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PacifiCorp's Spread Threatens OR Restructuring
PacifiCorp last month proposed a radical change to the way it is regulated in its five-state service territory which spans Oregon, Washington, Utah, Wyoming and Montana .
The filing comes in response to the unique challenges the utility faces as the region's only multi-state utility. The company is regulated by five state utility commissions yet maintains generating plants and power contracts which are not assigned to specific jurisdictions. Under the current arrangement the states pay a share of the company's costs based on each state's proportion of load, but it only works if they all agree on PacifiCorp's resource acquisition strategy.
The problem threatens Oregon's ability to implement restructuring. Under terms of the new law, as large users leave PacifiCorp for the market, the generation they leave behind should be sold either the actual resources or just the electricity output and the proceeds given to those users as a transition credit. Under the existing regulatory arrangement, however, each of the remaining four states would also have some claim to the money, threatening the departing PacifiCorp customers' share, without which they would be unable to afford to purchase power at current market prices. If nothing is done, Oregon's law will be unworkable for PacifiCorp's customers.
PacifiCorp seeks to solve the problem by fundamentally restructuring the company and its relationship with each state. The plan proposes five separate state distribution companies and an additional company with ownership of current generation assets. The generating company would then sign long-term power supply contracts with each state.
While intriguing, it remains to be seen if the proposal will gain approval from each of the involved states and if each state will be able to negotiate an acceptable long-term power arrangement with the restructured generation company.
Steven Weiss