Renewable Energy Standard Bill Gets a Hearing

The Renewable Energy Standard (RES) bill, Senate Bill 373, had its first hearing Tuesday in the Senate Environment and Natural Resources Committee, chaired by Sen. Brad Avakian. Governor Kulongoski made a brief speech about the importance of passing this bill, which would require that 25% of Oregon’s electrical power be produced from new renewable resources by the year 2025. CUB’s Program Director, Jason Eisdorfer, also testified at the hearing in support of the bill. We are happy to say that OSPIRG, the Northwest Energy Coalition, the AFL-CIO, and Portland General Electric have also signed on as supporters.

The bill is, of course, not without its opponents, (those groups were given a voice in the March 7th Oregonian). We are convinced, however, that the RES is good environmental policy, is good for statewide economic development, and is a fundamental customer protection issue. As consumer advocates, we’d like to elaborate on that last item. Here’s what an RES offers Oregon utility customers:

1) Diversity of Resources & Cheap Fuel

Resource planning for a utility’s customers should ideally be both broad and deep. The breadth of the resource portfolio is what is addressed here. By adding significant amounts of new renewable resources to our energy resource portfolio, we are without a doubt reducing our own risk of being exposed to fluctuating costs. Partially, this is because there are simply fewer costs to begin with. All energy resources require capital investment and will have Operations & Maintenance costs. However, fuel costs can simply be written out of the equation when you are dealing with many renewable energy sources. As Jason Eisdorfer said at the RES hearing Tuesday, “There’s no market for sunshine. There’s no market for wind. There’s no market for the tidal pull of the moon.” Greater diversity also means less risk falls on any one resource.

2) Long-term Resource Prudence

On the depth side of resource planning, we need to be looking not just 2, not just 5, not just 10 years out, but decades into the future in order to ensure a steady and affordable and sustainable source of electrical power. We are on the cusp with the issue of global warming; concern is building and will soon turn to some form of governmental action regarding greenhouse gas emissions. Fossil fuels in general, and coal in particular, will be targeted with some form of carbon regulation and the result will be costly. All coal power production will become more expensive and it will likely end prematurely the lifespan of some coal plants. A Renewable Energy Standard would set Oregon utility customers up well for the future, ensuring that we don’t get caught holding the bag.

3) Protective Rate Cap

CUB is always working to protect reasonable rates. In fact, working for renewables is the best way we see to protect ratepayers’ long-term economic health (see again No. 2). But new resources require new capital investments to get going, and so this Renewable Energy Standard Bill includes a cost cap to ensure that those initial investments do not become too big a burden on customers. The cost cap in the RES bill has been set at 4%, so that the differential between the green power we hope to acquire and the brown power we would otherwise have bought shouldn’t raise rates more than 4%. We don’t believe this cost cap will be triggered, but if it was the investment would pay huge dividends as fossil fuel-based energy becomes more scarce, more volatile, and more regulated.

4) Addresses Future Market Volatility

Did we mention more volatile? Market volatility will apply not only to fossil fuels (an area in which natural gas markets, for instance, have been on a roller coaster ride for several years). Even without variable fuel costs, renewable energy markets could be subject to price volatility, as well. This is because renewables like large wind farms are site-specific, and once the best sites are developed, the demand for power from those sites will grow and the cost will rise. Oregon, without an RES, would be at the mercy of California and Washington power customers, who have passed Renewable standards into law and who will be looking to meet their states’ goals. If prices for renewable power should spike, Oregon’s RES would offer the Oregon Public Utility Commission the ability to choose a market price at which customers’ green power investment (again, the differential between green and brown power) would be channeled into a savings fund, until such time as the market settles and the opportunity to invest in a prudent renewable energy source arises. This mechanism is called the Alternative Compliance Payment and it is a mark of Oregon’s foresight.

5) Helps Keep Planet Habitable. ‘Nuff said.

If you have not already done so, now would be a good time to contact your Oregon State Senator and Representative, which you can do online here or by calling 1-800-332-2313. Let them know that passing the Renewable Energy Standard Bill, SB 373, is important to you.

And by the way, if you didn’t catch the fact that the Superbowl this year was carbon neutral and the Oscars was calling itself a green event (and by doing more than simply giving Academy Awards to the documentary Inconvenient Truth and its lead song, Melissa Etheridge’s I Need to Wake Up), here is an article about global warming from that bastion of environmental thought, Sports Illustrated. Global warming isn’t on the fringe anymore—it’s a mainstream issue now.

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