PGE Renewable Power Program Is Well-Designed & Successful

We are not ones to hold back our criticism of Portland General Electric (critiques of PGE are all over our website, particularly in General Utility Regulation). That being said, we disagree strongly with the Oregonian’s criticism of PGE’s voluntary renewable power program. The Oregonian cites the percentage of each dollar that goes into marketing, but fails to point out that the reason the percentage appears high, is because the cost of the green power itself is so low. Oregon’s green power programs are well-designed, and allow customer to purchase 100% of their power from new renewable sources of energy for a cost that is lower than other utilities in the country. By joining with others to purchase renewable power, participating customers are sending a clear and effective signal to developers to build more renewable resources in the Northwest.

The Oregonian Is Just Plain Wrong

First, we must point out that the Oregonian’s main criticism is simply wrong. The Oregonian article says that Oregon’s is one of the most expensive nationally when it comes to marketing. The Oregonian has it exactly backwards. The administration and marketing costs of PGE’s program are significantly less than those of similar programs around the country.

An average participating PGE customer pays an additional $8 per month to ensure that 100% of his or her power comes from new renewable resources. Around the country, other utilities charge an average of $24 per month for similar programs. PGE’s administration and marketing costs are 56% of the additional monthly payment, or about $4.50 per customer. The federal Department of Energy cites a figure of 29% marketing for other utility programs. 29% of $24 per month works out to about $7 per month. By our math, $4.50 is less than $7.

The real question the Oregonian ought to have investigated is why Oregon is able to supply 100% of a customer’s power with green energy so much more cheaply ($8/month) than other states ($24/month). The answer is that Oregon’s program is well-designed, carefully regulated, uses competitive bidding, does not allow for utility profit, and strives to keep costs down.

A Little History

In the late 1990s Enron and PGE, big power marketers, industrial customers, and free-market ideologues were pushing electric deregulation. Their idea was to get rid of traditional monopoly power companies, and instead require that all customers purchase their power from a wide open retail marketplace. In many states, Enron was joined by advocates of renewable power who believed that there was a market for renewable energy, but that utilities were not serving that market.

CUB responded to the concern of renewable power advocates by proposing that we simply require utilities to offer renewable power to customers under a regulated system.  Advocates of deregulation argued against CUB’s proposal, claiming that a deregulated market would bring the necessary marketing to reach customers who want green power. We responded by including marketing in Oregon’s regulated green power programs. Thus evolved CUB’s proposed model that we have today.

Not only was CUB instrumental in stopping Enron-style deregulation in Oregon, but we devised a way to bring renewable power options to Oregonians, while continuing to protect customers in a regulated electric system.

The Process For The Renewable Power Programs

Currently, a committee overseen by the Public Utility Commission (PUC) designs the criteria for the renewable power products to be offered to customers. In addition to criteria for the power itself, the committee includes requirements ensuring that the renewable products are adequately marketed. The utility puts these products out for bid in the wholesale market, selects the lowest-cost provider, and offers these choices to customers. The utilities do not earn a profit on these products. The PUC oversees the entire process to ensure that customers who pay for renewable power are getting high-quality, reasonably-priced renewable power. (More information about the administration of the renewable program can be found in a previous blog entry, Oregon Leads the Way in Voluntary Support for Renewables.)

This renewable program design has worked well. Oregon has proven that, through wholesale bidding, we can make renewable developers and marketers compete against each other to offer Oregonians renewable power at a low price.

Renewable Programs Jump-Started NW Renewable Industry

At the time we started the renewable power programs, we were frustrated that we had been unable to get utilities to invest in renewable power. Developers of renewable projects in the Pacific Northwest were struggling to survive. It is not a leap of faith to claim that Oregon’s voluntary enrollment renewable power programs helped to jump-start the renewable power industry in the Northwest, and helped developers through some tough times.

Oregon’s voluntary renewable power programs have also shown the utilities that customers support investment in renewables. The programs not only helped to change the marketplace, they have also had a significant environmental impact. In 2005, through these programs, Oregonians purchased enough renewable power to serve 44,000 homes. This reduces CO2 emissions by approximately 350,000 tons—the equivalent of taking 60,000 cars off the road.

Today, utilities across the region are investing in renewable resources. Seven large wind farms have been developed in the Northwest since October 2005, producing enough power to serve more than 230,000 homes. Washington and California have passed laws requiring utilities to purchase renewable power for all their customers. Oregon’s legislature will soon be considering such a law for our state.

Oregonians should be proud of their extremely successful and inexpensive renewable power programs. These programs are the envy of utilities around the country, their environmental impact is real and measurable, and their contribution to the development of the renewable power industry in the Northwest is admirable. We encourage everyone to sign up.

Bottom Line is Green

In summary:

1)  Customers paying for the renewable option are responsible for putting up to 100% of their power usage in the form of renewable energy onto the system.

2)  Both in terms of the overall costs of the renewable option and the amount spent on marketing, Oregon’s program costs less than similar programs around the nation.

3)  By participating in these programs, customers are having exactly the effect they hope: that is, expanding the development of new renewable energy and greening up a distressed planet.

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