PGE Customers Will See Rates Increase in January
Posted on November 3, 2023 by Charlotte Shuff
Tags, Energy, General Interest
On Monday, regulators at the Oregon Public Utility Commission approved a rate increase of an estimated 17% for residential customers of Portland General Electric (PGE). This could be the largest rate increase in more than 20 years.
An average household could experience an additional $22 per month on PGE bills starting in January. This estimate may increase pending additional rate adjustments this year that regulators still need to rule on, leaving customers uncertain about what to expect on their electricity bills this winter.
CUB Concerned About More Increases Before January
CUB is criticizing PGE’s lack of transparency on what to expect in January. Although the utility has publicized an increase, PGE is keeping its estimates of the actual final number confidential. The utility has several outstanding requests to regulators that CUB fears could push the rate increase higher than the currently estimated 17%.
In November and December of 2022, PGE filed updates that added about $75 million to rates. If similar updates occur this year, then the January rate increase could be more than 20 percent.
“Not telling customers the best estimate of how much their bills will increase is absurd. Families need to know what to expect to pay for heating. Government agencies need to be able to plan for bill assistance demands. With a rate increase this high, people will struggle this winter.” - CUB Executive Director, Bob Jenks.
Still to come this year are Commission approvals for additional rate adjustments PGE has requested. The utility has asked for adjustments for programs including energy efficiency, demand response, transportation electrification, community solar, energy storage, and the Colstrip coal plant. PGE is also requesting adjustments for wildfire mitigation costs.
The Commission will decide on these issues in November and December. New rates will go into place on January 1, 2024. Any changes will be in addition to the approved rate increase
Biggest Increase in 20 Years With Some Advocate Victories
This week’s approved rate increase includes new investments in utility infrastructure and adjustments for increased power costs. The total rate increase currently stands at $378 million total. However, CUB and allies were able to achieve some victories that prevented PGE from receiving a larger rate increase and pushing risk onto customers.
No New Profit Increases for PGE
Advocates won by rejecting more profits for PGE shareholders. PGE asked to increase the profits it is allowed to earn from customers. Portland General Electric currently receives a 9.5% profit margin, which they wanted to increase to 9.8%. This would have added tens of millions to customer bills each year.
New Investments in Infrastructure
Consumer advocates, including CUB, were able to push down costs by $34 million for investments at the Biglow wind farm and Faraday hydro facility, among other projects.
Faraday Hydroelectricity Facility: In 2018, PGE planned on spending $84 million rebuilding the Faraday facility on the Clackamas River (near Estacada). The project has been delayed by 4 years and has ballooned in cost.
CUB thoroughly investigated the costs related to this project as a major issue in this case. We were concerned that PGE may be asking customers to cover more than is reasonable. The amount approved for rates was kept confidential as a part of a larger agreement. But PGE did agree to eat some costs related to Faraday’s delay.
Investment in Generating Electricity: PGE is asking to spend money on two wind facilities, Biglow and Tuccanon, to improve the performance of the facilities. PGE is also planning on spending funds to reduce emissions at one of its natural gas power plants in Columbia County, Oregon. CUB is reviewing the reasonableness of these costs.
CUB expressed great concern with PGE asking customers to pay for maintenance issues at Biglow. In 2022, a blade from a wind turbine fell and marked a significant safety issue. CUB asked regulators to reject a $1 million capital investment from PGE’s rate increase related to issues at Oregon’s largest wind facility. The amount approved for rates was kept confidential but PGE did agree to not include a chunk of costs based on CUB’s advocacy.
Changes in Power Costs
The increased power costs are largely from a volatile electricity market last winter. Under Oregon rules, utilities are allowed to update the cost of fuel for electricity generation they anticipate they will incur the following year. The cost of electricity, natural gas, and coal has increased power costs for PGE customers. Globally, the cost of energy has increased due to global supply interruptions from recent geopolitical conflicts.
More Power Cost Rate Adjustments to Come: Power costs are subject to another update in November but we’re not sure what that’s going to be.
Future Power Costs Likely to Stabilize: As PGE moves to more renewable resources (and away from methane), CUB expects to see lower power costs in the future. This will likely mean more costs from infrastructure but will help stabilize the cost of fuels. This move to renewables will require big changes to meet customers’ needs but should help protect customers from the volatility of the methane gas market.
CUB Won Additional Policy Victories
Increased Bill Discounts for Low-Income Customers
PGE is increasing their bill discount amounts for customers who qualify based on income. In the past, the highest discount offered was 25% off monthly bills. Now, some customers can receive up to 60% off their bills each month.
Qualifications are based on income levels and number of people in the household. Full guidelines can be found on PGE’s website.
For a two-person household, customers can qualify for the following discounts:
- $0-$3,888 a year= 60% discount
- $4,666-$11,665 a year = 40% discount
- $12,443-23,331 a year= 25% discount
- $24,109-$34,997 a year= 20% discount
- $34,997-$46,665 a year= 15% discount
Power Cost Protections
CUB did win a significant policy win for customers related to how the utility can request money from changing power costs. This year, PGE wanted to change how they adjust customer bills for power costs each year. In the proposed system, customers would have had to cover 90% of the difference between what the utility spent and what was predicted. Currently, customers are not on the hook for any difference unless very strict parameters are met. In our settlement, CUB stopped this change that would have cost customers millions of dollars each year.
Reducing the PGE Employee Discount
PGE employees are offered a discount on their household PGE bills. With nearly 3,000 employees, these costs add up and are covered by other existing customers. CUB successfully negotiated these costs down by reducing the benefit to a 15% employee discount, previously 25%.
Reducing the Number of Rate Adjustments
A big policy issue for CUB this year is to reduce the number of rate requests that utilities are asking for each year. We have been pushing back against the rising tide of surcharges facing Oregon energy customers. In this case, CUB continued to fight for a more holistic approach to utility regulation and won on several issues we raised. Now, PGE is consolidating many of their requests and has dropped others. This is good for customers’ ability to know what to expect from bills down the line. (Read more: Are Utility Customers Being Nickled and Dimed? - CUB Blog)
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11/03/23 | 0 Comments | PGE Customers Will See Rates Increase in January