Bid of
VEPP Inc.
In response to request for proposals for a
SPEED Facilitator, under Rule 4.300
Vermont Public Service Board
November 2006
A. Transmittal Letter
November 22, 2006
Ms. Cynthia Muir, Business Manager
Vermont Public Service Board
112 State Street, Drawer 20
Montpelier, VT 05620-2701
Re: Response to RFP for Rule 4.300 SPEED Facilitator
Dear Ms. Muir:
Please accept this transmittal letter along with the accompanying documents as a bid
proposal for the Rule 4.300 SPEED Facilitator by VEPP Inc.
VEPP Inc.
P.O. Box 1938
Resource Professional Building
Rte.11/30
Manchester Ctr., VT 05255
BID Amount: $57,400 and cost reimbursement
Consistent with the requirements set forth in the Board’s RFP, VEPP Inc. submits its bid
for a term beginning January 1, 2007 and ending on December 31, 2010. VEPP Inc. does
wish to candidly note that the proposed term of the contract does not align with that of
the Rule 4.100 Purchasing Agent contract, which began on July 1, 2006 and ends on June
30, 2008. The ability of VEPP Inc. to offer the pricing and service terms it has offered in
this RFP is dependent on the economies of operation associated with performance of both
the Rule 4.100 Purchasing Agent and Rule 4.300 SPEED Facilitator functions. If VEPP
Inc. is the successful bidder, it will be necessary to enter into discussions with the Board
regarding alignment of the contracts, as is allowed by part F.D. of the RFP.
VEPP Inc. understands and accepts the standard State of Vermont contract provisions and
terms, conditions and stipulated administrative requirements included in this RFP.
Ms. Cynthia Muir, Business Manager
Vermont Public Service Board
November 20, 2006
Page 2
Also attached is a motion approved by the VEPP Inc. Board of Directors on November
20, 2006 to authorize me, John R. Spencer, P.E., Executive Director of VEPP Inc. to bind
the bidder in the proposal offerings.
We have enclosed one (1) original, six (6) paper copies, and one electronic copy of this
proposal. Should you have any questions, please feel free to contact me.
Very truly yours,
VEPP Inc.
John R. Spencer, P.E.
Executive Director
Email address: jspencer@veppi.org
Telephone 802-362-0748
Fax
802-362-5496
MOTION made at VEPP Inc. Board of Directors Special Meeting on
Monday November 20, 2006
The VEPP Inc. Board of Directors hereby authorizes John R. Spencer, P.E., Executive
Director to bind VEPP Inc. as bidder of the proposal for Rule 4.300 SPEED Facilitator
for the State of Vermont, Public Service Board. Such proposal shall be substantially in
the form of that reviewed by the VEPP Inc. Board of Directors on November 20, 2006
Motion made by: Bill Deehan, second by Don Rendall, motion unanimously approved.
____________________________________
Alicia Sharp, Secretary to the Corporation
Page 3
B. Project Approach
A.
Clearinghouse and Information Tasks
VEPP Inc. understands that the primary purpose of the SPEED Facilitator is to
promote the development of SPEED resources by bringing together SPEED
projects and Vermont utilities seeking to purchase power.
VEPP Inc. proposes to aggressively and energetically pursue this
“communication” task by using its contacts among both developers and
utilities to identify and contact potential SPEED projects. Also VEPP Inc.
will, on a routine basis, discuss with the Vermont utilities their existing and
projected needs for purchased power. As Speed Facilitator VEPP Inc. will
promote the opportunities under Rule 4.300 to potential developers and
connect them with utilities that need to make SPEED power purchases.
To provide structure to this communication, VEPP Inc. proposes to develop
and maintain a SPEED website. This website will contain current information
on the SPEED Program as defined in Rule 4.300. The website will provide
information on the Vermont utilities and their appetite for SPEED power. The
website will also provide information on SPEED projects under development
including such things as estimated output, anticipated on-line date, etc.
Contact information for SPEED developers, Vermont utilities and the SPEED
facilitator will be listed.
An additional component of the website will be a “mapping” of the progress
of the SPEED program against the load growth of the Vermont utilities.
Whether or not Vermont adopts a renewable energy Portfolio Standard
depends on the effectiveness of the SPEED program to meet new statewide
load growth for the test period of January 1, 2005 through January 1, 2013.
The website will provide a mapping of these two variables using identified
SPEED projects that are expected to come on-line prior to the end of the test
period versus both past and projected load growth through the test period.
VEPP Inc. recognizes that the success of the SPEED program to meet the goal
established by the legislature is dependent both on the amount of SPEED
resources than can be brought on-line by January 1, 2013, and the
effectiveness of energy efficiency in reducing statewide load growth through
the test period.
At the present time, VEPP Inc. anticipates that all costs for Clearinghouse and
Information Tasks will be allocated to the Vermont Utilities for the first two
contract years.
Page 4
B.
Contract Development and Administration
Rule 4.300 outlines a number of possibilities for contracts with SPEED projects.
In general the possibilities fall under three categories;
1. A voluntary contract between a utility (or several utilities) and a
SPEED Producer.
2. A non-voluntary contract where the output from a SPEED Project is
contracted for by the SPEED Facilitator under terms approved by the
Public Service Board and allocated (on an approved pro-rata basis) to
the Vermont Utilities.
3. A contract where the SPEED Facilitator enters into a contract
approved by the Public Service Board and sells the output either to the
ISO-NE spot market or to an out-of-state buyer.
Relative to the pricing terms of a potential SPEED contract, Rule 4.300 outlines
two possibilities:
1.
A specified margin below hourly spot market price
2.
A discount to the “anticipated” market price over the term of the
contract.
Rule 4.300 does not define the specifics of these contract options, but stipulates
that contracts will be authorized by the Public Service Board.
In the case of a voluntary contract between one or more Vermont Utilities and a
SPEED project owner, the SPEED Facilitator may have involvement if requested
by the parties to the contract. Based on our experience we believe that, in general,
project developers and Vermont utilities are able to negotiate contracts between
themselves. VEPP Inc. anticipates that as SPEED facilitator it can assist the
developers and the utilities when more than one utility is involved, or where some
or all of the power is sold out of state. Additionally, VEPP Inc. can provide
expert testimony in support of projects and specific contract terms during the 248
approval process. VEPP Inc. proposes the following fee structure for this task:

For assistance in developing the contract we propose to charge both the
SPEED Producer and the utility (s) on a cost reimbursement basis.

For on-going costs associated with administering the contract , whether
power is sold to Vermont utilities, or another entity such as an out-ofstate purchaser, VEPPI proposes to charge the SPEED Producer a
monthly fixed fee based on a fee schedule which is derived based on a
percentage of VEPPI’s annual budget.
Page 5
In the case of a non-voluntary contract between a SPEED project owner and the
Vermont utilities,

For assistance in developing the contract we propose to charge the
SPEED Producer on a cost reimbursement basis.

For on-going costs associated with administering a contract , VEPPI
proposes to charge the SPEED Producer a monthly fixed fee based on a
fee schedule which derived based on a percentage of VEPPI’s annual
budget.
In the case of a contract between the SPEED project owner and the SPEED
Facilitator where the power is sold into the Regional Market, VEPP Inc. proposes
the following fee structure for this task:

For assistance in developing the contract we propose to charge the
SPEED Producer on a cost reimbursement basis.

For on-going costs associated with administering the contract , VEPPI
proposes to charge the SPEED Producer a monthly fixed fee based on a
fee schedule which derived based on a percentage of VEPPI’s annual
budget.
If selected, VEPP Inc. will aggressively pursue the duties of SPEED Facilitator.
VEPP Inc. recognizes the potential for serious financial consequences for the
Vermont utilities and the Vermont ratepayers if the SPEED program does not
achieve the goals established by the Legislature. However, regardless of
promotion by the SPEED Facilitator, the success of the SPEED program will be
dependent on developers proposing and constructing sufficient amount of SPEED
projects. Rule 4.300 authorizes a number of contract options which developers
and utilities may find more attractive than a simple specified margin below hourly
spot market price. Any utility or developer can propose alternative contract terms
1, however there is a high hurdle for doing so because alternative contract terms
require Public Service Board approval which is viewed as uncertain by all project
developers and cost prohibitive for all but the largest SPEED project.
1
Alternative Pricing Terms must meet the test of being “less than the anticipated market price, over the term
of the proposed purchase.”
Page 6
Periodically, the VEPP Inc. Board of Directors will review the above described
“mapping” of the progress of the SPEED program. If the VEPP Inc. Board of
Directors determines that it is likely that there will be a significant shortfall of
SPEED resources to meet the legislative goals, VEPP Inc. as SPEED Facilitator
may initiate a Docket before the Public Service Board for approval of a generic
contract with alternative pricing terms to be offered to potential SPEED project
developers. Alternatively, VEPP Inc. may request Public Service Board approval
to determine alternative pricing through auctions or competitive bids. VEPP Inc.
expects to discuss any such potential requests and gather input from the Vermont
Department of Public Service in advance of any formal filing with the Public
Service Board. VEPP Inc. proposes to charge the Vermont Utilities on a cost
reimbursement basis for work associated with developing and gaining approval to
offer a generic contract with alternative pricing. However, future SPEED projects
that avail themselves of the generic contract will be charged on a pro-rata basis
for the cost of approval of the generic contract. Such charges will be used to
reimburse the utilities for 50 % of the charges for development of the contract.
Page 7
C. Related Experience
VEPP Inc. is pleased to review its experience relating to the duties of the SPEED
Facilitator. VEPP Inc. was formed in 1994 specifically to perform the functions of the
Rule 4.100 Purchasing Agent. It took over all duties of Purchasing Agent in August of
1996. Since then VEPP Inc. has performed the duties of Purchasing Agent as its sole
activity.
On a day-to-day basis VEPP Inc. provides contract administration for 21 renewable
energy projects. This contract administration includes periodically over the course of the
day downloading generation information, providing forecasts to the utilities of expected
next day generation, providing “bid” information into the ISO-NE market related to
expected project output, re-declaring project output when there is an unexpected variance
from expected output, reporting to ISO-NE on monthly project outages. Additionally,
VEPP Inc. performs all monthly billing functions including the aggregation and proration as specified in Rule 4.100 and in the 21 individual project contracts, collects
payments from the individual utilities, and in-turn pays the individual project owners.
VEPP Inc. also maintains a website which provides updated information on the
Purchasing Agent’s transactions. Last year VEPP Inc. handled approximately $52
million in power sales transactions. It is anticipated that this 10 years of experience will
be directly applicable to the ongoing administration of future SPEED projects.
There have been only a few new renewable energy projects which have come on-line
since 1996. However, VEPP Inc. has been involved either directly or in the periphery in
the contract formation of most of these projects. Examples are the Factory Falls and
Carthusian Foundation hydro projects where VEPP Inc. participated in the contract
formation and in the Public Service Board hearings although output from these projects
ultimately was sold directly to the interconnecting utility, and the redevelopment of
Brockway Mills where VEPP Inc. participated in the hearings before the Public Service
Board and now administrates the contract on behalf of one utility. VEPP Inc. was also
involved in revisions to existing Rule 4.100 contracts resulting from Docket #6270. In
the case of two projects, these revisions include dispatch operations. VEPP Inc. was
integral in the formation of the dispatch protocols and provides on-going computation
and billing to the utilities relative to the dispatch savings. It should also be mentioned
that in 1999 VEPP Inc. opened docket # 6279 before the Public Service Board seeking
approval of a short term generic market-priced power purchase contract for small
renewable energy projects. Although no decision was ever reached in this docket, the
terms proposed for the generic contract at that time are very similar to the market based
contract outlined in the SPEED program.
Page 8
In describing VEPP Inc.’s related experience, it would be remiss not to ascribe much of
VEPP Inc.’s success to the experience of its Board of Directors. There are four utility
directors, two representing public power and two from the large investor owned utilities.
On the producer side, all directors are either the original developers and owners of their
sites or, in the case of the Ryegate and Sheldon Springs, the plant managers. Both the
utility Directors and the producer Directors, have long experience in their respective
businesses. To balance the interests of the utilities and the producers the VEPP Inc.
Board also includes three public directors. Two of the three public directors have been on
VEPP Inc.’s Board since its inception. The public directors bring expertise from outside
the utility industry. This Board meets at least quarterly and as a part of its normal
function provides advice to the VEPP Inc. staff on ongoing initiatives. The VEPP Inc.
Board provides deep access to both the potential SPEED developer community and the
Vermont utilities.
It should also be noted that VEPP Inc. has been involved with the SPEED program since
the drafting of the authorizing legislation and was an active participant in the rulemaking
process that resulted in Public Service Board Rule 4.300.
Page 9
D. REFERENCES
Bill Gleason
Vermont Marble Company
61 Main Street
Proctor, VT 05765
(802) 770-7174
Nanette Stevens, Vice President
Trust Company of Vermont
196 Battery St.
Burlington, VT 05401
(802) 846-9860
David John Mullett, Attorney
136 Main St., Suite 2
Montpelier, VT 05601-0127
(802) 223-3080
Robert Thompson, CPA
Hill & Thompson
PO Box 2465
Manchester Ctr., VT 05255
(802) 362-1880
Stephen C Terry
15 Sheldon Lane
Middlebury, VT 05753
(802) 388-2642
Page 10
E. Organization and Staff Qualifications
History, Organization and Size
VEPP Inc. was incorporated on April 1, 1994, to act as Purchasing Agent under
Board Rule 4.100 and to perform the various duties and acquire the various things needed
for that task. It is a nonprofit corporation under Vermont law, and holds 501c)(3) status.
The corporation is in good standing, and is subject to annual audits.
VEPP Inc. is guided by an eleven person Board of Directors consisting of four Vermont
utility representatives, four producer representatives and three public representatives
nominated by the Department of Public Service. The VEPP Inc. Board consists of a
Chair, Vice-Chair, Treasurer and Secretary. (List of Directors attached). The Board of
Directors holds quarterly meetings, and special meetings as needed and in accordance
with its bylaws. VEPP Inc. operates in conformance with Vermont’s open meetings and
public records statutes.
The structure of VEPP Inc. described above, and the ability to accomplish results through
that structure, is readily transferable to performance of the SPEED Facilitator role. As a
state nonprofit corporation holding 501(c)(3) status, VEPP Inc. has no profit motive, and
this characteristic is important in keeping costs down, given the SPEED goals of
obtaining renewable energy projects at prices anticipated to be below market. The
technical amendments to the bylaws and articles of association which would be needed to
incorporate the SPEED Facilitator role are straightforward, and ratepayers will have the
benefit of a structure, honed over more than a decade, which brings together persons
knowledgeable in all of the most key facets of the Vermont energy picture. The
executive director of VEPP has served in that role for eleven years, and the
administrative assistant has held her job for five. This combination of experience and
perspective is precisely what is needed to aggressively solicit SPEED projects, to work
with all parties in the sometimes challenging tasks of arriving at contractual agreements,
and in understanding and respecting the regulatory landscape under which SPEED
projects will work in order to come to fruition.
Day-to-day operations of VEPP Inc. are carried out by its two employees; the Executive
Director, John R. Spencer, P.E. and the Operations Manager/Administrative Assistant,
Alicia Sharp. (See next page for resumes).
Page 11
VEPP Inc.
Board of Directors/Officers
September 2006
President:
Mathew Rubin, President
Winooski Hydroelectric Co.
26 State Street
Montpelier, VT 05602
TEL: 802-223-7141
Director:
Mark Driscoll
SUEZ Energy Generation NA
247 Weesner Dr
E Ryegate, VT 05042
TEL: 802-633-3500
V. President:
Linda Nelson, Vice President
Washington Electric Coop
PO Box. 8
E Montpelier, VT 05651
TEL: 802-865-7405
Director:
George Moskevitz
Sheldon Springs Hydro Electric
PO Box 7
Sheldon Springs, VT 05485
TEL: 802-933-2570
Treasurer:
Tom Wallin, Treasurer
Comtu Falls
199 Howard Hill Rd.
Cavendish, VT 05142
TEL: 802-226-7344
Director:
Ken Nolan
Burlington Electric
585 Pine St
Burlington, VT 05401
TEL: 802-933-5245
Secretary:
Alicia Sharp, Secretary
VEPP Inc.
Corp
PO Box 1938
Manchester Center, VT 06255
TEL: 802-362-0748
Director:
Bill Deehan
Central Vermont Public Service
Director:
Donald J. Rendall, Jr,
Green Mountain Power Corp
163 Acorn La.
Colchester, VT 05446
TEL: 802-655-8420
Public Director:
Kathleen Keenan
8 Thorpe Avenue
St. Albans, VT 05478
TEL: 802-524-1037
Public Director:
Phillip Paull
3821 Cabot Rd.
Cabot, VT 05647
TEL: 802-563-2671
Public Director:
Rita Ricketson
323 South Bear Swamp
Middlesex, VT 05602
TEL: 802-223-1544
77 Grove Street
Rutland, VT 05701
TEL: 802-747-5672
Page 12
JOHN R. SPENCER, P.E.
REGISTRATION
Professional Engineer - Vermont
EDUCATION
University of Denver, Denver, Colorado
Bachelor of Science, Civil Engineering, 1972
1996-Present
Executive Director, VEPP Inc., Manchester, Vermont.
VEPP Inc. is the Purchasing Agent under Vt. Public
Service Board, Rule 4.100. Responsibilities include
accounting and fiduciary duties relating to wholesale power
purchase transactions between small power production
facilities and the state’s utilities. Additional duties include
monitoring of power purchase contract compliance and
seeking contract modifications in order to maintain and
enhance the interests of the Vermont ratepayer.
1989-1996
President, Resource Engineering Group, Inc. (REG),
Manchester, Vermont. REG is a consulting engineering
firm providing engineering services in the fields of civil,
structural, and environmental engineering.
Specific areas of the firm's expertise include small power
production facilities, construction management, computer
modeling, water and wastewater facilities, dams, hydraulic
analysis, and commercial and residential buildings.
1984-1989
Technical Vice President, Environmental Power
Corporation, Manchester, Vermont. Feasibility and
financial analysis, engineering and construction
management for developer of alternative energy properties.
Responsible for technical due diligence for
industrial/commercial properties purchased or sold.
Page 13
JOHN R. SPENCER
1982-1984
Project Manager, Dufresne-Henry, Inc., Springfield,
Vermont. In charge of all aspects of hydroelectric
development for the firm including feasibility analysis,
energy estimates, licensing, design and administration of
construction.
1979-1982
Principal-in-charge for the consulting engineering firm of
Donnelly, Conklin, Phipps & Buzzell, Inc., Springfield,
Vermont. Technically responsible and financially
accountable for a diverse variety of civil and environmental
projects, including municipal waterworks, dam
reconstruction, building projects, hydroelectric feasibility
studies, computer modeling, structural consulting, permit
work and expert witness testimony. Business responsibilities included business development, client liaison,
proposal preparation and served as secretary/treasurer for
the corporation.
1972-1977
Various civil engineering positions.
Dufresne-Henry,Inc. and Kennel-DelaneyAssoc.
Page 14
ALICIA L SHARP
EDUCATION
Jones College, Jacksonville, Florida
Bachelor of Science, Accounting, 1976
Bachelor of Science, Computer Science, 1979
2002-Present
Administrative Assistant,
VEPP Inc., Manchester, Vermont.
Responsibilities include all areas of accounting,
(receivables, payables, payroll, budgets, taxes), monitoring
of power purchase contract compliance and administrative
duties relating to wholesale power purchase transactions
between small power production facilities and the state’s
utilities, as an officer of the corporation (secretary) duties
also include Board of Director liaison/ communications
work.
1998-2002
Manager, Accounting
Crowley Maritime Corp, Jacksonville, Fl.
Responsible for overseeing Connecting Carrier Activities,
payments and collections. Ship & Vessels leasing payments
and owner expenses billing and collections. Ad Hoc
reporting using QMF, PeopleSoft Query, Crystal, and
Lawson General Ledger Reporting. Reconcile and monitor
liabilities accounts for all administrative employees’
benefits. Coordination of special projects and new
computer systems implementations.
1993-1998
Controller
Crowley American Transport, Inc., San Juan, Puerto Rico
Responsible for all accounting activities including Credit &
Collections and Agency Accounting.
Oversee budget preparations and compliance
Visited customers to resolved issues with the Common
Carrier Billing Dept as it related to Credit &
Collections
Coordinated external and internal audits.
1986-1993
Payroll Manager
Crowley Maritime Corp, Jacksonville, FL
Responsible for Administrative and Union payrolls for
several Crowley companies with over 5000
employees,
including all taxes compliances,
workers comp reporting
coordination,
including Puerto Rico. Coordinated, assisted,
and monitored all audits related to payroll processing, union,
states, workers comp and federal audits.
Page 15
ALICIA L SHARP
1976-1986
Analyzed
resulting in increased
Accounting Supervisor
Supervised general accounting, accounts receivables and
accounts payables for several Crowley companies.
and improved department operations
productivity
Civic Organizations/Affiliations
UD23 School Treasurer, Danby, Vermont
PTO Secretary, Currier Memorial, Danby, Vermont
Danby-Mt Tabor Seniors group, Danby, Vermont
Treasurer, UU Church of Jacksonville, Fl
Page 16
G. Cost Proposal
VEPP Inc. proposes a two year budget of $57,400 for performing the Clearinghouse and
Information Tasks services of SPEED Facilitator. It is anticipated that for the first two
years of the Contract these costs will be borne on a pro-rata basis by the utilities. This
price is broken down as follows:
Initial one-time charge
The cost proposed for the one-time charge is $5,000. This amount is budgeted for
design and implementation of the SPEED website. The one-time charge will be
billed in the first contract month.
Calendar Year 2007 - 2008
First year operational costs are proposed to be $25,700 2 to be billed to the
utilities monthly at the rate of about $2,142 per month.
Calendar Year 2008 - 2009
Second year operational costs are proposed to be $26,700 to be billed to the
utilities monthly at the rate of about $2,225 per month.
VEPP Inc. proposes to charge on a cost reimbursement basis for work as SPEED
Facilitator associated with Contract Development and Administration. Generally,
charges associated with Contract Development and Administration are on an “asrequested” basis and will be billed to either the SPEED developer or the SPEED
Developer and one or more Vermont utilities. Until the SPEED Program becomes active
it is not possible to estimate the amount of services requested. However the following
hourly costs are proposed:
Speed Facilitator (VEPP Inc. Executive Director)………………… $90/hr.
Administrative Assistance……………………………………….….$40/hr.
Legal Assistance3 (in support of SPEED Facilitator)……………..$150/hr.
Misc. Expenses………………………………………….…………...at cost
VEPP Inc. proposes a 4% increase in these hourly rates for the second contract year.
2 This cost is largely the cost of an additional day/week of time by the Executive Director
3 Provided by VEPP Inc.’s Corporate Counsel, David Mullett, Esq.
Page 17
Fee for On-going Administration of Projects
Presently VEPP Inc. provides on-going administration for 21 renewable energy projects.
There is available capacity to add SPEED projects without increasing VEPP Inc.’s
administrative budget. Based on the approved 2006/2007 VEPP Inc. budget, we would
propose to provide contract administration of new SPEED projects based on the
following fee schedule:
Annual Output
Monthly Fee
<1000 MWH/yr
$210
<5000 MWH/yr
$420
<10,000 MWH/yr
$1,000
<30,000 MWH/yr
$1,500
<100,000 MWH/yr
$3,000
<200,000 MWH/yr
$6,250
It should be noted that in the case of new SPEED projects these fees are to be paid for by
the SPEED project only.
The VEPP Inc.’s budget is reviewed and adjusted annually by the VEPP Inc. Board.
Since VEPP Inc. is a not-for-profit entity, any net revenue at the end of the year is used to
offset expenses the following year, or it is returned to the VEPP Inc. participants.
Additionally, the VEPP Inc. budget has been approved through June of 2008 by the
Public Service Board.
Page 18