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March 30, 2006

CUB Prowls the Halls of Congress

It's not unusual to find CUB in Salem protecting ratepayers' rights, but it's not every day that we can be found in Washington, D.C., raising utility consumer interest concerns to members of Congress.

Last week, CUB Organizing Director Jeff Bissonnette was in the nation's capitol attending the Consumer Federation of America's annual Consumer Assembly. The event brings together consumer advocates from all over the country to discuss a broad range of consumer protection issues, ranging from banking and insurance to housing and, yes, to energy and telecommunications. It's a chance to hear about what's happening in other states and share what Oregon is doing in terms of progressive utility policy.

It's also an opportunity to make "Hill visits," meetings with Congressional staff people who deal with energy, telecommunications and other utility issues that are being considered by both the U.S. House and Senate. These meetings are important in building relationships with the Oregon congressional delegations, raising concerns about current issues and, where appropriate, thanking a Congressional member for past support on crucial issues.

Jeff was able to meet with six of the seven offices of the Oregon delegation (one congressional energy and utilities staff person was actually spending the week back in Oregon). During these meetings, Jeff discussed a variety of topics that affect Oregon utility ratepayers. Our highlights included concerns about the Bush Administration's proposal to increase the rates of the Bonneville Power Administration; the need for increased federal funding for the Low-Income Energy Assistance Program; the dangers to consumers and communities from pending national legislation being pushed by the telecommunications industry; and going over potential items of a Clean Energy Agenda being crafted by CUB and others in preparation for the next session of the Oregon legislature. This last item is very important because, as one staffer pointed out, "We need to know what's happening on the home front so we can support policies in Congress that help Oregon continue to be a national leader on clean energy issues."

In addition to the issues Jeff raises with the Congressional offices, staff members also ask questions about CUB's positions and viewpoints on other issues, including the sale of PacifiCorp to MidAmerican Energy Holdings Company, future carbon regulation in energy production, and the need for increased consumer representation at the proceedings of federal regulatory agencies.

A key reason CUB gets so much attention and respect, both in Salem and in Washington, D.C., is our members. Jeff can tell each legislator how many members CUB has in their district. Furthermore, most legislators and their staff know how willing CUB members are to raise important issues through letters, emails, phone calls and local town hall meetings. Therefore, CUB has a powerful combination of solid policy development and the grassroots clout to back it up.

If you're interested in helping keep CUB's influence felt both in Washington, D.C. and closer to home, join the new CUB Action Network (members CAN). To find out more, contact Jeff at jeff@oregoncub.org.

Posted by Oregon CUB at 10:04 AM | Comments (0)

March 24, 2006

Rates Going Through the Roof in Deregulated States

Thank goodness we're not paying Maryland's electric bills here in Oregon. Due to deregulation of the electricity industry, Maryland ratepayers are expected to see a 72% increase in their electricity bills this summer, when a temporary price cap disappears. According to the Baltimore Sun on 03/22/06, "The 72 percent rate hike scheduled to take place July 1 would cost residential consumers of BGE $750 million -- an average of $740 a year for the company's more than 1 million customers in Maryland." Those customers will be at the mercy of the market, and -- contrary to what the deregulation proponents claimed -- the market has gone up, not down.

Customers of Pacific Power here in Oregon are currently paying a little over $.06 per kilowatt hour (kWh) for electricity, Portland General Electric customers about $.08. Maryland customers could be paying as much as $.15/kWh by year's end.

This result is consistent with what we're seeing in other states such as Pennsylvania who deregulated their system and sold off their generation facilities. The free market philosophy suggested that giving the customers more choice and the electricity-generating companies more latitude would result in a better deal for customers. It hasn't exactly worked out that way.

Temporary price caps implemented during the transition to a deregulated system were supposed to make way for prices lowered by the competition of the free market. Instead, "caps that are expiring now are 'coming off at a time when the wholesale market is way out of line with what had been expected. The real question is whether this is going to get better or not.'" Associated Press on AOL 03/08/06. And "in Montana, higher rates have led to a move to scrap the deregulation plan that originally was viewed as an avenue to cheaper electricity."

This could have been happening here in Oregon, quite easily. As one of its first acts after buying PGE in 1997, Enron proposed a radical deregulation scheme for Oregon. CUB built a coalition of Oregon's environmental, low-income, and other consumer advocacy organizations to fight Enron's plan, and we succeeded. This happened only a few years before the West Coast Energy Crisis, and it has been said that by redirecting Enron's push for change toward a restructuring plan that gave industrial customers some of the flexibility they wanted, while still retaining rate regulation for residential customers, we saved ratepayers an estimated one billion dollars. In addition, we won critical energy efficiency and renewable programs, and programs that protect low-income Oregonians' access to service. Oregon wound up with a system that not only looked better on paper, but has actually functioned more successfully in the real world.

So thank goodness and thank the CUB members who supported that work: Oregonians may see modest increases in electricity rates as fuel costs go up, but we aren't sitting around trying to cut $750 out of next year's budget, knowing it will have to go to pay our electricity bill. That's a success story.

Addendum: Here is a nice blog piece from Slacktivist about a similar situation with deregulation in Delaware.

Posted by Oregon CUB at 01:49 PM | Comments (0)

March 16, 2006

PGE Files Rate Case - CUB Gears Up to Fight

PGE filed a rate case with the PUC yesterday, hoping to attain a rate increase of $143 overall, an 8.5% increase in residential customers' rates. This rate case will set rates going forward from January 2007. CUB is disappointed but not surprised by this rate filing. We believe PGE would be wiser to wait on asking for increased money from customers, but we don't set the timing of these cases - that is up to the company.

The details of PGE's arguments are not known to us yet, since we have not yet started wading through the thousands of pages of the filing itself. What we do know is that PGE believes it isn't making enough money, and has asked the PUC to give it a profit margin of 10.75% rather than the 10% that has been given in recent cases. We aren't sure why they feel, particularly at this moment with the news full of Enron trials and disputes between PGE and the City of Portland, it is appropriate to ask for this higher rate of return. However, we will undoubtedly find out more as the case progresses.

Public perception aside, we also believe the case, from the standpoint of its contents, is poorly timed. Much of the impetus behind the case seems to stem from PGE's desire to set up a mechanism to automatically enter their new power plant at Port Westward into rates, as soon as it comes on line. A couple of problems arise for CUB on this issue: this rate case goes into effect in January of next year but Port Westward is not expected to be operational until March or April at the earliest; also, it is quite possible that Port Westward's opening might not occur until the summer or fall of 2007, and other costs associated with running it might well have changed by then. CUB believes that the time to add a power plant into rates is after that plant opens, which makes much of the content of this filing premature.

PGE's rates are already among the highest in the Pacific Northwest and we are not convinced any rate hike is currently justified. Furthermore, because we know the impact that a rate increase could have on customers, we are going to go through this filing with a fine-tooth comb and question every cost. As we said earlier, it is not for CUB to set the timing of these rate cases. We simply respond to the cases as they are filed, taking in our toolkit of ratemaking experience and concern for customers' financial well-being. We will be taking apart this case and putting it back together again in arguments before the PUC that will hopefully result in a much different rate case outcome than the one PGE has requested. The standard, after all, is "fair, just, and reasonable" rates, and not a penny more.

Posted by Oregon CUB at 01:50 PM | Comments (0)

March 07, 2006

Governor's Address Hits the Right Energy Solutions

Governor Kulongoski talked big and he talked tough on energy during his State of the State address 10 days ago. And we here at CUB think the governor is on the right track. As Bush said in his State of the Union address, and Kulongoski quoted in his State of the State speech, we are "addicted to oil." The question is, what to do about it?

Two issues emerged from the Governor's discussion: 1) global warming must be addressed; and 2) the economy must be kept on track. The Governor's twofold response is appropriate to the challenge: 1) conservation must continue to be a priority; and 2) renewable energy offers much room for expansion.

You have heard us talk about global warming before, and you will again. The dangers are becoming more and more apparent. The solutions are also becoming more apparent. First let's talk conservation. When the Governor says that conservation is not a personal virtue, he is attempting to broaden the discussion to include both our daily behaviors around energy usage, and the investment in our infrastructure that reduces our need for energy.

Conservation is often invoked when its equally important cousin, energy efficiency, is meant. Conservation is turning off the light when you leave the room. Energy efficiency is burning a compact fluorescent lightbulb. Conservation is turning down your furnace; energy efficiency is installing double-paned windows and a high-efficiency furnace. Conservation is cutting the hours of your manufacturing plant to use less fuel; energy efficiency is retrofitting the plant with a technology that uses less fuel even while it keeps working. You get the idea.

Both sides of energy savings are important, but one is, as the Governor says, a matter of "personal virtue" - that would be conservation. The other is pragmatic and structural - that part is the energy efficiency. If you invest in a cost-effective system for saving energy, you don't have to deprive yourself of heat, light, or power. You save energy and go about your business, at the same time.

CUB helped develop the infrastructure of the Energy Trust of Oregon, one of whose purposes is instituting energy efficiency changes. Funded by the 3% public purpose fund set up by the Oregon Energy Restructuring Act of 1999, the ETO works every day to help businesses and individuals set up the systems that will allow them to use less energy, without denying themselves or abstaining from power usage. ETO programs are in huge demand, and have been wildly successful, saving 36 Average Megawatts in 2005, the amount of electricity required to power 26,000 homes.

Those projects will save energy this year, and every year the structure or technology is operational. The snowball effect over time of implementing energy efficient technologies could be considerable and greatly benefit the economy (which sees less demand and lower energy costs), the environment (which absorbs less pollutants), and the customer (who sees lower prices for energy when less energy is demanded from the system).

ETO also helps pay the extra costs involved in developing renewable energies. The Bush Administration Budget has set aside huge subsidies for the fossil fuel industries. We believe that our public money is better off spent here, developing wind, solar, geothermal and other renewable, non-polluting energy. Because renewables do not contribute to greenhouse gas emissions, they address the global warming problem; because they can be developed right in Oregon (unlike most fossil fuel production), they contribute to the development of Oregon's economy. And because renewables make the electricity system less reliant on fossil fuel and electricity markets, our rates become less volatile. Now, that is an elegant solution.

The Governor's plan to use 25% renewable power by 2025 is ambitious but achievable. We will support the effort and continue to educate the public about options for producing clean energy and turning the tide for Oregon's environment and economy.

"Conservation is the most cost-effective way to cut greenhouse gases, cut our dependence on foreign oil, and cut the cost of doing business. It is not a personal virtue. It is a national necessity...

In Oregon, we're going to move ahead with reducing our reliance on fossil fuels, increasing energy efficiency and cutting greenhouse gasses. Global warming is not junk science. Junk science is the denial of global warming. We have already taken major steps to combat global warming and develop renewable energy sources. I call this - intelligent redesign...

The Legislature must join me in making Oregon a world leader in alternative fuels. That includes passage of a renewable portfolio standard that will result in 25-percent of our energy coming from renewable sources by 2025...

If we cannot convince the federal administration of the value of an alternative and renewable energy portfolio standard as part of a national policy of energy independence for America, Oregonians will do what we always have done: Roll up our sleeves, do it ourselves, and be a beacon for the rest of the country."

-- Governor Ted Kulongoski, Feb. 24, 2006, full speech here

Posted by Oregon CUB at 10:07 AM | Comments (0)