation and maintenance cost for the facility, expressed in US$/kWh sent out from the facility (EOV)? ____ Q23a: What is the amount of energy expected to be sent out from the facility, averaged over a year to allow for planned maintenance periods and unplanned outages, expressed as kWh per month (EENERGY)? ____ Q23b: What is the expected average monthly capacity utilization of the plant based on the expected amount of sent-out energy? ____ 32 5311-CHANNEX.pdf 32 5311-CHANNEX.pdf 32 9/25/08 8:36:29 AM 9/25/08 8:36:29 AM Questionnaire for Computing the Average Purchase Price of Power Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant Note 14 The expected average monthly load factor should be calculated from the following formula: Expected amount of energy produced monthly (E ) ENERGY Expected declared available capacity (C ) x 720 CAPACITY The value for E is given in the response to Q23a. ENERGY The value for C is given in the response to Q2b. CAPACITY For the purposes of computing the average purchase price in the case of a fossil-fueled power plant that is to operate in base load mode, E will be computed on the assumption that ENERGY the plant will operate at the equivalent of its declared available capacity for 70 percent of the payment period (equivalent to 534 hours in a month of 720 hours), even if the plant is expected to operate for longer. E = C x 534 kWh/month ENERGY CAPACITY Q24: What--if any--is the purchaser's minimum monthly payment for energy under the PPA (allowing for planned maintenance) under a "take-or-pay" provision, expressed as US$/month (Pmin)? ____ Note 15 This minimum payment for energy--if applicable--will be used for computing the average energy purchase charge (E ) component of the average purchase price (P ) under Q29, if the purchaser AV AV is committed under the PPA to pay for an amount of energy that is greater than 70 percent capacity utilization during each payment period according to the response to Q23b. Also in this event, the amount of energy (E ) used in the formula for the average purchase price will be ENERGY set at the equivalent of 70 percent monthly capacity utilization. Q25: What is the estimated average energy purchase charge payable from the date of commercial operation, expressed in terms of US$/kWh (ECALC)? ____ Note 16 The energy charge component (E ) of the average purchase price, expressed in US$/month, CALC is calculated as follows: E = (E + E ) x E if this amount is greater than P CALC F OV ENERGY min Otherwise, if applicalbe: E = P CALC min E is given in the response to Q21 F E is given in the response to Q22 OV Q26: What is the percentage difference between the level of the energy charge given in the PPA (EAV) and the estimated energy cost (ECALC)? ____ Note 17 This percentage difference should be calculated as follows; [(E ­ E )/E ] x 100 AV CALC AV E is given in the response to Q14 AV E is given in the respnse to Q25 CALC Q27: What supplemental charges are payable by the purchaser for normal operation of the plant under the PPA, showing each charge separately with any applicable indexes, and expressed in US$/month (S)? ____ Q28: What is the average supplemental charge payable by the purchaser, expressed in US$/kW, maximum declared availability/month (SAV)? ____ 33 5311-CHANNEX.pdf 33 5311-CHANNEX.pdf 33 9/25/08 8:36:30 AM 9/25/08 8:36:30 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Note 18 The average supplemental charge (S ) should be calculated from the following formula: AV S = S/C AV CAPACITY Q29: What is the average purchase price of power under the PPA from the following formula, expressed in US$/kWh (PAV)? ____ PAV= (CPLEV + SAV) × CCAPACITY/EENERGY + EAV Note 19 CP is given in the response to Q5b LEV S is given in the response to Q28 AV C is given in the response to Q23a CAPACITY E is given in the response to Q14 AV Where a value for CP is not available from the PPA, use instead the value for C given in the LEV PAV response to Q4 Where a value for E is either zero because fuel is supplied at no charge or is not available AV from the PPA, use instead the value for E given in the response to Q25. CALC Q30: What exchange rate is used for converting costs incurred in Nigerian currency to equivalent amounts in U.S. dollars? ________ Naira = 1 US$. Seller's Declaration: Date of Declaration: 34 5311-CHANNEX.pdf 34 5311-CHANNEX.pdf 34 9/25/08 8:36:30 AM 9/25/08 8:36:30 AM Annex Summary of Key Factors Affecting a 2 Power Purchase Agreement for a New Fossil-Fueled Generation Plant Seller: ___________________________ Purchaser: __________________ NERC's License Application Number: _________ Factor Reference in the Unit Value Average Purchase Price Questionnairea Duration of the PPA Q3 years Capacity Purchase Charge: Types of technology Q1 n.a. employed Nominal capacity of the Q2a kW facility Total investment in the Q6a US$ facility Investment per unit of Q6b US/kW nominal capacity Levelized capacity purchase Q5c US$/kW/month charge Proportion of the total Q7c % investment as equity Weighted average cost of Q7e %/year capital Energy Purchase Charge: Fuel charge payable Q14 US$/kWh Type of fuel used for Q16 fuel generating power Energy conversion efficiency Q18 joules/kWh of the power plant Unit cost of the fuel Q19 US$/unit of fuel Average monthly load factor Q23b % of the plant Minimum monthly payment Q24 US$/month for energy, if any 35 5311-CHANNEX.pdf 35 5311-CHANNEX.pdf 35 9/25/08 8:36:31 AM 9/25/08 8:36:31 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Factor Reference in the Unit Value Average Purchase Price Questionnairea Average energy purchase Q25 US$/kWh charge Supplemental Charges: Supplemental charges Q28 US$/kW/month payable Average Purchase Price of Power Q29 US/kWh General Exchange rate: Naira per U.S. Q30 Naira/US$ dollar aQuestionnaire for Computing the Average Purchase Price of Power under a PPA Seller's Declaration: Date of Declaration: 36 5311-CHANNEX.pdf 36 5311-CHANNEX.pdf 36 9/25/08 8:36:31 AM 9/25/08 8:36:31 AM Annex Purchaser's Declaration About Affordability 3 of Its Payment Obligations Under a Power Purchase Agreement for a New Fossil-Fueled Generation Plant Seller: ___________________________ Purchaser: __________________ NERC's License Application Number: _________ Q1: Can you afford to make this proposed purchase under your existing tariff(s) to your own customers? ___________ Q2: If the answer is no, what is your current estimated revenue shortfall without the addition of this PPA? ____________ Q3: If nothing else changes, by how much would your current revenue shortfall increase on a percentage and absolute basis as a result of the expected payments under the PPA? _____ Q4: Estimate the required percentage increase in your average tariff(s) to eliminate any additional shortfall as a result of this PPA. ____________ Purchaser's Declaration: Date of Declaration: 37 5311-CHANNEX.pdf 37 5311-CHANNEX.pdf 37 9/25/08 8:36:32 AM 9/25/08 8:36:32 AM 5311-CHANNEX.pdf 38 5311-CHANNEX.pdf 38 9/25/08 8:36:32 AM 9/25/08 8:36:32 AM Annex Questionnaire on Risk Allocation Under 4 a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 39 5311-CHANNEX.pdf 39 5311-CHANNEX.pdf 39 9/25/08 8:36:32 AM 9/25/08 8:36:32 AM Pages:____ e of sponse R Number __________________ e )e Claus Not eriod A PP ees( P Purchaser: truction e ons C ormf )s y allf the ed-pricxfi act allf entionter act the ellers;e tium( in ye ? ontrc that ? w onsumedc during ontrc that or onsumedc la and and-bts tium onsc the er tium majeur fo or fuel _________ urnkt the or edit fo w a po cr errunsvo ce s age onsc for the eement gr cribes errunsvo onsc fo orf ed orf s change truction A under De ed. entc tsoc Number: e stsoc tsoc yap yap ed ? us ertt le onsc insur per er made--including truction er act is truction chas fo a ? truct onsc the truction as) chas ? onsc chas Pur ontrc truction ormsf yb being ent;ve onditions;c er onsc e o the ermst or pur onsc the ed pur ar sioning Application wo truction be wt onsc y fo in edts act or fo ound or ting P onsc es y truction ol insur gr an ol po s ontrc ellers s: mee s; the in plant -plustsoc ellers a the be ar onsc ommisc Licenses se fo ontrc visionso or ontrc der the pr the or be ecurits ot e alent entve or the s ___________________________ under ase the s ill ho the hat ar plant hat plant tions s W act )?s W. W equiv e( Doe W. wing side Incr Doe. NERC' Que Risk 1. Q1a. ontrc neither if Q1b within Q1c. bonds or( pric Q1d. during Q1e nancing--ffi out ollof ariationv Q1f during Seller: 40 5311-CHANNEX.pdf 40 5311-CHANNEX.pdf 40 9/25/08 8:36:32 AM 9/25/08 8:36:32 AM e sponse R e )e Claus Not A PP ees( or orf er w / orf tse ot the the po er orf ), ? hand er er s w ellers A been AS truction in anged signment int ellers --on ellers upplierS (F ASF ev under PP arr the alsvo not or ha ?tsoc as,stes chas lender s changexe s onsc is pur entionter,se elopingv po de the in under the the the A liens ot se ot in ev uelF the y orf ase ed? s appr PP has ellers as( s an and eement with nancingfi shar yb that s s s fo fo y incr enuever enuever fo ha the ed ecurs et the an ation one er agr the fo s truction ement c.)te,e y ailableva lender om ailableva change at and,s in be dur loc chas ed eement ompc fo be fr omplec be om ot which stsoc doe onsc ermst pledge, sibilits fr the be pur supply anc will ?se ?se y not sec agr additional will additional ot tey ed equirr po the s or liens arising se ase se ase is ev permit,se the fuel specifi and y ect at fo Dela and,e e insur --or arising plant s ha ens doe ourser s and dat timatse dir fo oper stes than nancingfi stsoc ervo eiv incr eiv incr anc dat ecr es ecr tion er plant A a timing ecurits liens as nancingfi y in stsoc es lic w right ot e right PP ellers yb nancing fi the the the sion,se &M y the y the po the ermst O/ ? an the thero( se ellers in omple fo us ?e the the age in e e or e se ellers arysse C signment what ained se nancialfi ervoc or ar ? ar nec dat what if, act plant plant and-bts ase the and-bts ther ase the which om tion land obt and ot fr ely ackp ase hat ot oncc/e hat hat as,s er incr e stes er eringvoc eringvoc on hat incr hat hich wa tions W W. oject w W Ar as w until hat until e truction W ed, been Under Incr allc pr ens ontrc ?) po po orf orf lic ountc W. ervoc se omple sit W. A W. ev ained Que 2. Q2a. on Q2b the Q2c. fo EPC ac the Q2d. plant the plant Q2e ot atr PP Q2f ervoc se A atr ons C. PP C 3 Q3a. the ecurs Q3b ha obt Q3c. withdr spectiver nancingfi 41 5311-CHANNEX.pdf 41 5311-CHANNEX.pdf 41 9/25/08 8:36:32 AM 9/25/08 8:36:32 AM e sponse R e )e Claus Not A PP ees( ? s' the t , is the is er a w the the ? por upplierS ellers in ondy sion supply as that yb that or po y supply ork or ellers( be an ed A ondy A ? ? eement the wt in fuel aloc fuel uelF the be PP PP ansmis ne such( a if, the tion tium agr plant ellers( in sy orf ot ot yb ationts tium the tion tr, the or er sy pipeline and ely specifi ableyap or w ork dela sion er e er po wt onnectc including plant w dat ot ellers( dela yb fuel ? or eement er po in under ne ork, )?yt chas spectiver a ableyap omplec onsc under onsc omplec s the ed ansmis the yb y e e in onnectionc onnectionc w or ed wt ork tr agr onnectionc po the pur be y at sion ne wt )?yt arp e ausc the d the A,SF dela ervics truction tingt truction ne arp the the a ompensationc ervics acilitief oper equirr ador thir ould o dela o signed ge s sion d errunsvo ot signed funding anc ervics w fo a plant int onsc a ed a ansmis or om e sion a and o s orf onsc int sion orf tr ork thir building orf supplying A atr orf ev w a tsoc er ev y or, the )? ailr fr)y int y w plant tium the fo er ociats ha er w or ansmis y ha or ermst PP er entry entry fo or an tr or, an po er ge penaltie fo fo ansmis as po er w acilitf daily ol ansmis at chas er tr acilitf videro the ol fo ent onsc e e fo ellers tr orf w orf the po ellers char what the pur er the oper the chas age sponsibleer pr om not ? daily dat dat ontrc sponsibleer the w ot po the in pipeline fr s wa ASF ontrc is tion is syap ot syap the is is fuel, ed the ed s po sion s orts hat the ed the pur, the hat ho ho or ho sioning gas ho ?s ho er tions Under doe or W. truction act ot ot els onnectionc A W. act Doe omple the W at W al W ondy W. Doe. C. ension W. ur die chas Que Q3d. withdr plant PP Q3e onsc ontrc within Q3f ellers ontrc be 4 Q4a. with Q4b onnectc ansmis tr Q4c. plant xte oper Q4d. ommisc onnectingc Q4e Q4f nat or acilitief Q4g. other pur 42 5311-CHANNEX.pdf 42 5311-CHANNEX.pdf 42 9/25/08 8:36:33 AM 9/25/08 8:36:33 AM e sponse R e )e Claus Not A PP ees( ed ? the the er the the d yb the the the t t , ot ociats ation w chas thir enuever yb e--will la as as )? ? mee or the mee e sioning sioning and ellers pur or anc truction ot yb ot ax,t other the the ectingf at ableyap ? in periods af insur onsc e stsoc ableyap implement majeur ommisc onnectionc s' e ailsf s ommisc supply e oper ot ar,s ailsf Q6a ce the in in allingt ableyap in er sy ectingf ation ectingf y ar,s plant fuel sy at plant ellers s plant for or( ins w, af af ?stset dela ?stset e oper e majeur ?s erruption the the A changefo dela the or dela ec damage the and or or adsor int om and orf ss fr entve tion cribeds PP under ed that penaltie de that allf majeur majeur fo e ervoc damage tion ed the ountc as building building ce ce supplier entve omplec ot entve entve omplec in ac e not errunsvo in in for arising liquidat truction akt do tsoc sy errunsvo for busine at at sy such, fo fo nition majeur liquidat fuel as the y the the ds dela tsoc ec in supplement ? as in in included ot) that dela e onsc defi stsoc plant orf ailableva ot e y yb y yb one nition nition ar oms the is A an er een such e--such tium e tium tium is an w wt ervoc fo e including,s or ailabilitva PP andarts or or ? orf ed ed e majeur defi defi orf po elect be --isy A, allft including,s e anc ot allft y aus anc A actions syap ausc PP the atr PP ? syap ausc ec the the an onsc acit onsc shor onsc ther egulationsr the orf shor visionso at ot and, is is --if the insur arryc bec y penaltie apc insur e pr if, penaltie he under and, the ho plant plant ho plant s ge ed hat hat hat ot hat tion acit hat ed hat atr ed hat in tions W W W s er er W er tinguishing W. W W truction truction at hat truction ernmentv W w w w char ned Insur. tie ellers ap W. C gone W. Go eement omst Que Q4h. po po Q4i. po acilitief dis 5 Q5a. dis( Q5b Q5c. arp Q5d. the omplec 6. Q6a. onsc specifi Q6b orf onsc He.7 Q7 onsc specifi 8. Q8a. agr cus defi 43 5311-CHANNEX.pdf 43 5311-CHANNEX.pdf 43 9/25/08 8:36:33 AM 9/25/08 8:36:33 AM e sponse R e )e Claus Not A PP ees( ? s e y period s and and ? er aint ,y e the er ellers that or s' ational the or tr enanc ?s fo chas ation will the )?s chas ery in chas pur the entve ent ellers onsc oper s principle amp-upr time yb supplier qualit( pur ectingf pur and is onsc oper maint er y af deliv ? actions the the A, w s the the s fo video ?s ot the other ge urbinet plant ed aint change the in wa pr PP slo videdo ations acit and e y as tr A an ot ert pr aint and om om chedulings the char orf apc tr PP or asf s be equipment oper educr onsc fr fr ellers withdr during ev such( ejudic s ? ha orf s the orf the onsc orf ellers ompensationc will the the or pr chedulings and under s A s ed sion fo e aint ch ode otherfo yap arising the arising om sion een under plant erves tr and C plant orf t PP een eement at penaltie, fr ot ? s policie wt A gr onsc ch arp the the elys ansmis stsoc e wt stsoc be ermst e A at disp Grid the PP ?se aidp as in e omponentc ansmis tr be se be erv angement antie anc )?y tr ed and ausc disp the the will or ompensatc ating ating at the ating y s ed chas in ervics onc arr arr obligation fo will t w ? be at the obligations se ge videdo plant insur s' stsoc er olonged oper oper alloc opriat that s Pur oper abilit pr within er pr in alloc in under it ectf char e and,,s s' eliabilitr entve plant er main a e onditionsc xpre sya e er apc e ar suppor s' chas ating se se w wo mode af plant plant P will ablishedtse ervics and chas al ancillary at se lefio al the ailableva ellers the fo chas ar y pur ase ase pr the fo ? pur in oper the the ellers pur ormanc ating in incr incr what either e eps or other the se entiv s e the erminatt ation entve e time er egulationsr e in ar that echnict other edt ancillary inc echnict e ar act ar ciencfi the the is se ar ar ot se perf oper A edur ur and under wn w w w thefo under hat PP gener oc hat e hat hat hat act hat hat ef,y fo will the adjus w ase in tions Under. er ch Ho ernmentv s W pr W. W W W. ontrc W Ho ge at Ho Ho. erf the the w Incr. ernmentv Que Q8b entitled Go int nancialfi Plant. Risk 9 Q9a. in fo and Q9b ervser aidp W. er Q9c. be Q9d. amp-dor &M Q9e manuf Q9f O Q9g. quantit Q9h. char disp Q9i. po 10 Q10a. go Q10b inactions 44 5311-CHANNEX.pdf 44 5311-CHANNEX.pdf 44 9/25/08 8:36:33 AM 9/25/08 8:36:33 AM e sponse R e )e Claus Not A PP ees( y ailabilitva ? or ot y plant allc the the ed y ating at the the the acit due ot ot ot / the fo eement this e the cap A der/ ailableva is om oper giv declar ge age fr &M--both fo agr in PP orf will ellers under age ed plant ? er O,e ?s either nancialfi s ge orf entve ailabilitva er out the er changexe allft the allc an long ailableva the out char w other er chas e edc arising er anc w yb declar stsoc w chas char adingser the orf ed edc belo po chas fo doe,y or shor pur ho orf chas y pur an er y in eign A y under chas orf the insur s or if ev orf allc ?se orf ?stset pur PP ar the pur t declar orf w pur acit y the orf A, met tibilit ha fo right ot est,t y s ableyap y aris and/ the ot s belo ating egorie PP ompensationc in s erv y the it apc the mus in the ot --isy aultf aultf y acit in and atc the orf or on ellers emport right e at tibilit an at ?stset apc oper ellers ev anc acit is ev err or uation ned y ha the is allft ailabilitva in the notic plant sit apc er the se the ellers ailableva ymentap fo erv ailabilitva in other under ha nonc/y on defi er arey e has in shor een ase fo fo is er ould chas er anc ault ellers wt the es se and ause w ses ating a an the s e chas ary be ase chas bec es nonc der/ ?tset ailsf def allft ailabilitva the tion pur y adv a y incr een our e wt visionso ailabilitv or pur age chas time y ?tset ortser e shor een the ar ecr incr pur ed our y purpo opor pur plant or acit inactions be ariable--v pr ompensation--ifc emport ecr orf out the much ot s when wt pr ary w or hat the nona man hat the w this the ev bef be or apc ed limit w hat er when y y hat tions Ho W or incurr ? xe edc at ot ailabilitva and W. hat W ailabilitv Doe Ho orf If ha ellers A orF If. W. an acit chas acit W. Que Q10c. actions alloc Q10d. PP edxfi orF Q10e ellers losses output 11. Q11. nona the 12. Q12a. orf Q12b ho,tset ?ts emport te Q12c. ellers Q12d. ellers apc Q12e pur or apc Q12f ableyap ating der ailableva 45 5311-CHANNEX.pdf 45 5311-CHANNEX.pdf 45 9/25/08 8:36:34 AM 9/25/08 8:36:34 AM e sponse R stsoc M & O e )e Claus Not A ariablev PP ees( and )e atr w at .)e the , e he er A belo w ? the be full in emtsys fo ellers is gy ? orf PP e in po plant orf and and ASF arising ge the y majeur the )s ener atr aultf the sioning the ermst tionnairs or the ce at e( at ation fuel fuel or ormula,f should, que output er fo char the he is orf not( om ? y fr e for atr ymentap orf ecurits the on al a ot s' eriort this mirr the er fo ellers edt chas er ed fuel ommisc acit chas plant ellers de stsoc ationx os e ocuring in the pur apc pr chas pur under made om fuel ? inde and electric the y specifi fr ocuring ed plant yb omplec the be the A A obligation ocuring orf s' e, fuel-buy videnc pur pr w in obligations fo the yb pr PP (E acit ellers y ya orf ? this er edts ailableva the ould which orf ellers PP,e ot apc s belo the signed arising orf ASF majeur the e ation orf ectfler)e dat dela( the atr e-or-p ASF with t deliv ed the ot w--y ? A atr s ce A the ASF ot equer fo an not( sponsibleer in at under akt ement the er for sion PP at eriort PP do arts --if in an he er the s is declar ailsf ailableva se he de not fo trigger ),y fo tion chas the sponsibleer e the in s equirr y in orf stsoc sponsibleer is ase is A,SF ee the in chas a is,y ommis that ar ? pur in tment the ant opc C ellers s A opor ge fuel incr ed ed e ation pur is ermst an e a pr the ation ellers ? e in the PP adjus ed ellers who, it ar damage ailabilitva if, ar guar as plant within the hat yb char the e ase the ot the or the orf w eriort ther ed hat hat tions If specifi hat Is plant yb the emedier W eriort at W. specifi)s If ? If. Ho de W. eller such om Que Q12g. fr oper what under Q12h. ableyap chas er er e( plant,e W. entve De. Incr. w videdo 13 Q13 pur atr 14 Q14a. plant Q14b po yingap om w Q14c. fr po Q14d. obligations liquidat dat Q14e Q14f fuel-s A,SF pr 46 5311-CHANNEX.pdf 46 5311-CHANNEX.pdf 46 9/25/08 8:36:34 AM 9/25/08 8:36:34 AM e sponse R e )e Claus Not A PP ees( A in PP e ed e y .t A, or ? orf the is the A the the ellers fuel); an ot PP fuel bef y the w fo and ot s PP if om fr equential orf the specifi itl ellers the ernativ and plant edt acit ? this er ee t suppor onsc belo is alt unit ge; video under the fulfi the fuel A fuel pr the plant apc ymentap ant this fo PP under edt chas ot fo per the using equipment under will fo char fo ommitc pur t e suppor guar main er plant s e ar equipment ur aget supplied the edt ot TUs fuel . ellers ailsf asc ? edit be in the permit B when ation ge ot obligations the damaged er in cr nat s er fuel shor ed ot the chas while (in the e the t oper fo yb suppor it er a permit plant ot char damage pur ge chas ymentap ernmentv the chas ot --or fuel is fuel mus er cial erruption the damage orm pur cr chas Go pur ery specifi e ? about w fuel char ement int e ableyap e edit mak a due er this otherwis major age pur perf or cribes w ching change the is the or ed the deliv ailst fo po att ss y all--is major ot or ? ernativ po the chas er eiv or in wits the fo om ommerc and/ de at er that om w s er de,os output y onditionsc alt aluev fo an fr ervoc einsr If ating fuel e );h e fo pur ecr al busine fr po ee age y ough chas wnedo ? ellers er an c wing chas e w dela ?y ationx anc e e fo atr kW out sicy orf entve ant thr long--if acit po what us at pur akt pur ellers or the gener fuel: ement per inde insur ph w the atts s ts qualit ot ollof wnero fo alorific and arising ompensationc ot guar he apc fo the is lo orf ypet s ot fo ho om the e in s' the Doe tions fo hat hat fr yb er er ed Under edt hat A the --including this age age joule olonged W W e Has Que Q14g. stsoc ypet PP If video erva erva orF. W. (in change Pr. ommencc stsoc ailablev ailurF ellers chas chas plant specifi Q14h. permit the 14i. pr fuel; 15 Q15a. the the equipment Q15b yingap eiv ault una 16. Q16a. the obligations Q16b ecr def Q16c. pur pur 47 5311-CHANNEX.pdf 47 5311-CHANNEX.pdf 47 9/25/08 8:36:35 AM 9/25/08 8:36:35 AM e sponse or at R oper e plant )e the Claus Not yb A PP ees( ed caus is that fo ? the A se , A or fo at the PP er or om fo ervoc pric PP at the ermst fr olutionser or altot an e at oject the ting the nedfied e ss the er the oper sa( chas pr fo amplexe ene in w age in e pric the ation, ? po pur A what, under s Oper/ ymentap mee egulationsr ying the A orf egulationsr al arising sioning, disput erva PP asc -out PP ?y under plant orf orf e etsa or oper w ectivf ained the bulk a fo ellers the achee ellers A al A acf and, in ef the yb the buy A:SF and/ the PP PP y ? in indemnif w ontc w en fo equit se eement br the the onment dous ommisc that the ? ma la er the ot e or the ar ar on w agr ot or s the onment the vir orf it plant fo change er belo akt la e at yb en A e chas and obligations haz ed during entve ell gy ermst Doe s ervics or vir at en ot A, aft made ellers A PP pur w ? it oper that fo or under under PP es urnter s the ener -out er PP t the enanc caus y fo s thefo be choic ? y act the allf the oper the visionso s elap anc in pr in A te fo h buy yb the Nigerian mee plant chas ot ainster maint the ache om t change e ontrc thefo ellers c ot or handling sioning fr PP w yb the br ar liabilitie y sit kW the mus mark ault pur ed the minimum e la and incident orf with the apply ellers an and or yb that ommis fo er per def the w plus ellers ation the ableyap al sponsibiliter sponsibiliter t signment time --specifiy er ar--y fo ? s eds s ermination,t, equirr yb will as amendment po an w ? an fo the is entve ar ar visionso ationt ellers dec plant w English, ent po A ault debt be be pr w agains the much an --if --if entve la e e oper la y onment impo eement ho s ? ho omplyingc the and e w orf PP hat er orf or hat hat def an hat her an the onsc thefo vir W tions W anspor signment Is s W Nigerian the W fo ailurF. W. in agr W. fo yb) fo orkY En plant A Que 17 Q17 under indemnit PP this 18. Q18a. penaltie the Q18b stsoc tr w ation, ol Ho. bef W. chas la As. A enegotiationr e andingts the Q18c. pur the in oper 19 Q19a. lender ontrc Q19b PP Q19c. orf in ymentap under Q19d. asc entve w out Q19e Ne 48 5311-CHANNEX.pdf 48 5311-CHANNEX.pdf 48 9/25/08 8:36:35 AM 9/25/08 8:36:35 AM eviation abbr the ences, eferr such have not do that e esponsesr of sponse case R the In e column. )e Pages:____ this of in Claus Not A PP ees( noted be __________________ Number should e cur esponser ot the y ot each ed ma Purchaser: for oject or limit pr bring ? will ot not A the s documents _________ PP that but s elatedr the about wishe s any or and Number: under eement ellers actf --including agr FSA, the ? A, ed PP sion visionso olutionser ticular that the in pr arp ociats e and y Application as ommis ences the an C e e eferr disput and stsoc instead. the ar A or ther fo ted hat --f e PP Licenses clause inser tions W. al higher Ar. ___________________________ be the e 0 entiont elevantr Declaration:s' Declaration: of Que Q19f periods Gener Q2 and ausc at NERC' The should Seller: Note: "n.a." Seller Date 49 5311-CHANNEX.pdf 49 5311-CHANNEX.pdf 49 9/25/08 8:36:35 AM 9/25/08 8:36:35 AM 5311-CHANNEX.pdf 50 5311-CHANNEX.pdf 50 9/25/08 8:36:36 AM 9/25/08 8:36:36 AM Annex Table for Risk Assessment of a Power 5 Purchase Agreement for a New Fossil-Fueled Generation Plant 51 5311-CHANNEX.pdf 51 5311-CHANNEX.pdf 51 9/25/08 8:36:36 AM 9/25/08 8:36:36 AM WR 3) e ating R R Not Risk ees( W %3 %3 % er es chas and our er ec Pur are /R Pages:____ B of Risk emedy R eller S Number e __________________ in 1e 2) e Alloc. e 1d, enc 1f 23 er Risk tionnairs Not 1c,, ef 1b R the Que ees( 1a, ol: Purchaser: ontrc w or ,s la tium fo arising tium and/ or or ec der s or onsc orf stsoc se se e onsc atr ed change, tse atr aus eriod er C P _________ truction insur, ariationv nancingfi int truction in in e changexe truction onsc onsc entve ellers,e onditionsc se ris in ed a side ase Number: ons C ithin lortn ound om W co Out Insur majeur gr Incr fr change the Application during A PP truction Licenses the onsc 1) or in ___________________________ e se Not actF under s NERC' ase Seller: ees( Risk Risk Incr ostsc 52 5311-CHANNEX.pdf 52 5311-CHANNEX.pdf 52 9/25/08 8:36:36 AM 9/25/08 8:36:36 AM WR 3) e ating R R Not Risk ees( W 3% %3 % 2% %3 %3 % 2% 2% 03 er es eriod P and chas our er ec Pur are /R truction B ons C Risk emedy R eller al S ot btuS e in 2) e Alloc. e 3c,, enc 3f, 43 5 6 7 er Risk tionnairs Not 3b 3d 8a 8b 3e ef 3a, R the Que ees( als;vo fo ol ot and, ec orf both appr plant s ontrc fuel omst yb ausingc ed e e and other e wna aus and,s cultiefi the cus, w enc and er C nancing;fi dif ondy onnectionsc sion allsft la ervoc withdr e or ed fo majeur allft e erf be permit,se at shor sioning truct shor in ejudic and tion ansmis tr emstsys not ur ec axt orf y e s int,s pr truction onsc truct ed atr e e er ens as acit opriation, ent w at Lic onsc ommisc omple fr ap Unanticip within the C po supply in Insur C He Change egulationsr majeur Expr onsc erves er w ed e ed po act fo tion ontrc ervics specifi tion o t omplec the int A mee at actions or omplec PP ondy ot e entry actF in be y fo the ailsf e ormanc sts ernmentv Risk Dela plant dat under Plant perf te Go 53 5311-CHANNEX.pdf 53 5311-CHANNEX.pdf 53 9/25/08 8:36:36 AM 9/25/08 8:36:36 AM WR 3) e ating R R Not Risk ees( W %5 %5 %5 %5 %5 % % 6% 4 4 %5 %7 er es chas and our Pur er ec are /R B Risk emedy R eller S e in 2) e Alloc. e 10e 12c,, 12e enc 9 11 12g, 13 14 er Risk tionnairs Not 10a 10b 10d, 12b 12h 12d, 12f ef R 10c, the Que ees( 12a, ot s' e yb er actions y , or s' edur oc ed e aint chas pr fuel, supply tr fo aus limit pur ellers ault C onsc ernmentv ake ailabilitva entve e fuel w y needs eriod echnologyt the the def go aultf e in pric e P ation sion in om om acit s' s fr fr ault;f in oper ation s' apc er aultf e majeur s' ation ernmentv y chas ec ase enanc erruption ansmis Oper Plant gener tr Change egulationsr Arising actions Arising Go ellerS erifv Pur orF ellerS Incr int maint the y ed A at PP stsoc acit )e due or during apc e atr atr A oper at the /y in )s not( at e( he PP be ating ating y der/ allft he atr in stsoc stsoc in the under &M oper ed O or annotc shor in ailabilitv tibilit age y fuel ation se erv ation out actF under ary nona specifi ed s visaged plant ase en xe on edc w ase eriort ariablev Risk Risk heT as Incr orF nonc orF emport ailabilitva eriort de De belo Incr ot and 54 5311-CHANNEX.pdf 54 5311-CHANNEX.pdf 54 9/25/08 8:36:37 AM 9/25/08 8:36:37 AM WR 3) e ating R R Not Risk ees( W %5 %3 %3 %3 %5 % 07 100% er eriod ating es P R chas and our er Pur ation Risk ec are /R Oper B altoT al ot Risk emedy R eller S btuS e het in 2) e Alloc. e that to enc IPP 15 16 17 18 19 chaser/ er Risk tionnairs Not the pur ef eements with for R the Que ees( e Agr chaser chase exposur pur Pur risk the the A o cientfi fo ste ations ations by zer PP Power er is into eement eement with (0 oper oper ed under 5 e mark chas agr agr er diligence. to insuf about 0 output er e e enter aus w pur due Power Plants C as chas se the po achinge achinge scale Sell a entve the pur legal such orf br enanc br enanc eements to on the yb disput agr and s or or Generating ed in and of opose or ed at maint at maint Rating Pr is Insur actF demand plant ervs Oper and Oper and ellerS eriouss R ermst nancial,fi that analysis /5 R risk Fossil-Fueled × 100%. ed Entities W or full = = orm a technical, at for New t that A A ausc its for (%) major e perf s oft omfr PP mee PP oper weighting om ot par ot Rating or Allocation as fr total er the the substitute plant at disput Risk Customers not take with age chas ellers incident on eighted the al oper/ and, e W does under is out equipment under under or ot pur the yb ermination,t, w Captive la eighting, WR fo fo actF ed ellers fo table with W should is e e Declaration:s' Declaration: onment e This Questionnair W of olonged ausc nment). vir the signment Risk Pr damage ailurF obligations ailurF obligations is En yb As choic olutionser 1: 2: 3: chaser chasers Note pur Note pur Note Gover Seller Date 55 5311-CHANNEX.pdf 55 5311-CHANNEX.pdf 55 9/25/08 8:36:37 AM 9/25/08 8:36:37 AM 5311-CHANNEX.pdf 56 5311-CHANNEX.pdf 56 9/25/08 8:36:38 AM 9/25/08 8:36:38 AM Annex Illustrative Risk Assessment of a Power 6 Purchase Agreement for a New Fossil- Fueled Generation Plant 57 5311-CHANNEX.pdf 57 5311-CHANNEX.pdf 57 9/25/08 8:36:38 AM 9/25/08 8:36:38 AM % % % % WR 0%. 3) 0.0 0.0 1.8 0.0 0 e ating R R Not 0 0 3 0 0 Risk ees( W %3 %3 %3 %3 %3 .e er pric tment e chas adjus chas Pur x es pur Inde ot and our er ec wa are /R ss B lump Dr.e in .e if e nancingfi e ,se Risk emedy anc alsvo sur nancing.fi R busine clo y pric fo pric ens y eller lic appr S edxfi insur nancingfi edt e y act eeds and-bts all and-bts in ntroc oc xhause chas nancialfi on has and,s pr e erruption and-bts on y pur ed.t yb wa wa Include sum Us int on polic Dr until adjus ellerS permit hand Dr e in 1e 2) ol: e Alloc. e 1d, , enc Not ontrc 1f, 3b 3d 1e 2 3f, er Risk tionnairs 1c,, 1d, 3c, 3e ef 1b 3a, R tium the Que ees( 1a, or eriod P onsc e ed s' fo ris or ol ound s a ol and/ and,s within ontrc or e truction ontrc truction insur, ellers,e gr,s om nancingfi fr se truction aus ons truction der change, atr onsc ed the both truct C C onsc onsc entve or in plant tium se tse changexe in permit,se at s sioning ondy onsc the or ed majeur side ec ase arising er als;vo ithin w int ens cultiefi be the W onsc Out Insur orf ariationv onditionsc la Incr stsoc set in change ra Lic appr nancing;fi ommisc Unanticip dif and fo during A PP the stsoc tion fo e e A 1) dat or in e se omplec ervics PP plant the ed o Not actF under in er the s ase truction y w act int po ondy ees( Risk Risk Incr onsc Dela fo be ontrc entry under 58 5311-CHANNEX.pdf 58 5311-CHANNEX.pdf 58 9/25/08 8:36:38 AM 9/25/08 8:36:38 AM % % % % % % 3) WR 0.0 0.0 0.0 0.0 1.2% 0.0 0.3 e ating R Not R 0 0 0 0 3 0 Risk ees( W %3 % 2 %3 %3 % % 2% 2 03 . s er se ot a er at ervoc w s' .e eriod P er er tment chas that pric e Pur ompensatc chas e pofotsoc chas atr adjus truction es pur pur x chas and ellerS the daily the oidedva ons Inde pur C our al er ec are /R ot tse y y ot e an " B er ss polic int e yb s (if anc btuS ar wna tium tium, truction e period. dr Risk emedy yb .stsoc be R or onable anc or ot insur debt onsc pric ernmentv e ase eller S ableyap onsc ervoc ating businefo nancing.fi ableyap by Go insur onsc y ellers e ed om truction "r oper ar fr chas as s entitiled e y with is truction ellers edxfi eedscorp s s .stsoc nancingfi and-bts tium. pur onsc t or enaltieP onsc es erruption the and U int plus altieneP truction ther ault onsc enaltie supplement P onsc djus fur A and-bts during ellerS erminatt def ompensation.c e in 2) e Alloc. e enc 4 5 6 7 er Risk tionnairs Not 8a 8b ef R the Que ees( e ed er e w fuel po and ur ervoc ,s e ent e e fo ot and majeur allft allsft and, ausingc aus C sion tion emstsys truct ec axt not shor onsc e as ejudic fr orf shor in y e s omst majeur enc pr in ed atr ec wna er e acit at cus, orf opriation, erf omple C onnectionsc ansmis ap w tr supply other Insur C He Change la egulationsr yb Expr withdr int erves e t mee ormanc stset actions or ot perf tion actF ailsf ed omplec ernmentv Risk Plant specifi at Go 59 5311-CHANNEX.pdf 59 5311-CHANNEX.pdf 59 9/25/08 8:36:39 AM 9/25/08 8:36:39 AM % % % % % % WR 3) 0.0 .03 0. 0.0 0.0 4 0.0 e ating R R 0 3 0 0 4 0 Not Risk ees( W 5% 5% 5% 5% 5% %6 t as y le ot acit er at ot omes chas syap apc sion ge .e .e plant timing fo char .s tment has . pric pric er e ansmis e tment e er ervo Pur tr aint adjus ol es chas minimum tr x chas chas adjus chas chas tingset and our Pur the pur under onsc Inde pur No pur Pur ontrc and inspections er ec , are /R e e B giv plant chas with ellers Risk emedy R ermst but,e e arningse pur yb ade orf ot tbed fo .stsoc eller e rof ss S choic upgr . pric e ellers ot erminatt lo, ableyap er e e tment ch. anc s chas at chas entiv adjus .e sp ymenta erminationt pur Pur penaliz echnologyt inc de No pric ellerS ompensationc epr enaltie and P ot e in 2) e Alloc. e 10e 12c,, 12e enc 9 11 er Risk tionnairs Not 10a 10b 10d, 12b 12d, ef R 10c, the Que ees( 12a, eriod P y y ation ault ake e ation the w erifv or actions the def aus ation gener ot C Oper yb sion in om s' om s fr er fr actions ault;f e ailabilitva oper aint y the s' ed tr s' ansmis ernmentv chas ernmentv edur acit oc Plant limit echnologyt tr onsc Change go egulationsr Arising pur Arising ellers Go ellerS pr apc during A /y ary y PP the ating y / acit the as oper or annotc under apc ed in ailabilitv emport tibilit age y at se actF under erv or in out s plant oper ase nona visaged A xe on edc allft ating Risk Risk heT be en PP Incr ostsc orF nonc orF der shor ailabilitva 60 5311-CHANNEX.pdf 60 5311-CHANNEX.pdf 60 9/25/08 8:36:39 AM 9/25/08 8:36:39 AM % % 3) WR 4%. 4%. .2% 2 2 0.0 4 0.0 e ating R R 3 3 0 3 0 Not Risk ees( W 4% 4% 5% %7 5% e is . ge ge chas wlyo e pur while char char ailablev er e e ot y narr una chas majeur chas chas .e acit is under ec y tment es Pur pur pur pric y . y orf apcfo suspended e acit and .s is adjus apc our acit acit ned x er chas ge ec are ap /R C ableyap ap ableyap C is defi entve Inde pur ymentaP char plant B ot Risk emedy fo R e rof al (plus ss and lo, made erminationt is .e eedscorp sicy damagedfo eller S erminatt erruption anc ompensationc ymentaper and, pric tment e adjus chas ecnarusni phfo stsoc equipment int nancing).fi ement att and ss y the ellerS with debt arningse osts.c es No pur U orf einsr plant busine and-bts e in 2) e Alloc. e enc 12g, 13 14 15 er Risk tionnairs Not 12h 12f ef R the Que ees( entve fo e e aultf e , needs s' pric e aus C er aultf in e erruption entve majeur s' supply enanc chas ec ase int ed fuel Pur orF ellerS Incr fuel, in maint Insur at in w )s ot he in age e( damage or belo atr fuel due ariablev out ation e ation actF atr ed ed eriort ase not( stsoc major at Risk De he specifi Incr stsoc eriort and)e &M olonged equipment de atr om O Pr fr ot 61 5311-CHANNEX.pdf 61 5311-CHANNEX.pdf 61 9/25/08 8:36:39 AM 9/25/08 8:36:39 AM % % % % % WR 3) 1.8 0.0 0.0 0.0 8.71 e ating R Not R 3 0 0 0 Risk ees( W %3 %3 %3 % 5% 07 100% se e the ellers eriod ating P R er ot A. olutionser yb PP e enegotiat . ation Risk chas ompensatc olutionser ding e R oughts er the Oper es Pur er orc ac fo A. disput altoT chas disput PP if not al and chas our ot or pur ot er ec Pur ellers ermst Go under ermst ailsf and btuS are /R B fo ed ed e ellers Risk emedy e R rof ss lo, the erminationt .y the .y olutionser olutionser yb e enegotiat . eller S erminatt om supplement om e er and, fr equit fr supplement equit R oughts anc ompensationc ymentaper y is s' y is s' A. disput or or chas disput PP if not at ellers at ellers ot or pur ellerS with debt arningse osts.c ndemnitI oper yb ndemnitI oper yb Go under ermst ailsf and e o in 2) by zer Power e is Alloc. e into (0 enc Not 16 17 18 91 ed under 5 /5 er Risk tionnairs technical, to R 0 × enter ef its W Power R Fossil-Fueled = the Que ees( oft scale par Sell New a (%) eements to as on er se agr omfr of take Rating the fo er yb opose Rating Pr is w e as ed chas under R that demand po eighted er achinge and e achinge disput and e pur ermst analysis Customers W aus br br A risk should 100%. is C such output the ervs full = s or cientfi in ste chas Entities or or enanc enanc and a for at ations at ations eriouss PP Captive WR the pur eement eement for chaser with actF insuf orf plant mark the Oper oper maint agr Oper oper maint agr ellerS pur weighting nment). with about the Allocation yb chasers total e substitute that or e Risk pur not diligence. with A ellers that IPP at on to ed A the e chaser/Gover ot or al choic the due does pur or PP the PP yb , at ausc disput with eighting, fo er obligations oper/ legal eements for s table Declaration: Plants W e actF the fo ed is e e obligations the and Agr oper Declaration:s' of chas orm t onment ausc ellers and, This chaser Questionnair W w vir signment la Risk ailurF Pur perf under ailurF to mee under is plant En ncidenti the As ermination,t fo olutionser 1: 2: 3: pur chase exposur Note the nancial,fi Note Pur Generating Note risk Seller Date 62 5311-CHANNEX.pdf 62 5311-CHANNEX.pdf 62 9/25/08 8:36:40 AM 9/25/08 8:36:40 AM Annex Purchaser's Declaration About Seller's Table for Risk Assessment of a Power Purchase Agreement for a New Fossil-Fueled Generation Plant 7 Responses to Questionnaires and Tables Under a Power Purchase Agreement for a New Fossil- Fueled Generation Plant Seller: ___________________________ Purchaser: __________________ NERC's License Application Number: _________Number of Pages:____ Questionnaire for Computing the Average Purchase Price of Power under a Power Purchase Agreement for a New Fossil-Fueled Generating Plant (Annex 1) Q1: Have you seen the seller's responses to this questionnaire? _________ Q2: Are you in general agreement or disagreement with these responses? _________ Q3: Please state the particular responses with which you disagree, and why. _________ Q4: Are you adding your own set of responses to this questionnaire? _________ Summary of Key Factors Affecting a Power Purchase Agreement for a New Fossil-Fueled Generating Plant (Annex 2) Q1: Have you seen the seller's responses to this summary? _________ Q2: Are you in general agreement or disagreement with these responses? _________ Q3: Please state the particular responses with which you disagree, and why. _________ Q4: Are you adding your own set of responses to this summary? _________ Questionnaire on Risk Allocation Under a Power Purchase Agreement for a New Fossil-Fueled Generating Plant (Annex 4) Q1: Have you seen the seller's responses to this questionnaire? _________ Q2: Are you in general agreement or disagreement with these responses? _________ Q3: Please state the particular responses with which you disagree, and why. _________ Q4: Are you adding your own set of responses to this questionnaire? _________ Table for Risk Assessment of a Power Purchase Agreement for a New Fossil-Fueled Generating Plant (Annex 5) Q1: Have you seen the seller's responses to this table? _________ Q2: Are you in general agreement or disagreement with these responses? _________ Q3: Please state the particular responses with which you disagree, and why. _________ Q4: Are you adding your own set of responses to this table? _________ Seller's Declaration: Date of Declaration: 63 5311-CHANNEX.pdf 63 5311-CHANNEX.pdf 63 9/25/08 8:36:40 AM 9/25/08 8:36:40 AM 5311-CHANNEX.pdf 64 5311-CHANNEX.pdf 64 9/25/08 8:36:41 AM 9/25/08 8:36:41 AM List of Formal Reports Region/Country Activity/Report Title Date Number SUB-SAHARAN AFRICA (AFR) Africa Regional Anglophone Africa Household Energy Workshop (English) 07/88 085/88 Regional Power Seminar on Reducing Electric Power System Losses in Africa (English) 08/88 087/88 Institutional Evaluation of EGL (English) 02/89 098/89 Biomass Mapping Regional Workshops (English) 05/89 ------ Francophone Household Energy Workshop (French) 08/89 ------ Interafrican Electrical Engineering College: Proposals for Short- and Long-Term Development (English) 03/90 112/90 Biomass Assessment and Mapping (English) 03/90 ------ Symposium on Power Sector Reform and Efficiency Improvement in Sub-Saharan Africa (English) 06/96 182/96 Commercialization of Marginal Gas Fields (English) 12/97 201/97 Commercializing Natural Gas: Lessons from the Seminar in Nairobi for Sub-Saharan Africa and Beyond 01/00 225/00 Africa Gas Initiative--Main Report: Volume I 02/01 240/01 First World Bank Workshop on the Petroleum Products Sector in Sub-Saharan Africa 09/01 245/01 Ministerial Workshop on Women in Energy 10/01 250/01 and Poverty Reduction: Proceedings from a Multi-Sector and Multi-Stakeholder Workshop Addis Ababa, Ethiopia, October 23­25, 2002 03/03 266/03 Opportunities for Power Trade in the Nile Basin: Final Scoping Study 01/04 277/04 Energies modernes et réduction de la pauvreté: Un atelier multi-sectoriel. Actes de l'atelier régional. Dakar, Sénégal, du 4 au 6 février 2003 (French Only) 01/04 278/04 Énergies modernes et réduction de la pauvreté: Un atelier multi-sectoriel. Actes de l'atelier régional. Douala, Cameroun du 16­18 juillet 2003. (French Only) 09/04 286/04 65 5311-LIST.pdf 65 5311-LIST.pdf 65 10/9/08 8:56:02 AM 10/9/08 8:56:02 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Energy and Poverty Reduction: Proceedings from the Global Village Energy Partnership (GVEP) Workshops held in Africa 01/05 298/05 Power Sector Reform in Africa: Assessing the Impact on Poor People 08/05 306/05 The Vulnerability of African Countries to Oil Price Shocks: Major 08/05 308/05 Factors and Policy Options. The Case of Oil Importing Countries Maximizing the Productive Uses of Electricity to Increase the Impact of Rural Electrification Programs 03/08 332/08 Angola Energy Assessment (English and Portuguese) 05/89 4708-ANG Power Rehabilitation and Technical Assistance (English) 10/91 142/91 Africa Gas Initiative--Angola: Volume II 02/01 240/01 Benin Energy Assessment (English and French) 06/85 5222-BEN Botswana Energy Assessment (English) 09/84 4998-BT Pump Electrification Prefeasibility Study (English) 01/86 047/86 Review of Electricity Service Connection Policy (English) 07/87 071/87 Tuli Block Farms Electrification Study (English) 07/87 072/87 Botswana Household Energy Issues Study (English) 02/88 ------ Urban Household Energy Strategy Study (English) 05/91 132/91 Burkina Faso Energy Assessment (English and French) 01/86 5730-BUR Technical Assistance Program (English) 03/86 052/86 Urban Household Energy Strategy Study (English and French) 06/91 134/91 Burundi Energy Assessment (English) 06/82 3778-BU Petroleum Supply Management (English) 01/84 012/84 Status Report (English and French) 02/84 011/84 Presentation of Energy Projects for the Fourth Five Year Plan (1983­1987) (English and French) 05/85 036/85 Improved Charcoal Cookstove Strategy (English and French) 09/85 042/85 Peat Utilization Project (English) 11/85 046/85 Energy Assessment (English and French) 01/92 9215-BU Cameroon Africa Gas Initiative--Cameroon: Volume III 02/01 240/01 Cape Verde Energy Assessment (English and Portuguese) 08/84 5073-CV Household Energy Strategy Study (English) 02/90 110/90 Central African Republic Energy Assessment (French) 08/92 9898-CAR Chad Elements of Strategy for Urban Household Energy The Case of N'djamena (French) 12/93 160/94 66 5311-LIST.pdf 66 5311-LIST.pdf 66 10/9/08 8:56:02 AM 10/9/08 8:56:02 AM List of Formal Reports Comoros Energy Assessment (English and French) 01/88 7104-COM In Search of Better Ways to Develop Solar Markets: The Case of Comoros 05/00 230/00 Congo Energy Assessment (English) 01/88 6420-COB Power Development Plan (English and French) 03/90 106/90 Africa Gas Initiative--Congo: Volume IV 02/01 240/01 Côte d'Ivoire Energy Assessment (English and French) 04/85 5250-IVC Improved Biomass Utilization (English and French) 04/87 069/87 Power System Efficiency Study (English) 12/87 Power Sector Efficiency Study (French) 02/92 140/91 Project of Energy Efficiency in Buildings (English) 09/95 175/95 Africa Gas Initiative--Côte d'Ivoire: Volume V 02/01 240/01 Ethiopia Energy Assessment (English) 07/84 4741-ET Power System Efficiency Study (English) 10/85 045/85 Agricultural Residue Briquetting Pilot Project (English) 12/86 062/86 Bagasse Study (English) 12/86 063/86 Cooking Efficiency Project (English) 12/87 Energy Assessment (English) 02/96 179/96 Gabon Energy Assessment (English) 07/88 6915-GA Africa Gas Initiative--Gabon: Volume VI 02/01 240/01 The Gambia Energy Assessment (English) 11/83 4743-GM Solar Water Heating Retrofit Project (English) 02/85 030/85 Solar Photovoltaic Applications (English) 03/85 032/85 Petroleum Supply Management Assistance (English) 04/85 035/85 Ghana Energy Assessment (English) 11/86 6234-GH Energy Rationalization in the Industrial Sector (English) 06/88 084/88 Sawmill Residues Utilization Study (English) 11/88 074/87 Industrial Energy Efficiency (English) 11/92 148/92 Corporatization of Distribution Concessions through Capitalization 12/03 272/03 Guinea Energy Assessment (English) 11/86 6137-GUI Household Energy Strategy (English and French) 01/94 163/94 Guinea Bissau Energy Assessment (English and Portuguese) 08/84 5083-GUB Recommended Technical Assistance Projects (English & Portuguese) 04/85 033/85 Management Options for the Electric Power and Water Supply Subsectors (English) 02/90 100/90 Power and Water Institutional Restructuring (French) 04/91 118/91 67 5311-LIST.pdf 67 5311-LIST.pdf 67 10/9/08 8:56:02 AM 10/9/08 8:56:02 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Kenya Energy Assessment (English) 05/82 3800 KE Power System Efficiency Study (English) 03/84 014/84 Status Report (English) 05/84 016/84 Coal Conversion Action Plan (English) 02/87 ------ Solar Water Heating Study (English) 02/87 066/87 Peri-Urban Woodfuel Development (English) 10/87 076/87 Power Master Plan (English) 11/87 ------ Power Loss Reduction Study (English) 09/96 186/96 Implementation Manual: Financing Mechanisms for Solar Electric Equipment 07/00 231/00 Lesotho Energy Assessment (English) 01/84 4676-LSO Liberia Energy Assessment (English) 12/84 5279-LBR Recommended Technical Assistance Projects (English) 06/85 038/85 Power System Efficiency Study (English) 12/87 081/87 Madagascar Energy Assessment (English) 01/87 5700- Power System Efficiency Study (English and French) 12/87 075/87 Environmental Impact of Woodfuels (French) 10/95 176/95 Malawi Energy Assessment (English) 08/82 3903- Technical Assistance to Improve the Efficiency of Fuelwood Use in the Tobacco Industry (English) 11/83 009/83 Status Report (English) 01/84 013/84 Mali Energy Assessment (English and French) 11/91 8423-MLI Household Energy Strategy (English and French) 03/92 147/92 Islamic Republic of Mauritania Energy Assessment (English and French) 04/85 5224- Household Energy Strategy Study (English and French) 07/90 123/90 Mauritius Energy Assessment (English) 12/81 3510- Status Report (English) 10/83 008/83 Power System Efficiency Audit (English) 05/87 070/87 Bagasse Power Potential (English) 10/87 077/87 Energy Sector Review (English) 12/94 3643- Mozambique Energy Assessment (English) 01/87 6128- Household Electricity Utilization Study (English) 03/90 113/90 Electricity Tariffs Study (English) 06/96 181/96 Sample Survey of Low Voltage Electricity Customers 06/97 195/97 Namibia Energy Assessment (English) 03/93 11320- 68 5311-LIST.pdf 68 5311-LIST.pdf 68 10/9/08 8:56:03 AM 10/9/08 8:56:03 AM List of Formal Reports Niger Energy Assessment (French) 05/84 4642-NIR Status Report (English and French) 02/86 051/86 Improved Stoves Project (English and French) 12/87 080/87 Household Energy Conservation and Substitution (English and French) 01/88 082/88 Nigeria Energy Assessment (English) 08/83 4440-UNI Energy Assessment (English) 07/93 11672- Strategic Gas Plan 02/04 279/04 Rwanda Energy Assessment (English) 06/82 3779-RW Status Report (English and French) 05/84 017/84 Improved Charcoal Cookstove Strategy (English and French) 08/86 059/86 Improved Charcoal Production Techniques (English and French) 02/87 065/87 Energy Assessment (English and French) 07/91 8017-RW Rwanda Commercialization of Improved Charcoal Stoves and Carbonization Techniques Mid-Term Progress Report (English and French) 12/91 141/91 SADC SADC Regional Power Interconnection Study, Vols. I­IV (English) 12/93 ------ SADCC SADCC Regional Sector: Regional Capacity-Building Program for Energy Surveys and Policy Analysis (English) 11/91 ------ Sao Tome and Principe Energy Assessment (English) 10/85 5803-STP Senegal Energy Assessment (English) 07/83 4182-SE Status Report (English and French) 10/84 025/84 Industrial Energy Conservation Study (English) 05/85 037/85 Preparatory Assistance for Donor Meeting (English and French) 04/86 056/86 Urban Household Energy Strategy (English) 02/89 096/89 Industrial Energy Conservation Program (English) 05/94 165/94 Seychelles Energy Assessment (English) 01/84 4693-SEY Electric Power System Efficiency Study (English) 08/84 021/84 Sierra Leone Energy Assessment (English) 10/87 6597-SL Somalia Energy Assessment (English) 12/85 5796-SO Republic of South Africa Options for the Structure and Regulation of Natural Gas Industry (English) 05/95 172/95 Sudan Management Assistance to the Ministry of Energy and Mining 05/83 003/83 Energy Assessment (English) 07/83 4511-SU 69 5311-LIST.pdf 69 5311-LIST.pdf 69 10/9/08 8:56:03 AM 10/9/08 8:56:03 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Power System Efficiency Study (English) 06/84 018/84 Status Report (English) 11/84 026/84 Wood Energy/Forestry Feasibility (English) 07/87 073/87 Swaziland Energy Assessment (English) 02/87 6262-SW Household Energy Strategy Study 10/97 198/97 Tanzania Energy Assessment (English) 11/84 4969-TA Peri-Urban Woodfuels Feasibility Study (English) 08/88 086/88 Tobacco Curing Efficiency Study (English) 05/89 102/89 Remote Sensing and Mapping of Woodlands (English) 06/90 ------ Industrial Energy Efficiency Technical Assistance (English) 08/90 122/90 Power Loss Reduction Volume 1: Transmission and Distribution System Technical Loss Reduction and Network Development (English) 06/98 204A/98 Power Loss Reduction Volume 2: Reduction of Non-Technical Losses (English) 06/98 204B/98 Togo Energy Assessment (English) 06/85 5221-TO Wood Recovery in the Nangbeto Lake (English and French) 04/86 055/86 Power Efficiency Improvement (English and French) 12/87 078/87 Uganda Energy Assessment (English) 07/83 4453-UG Status Report (English) 08/84 020/84 Institutional Review of the Energy Sector (English) 01/85 029/85 Energy Efficiency in Tobacco Curing Industry (English) 02/86 049/86 Fuelwood/Forestry Feasibility Study (English) 03/86 053/86 Power System Efficiency Study (English) 12/88 092/88 Energy Efficiency Improvement in the Brick and Tile Industry (English) 02/89 097/89 Tobacco Curing Pilot Project (English) 03/89 UNDP Terminal Report Energy Assessment (English) 12/96 193/96 Rural Electrification Strategy Study 09/99 221/99 Zaire Energy Assessment (English) 05/86 5837-ZR Zambia Energy Assessment (English) 01/83 4110-ZA Status Report (English) 08/85 039/85 Energy Sector Institutional Review (English) 11/86 060/86 Power Subsector Efficiency Study (English) 02/89 093/88 Energy Strategy Study (English) 02/89 094/88 Urban Household Energy Strategy Study (English) 08/90 121/90 70 5311-LIST.pdf 70 5311-LIST.pdf 70 10/9/08 8:56:03 AM 10/9/08 8:56:03 AM List of Formal Reports Zimbabwe Energy Assessment (English) 06/82 3765-ZIM Power System Efficiency Study (English) 06/83 005/83 Status Report (English) 08/84 019/84 Power Sector Management Assistance Project (English) 04/85 034/85 Power Sector Management Institution Building (English) 09/89 ------ Petroleum Management Assistance (English) 12/89 109/89 Charcoal Utilization Pre-feasibility Study (English) 06/90 119/90 Integrated Energy Strategy Evaluation (English) 01/92 8768-ZIM Energy Efficiency Technical Assistance Project: Strategic Framework for a National Energy Efficiency Improvement Program (English) 04/94 ------ Capacity Building for the National Energy Efficiency Improvement Programme (NEEIP) (English) 12/94 ------ Rural Electrification Study 03/00 228/00 Les réformes du secteur de l'électricite en Afrique: Evaluation de leurs conséquences pour les populations pauvres 11/06 306/06 EAST ASIA AND PACIFIC (EAP) Asia Regional Pacific Household and Rural Energy Seminar (English) 11/90 ------ China County-Level Rural Energy Assessments (English) 05/89 101/89 Fuelwood Forestry Preinvestment Study (English) 12/89 105/89 Strategic Options for Power Sector Reform in China (English) 07/93 156/93 Energy Efficiency and Pollution Control in Township and Village Enterprises (TVE) Industry (English) 11/94 168/94 Energy for Rural Development in China: An Assessment Based on a Joint Chinese/ESMAP Study in Six Counties (English) 06/96 183/96 Improving the Technical Efficiency of Decentralized Power Companies 09/99 222/99 Air Pollution and Acid Rain Control: The Case of Shijiazhuang City and the Changsha Triangle Area 10/03 267/03 Toward a Sustainable Coal Sector In China 07/04 287/04 Demand Side Management in a Restructured Industry: How Regulation and Policy Can Deliver Demand-Side Management Benefits to a Growing Economy and a Changing Power System 12/05 314/05 A Strategy for CBM and CMM Development and Utilization in China 07/07 326/07 Development of National Heat Pricing and Billing Policy 03/08 330/08 Fiji Energy Assessment (English) 06/83 4462-FIJ Indonesia Energy Assessment (English) 11/81 3543-IND Status Report (English) 09/84 022/84 71 5311-LIST.pdf 71 5311-LIST.pdf 71 10/9/08 8:56:03 AM 10/9/08 8:56:03 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Power Generation Efficiency Study (English) 02/86 050/86 Energy Efficiency in the Brick, Tile and Lime Industries (English) 04/87 067/87 Diesel Generating Plant Efficiency Study (English) 12/88 095/88 Urban Household Energy Strategy Study (English) 02/90 107/90 Biomass Gasifier Preinvestment Study Vols. I & II (English) 12/90 124/90 Indonesia Prospects for Biomass Power Generation with Emphasis on Palm Oil, Sugar, Rubberwood and Plywood Residues (English) 11/94 167/94 Lao PDR Urban Electricity Demand Assessment Study (English) 03/93 154/93 Institutional Development for Off-Grid Electrification 06/99 215/99 Malaysia Sabah Power System Efficiency Study (English) 03/87 068/87 Gas Utilization Study (English) 09/91 9645-MA Mongolia Energy Efficiency in the Electricity and District Heating Sectors 10/01 247/01 Improved Space Heating Stoves for Ulaanbaatar 03/02 254/02 Impact of Improved Stoves on Indoor Air Quality in Ulaanbaatar, Mongolia 11/05 313/05 Myanmar Energy Assessment (English) 06/85 5416-BA Papua New Guinea (PNG) Energy Assessment (English) 06/82 3882- Status Report (English) 07/83 006/83 Institutional Review in the Energy Sector (English) 10/84 023/84 Power Tariff Study (English) 10/84 024/84 Philippines Commercial Potential for Power Production from Agricultural Residues (English) 12/93 157/93 Energy Conservation Study (English) 08/94 ------ Strengthening the Non-Conventional and Rural Energy Development Program in the Philippines: A Policy Framework and Action Plan 08/01 243/01 Rural Electrification and Development in the Philippines: Measuring the Social and Economic Benefits 05/02 255/02 Solomon Islands Energy Assessment (English) 06/83 4404-SOL Energy Assessment (English) 01/92 979-SOL South Pacific Petroleum Transport in the South Pacific (English) 05/86 ------ Thailand Energy Assessment (English) 09/85 5793-TH Rural Energy Issues and Options (English) 09/85 044/85 Accelerated Dissemination of Improved Stoves and Charcoal Kilns (English) 09/87 079/87 72 5311-LIST.pdf 72 5311-LIST.pdf 72 10/9/08 8:56:03 AM 10/9/08 8:56:03 AM List of Formal Reports Northeast Region Village Forestry and Woodfuels Preinvestment Study (English) 02/88 083/88 Impact of Lower Oil Prices (English) 08/88 ------ Coal Development and Utilization Study (English) 10/89 ------ Why Liberalization May Stall in a Mature Power Market: A Review of the Technical and Political Economy Factors that Constrained the Electricity Sector Reform in Thailand 1998­2002 12/03 270/03 Reducing Emissions from Motorcycles in Bangkok 10/03 275/03 Tonga Energy Assessment (English) 06/85 5498- Vanuatu Energy Assessment (English) 06/85 5577-VA Vietnam Rural and Household Energy-Issues and Options (English) 01/94 161/94 Power Sector Reform and Restructuring in Vietnam: Final Report to the Steering Committee (English and Vietnamese) 09/95 174/95 Household Energy Technical Assistance: Improved Coal Briquetting and Commercialized Dissemination of Higher Efficiency Biomass and Coal Stoves (English) 01/96 178/96 Petroleum Fiscal Issues and Policies for Fluctuating Oil Prices In Vietnam 02/01 236/01 An Overnight Success: Vietnam's Switch to Unleaded Gasoline 08/02 257/02 The Electricity Law for Vietnam--Status and Policy Issues-- The Socialist Republic of Vietnam 08/02 259/02 Vietnam Petroleum Sector Technical Assistance for the Revision of the Existing Legal and Regulatory Framework 12/03 269/03 Western Samoa Energy Assessment (English) 06/85 5497- SOUTH ASIA (SAR) SAR Regional Toward Cleaner Urban Air in South Asia: Tackling Transport Pollution, Understanding Sources 03/04 281/04 Potential and Prospects for Regional Energy Trade in the South Asia Region 08/08 334/08 Trading Arrangements and Risk Management in International Electricity Trade 09/08 336/08 Bangladesh Energy Assessment (English) 10/82 3873-BD Priority Investment Program (English) 05/83 002/83 Status Report (English) 04/84 015/84 Power System Efficiency Study (English) 02/85 031/85 Small Scale Uses of Gas Pre-feasibility Study (English) 12/88 ------ Reducing Emissions from Baby-Taxis in Dhaka 01/02 253/02 Improving Indoor Air Quality for Poor Families: A Controlled Experiment in Bangladesh 03/08 335/08 73 5311-LIST.pdf 73 5311-LIST.pdf 73 10/9/08 8:56:03 AM 10/9/08 8:56:03 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY India Opportunities for Commercialization of Non-conventional Energy Systems (English) 11/88 091/88 Maharashtra Bagasse Energy Efficiency Project (English) 07/90 120/90 Mini-Hydro Development on Irrigation Dams and Canal Drops Vols. I, II and III (English) 07/91 139/91 WindFarm Pre-Investment Study (English) 12/92 150/92 Power Sector Reform Seminar (English) 04/94 166/94 Environmental Issues in the Power Sector (English) 06/98 205/98 Environmental Issues in the Power Sector: Manual for Environmental Decision Making (English) 06/99 213/99 Household Energy Strategies for Urban India: The Case of Hyderabad 06/99 214/99 Greenhouse Gas Mitigation In the Power Sector: Case Studies From India 02/01 237/01 Energy Strategies for Rural India: Evidence from Six States 08/02 258/02 Household Energy, Indoor Air Pollution, and Health 11/02 261/02 Access of the Poor to Clean Household Fuels 07/03 263/03 The Impact of Energy on Women's Lives in Rural India 01/04 276/04 Environmental Issues in the Power Sector: Long-Term Impacts And Policy Options for Rajasthan 10/04 292/04 Environmental Issues in the Power Sector: Long-Term Impacts And Policy Options for Karnataka 10/04 293/04 Nepal Energy Assessment (English) 08/83 4474-NEP Status Report (English) 01/85 028/84 Energy Efficiency & Fuel Substitution in Industries (English) 06/93 158/93 Pakistan Household Energy Assessment (English) 05/88 ------ Assessment of Photovoltaic Programs, Applications, and Markets (English) 10/89 103/89 National Household Energy Survey and Strategy Formulation Study: Project Terminal Report (English) 03/94 ------ Managing the Energy Transition (English) 10/94 ------ Lighting Efficiency Improvement Program Phase 1: Commercial Buildings Five Year Plan (English) 10/94 ------ Pakistan Clean Fuels 10/01 246/01 Household Use of Commercial Energy 05/06 320/06 Sri Lanka Energy Assessment (English) 05/82 3792-CE Power System Loss Reduction Study (English) 07/83 007/83 Status Report (English) 01/84 010/84 74 5311-LIST.pdf 74 5311-LIST.pdf 74 10/9/08 8:56:04 AM 10/9/08 8:56:04 AM List of Formal Reports Industrial Energy Conservation Study (English) 03/86 054/86 Sustainable Transport Options for Sri Lanka: Vol. I 02/03 262/03 Greenhouse Gas Mitigation Options in the Sri Lanka Power Sector: Vol. II 02/03 262/03 Sri Lanka Electric Power Technology Assessment (SLEPTA): Vol. III 02/03 262/03 Energy and Poverty Reduction: Proceedings from South Asia Practitioners Workshop How Can Modern Energy Services Contribute to Poverty Reduction? Colombo, Sri Lanka, June 2­4, 2003 11/03 268/03 EUROPE AND CENTRAL ASIA (ECA) Armenia Development of Heat Strategies for Urban Areas of Low-income Transition Economies. Urban Heating Strategy for the Republic Of Armenia. Including a Summary of a Heating Strategy for the Kyrgyz Republic 04/04 282/04 Bulgaria Natural Gas Policies and Issues (English) 10/96 188/96 Energy Environment Review 10/02 260/02 Central Asia and The Caucasus Cleaner Transport Fuels in Central Asia and the Caucasus 08/01 242/01 Central and Eastern Europe Power Sector Reform in Selected Countries 07/97 196/97 Increasing the Efficiency of Heating Systems in Central and Eastern Europe and the Former Soviet Union (English and Russian) 08/00 234/00 The Future of Natural Gas in Eastern Europe (English) 08/92 149/92 Kazakhstan Natural Gas Investment Study, Volumes 1, 2 & 3 12/97 199/97 Kazakhstan & Kyrgyzstan Opportunities for Renewable Energy Development 11/97 16855- Poland Energy Sector Restructuring Program Vols. I­V (English) 01/93 153/93 Natural Gas Upstream Policy (English and Polish) 08/98 206/98 Energy Sector Restructuring Program: Establishing the Energy Regulation Authority 10/98 208/98 Portugal Energy Assessment (English) 04/84 4824-PO Romania Natural Gas Development Strategy (English) 12/96 192/96 Private Sector Participation in Market-Based Energy- Efficiency Financing Schemes: Lessons Learned from Romania and International Experiences 11/03 274/03 Slovenia Workshop on Private Participation in the Power Sector (English) 02/99 211/99 75 5311-LIST.pdf 75 5311-LIST.pdf 75 10/9/08 8:56:04 AM 10/9/08 8:56:04 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Turkey Energy Assessment (English) 03/83 3877-TU Energy and the Environment: Issues and Options Paper 04/00 229/00 Energy and Environment Review: Synthesis Report 12/03 273/03 Turkey's Experience with Greenfield Gas Distribution since 2003 03/07 325/05 MIDDLE EAST AND NORTH AFRICA (MNA) Arab Republic of Egypt Energy Assessment (English) 10/96 189/96 Energy Assessment (English and French) 03/84 4157- Arab Republic of Egypt Status Report (English and French) 01/86 048/86 Morocco Energy Sector Institutional Development Study (English and French) 07/95 173/95 Natural Gas Pricing Study (French) 10/98 209/98 Gas Development Plan Phase II (French) 02/99 210/99 Syria Energy Assessment (English) 05/86 5822-SYR Electric Power Efficiency Study (English) 09/88 089/88 Energy Efficiency Improvement in the Cement Sector (English) 04/89 099/89 Energy Efficiency Improvement in the Fertilizer Sector (English) 06/90 115/90 Tunisia Fuel Substitution (English and French) 03/90 ------ Power Efficiency Study (English and French) 02/92 136/91 Energy Management Strategy in the Residential and Tertiary Sectors (English) 04/92 146/92 Renewable Energy Strategy Study, Volume I (French) 11/96 190A/96 Renewable Energy Strategy Study, Volume II (French) 11/96 190B/96 Rural Electrification in Tunisia: National Commitment, Efficient Implementation and Sound Finances 08/05 307/05 Yemen Energy Assessment (English) 12/84 4892-YAR Energy Investment Priorities (English) 02/87 6376-YAR Household Energy Strategy Study Phase I (English) 03/91 126/91 Household Energy Supply and Use in Yemen. Volume I: Main Report and Volume II: Annexes 12/05 315/05 LATIN AMERICA AND THE CARIBBEAN REGION (LCR) LCR Regional Regional Seminar on Electric Power System Loss Reduction in the Caribbean (English) 07/89 ------ Elimination of Lead in Gasoline in Latin America and the Caribbean (English and Spanish) 04/97 194/97 76 5311-LIST.pdf 76 5311-LIST.pdf 76 10/9/08 8:56:04 AM 10/9/08 8:56:04 AM List of Formal Reports Elimination of Lead in Gasoline in Latin America and the Caribbean--Status Report (English and Spanish) 12/97 200/97 Harmonization of Fuels Specifications in Latin America and the Caribbean (English and Spanish) 06/98 203/98 Energy and Poverty Reduction: Proceedings from the Global Village Energy Partnership (GVEP) Workshop held in Bolivia 06/05 202/05 Power Sector Reform and the Rural Poor in Central America 12/04 297/04 Estudio Comparativo Sobre la Distribución de la Renta Petrolera en Bolivia, Colombia, Ecuador y Perú 08/05 304/05 OECS Energy Sector Reform and Renewable Energy/Energy Efficiency Options 02/06 317/06 The Landfill Gas-to-Energy Initiative for Latin America and the Caribbean 02/06 318/06 Bolivia Energy Assessment (English) 04/83 4213-BO National Energy Plan (English) 12/87 ------ La Paz Private Power Technical Assistance (English) 11/90 111/90 Pre-feasibility Evaluation Rural Electrification and Demand Assessment (English and Spanish) 04/91 129/91 National Energy Plan (Spanish) 08/91 131/91 Private Power Generation and Transmission (English) 01/92 137/91 Natural Gas Distribution: Economics and Regulation (English) 03/92 125/92 Natural Gas Sector Policies and Issues (English and Spanish) 12/93 164/93 Household Rural Energy Strategy (English and Spanish) 01/94 162/94 Bolivia Preparation of Capitalization of the Hydrocarbon Sector 12/96 191/96 Introducing Competition into the Electricity Supply Industry in Developing Countries: Lessons from Bolivia 08/00 233/00 Final Report on Operational Activities Rural Energy and Energy Efficiency 08/00 235/00 Oil Industry Training for Indigenous People: The Bolivian Experience (English and Spanish) 09/01 244/01 Capacitación de Pueblos Indígenas en la Actividad Petrolera Fase II 07/04 290/04 Boliva-Brazil Best Practices in Mainstreaming Environmental & Social Safeguards Into Gas Pipeline Projects 07/06 322/06 Estudio Sobre Aplicaciones en Pequeña Escala de Gas Natural 07/04 291/04 Brazil Energy Efficiency & Conservation: Strategic Partnership for Energy Efficiency in Brazil (English) 01/95 170/95 Hydro and Thermal Power Sector Study 09/97 197/97 Rural Electrification with Renewable Energy Systems in the Northeast: A Preinvestment Study 07/00 232/00 77 5311-LIST.pdf 77 5311-LIST.pdf 77 10/9/08 8:56:04 AM 10/9/08 8:56:04 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Reducing Energy Costs in Municipal Water Supply Operations "Learning-while-doing" Energy M&T on the Brazilian Frontlines 07/03 265/03 Chile Energy Sector Review (English) 08/88 7129-CH Colombia Energy Strategy Paper (English) 12/86 ------ Power Sector Restructuring (English) 11/94 169/94 Energy Efficiency Report for the Commercial and Public Sector (English) 06/96 184/96 Costa Rica Energy Assessment (English and Spanish) 01/84 4655-CR Recommended Technical Assistance Projects (English) 11/84 027/84 Forest Residues Utilization Study (English and Spanish) 02/90 108/90 Dominican Republic Energy Assessment (English) 05/91 8234-DO Ecuador Energy Assessment (Spanish) 12/85 5865-EC Energy Strategy Phase I (Spanish) 07/88 ------ Energy Strategy (English) 04/91 ------ Private Mini-hydropower Development Study (English) 11/92 ------ Energy Pricing Subsidies and Interfuel Substitution (English) 08/94 11798-EC Energy Pricing, Poverty and Social Mitigation (English) 08/94 12831-EC Guatemala Issues and Options in the Energy Sector (English) 09/93 12160- Health Impacts of Traditional Fuel Use 08/04 284/04 Haiti Energy Assessment (English and French) 06/82 3672-HA Status Report (English and French) 08/85 041/85 Household Energy Strategy (English and French) 12/91 143/91 Honduras Energy Assessment (English) 08/87 6476-HO Petroleum Supply Management (English) 03/91 128/91 Power Sector Issues and Options 03/08 333/08 Jamaica Energy Assessment (English) 04/85 5466-JM Petroleum Procurement, Refining, and Distribution Study (English) 11/86 061/86 Energy Efficiency Building Code Phase I (English) 03/88 ------ Energy Efficiency Standards and Labels Phase I (English) 03/88 ------ Management Information System Phase I (English) 03/88 ------ Charcoal Production Project (English) 09/88 090/88 FIDCO Sawmill Residues Utilization Study (English) 09/88 088/88 Energy Sector Strategy and Investment Planning Study (English) 07/92 135/92 Mexico Improved Charcoal Production within Forest Management for the State of Veracruz (English and Spanish) 08/91 138/91 78 5311-LIST.pdf 78 5311-LIST.pdf 78 10/9/08 8:56:04 AM 10/9/08 8:56:04 AM List of Formal Reports Mexico Energy Efficiency Management Technical Assistance to the Comisión Nacional para el Ahorro de Energía (CONAE) (English) 04/96 180/96 Energy Environment Review 05/01 241/01 Proceedings of the International Grid-Connected Renewable Energy Policy Forum (with CD) 08/06 324/06 Nicaragua Modernizing the Fuelwood Sector in Managua and León 12/01 252/01 Policy & Strategy for the Promotion of RE Policies in Nicaragua. (Contains CD with 3 complementary reports) 01/06 316/06 Panama Power System Efficiency Study (English) 06/83 004/83 Paraguay Energy Assessment (English) 10/84 5145-PA Recommended Technical Assistance Projects (English) 09/85 Status Report (English and Spanish) 09/85 043/85 Reforma del Sector Hidrocarburos (Spanish Only) 03/06 319/06 Peru Energy Assessment (English) 01/84 4677-PE Status Report (English) 08/85 040/85 Proposal for a Stove Dissemination Program in the Sierra (English and Spanish) 02/87 064/87 Energy Strategy (English and Spanish) 12/90 ------ Study of Energy Taxation and Liberalization of the Hydrocarbons Sector (English and Spanish) 120/93 159/93 Reform and Privatization in the Hydrocarbon Sector (English and Spanish) 07/99 216/99 Rural Electrification 02/01 238/01 Saint Lucia Energy Assessment (English) 09/84 5111-SLU St. Vincent and the Grenadines Energy Assessment (English) 09/84 5103-STV Sub Andean Environmental and Social Regulation of Oil and Gas Operations in Sensitive Areas of the Sub-Andean Basin (English and Spanish) 07/99 217/99 Trinidad and Tobago Energy Assessment (English) 12/85 5930-TR GLOBAL Energy End Use Efficiency: Research and Strategy (English) 11/89 ------ Women and Energy--A Resource Guide The International Network: Policies and Experience (English) 04/90 ------ Guidelines for Utility Customer Management and Metering (English and Spanish) 07/91 ------ Assessment of Personal Computer Models for Energy Planning in Developing Countries (English) 10/91 ------ Long-Term Gas Contracts Principles and Applications (English) 02/93 152/93 79 5311-LIST.pdf 79 5311-LIST.pdf 79 10/9/08 8:56:04 AM 10/9/08 8:56:04 AM REGULATORY REVIEW OF POWER PURCHASE AGREEMENTS: A PROPOSED BENCHMARKING METHODOLOGY Comparative Behavior of Firms Under Public and Private Ownership (English) 05/93 155/93 Development of Regional Electric Power Networks (English) 10/94 ------ Round-table on Energy Efficiency (English) 02/95 171/95 Assessing Pollution Abatement Policies with a Case Study of Ankara (English) 11/95 177/95 A Synopsis of the Third Annual Round-table on Independent Power Projects: Rhetoric and Reality (English) 08/96 187/96 Rural Energy and Development Round-table (English) 05/98 202/98 A Synopsis of the Second Round-table on Energy Efficiency: Institutional and Financial Delivery Mechanisms (English) 09/98 207/98 The Effect of a Shadow Price on Carbon Emission in the Energy Portfolio of the World Bank: A Carbon Backcasting Exercise (English) 02/99 212/99 Increasing the Efficiency of Gas Distribution Phase 1: Case Studies and Thematic Data Sheets 07/99 218/99 Global Energy Sector Reform in Developing Countries: A Scorecard 07/99 219/99 Global Lighting Services for the Poor Phase II: Text Marketing of Small "Solar" Batteries for Rural Electrification Purposes 08/99 220/99 A Review of the Renewable Energy Activities of the UNDP/ World Bank Energy Sector Management Assistance Program 1993 to 1998 11/99 223/99 Energy, Transportation and Environment: Policy Options for Environmental Improvement 12/99 224/99 Privatization, Competition and Regulation in the British Electricity Industry, With Implications for Developing Countries 02/00 226/00 Reducing the Cost of Grid Extension for Rural Electrification 02/00 227/00 Undeveloped Oil and Gas Fields in the Industrializing World 02/01 239/01 Best Practice Manual: Promoting Decentralized Electrification Investment 10/01 248/01 Peri-Urban Electricity Consumers--A Forgotten but Important Group: What Can We Do to Electrify Them? 10/01 249/01 Village Power 2000: Empowering People and Transforming Markets 10/01 251/01 Private Financing for Community Infrastructure 05/02 256/02 Stakeholder Involvement in Options Assessment: 07/03 264/03 Promoting Dialogue in Meeting Water and Energy Needs: A Sourcebook A Review of ESMAP's Energy Efficiency Portfolio 11/03 271/03 A Review of ESMAP's Rural Energy and Renewable Energy Portfolio 04/04 280/04 80 5311-LIST.pdf 80 5311-LIST.pdf 80 10/9/08 8:56:05 AM 10/9/08 8:56:05 AM List of Formal Reports ESMAP Renewable Energy and Energy Efficiency Reports 1998­2004 (CD Only) 05/04 283/04 Regulation of Associated Gas Flaring and Venting: A Global Overview and Lessons Learned from International Experience 08/04 285/04 ESMAP Gender in Energy Reports and Other related Information (CD Only) 11/04 288/04 ESMAP Indoor Air Pollution Reports and Other related Information (CD Only) 11/04 289/04 Energy and Poverty Reduction: Proceedings from the Global Village Energy Partnership (GVEP) Workshop on the Pre-Investment Funding. Berlin, Germany, April 23­24, 2003. 11/04 294/04 Global Village Energy Partnership (GVEP) Annual Report 2003 12/04 295/04 Energy and Poverty Reduction: Proceedings from the Global Village Energy Partnership (GVEP) Workshop on Consumer Lending and Microfinance to Expand Access to Energy Services, Manila, Philippines, May 19­21, 2004 12/04 296/04 The Impact of Higher Oil Prices on Low Income Countries and on the Poor 03/05 299/05 Advancing Bioenergy for Sustainable Development: Guideline For Policymakers and Investors 04/05 300/05 ESMAP Rural Energy Reports 1999­2005 03/05 301/05 Renewable Energy and Energy Efficiency Financing and Policy 07/05 303/05 Network: Options Study and Proceedings of the International Forum Implementing Power Rationing in a Sensible Way: Lessons Learned and International Best Practices 08/05 305/05 The Urban Household Energy Transition. Joint Report with RFF Press/ESMAP. ISBN 1-933115-07-6 08/05 309/05 Pioneering New Approaches in Support of Sustainable Development In the Extractive Sector: Community Development Toolkit, also Includes a CD containing Supporting 10/05 310/05 Reports Analysis of Power Projects with Private Participation Under Stress 10/05 311/05 Potential for Biofuels for Transport in Developing Countries 10/05 312/05 Experiences with Oil Funds: Institutional and Financial Aspects 06/06 321/06 Coping with Higher Oil Prices 06/06 323/06 Designing Strategies and Instruments to Address Power Projects Stress Situations 02/08 329/08 An Analytical Compendium of Institutional Frameworks for Energy Efficiency Implementation 03/08 331/08 Regulatory Review of Power Purchase Agreements: A Proposed Benchmarking Methodology 10/08 337/08 81 5311-LIST.pdf 81 5311-LIST.pdf 81 10/9/08 8:56:05 AM 10/9/08 8:56:05 AM 5311-LIST.pdf 82 5311-LIST.pdf 82 10/9/08 8:56:05 AM 10/9/08 8:56:05 AM Energy Sector Management Assistance Program Regulatory Review of Power Purchase Agreements: A Proposed Benchmarking Methodology Feedback Form 1. 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If so, please give us your E-mail: _______________________________________________________________________________________________ Area of work: Government / NGO / Private Sector / Academia / Consultant / Bilateral Agency / Dev Bank / any other Energy Sector Management Assistance Program (ESMAP) 1818 H Street, NW Washington, DC 20433 USA Tel: 1.202.458.2321 Fax: 1.202.522.3018 Internet: www.esmap .org E-mail: esmap@worldbank.org 5311-FORM.pdf 2 5311-FORM.pdf 9/25/08 8:38:08 AM 9/25/08 8:38:08 AM Green Initiative Environmental Benefits Statement The Energy Sector Management Assistance Program, together with the World Bank, is committed to preserving endangered forests and natural resources. To this end, this publication has been printed on chlorine-free, recycled paper with 30 percent postconsumer fiber in accordance with recom- mended standards for paper usage set by the Green Press Initiative, a nonprofit program supporting publishers in using fiber that is not sourced from endangered forests. For more information, visit www.greenpressinitiative.org. Energy Sector Management Assistance Program 1818 H Street, NW Washington, DC 20433 USA Tel: 1.202.458.2321 Fax: 1.202.522.3018 Internet: www.esmap.org E-mail: esmap@worldbank.org