5. Must-Take Requirement
The Existing FIT is a must-take obligation based on a first-come
first-served basis at a known price (MPR) up to a program limit. It includes a wait-list for additionally interested developers. ED's original proposal would require each IOU to have an auction soliciting projects up to 10 MW for up to 1,000 MW, and allow IOUs to solicit projects from 10 to 20 MW.36 ED's proposal recommended that the total cost of procurement for projects up to 10 MW would be limited by a revenue requirement cap, so that utilities must accept all bids for projects up to 10 MW, starting with least cost projects first, until the revenue requirement cap or capacity cap is exhausted, whichever comes first.37 All other procurement would be voluntary.
The proposed decision would have required the utilities to solicit eligible projects up to 20 MW and accept all bids offered through RAM up to a pre-established price and a capacity cap. Parties dispute the legality of this approach based on both federal and state law.38 The federal law issue is rendered moot in this decision because we preserve the IOUs' discretion to reject bids in instances of market manipulation or non-competitive pricing compared to other renewable procurement opportunities. See Section 6.3 for details on project bid selection.
36 March 2009 Proposal at 5.
37 August 2009 Proposal at 8.
38 PG&E, SCE, and SDGE assert that a requirement to procure all bids up to a pre-established price set at the market price referent plus a 50% premium violates state and federal law. They argue that it violates state law (Pub. Util. Code Section 399.15[d]) which sets a limitation on the IOUs' obligation to procure renewable energy at above-MPR costs. They also argue that it violates federal law because it would require them to purchase power at a rate above avoided cost.
FIT Coalition, Vote Solar, Solar Alliance and IEP oppose the IOUs' arguments about the legality of the proposed decision. For example, Vote Solar opposes the IOUs' arguments about state law and contends that the IOUs' arguments are based on the erroneous assumption that RAM prices will exceed the MPR. IEP states that the proposed decision does not violate federal law because it would only set targets for the IOUs' procurement of specific products and the contract prices would be determined through a market mechanism.
We disagree with the IOUs' contention that the RAM violates state law. The limitation imposed by Pub. Util. Code Section 399.15(d) on procurement of energy used for RPS compliance at prices above the MPR applies to contracts selected through the IOUs' annual RPS solicitations. See Pub. Util. Code Section 399.15(d)(2)(A). State law, however, does not preclude the Commission from using other mechanisms to ensure compliance with California's RPS requirements.
