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First New Jersey Offshore Wind Solicitation: Q&A

Questions submitted regarding the solicitation were collected, answered, and posted here by the BPU. Questions and answers posted are available for all to see. Please note that these answers are the opinion of Board Staff and should not be construed as opinions or rulings of the Board.

Questions were accepted until 6pm Tuesday, December 11, 2018.

1. QUESTION: Section 14:8-6.3(e) of the New Jersey regulations states that all applications must be consistent with Board application standards as set forth in Title 14 of the New Jersey Administrative Code. Other than the requirements set out in N.J.A.C. 14:8-6, are there other requirements that applicants are expected to comply with? For instance, are there any formatting requirements that applicants must comply with when preparing and submitting their applications?

RESPONSE:
All guidance, forms and applications to be used for this procurement are posted on www.njoffshorewind.com. All applicable requirements are stated within the Guidance Document. Please ensure PDFs are searchable and that the application is indexed so that information can be easily located.

2. QUESTION: The Solicitation Guidance Document asks for a minimum bid of 400 MW nameplate capacity. However based on the rated capacity of the selected turbine it is difficult to hit 400 MWs exactly. Should the applicant choose a slightly higher or lower amount of capacity to conform with the 400 MW minimum bid size?

RESPONSE:
The Solicitation Guidance Document specifies that bidders may offer projects up to 1,100 MW in size. The minimum offer size is 300 MW. Bidders may offer any size project within those parameters. However all bidders must offer at least one bid alternative sized bid at 400 MWs. In all instances these bid requirements refers to nameplate capacity. In general, Minimum bid size should be no more than 400 MWs of installed capacity but we will consider whatever you submit as the closest possible configuration based on the rated capacity of the selected turbine.

3. QUESTION: Given the potential early stage of project maturity at the time of application, what documentation is the NJ BPU expecting to demonstrate applicants have "applied for all current eligible State and Federal grants, rebates, tax credits, and programs available to offset the cost of the project or provide tax advantages"?

RESPONSE:
The Applicant should identify those State and Federal grants, rebates and tax credits which it is aware of, has considered, and has factored into the OREC Price. The Applicant should include documentation of these applications as may be available and "a description and estimate of any State or federal tax benefits that may be associated with the project" N.J.A.C. 14:8-6.5 (a) 3 and 5.

4. QUESTION: For the system upgrade OREC true-up process, what is the planned procedure for establishing the revised OREC price? If final costs for the system upgrades are below the amount in the application will the approved OREC be reduced as part of the true up process? Additionally, what documentation will be required in the application and at time of the true up to support the process?

RESPONSE:
As noted in the Guidance Document (Section 3.18.2 Base/Alt Offer) if the bidder is electing to have their system upgrade cost estimate trued up to actual costs, they should indicate this on the sheet and show separately their "System Upgrade" costs. Note that even if the bidder is requesting this option, their All-in OREC Price should be inclusive of these System Upgrade costs and should provide the technical report used to estimate these costs at the time of the bid. The Applicant will be required to submit documentation to verify the actual "System Upgrade" costs such as the PJM Interconnection Report and cost estimate. The OREC Price will be adjusted according to the difference in costs. If the verified costs are higher the OREC Price will be increased by the difference. If the verified costs are lower than what was estimated, the OREC Price will decrease by the difference.

5. QUESTION: In the answers posted on the NJ BPU's website on December 10, the BPU states that selected projects will be required to seek approval for changes in key personnel, the organizational structure of key employees, financing plans, ownership, technology, and other deviations from the proposal. Please clarify the procedural process that applicants will be expected to follow to obtain this approval. For instance, will an applicant be required to submit a formal petition seeking approval for these changes? If so, what is the timeline for processing these requests?

RESPONSE:
Please see prior response to question regarding Changes to Employees. The Board will review all requests made by the petitioner in a timely manner. The petitioner may include in its request a time by when the decision is requested.

6. QUESTION: When submitting a bid through the RFP website, is an applicant required to submit separate files for each of the sections of the response? For instance, is it possible to submit a single narrative that addresses the various components of the bid, with attachments as needed and appropriate? Currently, the website is structured in a manner that appears to require applicants to upload each section individually. If it is the case that an applicant is required to upload each section individually, is it permissible for an applicant to incorporate material from another section by reference to avoid redundancy?

RESPONSE:
The website is structured in a manner that requires applicants to upload each section individually. However an applicant may incorporate material from another section by reference to avoid redundancy. The exception to this is the Environmental Protection Plan and Economic Development Plan which may reference other sections but must include each of the specified elements and should be comprehensive and detailed enough to provide a complete understanding how these plans shall be realized.

7. QUESTION: (a) Board rules allow the Board to grant waivers of its rules, provided certain standards are satisfied. See N.J.A.C. 14:1-1.2. May an applicant, as part of its application, request waivers of certain provisions under the OWEDA regulations, or will any such request for waiver cause an application to be deemed administratively incomplete? (b) If the answer to (a) above is that the application seeking a waiver would be deemed administratively incomplete, could an applicant submit in the alternative? In such instance the applicant would request the waiver, and explain the reasons for the request, but expressly state that, in the event the Board denies the waiver request, the applicant would fully comply with the applicable Board regulations.

RESPONSE:
An applicant, as part of its application, may request a Waiver of certain administrative provisions under the OWEDA regulations and explain the reasons for the request, but expressly state that, in the event the Board denies the waiver request, the applicant would fully comply with the applicable Board regulations. It is at the Board’s discretion whether to approve a request for a Waiver even if well supported.

8. QUESTION: (a) Please confirm whether, in the event an application is approved by the Board but the project contemplated thereby is not ultimately constructed due to force majeure or otherwise, the successful applicant will be subject to any residual liability to the Board, by way of liquidated damages or otherwise. (b) What happens in the event that the commencement of operations date stated in a Board approval order is delayed due to an event of force majeure, with reference to the OREC term? Will the developer be required to seek Board approval for the 20 year OREC term to commence at the later commencement of operations date, or is it anticipated that the commencement date of the 20 year OREC term will be extended as of right?

RESPONSE:
The current solicitation does not include a surety bond or payment in the event an application is approved by the Board but the project contemplated thereby is delayed or is not ultimately constructed due to force majeure or otherwise.

9. QUESTION: To the extent an applicant proposes a certain method of financing in connection with its project and such application is approved by the Board, may an applicant later utilize an alternate plan of finance, so long as such alternate plan does not increase the OREC Price? For instance, but without limitation, if an applicant proposes 100% equity financing in its application, and later decides to utilize third party debt, but maintains the same OREC Price as approved in the application, may an applicant do so without further Board approval?

RESPONSE:
An applicant is bound by all representations made in its Application to the State including those related to the project financing. Any changes to the Project Financing Plan will be subject to Board Approval in order to ensure all risks are appropriately allocated and savings are passed along to ratepayers.

10. QUESTION: Regarding potential phasing of a project: a. Please confirm whether an applicant may propose to construct a single project in distinct phases. b. If yes to (a) above, please confirm whether each phase of the project may have an independent commencement of operations date and therefore each phase may have differing 20 year OREC terms. c. If yes to (a) above, please confirm whether an applicant may propose different OREC pricing schedules for each phase. d. If yes to (b) above, please note that the application form included as Attachment 1 to the Guidance Document approved by the Board's September 17, 2018 Order, does not allow an applicant to propose OREC pricing beyond 2043. How shall an applicant communicate proposed OREC Pricing for years 2044 and beyond, where said applicant proposes multiple project phases, the final year of which will extend beyond 2043? e. If yes to (b) above, shall applicants proposing a phased project utilize the "Base offer" excel tab for phase 1, and the "Alt offer" excel tab for subsequent phases, even though the pricing for such subsequent phases is not reflective of an independent, standalone alternative proposal? f. If yes to (a) and (b) above, but no to (c) above, please confirm whether an applicant may nonetheless propose identical OREC Prices across multiple phases for any given energy year, even if such phases achieve COD in differing years? For example, assume an applicant proposes a two phase project. Phase 1 achieves COD in 2022. Phase 2 achieves COD in 2023. The OREC Pricing for Phase 1 is as set forth below: Phase 1 Phase 2 Year 1 (2022) $200 N/A Year 2 (2023) $220 X May an applicant propose that "X" (i.e., the OREC Price for ORECs generated in the first year of operation of Phase 2) be valued at $220? Or must "X" be valued at $200, in order to match the first year OREC Price for Phase 1, even though Phase 1 achieved COD in an earlier year?

RESPONSE:
An applicant may propose to construct a single project in distinct phases, in which case each phase of the project may have an independent commencement of operations date based on the date the project is interconnected to the grid and the phase becomes operational. In such a case each project phase may have differing 20 year OREC terms. The OREC Pricing Plan for the project should include all project phases and should establish a uniform price for all ORECs generated in each Year. An applicant may thus propose identical OREC Prices across multiple phases for any given energy year, even if such phases achieve COD in differing years. Thus if Phase 2 begins operation in Year 5 it should reflect the set OREC Price for Year 5 vs offering separate OREC Schedules.

The application form included as Attachment 1 to the Guidance Document has been adjusted to allow an applicant to propose OREC pricing beyond 2043. Bidders are encouraged to use a separate pricing sheet per project phase and make it clear in their submission if the phases are a single offer – i.e. if the entire offer must be taken or if a single phase may also be accepted.

11. QUESTION: The levelized OREC price calculation in "Attachment One: New Jersey OREC Application Form" incorrectly levelizes the OREC costs back to 2019 dollars. For example, take proposed projects with identical production, first year OREC prices, and OREC prices escalation factors, one with a start date of 6/1/2021 and one with a start date of 6/1/2022. The project beginning in 6/1/2022 should have a lower levelized cost in 2019 terms as costs for this project are put off one year beyond the cost of the project starting on 6/1/2021, and therefore should be discounted and be 7% less costly in real terms. However, when inputting this scenario into the "Attachment One: New Jersey OREC Application Form", the worksheet calculates identical levelized OREC prices. The calculation in this spreadsheet should be amended to properly account for the fact that payments made later have less present value cost to ratepayers and therefore the levelized cost to ratepayers is relatively lower in 2019 terms. A reasonable method for accounting for this factor is to discount the projected output at a different discount rate than the total OREC payments. For example, if the projected output were discounted at a discount rate which removed inflation, i.e., was lower than the 7% discount rate used elsewhere; it would properly account for discounting of different COD dates and result in a lower 2019 levelized cost for a project achieving COD one year later. This method was used by the New York and Maryland Commission to calculate LCOE (see Appendix 8 and Appendix 9, beginning on PDF page 96 for discussion on levelized cost: http://www.offshorewindhub.org/sites/default/files/resources/OWEA_Report_0.pdf) .

RESPONSE:
The OREC Application Form is meant to give the Board an “at a glance” summary of the project application. In that context, the Levelized OREC price is intended to provide an average of the actual, nominal, fixed OREC prices New Jersey ratepayers will pay over the life of the project. As such the Form works as intended.

We are concerned that including additional years of discounting for a project that has a later commercial operation date might be misleading when applied only to costs because the delay also means that New Jersey must wait to realize the economic and environmental benefits off the project. We do expect all project applicants to calculate the benefits and costs of the project by discounting back to a common date; that will assure the effect of the later start date is reflected in both benefits and costs.

12. QUESTION: Attachment 1 (Offshore Wind Application Form) currently calculates annual production based upon P(50) capacity factor, and therefore assumes production each year (other than year 1 and year 20) is constant. However, production will vary by year, and therefore the LCOE is calculated incorrectly. Please update this form to allow bidders to input annual production each year; and not be locked into only inputting a capacity factor.

RESPONSE:
The Application Form is designed to provide a high-level overview of the project that is comparable across all projects. As such, the output calculation is accurate for the purposes of the form. Nonetheless, should bidders wish to fine tune their annual output estimate the relevant column has been unlocked to allow for such editing.

13. QUESTION: Please provide an updated Attachment 1 (Offshore Wind Application Form) from the Guidance Document which extends until at least 2060. The document currently ends at 2043, and projects beginning in 2024 or later will not be able to include all 20-years of OREC production in the analysis

RESPONSE:
The time period on the revised Application Form has been extended through energy year 2050.

14. QUESTION: There appear to be two errors related to the calculation of projected output (column F) on the worksheets titled 'Base offer' and 'Alt Offer' of "Attachment One: New Jersey OREC Application Form". These calculation errors are: a. Column F calculates Projected Output for the first calendar year of production, based upon details input in cells C7 and C8, but OREC prices are set based upon energy years, not calendar years. Therefore, this calculation does not properly calculate the number of months which would be subject to a given OREC price. For example, the default setting provided in the "Attachment One: New Jersey OREC Application Form" contemplates a project COD start year of 2021 and COD start month of 6 (assumed to be June). A project with COD in June of 2021 will have a full 12-months of production in EY 2022 (which begins June 1, 2021). However, the spreadsheet calculation in Attachment One of Guidance Document only attributes partial production in 2021. Please rectify this issue as it results in incorrectly calculated projected output, total OREC payments, system upgrade portion of payments, Net Costs, and subsequently, Levelized OREC Price, Levelized Transmission Portion, and Levelized Net Cost. b. As stated above, Column F calculates Project Output for the first year of production by months in the year. This split is made based upon days per month rather than capacity factor per month. As such, it does not consider the fact that offshore wind resources do not generate equally each month across the year. Please rectify this issue as it results in incorrectly calculated projected output, total OREC payments, system upgrade portion of payments, Net Costs, and subsequently, Levelized OREC Price, Levelized Transmission Portion, and Levelized Net Cost.

RESPONSE:
To align with the request above for a fixed price per energy year the revised Application Form has been adjusted to make it clear that each year represents an Energy Year. Regarding partial year output, the Application Form is designed to provide a high-level overview of the project that is comparable across all projects. As such, the output calculation is accurate for the purposes of the form. Nonetheless, should bidders wish to fine tune their annual output estimate the relevant column has been unlocked to allow for such editing.

15. QUESTION: Please confirm that OREC prices should be offered based upon energy year, and not calendar year.

RESPONSE:
Per N.J.A.C. 14:8-6.5 (a).12.iii “[t]he Board requires a fixed, flat OREC price for the proposed term or a fixed price for every contract year.” However, for the sake of alignment with existing and proposed processes regarding payment, true-ups, and OREC purchase requirements the Board would request that bidders asking for a non-levelized price provide a fixed price per energy year. To be clear, the total OREC purchase term should cover a twenty-year period from COD and COD does not have to begin in June.

16. QUESTION: It is industry standard to "overbuild" in nameplate capacity, so that the electricity actually delivered on land equals the desired output. Taken in the context of the minimum bid required in the Guidance Document, the nameplate capacity would be a number slightly higher than 400 MW to achieve 400 MW at point of land delivery of electricity. Please clarify if in the MW determinations made by bidders, and using the example of the minimum bid, is a 400 MW bid one that has a nameplate of 400 MW (not industry standard, where less than 400 MW will be delivered to land), or one that delivers 400 MW to land, but has a slightly higher than 400 MW nameplate (industry standard). Please note that there is a third party check on the latter, as anything that arrives over (in this example) 400 MW will be rejected by PJM at point of PJM connection.

RESPONSE:
OWEDA and the implementing rules at N.J.A.C. 14:8-6 which govern the solicitation of 1,100 MWs only contemplate the procurement of a set amount of nameplate capacity as determined by the manufacturer of the selected turbine. The BPU thus requests that all bidders use nameplate capacity in describing their respective capacity bids. All production estimates should also be based on nameplate capacity minus any losses.

17. QUESTION: The RFP requests projects to provide information on their expected production that is coincident with peak. Which hours of the day do you consider to be peak? Is it those consistent with the wholesale market?

RESPONSE:
PJM defines seasonal peak and off-peak hours for both the wholesale energy market and for the capacity market. PJM data is available here: https://www.pjm.com/markets-and-operations/energy.aspx

Please note that PJM uses Locational Marginal Pricing (LMP) which is defined by PJM as “the marginal price for energy at the location where the energy is delivered or received. LMP is expressed in dollars per megawatt-hour ($/ MWh). LMP is a pricing approach that addresses Transmission System congestion and loss costs, as well as energy costs. Therefore, each spot market energy customer pays an energy price that includes the full marginal cost of delivering an increment of energy to the purchaser’s location.”

Also of note, New Jersey is within the EMAAC Locational Delivery Area (LDA) which represents the Eastern Mid-Atlantic Area Council (EMAAC) Region.

The PJM Market Monitor may also provide useful data and reports available at www.monitoringanalytics.com

18. QUESTION: The regulations in N.J.A.C. 14:8-6.5 require Board approval for the hiring or replacement of key employees, changes in the organizational structure of key employees, and certain changes in ownership and control. Please explain: .The process for seeking and obtaining Board approval for each of the changes set out in N.J.A.C. 14:8-6.5; .The standards and criteria that the Board will use to determine whether to approve or deny a request; .The form that Board action will take (e.g., a formal Board order); and .The timeline for Board action in response to a request for approval.

RESPONSE:
The goal of the BPU is not to impede business operations but rather ensure that a comparable level of expertise and oversight represented by the Applicant is maintained during the course of operations. The BPU thus requests notification of changes in “key employees” who have been designated by the Applicant pursuant to the rules at N.J.A.C. 14:8-6.5 which state;

The Applicant shall, for the duration of the project, commit to: notifying the Board, within 30 days of the departure of any key employee; submitting the expertise and qualifications for any new key employee for approval by the Board; seeking Board approval for any changes to the organizational structure of key employee positions and the level of expertise and qualifications of those key employees; and obtaining prior Board approval of an entity to assume a controlling interest in the proposed project or the approved qualified offshore wind project. Enforcement of this provision shall be a condition of the order granting ORECs. (N.J.A.C. 14:8-6.5)

The notification should include the reason for the change, when the change is to be effective, and the complete qualifications of the proposed new key employee. Additional provisions will be spelled out in future rule amendments which will be subject to public comment. The Applicant may however request a Waiver of these provisions if too restrictive and propose alternate provisions and timeline for notifications suitable to its business operations. However, the Board is under no obligation to grant such a Waiver.

19. QUESTION: The proposed regulation in N.J.A.C. 14:8-6.6(b)(9) requires qualified offshore wind projects to submit reports annually to the OREC administrator and to the Board on actions taken by the developer to maximize production and revenues. Please explain: .The procedural process that will be used to provide the report to the OREC administrator and the Board; .Whether the OREC administrator and Board will take any action in response to the report; .If the OREC administrator and Board will take action in response to the report, what form that action will take (e.g., a formal Board order); and, .If the OREC administrator and the Board will formally review and approve the report, the criteria and standards that will be used to evaluate the report.

RESPONSE:
The Offshore wind developers are asked to report to the OREC Administrator and to the Board annually on actions taken by the developer to maximize offshore wind production and market revenues. The Annual Offshore Wind Developer Report will be delivered to BPU Staff and filed with the Board on an annual basis within three months after the close of the energy year. The Board shall review and accept the filing as complete or request additional information. The primary intent is to ensure the revenues due to be refunded to ratepayers are being managed in the best interest of the ratepayer. Based on the Annual Offshore Wind Developer Report, The Board may ask questions, propose a course of action or propose a course of study.

20. QUESTION: The proposed regulations in N.J.A.C. 14:8-6.6 list items to be included in the Board's Order granting a bidder qualified offshore wind project status. Specifically, N.J.A.C. 14:8-6.6(b)(5) includes a requirement that the project comply with a Standard Participation Agreement that will be established by the OREC administrator. Can the Board provide bidders with copies of a draft Standard Participation Agreement or any additional detail regarding the terms and conditions that will be included in this agreement? Can the Board provide bidders with copies of any other pro forma agreements that selected projects will be required to enter into in connection with the supply of ORECs?

RESPONSE:
Upon Board approval of an Annual OREC Schedule and the designation of a proposed project as “a qualified offshore wind facility,” The Board will then direct the EDCs to jointly contract the OREC Administrator. The RFP and final contract award will be subject to Board Approval. The contracted OREC Administrator will then draft the Standard Participation Agreement consistent with the rules at N.J.A.C. 14:8-6.5-7 and subject to Board Approval. The OREC Participation Agreement cannot vary from the governing rules established under N.J.A.C. 14:8-6.6-7. The OREC Participation Agreement will facilitate implementation of the rules by detailing the monthly invoicing, payments and accounting of all OREC revenues and OSW project revenues as well as the annual true-up of all obligations as described in the proposed OREC Funding Mechanism Rules.

21. QUESTION: Will the BPU require applications to incorporate critical safety measures vital to navigational safety and the environmental health of our coastal waters? It is imperative that every possible precaution is taken to avoid collisions between ships and wind turbines, or between vessels that are confined to narrower channels as a result of the placement of wind turbines. The consequences of such events are potentially disastrous for our coastal waters and for the operation of our Port. Specifically, the Maritime Association of the Port of NY & NJ requests that any offshore wind development project be required to include the following measures: . All in-water construction should at a minimum, be equipped with perimeter Automatic Identification System (AIS) transponders to allow proper detection. . All in-water construction should include both weather observation capabilities and cellular telephone repeaters. . A minimum setback of 5 miles must be established from all entry and exit points of historical and established waterway transit lanes, including internationally recognized traffic separation schemes and traditional deep-draft, and near-shore lanes . A two-mile setback must be established from all other traffic lanes. This setback will protect against the potential for impacts between vessels and project developments, and will allow a clear field of vision for any vessels that may be emerging from a developed field. . There must be clearly delineated contingency plans for any incident which may impede vessel traffic in the area. . All continuous developed areas should have allowances for clear "cut-through" passages to allow marine traffic to pass through a field. . Lighting must be constructed so as not to interfere with mariners' night vision capabilities. The mission of the Maritime Association of the Port of New York and New Jersey is to promote the safety of navigation, the security of marine assets, and the sustainability of the marine environment. We thank the BPU staff for its serious consideration of these proposed safety criteria.

RESPONSE:
The Board considers safety as a core responsibility of all ocean users across the entire offshore wind supply chain and throughout all stages of development and operation. However, the BPU does not regulate marine transportation in Federal Waters and thus must confer with federal agencies such as the U.S. Coast Guard and the Bureau of Ocean Energy Management (BOEM) on such requirements. An OREC Award resulting from this solicitation process is contingent upon the applicant receiving all necessary state and federal permits and operating in compliance with those regulations.

Federal and State Agencies including the BPU do however consider the type of issues raised in your comment through the BOEM Intergovernmental Taskforce in its deliberations to establish new offshore wind lease areas and the federal regulations that offshore wind lease holders are subject to in the building and operation of offshore wind facilities. The BPU will confer with fellow Taskforce members as to how best integrate the recommended safety features. However, we encourage the Maritime Association to submit these comments directly to BOEM and the US Coast Guard for further deliberation.

22. QUESTION: In connection with proceedings for determinations that Projects are Qualified Offshore Wind Projects ("QOWPs") pursuant to the requirements of N.J.A.C. 14:8-6.5 (the "Application Regulations") and N.J.S.A. 48:3-87.1, by this submission we request that the BPU make an advance determination that offshore wind industry competitors-including (1) other QOWP applicants, (2) current U.S. offshore wind project proponents, and (3) offshore wind generation and transmission project development companies that may compete under the Offshore Wind Economic Development Act ("OWEDA") in the future-shall not be granted intervenor or participant status in a QOWP proceeding. Because each QOWP application proceeding will adjudicate only the rights and obligations of that specific QOWP applicant, industry competitors will have no cognizable interest in the outcome of a competitor's proceeding. To the contrary, involvement in that QOWP proceeding would presumably give those competitors access to trade secrets and other confidential information of the applicant, thus not only undermining the competitiveness of this solicitation and future ones, but also exposing any competitors who did intervene or participate to inferences of potential impropriety. At a minimum, such concerns would lead to undue delay and confusion in QOWP proceedings where competitors sought to intervene or participate. In ruling on a motion to intervene, N.J.A.C. 1:1-16.3(a) requires that the BPU consider the following factors: 1. The nature and extent of the moving party's interest in the outcome of the case; 2. Whether that interest is sufficiently different from that of any other party so as to add measurably and constructively to the scope of the case; 3. The prospect for confusion and delay arising from inclusion of the party; and 4. Other appropriate matters. If the standard for intervention is not met, N.J.A.C. 1:1-16.5 and N.J.A.C. 1:1-16.6(c) provide for a more limited form of involvement in the proceeding as a "participant", if, in the discretion of the BPU the addition of the moving party is likely to add constructively to the case without causing undue delay or confusion. The Application Regulations and the BPU's September 17, 2018 Guidelines for Application Submission for Proposed Offshore Wind Facilities call for QOWP applications to include detailed, confidential financial and other proprietary information, in some cases rising to the level of trade secrets. If this information is disclosed to an industry competitor, that disclosure will: (1) harm the public interest by adversely affecting competition and bidding, including by potentially creating the appearance of improper collusion; (2) lead applicants to wish to provide less detailed information-or even to be forced to withhold their best possible pricing due to supplier sensitivities, to the detriment of New Jersey ratepayers; and (3) create confusion and delay in proceedings. Furthermore, allowing industry competitors to intervene, and thereby potentially affording them access to an applicant's competitively sensitive information, could have implications on competitiveness going beyond this initial 1100-Megawatt solicitation. First, if fellow applicants and other industry competitors gain insights into trade secrets such as financing strategy, they will gain an advantage in future solicitations under OWEDA, including the stakeholder proceedings for developing the competitive framework for such solicitations. Second, offshore wind generation and transmission companies taking an interest in New Jersey are likely also to be in competition with QOWP applicants in other U.S. States and abroad, and could be penalized in other jurisdictions' solicitations by virtue of having intervened or participated in a QOWP proceeding. For example, offshore wind and renewable energy solicitations in New England States have required bidders to certify that they have no knowledge of non-public information associated with a competing proposal; intervening in a competitor's QOWP application proceeding could complicate a bidder's ability to make such a certification in another State. It is not difficult to imagine discovery battles over trade secrets occurring between one competitor and another. Even without the introduction of competitors, we have seen the struggles over confidential information in In the Matter of Consideration of the State Water Wind Project and Offshore Wind Renewable Energy Certificate, Docket No. QO18080843 wherein discovery battles not involving competitors have already resulted in the delay of proceedings. The introduction of competitors would increase the likelihood of such battles. Fundamentally, a competitor does not have any cognizable interest in the outcome of another applicant's proceeding. Each QOWP application proceeding will adjudicate only the rights and obligations of that applicant, not those of a competitor or potential competitor in New Jersey or beyond. This Board has recognized, in a different context, that one water company should not be granted intervention status in an acquisition proceeding of another water company. In the Matter of the Joint Petition of American Water Works Company, Inc., Docket No. WM16101036 (Order 1/25/17). There was no sufficient interest to justify intervention, because the rights and obligations of the other water company were not being adjudicated. Because a competitor or potential competitor has no cognizable interest in the outcome of a QOWP application proceeding that is not theirs, because of the harms to the public interest in competitiveness under OWEDA that could result from competitors' involvement, and because intervention or participation by such a competitor or potential competitor would at a minimum cause confusion and delay, the BPU should make an advance determination that a competitor or potential competitor shall not be granted intervenor or participant status in a QOWP application.

RESPONSE:
See BPU Staff response regarding issues of ‘confidentiality’.

BPU Staff noted that this matter is considered a competitive solicitation and further noted that this matter will not be treated as a contested case with intervenors. Interested parties and stakeholders, including other applicants or potential applicants for QOWP status, will not therefore have standing to intervene or participate in QOWP application proceedings of other applicants.

23. QUESTION: Please clarify the statement on page six (6) of the Guidance Document that: "The BPU may ask for best and final offers from projects deemed to be administratively complete." Economic research, game theory, and empirical evidence support the conclusion that "best price discovery" and "truth revealing bids" are more likely to occur if a "sealed one-time bid" process is utilized. That is, a "sealed one-time bid" will induce bidders to put their best offer (i.e., lowest possible offer) forward as they know, in advance, that they have "one shot" at providing a winning offer. This result is, of course, in the best interest of ratepayers, as it will promote providing lowest-possible OREC prices. Other approaches including but not limited to the "best and final offer" (second offer) approach used in the Guidance Document (or worse, using an unknown process without clarity where bidders might be called in for negotiation) will induce bidders to "hold back" their lowest possible prices which may not be discovered by the BPU. In this context, please clarify whether, in this process, the BPU will request only a "sealed one-time bid" and that there will not be a second "best and final offer" round; including a statement by the BPU that the offered prices will not be followed by any additional requests for price offers, price negotiations, or other follow-on price processes. In this regard it should be noted that under Local Public Contract Law used in New Jersey to procure renewable energy projects by local public entities, the price offer proposed at the time when bids are opened are not subject to any subsequent adjustment (i.e., pursuant to law, the buying local unit is not permitted to ask for a revised price offer), to efficiently discover best pricing. While it is recognized that the BPU may not be subject to this law, this provides further support for this request.

RESPONSE:
The BPU appreciates the value of a competitive solicitation requiring a “sealed one-time bid” to help discover the most competitive pricing and has considered this format in other solicitations. This type of format is most applicable to competitive solicitations where there is relative uniformity to bids and the products or services being offered as in the case of electric generation where all bidders offer $/MWh price for the generation and delivery of electricity. However, in this current solicitation OWEDA and the governing rules at N.J.A.C. 14:8-6 require that the Board consider price ($/MWh) and other factors including broad “net economic and environmental benefits” associated with each project. The BPU is seeking the lowest OREC Price ($/MWh) but also the “best value” for New Jersey ratepayers relative to the net economic benefits. As noted above the Board thus reserves the right to negotiate the final OREC Price with any and all applicants in the best interest of the ratepayer.

24. QUESTION: Since the wind farms will be miles offshore, I ask you to consider floating wind turbines. I include here some specifics about this technology. This article is two years old, and the technology and cost have improved recently. Please review. There are advantages with floating turbines: (1) less disruption to the seafloor and fisheries; (2) easier and less costly to replace after damage from storms; (3) mobility allowing for optimum placement based on winds and allowing more flexibility for fishing and sea lanes. I still have concerns about the "hum" of wind turbines and how this will affect sea mammals. Also, the consequences to migrating flocks of birds. There are also the electromagnetic fields created around wind farms that cause micro-climates. We do not fully understand the outcomes of this technology. I am of the opinion that all of this is too little, too late. If the project must move forward, and I see there is much enthusiasm for it, then please consider floating turbines and doing the least harm. https://www.technologyreview.com/s/601481/floating-wind-farms-great-concept-implausible-economics/

RESPONSE:
The BPU appreciates the recommendation for consideration of floating offshore wind turbines. Applicants may choose any preferred technology based on its costs, site suitability and other benefits. Floating offshore wind turbines however are generally suitable to deeper waters further offshore than the federal lease areas being considered in this current solicitation. However, future lease areas and solicitations may utilize this emerging technology which offers numerous benefits referenced above.

25. QUESTION: At the Board of Public Utilities Technical Conference on October 10, 2018 in connection with the referenced matter, there was a discussion of the confidential nature of some of the material that must be submitted with an application for a determination that a Project is a Qualified Offshore Wind Project ("QOWP") pursuant to the requirements of N.J.A.C. 14:8-6.5 (the "Application Regulations"). Pursuant to the provisions of N.J.A.C. 14:1-12.1 et seq. a person who wishes to make a claim that certain information submitted to the Board pursuant to Title 48 of the New Jersey Statutes or Title 14 of the New Jersey Administrative Code should be treated with confidentiality, may make such a claim by following certain procedures. Such a claim may be made by a person who in good faith believes that information so submitted constitutes inter alia, confidential information, trade secrets, proprietary commercial or financial information, or other information which if disclosed, would be likely to cause damage to either a competitive or bidding position (the "Confidential Material"). Pursuant to N.J.A.C. 14:1-12.3(b) a claimant must submit a preliminary public and confidential copy of such material to the BPU Secretary. Some of the information required by the Application Regulations constitutes such Confidential Material on its face. Since this information must be submitted to the BPU electronically, we are asking that a determination be made in advance, that by its very nature this information should be treated as Confidential Material pursuant to the Board's regulations. This would allow an applicant to submit electronic copies of a public copy (redacted) of an application and confidential copy (un-redacted) through the website without further filings with the Board Secretary. While N.J.A.C. 14:1-12.1 et seq. sets out procedural requirements for filing a confidentiality claim with the Board, N.J.A.C. 14:1-12.1(e) provides as follows: "Nothing in this subchapter shall limit the Board's authority to make a confidentiality determination within the context of a hearing or other proceeding or with regard to any other matter the Board may deem appropriate." We would suggest that the Board should make such confidentiality determinations, in advance relative to certain of the QOWP determinations. Certain information required by the Application Regulations manifestly would fall into the categories of trade secrets; proprietary confidential or financial information, or information which, if disclosed would be likely to cause damage to either a competitive or bidding position. In this regard we would draw your attention to the following provisions: N.J.A.C. 14:8-6.5(a) 2; except: N.J.A.C. 14:8-6.5(a) 2.i(1) N.J.A.C. 14:8-6.5(a) 2.i(6) N.J.A.C. 14:8-6.5(a) 3; except: N.J.A.C. 14:8-6.5(a) 3.vi N.J.A.C. 14:8-6.5(a) 3.vii N.J.A.C. 14:8-6.5(a) 4; except: N.J.A.C. 14:8-6.5(a) 4.v N.J.A.C. 14:8-6.5(a) 5; except: N.J.A.C. 14:8-6.5(a) 5.iv N.J.A.C. 14:8-6.5(a) 6; except: N.J.A.C. 14:8-6.5(a) 6.iv N.J.A.C. 14:8-6.5(a) 6.v N.J.A.C. 14:8-6.5(a) 7; except: N.J.A.C. 14:8-6.5(a) 7.vi N.J.A.C. 14:8-6.5(a) 10 N.J.A.C. 14:8-6.5(a) 10.1 N.J.A.C. 14:8-6.5(a) 10.ii N.J.A.C. 14:8-6.5(a) 10.v N.J.A.C. 14:8-6.5(a) 11 N.J.A.C. 14:8-6.5(a) 12 N.J.A.C. 14:8-6.5(a) 13 We believe that an advance determination that the materials submitted in response to these sections of the Application Regulations are Confidential Material would be very helpful, and therefore request the same. If this request is granted applicants should be allowed to submit public (redacted copies) and confidential (un-redacted copies) of the applications through the website. If the request is not granted, BPU regulations at N.J.A.C. 14:1-12.1 et seq. would require separate filings with the BPU Secretary outside of the website. This could become confusing and cumbersome. Moreover, the BPU might wish to make an advance determination that other applicants or potential applicants for QOWP status will not have standing to intervene or participate in QOWP application proceedings of other applicants. Moreover, such a determination would help preserve confidentiality.

RESPONSE:
The BPU appreciates the confidential nature of some of the material that must be submitted with an application for a determination that a Project is a Qualified Offshore Wind Project (“QOWP”) pursuant to the requirements of N.J.A.C. 14:8-6.5 (the “Application Regulations”). The Solicitation Guidance Document: Guidelines for Application Submission for Proposed Offshore Wind Facilities asks applicants to identify any confidential information: “The bidder should identify any information that they wish to keep confidential.” (Page 7)

Furthermore, BPU Staff confirmed at the BPU Public Stakeholder Meeting on November 13, 2018, the that the Solicitation for 1,100 MWs of offshore wind capacity will be treated as a competitive solicitation whereby applications will be considered confidential in accordance with the Open Public Records Act, N.J.S.A. 47:1A-1 et seq. (OPRA) and the guidelines used by the State and all State Agencies for competitive solicitations (N.J.A.C. 17:12). Section 17:12-1.2 (b) and (c) on Public Information state:

(b) After the opening of sealed proposals, all information submitted by bidders in response to a solicitation of proposals is considered public information, notwithstanding any disclaimers to the contrary submitted by a bidder, except when an RFP contains a negotiation component or as may be exempted from public disclosure by the Open Public Records Act, N.J.S.A. 47:1A-1 et seq. (OPRA), and the common law. As a part of its proposal, each bidder may identify any data or materials it asserts are exempt from public disclosure under OPRA and/or the common law, explaining the basis for such assertion. Assertions that the entire proposal and/or prices are exempt from public disclosure under OPRA, the common law, or the U.S. Copyright Act are overbroad and will not be honored by the Division. In the event that a public request is made for materials that the bidder has identified as confidential, the Director [Board Secretary?] shall have the final authority to determine whether the materials are exempt from public disclosure under OPRA and shall take action as required by applicable law. The bidder or contractor may elect to defend its assertion of exemption from the public disclosure requirements of OPRA or the common law, but in doing so, all costs and expenses Page 3 of 32 associated therewith shall be the responsibility of the bidder or contractor. The State assumes no such responsibility or liability. (c) When the RFP permits negotiation with bidders after the submission of proposals, such proposals shall be made publicly available only after issuance of a notice of intent to award.

Since this matter is a competitive solicitation, BPU Staff further noted that this matter will not be treated as a contested case with intervenors. Interested parties and stakeholders, including other applicants or potential applicants for QOWP status, will not therefor have standing to intervene or participate in QOWP application proceedings of other applicants.

The BPU thus requests that an Applicant submit electronic copies of a public copy (redacted) of an application and confidential copy (un-redacted) through the website at www.NJOffshoreWind.com. The Application should be accompanied by a Statement by the Applicant pertaining to the confidential nature of the application, identifying the type of data or materials it asserts are exempt from public disclosure under OPRA and/or the common law, and explaining the basis for such assertion. Assertions that the entire proposal and/or prices are exempt from public disclosure under OPRA, the common law, or the U.S. Copyright Act are overbroad and will not be honored by the Board.

26. QUESTION: In the event that multiple projects are chosen, will each project receive the OREC price that it specifically bid at, or will all successful projects receive a clearing price as with some auctions in Europe?

RESPONSE:
The governing law and rules do not require a clearing price for ORECs and allow for individual OREC prices. However, the Board reserves the right to negotiate the final OREC Price with any and all applicants in the best interest of the ratepayer.

27. QUESTION: Please clarify how the BPU will assure that bids that are speculative will be rejected from consideration. Specifically explain whether there will be a screening process prior to evaluating and/or scoring projects in accord with Evaluation Criteria in Section 4.0 of the Guidelines. In this regard, it should be noted that if bid viability and probability of completion is ONLY considered in the evaluation phase of review pursuant to Section 4.0, it is possible for a project with a very low chance of completion (for example, soft financing or little or no interconnection plan) but with a low price to be awarded. Please explain the process by which the BPU will prevent this result. In this regard, in many cases where state, local or federal agencies are accepting bids there is an "upfront screening" or a "pre-qualification" round of review of bids in which speculative projects are removed from further consideration.

RESPONSE:
OWEDA and the rules at N.J.A.C 14:8-6 do not provide for a screening process or pre-qualification to remove bids based on bid weaknesses that may be perceived as speculative. The governing law and rules require a determination of Administrative Completeness based on application requirements stipulated at N.J.A.C. 14:8-6 which require supporting documentation of all inputs and pricing tied to the OREC Price for the project to guard against speculative bids. Furthermore, The Solicitation Guidance Document Section 4.0 Criteria for Evaluation of Applications further states that “To be eligible to win a contract for the sale of ORECs, an Applicant must: “Demonstrate the project is viable – it is likely to come on-line on time and on budget.” The Criteria against which the project will be evaluated includes “Likelihood of successful commercial operation – This includes feasibility of project timelines, permitting plans, equipment and labor supply plans and the current progress displayed in achieving these plans.” A speculative bid would not pass this threshold.

28. QUESTION: Please clarify whether bidders can include the merit order effect (also known as the DRIPE effect) as part of the ratepayer benefits and net benefits of their bids. Exclusion of merit order benefits would not accurately and reasonably show the public, the Board and other stakeholders the full value of offshore wind projects. In this regard it should be noted that it would be discriminatory toward offshore wind energy to not include such benefit as it is included in the benefit calculation for energy efficiency pursuant to BPU filing requirements for energy efficiency filings (Minimum Filing Requirements for Petitions under N.J.S.A. 48:3-98.1 subsection V.a). Such exclusion would also disadvantage bids that have higher capacity factors as more energy per MW increases the merit order benefit.

RESPONSE:
The question includes some legal opinions regarding the “merit order effect” which are not appropriate to address here. The valuation and contribution of the “merit order effect” is not requested as part of net economic benefits and ratepayer impacts within the Cost Benefit Analysis. This potential benefit is not specific to offshore wind generation and is not being evaluated in this solicitation. Moreover, price suppression is not among the goals of OWEDA and including price suppression benefits will raise red flags for Federal regulators and Federal courts.

29. QUESTION: Please confirm that the Board's evaluation of OREC Purchase Price (Criteria 1 in Section 4.0), Economic Impacts (Criteria 2 of Section 4.0) and Ratepayer Impacts (Criteria 3 in Section 4.0) will be based on P50 Production. If this is not the case, please specify how this calculation will be made by the Board.

RESPONSE:
The comparative bid evaluation for OREC Purchase Price (Criteria 1 in Section 4.0), Economic Impacts (Criteria 2 of Section 4.0) and Ratepayer Impacts (Criteria 3 in Section 4.0) will be based on P50 Production. The Solicitation Guidance document requests at a minimum bids be presented based on a P50 production estimate. Subsection 3.3 Financial Analysis (14:8:6.5.(a).3)requests bidders calculate the levelized cost of energy (LCOE) using P(50) output (Page 8). Subsection 3.11 Cost Benefit Analysis (14:8:6.5. (a).11) also requests calculations based on a P(50) output . Subsection 3.18 Application Form requests that bidders should specify, for each alternative [bid], the nameplate capacity of the project, turbine type, P(50) net capacity factor and location information as well as contact information. (Page 16).

Bidders are free to base their OREC purchase price off of another level of production, provided such price is appropriately tied to project costs.

30. QUESTION: With respect to Criterion 3 (ratepayer impacts) in Section 4.0 please explain how comparing "the average increase in residential and commercial customer bills" will be normalized across project sizes. For example, if the average increase is calculated for two projects that have the same OREC price, a project that is twice the size of the other will have twice the rate impact. Failing to adjust the rate impact by size could result in the Board awarding to smaller projects whose cumulative rate impact for the full 1,100 MW is larger than the cumulative rate impact for larger projects totaling 1,100 MW. How will the Board adjust for this fact to give a reasonable evaluation of larger versus smaller projects?

RESPONSE:
Rate Impact will be evaluated based on total rate impact of the project $/kWh on Residential and Commercial Customers and based on rate impact per the installed capacity $/MW.

31. QUESTION: In evaluating "economic multiplier benefits" pursuant to 3.11.2 (page 10) and criteria 2 in section 4.0, please explain how the BPU will "normalize" results from different economic models provided by different bidders. For example, it is possible that a dollar spent on the exact same item will calculate to a different amount of statewide economic benefit in accord with which input-output model is used.

RESPONSE:
Without knowing which input/output models will be selected by the applicants and the assumptions/inputs to be used, the BPU cannot establish a calculation to normalize results. However OWEDA and the rules at N.J.A.C. 14:8-6 specifically allows for the BPU and its economic consultant to test an applicant’s cost benefit analysis by inputting alternate assumptions or running the same assumptions through the model of the State’s choosing. Furthermore, all assumptions used in the model must be documented and transparent so that the evaluation team can run its own analysis.

N.J.A.C. 14:8-6.5, 11 (x-xii) specifically states “The major assumptions and inputs used in the modeling must be specified by the applicant; xi. The Board staff may ask the applicant to rerun the model with other assumptions and inputs to be provided by the Board staff; xii. The Board staff may test an applicant’s cost benefit analysis on its own model, which, preferably, would be the same one used by an applicant but it could be a different one, by replicating the analysis using model inputs supplied by the applicant;”

32. QUESTION: Please provide the quantitative method for determining/calculating a bidder's score for each of the six criteria in section 4.0. Please note that this question is not requesting the "weights" to be applied to each criterion, it is requesting an explanation of how each of the criteria will be calculated and scored.

RESPONSE:
As noted in the Solicitation Guidance Document, “The Applications will be evaluated against the six criteria which reflect the goals of New Jersey’s OSW policy. The goals are: to promote economic development by jump-starting an OSW supply chain in the State; to combat the threat of global climate change to New Jersey; and to achieve these first two goals at the lowest reasonable cost and lowest risk to New Jersey ratepayers.” Projects with lowest costs ($/MWh) and highest benefits ($/MW) and relatively low risk will do best. The Board will make the final determination in accordance with OWEDA and the governing rules.

33. QUESTION: Please clarify whether the allowance on page 5 of the Guidelines that permits bidders to provide a bid that has an OREC Price will be "trued up based on the difference between actual and estimated system upgrade costs" complies with OWEDA, which provides that "ratepayers and State shall be held harmless for any cost overruns associated with the project."

RESPONSE:
The Solicitation Guidance Document notes that “An estimate of Transmission System Upgrade costs must also be included in the OREC Purchase Price along with documentation. While the BPU prefers a fixed price offer, they will entertain offers in which the OREC price is trued up based on the difference between estimated and actual system upgrade costs.” This provision does not allow for a cost overrun. It allows a developer who may not have completed the PJM interconnections process to submit an estimated cost that is fully supported and to then true up OREC price upon receipt of a final cost study from PJM.

34. QUESTION: Following the Conference held on October 10, 2018, could you please confirm our understanding that: i) the only eligible areas for locating the Point of Interconnection are: - Atlantic City Electric Company (ACE); - Jersey Central Power and Light (JCP&L); - PSE&G; - Rockland Electric Company. (i.e. PJM Control Areas in New Jersey) and that, therefore, ii) any proposal indicating a different POI will be deemed inadmissible?

RESPONSE:
The Definitions under OWEDA and the governing rules at N.J.A.C. 14:8-6 define a Qualified offshore wind facility as follows: “Qualified offshore wind project” means a wind turbine electric generation facility in the Atlantic Ocean and connected to the electrical transmission system in this State, and includes the associated transmission-related interconnection facilities and equipment, and approved by the Board pursuant to section 3 of P.L. 1999, c. 23 (N.J.S.A. 48:3-51).

In order to meet this definition of a “Qualified Offshore Wind Project” the project must interconnect within one of the four electric distribution companies operating in New Jersey and within the PJM Control Area in New Jersey which includes: Atlantic City Electric Company (ACE); Jersey Central Power and Light (JCP&L); Public Service Electric & Gas (PSE&G); Rockland Electric Company. (i.e. PJM Control Areas in New Jersey).

35. QUESTION: The Offshore Wind regulations seem to require a bid that bundles OSW generation and transmission. Is that correct? Will the Board consider unbundled bids that include only generation or only transmission? Is the Board's position that NJ utilities, or their affiliates, may participate in a joint venture or partnership structure as part of the OSW solicitation process in light of the existing NJ affiliate transaction rules? NJ utilities are permitted to own or invest in Class I renewables and to seek cost recovery of such investments. Would such investments be eligible for the OSW solicitation process? Is the Board prepared to reject all bids received? If so, would the Board provide guidance and an opportunity to rebid?

RESPONSE:
The Offshore Wind regulations require a bid that bundles OSW generation and transmission. The rules governing the application and award of ORECs define a “Qualified offshore wind project” as “a wind turbine electric generation facility in the Atlantic Ocean and connected to the electrical transmission system in this State, and includes the associated transmission-related interconnection facilities and equipment, and approved by the Board pursuant to section 3 of P.L.2010, c. 57 (C.48:3-87.1 ). (N.J.S.A. 48:3-51).” The Application requirements (N.J.A.C. 14:8-6.14) also specifically request an Interconnection Plan for how the project will interconnect to the grid, including the location of transmission lines and all points of interconnection to the PJM system serving New Jersey. The OREC Price thus reflects the full cost of the offshore wind generation facility and the interconnection and should be considered as “a bid that bundles OSW generation and transmission.” Applicants may partner with transmission providers to meet this requirement.

The BPU will consider offers in which NJ utilities or their affiliates participate. The offer must disclose all participants and their relation to NJ utilities and explain how their project conforms with applicable laws. The BPU retains the right to accept or reject all offers made into the RFP.

36. QUESTION: NJAC 14:8:6.5. (a).15 notes that "All applicants must place a minimum of $ 100,000 on deposit with the State to reimburse the Board for the costs of consultants and other costs associated with the review of the application." However, the Guidance document references a $150,000 amount (see Subsection 3.17 Bid Deposit). Could the BPU clarify the deposit amount due upon application submittal?

RESPONSE:
The Guidance Document requests $150,000 which is consistent with the rules that state a minimum amount and also allow for BPU to request additional funds as needed “based on the current and expected costs associated with the application review and related administrative proceedings.” (NJAC 14:8-6.5. (a). 15. Applicants should make payment in the amount of $150,000 consistent with the Guidance Document. All checks should be made out to “Treasurer – State of New Jersey” and sent to the following address:

New Jersey Board of Public Utilities

Attn: Chief Fiscal Officer

44 South Clinton Avenue, 9th Floor

P.O. Box 350

Trenton, NJ 08625-0350

37. QUESTION: NJAC 14:8:6.5. (a).14 discusses "load pocket" and "load constraints". Is the BPU asking how the project will address existing problems on the grid or how the project will address problems that the project creates? The project will only be responsible for network upgrades caused by its interconnection so what is the BPU envisioning for "network upgrades that flow from the project even if not directly caused by the interconnection?"

RESPONSE:
The BPU is asking for how the offshore wind project may affect or address existing problems on the grid. Specifically the rules require that the Interconnection Plan and application include “a detailed description of how the proposed project will address and mitigate load constraints in the electric distribution and PJM transmission system.” The Interconnection Plan must also “demonstrate to the greatest extent possible how the project will address current or potential future load pocket or constraint problems with the electric distribution system and the PJM transmission system.” (N.J.A.C. 14:8-6.14 (iii, iv)).

38. QUESTION: Subsection 2.4 states that "once the winner or winners of the solicitation are known, if an opportunity to reduce interconnection costs is defined, the BPU will work with the winner or winners to identify ways to reduce these costs." Can you please explain the identification process? Does the BPU intend to solicit interconnection cost studies from 3rd parties to compare interconnection costs, open a subsequent transmission only solicitation, assign on shore portion to incumbent utility to leverage existing infrastructure or other?

RESPONSE:
At present, the BPU does not intend to solicit interconnection cost studies from 3rd parties to compare interconnection costs. The BPU also does not intend to open a subsequent transmission only solicitation before an award is made for this first solicitation of 1,100 MWs. The BPU also has no plan to “assign on shore portion of interconnection to incumbent utility in order to leverage existing infrastructure.” The BPU reserves the right to examine interconnection costs and to consider cost reduction measures that may be available or not considered by the applicant.

39. QUESTION: Would a non-conforming bid be accepted and studied, or would it be sent back to the proposing entity as incomplete with a timetable to submit a refined bid that is conforming? a. If after allowing the bidder to refine their bid the NJ BPU still deems the application as non-conforming, would the bid be disqualified at that point?

RESPONSE:
The Applicant is responsible for preparing a bid that is in conformance with all Application Requirements specified under N.J.A.C 14:8-6 and the Guidance Document. Once an Application is deemed Administratively Complete, the BPU and evaluation team may request additional clarifying information, to which the applicant may respond, however the responsibility rests with the applicant to conform to all specified requirements. The BPU may also negotiate the final price and other elements of the application in order to make a final award.

40. QUESTION: Please confirm if references to Interconnection costs and system upgrade costs are interchangeable terms, i.e., they mean the same thing and are the same category of costs.

RESPONSE:
The OREC Price includes the cost of transmission and interconnection costs per the requirements established under OWEDA and at N.J.A.C 14:8-6. However, only on-shore system upgrade costs are eligible for a true-up. Direct interconnection costs are not eligible for true-up (but must be split out somewhere in your offer). Please reference the following definitions:

“System upgrade costs” includes the on-shore transmission owner upgrades necessitated by the OSW interconnection request.
“Direct interconnection costs” includes the off-shore substation and all associated facilities up to the transmission owners point of interconnection

41. QUESTION: Subsection 3.12 states that bidders "should separate out both interconnection and system upgrade costs." However, the Application Form for Qualified Offshore Wind Projects contains a pro-forma table that only requires the separation of the "System Upgraded portion of OREC Cost". There is no column to separate out the interconnection cost. Please clarify how to address.

RESPONSE:
The Application Form only requests the separation of system upgrade costs because those are the only costs eligible for true-up (at bidders request). Direct Interconnection costs may be identified in the Financial Analysis and the OREC Pricing Schedule.

42. QUESTION: Please confirm "system upgrade costs" includes the on-shore transmission owner upgrades necessitated by the OSW interconnection request.

“System upgrade costs” includes the on-shore transmission owner upgrades necessitated by the OSW interconnection request.
“Direct interconnection costs” includes the off-shore substation and all associated facilities up to the transmission owners point of interconnection

43. QUESTION: Please confirm "direct interconnection costs" includes the off-shore substation and all associated facilities up to the transmission owners point of interconnection.

“System upgrade costs” includes the on-shore transmission owner upgrades necessitated by the OSW interconnection request.
“Direct interconnection costs” includes the off-shore substation and all associated facilities up to the transmission owners point of interconnection

44. QUESTION: The Guidelines for Application Submission for Proposed Offshore Wind Facilities Subsection 3.12 OREC Pricing Schedule notes that "[t]he Bidder should separate out both interconnection and system upgrade costs. The bidder should make it clear if they are offering a fixed price or expect the system upgrade costs to be "trued-up" to actual interconnection costs." The terms "interconnection" and "system upgrade" costs are unclear. The PJM Open Access Transmission Tariff OATT define several categories of interconnection-related upgrades: . Direct Connection Network Upgrades - "Network Upgrades that only serve the Customer Interconnection Facility and have no impact or potential impact on the Transmission System until the final tie-in is complete." Such upgrades may include a new interconnection substation that cuts into an existing transmission line. . Non-Direct Connection Network Upgrades which are parallel flow Network Upgrades that are not Direct Connection Network Upgrades. These upgrades may include changes to existing substations to accommodate the interconnection of a generator such as construction of new bays and breakers. . Attachment Facilities - "[F]acilities necessary to physically connect a Customer Facility to the Transmission System or interconnected distribution facilities." These upgrades may include facilities from the point of interconnection to the transmission owner's substation bus. . Customer Interconnection Facilities - "facilities and equipment owned and/or controlled, operated and maintained by Interconnection Customer on Interconnection Customer's side of the Point of Interconnection." Such facilities would include a gen-tie facility. Could the NJ BPU expand on its definition of "interconnection" and "system upgrade costs" to use the defined terms in PJM's OATT?

“System upgrade costs” includes the on-shore transmission owner upgrades necessitated by the OSW interconnection request.
“Direct interconnection costs” includes the off-shore substation and all associated facilities up to the transmission owners point of interconnection

45. QUESTION: The Guidelines for Application Submission for Proposed Offshore Wind Facilities Subsection 2.4 Bid Requirements notes specifically that "While the BPU prefers a fixed price offer, they will entertain offers in which the OREC price is trued up based on differences between estimated and actual system upgrade costs." Please confirm if "direct transmission interconnection" including transmission from the off-shore substation and all associated facilities up to the transmission owners point of interconnection, both on-shore and off-shore can be submitted as a component of the OREC price that is trued up based on differences between estimated and actual costs.

“System upgrade costs” includes the on-shore transmission owner upgrades necessitated by the OSW interconnection request.
“Direct interconnection costs” includes the off-shore substation and all associated facilities up to the transmission owners point of interconnection