Questions on the 2023 All-Source RFP may be submitted to us via the RFP e-mail address at IMAllSourceRFP@crai.com. Responses to questions will be posted on this page to all participants without any information that would identify the questioner.
Responses to Questions and Comments Received – Updated 3/20/2023
| No. | Question | Answer |
| 1 | Please explain why I&M will not consider SCRs for the CTs at Rockport. | Based on the selection of the machines specified for the Rockport site, the Company is confident the newer technologies will meet our NOx and other emissions goals without using SCRs |
| 2 | For the Rockport site, will a storage only project be considered or only if paired with a CT? | A storage only project will be considered. It does not need to be paired with a CT. |
| 3 | At Rockport, are reciprocating combustion engines going to be considered? | No, only CTs. |
| 4 | If the 540 MW possibly is not met at Rockport, are there other sites that could get thermal technology beyond CTs at Rockport? | Yes, I&M would consider that as part of the aggregate to the 540 MW. |
| 5 | Will I&M consider energy storage using grid-forming inverters for black start capability at Rockport instead of CTs? If so, will this option be expressly identified in the RFP? | The draft RFP specifies that both CTs and energy storage are eligible technologies available for bidders to include in their proposals. |
| 6 | Why is there a <=20% nameplate requirement for storage options paired with wind and solar? | I&M had been considering 20% or less, but upon further consideration decided to allow for one offer at 20% and additional offers at greater than 20%. |
| 7 | Will I&M consider a greater amount of storage integrated with solar, beyond 60 MW? | Yes, as long as it is able to meet all RFP requirements and can be justified economically. |
| 8 | Can you explain what can be considered in the “other” resource category? Is it truly any technology with “low carbon emissions” or “emissions mitigations” and could include intermittent resources? | That is correct, as long as it complies with the RFP criteria. |
| 9 | Will other bid types (e.g., self-build) besides PSA/PPA be considered? | No. No affiliates/I&M entities are allowed to submit bids, only third-parties. The contract structures would be PSA and PPA |
| 10 | Regarding the concept “Supplemental capacity to meet overall portfolio capacity need and timing”: is the “capacity need” as determined by the recent approved Michigan settlement or based on some other methodology? | It is not just based on the Michigan settlement. It just allows for all-source RFPs, so that other resources that meet the criteria beyond just those that were specifically identified as targets in the IRP can be considered. |
| 11 | How is overall portfolio capacity defined? | Capacity need is defined by the target in the IRP. That will be refined by the most current assumptions / requirements set forth by PJM going forward. |
| 12 | Can you elaborate on how the “Resource Optionality and Flexibility Benefits” criteria will be evaluated? | This category is based on ensuring I&M can meet energy, capacity, and ancillary service needs under volatile market conditions. We want to ensure we have space to pivot due to potential new technologies or changing market rules. These criteria will answer the question: “What other option does the proposal provide to I&M to address changing needs going forward?” |
| 13 | Is it possible to request I&M’s Form CA and gain access to the subsequent documents (Appendices D-F, H-S) prior to release of the final RFP? | Bidders providing the executed confidentiality agreement will be provided copies of Appendices, once available, potentially in advance of final RFP issuance. |
| 14 | Do the results from [a forthcoming distribution-level interconnection study] application satisfy the interconnection requirement and the I&M Distribution Impact Study requirement? Additionally, what is the timeline to receive the I&M Distribution Impact Study after an interconnection application is submitted? | To qualify for the RFP, bidders must meet the criteria of the RFP. For Distribution Projects, this includes providing a completed I&M Distribution Impact Study (as required in Section 6.5 of the draft RFP) in conjunction with an executed confidentiality agreement. The distribution interconnection process is handled by the Distribution Planning team through the guidelines published on I&M’s website at: https://www.indianamichiganpower.com/business/builders/CreateGreen-IN, and https://www.indianamichiganpower.com/business/builders/CreateGreen-MI Please direct inquiries related to distribution system interconnection to this department. |
| 15 | Regarding evaluation criteria, why are debt equivalence costs included? These do not seem like actual costs that would be paid by ratepayers. E.g., a $40/MWh PPA is passed through at $40/MWh to ratepayers without an additional “debt equivalence” cost recovery component added to that for ratemaking purposes, right? | Debt equivalency costs are intended to account for the debt-like financial obligation that Power Purchase Agreements (PPAs) represent. PPAs are a significant and incremental long-term financial obligation for I&M. Debt equivalency costs are included in the Levelized Adjusted Cost of Energy (LACOE) for all PPAs to ensure bids are compared on an equivalent basis. |
| 16 | Will BESS proposals be accepted for the Rockport opportunity? | Yes, that is allowed under the RFP rules. |
| 17 | In Section 5.13 of the Draft Materials, can you clarify that bonus credits do not include Prevailing Wage/Apprenticeship & only apply to energy communities etc.? | Per Section 3.8.12, “…proposals for non-thermal bids must comply with Prevailing Wage and Apprenticeship Requirements (PWAR) tied to full value Federal Tax Credits (e.g., PTCs and ITCs) provided under the Inflation Reduction Act.” The bonus credits referenced in Section 5.13 point to Section 8.6, which specifies that non-thermal bids must provide “detailed information regarding the Project’s ability to qualify for bonus credits provided under the Inflation Reduction Act (i.e., Domestic Content Bonus Credit and Energy Community Bonus Credit).” |
| 18 | Given that you’re looking for CODs almost four years in the future, why is it reasonable to require that projects have gone through the interconnection process? Please correct my understanding if it’s in error. If not, I don’t think I’ve ever seen an RFP with that requirement. | The resources I&M is soliciting through this RFP are needed to replace Rockport which has a firm retirement commitment by the end of 2028. Consequently, it is necessary that the resources that I&M select from this RFP are able to be operational prior to the beginning of PJM’s 2028/2029 Planning Year which begins June 1, 2028. The generator interconnection study process has incurred lengthy delays, requiring projects to wait longer periods before securing an interconnection agreement and before completion of any needed network upgrades. The interconnection study status requirements in the RFP are designed to ensure that: 1) projects have reached a level in the interconnection process that ensures they can be reliably delivered within the required timeframe, and 2) that estimated interconnection and network upgrade costs can be incorporated into the bid selection process. |
| 19 | Will both PPA and PSA proposals be accepted for the Rockport opportunity? | Per Section 2.15, only PSA proposals will be accepted for the Rockport site. |
| 20 | Can you please clarify what documents are needed to prove site control? Would site map and lease memo suffice? | For the purpose of demonstrating site control to receive the form confidentiality agreement, we can accept an officer’s certificate affirming the amount of acreage under site control agreements. However, memoranda of lease will be required as part of respondent’s RFP proposal package. Site maps with sufficient current land use details are also helpful to characterize land under control. |
| 21 | My understanding is that there are a certain number of generators in the cluster that PJM will evaluate for interconnection. I’m wondering why that isn’t a minimum criteria to bid into the RFP. I’m having a hard time believing that there are a lot of projects that have gone through the interconnection process that have offtakers, and even if there were, that they could wait four years for COD without issues. There is a mismatch between project online date and interconnection process requirement. I think there needs to be a lower threshold. | The resources I&M is soliciting through this RFP are needed to replace Rockport which has a firm retirement commitment by the end of 2028, so it is necessary that the resources that I&M select from this RFP are able to be operational prior to the beginning of PJM’s 2028/2029 Planning Year which begins June 1, 2028. The generator interconnection study process has incurred lengthy delays, requiring projects to wait longer periods before securing an interconnection agreement and before completion of any needed network upgrades. The interconnection study status requirements in the RFP are designed to ensure that: 1) projects have reached a level in the interconnection process that ensures they can be reliably delivered within the required timeframe, and 2) that estimated interconnection and network upgrade costs can be incorporated into the bid selection process. Additional considerations to determine the feasibility of a requested COD include steps needed to conduct the RFP, carry out contract negotiations, and complete the necessary regulatory processes. |
| 22 | I don’t think anyone is surprised that transmission is a limiting factor. We have previously mentioned this to I&M before, but it might be helpful to explore the possibility of projects that can be connected to the injection point at the Rockport site. There’s not really a way to collect information on those projects through this RFP. I was wondering if this is a middle ground that you would be willing to entertain. | Through this RFP, I&M is seeking competitively-priced projects that are able to demonstrate they are capable of being completed in a timely manner without high execution risk. We are offering up the Rockport site for CTs and storage as an opportunity to take advantage of existing land rights that are well-characterized and in close proximity to the point of interconnection (POI). After further consideration, I&M is willing to offer the Rockport injection point to offsite projects. Such proposals will need to demonstrate site control that does not introduce an unacceptable level of risk and uncertainty with respect to execution, schedule, and cost. Additionally, such projects must demonstrate compliance with all aspects of the RFP. |
| 23 | I understand that those are the current requirements. The transmission rights you have at Rockport are really valuable and there are multiple ways to use them. I think there are multiple ways to evaluate the different ways to use them. The point of the RFP is to collect information about viable projects that could provide value to the I&M system, so I think you would want to cast the widest net possible. | See previously provided response regarding Rockport. |
| 24 | Does one bid have to be included where storage is just for 20% of nameplate or can we submit an offer greater than 20%? | It is helpful to have proposals that can be easily compared for evaluation purposes. As a result, the RFP requests bids where storage represents 20% of the nameplate of the wind or solar with which it is paired. If bidders believe a more competitive offer can be made at a nameplate percentage greater than 20%, we invite respondents to submit such bids. As noted earlier, the RFP also allows for standalone storage projects to be submitted. |
| 25 | For transparency of this process and to allow a thorough regulatory review, the bid information should be available to stakeholders without competitive interests under a non-disclosure agreement. In addition, non-competitive stakeholders should be able to review the information used to evaluate the bids. There are several non-trivial and black box cost adders that I&M proposes to use in its evaluation including congestion cost, capacity value, and debt equivalence cost, and it will be very important for stakeholders to have an opportunity to review the basis for these cost adders as well as the application of those adders to the bid evaluation. | Language is included in the NDA between AEP and potential RFP Participants that outlines a procedure for the confidential disclosure of RFP bid results and analyses of RFP bid results to interested stakeholders that are not competitive entities. |
| 26 | On the issue of debt equivalency (section 9.2.1), we are also keen to understand whether this is a risk that needs to be priced. For example, it seems likely that the Rockport Unit 2 lease was treated as debt equivalent; with the closure of that unit, wouldn’t the Company’s debt equivalency position be improved? Our bottom line position is that debt equivalency is not a linear cost/risk, and it shouldn’t be treated as such in this RFP. | Debt equivalency costs are intended to account for the debt-like financial obligation that Power Purchase Agreements (PPAs) represent. PPAs are a significant and incremental long-term financial obligation for I&M. Debt equivalency costs are included in the Levelized Adjusted Cost of Energy (LACOE) for all PPAs to ensure bids are compared on an equivalent basis. |
| 27 | I&M seeks to limit the use of the Rockport site only to combustion turbines and battery (section 2.15). Without knowing the potential limitations of the site itself, at a minimum, I&M should invite the possibility of projects (of a wider variety of resource types) close to the Rockport site but connected to a gen tie line that would facilitate the re-use of Rockport’s injection rights. The ability to interconnect is an obvious bottleneck for projects located on anything other than existing plant sites, so some creativity is needed to make sure that those injection rights are used for the least-cost resources and not merely to narrow the range of opportunities only to those technologies that I&M wishes to build at the site. MISO’s interconnection queue map shows a range of solar, battery and even a wind project already in the queue in a radius around the Rockport site. | Through this RFP, I&M is seeking competitively-priced projects that are able to demonstrate they are capable of being completed in a timely manner without high execution risk. We are offering up the Rockport site for CTs and storage as an opportunity to take advantage of existing land rights that are well-characterized and in close proximity to the point of interconnection (POI). In contrast, the projects plotted in the MISO map provided show projects that are located more than 10 miles away from the Rockport POI. Nonetheless, after further consideration, I&M is willing to offer the Rockport injection point to offsite projects. However, such proposals will need to demonstrate site control that does not introduce an unacceptable level of risk and uncertainty with respect to execution, schedule, and cost. Additionally, such projects must demonstrate compliance with all aspects of the RFP. |
| 28 | We remain concerned about the very stringent requirements for interconnection that I&M has imposed in this RFP (section 3.9). Have I&M and/or CRA examined the difference in the number of potentially eligible projects at the required stage of interconnection now versus at the time that the 2022 RFP or the 2021 RFP was issued? Given some of the recent changes in the interconnection processes in PJM and MISO (e.g., for PJM, see FERC Docket No. ER22-2110; and for MISO, see FERC Docket No. ER22-661), we’d recommend that I&M establish a more relaxed minimum requirement such as a requirement that projects are in the Definitive Planning Phase in the case of MISO and then award points to projects based on where they are in the process, e.g., so that any project that has an interconnection agreement would receive more points than one that has only completed the system impact and interconnection facilities study. | The resources I&M is soliciting through this RFP are needed to replace Rockport which has a firm retirement commitment by the end of 2028. Consequently, it is necessary that the resources that I&M select from this RFP are able to be operational prior to the beginning of PJM’s 2028/2029 Planning Year which begins June 1, 2028. The generator interconnection study process has incurred lengthy delays, requiring projects to wait longer periods before securing an interconnection agreement and before completion of any needed network upgrades. The interconnection study status requirements in the RFP are designed to ensure that: 1) projects have reached a level in the interconnection process that ensures they can be reliably delivered within the required timeframe, and 2) that estimated interconnection and network upgrade costs can be incorporated into the bid selection process. I&M has reviewed the generator interconnection study queues. The established interconnection study threshold noted in the RFP is expected to yield a robust set of projects that are competitively-priced, have a high likelihood of being completed in a timely manner, and lack high execution risk. |
| 29 | While RFPs may not be the best way to acquire demand-side resources, we believe they should be eligible to respond. Currently, it is unclear whether demand-side resources are eligible, as “Emerging Technologies” (section 2.3) and “Other Capacity Resources” (section 2.3) appear to be undefined, at least absent a glance at related documents not provided with this RFP. We do not think any energy efficiency resources are likely to respond, but a demand response aggregator may and should be allowed to make an offer as it was in the 2021 RFP. | While demand-side resources are not an eligible resource within this RFP, I&M has a number of demand response options available to its customers that provide opportunities to reduce peak load as well as act as a capacity resource when needed by PJM. This includes opportunities for curtailment service providers in Indiana. |
| 30 | Without access to Appendix F – AEP Generation Facility Standard, it’s not clear which battery vendors would be eligible to respond, but we think it is important that AEP does not foreclose new storage technologies just because they are unfamiliar to AEP. AEP could substitute this requirement with more information about the commercial status of the technology, the testing it has undergone, etc. | Projects proposed for the Standalone Energy Storage Resources category would need to follow the battery energy storage system (BESS) requirements outlined in the corresponding technical specifications. Storage technologies that do not fall within this category can bid into the Supplemental Capacity category of the RFP. |
| 31 | The draft RFP at page 1, page 3 (§ 2.2), and page 7 (§ 3.4) uses the term “overall capacity need”. It is unclear how that concept is determined or what the amount is (or if that concept represents different megawatt tranches across different resource types). The RFP should make that clear for the benefit of both stakeholders and bidders. | I&M has used the results of the IRP process to establish approximate targets for annual resource additions by type. However, the actual MW totals by resource type may differ depending on the characteristics of the bids themselves. Ultimately, I&M will select a set of projects that best meets the capacity and energy needs of the company while providing the best overall value to our customers. The need will be refined by the most current assumptions and requirements set forth by PJM at the time resources are selected. |
| 32 | The draft RFP at § 9.4.5 (page 27) uses the term “Accredited Capacity Resource needs”. It is not clear how that concept is determined or what the amount is (or if that concept represents different megawatt tranches across different resource types). | PJM determines the capacity accreditation associated with different resource types. I&M will reference PJM’s latest determination(s) with regards to capacity accreditation. |
| 33 | Additionally, it is unclear whether wind and solar resources are part of “Other Capacity Resources.” Since the total of 1,650 MWac (nameplate) of wind and solar targeted by this RFP are less than the 2,160 MW of carbon-free resources specified in the recent approved settlement in Michigan PSC Case No. U-21189, it would seem logical that “Other Capacity Resources” within “Supplemental Resources” could potentially include wind and solar resources. On the other hand, the selection methodology described in Section 9.4.3 suggests that a maximum of 100 MWac of Supplemental Capacity Resources could be considered, which seems inconsistent with I&M’s existing commitments. This potential contradiction should be clarified. | Wind projects are part of Wind Energy Resources and Solar project are part of Solar Energy Resources; they are not part of Other Capacity Resources. The nameplate quantities targeted in the RFP account for current procurement efforts underway and for changes in capacity accreditation by PJM. The goal is for this RFP to fill the remaining need identified under the IRP. In addition, the targets specified in the RFP do not prevent any resource meeting the eligibility and threshold criteria of the RFP to participate As part of the evaluation process, I&M will be evaluating all supplemental capacity resources through two phases. As part of the first phase, Section 9.4.3 references that “approximately 100 MWac” may be advanced for further evaluation, however, this is intended as a target and not a cap. |
| 34 | Once the Confidential Agreement is executed, how quickly will AEP grant access to the form documents and appendices? Given scope of RFP, we want to ensure ample time to review and price to specifications for wind, solar, storage and thermal. | As soon as the documentation is received and reviewed, the form documents and appendices will be provided. At this time, review cycles are approximately 1-3 business days. |
| 35 | Does AEP want Dual Fuel capability on the peakers at non-Rockport sites? The Draft RFP did not speak to this. | I&M does not require this, however, it may be provided as an option with optional pricing. |
| 36 | Is black start a firm request for sites that are non-Rockport? The Draft RFP did not speak to this. | See Section 3.8.1, which states: “I&M has a preference for proposals offering black start capabilities. Bidders should state whether a facility has black start capability. If a facility does not have black start capability installed but could be made black start capable, Proposals are required to provide the additional pricing needed for black start capability (as an option in addition to the base proposal) as well an estimated construction timeline and estimated cost to operate.” |
| 37 | Does AEP require layouts and designs for combined cycle following the referenced Appendix R layout for non-Rockport sites? | Yes, please reference Appendix O which states the submittal requirement: “Site Layout: Attach a diagram identifying anticipated placement of major equipment and other project facilities, including transmission layouts and Point of Delivery.” |
| 38 | What space allocation is required by AEP for carbon capture and/or hydrogen? Are there specifications AEP can provide? | I&M is open to bidder’s proposed space allocation based on the specific technology and design proposed. |
| 39 | The total net output for thermal is listed as approximately 540 MW. Is that a firm number or can bids be lower or above that threshold? | No, this is not a firm number. Bidders are requested to provide at or around 540 MW to the extent possible. |
| 40 | Does AEP have any operating standards for Thermal that it can share? Looking to understand start ups, run times, etc. that AEP is targeting. | Does AEP have any operating standards for Thermal that it can share? Looking to understand start ups, run times, etc. that AEP is targeting. |
| 41 | When will the 2023 PSA be uploaded to the website documents? And will it be uploaded with all referenced Exhibits? | The PSA will be made available to bidders once it is ready for distribution. It is expected to be ready around the timeframe that the RFP is issued. |
| 42 | We are particularly interested in the form of Seller Parent Guaranty (Exhibit N to the PSA) which we noted was not included in the 2022 PSA – nor did we appear to see any other Exhibits (but apologies if we’ve missed those). Might the 2022 Exhibit N be something that the RFP team can send while we await the release of the 2023 version? | The PSA and any associated Exhibits will be made available to bidders once it is ready for distribution. It is expected to be ready around the timeframe that the RFP is issued. |