PacifiCorp’s Proposal for Higher Rates
PacifiCorp is once again proposing significant
electricity rate increases for its Oregon customers. In total,
the two rate cases would add about $113 million in added
annual costs for PacifiCorp’s more than 550,000 ratepayers.
The proposed rate increases would average about
eight-and-one-half percent for its Oregon residential
customers, about sixteen-and-one-half percent for its
industrial customers, and more than twenty percent for its
irrigation customers. These proposed increases are in addition
to renewable energy adjustments already implemented.
PacifiCorp claims that its operation and
maintenance costs are stable, and that its administrative and
general costs have actually declined. However, the utility
company states that the primary reason for the rate increase
is the cost of acquiring over 1200 Mega Watts of new
generation capacity. It claims that the higher costs of
capitalization of these new resources as well as the company’s
need for more return on investment are significant cost
drivers. It also states that the increase in new power costs
is due in part to lower output from it hydroelectric resources
and higher integration costs of wind generation.
We will concede that environmental regulations
that restrict hydropower generation, and mandates requiring
the expansion of non-hydro renewable power, are cost drivers
imposed on PacifiCorp that it cannot control. However, the
company is asking for higher percentage returns on equity and
capitol investments at a time when interest rates are near all
time lows. In my opinion, for a utility to request draconian
rate increases to achieve greater returns on investment during
this time of economic upheaval is unconscionable.
Inexplicably, PacifiCorp is allocating a
significantly larger percentage share of the proposed cost
increase to industries and irrigators even though the demand
for electricity from these two sectors has diminished. We
might question the reason why these sectors are being targeted
when their demand for electricity is not increasing and is not
driving the company’s need for new generation.
While it may be politically correct to reduce
proposed rate increases for residential users at the expense
of the business ratepayers, it is neither fair nor does it
represent good economic policy. Our business sector is already
under great duress and is shedding jobs at an unprecedented
rate. The rate increases proposed for industries and
irrigators will result in even more economic stress that will
certainly result in even more job losses. In fact, these
proposed substantial rate increases may be expected to result
in closure of some businesses that will cause total
elimination of their employee base.
All rate cases involving investor owned utilities
are decided by the Oregon Public Utility Commission in a
process that includes public hearings. We encourage you to
take advantage of these opportunities to participate in the
Political policy decisions are often the cause of
a request for a needed rate increase. Oregon’s adoption of the
Renewable Portfolio Standard (RPS) in 2007 requires electric
utilities to purchase increasing quantities of non-hydro
renewable power. It also requires the Oregon Public Utility
Commission to allow the utilities to recover all costs
associated with their implementation of the RPS. We encourage
you to take any opportunity available to discuss the costs of
these renewable energy mandates with your legislators.
House Concurrent Resolution 5: Honoring
Representative Bill Garrard and I co-sponsored
to honor the incredible success of OIT men’s head basketball
coach Danny Miles. I testified in committee on the necessity
for his recognition:
Danny Miles is an icon at OIT, in Klamath
Falls, and among all collegiate coaches. As Head Coach of
the OIT men’s basketball team, his teams have won more than
seven out of every ten games played for nearly four decades.
This record has been compiled while playing in one of the
toughest, most competitive leagues in the nation. In
addition, Coach Miles schedules his teams to play against
the best non-league competition that is available to play.
Everyone wants the opportunity to beat his “Hustlin’ Owls.”
Few are up to the task.
As a coach, he ranks number six in all time
victories in the history of men’s collegiate basketball at
all levels. He will undoubtedly be ranked no worse than
number four after next season. It is also possible that
Coach Miles has coached more collegiate academic All
Americans than any other coach in history. Unfortunately, to
my knowledge, no records are kept on that accomplishment.
However, it is no accident that Coach Miles recruits good
athletes with good academic records. From the first day of
practice Coach Miles makes it clear to his players that the
reason that they are attending OIT is to acquire an
education. If his players do not perform in the classroom
they are not allowed to perform on the court.
Young men come to OIT from all across the globe
to play basketball at OIT. They do not come for the night
life in Klamath Falls. They do come to play for one of the
best basketball coaches that ever lived.
Coach Miles has been recruited to serve as head
coach at universities all across the nation. He has been
offered multiples of what he is paid to coach his Hustlin’
Owls. Fortunately for OIT, Coach Miles is not for sale. He
has remained at OIT because the Oregon Institute of
Technology is HIS University and Klamath Falls is HIS home
I have never met a finer coach, a better
developer of athletic and academic talent, and certainly
have never met an all around better man than Danny Miles.
HCR 5 passed out of committee with unanimous
support. It is currently being printed for consideration by
the full House of Representatives.
Ways & Means Update: 2009-11
Agency-Proposed 30 Percent Reduction Lists
The deficit for the next budget cycle is estimated
to be about $4.4 billion. What that means is that projections
indicate we will have $4.4 billion less than is needed to
maintain current state services using standard rates of
inflation in government costs. The Legislature has several
funding mechanisms to help reduce that budget shortfall. The
Rainy Day Fund, the Education Stability Fund, and the federal
stimulus money available for the 2009-11 budget cycle add up
to about $2 billion. If the Legislature chooses to use all of
the available reserves the budget deficit is reduced to around
Today, the Co-chairs of Ways and Means released a
of potential 30 percent reductions in the budgets of every
state agency. These projections were prepared by the agencies.
They have not been adopted by the Legislature. The reductions
represent a starting point for the Legislature to begin
deliberations on prioritization of reductions.
yesterday, Speaker of the House Dave Hunt (D-Clackamas
County) stated: “State reserve funds and federal stimulus
dollars won’t fill the entire hole. So we’re going to need a
combination of budget cuts and targeted, fair revenue
increases to balance the budget in these difficult economic
times.” His House Democrat colleagues have already introduced
more than 60 bills to either raise current taxes or create new
taxes. About an equal number of bills have been introduced to
either raise existing fees or create new fees.
Speaker Hunt also said that the budget process
will be a fair and transparent procedure with multiple
opportunities for citizens to weigh in. The entire Joint Ways
and Means Committee will be on the road for six public hearing
on the budget starting April 20.
Monday, April 20 – Lincoln City
Tuesday, April 21 – Portland
Wednesday, April 23 – Capitol Building with video links to
Wednesday, April 29 – Bend
Thursday, April 30 – Ashland
Friday, May 1 – Eugene
Specific venues and times are still being
determined and will be announced next week. Updated
information will be available on the Legislative
Fiscal Office website.
For more information on our state's current budget
situation, I would encourage you to read a very well written
from Representative Dennis Richardson (R-Central Point) that
accurately describes the reality we are facing.
And lastly, please do not forget to attend the
“Tax Day Tea Party” in your local area on April 15. If you
don't stand up for rural Oregon, no one will!
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