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December 14, 2006

Now, here is movement!

This week we want to recognize and applaud PGE. Does that seem surprising? Well, credit should go where credit is due, and PGE has done a good thing. In fact, they've done exactly what we asked them to do, which is to take a leadership role on addressing global warming. Here's how:

Yesterday CUB Staff Attorney Jason Eisdorfer spoke on a panel at the NW Energy Summit, a conference on energy issues generally throughout the region; the topic was regulation. He made the point that of the types of regulation possible (there are 4), the only one he wanted to talk about, the one that will be playing a dominant role in energy regulation for at least the next 100 years, is environmental regulation. Global warming has brought this particular issue to the forefront, and there it is likely to stay.

Peggy Fowler, chief executive of Portland General Electric, also spoke at the Energy Summit. She could have chosen a topic that didn't touch on global warming. She could have hemmed and hawed around, as so many businesspeople have done for decades: the science isn't certain; solutions would be too expensive; we don't have the tools, etc. Peggy didn't say any of that. Instead, she said, "Doing nothing is not an option."

She said PGE would "work in the next legislative session to ensure that Oregon adopts a successful RPS." Wow. She went on to say that "PGE is launching an effort to advocate adoption of a national policy to reduce climate change, including the enactment of mandatory federal limits on global warming pollution..." Finally, Peggy made the essential point that "The longer we do nothing, the more it will cost our region, and the nation, both environmentally and economically." We couldn't have said it better ourselves.

These statements contrast very favorably with the statements of Oregon's other large electric utility, PacifiCorp. PacifiCorp has questioned the science of global warming, and their actions show this attitude: PacifiCorp spent money trying to defeat Washington's recent RPS (which won despite the opposition); and they continue to propose new coal plants as sensible resource choices. Which means that, on the PacifiCorp front anyway, we have a long way to go.

This week's Energy Summit, though not labeled as "environmental," was driven by topics such as energy efficiency, renewable energy sources, and how to address global warming. Jason mentioned this to a longtime observer of state policy and the energy industry, who responded, "You're mainstream now!" It's true that we've been beating this drum for quite a while now, and we're ecstatic to have been joined in the past few weeks by the Oregon Public Utility Commission (and the Commissions of Washington, California and New Mexico -- see their Joint Statement pledging to find ways to address global warming), and now by Oregon's largest electric utility provider. This creates a political environment that could result in real change, positive movement toward a sustainable energy policy.

CUB believes that, if federal regulation is not immediately forthcoming, then it is appropriate and necessary for Oregon and other states to take action, reducing greenhouse gas emissions and thereby minimizing the threats posed by global warming. We also believe that Oregon ratepayers are in agreement, that they understand the dangers of our current situation and want to help turn the tide. More than that, Oregonians love their particular place in the world and want to help preserve its health and beauty.

CUB is not automatically against every action of the big utilities. When they use their powers for good, we're right there with them. And when they use their powers -- well, you probably know what we often have to say about our largest energy producers. CUB will always focus on what will ultimately benefit the residential and small business utility consumer.

Those customers are facing rising seas and financial storms with the course as currently set. But we have the power to change course, and working together will help bring that about. With PGE and the PUC on board, along with CUB of course, this ship is going to turn.

Posted by Oregon CUB at 03:11 PM | Comments (0)

December 06, 2006

Who's really writing the credit reports?

Well, the cat is out of the bag now. PGE's credit bag, that is. Apparently there was more going on than met the eye with a recent credit report written by Standard & Poor's about PGE's credit-worthiness. PGE cited the report's rating of "negative," and has been using the report as ammunition to fight for its requested 8.9 percent rate increase, and also for a power cost adjustment (PCA).

The PCA, about which we've written before, is an extremely important issue in the current rate case, and in other cases in which it's been an issue for the past 5 years. PCAs have the effect of shifting the primary burden of risk in power cost changes off of shareholders and onto customers. This is totally inappropriate, since the utility is being paid a rate of return to manage that risk.

Now it surfaces that PGE might have been able to exercise influence over S&P's credit report by editing the report so that it called for the PUC to implement a PCA, even though the draft report said nothing about a PCA. They then used that report as independent evidence in a rate case asking for a PCA. This not only calls into question the basic integrity of credit reports such as this one, but also makes us wonder if these reports should be included in rate cases at all.

PGE employees apparently had a hand in editing the supposedly independent report, and it appears that the amount of influence exercised by PGE over the final version of the report went beyond the expected level of fact-checking. (Our thanks to Industrial Customers of Northwest Utilities, the party who uncovered the history of the report.) This question of company influence on the report is extremely problematic: third-party reports should not be used to manipulate regulatory outcomes.

Both Willamette Week and the Oregonian made the issue a top story today. On the one hand, we know it's really easy to beat up on PGE in the press. On the other hand, actions like this one make it impossible not to criticize them.

It remains unknown whether this particular irregularity was the result of merely one analyst's poor judgment or whether the problem is more widespread and systemic. Utilities cite credit agency reports in rate cases all the time. PGE says there is nothing wrong with what they did, that it is just business as usual. If that is true -- if collusion is the norm -- then these reports have no value to regulators. Enron is gone, but Wall Street continues to be the center of ethical controversies.

We meet today with a representative of a project to chronicle Oregon ballot measures for the Oregon Historical Society. We will be handing over some materials from the 1984 ballot measure that created CUB. In digging out those materials we came across this ghoulish graphic, used in the Halloween time period of the campaign.

Okay, it's rough and it's dated, but it's still a valid critique (and don't ya love the nose on that guy?). So we'll keep fighting "to protect and defend the regulated arena" as Fred Heutte, a CUB board member, put it. Somebody's got to be a voice for residential ratepayers, particularly in light of questionable credit reports and other tricks of the trade.

Posted by Oregon CUB at 04:33 PM | Comments (0)