State By State Proposals - Oregon
Oregon’s Electricity Future
State Snapshot
Two investor-owned utilities -- PacifiCorp and Portland General Electric -- provide four-fifths of the state’s electric load. Publicly owned utilities serve the remaining 20 percent. Oregon’s resource mix is far from clean.
Oregon citizens have already brought their diverse strength to the campaign for a clean and affordable energy future. They have achieved a great deal and they have the potential for more. While many states rushed headfirst into deregulation, Oregon took a more cautious approach. Oregon’s 1999 law (SB1149) allowed large customers to buy power directly from the wholesale market and offered green power choices to captive customers. It also instituted a system benefits charge -- 3 percent of retail revenue – through which PacifiCorp and PGE customers fund conservation and renewable programs and low-income weatherization. A separate meter charge raises another $10 million a year for low-income bill-payment assistance, which, along with low income weatherization funds, are distributed to local community action organizations by the Housing and Community Services Agency.
Remarkably, rather than leave the task of acquiring conservation and renewables to the utilities, the law created a not-for-profit organization, the Energy Trust of Oregon, to invest the funds -- currently more than $47 million a year -- in projects that benefits consumers in the areas served by PGE and PacifiCorp. The Trust also administers the NW Natural Gas conservation program, which is funded through a small public-purpose charge. The Energy Trust is overseen by the Public Utility Commission.
The state boasts the region’s most progressive residential/commercial building energy codes and offers the best incentives for energy efficiency and renewables. In 1997, Oregon law required the state power plant siting council to establish the country’s first carbon dioxide mitigation standard, affecting new power plants larger than 25 megawatts.
In Oregon, the Citizens Energy Plan supports effective implementation of Energy Trust projects, reducing barriers to renewable resource development and greater clean-energy incentives.
Priority Opportunities
Effective Implementation of Public Benefits Funds - Ensure benefits of restructuring law (SB 1149) are maintained. Support implementation of programs to acquire energy savings and develop renewable resources by the Energy Trust of Oregon. Highlight and promote the programs and effectiveness of the Energy Trust.
Improve Incentives for Clean Energy - Make certain that utility integrated resource planning (IRP) and resource procurement (RFP) processes forward the goal of a clean and affordable energy future. Use utility ratecases to advance mechanisms to remove utility disincentives to capture all cost-effective energy efficiency opportunities. Increase marketing and promotion of green power products offered to retail customers. Other lower priority opportunities: Increase flexibility of efficiency and renewable energy tax credits to encourage more participation; establish a commercial building commissioning requirement in the state energy code; and establish minimum efficiency standards for appliances and equipment not covered by Federal standards.
Legislative Efforts - Explore the possibility of introducing legislation in a number of areas, for example: (1) Increasing the $10 million low-income energy assistance funds by adjusting for inflation, population growth, or need; (2) Instituting a Renewable Portfolio Standard that would require utilities to have an increasing amount of renewables; (3) Requiring a deposit on florescent lights to incent and fund responsible recycling.
Reduce Barriers to Rural Renewable Resource Development – Expand net metering to allow for small farm projects using 100-kilowatt systems. Work with local and state siting agencies to improve the permitting process, helping local communities reap the economic benefits from new renewable energy projects.
Collect Data on Utility Arrearages and Service Terminations for Non-Payment – Encourage regulators and public utility governing boards to track select residential class statistics from electric and natural gas utilities.
Portland General Electric Must Continue to Support Clean and Affordable Electricity – PGE will likely be taken over by a new entity. Currently Oregon Electric, backed by the Texas Pacific Group, is before the PUC seeking approval of the sale. There will be a major opportunity to affect PGE's new management and its positions on clean energy and low-income energy services.
Policies to Deliver Oregon’s Electricity Goals
Effective Implementation of Public Benefits Funds
Current Status: Oregon implemented a system benefits fund program in March 2002 for ten years. The system benefits charge (3% of retail revenues) applies only to investor-owned utilities in the state. Collected funds go to a third party administrator (Energy Trust of Oregon) which then funds proposals to implement efficiency programs and develop renewable resources. Industrial customers may control some of their own funds. Public utilities may opt into the System Benefits program if they allow their industrial customers direct access to the power market. 11.7% of the public benefits charge goes to weatherization of low-income housing. 4.5% of the total is for construction of low income housing, 17% is for renewable resource development, 10% is for energy programs within schools and the remainder is for energy efficiency investment. NW Natural also adopted such a program, though at a lower funding level (about 1.3%), which allows the Energy Trust to run programs to conserve natural gas, with a set portion for low-income housing. . The legislation requires a review in 2007.
Recommendation: Publicize and promote the benefits of investment of the public benefits funds and the value brought by the Energy Trust. Work with the Energy Trust and related parties, including utilities and BPA, to ensure effective design and implementation of programs. Use the statutory review process to push for improvements.
Improve Incentives for Clean Energy
Current Status: Oregon's utilities, facing increasing demand, are in the process of making resource choices and procuring those resources. Investor-owned utilities still have incentives to increase demand. Oregon, as a state, has the most generous financial incentives in the region for encouraging investment in energy efficiency and renewable energy. The Business Energy Tax Credit allows businesses a five-year credit for 35% of project costs for efficiency measures beyond code and renewable systems up to $10 million. The Residential Energy tax credit allows an income tax credit for energy efficient appliances, equipment and small-scale renewable systems. The state energy loan program offers between 5.5% and 6.5% interest loans for energy efficiency and renewable energy investments (loans for renewables up to $20 million.) States are allowed to adopt appliance and equipment efficiency standards for products not yet covered by federal efficiency standards. The commercial building energy code is one of the best in the country except it has no commercial building commissioning requirement.
Recommendations: Use utility planning and procurement processes to ensure that resource decisions are made that reflect the goals of this CEP. That includes evaluating demand-side as well as supply side resources; fair treatment of intermittent resources and distributed generation; giving full benefit for environmental costs; and accounting for the risks to consumers of overexposure to volatile fossil fuel and market prices.
Advance utility rate mechanisms that remove utilities' incentives to increase energy use.
Introduce tiered incentives in the tax credit program to encourage investments in the most energy efficient options available. Restructure the tax credit program to allow for customer rebates as well as tax credits.
Establish minimum efficiency standards for appliances and equipment not covered by federal standards, such as torchieres, ceiling fans, standby energy use for electronic equipment and power supplies, unit heaters, dry-type distribution transformers, refrigerated beverage vending machines, commercial refrigerators and freezers, traffic lights, exit signs, commercial clothes washers, automatic commercial ice-makers, and packaged air conditioning and heat pump equipment.
Establish a commercial building commissioning requirement that ensures that all the systems in the building are working as they were designed. Commissioning can be done on both new and existing buildings to improve the operational performance of the building.
Legislative Efforts
Current Status: The 2005 session starts in 2005. In addition, SB 1149 requires a review to take place by 2007. The Power and Conservation Council's 5th Power Plan will show that the 3% level for conservation and renewables is grossly inadequate to achieve the cost-effective conservation and renewables available. In addition, the needs of low-income Oregonians have skyrocketed since funding levels were established. Florescent lights save tremendous amounts of energy--and the pollution created when fossil fuels are used to generate it. However, those lights contain small amounts of Mercury and other metals. While they last a long time, many are now wearing out and are showing up in landfills.
Recommendation: Explore the possibility of introducing legislation, for example: (1) Increasing the $10 million low-income energy assistance funds by adjusting for inflation, population growth, or need; (2) Instituting a Renewable Portfolio Standard that would require utilities to have an increasing amount of renewables; (3) Requiring a deposit on florescent lights to incent and fund responsible recycling.
Reduce Barriers to Rural Renewable Resource Development
Current Status: Oregon’s law requires public and private utilities to offer net metering for systems 25 kilowatts or less. While Oregon has five operating wind projects, local and state permitting agencies still struggle with what they consider the novelty of renewable energy projects. This can slow down and sometimes unduly burden projects during siting.
Recommendation: Expand application of net metering to allow for small farm projects using up to 100 kilowatt systems. For some small farm systems to be effective at meeting the farm’s energy needs, larger distributed renewable energy generating systems are needed. Work with local and state siting agencies to improve the permitting process and help local communities reap the economic development potential from new renewable energy projects.
Collect Data on Utility Arrearages and Service Terminations for Non-Payment
Current Status: Few utilities collect detailed information in one place on a regular basis on the cost and impact of utility arrearages and disconnections, but some studies have been done.
Recommendation: State regulators and public utility governing boards should gather information on an annual basis from electric and natural gas utilities on key residential customer statistics that relate to monthly energy assistance customers, disconnections, and past due accounts, among other items, and their relation to low-income weatherization, education and assistance programs. Information that shows the benefits of these programs should then be used in ratecases and other venues to advance widespread use.
Ensure that the Transfer of Ownership of Portland General Electric Results in Progress Towards Clean and Affordable Energy
Current Status: Oregon Electric/Texas Pacific Group is seeking acquisition of PGE in 2004. The Public Utility Commission is reviewing the sale to ensure it is in the public interest.
Recommendation: Participate proactively in the process in order to ensure that the resulting management adopts strong and clear goals to secure energy efficiency and renewable energy resources and maintain effective low income energy services.