Ohio Revised Code Request for Proposals by qgc21233


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        A Management/Performance Audit

              of the Gas Purchasing

       Practices and Policies of a Regulated

           Gas Distribution Company

          180 East Broad Street
            Columbus, Ohio

       PROPOSAL DUE: April 17, 2009

      The Public Utilities Commission of Ohio (PUCO or Commission), by Entry
      journalized March 18, 2009 has ordered a management/performance (M/P)
      audit of the gas purchasing practices and policies of Duke Energy Ohio (Duke
      or Company). Rule 4901:1-14-07(D), Ohio Administrative Code, specifies that
      the Commission has the sole responsibility for selecting the Company's
      management/performance auditor. The Commission is now seeking an
      auditor through a request for proposals (RFP) to conduct this
      management/performance audit. Duke’s management/performance auditor
      will be required to conduct such an audit and will be responsible for
      submitting a report which identifies and evaluates the management policies
      and procedures and assessing the Company’s progress in advancing
      competitive retail supply services and ultimately achieving an unregulated
      commodity service.


      (A) Purpose of Management Performance Audit

          The management/performance audit is designed to investigate the
          Company’s management policies and operational procedures. The audit
          should determine the Company's effectiveness in fuel procurement to
          achieve an adequate and reliable supply of natural gas at minimum prices.
          The audit also will examine the Company’s transportation programs,
          along with capacity and commodity arrangements utilizing contracts
          recoverable through the Company’s purchase gas adjustment - Gas Cost
          Recovery (GCR) Mechanism.

      (B) Role of Auditor

          Any auditor who is chosen by the Commission to perform the audit
          expressly agrees to perform the audit as an independent contractor. Any
          conclusions, results or recommendations formulated by the auditor may
          be examined by any participant to the proceeding for which the audit
          report was generated.        Further, it shall be understood that the
          Commission and/or its Staff shall not be liable for any acts committed by
          the auditor or its agents in the preparation and presentation of the audit

       (C) PUCO Staff

            The Staff’s involvement in the audit process will be to ensure that the
            audit requirements are addressed. Staff personnel shall be copied and
            informed of all correspondence between the auditor and the Company
            and shall be given five working days’ notice of all meetings and
            interviews with the Company, so as to allow Staff the opportunity to
            attend. The auditor shall notify the Staff of such meetings and interviews.
            The auditor will submit to Staff a list of the individuals being interviewed
            and topics to be discussed. This list shall be sent to Roger Sarver at the
            following Email address: roger.sarver@puc.state.oh.us. All interviews of
            Company personnel and on-site reviews of Company documents must be
            conducted at the Company's Ohio offices.

       (D) Cost of Audit and Quotation of Charges

            The bid for the audit of Duke shall not exceed $75,000.

            The maximum expenditure quoted above represents a ceiling price that
            takes into account all costs associated with the audit project. Expenses
            associated with the preparation and presentation of expert testimony
            regarding the findings of the management/performance audit are not part
            of the above quoted ceiling prices. These expenses will be billed
            separately from the cost of the audit and will be reimbursed up to $35,000
            per audit.

            The winning proposal will be selected based on expertise in natural gas
            procurement, knowledge of the changing natural gas industry, lead
            auditor and team member qualifications, audit approach, proposal content
            and cost.


       In order to fulfill the purpose described above, the designated auditor will be
       expected to analyze, interpret and make specific recommendations with respect
       to the audit requirements identified below.


            (1)   Examine the Company’s peak day and winter season forecasting
                  methodology for both sales and choice customers. Compare the

      forecast results to actual send-outs to access the accuracy of the
      forecasting methodology. Verify that the forecasting methodologies
      are consistent between and sales and choice customers and if any
      differences between them assess the rational for such differences.

(2)   Compare the Company’s forecasted peak day and seasonal demands
      to the portfolio of commodity and capacity entitlements under

(3)   Determine if the Company’s strategy of contracting for capacity
      entitlements has minimized unutilized capacity and costs.

(4)   Review Duke’s plan that assesses the needs of the Gas Commercial
      Operation’s department over the near term.

(5)   Examine the Company’s descriptions of the relationships and
      interactions between the forecasting and planning models and tools
      developed, shared and utilized by Duke’s gas commercial operations
      department for demand forecasting and supply planning.

(6)   Review the Company’s analysis of the reasons for the long-term
      declining consumption.

(7)   Verify that the Company monitored developing pipeline projects and
      other changes in the natural gas industry to evaluate opportunities to
      further diversify Duke’s natural gas supply portfolio.

(8)   Examine the Company’s revised asset manager procedures for the
      inclusion of events and action timelines.

(9)   Assess the Company’s FERC monitoring procedures including the
      tracking of cases and refunds.

(10) Document the Company’s efforts to improve the documentation of
     its commodity supplier selection process.

(11) Examine the objectives of Duke’s hedging program and impact on
     price volatility. Also ensure that the Company’s physical hedging
     program does not extend beyond 36 months without Commission-

(12) Review the Company compilation of monthly results of its hedging
     program on an aggregated basis and explore the use of a

                combination of training, outside assistance, and commercially
                available tools in order to assure the effectiveness of its hedging

           (13) Review the Company’s written procedures for negotiating flex-rate

           (14) Verify that the Company has developed a plan for the times when
                only one gas controller is on duty in gas control.

           (15) Examine Duke’s monitoring and management of lost and
                unaccounted for gas program, in part through the development of a
                plan to address any identified problem areas.

           (16) Assess the Company’s utilization of its propane facilities for
                economic dispatch purposes, in situations other than emergency or
                peak operating conditions, without jeopardizing the operational
                integrity of the propane facilities.

           (17) Determine if the Company evaluated its asset management
                agreement with respect to developments at FERC which may allow
                the Company to assign assets to an asset manager instead of entering
                into an agency agreement. As part of the evaluation, Duke will also
                consider the alternative of retaining the capacity and generating
                revenue in the secondary market via off-system sales and capacity
                release transactions.


      (A) Duke shall be ordered by the Commission to enter into a contract, which
          shall incorporate by reference all provisions of this proposal, with the
          auditor     chosen    by    the    Commission       to   perform     the
          management/performance audits. Auditors will submit a copy of the
          contract agreement between the auditor and Company to Staff.

      (B) Availability of Documents - Upon request of the auditor or Staff, the
          Company shall provide any and all documents or information requested.
          The Company may conspicuously mark such documents or information as
          being "confidential" if this data is closely held. In no event, however, shall
          the company refuse or delay to provide such documents or information.

      The Staff or the Auditor/Contractor shall not publicly disclose any
      document marked "confidential" by the Company, except upon three
      days' prior notice of intent to disclose served upon the Company's
      counsel. Three days after such notice, the Staff or Auditor may disclose or
      otherwise make use of such documents or information for any purpose,
      unless the Company moves the Commission for a protective order
      pertaining to such documents or information within the three-day notice

      The three-day notice period will be computed according to Section 4901-1-
      07 of the Ohio Administrative Code. Service shall be complete upon
      mailing or delivery in person.

(C) Fiscal Reports - The auditor shall submit invoices when work is 50%
    complete and when work is 100% complete to Staff. The invoices shall
    include hours expended by project personnel, hourly rates and includable
    billed expenses which are sufficiently detailed to allow Staff to identify the
    work completed and its corresponding charges. All reasonable and
    justified expenses will be forwarded to the Company for payment. Failure
    to follow this procedure may result in delayed or reduced payments.

(D) Presentations - The auditor may meet with the PUCO Staff prior to start of
    the audit. Upon the request of Staff, the auditor will meet to present its
    findings, conclusions and recommendations.

(E) Draft Report – Four copies of a draft of the final report will be delivered to
    the Staff fourteen days prior to the due date of the final report, as shown
    in Attachment A.

(F)   Final Report - Eleven (10) copies of the final report, plus one reproducible
      original will be delivered to Staff by the date specified in Attachment A.
      The final report shall include an Executive Summary of Recommendations
      and an index to show where Audit Requirements are addressed. The Staff
      may request that certain statistical information be provided in a specified
      format on computer disk.

(G) Working Papers - The auditor shall deliver to Staff one complete set of
    working papers, indexed and in orderly form, supporting the
    development of all calculations and recommendations by the auditor and
    summarizing the procedures used in analyzing and evaluating all data.
    These working papers must be delivered to Staff concurrent with the
    delivery of the final report. For the purposes of this project, audit
    interview notes shall be deemed part of the auditor's work papers.

     (H) Production of Documents - Upon request of the Commission or its Staff at
         any time, the auditor shall immediately produce any document or
         information obtained or produced within the scope of the audit.

     (I)   Testimony - The auditor shall present expert testimony during the course
           of the hearing at which the audit report is considered.


     (A) General Requirements

           Each proposal shall contain page numbers and a Table of Contents. In a
           separate numbered section, reflected in the Table of Contents, the
           following information shall be provided:

            (1)   The name, mailing address, telephone, Email address and fax
                  number of the individual to contact if further information about the
                  proposal is desired.

            (2)   A description of the proposed Scope of the Work to be performed
                  including a workplan, expected deliverable products, and task
                  timing. The maximum contract price quoted by the proposer shall
                  include all items of work defined in the proposal. The consultant
                  will be expected to deliver the performance described in its
                  proposal within the agreed price.

            (3)   Identification, by name, of the Lead Personnel to be employed, the
                  extent of their involvement in the project. Contract terms will not
                  permit substitution of lead personnel without prior written
                  approval of the assigned Staff member. Identification of lead
                  personnel in the cost proposal will not constitute satisfactory
                  compliance with this requirement.

            (4)   Identification by name and title, and the hourly rate of pay and all
                  other related costs, of the individual or individuals who will
                  present expert testimony before the Commission during the
                  appropriate hearing.

            (5)   A description of the qualifications, experience, and proven results
                  achieved by all audit team members to be employed on the project
                  with a summary of work performed on projects similar to the one

       contemplated by this RFP. The Commission reserves the right to
       request samples of prior relevant work from any proposer prior to
       making its final consultant selection.

 (6)   A listing of the proposer's and subcontractor's clients which may
       have any financial interest in or litigation with Duke or its
       affiliates. Proposers maintaining any present or ongoing contracts
       or agreements with the aforementioned company and affiliates
       may, at the discretion of the PUCO, be disqualified by reason of
       possible conflict of interest. In the proposal, such contracts should
       be described in sufficient detail that the PUCO can determine
       whether such a conflict of interest exists. A response indicating
       that this information will be provided on request or that such
       contracts are too numerous to enumerate will be cause for
       disqualification of the proposer.

 (7)   A listing of all the proposer's offices and facilities in Ohio. If none,
       state - none.

 (8)   A statement of financial responsibility including certification that
       the proposer, joint partners if the proposer is a conglomerate
       operation and any subcontractors have no outstanding liens or
       claims against them.

 (9)   References that may be contacted to obtain an assessment of the
       auditor's work performance. References should be provided for
       the company and for designated principals for the project to be
       undertaken. The information required for each reference is as

       -   Name of individual to contact
       -   Company at which the individual is located City and State
           Telephone number
       -   Company or principal for whom the reference is given
       -   Project or work for which reference is given

(10)   The name(s) of all subcontractors to be used in performance of the
       proposed work, identification of the specific items to be
       performed/provided by the subcontractor, and the cost of the
       proposed subcontracted work; or if no subcontractors are to be
       used, the entry should be "Subcontractors - none". (All such
       subcontracts indicated in the proposal will be acknowledged as
       accepted by the Commission upon selection of the proposal for

           contract award unless the proposer is previously notified of the
           contrary. No addition, deletion, or substitution of subcontractors
           will be permitted during the course of the contract unless approved
           in advance by the Commission in writing.) If subcontractors are
           proposed, all information required in this section shall be supplied
           for each subcontractor proposed. Such information shall be
           supplied in a format parallel to the overall format specified for

(B) EEO Data


    The following required Equal Employment Opportunity data must be provided for
    the proposer and each subcontractor:

    (1) The proposer's total number of employees.

    (2) The percentage of the total which are women.

    (3)   The percentage of the total which are Black or African American, Hispanic
          or Latino, Asian, Native Hawaiian or Other Pacific Islander, American
          Indian or Alaska Native, or Two or More Races. (Please specify.)

    (4) The proposer's total number of employees located in Ohio offices.

    (5) The percentage of the Ohio total which are women.

           (6)   The percentage of the Ohio total which are Black or African American,
                 Hispanic or Latino, Asian, Native Hawaiian or Other Pacific Islander,
                 American Indian or Alaska Native, or Two or More Races.       (Please

           (7) The number of individuals to be assigned to the project.

           (8) The percentage of the total assigned which are women.

           (9)   The percentage of the total assigned which are Black or African American,
                 Hispanic or Latino, Asian, Native Hawaiian or Other Pacific Islander,
                 American Indian or Alaska Native, or Two or More Races. (Please specify.)

      (C) Current Contracts

           The number of contracts the proposer currently has with the State of Ohio and:

           (1) The name of the state agency(s) for each contract.

           (2) The cost of each contract.

           (3) The duration of each contract.

           (4) A brief description of each contract.


      Proposals will be evaluated on the basis of the following criteria:

      (A) Understanding of Project - The proposal shall demonstrate that the
          Proposer has grasped the intent of the project, is knowledgeable of the
          technical aspects required and has an understanding of potential problems
          and regulatory issues, trends, and perspectives; and the proposed work
          plan shall indicate appropriate phasing. The Proposal shall be responsive
          to the RFP.

      (B) Experience of organization and the personnel assigned to the Project and
          Related Organizational Experience - Relevant experience in field, qualified
          to undertake assignment.      References of previous clients/projects

      (C) Cost - The total proposed contract price as specified in the Proposal.

       (D) Timeliness - Demonstrated ability to meet stated deadline; realistic
           timeline; demonstrated proven results of lead personnel, appropriate

       (E) Compliance with Minimum Contents Requirements - Lack of satisfactory
           response to the Minimum Contents Requirements will be grounds for
           elimination of any proposal from further consideration.


       (A) Proprietary Data in Proposal

           Submissions to the Public Utilities Commission of Ohio become public
           documents available for open inspection. Proprietary data in a proposal
           will also assume this status; therefore, discretionary action is
           recommended for any proprietary data contemplated for submittal in

       (B) Due Date and Submittal Address

           Proposals must be received at the following address no later than
           5:00 p.m., April 17, 2009. The proposal should be sent in a sealed
           container, clearly marked and addressed to:

           Public Utilities Commission of Ohio
           Attn: Mr. Roger Sarver
           Response to RFP No. U09-GCR-1
           180 East Broad Street, 3rd floor
           Columbus, Ohio 43215-3793.

           NOTE: By responding to this request for proposal, the proposer expressly
           accepts and is bound by all the terms thereof including all attachments,
           exhibits, and schedules.

           Five (5) copies of the proposal are to be submitted to the Commission.

       (C) Required Response

           All firms wishing to remain on the Commission’s bidder list must
           subscribe to the PUCO RFP list by clicking on the “RFP – Requests for
           Proposals” link at: http://www.puco.ohio.gov/PUCO/Docketing

     Pending RFPs and further information will be posted at the above

     All bidders submitting proposals will be notified by mail of the companies
     with the successful bids.

(D) Auditor Requirements and Minority Participation

     (1)   The PUCO in awarding the contracts will give preference to Ohio
           auditors. Ohio auditors include not only established domestic
           companies actively doing business in Ohio, but also encompass
           multi-state companies with headquarters outside of Ohio, but with
           substantial commitments of offices, divisions, and facilities within
           this State.

     (2)   The Commission will give preference to proposers demonstrating
           compliance with Minority and women EEO criteria.

(E) Late Proposals

     A proposal is considered late if it is received after the exact time set for
     receipt of proposals. A late proposal will be considered along with other
     proposals only if it is received before the evaluation of proposals has, in
     the sole opinion of the Commission, substantially progressed and then
     only if one of the three following conditions exists:

     (1)   Mail Delay - The lateness is due solely to a delay in the mail when
           the response has been sent by registered or certified mail for which
           an official dated postmark on the original receipt has been obtained.

     (2)   Commission Error - If it is received by any reasonable means at the
           Commission in sufficient time to be delivered at the office designated
           for the opening and would have been received at such office except
           for delay due to mishandling at the Commission. Only an
           appropriate date or time stamp showing the time of receipt will be
           accepted as evidence of timely receipt of the proposal.

     (3)   Exceptions - Any other late proposal will not be considered, unless it
           is the only proposal received or in the sole judgment of the
           Commission it offers some important technical advantage and is of
           benefit to the Commission.

(F)   Modification or Withdrawal of Proposal

      Any proposal may be withdrawn or modified by written request of the
      proposer if the request is received by the Commission at the above
      address before the date set for receipt of original proposals

(G) Modification or Withdrawal of this RFP

      This RFP may be modified or withdrawn at any time prior to the time set
      for receipt of proposals and thereafter as long as no proposal has been
      opened. Upon any such modification or withdrawal, all proposers will be
      notified and any person or firm who has expressly requested such notice
      in writing will also be notified of such changes at the discretion of the

(H) Right to Reject any and all Proposals

      The Commission reserves the right, without limitation or discussions with
      those submitting proposals, to reject any and all proposals.

(I)   Relevance

      The proposer shall include only relevant information and pertinent
      exhibits in the proposal. Duplication of materials provided in the RFP,
      exhaustive resumes, inclusion of standard company promotional
      materials, etc. will not garner additional points in the evaluation process
      and may detract from the clarity and conciseness of the proposal.

(J)   Statutory Scope of the Audit

      Any Auditor/Contractor who is chosen by the Commission or the
      company to perform an audit shall execute its duties pursuant to the
      Public Utilities Commission's statutory authority to investigate and
      acquire records, contracts, reports and other documentation under
      Sections 4903.02, 4903.03, 4905.06, 4905.15 and 4905.16, Revised Code.

(K) Disclosure

      Any Auditor/Contractor shall abide by all provisions of Sec. 4901.16 of
      the Ohio Revised Code which states:

         Except in his report to the Public Utilities Commission or when
         called on to testify in any court or proceeding of the Public Utilities

                Commission, no employee or agent referred to in Section 4905.13 of
                the Revised Code shall divulge any information acquired by him in
                respect to the transaction, property, or business of any public
                utility, while acting or claiming to act as such employee or agent.
                Whoever violates this section shall be disqualified from acting as
                agent, or acting in any other capacity under the appointment or
                employment of the Commission.

            Once disclosure is permitted by Section 4901.16, Revised Code, the
            following process applies to the release of any document or information
            marked as confidential. Three days’ prior notice of intent to disclose shall
            be provided to the party claiming confidentiality. Three days after such
            notice, staff or the auditor may disclose or otherwise make use of such
            documents or information for any lawful purpose, unless the Commission
            is moved for a protective order pertaining to such documents or
            information within the three-day notice period. The three-day notice
            period will be computed according to Rule 4901-1-07, Ohio Administrative


        Administrative or technical questions regarding this RFP should be directed to
        Roger Sarver at (614) 466-7647.


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