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Portland General Electric : Utilities throw weight behind plan to eliminate coal and increase renewables

01/30/2016 | 11:02pm US/Eastern

Jan. 30--Oregon's two biggest electric utilities told state regulators Friday that their compromise plan to eliminate coal-fired electricity and meet half their customers' demand with renewable energy would be affordable, technically feasible and vastly preferable to ballot measures that environmental groups are proposing for next November.

It's not clear if those assurances will be enough to win the support of Oregon's three public utility commissioners or of lawmakers. They have expressed significant concerns over the potential cost of the proposed legislation, as well as the wisdom of rushing through such a complex change to the state's energy policies in a short legislative session.

The commissioners also question whether the plan would have any real impact on the state's global warming emissions.

The plan, now codified in House Bill 4036, was negotiated behind closed doors by utilities and environmental groups and will likely be the subject of intense if truncated debate in the session that begins next week.

In an unusual hearing to review the proposed legislation Friday, Portland General Electric and PacifiCorp estimated the savings their plan would offer ratepayers in comparison to the ballot measures, which environmental groups have agreed to drop if lawmakers pass the compromise bill. The utilities also offered the Oregon Public Utility Commission estimates of the cost increases their ratepayers would face.

The legislation would mandate that utilities eliminate imports of "coal-by-wire" by 2035, and requires them to meet 50 percent of their customers' demand with renewable energy by 2040. That's double the current standard of 25 percent renewables by 2025. Both standards include interim, stair-stepped mandates that increase over time.

The ballot measures contain similar provisions, but the utilities say their compromise plan offers the opportunity to run coals plants for longer, as well as more flexibility in meeting the renewables requirements. Both deliver financial benefits to ratepayers, they say.

The utilities have adopted a unified lobbying front on the bill, but they have markedly different systems today, and took different approaches to modeling the costs they believe would be involved.

PGE took a more conservative approach. Its cost estimates were based on what it acknowledged was an unrealistic assumption: that it would meet the renewables standard by purchasing energy exclusively from wind farms in the Columbia River Gorge. It also assumed that it would build or buy enough renewable energy to reach full compliance with the renewable mandates as they stair-step higher over the next 25 years.

In reality, it is likely to produce more renewable energy than it needs to meet compliance obligations in the early years, which will generate bankable renewable energy credits it can use to satisfy later obligations.

PGE estimated that the approach it modeled would save its customers between $220 million and $360 million over the next 25 years compared to the ballot measure. And it said the compliance strategy it modeled would raise rates by between 1.2 percent and 1.5 percent annually during the same period.

PacifiCorp's model, by contrast, hewed closer to the strategy it might actually pursue, but only estimated costs out to 2030. It included some big upfront investments in renewables, for example, to take advantage of federal tax credits that expire in 2020.

PacifiCorp's plan also leaned heavily on the use of banked renewable energy credits, and didn't reflect all the costs it would have to incur to comply with renewables mandates once that bank of credits is exhausted.

Based on the assumptions it made, PacifiCorp said the plan would save its ratepayers $600 million between 2017 and 2030 compared with the ballot measures. And it said its customers would see rate increases of 0.8 percent annually over the same period.

"Removing coal-fueled generation from Oregon rates by 2030, under the bill provisions, will have no impact on customer rates through 2030 when compared to current Oregon policy," the company said in a news release. "Incremental renewable resources may have a modest impact on costs, with an annual average cost increase of less than 1 percent between now and 2030."

Both utilities analyses were high-level and filled, they acknowledged, with many assumptions and uncertainties. Those include the inability to forecast the cost and future technology improvements in renewable energy, transmission and energy storage.

The utilities emphasized, however, that the cost of solar and wind energy is already competitive with the output of natural gas-fired plants, including the cost of back-up resources to smooth their intermittent output. And they returned repeatedly to the notion that their plan would provide financial flexibility and put them on a path to meet Oregon's carbon reduction goals.

The commissioners reached no conclusions Friday. But they will be on tap to answer legislators' questions about the bill when it is introduced, and stressed Friday that they'd need more data from utilities to do that.

The commission took no public comments Friday. But at the end of the hearing, PUC chair Susan Ackerman asked Sen. Doug Whitsett, R-Klamath Falls, whether he had any questions or comment.

Whitsett said the bill was formulated behind closed doors without the input of those who would have to pay for it, which he described as the "new Oregon way." He also said the legislature would have inadequate time to drill down on the bill in a 35-day session.

"This is the wrong time and the wrong place," he said.

- Ted Sickinger

503-221-8505; @tedsickinger

___

(c)2016 The Oregonian (Portland, Ore.)

Visit The Oregonian (Portland, Ore.) at www.oregonian.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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