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PUC question utilities about renewable power plan

Commissioners pressed utility representatives to explain whether the deal would impact the operations of their coal plants in other states, and how the companies would maintain a reliable power supply.

By Hillary Borrud

Capital Bureau

Published on January 29, 2016 4:02PM


SALEM — Oregon’s two largest utilities presented the case for legislation to phase out coal energy for their customers in the state, during a special meeting of the Oregon Public Utility Commission Friday.

Skeptical commissioners pressed utility representatives to explain whether the bill would effect the operations of their coal plants in other states, and how the companies would maintain a reliable power supply during a major transition to variable sources such as solar and wind.

Lawmakers plan to ask the Public Utility Commission to weigh in on the costs and benefits of the bill, which the Legislature will consider during the 35-day session that begins Monday. The first hearing on the bill is scheduled Tuesday.

House Bill 4036, which resulted from negotiations between PacifiCorp, Portland General Electric and the politically active nonprofit Renew Oregon, would require the utilities to use renewable power sources such as wind and solar to serve at least 50 percent of energy demand in Oregon by 2040. That is double the current state mandate of 25 percent renewable energy by 2025. Renew Oregon represents a coalition of environmental groups, renewable energy companies and other businesses.

Under the deal negotiated with Renew Oregon, PacifiCorp would stop using coal power for its Oregon customers by 2030 and Portland General Electric would do so by 2035. The environmental groups agreed to drop their efforts to get voters to pass several new renewable energy mandates in November, including an initiative that would eliminate coal power, if lawmakers and the governor approve House Bill 4036.

Oregon’s largest utilities are state-regulated monopolies, and the Public Utility Commission is the entity that enforces those regulations and sets utility rates. On Friday, the commissioners aired their suspicions the utilities might have inserted provisions into the bill to get around previous commission decisions with which they disagreed.

“I guess one of our concerns is we already allow the utilities to make proposals as to when costs associated with the (renewable energy mix standard) can come into rates,” said Susan Ackerman, chair of the commission. Ackerman said part of House Bill 4036 appeared to re-state that. “Just the fact the language seems to say what we already do makes me suspicious, frankly.”

The Public Utility Commission already raised concerns about the legislation privately, in emails with staff in Gov. Kate Brown’s office that were obtained and reported by The Oregonian.

“We (at the public utility commission) have some deep concerns about these negotiations because we think they will not be effective in reducing carbon emissions, but they will be expensive to consumers,” Ackerman wrote in a Dec. 15 email to Gov. Kate Brown’s chief of staff Kristen Leonard and energy adviser Ruchi Sadhir.

Commissioner John Savage listed similar concerns. “It won’t alter one bit what coal plants run and what are shut down regardless of what folks say — with or without the bill, what plants are shut down and when will be determined by what happens in other states and for other reasons (e.g. EPA regulation),” Savage wrote in a Dec. 17 email to Sadhir. When asked by the commission on Friday whether the bill would force PacifiCorp to shut down coal plants in other states, Scott Bolton, a vice president at the company, said no.

Ackerman said that state Sen. Lee Beyer, D-Springfield, asked the commission to prepare an analysis of the measure for lawmakers. The two utilities released analyses earlier this week which showed House Bill 4036 would increase the cost of power to customers by roughly 1 percent annually in the lead-up to full implementation. However, the utilities found the renewable energy requirements in the legislation would be $880 million to $960 million less expensive for customers than the ballot measure proposal to eliminate coal, Initiative Petition 63.

Beyer wrote in an email Friday that his request should not be interpreted as support or opposition for House Bill 4036. Beyer is co-sponsor of a competing bill to switch over to a carbon trading system.

“It is merely an attempt to make sure that legislators will have the benefit of the informed and independent judgment of the PUC about the proposal,” Beyer wrote. “The PUC is the only one in a position to technically make such a judgment without bias since it is their responsibility to protect ratepayers while also allowing the utilities the opportunity to obtain a reasonable return for their shareholders.”

The commissioners and utilities briefly discussed where the companies might obtain the large amounts of renewable power necessary to meet the proposed mandates. Portland General Electric employees said in order to simplify their analysis of the bill’s impacts, they assumed the additional renewable energy would come from wind turbines. Ackerman noted that wind turbines already occupy most of the viable sites along the Columbia River Gorge. Brett Sims, Portland General Electric’s resource strategy director, said it was true sites in the area are “less plentiful” and the utility would have to look to other regions or states to meet the 50 percent renewable proposal. Commissioner Stephen Bloom said that could add to the cost, since new transmission lines might be necessary for wind turbines in eastern Oregon and it could be difficult to install turbines along the coast due to the presence of the federally protected marbled murrelet.

The commission also raised questions about elements of the bill that have received little public attention, such as the requirement for PacifiCorp and Portland General Electric to file plans with the Public Utility Commission to increase charging infrastructure for electric vehicles. The bill also lays out guidelines for the utilities to pass the cost on to customers.

“Are you saying it’s OK for low-income customers to subsidize a Tesla owner?” Savage asked.

Bryce Dalley, vice president of regulation at PacifiCorp, said no.

“Net benefit is assuming all customers benefit,” Savage said, referring to one of the policies the commission must consider regarding utility company requests. “It’s real straightforward ... You’re asking a certain group of customers to subsidize another group of customers.”

Bob Jenks, executive director of the residential ratepayer advocacy group Citizens Utility Board, said after the meeting that the bill has “strong consumer protections.” The board was also involved in negotiating the deal with the utilities and Renew Oregon. Jenks pointed to a provision in the bill that would allow the Public Utility Commission to suspend the renewable energy mandate if necessary to maintain grid reliability, and said the long-term goals would give the utilities time to meet them in the last expensive ways.

The Capital Bureau is a collaboration between EO Media Group and Pamplin Media Group. Hillary Borrud can be reached at 503-364-4431 or hborrud@eomediagroup.com.



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