With Process Finished, CUB Awaits Outcome in Pacific Power General Rate Case
Posted on November 6, 2020 by Mike Goetz
Tags, Energy
Quite some time has passed since Pacific Power filed its request for a general rate revision in Oregon on February 14, 2020. Pacific Power customers across the state have endured the devastating impacts of a global pandemic and wildfires brought by drought and severe wind conditions exacerbated by climate change. In the interest of protecting Pacific Power’s most vulnerable Oregon customers - which includes many rural areas across the state outside of the Willamette Valley - CUB has vigorously fought throughout the process to ensure the company can only charge customers rates that are fair, just, and reasonable. While any proposed rate hike is subject to a high degree of scrutiny, CUB turned up the dial on advocating for lower rates in this proceeding. Because utilities are eligible to earn rates within a reasonable range, CUB argued that the prevailing economic conditions dictated that rates be set in the lower part of that range.
In a proceeding like a general rate case where a utility is requesting an increase in the rates it can charge customers, the Oregon Public Utility Commission (PUC) oversees a robust, fact-based process. This process generally includes several rounds of written testimony, a trial-like evidentiary hearing, several rounds of legal briefing, and an oral argument. The PUC then decides on the live issues to determine the proper rates that achieve a balance of competing interests. After oral argument during the last week of October, parties, including CUB, are now awaiting a final PUC decision, which is currently targeted for mid-December 2020.
Pacific Power requested an increase in its rates of $47.5 million, or approximately 4 percent across its Oregon service territory. Although these costs would be largely offset this year by savings in other arenas like federal tax benefits, CUB took issue with many of the cost recovery requests and fundamental ratemaking changes in the company’s filing.
For example, Pacific Power is requesting cost recovery for environmental retrofit upgrades installed in 2015 and 2016 at Units 3 and 4 of its Jim Bridger coal-fired power plant in Wyoming. CUB has been tracking the company’s decision to invest millions in these retrofits for the better part of a decade and believes that Pacific Power’s decision-making was seriously flawed. CUB is requesting that the PUC completely deny the company cost recovery for these investments. By sinking a large capital investment into an aging and dirty coal plant, the company did not act in the interest of Oregon customers. Coal represents an economic risk, and the PUC articulated that risk clearly before Pacific Power made its decision.
CUB also contested Pacific Power’s request to retain its currently authorized profit margin, despite the fact that prevailing economic conditions in recent years have rendered its profit margin out of line with peer utilities. As mentioned, utilities are generally able to earn within a reasonable range. Given the difficulties faced by Pacific Power’s customers throughout 2020, the company’s request was unreasonable.
Aside from the issues that remain contested, CUB, Pacific Power, and other parties were able to agree to the terms of a settlement stipulation on July 15, 2020 that covered all issues related to rate spread and rate design. Speaking at a high level, rate spread is the method used to spread a utility rate increase in different ways to various classes of customers. Rate design includes the prices and policies that make up the individual bills customers can be charged. For example, whether the utility can charge different rates at different times or charge a higher fixed portion of a bill per month. CUB was able to achieve significant residential customer benefits in the rate spread and rate design stipulation.
CUB was adamant that the fixed portion of a residential customer’s bill remain low. Pacific Power initially proposed to change this fixed customer charge from $9.50 to $12 per month for single-family residential customers. CUB was able to convince the company to retain its $9.50 customer charge in settlement. Retaining a low customer charge gives residential customers more control over their energy burden by minimizing the portion of the bill not associated with monthly usage. Pacific Power also proposed a time-of-use pricing pilot that would charge residential customers more during on-peak morning and evening hours to shift electricity consumption. CUB was able to get an agreement from Pacific Power to both expand the pilot’s size and limit the time period in which customers are charged higher prices. This will provide stakeholders with greater data from the pilot while decreasing the on-peak pricing burden to customers.
This was a very complex and litigious proceeding, and the issues discussed here are only a snapshot of CUB’s advocacy in this case. Those wishing to see the full scope of CUB’s issues in this proceeding can reference this brief and our June 4 testimony.
Stay tuned to the CUB blog for an update in December regarding the PUC’s final decision in this case. In the meantime, stay safe and well.
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11/06/20 | 1 Comment | With Process Finished, CUB Awaits Outcome in Pacific Power General Rate Case