CUB Seeks Fairer Cost Allocations in PGE Rate Case
Posted on June 7, 2018 by Will Gehrke
Tags, Energy
In its recently filed general rate case, PGE has requested an $86 million increase in rates, with residential rates increasing by an average of 6.3 percent. CUB recently submitted our analysis of the case in the opening round of testimony after PGE’s initial filing.
In its opening testimony, CUB is proposing a fundamental change to how PGE allocates costs between classes of customers. CUB’s analysis shows that the reason PGE is proposing a larger increase to residential customers is because when it is assigning costs, PGE takes smart grid investments that provide broad system benefits to all classes of customers, and assigns these costs on a per-customer basis. This allocation method assigns most of the costs to residential customers. CUB believes this is inappropriate and is asking that a set of costs be reassigned. In addition, CUB is asking the PUC to require an independent third party analysis into PGE’s assignment of smart grid costs. As it stands now, certain smart grid costs that benefit all customers are being assigned to residential customers only.
CUB is also critical of PGE for proposing to shift the risk of weather-related costs from shareholders to customers. The rates customers pay are based on a forecast that assumes normal weather conditions. However, weather is rarely perfectly normal. If the weather is cold in the winter, the company sells more power and earnings are up; if the weather is mild, they sell less and earnings fall. This means that PGE’s corporate earnings vary. PGE, however, is trying to shift this weather risk by proposing that cost variations caused by weather be identified and charged to customers in the following year. In this model, the basic per-kilowatt-hour charge would be based on normal weather, but the bill would include an extra charge/credit associated with the previous year’s weather. If a given winter was mild, the next year’s rates would increase to adjust for lower sales in the preceding winter.
CUB is also proposing to remove several items from rates that do not benefit customers, such as providing stock incentives to members of the Board of Directors.
PGE’s general rate case is still in the early stages; CUB is working diligently to ensure that residential customers receive an equitable outcome from the rate case.
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06/07/18 | 0 Comments | CUB Seeks Fairer Cost Allocations in PGE Rate Case