Previously the sale was approved by the public utility commissions of Utah, Idaho, Washington, Wyoming and California.

Posted by Oregon CUB at 02:11 PM | Comments (0)

Pacific Power Files for Rate Increase AGAIN!

Don't look now, but Pacific Power (under their corporate name PacifiCorp) is looking to raise your rates again. But didn't we just get done talking about UE 170, their last rate case, you may ask? After a yearlong investigation of their rates and costs, the Commission gave a decision only 5 months ago which resulted in a 3% increase (down from 12% requested). As a matter of fact that rate case is still open, since Pacific Power filed a Motion for Reconsideration of the Public Utility Commission's decision.

Amazingly enough, this is not an unusual situation. Since Pacific Power was purchased by Scottish Power in 1997, they have been very aggressive about seeking rate increases. The newest filed rate case, which we just received in the mail today, makes the 7th Pacific Power rate proceeding in 7 years. No other utility files rate cases at this accelerated pace.

In the past 6 case decisions, the Commission has granted Pacific Power an average of 28% of the rate increase they requested. Why is that number so low? They have tended to exaggerate their need for a rate increase, which is decided based upon costs. For example, in the current rate case filing, Pacific Power is asking for an additional $112 million, or a 13% overall increase in rates. For residential customers, this would come to a 10.8% increase.

Two issues stand out immediately for CUB, not even having fully read the filing. 1) Pacific Power wants the PUC to raise their return on equity (ROE) or profit margin up from 10% to 11.5%, a sizeable jump. 2) Pacific Power wants the PUC to reinstate the $26 million in tax costs, removed from their last requested rate increase under the aegis of SB 408 (which requires utility taxes collected to roughly match taxes paid). Hmmmm.

Pacific Power does have relatively low electricity rates in a nationwide comparison. This is because their generation assets are mostly low-cost coal, low-cost hydropower, and some natural gas generation. And while it's true that natural gas prices spiked after the Gulf Coast Hurricanes last summer, those prices have been consistently dropping until now prices are at about $7 per MMBTU, half of the spiked price of $14.

This filing begins a process in which CUB plans to expend a huge amount of energy and resources in tracking and analyzing the actual costs, such as those mentioned above, of Pacific Power's electricity generation and purchase. We will write hundreds of data requests, wade through thousands of pages of Pacific Power information, will produce at least two rounds of testimony, undergo cross-examination, attend hearings, file a Brief, and make oral argument. This is an intensive process but it's a necessary process. As we've shown in the last 6 filings, such an effort pays off by reducing rate increases by millions and millions of dollars.

We're not sure any rate increase is warranted, with the last Pacific Power rate case still pending. But we'll meet them on the playing field. Again. And we'll make sure that whatever fraction of this requested rate increase they may win, is justified.

Posted by Oregon CUB at 11:02 AM | Comments (0)

February 15, 2006

First Question First: Why do Oregon utilities dislike Portland's voter-owned elections?

The Campaign Contributions and Expenditures Reports for the upcoming May elections came out this month. On the ballot could be a measure that attempts to rescind the voter-owned elections law enacted by Portland's City Council last year. The First Things First Committee, running the campaign to end public financing of elections in Portland, is attracting some heavy-hitting financial support. Many of these supporters have ties to utility companies, either directly or indirectly.

For example, NW Natural gave $5,000, Qwest gave $7,500, Portland General Electric gave $7,500, and Stoel Rives (a law firm which often represents utilities) gave $3,500. Executives of utilities such as Dick Reiten and Kevin Lynch, and consultants for utilities such as Tom Imeson, are also contributors. And then there is the Portland Business Alliance. The PBA has many ties to Oregon utility companies: Judy Peppler, President of Qwest in Oregon is the Chair-Elect; as such, she would exercise a great deal of influence over the political agenda of the organization. In addition, the Chair Emeritus and several members at large on the Board hail from utilities such as PGE, PacifiCorp, and NW Natural. Size of the PBA check against voter-owned elections: $32,000.

Well, it's a free country, and people (and corporations) can give money to whomever they want, right? Yes, that's right. That's also the point of Portland's new public financing mechanism, which allows a candidate for Portland office to gather a large number (1000) of donations for a small amount of money ($5) in order to qualify for a limited amount of money from the City to run a competitive campaign. And if that candidate should happen to win, the people he/she is used to talking with, the people he/she will be talking with more in the future, are not limited to those who can write a 4- or 5-figure check. Another advantage is all the time that candidate frees up from fundraising, to focus on public policy. That is good news for the candidate, yes, but even better news for all of us who, as citizens, rely on good public policy to make things work.

But why, specifically, do utilities dislike voter-owned elections? Utilities dislike it because it wrests ownership away from them, and puts them in a more vulnerable spot when decisions about utility services are made. Cities have the ability to compete with utility companies by offering a variety of services (such as electric, cable, broadband, etc.), often at lower prices than private utilities offer, and sometimes the city even acts as the community's sole provider of that service. Much less commonly, there is discussion of municipal options such as condemnation or rate-setting, balls that have been tossed around in the past year's discussions regarding the City of Portland and PGE. The utilities therefore want as much influence, and as many allies in City Hall, as they can buy. The way they usually do this is by contributing money to campaigns.

As a matter of fact, of the approximately $3 million that was spent overall in Portland elections in 2004, over half a million, or about 18%, came in the form of large checks from the same small group of people (individuals, families, and corporations) that spent large amounts of money as part of the First Things First Campaign, trying to repeal voter-owned elections. So these folks are spending money to win back the right to spend more money - on the campaigns that decide who will govern Oregon's largest city.

Taking away utilities' ability to pay into the electoral system would undoubtedly reduce their input and influence at City Hall. That would not be a popular outcome at the PBA, but CUB believes that rebalancing the political influence between corporations and individuals is a good idea. In fact, we feel it's a way of moving closer to the "one person, one voice, one vote" philosophy that underlies a true democracy.

It is quite possible that the repeal campaign's paid signature-gathering effort will have failed to collect enough valid signatures to make the May ballot; we will know later this week. Should this issue make the ballot, the Vote No Power Grab campaign to defend voter-owned elections in Portland (like the original CUB Campaign in 1984) is destined to be an underdog, outspent by a large margin. We don't mind those kinds of odds. We'll put our money on voter-owned elections and hope the majority of Portland voters do the same.

(Full Disclosure: Janice Thompson of the Money in Politics Research Action Group is a member of the CUB Board of Governors, and involved in the Vote No Power Grab campaign.)

Posted by Oregon CUB at 11:23 AM | Comments (0)

February 08, 2006

Bush Budget Harms Northwest Ratepayers

President Bush recently unveiled a budget plan that, among other things, siphons money from the federal hydropower system and raises electric rates throughout the Pacific Northwest. Customers of the Bonneville Power Administration (BPA), which sells the power from the federal hydropower system, pay the full costs of operating the system. Taking revenues from the hydro system is a special tax on Northwest electricity customers and would harm the region's economy; all residential customers of PGE, Pacific Power, and the public utility districts of Oregon would be negatively impacted.

BPA, along with every utility in the country, sells surplus power into the open market. The revenues from these surplus power sales help offset customer rates, keeping them from spiking in those years when demand is high or hydropower is low, and power must instead be bought from the open market. This system has worked for decades in maintaining a financial equilibrium for Northwest ratepayers. The price of electric power neither skyrockets nor plummets, so long as the years of surplus and drought in the federal hydropower system are allowed to balance each other out. The Bush Administration's current budget would cancel this system and gather surplus revenues back to Washington instead, causing rates to increase in the Northwest.

Once Northwest electric customers become a source of revenue for federal budget-makers, you can bet they will come back for more. Rather than electric rates that are based on the costs of producing electricity, we will end up with electric rates that are largely set by the President and based on the needs of the federal budget.

This tax on Northwest electric customers is designed to make the federal deficit look smaller than it is, and thereby justify the Administration's tax cuts. The difference in rates could be sizeable, amounting to $900 million over 10 years, according to the Salem Statesman Journal. In addition, as public utilities complain about the high rates, it is possible that BPA could respond by eliminating important energy programs that support cost-effective investments in energy efficiency and renewable energy. Fish programs would undoubtedly suffer.

It is possible that the revenue expected by the U.S. Treasury from BPA -- or more specifically, from BPA customers -- will never materialize. The Congressional Delegations of Oregon, Washington, Idaho, and Montana have united before to fight such proposals and been successful. Should this budget line be more than a political gimmick designed to facilitate tax cuts, the Delegations would undoubtedly unite to fight for Northwest customers, and the Northwest Region's economy, once again.

In addition to higher electricity rates, the Bush budget would cut $91 million from the Weatherization Assistance Program, which helps poor folks weatherize their homes when cold weather hits. The combined effect of higher electric rates and loss of weatherization assistance would hit low-income ratepayers of the Northwest especially hard. Weatherization programs also provide much-needed conservation of energy for the system overall, keeping usage down. This energy savings would be lost.

Even when the Bush budget is good on an energy issue, it comes at the cost of another. The Administration did earmark an additional $66 million for solar energy projects, and $39 million for biomass energy. However, this comes at a cost of $23 million from geothermal projects and the $91 million cut in weatherization. The overall cut to renewable energy and conservation programs in this budget is significant.

The budget contains an additional $115 million in subsidies for nuclear energy projects. However, nuclear has not proven itself to be economically feasible (even leaving safety concerns out of the discussion); the Northwest Region's ratepayers lost hundreds of millions of dollars in the Trojan and WPPSS nuclear projects. In fact, Oregon voters decided not to allow any nuclear projects until a permanent waste site is established, which would make a change in the law necessary before nuclear could join our energy portfolio. Nuclear power doesn't make a lot of sense when compared to wind and other renewable sources of energy.

The Bush budget should be taken seriously, since it is the suggestion of the Executive Branch of our nation to its Legislative Branch about meeting energy needs and managing fiscal responsibilities. The budget line items we have mentioned today, however, look more like political tinkering and less like clean energy leadership. We hope it doesn't become a real fight over the benefits of the Bonneville hydropower system, which customers should reap, just as they pay the costs. But if it does come to a real fight, we will be counting on our Congressional Delegation to do the right thing and fight for retaining the integrity of the system that our rates have helped to build.

Posted by Oregon CUB at 12:05 PM | Comments (0)

February 02, 2006

Cable Rates Make Case for Telecomm Regulation

Did you catch the news about cable rates last week? If not, here's a quick update: Comcast raising cable rates again, Oregonian 01/25/06. "How is this possible," those of you seeing the 7% annual increase, may be asking. The short answer is: they're deregulated.

The Federal Telecommunications Act of 1996 effectively deregulated cable companies and kept wireless telephone companies from ever having to meet regulatory standards. That is why CUB opposed the bill, along with the national organization, Consumer Federation of America. Despite that opposition, the bill passed, and cable bills began to skyrocket. Thank goodness we had better luck when Enron came knocking with their electricity deregulatory scheme back in '97. Thanks to many organizations, with CUB in the lead, we were able to practice a little energy legislation judo on Enron, throwing the weight of their call for change toward an energy restructuring bill, SB 1149, that actually improved the way electricity is regulated and structured in the state of Oregon.

This has been a major fight across the utility industry for a decade or more, with every large utility company asking for deregulation, so that "competitive markets" can bring the price down for customers. A safer way to inject competition into utility markets is a model in which either several private companies vie for shares of a market within a regulated system, or one in which a private company is competing with a publicly owned utility service (for example, note lower local cable rates in Ashland, where the City offers cable service). The unregulated monopoly model is the worst for customers. Regulation of utility services provides a much-needed restraining influence on price and a helpful oversight of the quality of those services.

Other cities have pursued the idea of publicly-offered telecommunications services. The City of Eugene passed a ballot measure, with CUB's support, that allowed the City's public electric utility, EWEB, to explore building its own telephone, cable and broadband network. The Power Crisis of 2001 intervened and postponed the plan, but the city retains the right to move ahead. Portland has also looked into a public-private partnership, such as the one just finalized in Philadelphia, PA, wherein the city offers the right-of-way for wireless broadband network to a private company in return for reduced rates for the city's residents (Philadelphia's contract is with Earthlink).

Because of Ashland's success in setting up a publicly-offered cable network, we've seen Qwest and Comcast lobby for bills that would prohibit public ownership of telephone, cable, and broadband networks. This kind of activity applies to the telephone market, as well. For years, Oregon's primary telephone providers, Qwest and Verizon, have pushed for deregulation of local telephone service (long distance service has been deregulated for some time).

Recently, a Task Force on Telecommunications Law Revision was appointed by Gov. Kulongoski to investigate issues of the industries (cable, telephone, wireless, broadband). Of the 10 voting members, four are state legislators, five are industry representatives, and one is a consumer advocate. That consumer advocate is Bob Jenks, CUB's long-time executive director.

While the industries continue to push for deregulation in hopes of extracting more profit with less stringent quality checks, Bob will continue to hold the line for customers who want good service at fair costs.

Posted by Oregon CUB at 12:03 PM | Comments (0)