May 6, 2016

How Oregon's Clean Energy Law Could Affect Power Bills

The Oregon Legislature passed a bill in February that requires public utility companies to phase out coal from their energy portfolios by 2030.

But what does this mean for your electric bill? The short answer: It depends.

The sweeping, first-of-its-kind law, signed by Gov. Kate Brown last month, also mandates that at least half the electricity sold to Oregonians is generated from renewable sources by 2040.

Proponents of the law, called the The Clean Energy and Coal Transition Act, testified to the Legislature that rate increases would be negligible, because the coal plants serving Oregon would require $2 billion in retrofits in the next 15 years — leading to inevitable rate increases. But some Republican state lawmakers criticized the law, saying it will increase rates more than if coal was kept in Oregon's energy portfolio.

How your bill could change

How your electric bill will change depends on who your provider is.

For now, the law only affects customers of investor-owned Portland General Electric and Pacific Power. If a public utility district expands its service area, then it will have to abide by the renewable energy mandates.

How your bill will be affected also depends on if current federal tax credits for alternative energy remain in place. Those credits keep alternative energy investments cost-competitive for utilities.

Electric bills will also be affected by a potential carbon trading system, future costs of natural gas and the costs borne by utilities for building renewable power resources like wind and solar farms.

Utilities are projecting an electric bill increase of around 1.5 percent each year, said PGE spokesman Steve Corson.

He added that the cost estimates are "very general" and subject to change. Corson said rates might stay flat or go down if costs for the utilities are lower than projected.

An analysis of the law from Flink Energy Consulting said the average annual change for PGE and Pacific Power customers will range from a 0.9 percent cost increase to a 2.2 percent decrease, depending on the federal tax credits and carbon trading system.

Pacific Power spokesman Ry Schwark said the utility projects price increases around 1 percent per year.

Uncertain costs

Bob Jenks, executive director of the Citizen's Utility Board, said he believes the projections overestimate the cost of moving to renewables.

Jenks added that CUB, a nonprofit which represents the interests of ratepayers, wouldn't be supporting the law if it didn't believe it was the best option for customers.

There's also another safeguard for ratepayers built into the law. Rates can only increase a maximum of 4 percent each year. If utilities expect to raise rates more than 4 percent, they can go back to using nonrenewable power sources until the cost of implementing renewables goes down.

Some Republican lawmakers criticized the bill during the 2016 legislative session. Many said rates could rise as much as 40 percent by the time the bill is fully implemented.

Sen. Brian Boquist, R-Dallas, called the law "radical." Sen. Jeff Kruse, R-Roseburg, called it a "sweetheart deal" for PGE and Pacific Power.

Corson said a 1.5 percent annual increase would end up "pretty close" to the 40 percent figure, but added, "You can’t say that that’s wrong over that 24 year (implementation) period, but it’s a very narrow view."

Jenks said the 40 percent figure "really came from bad mathematics."

Schwark added: "If someone can tell me how much prices will rise over the next 25 years they’re going to win the Nobel Prize in economics."

The "moving parts" in the cost analysis make it impossible to predict with certainty how rates will change, he said.

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