4.1. ERMUSR 05-10-2011 - Laserfiche WebLink

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DRAFT Attachment 2 B To the Resource Planning Coalition Participation Agreement dated May 1, 2010 Phase 2 B Proposed Scope, Time Schedule, Estimated Costs and Proposed Allocation of Costs Between the Participants Phase 2 B -Portfolio Risk Analvsis for RFP Evaluation Scone and Intent of Project: Phase 2 B is asub-section of Phase 2 intended to more definitively determine the optimal portfolio and resource plan for the Coalition's needs. Phase 2 B's deliverables are intended to provide documentation towards two purposes. The first is to support the idea that Coalition recommendations followed best practices in developing portfolios from the RFP responses. The second is to support the explanation of the Coalition's technical recommendations by Coalition participants to non-technical stakeholders. Phase 2 B has already been budgeted, per Attachment 2, at $75,000. Attachment 2 B is intended to supply all remaining approvals needed to go ahead with the Portfolio Risk Analysis (PRA). Phase 2 B will result in a PRA which will balance minimizing cost and minimizing risk using the best available information. Both quantitative and qualitative methods will be used to help determine this balance. Qualitative methods will be discussed in relevance to the risks faced by Coalition participants as well as limitations in ostensibly competing quantitative methods. The quantitative methods envisioned for this PRA would use probabilistic methods which allow for more detailed and complete analysis of some risk factors than simple sensitivities. These methods would use portfolio diversification strategies which balance risk exposures to, among other things, the regulatory risk posed by evolving nuclear and emission regulations, as well as the risk of increased prices in natural gas as well as in the MISO market. A result of this analysis would be the precise determination of what the cost premium should be to reduce exposure to high and extreme portfolio costs, as well as provide "tiebreakers" between portfolios that would appear closely comparable without a risk analysis. A further result would be market intelligence useful for evaluating competing portfolio proposals as well as later portfolio modifications. Phase 2 B: Portfolio Risk Analysis A. Evaluate Expected Coalition-Aggregate Costs of Remaining Portfolio Choices i. Use existing base-case forecasts of economic and operation variables B. Develop Concise Statement of Risks for the Coalition-Aggregate Portfolio Page 1 of 8