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SDG&E may be ordered to buy solar at higher price than it wants to pay

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SDG&E may be ordered to buy solar at higher price than it wants to pay

TheCalifornia Public Utilities Commission proposed a resolution for its July 14meeting to order San Diego Gas& Electric Co. to award renewable energy contracts to morebidders even though they did not make a competitive price cut-off.

ThePUC said SDG&E has a 62%, or 102 MW, shortfall in meeting the PUC'srenewable auction mechanism, or RAM, targets. SDG&E was required to procure164.7 MW over six RAM auctions, but has procured only 62.7 MW, the commissionsaid.

SDG&Econtended it has enough renewables and does not want to spend a higher pricefor more. The utility is already exceeding its renewable portfolio standardrequirements. The Sempra Energysubsidiary served 32.2% of its retail load in 2014 with renewables, and wasforecast to obtain 43.8% of its power from renewables by 2020, according to aMay 12 presentation. California Gov. Jerry Brown signed legislation on Oct. 7,2015, requiring utilities meet a 25% RPS by the end of 2016, 33% by the end of2020, and 50% by the end of 2030.

Inaddition to meeting RPS requirements, the PUC requires utilities to provideincentives to independent power producers to develop small-scale photovoltaicfacilities.

SDG&Easserted that all but one of the bids it received in a PUC-mandated auctionwere not cost-competitive. SDG&E said its most recent solicitation in 2015produced 13 bidders who responded with 35 bids, but only one of those bids madethe top 10% in terms of the utility's quantitative bid ranking price measurerelative to the utility's other renewable energy opportunities.

Inits proposed resolution, the PUC said SDG&E has not provided adequatejustification that it put forth a good faith effort to meet its overall RAMtarget or justified why it was consistently unable to meet its RAM auctiontargets. "Consequently, SDG&E is ordered to procure the remainingadditional megawatts from the bids it received in its RAM VI solicitation,"the commission said.

ThePUC reasoned that renewable energy auctions have become increasinglycompetitive over the years, so not meeting SDG&E's price cutoff does notautomatically make the bids unreasonable. Further, the commissionsaid SDG&E is ignoring that the PUC adopted the RAM program in 2010 tocreate a simplified market-based procurement process for smaller renewableenergy projects that are not able to participate in the utilities' RPS annualsolicitations.

ThePUC said it approved the RAM and several other RPS programs to promote thegrowth of renewable energy segments, such as a feed-in-tariffs for bioenergyand smaller-sized renewable projects and a green tariff-shared renewablesprogram for community-based projects.

TheRAM is designed to facilitate quick, simple transactions characterized by astandard non-negotiable contract and a standardized valuation process, the PUCsaid on its website. Bidders set their own price, and all projects are eligiblefor expedited regulatory review.

Aspart of the pending resolution, the commission proposed to approve the onlyproject SDG&E submitted, namely Solar Frontier Americas' 20-MW solar MidwaySolar Farm III from which the utility would purchase an average annual 58.3 GWhand associated renewable energy credits for 20 years. The project, located atCalipatria, Calif., in the Imperial Valley, is expected to start production onDec. 1, 2017.