§ 69.1807. Competitive bid solicitation processes.
The following guidelines will apply to competitive bid solicitation processes:
(1) DSPs should use standardized request for proposal documents and supplier master agreements approved by the Commission for use in the default service procurements. The Commission will review these documents and agreements on a regular basis and revise them when appropriate after consultation with stakeholders. Revisions to these documents will not be applied retroactively to existing contracts.
(2) The public interest would be served by the adoption of uniform criteria and processes for bidder qualification.
(3) Competitive bid solicitations should be structured along customer classes, consistent with the groupings identified in § 69.1805 (relating to electric generation supply procurement). Bids should be solicited for tranches of load within each customer class. Slice of system bid designs should not be utilized. However, DSPs may allow individual tranches to be stratified by soliciting separate bid prices for residential, commercial and industrial segments when there are too few customers to organize tranches along the groupings identified in § 69.1805.
(4) The Commission finds that a clearly optimal bid solicitation model does not exist at the current stage of wholesale market development. DSPs may utilize various competitive bid solicitation approaches, including request for proposals that result in the submission of sealed bids and real time auctions in which energy suppliers compete with each other for tranches of customer load.
(5) DSPs are encouraged to coordinate their competitive bidding solicitation schedules to minimize conflicts that might negatively affect the ability of suppliers to participate in multiple procurements. DSPs should coordinate their bid conferences and bidding dates to facilitate bid participation and economies of scale, yet also providing opportunities for additional wholesale bidding over reasonable time intervals.
(6) The Commission’s objective is to review the results of competitive bidding processes in a manner sensitive to market dynamics but that also allows it to discharge its statutory obligations. The Commission recognizes that bid prices may be negatively affected by the length of time taken for Commission review. In the default service regulations, the Commission has reserved a period of 1 business day to review the results of competitive procurements. As retail and wholesale markets mature, and as other appropriate safeguards become available, the Commission may elect to reduce the amount of time it uses to review bidding results.
(7) The public interest would be served by the adoption of uniform rules for the confidentiality of competitive solicitation information. Supplier participation, bid prices and retail rates may be impacted by protecting certain information, including, the identity of winning and losing bidders, the number of bids submitted, bid prices, the allocation of load among winning bidders, and the like. At the same time, the Commission recognizes that there is a legitimate public interest in knowing some of this information when there is no possibility of any prejudice to ratepayer interests.
(8) The competitive bid solicitation process will be monitored by an independent evaluator. The Commission may direct that this evaluator administer competitive bid solicitations to ensure the independence of the process. This independent party will be selected by the DSP in consultation with the Commission. The DSP may not have an ownership interest in the evaluator, and vice versa, and the DSP should disclose any potential conflicts of interest on the part of the evaluator during this consultation process. The Commission will review conflicts of interest and may disqualify an evaluator to ensure the independence of the position. The evaluator should have an expertise in the analysis of wholesale energy markets, including methods of energy procurement. The evaluator should monitor compliance with Commission orders relating to a default service program, confidentiality agreements and other directives. The evaluator should report all information it obtains to the Commission.
(9) Wholesale energy suppliers may include a significant risk premium in their competitive bids to hedge against changes in transmission rates during the term of a default service supply contract. The public interest would be served by consideration of mechanisms that allow for the tracking and automatic adjustment of transmission rates during the term of the default service supply contract in order to reduce this premium.
Source The provisions of this § 69.1807 adopted September 14, 2007, effective September 15, 2007, 37 Pa.B. 5019.
Cross References This section cited in 52 Pa. Code § 69.1801 (relating to scope); 52 Pa. Code § 69.1802 (relating to purpose); and 52 Pa. Code § 69.1803 (relating to definitions).
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