EXHIBIT 99.247
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 settlement 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 presented
in this proposal 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 settlement needs:
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(1) For the purpose of this proposal, Perot Systems includes its subcontracting
partners such as PresetMeter, 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.
SOLUTION 1: SCHEDULING AND SETTLEMENTS OPERATIONS SERVICES
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 process and
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
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 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. Furthermore, this service can start
almost immediately after Perot Systems and CDWR have entered into agreement for
such services(2).
SOLUTION 3: SOFTWARE SOLUTION
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 interface 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 you 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.
PRICING
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.
<Table>
<Caption>
STAGE PRICING RATE COMMENTS
MECHANISM
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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
2. T&M $200/hr Will determine a cap based on Stage
File based 1. Fees will be fully refunded if
Integration a minimum 2 year exclusive
operation service is purchased
3. Subscription Subscription: - Subscription fee covers 2.5
</Table>
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(3) 20% discount will apply to subscription and volumetric fees if 7X24
operation is not required.
<Table>
Business plus $550,000/month TWh per month of energy and
Operation Volumetric Volumetric: 250 GWh per month of capacity
2.5-5 c/MWh scheduling and ISO settlements
Per 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
</Table>
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.
<Table>
<Caption>
PRICING
STAGE MECHANISM RATE COMMENTS
- ----- --------- ---- --------
1. T&M $200/hr Will not exceed $100K. 50% of
Req. study such fees will be fully
refunded if a minimum 2 year
exclusive application hosting
service is purchased
2. T&M $200/hr Will determine a cap based on
File based Stage 1. 50% of the fees will
Integration be refunded if a minimum 2 year
</Table>
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(4) 20% discount will apply to subscription and volumetric fees if 7X24
operation is not required.
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 per
Hosting Volumetric month of capacity scheduling and ISO
Volumetric: settlements
1.5-3 c/MWh
Per 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
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.
PRICING
STAGE MECHANISM RATE COMMENTS
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1. T&M $200/hr Will not exceed $100K.
Req study
2. T&M $200/hr Cap will be determined at the
File based end of Stage 1.
Integration
<Table>
3. Upfront and License Fee: All major system/application
License fee annual license $2,000,000 changes due to ISO will be priced
on T&M basis.
Maintenance
$400,000/year
</Table>
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.
<Table>
<Caption>
OPTIONAL OPERATIONS APPLICATIONS SOFTWARE
SERVICE SERVICE(5) HOSTING(6) SOLUTION
- ------------------- -------------------- -------------------- ---------------
Integration with Subscription: Subscription: App. License:
CDWR $70,000/month $40,000/month $500,000
"participants" and (for 3 participants) (for 3 participants)
allocation of all App Maintenance
charges among $10,000/month per $5,000/month per $100,000/year
these participants additional additional
participant participant Integration:
$200/hr
Real-time Dispatch $25,000/month per Subscription: License:
and Tagging staff $25,000/month $250,000
Services
Maintenance:
$50,000/Year
Integration:
$200/hr
Trading: 2c/MWh per side 1.5c/MWh per side License:
Clearing Auction (No clearing) $500,000
Bilateral Matching Maintenance:
</Table>
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(5) Integration services are included.
(6) Integration services are included.
<Table>
<Caption>
Pay as bid $100,000/Year
Integration:
$200/hr
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Transparent N/A N/A $200/hr
integration with
existing and new
systems
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Meter data Subscription: Subscription: N/A
processing and $45,000/month $25,000/month
validation (for 3 participants) (for 3 participants)
& &
$5,000/month per $3,000/month per
additional additional
participant participant
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</Table>
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COMPARISON WITH OTHER SERVICE PROVIDERS
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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 available information on the services of this provider,
clearly indicates the completeness of our solution offering.
<Table>
<Caption>
SERVICES, SYSTEMS PEROT SYSTEMS OTHER MAJOR SERVICE VENDOR
AND QUALIFICATIONS
Scheduling DA, HA, Ancillary Services, DA, HA, Ancillary Services,
Supplemental Energy, Supplemental Energy, Bilateral
ETC/FTR, Bilateral, Inter-SC
Adjustment Bids
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Real-time dispatch and Available upon request Not mentioned
tagging
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HUB locations 25 Zones 8 hubs
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Settlements and All ISO charge types for over Few participants
Billing 70 in CA alone
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Metering Processed and Validate meter None
data from and provide
Settlement Quality Meter Data
to ISO
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</Table>
<Table>
<Caption>
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 Interface Automated data communication Not mentioned
of all ISO schedule and
settlement data.
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Settlement and Billing Web based Web based
data access
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ISO Public Market Provided Not mentioned
Information
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Handling of ISO No sharing between SCs Uplift spread over participants
charges
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Service Schedule 7 by 24 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 California market?
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.
</Table>
<Table>
<Caption>
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Operation Team Handled 80% of California spot Not mentioned
Experience market and long term contract
market (yearly, quarterly and
month). 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 based Web based, limited GUI
Participant Systems
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System Platforms NT, MS SQL databases NT, MS SQL databases
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Participant System PC compatible workstations PC compatible workstations
Requirements running Windows 85, 98, 2000 running Windows 85, 98 and
and NT NT
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Data transmission SSL, 128 bit encryption SSL, 128 bid encryption
security
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Pricing Volumetric and subscription Volumetric
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Clearing and Credit Not offered in California so as Offered to certain extent. Can
Management to insulate participants from the lead to similar failures as the PX
current credit crisis has experienced 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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Fee (based on 7.5 5.83 c/MWh 6.25 c/MWh
TWH per months) per side per side
- ----------------------------------------------------------------------------------------------------------
</Table>
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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 the 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)
- -----------------
(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.
SHM 02/12/2001
EXECUTIVE SUMMARY
CALIFORNIA DEPARTMENT OF WATER RES.
DEAL REVIEW
CLIENT NAME: California Department of Water Res. REVIEW TYPE: Qualification/SMR/Pre-Contract
INDUSTRY: EI/Energy REVIEW DATE: 12-Feb-01
GEOGRAPHY: Alhambra/Sacramento SPONSOR: Ken Scott
DEAL LEADER: Dariush Shirmohammadi START DATE: 01-MAR-01
COMPANY DESCRIPTION:
California Department of Water Resources, a state agency, has taken over some of
the responsibilities of CalPX in California - by an act of legislation. They do
need to develop a lot of capabilities in a very short time period.
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VALUE STATEMENT:
DWR will become capable of delivering scheduling and settlements services for
its new found customers (California IOUs) by using systems and processes
operated by Perot Systems in the timeline that they are mandated to provide such
services.
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DEAL DESCRIPTION:
Perot Systems will primarily provide business process outsourcing to DWR for
base fee of $550,000 per month and an additional revenue of about $250,000 in
volumetric fees (total of $800,000/month). Perot Systems will also offer an
application oursourcing option for base fees that are exactly half of the values
above ($400,000/month) in case DWR wants to run its own business processes. In
this case the cost will also reduce since no business process operations staff
will be needed. Finally, as a third option we will offer a
development/integration option for $3,000,000 fee (including integration) with
annual fee of $500,000 to maintain the applications.
CUSTOMER RELATIONS:
COMPETITION:
APX and internal IT are our main competitors. Due to urgencies involved, APX
will be in a better position than internal IT to compete with us.
SHM 02/12/2001
CALIFORNIA DEPARTMENT OF WATER RES. - DEAL OVERVIEW
FEB 12, 2001
RESOURCE REQUIREMENTS:
YEAR AVG SALARY 1 2 3 4 5
- ---- ---------- ------ ------ ------ ---- ----
Account Manager 250,000 0.74 1.00 1.00 0.00 0.00
Manager -Scheduling/Settlements 150,000 0.74 1.00 1.00 0.00 0.00
IT Manager 150,000 0.74 1.00 1.00 0.00 0.00
Admin Support - CEO 50,000 1.50 2.00 2.00 0.00 0.00
Admin Support - Sett/Sch/Mrkt/IT 30,000 1.47 2.00 2.00 0.00 0.00
IT - Support 95,000 12.00 15.00 15.00 0.00 0.00
Scheduling/Settlements 85,000 10.00 13.00 14.00 0.00 0.00
Legal 0 0.00 0.00 0.00 0.00 0.00
Marketing - Business Product
Dev/Support R 70,000 2.40 3.00 3.00 0.00 0.00
J 0 0.00 0.00 0.00 0.00 0.00
K 0 0.00 0.00 0.00 0.00 0.00
L 0 0.00 0.00 0.00 0.00 0.00
M 0 0.00 0.00 0.00 0.00 0.00
N 0 0.00 0.00 0.00 0.00 0.00
O 0 0.00 0.00 0.00 0.00 0.00
P 0 0.00 0.00 0.00 0.00 0.00
Q 0 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ---- ----
Total Staffing (Years) 29.58 38.00 39.00 0.00 0.00
------ ------ ------ ---- ----
Total Staffing (Months) 354.90 456.00 468.00 0.00 0.00
====== ====== ====== ==== ====
Explanation of Staffing Requirements:
Explanation of Capital Requirements:
FINANCIAL SUMMARY (000s)
SHM 02/12/2001
CALIFORNIA DEPARTMENT OF WATER RES. - DEAL OVERVIEW
FEB 12, 2001
<Table>
<Caption>
1st 2001 BACKLOG
YEAR TCV IMPACT ADDED
--------- ------- ------ ---------
P&L IMPACT
Revenues $ 9,163 $29,163 $ 7,500 $21,663
Gross margin 4,047 11,464 3,402 8,062
Gross margin % 44.2% 39.3% 45.4% 37.2%
Pretax 3,096 8,173 2,639 5,534
Pretax margin % 33.8% 28.0% 35.2% 25.5%
After-tax income 1,858 4,904 1,584 3,320
After-tax % 20.3% 16.8% 21.1% 15.3%
NET CASH FLOW (75) 4,904 (380)
PEAK NEGATIVE CASH (2,163) (2,163) (2,163)
CAPITAL COSTS 1,033 1,037 1,004
TOTAL STAFFING (FTEs) 29.58
</Table>
MAJOR RISKS
- Salaries and staffing numbers are estimates.
-
-
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MAJOR ASSUMPTIONS
- New P&L based on most recent data on DWR scheduling (no Clearing)
- All staff requirements filled with existing PSC account staff (no
upfront recruiting)
- Located in Alhambra facilities
- Startup period only one month
- Only DWR business/revenue modeled
- All travel is pass-thru
- 2 Year Fixed Price deal assumed.
-