Portland General Electric Wants to Raise Customer Rates by $80 Million
Posted on July 15, 2021 by Will Gehrke
Tags, Energy
Editor’s Note: On April 25, 2022 the Oregon Public Utility Commission issued its final decision in PGE’s general rate case. The decision includes several victories for CUB and for PGE’s residential customers. Thanks to CUB’s advocacy, the rate increase was whittled down to $10 million. Further, at CUB’s request, PGE agreed to stop charging residential customer deposits to establish electricity service. Read more about the outcome on the CUB Blog!
Portland General Electric (PGE) has asked the Oregon Public Utility Commission to allow it to increase customer rates in May 2022 by $80 million per year. If PGE’s request is approved as filed, the average residential customer’s monthly bill will increase by $7.65 or 6.9 percent.
The company is also seeking a 3.5 percent discount for large industrial customers and less than a 2 percent rate increase for midsized industrial and commercial customers. This means that PGE is seeking to place the majority of the rate increase on small commercial and residential customers.
PGE is a vertically integrated electric monopoly. As such, PGE has one incentive as a business, which is to invest in capital projects. The company’s business model allows its profit margin to increase as it builds more of these projects. PGE has made a variety of investments since its rates were last increased in 2018. There are two major investments associated with the current rate request: the Tualatin operations center and the rebuilding of a hydroelectric power plant on the Clackamas River.
PGE is asking to recover $215 million in costs associated with its Tualatin operations center from customers. The company has expressed concerns with the security of its Downtown Portland operations center. During summer 2020, PGE’s operations center was in the middle of protests against police violence. PGE has specially cited this protest activity as a cause to relocate its operations center to Tualatin. PGE has also cited seismic concerns with the land its operations center sits on as a reason for the move.
At first blush, CUB has questions about this rationale. Last year, Oregon’s largest gas utility, NW Natural, moved its corporate headquarters to a facility on land that was determined by engineers to be seismically sound. That facility is one block away from PGE’s current operations center.
Meanwhile, PGE is rebuilding the Faraday Power Plant, located near Estacada, Oregon, on the Clackamas River. The total cost of the project is expected to be $119 million. Faraday is being rebuilt to make the hydroelectric plant more resilient to seismic risk. CUB is concerned by the construction delays and overall costs associated with this project. We are looking to evaluate whether the Faraday Plant rebuilding project is a good use of PGE customers’ money. Click here for more information about PGE’s hydroelectric projects on the Clackamas River.
PGE has also proposed changes to how residential customers are charged for their electricity. Currently, PGE charges all residential customers $11 per month for the basic (or fixed) charge portion of their bill. (You can read more here about how to find basic charges and other charges and fees on your PGE bill.) The company has proposed to decrease the fixed monthly charge for multi-family buildings to $9 and increase the fixed monthly charge for single-family homes to $12.50. Multi-family dwellings such as apartments, condominiums, and townhomes are cheaper to connect to PGE’s energy system. Multi-family customers also use less energy than single-family homes.
At first glance, then, this reapportioning of basic charges appears equitable based on the difference in costs and energy usage between single- and multi-family households. However, CUB will have to dig into the details to fairly evaluate PGE’s rate design change and its impact on all residential customers.
CUB is in the beginning stages of evaluating PGE’s rate request. We will review the thousands of pages of testimony, and hundreds of spreadsheets, over the coming weeks and months. CUB remains steadfast in our commitment to keep rates low and fair for Oregonians and will scrutinize this case for every dollar of savings for residential customers that can be found.
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12/15/22 | 4 Comments | Portland General Electric Wants to Raise Customer Rates by $80 Million