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Pacific Power Doesn’t Think Things Through
PacifiCorp, the parent company of Oregon utility Pacific Power, is looking to raise customers’ rates by 4.4% over the next year. That sentence should sound familiar, as the company has raised its rates every single year since 2005, and there’s no sign that rates will level off any time soon. Last week CUB filed its reply testimony to PacifiCorp’s application and argued that the company’s continued investment in its coal-fired power plants, which has been driving a large portion of recent rate increases, has been imprudent because PacifiCorp has not committed to studying the early shutdown and replacement of its coal resources.
There is growing certainty amongst scientists regarding the effects of carbon dioxide emissions on climate change, and the increasing likelihood that future regulation of these emissions will make coal power plants money-losing propositions. New regulations on mercury, particulate emissions, water quality, and sulfur dioxide (to name a few) are set to go into effect in the next decade and will affect all of the coal plants in PacifiCorp’s system. The company’s response to these regulations was to begin planning in 2008 the construction of facilities that will help coal plants meet these new requirements, sometimes completing the projects as many as five or six years early.
While CUB will certainly not discount the importance of cleaner air and water, it seems that PacifiCorp is missing the big picture. Rather than launching a process of investing multiple billions of dollars in coal plants that may face even greater regulatory pressure in the near future, PacifiCorp should have taken a comprehensive look at these investments for its entire system, rather than the piecemeal approach that the company has chosen. It should have been obvious to PacifiCorp when it conducted its analysis that a number of coal plants slated to receive expensive environmental upgrades were going to be only marginally economical and could become money-losers in a hurry if carbon emission regulations emerge or coal prices go up.
Earlier this year we talked about our efforts to get PacifiCorp and other Oregon utilities to reconsider their continued investment in coal plants. PacifiCorp has already decided to repower its Naughton 3 coal plant with natural gas, so the company does seem to be paying attention. The company’s actions over the past several years, however, suggest that it doesn’t take seriously the potential liabilities surrounding coal investments. CUB’s testimony asked the Oregon Public Utility Commission to find a number of PacifiCorp’s coal investments to be either not used and useful in providing utility service, or in the alternative, to be imprudent and to disallow 25% percent of these investments. Our colleagues at the Sierra Club filed testimony that argues many of the same points, so we have some great support in our arguments.
Oregon’s share of this amount totals up to over $42 million, which is slightly more than the amount PacifiCorp has requested in its general rate case.
Keep up with CUB as we update you on rate cases and other utility issues throughout the year by joining our e-newsletter and liking us on Facebook. And consider becoming a CUB member—your support helps to develop the next generation of policy that will keep our state and region’s energy fair, affordable, and sustainable.