Optimization methods for evaluating competitive bids from private producers

Competitive bidding for private power contracts is becoming an important element in utility planning. The use of optimization methods for incorporating nonprice factors into the evaluation process is examined. Using data based on the 1988 Virginia Power solicitation and synthetic estimates of bids, the selection problem is simulated. The utility´s announced preference for coal-fired projects is modeled using modifications to assumes fuel and capacity prices. Methodological issued for incorporating nonprice factors in bid evaluation are discussed