PGE Rate Case Draws Win for Customers, Attention to EE Regulation Issues
Posted on December 26, 2017 by Liz Jones
Tags, Energy
In February 2017, Portland General Electric (PGE) filed a request for a general rate increase with the Oregon Public Utility Commission (PUC). PGE asked the PUC to approve $100 million in new revenue for the company and an overall 5.6 percent rate increase. The company’s rate increase varied by customer class, and the proposal asked that 7.1 percent of the increase be borne by residential customers, 5.7 percent by small businesses, and 4.2 percent by industrial customers. The 2017 request was PGE’s fourth rate increase since 2014.
Over the course of eight months, CUB pushed back on multiple aspects of PGE’s rate increases through several submissions of testimony, workshops, and settlement conferences. CUB raised a number of issues, including arguing that the company’s revenue requirements should be reduced because its employee level projections were inflated, its overall projections did not align with historic trends, and it had misallocated smart grid costs. As a result of efforts by CUB and other stakeholders, PGE’s initial request was reduced to $15.9 million, or a much reduced 2.3 percent rate increase for residential customers.
Although this rate case has concluded, CUB raised an additional issue which will continue to receive significant attention and an investigation by the PUC. The issue is whether residential ratepayers should be compensated for the benefits all PGE customers receive from energy efficiency (EE) measures purchased solely by residential ratepayers. It sounds wonky, and it is. But if you bear with me through an overview of the history of EE in Oregon, hopefully some clarity can be shed on this important issue.
Oregon has been at the forefront of energy efficiency since 1999 when the Oregon Legislature required all electric utilities to collect from their customers a “public purpose charge” equivalent to 3 percent of a utility company’s total revenues. For nearly 20 years, the public purpose charge has successfully provided funds to pay for conservation and energy efficiency measures for utility customers. In doing so, EE has significantly reduced the energy load that utilities must meet.
In 2007, new legislation authorized utilities to exceed the 3 percent public purpose cap to acquire cost-effective EE, but only from customers that use less than 1 aMW (average megawatt). Large industrial and commercial customers, i.e. customers that use more than 1 aMW, are: (1) not required to pay more than the 3 percent public purpose charge; and (2) not allowed to receive any direct benefit from energy conservation measures that exceed the 3 percent.
In 2016 the Oregon Legislature mandated utilities to “pursue all available energy efficiency resources that are cost effective.”
If it isn’t obvious already, the conflicting commands between the three pieces of legislation described above have created a great deal of confusion. For example, today customers that use less than 1 aMW (i.e. residential and small business customers) fund the majority of EE measures. Those measures reduce the overall load for the utility, in turn deferring or avoiding investments into more generation, and thus benefitting all utility customers – even the ones who did not pay for the EE measures. Does this violate the requirement that large customers not benefit from energy conservation measures that exceed the three percent public purpose charge?
Meanwhile, the Energy Trust of Oregon reports that, under the current framework, it will no longer be able to acquire all available cost effective EE resources from measures targeting large customers. Without receiving additional funding from residential customers, EE measures that target industrial customers will go unmet.
CUB raised these issues in PGE’s rate case and argued that residential customers are bearing a greater share of the costs of EE measures, while all customers are receiving the benefits. Based on these arguments, CUB was able to negotiate an agreement that will immediately provide a modest rate decrease to residential customers, and initiate an investigation at the PUC into these ongoing issues.
CUB will continue to investigate and advocate for residential ratepayers receiving the full benefit of the resource mix they are paying for. We’ll keep you posted as this issue develops and are optimistic about reaching the same level of success that we saw in significantly reducing PGE’s rate case.
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12/22/17 | 0 Comments | PGE Rate Case Draws Win for Customers, Attention to EE Regulation Issues