REPLIES TO QUERIES

on RAE's Call for Tenders for the project

"Long Run Marginal Costs (LRMC) of generation, transmission and distribution in the electricity sector of Greece"

 

1.         QUESTION No. 1

Regarding the call for tenders on Long Run Marginal Costs (LRMC) of generation, transmission and distribution in the electricity sector of Greece, we have the following question about submitting financial information for the parent company.

A)        The name of the parent company is …………………... It is a corporation registered in the …………….. It is a publicly traded company listed on the …………… Stock Exchange and trades under the ticker …………... Their Annual Report and audited financial statements for 2005 are attached. ………….(the bidder) is part of the Specialty Consulting business referred to in the Annual Report.

B)        For consolidated ….(the bidder) (which includes organizations in several countries) and for …….. (the bidding entity) there is no "official financial data" that we can provide. However, we will provide total turnover for …….. on a consolidated basis, unaudited, but supported by a notarized and apostilled statement from ……’s Chief Financial Officer.

C)        There is no official document that says we do not have to issue such data, however, we will provide a notarized and apostilled statement from ………'s Chief Financial Officer attesting to this fact.

D)        I am also attaching a draft of the Chief Financial Officer's statement regarding the information for items 12.1.1 (2 - as it relates to VAT), (3), (6), (7), (8), (9) and (11). Could you please confirm that this will be a sufficient response for these items?

 

REPLY to QUESTION No. 1

Regarding the questions that you have asked by your first e-mail dated on the 14th of June 2006, the answers of the Procurements Committee are the following:

1.         Regarding question A, in your proposal you can include the official organisation -plan of the group (where the relation between …….. and ….. -the bidding entity- will be shown).

2.         Regarding questions B and C, you should provide us with an official statement - declaration of ……..'s Chief financial officer, in order to verify that there is no legal obligation for ……… to publish balance sheets. However other financial data like the turnover of ……… for the last three (3) yeas and any other financial information will be helpful.

3.         Regarding question D, all the statements should be approved by official authorities unless if there is no such obligation. If that happens, the lawful representative of the bidding entity should sign all these documents.

 The Procurements Committee is at your disposal for any further clarifications.

 

2.         QUESTION No. 2

Thank you for the opportunity to ask questions about the Call for Tenders on LRMC of Generation, Transmission & Distribution in the Electricity Sector of Greece. We have the following questions:

1- Section 2.2.3 discusses consumer load profiles per customer category which are required for the analysis. For what years and in what detail (e.g. hourly, by geographic area) are consumer load profiles available from the regulated power utilities for current consumer categories?

2- Section 2.2.3 requires additional information on customers. Is information available on: (1) number of customers in each current category and geographic area (e.g., urban, semi-urban, rural); (2) number and size of customers connected at each voltage level; (3) number and electricity demand characteristics of non-residential customers by industry (e.g., manufacturing, tourism, agriculture); (4) price elasticity of demand and responsiveness to time-of-use pricing?

3- For use in the transmission and distribution optimization models [2.2.4 (b) and (c)], is detailed information available on capacity and loads (by time period) for each node?

4- How many countries will be included in the “further analysis of pricing policy and their tariffs” (in 2.2.1)?

5- In Section 2.2.9, are the tariff structures to be analyzed the current tariffs of the regulated utilities? And are "proposed tariffs by the regulated power utilities" not a part of this project?

6- Section 2.1(3)c lists as an objective of the project: "The financial recovery of the regulated power utilities must be secured in order to ensure their viability and enable future expansion of their operations". This objective seems to focus primarily on level of tariffs, rather than on marginal costs or tariff structures. Is determining an appropriate revenue requirement for the regulated utilities part of this project? Does RAE intend to use the results of the long-run marginal cost study to set the revenue requirements for the regulated power utilities?

7- Section 2.2.5(a) indicates that long-run marginal costs will estimated for a variety of scenarios. How many scenarios will be required and who will identify the assumptions in those scenarios (the consultant or RAE)? Will a single scenario be chosen for use in the rate structure and efficiency/demand-response cost-benefit analyses? Or will these tasks be performed using multiple marginal cost scenarios? If so, how many?

8- Are the efficient tariffs developed for each consumer category in Phase B (2.2.9) intended to produce an independently-determined revenue level, or produce long-run marginal cost revenue?

9- Is the marginal cost analysis expected to include marginal customer-related costs such as metering, meter reading, billing, collection expense, and customer service?

10- Is the marginal cost analysis expected to include the marginal cost of providing lighting equipment for street lights, traffic signals, and other outdoor lighting services?

11- Section 2.2.4 lists a number of deliverables, including analysis and updating of studies that have been carried out in the past. Please indicate how many such studies must be analyzed and, if possible, provide copies.

12- Please advise whether the marginal cost analysis applies only to the integrated system, or also includes the isolated island systems.

13- Please list the "regulated power utilities" for whom efficient tariffs and tariff transition plans should be developed and the types of tariffs covered by the project. Will the assignment include development of tariffs for the HTSO? PPC Grid? PPC Distribution? PPC as Supplier to consumers who have not chosen an alternative supplier?

14- If HTSO tariffs are included in the project's scope, will the HTSO's operating costs be included in the marginal cost analysis?

15- Regarding optimization tools for the modeling of generation, transmission and distribution expansion (Section 2.2.4) please clarify whether off-the-shelf software packages are envisaged, or whether a custom-developed package (or packages) are envisaged.

16- Regarding 2.2.4, if an off-the-shelf package is envisaged, or is possible, please clarify whether RAE expects that package (or those packages) to be identified in the proposal.

17- Regarding optimal transmission expansion, please describe the level of modeling detail that is expected from the model.  Specifically, is it expected that the transmission expansion model will model every transmission line and every transmission bus in Greece (and between Greece and foreign countries) or is it sufficient that it model the major lines and buses?

18- Does RAE require or expect that the optimal transmission expansion model and optimal generation expansion model be integrated into a single model? If not, please comment on the level of interaction that is expected between these two models.

19- Please elaborate on what decision variables are expected to be considered within the optimal distribution expansion model. For example: location of substations? number of substations? miles of distribution wire by voltage level?

20- Is the optimal distribution expansion model expected to select between transmission substations in deciding how to serve a particular distribution service area?

21- Is the optimal distribution expansion model expected to consider and choose between underground and over-head wire alternatives, and if so, what criteria are envisaged?

22- Is it expected that the optimal distribution expansion model will consider individual distribution lines and/or individual transmission nodes?

23- Does RAE require or expect that the optimal transmission expansion model and optimal distribution expansion model be integrated into a single model? If not, please comment on the level of interaction that is expected between these two models.

 

REPLY to QUESTION No. 2

With regard to your e-mails received by RAE on the 14th and the 15th of June 2006, on behalf of the procurements committee, we wish to communicate to you the following:                                                                                                              

  1. Regarding questions 1 to 3, RAE expects from the consultant to acquire the required data from the regulated power utilities. In case that the requested data is not available, the consultant is expected to propose alternative solutions based on the international experience, (see also 2.2.2. of the Tender).
  2. Regarding question 4, RAE expects from the consultant to further analyze the developments in four or five EU member states out of which the pricing policy and tariffs of two specific member states will be presented in detail.
  3. Regarding question 5, RAE expects from the consultant to analyze and evaluate the structure of both current and proposed tariffs by the regulated power utilities.
  4. Regarding question 6, the determination of an appropriate revenue requirement for the regulated utilities is not a priority of this project. However, the consultant is expected to calculate critical elements of the revenue requirement such as the economic life of the assets, the weighted average of cost of capital, etc.
  5. Regarding question 7, RAE expects from the consultant to use alternative efficient tariff structures based on different scenarios. The number of the scenarios will be discussed and agreed between RAE and the consultant.
  6. Regarding question 8, RAE expects from the consultant to produce long-run marginal cost revenue.
  7. Regarding question 9, RAE expects from the marginal cost analysis to include marginal customer-related costs such as metering, meter reading, billing, collection expense, and customer service.
  8. Regarding question 10, RAE expects from the marginal cost analysis to include the marginal cost of providing lighting equipment for street lights, traffic signals, and other outdoor lighting services.
  9. Regarding question 11, the consultant may be asked to analyze two studies carried out by RAE and two studies carried out by the regulated power utility. 
  10. Regarding question 12, the Call for Tender for the marginal cost analysis refers to the whole of Greece, that is, the marginal cost analysis has to be performed both to the integrated electrical system and the isolated islands. However, the isolated islands of Greece will be grouped into five to six major groups and the marginal cost analysis for the isolated islands will be also carried out for each of these groups of islands.
  11. Regarding question 13, the project will include development of efficient tariffs based on long run marginal cost of the generation, transmission, distribution and supply business of the regulated power utilities.
  12. Regarding question 14, the operating costs of the HTSO will not be included in the marginal cost analysis.
  13. Regarding questions 15 and 16, alternative optimization tools, appropriate for the modelling of generation, transmission and distribution expansion will be proposed by the consultant. The final decision for the specific optimisation tool which will be used will be taken by RAE during the project, based on the proposed tools’ characteristics.
  14. Regarding question 17, it is expected that the transmission expansion model will model the major lines and buses (including the interconnections between Greece and foreign countries), simulating accurately the operation and the expansion of the transmission system, as discussed and agreed between RAE and consultant during the project.
  15. Regarding question 18, during the process of the project and subject to the generation model that will be chosen it will be decided whether the optimal transmission expansion model and optimal generation expansion model will be integrated into a single model or not.
  16. Regarding question 19, RAE expects from the consultant to propose the decision variables which will be deemed the most appropriate for the optimal distribution expansion modelling.
  17. Regarding question 20, the optimal distribution expansion model is expected to select between transmission substations in deciding how to serve a particular distribution service area.
  18. Regarding questions 21 to 23, they will be discussed and agreed between RAE and the consultant upon the consultant’s proposals.