CPUC Implements Changes to the California Renewable Auction Mechanism

The California Public Utilities Commission (CPUC) has adopted several changes to the state’s Renewable Auction Mechanism program (RAM), created in 2010. The RAM program operates as a reverse auction, offering a standard contract with the state’s three largest investor-owned utilities for energy from renewable distributed generation facilities of up to 20 megawatts (MW). The utilities will procure up to 1,000 MW of renewable energy under the program over two years. The first RAM auction took place in November 2011 and the second auction is schedule for next month. Resolution E-4489, adopted last Thursday, modifies the CPUC decision creating the RAM program, Decision 10-12-048, and Resolution E-4417, which served to implement details of the program. Resolution E-4489 approves changes to align the RAM with recent updates to Southern California Edison’s Solar Photovoltaic Program and incorporate a change requested by Pacific Gas & Electric Company.

 

First, Resolution E-4489 extends the deadline for RAM project developers to bring a facility online – from 18 months to 24 months from the date of approval of the RAM contract by the CPUC. Second, project developers will have the option to bid their projects as energy-only or with full capacity deliverability status. For full capacity deliverability status bids, the utilities will consider the benefits of a project providing resource adequacy and the costs of deliverability upgrades. The utilities will explain how they value resource adequacy in their forthcoming RAM bidding protocols.

The CPUC also approved PG&E’s request to reallocate its procurement solicitation in the next RAM auction across the three eligible energy product categories:  baseload, peaking as-available, and non-peaking as-available. PG&E requested permission to solicit a total of 85 MW of peaking as-available energy and 10 MW from each of the other two categories, rather than 35 MW from each of the three product categories.

The Commission declined to provide utilities with a unilateral right to terminate a RAM contract in the event that the expected costs of ratepayer-funded transmission system upgrades necessary to accommodate a facility increase significantly beyond estimates provided in the facility’s RAM bid.  The Commission did order the utilities, however, to include a stakeholder discussion in their RAM program forum agendas related to a unilateral termination right to protect ratepayers from excessive network upgrade costs.

The changes to the RAM will go into effect in time for the second RAM solicitation for eligible facilities, closing on May 31, 2012. The Commission noted that it will consider more comprehensive RAM program modifications later this year.

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