CUB Challenges Pacific Power Rate Hike
Posted on October 19, 2017 by Mike Goetz
Tags, Energy
Another year, another proposed rate increase for Pacific Power customers. Every year Pacific Power updates its forecast of variable power costs (including fuel, purchased power, and customer demand) in an annual power cost update filing. Here at the Oregon Citizens’ Utility Board (“CUB”), our principal inquiry is whether the company’s forecasted costs result in just and reasonable rates for Oregon’s residential customers. CUB digs deep to find the main drivers for power cost increases because the utility companies’ forecasts must be as accurate as possible. For good reason—these forecasted costs eventually find their way onto your electricity bill. This year, Pacific Power initially forecasted $380.4 million in net power costs, representing an increase in Oregon rates of approximately $18.4 million.
CUB focused much of its attention on costs associated with Pacific Power purchasing power from qualifying facilities (“QFs”), which it is required to do under the Public Utility Regulatory Policies Act (“PURPA”). Under PURPA, public utilities are required to purchase a portion of their energy needs from QFs. QFs fall into two categories: small power production facilities of 80 MW or less whose primary energy source is renewable, and cogeneration facilities that sequentially produce electricity and another form of useful thermal energy (i.e. heat or steam).
Pacific Power is constantly negotiating with a wide range of QFs to meet its obligations under PURPA. This ties into the power cost forecast because Pacific Power forecasts which of these QFs will come online (i.e., begin generating electricity) in the following year. If the Oregon Public Utility Commission finds this forecast to be reasonable, then Pacific Power’s customers must pay for the costs associated with the QF generation. The problem is that, historically, Pacific Power’s forecasts have been fraught with inaccuracy and customers have been made to pay for QF generation that never actually came online during the following year. CUB believes this is patently inequitable. CUB has proposed that the forecast for new QFs be adjusted based on the historic average delay associated with such contracts.
This year, CUB filed a series of data requests to find out what the Company knew regarding which QFs were going to come online during the next year and which were not. The results were eye-opening. Pacific Power revealed a series of email correspondences with QF developers in which the QFs projected significant delays in their commercial operation dates. However, Pacific Power—through a senior executive—attested and swore to commercial operation dates that were earlier than what the QF counterparties indicated. Absent CUB’s inquiry, customers would have undoubtedly been charged for electricity that never served them.
The litigation process in this year’s proceeding has come to a close, and we are currently awaiting a final order from the Commission. Given the strong evidence that came to light, and CUB’s relentless advocacy through the process, we are hopeful that the Commission will approve CUB’s proposed adjustment to QF forecasting which will lower rates beginning in 2018. CUB’s brief to the Commission on this issue can be accessed here.
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10/19/17 | 0 Comments | CUB Challenges Pacific Power Rate Hike