9. Eliminate Overlap of the Commission's RAM Program and § 399.20 Program

As discussed in more detail below, any overlap between the RAM Program adopted in D.10-12-048 and the § 399.20 FiT Program is eliminated. Under D.07-07-027, Commission's § 399.20 FiT Program has, until today, only applied to facilities up to 1.5 MW. However, this decision increases the size of the eligible facilities under the FiT Program to 3 MW.⁷⁴ The RAM Program, as adopted in D.10-12-048, applies to renewable generation from 1 MW to 20 MW. Therefore, unless today's decision modifies the RAM Program, these two programs will overlap for projects 3 MW and under.

Some parties, including SCE and TURN, expressed concern regarding the overlap of these two renewable programs and the potential for gaming of the price of the two programs for projects of 3 MW and under. For example, as SCE points out, a bidder in the RAM Program who is eligible under § 399.20 would never bid below the FiT price because it knows it could go back to the FiT Program and receive that price. Moreover, a bidder would have more ability to inflate a bid in the RAM Program because it would be able to fallback to the FiT Program.

We find that the most effective means of preventing potential gaming is to prohibit generators with a nameplate capacity of 3 MW⁷⁵ and under and that meet other eligibility criteria for the FiT Program, from participating in the RAM Program if the capacity for the relevant FiT product type has not yet been reached. This approach was recommended by SCE and TURN. This restriction will also eliminate a duplicative procurement mechanism for these small renewable generators. The potential duplication would also increase administrative burdens and complicate the implementation process for program participants and the Commission.

Accordingly, within 90 days of the effective date of this decision, PG&E, SCE, and SDG&E shall file a Tier 1 Advice Letter restricting RAM to generators with a nameplate capacity of greater than 3 MW. This change will not affect the upcoming RAM auction scheduled to close in May 2012 but will take effect in time for the third RAM auction scheduled for the end of 2012.

⁷⁴ As originally enacted by AB 1969, § 399.20(b)(2) applied to facilities with an effective capacity of not more than 1.5 MW. In D.07-07-027, the Commission implemented a program under § 399.20 with a capacity limitation of 1.5 MW. SB 32 increased the capacity to 3 MW.

⁷⁵ The 3 MW AC size limitation corresponds to the nameplate capacity of the facility.