Exhibit 99.484
EXECUTIVE SUMMARY
CalPX is seeking an IT service provider that would enable it to have:
o A predictable performance with agreed upon service levels for its
information systems;
o A predictable expenditures for its information systems;
o Ability to quickly respond to the changing business requirements of
the California energy marketplace; and
o Ability to rapidly introduce new products and services both for the
California energy market and other energy markets worldwide.
We hereby propose an outsourcing solution of IT services that not only would
meet all the above desired outcomes but also is expected to provide CalPX with
significant cost savings.
Our solution calls for Perot Systems to provide IT program management,
applications development and computer operations services to CalPX, initially
for a 36 month time period. We would phase in these services over a six month
time period starting around November 1, 1999 - see below for our proposed
implementation timeline. Our approach is described in the body of this proposal.
Perot Systems' customer first service philosophy and proven track record at
CalPX, our credibility and smooth working relationship with business
organizations at CalPX, and our worldwide experience with providing outsourced
IT services and our established IT processes and methodologies will underwrite
the success of our proposed solution.
IMPLEMENTATION TIMELINE
We propose to provide IT program management, applications development and
computer operations services to CalPX for a period of 36 months starting with
the execution of the "outsource contract", which is expected to be around
November 1, 1999. Our proposal calls for a phased transfer of CalPX IT services
to Perot Systems according to the following timetable.
[GRAPH CalPX IT Service Provision Implement Timeline]
According to our proposal:
1. CalPX and Perot Systems will start the "Outsource Contract"
negotiations immediately after the acceptance of this proposal by
CalPX.
2. We foresee contract negotiations to last for about one month during
which time Perot Systems will conduct a due diligence study under the
existing Task Order 5 between CalPX and Perot Systems. All funds
collected for the due diligence study will be credited to CalPX should
CalPX agree with the outsource contract with Perot Systems. Once
signed, the outsource contract will supercede Task Order 5.
3. We would start the transition of all program management and
applications development services to Perot Systems immediately after
the outsource contract is signed. This transition, described later in
this proposal, is expected to last one month.
4. At the end of the transition time period IT program management and IT
applications development services for CalPX will be provided by Perot
Systems.
5. We would conduct a careful study of the computer operations starting
with month three and completing by month six. At the same time period
we will conduct a series of studies as indicated in Appendix D of this
proposal. At the end of this time period either party may decide not
to agree with the transfer of computer operations to Perot Systems.
Failure to reach an agreement by both parties to transfer computer
operations, should it occur, will have no bearing on the transfer of
program management and applications development services to Perot
Systems.
6. Should both parties agree to transfer computer operations services to
Perot Systems, we would transition computer operations to Perot
Systems over one month time period during month six.
The details of our proposed IT solution described in the body of this proposal.
PRICING
Our pricing scheme is meant to help CalPX with predictability of its IT
expenditure. In short, our pricing is as follows:
1. Starting with the transition period for transfer of program management
and applications development services Perot Systems, CalPX will pay
Perot Systems one million dollars ($1M) per month for the services of
up to 50 Perot Systems' associates and contractors. This payment will
also cover all travel cost to Los Angeles area for these 50 associates
and contractors - will not cover travel cost to outside Los Angeles
area on CalPX business. Services of additional Perot Systems
associates will be charged on time and material basis using Perot
System's published rates for such resources at a 25% discount. This
will include services rendered for studies enumerated in Appendix D.
2. Starting with the transition period for transfer of computer
operations to Perot Systems, CalPX will pay Perot Systems one million
three hundred and fifty thousand dollars ($1.35M) per month adjusted
annually based on consumer price index for the
services of up to 70 Perot Systems associates and contractors. This
payment will cover all travel cost to Los Angeles area for these 70
associates and contractors - will not cover travel cost to outside Los
Angeles area on CalPX business. Services of additional Perot Systems
associates and contractors will be charged on time and material basis
using Perot System's published rates for such resources less a 25%
discount.
3. If computer operations services are not transferred to Perot Systems,
CalPX will continue to pay Perot Systems one million dollars ($1M) per
month adjusted annually based on consumer price index for the services
of up to 50 Perot Systems associates and contractors. The remaining
pricing features will remain the same as clause 1 above.
BENEFITS
As we indicated earlier our proposed solution will enable CalPX to have
predictable IT performance and cost and to have the flexibility to address CalPX
business requirements in California and beyond. In addition, we believe that our
solution will bring substantial savings to CalPX in its current IT expenditure.
The following table compares the cost of our solution with what we have
estimated to be the baseline CalPX IT expenditure under status quo - we have
conservatively assumed that CalPX baseline IT expenditure will remain constant
over the next three years. The table shows a saving of more than six million
dollars ($6M) over the next 3 years for CalPX.
=======================================================================================================
Year 1 Year 2 Year 3 Total
=======================================================================================================
CalPX Current Baseline IT $18,742,000 $18,742,100 $18,742,100 $56,226,200
Expenditure [Am I right that
this does not include CalPX
IT network operation which we
are not planning to take
over? - FZ]
Payments to Perot System $14,530,000 $16,200,000 $16,200.000 $46,930,000
CalPX Retained and Pass $2,986,000 $117,400 $117,400 $3,220,800
Through costs
Total Perot Solution Cost $17,516,000 $16,317,400 $16,317,400 $50,150,800
Savings for CalPX $1,226,000 $2,424,700 $2,424,700 $6,075,400
=======================================================================================================
In addition we believe that there are additional major savings than will be
realized through our solution. These are:
o Saving in the cost of major financial liability for CalPX due to what
we believe to be an inevitable major system crash at CalPX;
o Savings due to potential restructuring of MCI and IBM contracts;
o Saving due to potential for housing the entire CalPX staff in Pasadena
that could result from streamlining of IT personnel and equipment; and
o Savings due to total consolidation of all IT services and elimination
of all "phantom IT organisms" throughout the company.
OUR APPROACH
Our approach is described in the body of this proposal. Here, we find it
appropriate to broadly describe our solution by referring to the questions in a
recent survey of IT services at CalPX. [JIM, PLEASE USE THE ACTUAL QUESTIONS AND
ELABORATE OUR PROPOSED ACTIONS IN GREATER DETAIL.]
----------------------------------------- ------------------------------------------------------------------
Survey Item Proposed Perot Systems Actions
----------------------------------------- ------------------------------------------------------------------
IT Performance Implement PSC PMM and follow a standard project management
approach
----------------------------------------- ------------------------------------------------------------------
Agreed on Schedules Use PIW/PDW to establish and communicate schedules
----------------------------------------- ------------------------------------------------------------------
IT Stability and Reliability Keep OS/Networks at (0) gen sofware levels, establish systems
availability targets
----------------------------------------- ------------------------------------------------------------------
Better Quality Control Use a standard approach to software testing & report defects,
peer reviews, walkthru's
----------------------------------------- ------------------------------------------------------------------
Project Controls/Methodologies Change, Problem, Issue, KSP, PSC methods
----------------------------------------- ------------------------------------------------------------------
Clear Roles & Responsibilities Define clearly what IT is responsible for, SLA
----------------------------------------- ------------------------------------------------------------------
No business alignment IT Steering Committee, SLA, monthly customer reporting
----------------------------------------- ------------------------------------------------------------------
Commitments not achieved/deliverables Deliverables based on project planning using PMM
----------------------------------------- ------------------------------------------------------------------
Lacks critical skills EDP, ESM, ASM, training programs, CBT, distance learning
----------------------------------------- ------------------------------------------------------------------
PEROT SYSTEMS' MAJOR ACHIEVEMENTS AT CALPX
Some of our major achievements at CalPX are enumerated below. These achievments
underscores our strong commitment to our customers, our wide ranging information
system and project management expertise, our complete dedication to our service
qualities, and our contributions to CalPX's business sucesses.
CALPX'S BLOCK FORWARDS MARKET (BFM)
Peort Systems played a key role in the development and deployment of the BFM for
CalPX. The Block Forwards Market provides CalPX's participants a means to trade
standardized monthly block electricity contracts on a forward basis - up to six
month ahead. Perot Systems developed the real-time ticker information system,
and the CalPX specific settlement and credit system for the CalPX BFM. BFM
brings significant benefits to CalPX participants including:
o Block forward contracts serve as a tool to protect market participants
against future price variations for both purchases and sales in the
Day-Ahead Market.
o BFM allows CalPX to expand its energy trading services and enhance
overall market efficiency. Th BFM market also positions the CalPX to
provide more innovative trading services to participants.
o BFM allows California ratepayers to benefit from a more competitive
and dynamic electricity market place.
Perot systems delivered its BFM products and support services on a extremely
tight schedule of ??? months.
ISO DATA BRIDGE (BUCKEYE)
We completely designed and developed the ISO Data Bridge (ISODAB, aka Buckeye)
for CalPX. Buckeye provides a seamless data interface between CalPX and the
California Independent System Operator (ISO) scheduling systems. Based on the
ISO schedule data template specifications, the Buckeye application generates all
required input data templates and uploads the templates to the ISO Intranet Web
Server, automatically or upon request. Buckeye also downloads all output data
templates available in the ISO Web Server and inserts the data into CalPX
trading system. Additionally, Buckeye allows the automatic download of ISO
settlements data files.
The Buckeye application provides ease of use through a user-friendly graphical
user interface. By automatically executing mundane and repetitive tasks, it
allows CalPX trader to focus on more important business issues. Due to its
flexible design, it has provided CalPX the capability to easily adapt to changes
in the Trading CORE applications and in the ISO interface. It has also
simplified IT operations by eliminating a layer of server hardware and database
that was used in a previous implementation of an ISO gateway. Finally, Buckeye
has enabled CalPX to retire very costly hardware and software systems that were
used to served as the original CalPX data bridge to the ISO.
Perot systems delivered ISODAB (Buckeye) on schedule in ??? months.
ZONAL PRICE CALCULATOR (ZPC)
We designed developed the Zonal Price Calculator before the launch of CalPX. ZPC
determines Market Clearing Prices (MCP) in different zones of the California
Power Energy market. The proper pricing of energy and transmission usage charges
is essential in establishing a fair and efficient energy market as well as
providing proper economic signals for future resource and transmission
allocation.
BOOKOUT
We designed and developed the Bookout application for CalPX. Bookout
automatically matches the schedules of participating imports and exports and
creates net schedules of matched imports and exports as well as their equivalent
adjustment bids. These net schedules are submitted to the ISO for use in
congestion management and power flow scheduling with neighboring control areas.
The application also translates the final values of the net schedules determined
by the ISO back to the corresponding values of imports and exports before the
matching, so that participants can schedule their respective resources.
Bookout enables the CalPX participants to save 10% to 20% in ISO Grid Management
Charge and wheeling charge on exports and save varying degrees of transmission
loss obligation for imports. Such savings are expected to lower the price
barrier for trading in the CalPX energy market, thus contributing to maintaining
and expanding the trading volume in CalPX energy market.
Perot Systems delivered the Bookout scheduling applications on schedule and on
budget.
REAL TIME DATA COLLECTION SYSTEM (RTDC)
We designed and developed the RTDC system to handle CalPX's real-time
operational transactions, and to speed up and improve the accuracy of the
real-time transaction process. The RTDC system centralized all transaction data
into one database while providing a user-friendly interface. RTDC allows the
operator to add new and modify previous transactions, track past transaction
information, Cancel incorrectly entered transactions, generate daily transaction
and daily summary report for real time operators and managers, and generate
Powerhouse report for PX data warehouse system.
INTER-TIE TRANSMISSION OVER SCHEDULING (ITOS - PIT O'BULL)
We designed and developed the ITOS to monitor CalPX participants who schedule
energy beyond the available transmission capacity across various ISO inter-ties
in CalPX Day-Ahead Market. ITOS has been helping PX Day-Ahead Market operators
to identify the over-scheduling situation and to prevent the possible market
gaming activities.
PX SETTLEMENT REPORTER (PXSR/TO DEBIT)
We designed and developed CalPX Settlement Reporter for CalPX settlement group
to handle the following tasks:
o For both PX Day-Ahead and Hour-Ahead markets estimate the total PX
congestion payment to the ISO or credit from ISO for each operating
hour. This estimate helps CalPX settlement group verify the congestion
settlement charge received from ISO and reduce the possibility of
financial dispute regarding the congestion charge.
o Calculate the TO Debit charge to CalPX due to derating of one or more
inter-zonal interface(s) in the Hour-Ahead Market. These charges are
used to settle with CalPX Participants according to the PX forward
market settlement timelines.
BUSINESS CONSULTING
Perot Systems effectiveness in providing information system products and
services to CalPX not only lies on its worldwide experience and expertise in the
IT fields, but also are built on our team's business skills and knowledge - our
deep understanding and long time experience in designing California energy
markets, developing and interacting with CAISO and providing regulatory
supports. With true appreciation of CalPX's business needs, we do not find
non-business problems for interesting IT solutions - we find the right IT
solutions for real business problems.
Our team was involved in the definition and design of both CalPX and CAISO. Our
business consulting team has played major roles in the design and development of
CalPX zonal pricing mechanism, TO Debit distribution, Bookout business
processes, Ancillary Services redesign implementation and the assessment and
influence of almost every ISO initiated market change. We have also been
providing support for CalPX regulatory filing since Tariff Amendment 5. As one
of our efforts to help CalPX initiate critical market changes aimed at retaining
CalPX participants, increasing CalPX market efficiency and expanding CalPX
service ranges, we recently engaged CalPX in developing alternatives for CalPX
participants to trade and schedule transmission rights.