EXHIBIT 99.221
EXECUTIVE SUMMARY
Perot Systems Corporation(1) is very pleased to present this proposal to
develop, integrate, and operate business and Information Technology (IT) systems
and services for California Department of Water Resources' (CDWR's) scheduling
and settlements function.
We understand the enormous challenge that CDWR is facing in leading California
out of its current energy crisis. And we understand the tremendous technical
challenge that your organization is facing in provide scheduling and settlements
services to CDWR in order for it to meet its challenge. The solutions proposed
will go a long way to completely mitigate your technical and business
challenges.
In our proposal, we present CDWR with three solution options. Each of these
solutions has its own specific characteristics. They enable you to optimize
between your competing objectives of risk mitigation and cost control.
We do not see a need to talk much about our qualifications in providing the
systems and services that you need. Suffice it to say that:
- Perot Systems was part of the team that designed, developed and
implemented scheduling and settlements business and IT solutions for
both the California ISO (Cal ISO) and the California PX (CalPX).
- Perot Systems developed and integrated the scheduling and settlements
system that is currently being used at CalPX. We believe that it should
be clear to all that the scheduling and settlements solutions that would
meet CDWR's needs are very similar to those currently being used by
CalPX. In fact we know of no other solution provider in the marketplace
who has such a complete solution as we do to meet your immediate and
long-term needs - please see our comparison table at the end of this
executive summary for better illustration of this point.
- Perot Systems staff that will be engaged in this "process" has been
operating all the IT infrastructure, applications and business processes
that CalPX currently uses for its scheduling and settlements functions.
As indicated earlier, we propose three solution options to CDWR to meet its
scheduling and settlements needs:
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(1) For the purpose of this proposal, Perot Systems includes its
subcontracting partners such as PowerMeter, Inc.
SOLUTION 1: Provide CDWR with scheduling and settlements operations services.
SOLUTION 2: Provide CDWR with scheduling and settlements applications hosting
services. In this solution, CDWR would run scheduling and settlements business
processes using its own staff.
SOLUTION 3: Provide CDWRT with a software solution for scheduling and
settlements and integrate the same into CDWR current infrastructure. In this
solution, CDWR would run scheduling and settlements business and IT processes
using its own staff.
We describe these solution options in further detail below where we will attempt
to highlight their main benefits from CDWR's point of view.
We must emphasize that for all our solution options, CDWR will be the official
Scheduling Coordinator vis-a-vis Cal ISO and rest of the marketplace. Perot
System will solely act as an agent of CDWR in providing the essential services
that it needs.
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SOLUTION 1: SCHEDULING AND SETTLEMENTS OPERATIONS SERVICES
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In this solution option, Perot systems will provide scheduling and settlements
operations services to CDWR on 7X24 basis. To implement this solution, we will:
- design interfaces between your business operation processes and systems
and our scheduling and settlements operation processes and systems;
- implement a file based interface to your existing systems;
- register your resources with the ISO;
- operate the scheduling and settlements processes -- send your forward
market and real-time schedules to ISO and return final schedules back in
the file format;
- interface with the ISO on scheduling and settlements processes,
questions or concerns;
- operate the ISO settlements system -- we will present the ISO
settlements statements in the file format;
- track ISO processes and system changes and adapt our processes and
systems to meet such changes as necessary -- you may need to modify your
file interface in response to some of these changes; and
- track and facilitate settlements disputes with the ISO.
As we will describe later in this proposal, we price these services based on a
subscription fee and a volumetric charge.
The benefits of this solution are obvious. Above all, our proposed Solution 1
practically eliminates all risks associated with setting up and running your
scheduling and settlements operations and allows you to concentrate on building
and operating your other much needed services. Furthermore, this service can
start practically immediately after Perot Systems and CDWR have entered into
agreement for such services.
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SOLUTION 2: SCHEDULING AND SETTLEMENTS APPLICATION HOSTING
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In this solution, CDWR would operate its scheduling and settlements services
using an application hosting service provided on 7X24 basis by Perot Systems.
For this purpose we will:
- design the interface between your business systems and our scheduling
and settlements systems;
- implement a file based interface to your existing systems;
- provide your operators with access to our scheduling and settlements
systems and applications -- you will interface with the ISO on
scheduling and settlements processes, questions or concerns;
- present ISO settlements statements in the file format; and
- track ISO system changes and adapt our systems to meet such changes as
necessary -- you need to modify your business processes and file
interfaces in response to some of these changes.
As we will describe later in this proposal, we price our applications hosting
services based on a subscription fee and a volumetric charge.
The benefits of this solution are also very clear. Our Solution 2 eliminates
almost all risks associated with setting up and running scheduling and
settlements systems and applications, while keeping all business operations
under your control. Furthermore, this service can start almost immediately after
Perot Systems and CDWR have entered into agreement for such services(2).
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SOLUTION 3: SOFTWARE SOLUTION
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In this solution, we will install and integrate our scheduling and settlements
systems and applications into CDWR current infrastructure. For this purpose we
will:
- specify your hardware and system software needs;
- design the interface between your business systems and our scheduling
and settlements systems;
- install our ISO scheduling and settlements application on your hardware
platform;
- implement a file based interface between your business systems and the
installed ISO scheduling and settlements subsystems -- you will run
these applications and interface with the ISO; and
- track ISO system changes and adapt our systems to meet such changes
based on upgrade fee -- you need to modify your business processes and
file interfaces in response to some of these changes.
Should you use this solution option, you will pay us a license fee for our
systems and software. Integration services will be provided on time and material
(T&M) basis. All major system and application changes will be made on T&M basis.
The main feature of this solution is that it keeps all business and IT
operations under your control. Installation and integration services will start
in earnest immediately after Perot Systems and CDWR have reached an agreement
for this solution. Since our knowledge of your current systems is limited, we
cannot propose a timeline for implementing solution. We foresee a minimum of two
months before this solution is fully implemented.
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(2) It seems that CDWR is hiring many of the CalPX past staffers. Since the
systems and applications that we will provide in this solution are the
same systems and applications currently used by CalPX, there will be very
short learning curve to bring your staff up to speed while implementing
this solution.
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OPTIONAL SERVICES AND SOLUTIONS
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In addition to the services described earlier for each of our proposed
solutions, Perot Systems can provide you with the following additional services
and solutions to improve the efficiency of your solution. These are:
- Transparently integrating our scheduling and settlements processes and
systems with your existing processes and systems (your processes and
systems permitting);
- Integrating your "participants" into the scheduling and settlements
processes and systems including allocating and invoicing your
participants' share of charges (based on your required formulas);
- Developing interfaces between your scheduling and settlements systems
and those of additional Control Area Operators (CAOs) with minimum
possible changes to your processes and systems;
- Managing your real-time resource dispatch and tagging needs;
- Processing and validating your meter data;
- Providing energy trading services - WITHOUT taking title in the power or
clearing such trades; and
- Consulting on RTO developments around the nation.
As we will describe below, depending on your selection of these options as an
operation service, application hosting service or software installation, our
pricing mechanism will vary. Regardless of the pricing option, our approach
allows you to only take on the services you need and disregard the ones that
have little or no value to you.
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OUR PLAN
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Once you accept any one of our solutions, we will start our engagement at CDWR
through a three-stage process:
STAGE 1 -- REQUIREMENTS STUDY: We will immediately enter into contract
negotiations with you while in parallel and based on a letter of intent we will
start providing requirements analysis and design services to you.
STAGE 2 -- INTEGRATION DESIGN AND IMPLEMENTATION: Upon completion of Stage 1 and
execution of the services agreement, we will start our integration design and
implementation (the nature of which will depend on the selected solution).
STAGE 3 -- OPERATION: Finally, depending on the selected solution we will either
enter into an operation service, an application hosting service or an
installation effort.
The timeline for any of these activities can only be developed after Stage 1
requirements study is completed.
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PRICING
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As indicated above, our pricing will vary depending on the selected solution. In
the following we present our pricing options.
PRICING FOR SOLUTION 1:
In this solution we will charge a monthly subscription fee and a monthly
volumetric fee for our scheduling and ISO settlements operations services.(3)
There will also be separate T&M charges for our services in Stages 1 and 2 of
the proposal. However, these charges will be fully refunded if CDWR enters into
a minimum two year agreement to receive scheduling and settlements operations
services exclusively from Perot Systems. Under this solution Perot Systems will
track ISO business process and systems changes to ensure compatibility with such
changes.
(3) 20% discount will apply to subscription and volumetric fees if 7X24
operation is not required.
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PRICING
STAGE MECHANISM RATE COMMENTS
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1. T&M $200/hr Will not exceed $100K. Will be
Req study fully refunded if a minimum 2 year
exclusive operation service is
purchased
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2. T&M $200/hr Will determine a cap based on Stage
File based 1. Fees will be fully refunded if a
Integration minimum 2 year exclusive operation
service is purchased
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3. Subscription Subscription: - Subscription fee covers 2.5 TWh
Business plus $550,000/month per month of energy and 250 GWh
Operation Volumetric Volumetric: per month of capacity scheduling
2.5-5 c/MWh Per and ISO settlements
side
- Volumetric fee is 5 c/MWh per
side for the second 2.5TWh of
energy and the second 250 GWh per
month of capacity scheduling and
ISO settlements per month
- Volumetric fee is 2.5 c/MWh per side
for energy and capacity scheduling
and ISO settlements exceeding 5 TWh
per month for energy and 500 GWh
for capacity
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PRICING FOR SOLUTION 2:
In this solution we will charge a monthly subscription fee and a monthly
volumetric fee for our scheduling and ISO settlements application hosting
services.(4) There will also be separate T&M charges for our services in Stages
1 and 2 of the proposal. However, 50% of these charges will be refunded if CDWR
enters into a minimum two year agreement to receive scheduling and settlements
application hosting services exclusively from Perot Systems. Under this solution
option Perot Systems will track ISO systems changes to ensure compatibility with
such changes.
(4) 20% discount will apply to subscription and volumetric fees if 7X24
operation is not required.
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PRICING
STAGE MECHANISM RATE COMMENTS
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T&M $200/hr Will not exceed $100K. 50% of such
1. fees will be fully refunded if a
Req study minimum 2 year exclusive
application hosting service is
purchased
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2. T&M $200/hr Will determine a cap based on Stage
File based 1. 50% of the fees will be
Integration refunded if a minimum 2 year
exclusive application hosting
service is purchased
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3. Subscription Subscription: - Subscription fee covers 2.5 TWh
Application plus $300,000/month per month of energy and 250 GWh
Hosting Volumetric Volumetric: per month of capacity scheduling
1.5-3 c/MWh Per and ISO settlements
side
- Volumetric fee is 3 c/MWh per
side for the second 2.5TWh of
energy and the second 250 GWh per
month of capacity scheduling and
ISO settlements per month
- Volumetric fee is 1.5 c/MWh per side
for energy and capacity scheduling
and ISO settlements exceeding 5 TWh
per month for energy and 500 GWh
for capacity
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PRICING FOR SOLUTION 3:
In this solution we will charge a license fee and an annual maintenance fee for
our scheduling and ISO settlements applications at CDWR. There will also be
separate T&M charges for our services in Stages 1 and 2 of the proposal. Under
this solution Perot Systems will track ISO systems changes to ensure
compatibility with such changes. CDWR will pay for installation and integration
of such changes.
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PRICING
STAGE MECHANISM RATE COMMENTS
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T&M $200/hr Will not exceed $100K. Will provide
1. up to 100 hours of study at no
Req study charge to CDWR once license fee
is paid.
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2. T&M $200/hr Cap will be determined at the end of
File based Stage 1. Will provide up to 400
Integration hours of integration services at no
charge to CDWR once license fee is
paid.
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3. Upfront and License: All major system/application changes
License fee annual license $2,000,000 due to ISO will be priced on T&M
Maintenance: basis.
$400,000/year
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PRICING FOR OPTIONAL SERVICES:
The following present the price menu of our optional services. All three options
of operations services, application hosting and solution provision are available
for these optional services. CDWR may choose one or more of these services and
the method of delivery in conjunction with one of the solutions offered earlier.
It is necessary the delivery option for optional services to be consistent with
that of the selected solution option.
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APPLICATIONS
OPTIONAL SERVICE OPERATIONS SERVICE(5) HOSTING(6) SOFTWARE SOLUTION
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Integration with Subscription: Subscription: License:
CDWR "participants" $70,000/month $40,000/month $500,000
and allocation of (3 participants) (3 participants)
all charges among Maintenance:
these participants $10,000/month per $5,000/month per $100,000/Year
additional additional
participant participant Integration:
$200/hr
(For more than 100
hours of services)
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(5) Integration services are included.
(6) Integration services are included.
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$25,000/month per Subscription: License:
Real-time Dispatch staff $25,000/month $250,000
and Tagging Services Maintenance:
$50,000/Year
Integration:
$200/hr
(For more than 50
hours of services)
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Trading: 2c/MWh per side 1.2c/MWh per side License:
Clearing Auction (No clearing) $500,000
Bilateral Matching Maintenance:
Pay as bid $100,000/Year
Integration:
$200/hr
(For more than 100
hours of services)
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Transparent N/A N/A $200/hr
integration with
existing & new
systems
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Meter data Subscription: Subscription: N/A
processing and $45,000/month $25,000/month
validation (3 participants) (3 participants)
& &
$5,000/month per $3,000/month per
additional additional
participant participant
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COMPARISON WITH ANOTHER SERVICE PROVIDER
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The following table compares our services with those of another scheduling and
settlements services provider in California. This table, which has been
developed based on openly available information on the services of this
provider, clearly indicates the completeness of our solution offering.
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SERVICES, SYSTEMS AND
QUALIFICATIONS PEROT SYSTEMS OTHER MAJOR SERVICE VENDOR
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Scheduling DA, HA, Ancillary Services, DA, HA, Ancillary Services,
Supplemental Energy, Supplemental Energy,
ETC/FTR, Bilateral Bilateral Scheduling
Scheduling, Inter-SC
Adjustment Bids
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Real-time dispatch Optional service Not mentioned
and tagging
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HUB locations 25 Zones 8 hubs
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Metering Process and Validate meter None
data from and provide
Settlement Quality Meter
Data to ISO (optional
service).
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Dispute Processing Developed a fully functional Not mentioned
dispute processing and
tracking system. The model
is expandable to provide
predictive disputes.
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ISO System Fully automated data Not mentioned
Interface communication of all ISO
schedule and settlement data.
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Settlements and All ISO charge types for Few participants
Billing over 70 participants in CA
alone.
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10 minute Settlements Provided Not mentioned
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Settlement and Web based Web based
Billing data access
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ISO Public Market Provided Not mentioned
Information
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Handling of ISO Provided. Sharing among Uplift spread over
charges participants as an optional participants
service.
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Service Schedule 7 by 24 operation Capable of 7 by 24 operation
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IT Team Experience Provided IT support to CalPX Handling less than 5% of
that handled 80% of California market?
California electric energy
market. Developed a
majority of improvement
applications in PX trading,
settlement, metering and
finance systems. Made all
PX system changes to
accommodate ISO market and
system changes. Conduced
numerous Market Simulation
including ISO and IOUs to
provide End to End
integration test before
introducing change. Provide
complete help desk and
computer operation services
using Perot's pool of
resources. Runs a Program
Office applying proven
project management
technologies. IT project
success (on schedule, under
budget) rate close to 95%.
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Business Team Involved in the design, Not mentioned
Experience implementation and operation
of ISO and PX from day one.
Intimately familiar with
energy market and utility
financing and operation.
Team experts published widely
on major market issues.
Handled 80% of California
energy market.
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Operation Team Handled 80% of California Not mentioned
Experience spot market and long term
contract market (yearly,
quarterly and month).
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Conducted Web based real-time
energy auction for the Alberta
Balancing Power Pool.
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Company Financial See Annual Report. See Annual Report
Strength
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Interface with Web based, initially file Web based, limited GUI
Participant Systems based
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System Platforms NT, MS SQL NT, MS SQL
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Participant System PC compatible workstations PC compatible workstations
Requirements running Windows 85, 98, 2000 running Windows 85, 98 and NT
and NT
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Data transmission SSL, 128 bit encryption SSL, 128 bit encryption
security
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Clearing and Credit Not offered in California so Offered to certain extent.
Management as to insulate participants Can lead to similar failures
from the current credit as the PX has experienced
crisis. with large participants
default. Large California
utilities will have difficulty
to trade with credit
self-management participants
due to the utilities current
credit standings.
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Trading services Clearing auction Provided (Fulin??)
Bilateral matching
Pay as bid
Block forward
(optional service)
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Credit Evaluation Part of trading service Not mentioned
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Pricing Volumetric and subscription Volumetric
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Scheduling/Settlements 5.83 c/MWh per side 6.25 c/MWh per side
Fee (based on 7.5
TWH/months)
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Trading Fee 2 c/MWh per side 3 c/MWh per side
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SUMMARY
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We are confident that one of our proposed solutions will meet all of your
immediate and long-term technical and business objectives of providing
scheduling and settlements services in California. In fact, we believe that only
our solutions can meet your very aggressive timeline while at same time
remaining cost effective. Finally, our operations or applications hosting
solution option will mitigate your ongoing risk of keeping up with Cal ISO's and
market's ongoing business processes or systems changes.(7)
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(7) We must mention that last year alone, CalPX spent $3.5M in software
development to keep pace with Cal ISO business process and system changes.