NYPA Organization

Request for Proposals RFP LTS #5 to Provide Long-Term Supply of In-City Unforced Capacity and Optional Energy - November 8, 2007

RFP Highlights:

v The New York Power Authority ("NYPA" or the “Authority”) is seeking proposals from Bidders interested in offering up to approximately 500 MW of Unforced Capacity ("UCAP") and associated energy located in In-City (Zone J), and/or qualifying Transmission to Zone J from an upstate New York location or an adjacent Control Area, commencing as early as summer 2010 for a period of up to twenty (20) years.

v Bidders offering products from new generation facilities must demonstrate sufficient progress in the siting, permitting, interconnection, engineering processes to have a high degree of confidence that the facility will be placed into service in the 2010-2012 time frame. Proposals may be for limited duration, providing service for as little as five years, but bids for up to twenty (20) years will be entertained. Bids are targeted for a submittal timeframe of approximately six weeks from the issuance of this RFP.

v NYPA will consider executing contracts with multiple suppliers for varying amounts and terms, should that best meet NYPA’s customer supply needs.

v Bids must offer UCAP either from proposed new facilities or proposed repowering projects. Bids representing existing In-City UCAP sources will not be accepted.

v Energy-only bids will not be accepted.

v NYPA is including its required Master Power Purchase & Sale Agreement (“PPA”), ISDA Master Agreement Schedule and Confirmation (collectively, the “ISDA Agreement”), and Firm Transmission Capacity Purchase Agreement (“FTCPA”) as attachments to this RFP at

http://www.nypa.gov/doing%20business/powerpurchase.htm.

The Authority will not accept any material changes, as determined by the Authority, to the terms and conditions of these agreements.

v Target Schedule:

Event	Target Dates
RFP Issuance	November 8, 2007
Due Date for All Bids:	December 20, 2007
Commencement of Bid Awards:	April 2008 (Subject to Approval of NYPA Trustees)

For all information concerning this RFP, refer to NYPA's website at

http://www.nypa.gov/doing%20business/powerpurchase.htm

All questions regarding this RFP must be submitted as set forth herein.

NYPA will post questions and responses on the above-referenced RFP website. Mr. Jordan Brandeis, Director of Power Resource Planning & Acquisition will serve as NYPA's point of contact for NYPA-initiated communications with Bidders. Except as described in Section VIII of this RFP, no contact will be allowed with anyone at NYPA (including its Trustees, NYPA staff, or NYPA consultants) or with NYPA’s New York City Governmental Customers (including their consultants) regarding this RFP during the RFP process. Violation of this requirement may be grounds for disqualification from the RFP process. Normal communications between Bidders and New York City Governmental Customers regarding site-related issues (such as zoning, community issues and use of Customers’ property) will not be considered grounds for disqualification.

TABLE OF CONTENTS

I. Introduction

II. Specifications for All Bids

III. Required Contract Agreements

IV. Letter of Credit Requirements

V. Bidder and Proposal Requirements

VI. Submission of Proposals

VII. Evaluation Process and Criteria

VIII. Communication during RFP Process

IX. Miscellaneous

A. Summary of the request. The goal of this New York Power Authority Request for Proposals (“RFP”) is to obtain up to approximately 500 MW of In-City (Zone J) Unforced Capacity (“UCAP”) to provide for its New York City governmental customers. Products are being sought under contract terms of up to 20 years, with service to commence as early as the summer of 2010. NYPA will consider executing contracts with multiple suppliers for varying terms should it best meet NYPA’s customer supply needs. NYPA may consider obtaining more than 500 MW if NYPA determines there would be compelling advantages.

Only proposals that increase the net capacity available within Zone J will be considered. Bids must offer UCAP either from proposed new facilities or proposed repowering projects physically located within Zone J, or new qualifying cable ties to power supplies located outside of Zone J. Bids representing existing In-City UCAP sources will not be accepted.

Bidders outside of Zone J capable of delivering UCAP or UCAP bundled with energy to a transmission project delivering to New York City are encouraged to submit a bid in concert with a transmission provider or developer.

Please note that capacity purchased by the Authority must be “electrically located” in New York City such that it would be deemed to be Zone J capacity pursuant to the rules of the New York Independent System Operator (“NYISO”). Products or combinations of products that do not meet this requirement will not be considered. Bidders offering UCAP and/or UCAP with energy outside of Zone J will not be considered unless an associated transmission project is also selected.

B. The Authority encourages Bidders to take advantage of the Authority’s status as a tax-exempt entity by proposing business arrangements with the Authority that may allow the issuance of tax exempt debt by the Authority in connection with their proposals, in whole or in part. Some examples of such arrangements may include:

1. Build, Own and Transfer (“BOT”) contracts. Bidder would be responsible for designing, engineering, procuring equipment and constructing the facility. All performance risk for constructing and bringing the facility into commercial operation would be placed on the developer. The facility would be on property acquired by the Authority. The site would not be the Poletti site. Bidder must acquire the property; the property and facility would be turned over to the Authority after completion of construction.

b. Bidder would operate under a “qualified management contract.” (Bidder is referred to Rev. Proc. 97-13, 1997-1, C.B. 632, which generally limits the contract term to not more than 20 years and requires that at least 80% of the compensation paid take the form of a fixed fee and that no portion of the remaining 20% be based on a share of net profits.)

2. The Authority and Bidder would share ownerships as “tenants in common”. Thus, the Authority would own a percentage of the facility, provide an equivalent percentage of the capital cost of the facility and be entitled to an equivalent percentage of the facility’s output. If the Bidder were to operate the facility, the operations and maintenance costs would be shared between the Authority and the Bidder in proportion to ownership.

Include as part of your bid the lump-sum transfer price to be paid by the Authority.

Note: Tax-exempt prepayment of output options will not be entertained by the Authority.

C. Bidders offering products from new generation facilities must demonstrate sufficient progress in the siting, permitting, interconnection, engineering and financing processes to have a high degree of confidence that the facility will be placed into service by the summer capability period of 2010, 2011 or 2012. Proposals may be for limited duration, providing service for as little as five years, but bids for up to twenty (20) years will be entertained.

D. Proprietary Information. The treatment of confidential information shall be as set forth in a Confidentiality Agreement which may be entered into between NYPA and the Bidder, upon request of the Bidder. Bidders are hereby advised that the Authority is subject to the New York State Freedom of Information Law (“FOIL”). Confidential information will be treated as such to the extent consistent with the Authority’s legal obligations under the FOIL and other applicable laws, regulations or legal process and the provisions of the Confidentiality Agreement.

A. Term. All products may commence delivery as early as the summer of 2010. NYPA will consider terms of up to 20 years.

· UCAP: Bidders may bid for any amount of capacity, up to the full 500 MW of UCAP but in no event no less than 25 MW.

· Energy: Bidders may offer bundled energy, provided that the energy quantity per hour will not exceed 100 percent of the amount of UCAP bid.

C. Pricing Options. Bidders must specify in detail the proposed pricing method.

D. Prices and terms offered by Bidders for capacity products must remain valid and available until April 30, 2008.

Those Capacity Bidders selected will be required to execute NYPA’s Master Power Purchase & Sale Agreement (“PPA”). Those Bidders proposing contracts for differences (“CFDs”) will be required to execute an ISDA Master Agreement, Schedule and Confirmation (collectively, the “ISDA Agreement”). Bidders that propose qualifying transmission facilities into New York City will be required to execute a Firm Transmission Capacity Purchase Agreement (“FTCPA”). NYPA is providing these forms of agreement on its RFP website

No material changes to these agreements will be entertained. Bidders must identify any of their non-material changes, in the form of a red-lined version, 10 days prior to their bid submittal.

A. Accompanying Bid (Optional). Bidders may accompany their bids with a letter of credit ("Bidder Letter of Credit") in the amount of $250,000 per 100 MW bid with a minimum letter of credit amount of $250,000 irrespective of the product quantity bid. Bidder Letters of Credit are optional, but Bidders should be aware that the Authority will consider the posting of such credit support as a favorable factor in the bid evaluation process. The Bidder Letter of Credit would be held by the Authority to assure that Bidders selected to negotiate a contract with the Authority: (i) have not made materially inaccurate representations in their bid with respect to the status of permits, regulatory progress, land rights any other aspects that bear on the Bidder’s ability to deliver the offered products in the manner, location and time set forth in the bid, and (ii) that Bidder negotiates with the Authority in good faith to enter a final contract for the products and on the terms and conditions offered with its bid. The Authority shall have the right, at any time based upon its good faith judgment, to draw on the credit in the event of material breaches of Bidder's representations, or in the event Bidder does not negotiate in good faith toward the timely execution of a contract in accordance with its bid. Once a contract is executed, the Bidder Letter of Credit accompanying the bid will be returned, replaced or extended by the letter of credit required under the contract (see B, below). A Bidder Letter of Credit must be an irrevocable standby letter of credit in a form acceptable to the Authority, expiring no sooner than 180 days following the bid date, issued or confirmed by a financial institution having a Standard & Poor's credit rating of A or higher or Moody's credit rating of A2 or higher, available at the issuer's or confirming institution's New York counters by the Authority's sight draft against a certificate, signed by an authorized representative of the Authority completed substantially in the following form, with the appropriate box or boxes checked:

The applicant __________________ ("Applicant") has made materially inaccurate representations in its bid to the New York Power Authority with respect to the status or capability of the proposed project identified in Applicant's bid or Applicant's ability to perform as indicted in its bid, and/or Applicant has materially failed to negotiate with the New York Power Authority to execute a contract consistent with that offered in its bid on a timely basis.

The Bidder Letter of Credit should incorporate and be governed by International Standby Practices 1998, International Chamber of Commerce No. 590 ("ISP98"), provided that notwithstanding Section 3.12(a) of ISP98, issuer should confirm in the credit that a lost original credit will be replaced upon the beneficiary's presentation of an affidavit of lost original and form of indemnification reasonably satisfactory to issuer.

B. Awarded Contracts. For awarded contracts, credit support will be required as detailed in the PPA, FTCPA and ISDA Agreements posted on the NYPA website:

All Letters of Credit, Performance Bonds, Payment Bonds, or similar instruments shall name as beneficiary the Power Authority of the State of New York and may be invoked to the benefit of the Power Authority of the State of New York, upon delivery of a certified statement to the issuing bank or surety company that the Bidder has failed to perform pursuant to the terms and conditions of the letter of credit, bond, or other instrument. Such Letters of Credit, Performance Bonds, Payment Bonds, or similar instruments shall be issued by a bank or surety company meeting the minimum rating standard as noted in Section IV-A above. The Bidder shall provide a letter from its bank or surety company stating that the letter of credit or bond will be provided if considered for a contract or in the event of a contract.

C. The contracts require Bidders to assume certain risks for delays and non-performance. Bidders are referred to the applicable contracts (PPA, FTCPA, ISDA) for provisions such as liquidated damages and early termination.

A. Minimum Bidder Requirements: In order to be considered, Bidders’ proposals must meet the following Minimum Requirements:

2. Proposals must be complete, in conformance with the specifications and other requirements of this RFP and include all documentation, evidence or verification requested.

3. Proposals to supply UCAP may be bundled with associated energy (i.e., energy from the generator supplying the capacity) up to the amount corresponding to the amount of UCAP offered. Energy-only bids will not be accepted.

4. Bidders shall be responsible for all costs and risks for delivery of products to the specified point or points of delivery, including any required interconnection reinforcements to make such delivery. In the case of products delivered to Zone J, the Authority has a strong preference for interconnection points within Zone J that avoid intra-zone bottlenecks.

5. Bidders should be aware that the market structure within the New York Control Area (“NYCA”) could change within the period of service contemplated by this RFP due to regulatory or judicial action, including but not limited to actions instituted by the NYISO, the market operator for the NYCA. Bids cannot be contingent upon the continuation or development of any particular form of market structure for the NYCA. The awarded Bidder shall retain full responsibility for the suitability of the UCAP products furnished under this award.

6. Suppliers outside of Zone J capable of delivering UCAP or UCAP bundled with energy to a transmission project delivering to Zone J are encouraged to either:

b. Offer capacity and energy that can be conveyed by one of the potential transmission projects from adjacent regions to Zone J.

7. Each Bidder must supply a summary description of its business and history, including its experience in the area of electric supply, its familiarity and experience with NYISO requirements and its participant status with the NYISO, and information concerning the existing electric generating plants owned and/or operated by the Bidder. Bidders who are not currently active participants in the NYISO must provide the same information for an outside firm that will provide these services and a commitment letter from that firm, or a plan and schedule for fulfilling the participant terms of the NYISO.

8. Bidders must specify in the proposal the bank or banks that would provide the necessary letters of credit. Such institutions must have a minimum S&P rating of “A” or the equivalent from another nationally recognized rating agency.

9. All Bidders must agree to comply with applicable local, state and federal laws and regulations, including the requirements of the New York State Public Officers Law establishing standards for business and professional activities of New York State employees and governing the conduct of employees of private firms in business with New York State. The PPA, the ISDA Agreements, and the FTCPA, and any other agreements entered into between the Authority and Bidders shall be governed by and construed in accordance with the laws of the State of New York.

10. Bidders must recognize that providers are subject to the rules and procedures of the NYISO and any applicable neighboring System Operators.

11. Disclosure of any instances in the last five years where Bidder, any of its officers, directors or partners, any of its affiliates, or its proposed guarantor (if any) defaulted or was deemed to be in noncompliance with any obligation related to the sale or purchase of power (capacity, energy and/or ancillary services), transmission, natural gas, or financial instruments, or was the subject of a civil proceeding for conversion, theft, fraud, business fraud, misrepresentation, false statements, unfair or deceptive business practices, anti-competitive acts or omissions, or collusive bidding or other procurement- or sale-related irregularities.

12. Disclosure of any instances in the last five years where Bidder, any of its officers, directors or partners, any of its affiliates, or its proposed guarantor (if any) was convicted of (i) any felony, or (ii) any crime related to the sale or purchase of power (capacity, energy and/or ancillary services), transmission, natural gas, or financial instruments, or was the subject of any civil or administrative proceeding for conversion, theft, fraud, business fraud, misrepresentation, false statements, unfair or deceptive business practices, violation of laws or regulations pertaining to issuance of securities or financial institutions, anti-competitive acts or omissions, or collusive bidding or other procurement- or sale-related irregularities, or has been subject to any voluntary agreement or order preventing such Bidder or any officer, director or partner from engaging in offering or trading of securities.

13. Information indicating Bidder’s and any proposed guarantor's financial condition and evidence of creditworthiness. Bidder must provide its and any proposed guarantor’s most recent audited financial statements. If audited financial statements are not available, Bidder must explain.

1. Briefly describe the Bidder’s business organization and history, emphasizing experience with similar projects.

2. Describe generation or transmission equipment, including rated capacity, actual or expected in-service date and expected life. Describe in full the underlying capacity source(s), including facility names, locations or proposed location, interconnection information and ages, if currently in service, or anticipated in-service dates. If outside Zone J, identify point of delivery into NYISO. Identify regulatory approvals granted or still needed for operation.

3. Identify the facility’s anticipated or actual UCAP rating and, if bidding a portion of the facility, UCAP amount to be provided. If a bundled energy bid is offered as a tolling arrangement, specify contractual heat rate and all other operating costs.

4. Specify minimum availability guaranties, including any differences by NYISO capability period.

5. If UCAP or transmission to be provided is external to Zone J, identify arrangements with regional transmission organizations to enable facilities to qualify as Zone J UCAP. Identify points of interconnection, routes of transmission equipment and point of delivery into Zone J.

6. Confirm net UCAP addition to Zone J provided by proposal, taking into account any associated retirements or de-ratings of other facilities.

7. For proposed new facilities, provide an estimated construction schedule and in-service date. Indicate current status of and projected schedule for all development and pre-development elements of the project, including permits, financing, site control, rights-of-way, FERC filings, interconnection queue position, and interconnection studies (provide if available) and completion of construction of transmission facilities required for interconnection and deliverability of capacity.

8. Provide details of any guaranties or other security for timely completion of proposed project by equipment suppliers, engineering and other contractors.

9. For proposed new facilities, describe anticipated environmental impacts, including mitigation and compliance measures relating to proposed installations. If there are associated retirements or de-ratings of other facilities, please show the environmental impacts, both with and without the effect of such retirements or de-ratings. Include any positive or negative land-use impacts. If currently in operation, provide summary records of emissions data for the two most recent years, as well as any history of citations or violations.

10. Describe any action plan for community outreach and mitigation associated with siting and permitting issues, including estimated costs. Please identify any land use impacts that would indirectly result from the proposed project.

11. If any permitting processes have commenced, describe in detail the status of these processes. If any such processes have been completed, provide copies of any certificates obtained or agreements that are in place.

12. Identify any unique enhancements that would be provided to the reliability of New York City’s electricity system as a result of such projects, quantifying results wherever possible.

13. For proposed new projects, provide detailed specification of all major components, equipment and transmission cable (above-ground or submarine), as applicable. Identify proposed manufacturers or vendors, and indicate the estimated lead time for delivery of such components, equipment or cable.

14. For proposed new projects, describe Bidder's contractual arrangements for obtaining necessary rights for all sites and rights-of-way.

1. Environmental Considerations. All generation and transmission facilities must be licensed, constructed and operated pursuant to and be in compliance with, for the duration of the agreement, all applicable New York State (or other state(s) if that is the case), local and federal laws, regulations and permit conditions. At NYPA's option and upon NYPA's request, the Supplier shall provide to NYPA copies of any or all reports, certifications and similar filings that are submitted by Supplier to any federal, state or local regulators. In no event and under no circumstances will NYPA bear any responsibility for failure of Supplier to meet applicable state or federal environmental regulations. Failure to meet environmental compliance requirements of any local authority, state or the federal government shall not act to release Supplier from its obligations to the Authority.

2. Bidders who propose transmission projects from neighboring zones or control areas shall be responsible for all required supporting studies (i.e., Feasibility Studies, System Impact Studies, and Facilities Studies) and all applicable external ISO interconnection fees and system upgrade assessments.

3. Changes by the Bidder. If a Bidder changes any element(s) of its bid, NYPA, in its sole discretion, may disqualify the Bidder.

4. Procurement Disclosure Requirements. Refer to the NYPA website to view and download Appendix J - Bidder/Contractor Compliance with New York Power Authority Policy Providing for Certain Procurement Disclosures. The New York Power Authority has adopted a policy providing for increased disclosure in the public procurement process. The Authority has determined that this bid document shall be subject to this Policy. Therefore, each Bidder must complete Appendix J in its entirety and return with Bidder’s proposal.

A. All proposals in response to this RFP must be received no later than 4:00 pm Eastern Standard Time on December 20, 2007. All proposals must be in a sealed envelope, marked as NYPA RFP – In-City Capacity and addressed to:

B. Four copies of the proposals are required. Late proposals may be returned unopened. Bidders should mark any items regarded as confidential. NYPA reserves the right to reject any and all bids for any reason or no reason. Bidders must also submit one copy of their proposal electronically, either by CD-ROM or by e-mail to

Only the following electronic formats will be accepted: Microsoft Word, Microsoft Excel, and/or Adobe PDF format.

A. Selection Process: The process of selecting bids and negotiating final terms may be an iterative process. The Authority will evaluate the proposals based upon the supplied information, and may develop a “short list” of Bidders with whom the Authority may seek to conduct negotiations. "Short list" Bidders may be asked to meet at NYPA's office in White Plains, New York, as a part of the negotiation process. If necessary, Bidders may be asked to refine their bids in subsequent rounds of bidding.

The Authority will evaluate all proposals against the possibility of developing additional In-City generation on its own. This benchmark will apply to all evaluation criteria listed in this RFP.

B. Evaluation Criteria: Proposals must, at a minimum, satisfy the following criteria:

- Will be deliverable under the Consensus Deliverability Plan filed by the New York Independent System Operator, Inc. ("NYISO") and the New York Transmission Owners ("NYTOs") on October 5, 2007, or as modified by FERC in a subsequent order

- Have no significant technical, engineering or other identified obstacles to successful and timely completion

- Have no material negative determinations to date in regulatory proceedings regarding necessary permits

- Have a high probability of acquiring ownership or control of any proposed development sites without litigation or other encumbrances

- Have a sponsor/developer with demonstrated organizational and financial resources to finance and build any required new facilities

C. Evaluation criteria will include, but not be limited to, the following (not necessarily in order of importance):

- Sensitivity of evaluated net cost to fluctuations and uncertainties of future energy markets

- Project risk (technical soundness, experience of lead development team, experience of proposed contractor team)

- Financial resources and conformance/acceptance of material terms of NYPA’s standard form of contract

- Contribution to the diversification of physical locations of electricity supply sources

- Contribution to the diversification of fuel supply of electricity supply sources

- Efficiency and minimization of projected overall levels of air emissions for the supply system serving New York City.

D. The evaluation process will favor bids or bid packages that minimize risk to the Authority and its customers. Such bid proposals will contain the following elements:

- Cost-effective pricing that moderates the cost of power supply to NYPA’s customers

- Projects with confirmed deliverability as articulated by current or anticipated NYISO rules for purposes of meeting the In-City UCAP requirement of NYPA government customers in Zone J

- Proposals that can meet the earliest in-service date, as early as the summer-2010 capability period

- Proposals that minimize or eliminate the Authority’s exposure to cost and schedule risks associated with interconnection and deliverability

- Projects demonstrating the highest probability of meeting proposed in-service date

- Projects with significant progress, at the time of bid submittal, toward successful application for necessary permits and interconnection

- Projects with significant progress, at the time of bid submittal, toward selection and award of Engineering, Procurement and Construction agreements

- Projects with significant progress, at the time of bid submittal, toward fabrication and procurement of equipment requiring significant lead times

- Developers who have previously constructed and are now operating similar facilities

- Projects that add new resources to the New York City supply system, in contrast to existing resources that already qualify as in-City capacity

E. Basis for Disqualification. A Bidder may be disqualified and the bid not considered for reasons including, but not limited to, the following:

- willful misrepresentations or material inaccuracies in the bid or other information submitted to NYPA;

- a determination by NYPA in its sole discretion that the Bidder is incapable of meeting its financial obligations including, but not limited to, inadequate credit rating or financial resources, failure to supply a requested letter of credit, parent guaranty or other form of security acceptable to the Authority;

- a determination by NYPA in its sole discretion that the Bidder is incapable of carrying out its power supply responsibilities in a manner or time consistent with NYPA’s needs;

- a determination that the implementation of the Bidder’s proposal would interfere with local governing bodies’ planned redevelopment or rezoning actions, or would by itself or in conjunction with other actions cause significant environmental degradation; or

- a determination by NYPA, in its discretion, that some or all bids should be rejected.

NYPA’s contact person for this solicitation is Jordan Brandeis, who can be reached at:

Unless otherwise agreed in advance with Mr. Brandeis, Bidders must not communicate directly or indirectly with any officer, employee, or other representative of NYPA or its advisors or its New York City governmental customers or their advisors on matters related to this RFP other than the contact person specified above or his designee.

Failure to Reach Timely Agreement. NYPA and a selected Bidder will endeavor to reach final agreement on terms and conditions within a reasonable interval from NYPA's notification to the Bidder of the selection of the Bidder. NYPA, in its sole discretion, may terminate negotiations with the Bidder at any time or negotiate with another Bidder.

RFP Not Binding on Authority. This RFP is not an offer or commitment and is not capable of being accepted to form a binding agreement. The Authority reserves the right, in its sole discretion, to withdraw or modify this RFP at any time, to reject any or all proposals for any reason, or no reason, and to enter into further discussions or interviews with any one or more Bidders.

Approval of NYPA’s Trustees. Execution of a final, binding agreement or agreements shall be subject to the approval of NYPA’s Trustees.

SEQRA Obligations - New Facilities. Any contract for the output from any proposed new facilities will not be executed until after the project has been the subject of the requisite environmental reviews, including the issuance of the appropriate findings and permits. Before any contract execution, the selected Bidder shall provide to the Authority the findings and permits or other authorizations to construct new transmission or generating facilities, which the Authority may use in completing its SEQRA evaluations and processes (21 NYCRR §461.13(b)). The Authority’s Trustees will then be requested to authorize the completion of the Authority’s responsibilities under SEQRA. For purposes of SEQRA, the Authority will not act as the lead agency on behalf of any Project Sponsor.