Pacific Power 2020 MSP Protocol Adopted by Oregon PUC
Posted on March 19, 2020 by Mike Goetz
Tags, Energy
Negotiations have started back up on PacifiCorp’s MSP after the Oregon Public Utility Commission (PUC) adopted the company’s protocol on January 23. For those catching up on this story: PacifiCorp is a large utility that does business in Washington, Oregon, and California as Pacific Power and in Idaho, Utah, and Wyoming under the name Rocky Mountain Power. Parties from these states have been engaging in a series of negotiations called the Multi-State Process (MSP) over almost two decades. Broadly speaking, the MSP is a series of cost allocation methodologies that seeks to equitably share the costs of PacifiCorp’s system between all states. The result has been a series of protocols that govern how these costs are shared.
As detailed late last year on the CUB blog, an agreement was reached in December 2019 between PacifiCorp, CUB, and over 35 other organizations spread across the six western states that PacifiCorp serves regarding interstate cost allocation. At that time, the agreement (called the “2020 MSP Protocol”), had not yet been adopted by the PUC. After a brief process, the PUC adopted the 2020 Protocol on January 23 of this year finding it to be a reasonable compromise that furthers the public interest.
The 2020 Protocol allows Oregon and other PacifiCorp states to establish exit dates to get out of paying for a given coal resource before 2030. Of course, Oregon’s SB 1547 requires that all coal costs must be out of customer rates by 2030 to begin with. It also establishes a method for allocating system-wide costs during an “interim period”, while further cost allocation issues are worked out in subsequent negotiation.
Given that most of the involved state utility commissions have either approved the 2020 Protocol or are in the process of doing so, PacifiCorp and other parties have resumed negotiations on outstanding issues that will need to be addressed. The six states in PacifiCorp’s system have broadly divergent energy policies. The durable solutions of the past will not be viable in a future that includes some states not paying for coal resources and building more renewables, and other states clinging to coal-fired power under the guise of reliability and local economic prosperity. For its part, PacifiCorp remains over 50 percent coal system-wide.
There are many complex and unresolved issues at play in the ongoing MSP negotiations that will affect the cost recovery of all parts of PacifiCorp’s system. For now, it is important to find long term solutions for the “framework issues” in the protocol that will be critical to developing a post-2023 cost allocation method. For example, PacifiCorp currently conducts Integrated Resource Planning (IRP) on a system-wide basis. That is, it takes a look at its six-state, system-wide resource needs over a 20-year horizon to serve all of its customers in a least cost, least risk manner. Given that PacifiCorp’s six states take very different approaches to energy policy, tailoring this planning process to ensure that differences are accounted for while retaining the economic benefits of system wide planning (i.e. economies of scale) is a key unresolved issue to be addressed in this round of negotiations.
For our part, CUB will continue to advocate for a fair and transparent cost allocation system that reflects the true costs of serving customers in Oregon. In an age in which coal-fired power plants are becoming increasingly uneconomic, CUB looks forward to negotiating a cost allocation protocol that allows Oregon to shed these risky investments and recognizes the benefits of resources that are paid for by Oregonians.
Negotiations have just begun to pick back up, and there is a two-day meeting scheduled for next week (March 25 and 26, 2020). A series of meetings is scheduled for the remainder of this year - though they were intended to take place in locations throughout the west, as of now all meetings will be held via teleconference to preserve public health and safety.
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03/18/20 | 0 Comments | Pacific Power 2020 MSP Protocol Adopted by Oregon PUC