Commission Fires Shot Across PacifiCorp’s Bow

Monday, October 28, 2013, may prove to be an important day at the Oregon Public Utility Commission (OPUC)!

As our regular readers know, for the last two years CUB has been trying to get PacifiCorp (Pacific Power) to seriously analyze and consider alternatives to investing in coal before making billions of dollars of new investments in its aging 26-unit coal fleet. Three years ago CUB worked with Portland General Electric to demonstrate that it was possible to phase out a coal plant as a way to avoid expensive new investments in pollution control and to do so in a manner that saved millions for the utility and its customers.

Last December, CUB and other stakeholders’ concerns, about PacifiCorp’s coal investments, led to a PUC Order disallowing $17 million of PacifiCorp coal investments. After that Order, CUB thought that PacifiCorp would have gotten the message that they need to work with Oregon stakeholders and conduct an analysis that explores the alternatives to coal investment. It appears, however, that the message did not get through.

Hopefully, the message finally got through yesterday, when PacifiCorp brought their 2013 Integrated Resource Plan (IRP) to the PUC at a public meeting. The IRP is a resource plan that electric and gas utilities produce to identify their plan to meet customer loads over a 20 year planning horizon. The utilities ask the PUC to “acknowledge” the items that it will take up in the next 3 to 5 years. “Acknowledgment” is important to utilities because most items acknowledged through the IRP process will qualify for financial recovery from ratepayers, subsequent to a prudence proceeding.

Each IRP process is designed so that the utility company can develop its final IRP plan with the in-put of stakeholders and the guidance of Commissioners. With that in mind Commission Staff scheduled a workshop on October 28, 2013, for the Company to present on its plan-in-progress so that Stakeholders and Commissioners could provide feedback.  Following the Company’s presentation the Company was peppered with questions from the Commissioners as to any additional analysis completed since its draft plan filing on April 30, 2013 – the answer was none.

Staff and stakeholders agreed with that assessment when it came their turn to speak. Commission Staff went first. Staff stated that there should be three core principles imposed when reviewing coal plants in this IRP. First, all coal plants with potential clean air compliance requirements by 2019 must be considered now in the current IRP.  Second, it is not sufficient for the Company to address these coal plants only in the less robust IRP Update – they must be analyzed now. Third, a thorough evaluation is needed of each individual plant. – Do you see the theme? We need to analyze each of these plants individually now! CUB has been stressing this point for three years. The Staff recommended that the IRP actions requested by the Company not be acknowledged until the Company provided a more comprehensive analysis of more of its coal units and that the IRP remain open until that time.

After Staff came CUB.  We reviewed our concerns with the IRP focusing mostly on our concerns with the Company’s planned coal investments. We explained that the analysis of the coal plants did not properly consider phasing out the plants as an alternative to making the clean air retrofits, and that the assumptions in the analysis were not consistent with the Company’s August filing with the EPA. CUB said we support the Staff proposal to extend the IRP but we also think that, as an alternative, the OPUC could open an investigation into PacifiCorp’s coal investments.

When all the Stakeholders had spoken the Commissioners voiced their individual and collective opinions. Commissioner Savage stated that the Company was not at the threshold for acknowledgment. He foresaw three possibilities in the future: first, a “train wreck” (meaning presumably the Company changes nothing, fails to get acknowledgment and ends up in a rate case facing disallowances); second, the need to extend the IRP so that there is time to figure out what needs to be evaluated and by when; third, for the Commission to open an investigation into PacifiCorp’s coal fleet. He closed by stating that the Commission was not aiming for a result but that there is a lot of money at issue, that the investments in question are very big investments and that without adequate analysis on the part of the Company the Commission simply cannot acknowledge them.

Commissioner Bloom agreed. He stated that he could see the same “train wreck” or “derailment” coming because there are lots of dollars at issue, no transparency making it impossible for stakeholders to stress test the information provided by PacifiCorp, and the analysis did not include the effect of possible plant closure on the need for transmission. He too proposed extending the IRP to allow for needed analysis or in the alternative the opening of an investigation to review PacifiCorp’s coal fleet. He finished by stating that at this time there is not an adequate record on which to make a decision that he could feel comfortable with.

Commissioner Chair Susan Ackerman provided her own thoughts and the wrap up. Chair Ackerman stated that there was almost nothing that Staff had said that she did not agree with. She noted that she did not want the Commission and Company to be back where they were last year – dealing with disallowances due to lack of analysis. She stated that she wanted to see analysis in this IRP, not in an IRP Update, and that if she did not see it here then she would require it in a rate case.

CUB was quite happy with the outcome. We have been trying to get PacifiCorp to analyze the proper alternative to coal investment for two years. While we haven’t been successful … yet; we have developed a consensus among Oregon stakeholders that this is necessary before the Company makes more investments in its coal fleet. All our hard work, supported by our members, was really having an effect.

So now what? The Commission said that what comes next is up to PacifiCorp. PacifiCorp has to choose which path it wants to take – the train wreck, the extended IRP proceeding, or an Oregon investigation of its entire PacifiCorp coal fleet. CUB encourages PacifiCorp to do the right thing and work with Oregon stakeholders to address this issue. CUB stands ready to work with the Company to get the analysis completed quickly. CUB strongly believes that the best way to keep rates affordable is to make the right investment in the first place.

Oregon stakeholders have a consensus. The message is clear. The only question is whether PacifiCorp, and its Midwestern owner, is listening.

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