On January 24, 2014, Southern California Edison (SCE) held a forum on its Renewable Auction Mechanism (RAM). RAM, a program open to all Renewable Portfolio Standard eligible technologies for projects generally not less than 3 MW and not greater than 20 MW and which are interconnected within any of the service territories of the three major utilities in California (SCE, Pacific Gas & Electric, and San Diego Gas & Electric), is designed to contribute toward compliance with California’s goals for renewable energy procurement. Under the RAM program, SCE is required to procure 754.4 MW in three separate resource categories: 1) peaking, as-available; 2) Non-peaking, as-available; and 3) baseload.
Participation in the RAM program requires all bidders to agree to a standard Power Purchase Agreement (PPA) drafted by SCE. One significant requirement of the standard PPA is that the Commercial Operation Date (COD) be within twenty-four (24) months after CPUC approval (with a potential 6-month extension in the event of regulatory delays beyond the bidder/seller’s control). SCE evaluates and ranks each bid separately within each of the resource categories mentioned above, based on price, plus transmission adder (the cost of upgrading SCE’s existing facilities to meet a proposed project’s load), minus resource adequacy benefits. Based on SCE’s prior RAM experience, the primary reason for a bid’s failure is its inherent inability to meet the required COD (based on interconnection studies and milestone schedules submitted with the offer).
The event held on the 24th focused on SCE’s fifth procurement period of the RAM program (RAM 5) and revealed several areas of the RAM 5 PPA to which SCE will be making changes. Of particular note, these changes are expected to include:
Safety – independent engineer report regarding written safety plan would be required
Network Upgrade Costs – termination right if network upgrade costs increase and the bidder/seller does not exercise a “buy-down right”
Curtailment – curtailment provisions would be simplified
Resource Adequacy and Full Capacity Deliverability Status – payments of FCDS TOD factors on date promised in the bid (rather than FCDS achieved) in order to align PPA with evaluation
Shared Facilities – provisions related to shared facilities would be put in the PPA (rather than in a consent)
SCE’s proposed PPA is expected to be filed with the CPUC, along with SCE’s Tier 3 Advice Letter proposing changes to RAM 5, on February 7, 2014. Interested parties will have twenty (20) days from then to submit comments on the proposed PPA and SCE’s Tier 3 Advice Letter. Shortly thereafter, the CPUC will draft a proposed resolution. Interested parties will have another twenty (20) day comment period on the proposed resolution before the final resolution will be voted on by the CPUC. The deadline to submit bids to SCE is June 27, 2014.
For further information on the RAM 5, click here.