The Oregon Public Utility Commission (PUC) was created
by the Legislative Assembly to ensure that “safe and
reliable utility services are provided to customers at
just and reasonable rates, while fostering the use of
competitive markets to achieve these objectives.” That
body is charged with regulating only the investor-owned
utilities (IOUs) that are owned by private companies
such as PacifiCorp and Portland General Electric (PGE).
IOUs are given monopolies within their utility service
areas. These monopolies are approved and regulated by
the state. The PUC is charged with ensuring that the
more than 1.5 million PacifiCorp and PGE customers in
Oregon are treated fairly by those two companies.
The PUC held an
informational hearing in Salem
last Friday regarding
House Bill 4036. The new law
proposed by PacifiCorp and PGE is being called the
“Clean Electricity and Coal Transition” bill.
HB 4036 would functionally double
the amount of renewable power required to meet the
Oregon Renewable Portfolio Standard (RPS).
It would also eliminate both the coal-fired generation
of electricity in Oregon and the importation of
electricity generated by coal-fired plants located
outside of the state.
The proposed law was negotiated by
selected group of participants.
The list includes environmental advocacy
organizations, renewable energy producers, organizations
that advocate for renewable energy, PacifiCorp and PGE.
Their bargain was reached behind closed doors in
Incredibly, the PUC and its members were not allowed to
participate in the closed door meetings. All but one
organization that advocates for ratepayers also appear
to have been barred from the discussions.
The only exception was the
Citizens' Utility Board (CUB).
CUB was formed in 1984 by initiative petition to
advocate for residential ratepayers. In my experience,
CUB has consistently and unabashedly advocated for the
production of renewable power.
The current chair of the
CUB Board of Governors is the
Director of Meteorology at Iberdrola Renewables, which
is the new name for
PPM Energy, Inc.
That company was previously the energy acquisition unit
for PacifiCorp. It is now owned by the Spanish-based
Governor Brown has
expressed her tacit support
for the proposal and had
her office suggest that the PUC members refrain from
She has also delayed consideration of the reappointment
of two of the commissioners until after the Legislative
Assembly has completed consideration of HB 4036.
Unfortunately, the development of new laws in closed
negotiations among special interest groups appears to be
the “New Oregon Way.”
The IOUs claim the proposed
changes are affordable, workable and are better for
their customers than the provisions of
Initiative Petition 63.
That proposed ballot measure is currently being advanced
by many of the same advocacy organizations who
participated in the closed door negotiations.
Not surprisingly, those who were not at the table were
on the menu. The list of significant losers appear to
include the IOUs’ ratepayers, the consumer owned
utilities that compete with the IOUs, and the PUC
Several points were made abundantly clear during
Friday’s PUC hearing.
The claim by IOUs that the PUC’s informational hearing
was “unprecedented” was first laid to rest by the
Commission Chair. She emphatically cited other examples
of similar hearings. The Chair also made clear that she
and her fellow commissioners are not pleased that the
IOUs failed to consult with them regarding the
negotiations. Nor are they pleased with the product of
the discussions, which is HB 4036.
The PUC members pointed out that HB 4036 would reverse
no less than four of that body’s previous decisions.
One example is in regard to the energy production tax
credit (PTC). The most common federal PTC is two cents
per kilowatt hour, and expires after ten years. HB 4036
appears to authorize the IOUs to shift the cost of the
expired tax credit to their ratepayers without even
consulting the PUC.
Another reflects the PUC’s concern regarding the
reliability of the power grid when much higher
percentages of intermittent wind and solar resources are
required. The Commissioners assert that HB 4036
eliminates the PUC’s ability to maintain control of
The PUC members openly questioned the appropriateness of
the IOUs’ participation in the confidential
negotiations. The IOUs, whom the PUC is charged with
regulating, appear to have rewritten their own preferred
outcomes to PUC orders. They further charged that HB
4036 raises other issues that were previously decided by
the PUC through its extensive public processes.
Members of the PUC pointed out that HB 4036 will result
in little, if any, overall reduction in greenhouse gas (GHG)
emissions. The IOU representatives were not able to
refute that assertion.
The only coal-fired plant in Oregon, located in
Boardman, is already scheduled to be closed. Coal-fired
plants located in other states that are currently
supplying electricity to Oregon will continue to operate
into the foreseeable future. Those plants will not cease
to operate, will not stop using coal and will not reduce
their GHG emissions.
Although the scheme will serve to help meet Oregon’s GHG
reduction goals, neither regional nor global GHG
emissions will be measurably reduced. It is worth noting
that Oregon currently produces about 0.04 percent of
global GHG emissions. That is four ten-thousandths of
the total global GHG emission, or one part in 2,500! The
simple, undeniable fact is that even the complete
depopulation of Oregon would not result in a measurable
change in global GHG emission.
"Prudently incurred costs" can
generally be recovered from an IOU’s ratepayers. Those
companies are generally allowed to make about a ten
percent profit on virtually all of their prudently
incurred costs. The PUC members questioned the IOU
representatives regarding the many ways they wrote HB
4036 to redefine most of the cost of the new law’s
implementation to be costs that are “prudently
PUC members further declared during the hearing that HB
4036 does create significant incentives to build solar
and wind powered generation capacity. However, they then
asserted that the text of the bill throws out the
requirement for the new construction to be effective and
prudent. It appears to remove oversight by both the
public and the PUC. The result is authorization for the
IOUs to charge the costs of new renewable generation
facilities to their ratepayers, as well as taking their
designated profits on those charges.
Most of the cost of siting and constructing of wind and
solar generation facilities is currently being paid by
taxpayers. These facilities are currently being
subsidized with refundable tax credits, production tax
credits, accelerated depreciation and loan guarantees.
Many facilities receive well more than 80 percent of
their funding through these tax giveaways. The fact of
the matter is that most of the cost of complying with
Oregon’s RPS is currently being paid by the taxpayers,
rather than the IOUs’ customers.
PUC members pointed out how HB 4036 could allow the IOUs
to transfer much of these costs to their customers with
reduced or delayed regulatory oversight.
The Commissioners questioned the purpose of two specific
sections of HB 4036 that appear to further enhance the
IOU service area monopoly. Those sections appear to make
any encroachment on their monopoly protected territory
and customers prohibitively expensive.
The bill would force consumer owned utilities, like
public utility districts and municipal utility
districts, to pay enormous new costs in the event that
they took a single ratepayer from the IOU monopoly
protected service area. HB 4036 would essentially
prohibit IOU ratepayers from escaping their monopoly
rates, other than by moving out of their protected
already increased its rates by
more than 80 percent since 2005. I believe HB 4036 has
the potential to cost their ratepayers billions of
additional dollars over the next two decades. Obviously,
nearly ten percent of their new prudently incurred costs
may be retained as profit for their investors.
PUC members asked repeated questions regarding the
potential cost increase for IOU customers. The queries
were generally deflected as being either a work in
progress or as currently being modelled.
one and a half million Oregon IOU customers
and many members of the Legislative Assembly would like
to know what those costs will be before a vote is
recorded on HB 4036.
The bill was scheduled for two
hearings in the House Energy and Environment Committee
One was held today, and the
other is set for Thursday.
That committee is chaired by a former
political chair for the Sierra
HB 4036’s subsequent
referral to Ways and Means
will likely prevent it from having even a single public
hearing in a Senate policy committee.
The passage of HB 4036 will result in certain and
enormous shifts of wealth. IOU customers will pay while
utility investors and the purveyors of renewable energy
This is not the Oregon Way. This is crony capitalism in
its most blatant form.
Please remember--if we do not stand up for rural Oregon,
no one will.
Senate District 28
I Phone: 503-986-1728
Address: 900 Court St NE, S-311, Salem, OR 97301