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Rocky Road Ahead For Restructuring In OR
Rift revealed in discussion over fate of PacifiCorp,PGE/Enron power plants
Implementation of Oregon's utility restructuring law (SB1149 ) began in earnest last month. And as expected, the biggest stumbling block has already emerged Ñ the fate of the valuable generation assets of Portland General Electric (PGE)/Enron and PacifiCorp after October 1, 2001 when commercial and industrial customers can opt to leave their utilities in favor of the open market for power.
Many customer groups and independent power marketers want the utilities to separate their generation and distribution (wires) functions to ensure fair competition. Without this separation, the utilities could wield control over and discriminate against other power marketers through their control of the wires which every potential marketer needs to deliver electricity to end-use customers. PGE/Enron and PacifiCorp could also shift costs from the generation portion to the wires portion of their business essentially allowing them to subsidize the competitive side of their business with the regulated side.
A seemingly simple concept, separation of generation and distribution is much more difficult than it sounds. PacifiCorp does not want to split its business. Although PGE/Enron wanted to separate at one time, Enron is now looking to sell PGE. The prospect of being on its own again has prompted PGE to approach restructuring negotiations as if it were a traditional, regulated utility looking to retain control of all of its assets. Independent marketers such as Enron favor aggressive separation of generation and distribution as a means to promote fair competition.
Complicating matters is the position of the Oregon Public Utility Commission (OPUC) , consumer advocates such as the Citizens Utility Board , and conservation groups which don't want the valuable hydropower assets of utilities to be sold off. Many experts feel the most effective way to achieve separation would be for PGE and PacifiCorp to sell off all of their power plants, including their hydroelectric dams.
The OPUC has scheduled bi-weekly two-day meetings for stakeholders in an attempt to reach consensus on the rules for implementing SB1149. Many of the stakeholders, however, have also been meeting outside the workshops working together as they did to write and pass the SB1149. Business and residential customer advocates, plan to develop a compromise in the months ahead to bring to the OPUC staff. Gaining acceptance of the plan by the two utilities, however, will be difficult. Although OPUC commissioners will make the final decision, everyone is aware that without consensus a lengthy court battle is likely to ensue.
Workshops on the Public Benefits Charge (PBC) and low-income assistance portions of the bill will begin soon. The PBC directs 3% of the states' investor-owned utility retail revenues toward energy conservation, new renewable resource development and low-income weatherization. The bill will make $10 million per year available for low-income bill assistance beginning in late 2001 when the law is expected to take effect. To get started, SB1149 directs utilities to invest $5 million annually in bill assistance on an interim basis beginning in January 2000.
The Bonneville Power Administration represents another important hurdle. The federal agency released a second draft of a paper on how sales of its low-cost power to residential customers of Oregon's investor-owned utilities, PGE and PacifiCorp may be hampered by SB1149.
Although most stakeholders seem genuinely motivated to work things out so that the restructuring can go into effect as scheduled, if no satisfactory solutions can be found, the law gives the OPUC authority to stop implementation.
Steven Weiss and Mark Glyde