2011 Legislative Session: One for the History Books – And Not

The 2011 session of the Oregon Legislature has been history for about a month now, and CUB Organizing Director Jeff Bissonnette has had some time to decompress a bit and summarize CUB’s work during the session. Here’s his overview of the session with its wins, losses and stuff still on the to-do list.

The 2011 session was one for the history books right from the start. It featured Oregon’s first third-term governor, the Oregon Senate’s first fifth-term President, and a first-ever evenly divided House of Representatives, complete with first-ever Co-Speakers of the House. In addition, legislators faced an unprecedented $3.5 billion (not a typo, that’s “billion” with a ‘b’) budget deficit to overcome.

This session was definitely not one in which revolutionary changes were going to be made–narrow voting margins and an even narrower financial margin would ensure that. But that didn’t stop us from bringing an ambitious agenda to the table. While we certainly didn’t get everything we wanted, CUB fared pretty well in the session.

Wins

SB 967 - Utility Tax Reform: This bill raised a hot-button issue from 2005: making sure the utilities don’t charge customers more for taxes than the utility actually pays. We helped pass SB 408 back in 2005, joining with the industrial customers and others. Since the passage of SB 408, CUB has come to the conclusion that while we got the policy right–utilities cannot charge customers more for taxes that the utility actually pays the way the policy was implemented–through an annual “true-up” process–was time-consuming, cumbersome, and resulted in some wacky outcomes (and yes, that’s a technical term). CUB was not, however, willing to engage in discussions about “reforming” SB 408 because we thought the utilities’ definition of reform was to repeal the law.

As our readers likely know, former PUC Chair Lee Beyer won a seat in the Oregon Senate in 2010, and in 2011 was appointed the chair of the Business, Transportation, and Economic Development Committee, which deals with a lot of utility issues. Sen. Beyer recognized the issues surrounding SB 408 and appointed a workgroup headed by Sen. Jason Atkinson and Sen. Ginny Burdick and facilitated by PUC Commissioner Susan Ackerman. His instruction to the workgroup was that: the policy of SB 408 must stay, and all the parties that are regularly involved in the annual true-up process have to agree on a new implementation solution or nothing happens. This was good news. With the assurance that the goal of the discussion was not to repeal the policy established in SB 408 but to figure out a better way to implement the policy, CUB was willing to engage in the negotiations.

And, although we didn’t think it was possible, all the parties–both customer groups and utilities–that have been actively involved in the annual true-up process came to an agreement. We decided that we could track taxes just like we do every other utility cost, on an ongoing and regular basis rather than in a special annual process and we can examine how the corporate structure of the utility affects its tax structure to prevent the kind of abuses we saw under Enron and ScottishPower. So, as we examine utility rates we can look at the tax level, and adjust it to make sure that customers are not being overcharged. The new law also instructs the PUC on how they should consider taxes collected by a utility that is part of a larger corporate conglomerate (like Pacific Power) and how they should treat taxes by an entity seeking to purchase a utility.

We know that a lot of folks wonder if this new implementation method will work. We’ll be reporting on the various dockets where taxes might be impacted and will tell you how successful the new process is. However, we believe that it’s a big win for consumers to have kept the hard-won policy of SB 408 but found a better, less-costly way to make the policy work.

HB 3461 - Klamath Dam Bill: In the 2009 session, CUB was involved in passing a bill that confirmed the PUC’s authority in determining whether PacifiCorp-owned dams in the Klamath River basin could be removed. While it appeared that there was a strong economic case to be made for removing the dams rather than relicensing the dams, CUB wanted to be sure the PUC had a process to determine that dam removal was the best approach for customers. As part of the 2009 bill, a small charge would be added to customers’ bills to build up funds so that any impact for either dam removal or relicensing wouldn’t come all at once as a lump sum sometime in the future.

HB 3461 allows the PUC and State Treasurer to manage the funds in order to generate a return and reduce the amount of money that needs to be collected from customers. Although some folks tried to revisit other issues previously settled at the PUC, that process was prevented and the bill passed, giving the PUC the ability to work with the state Treasurer’s office to invest some portion of the Klamath fund in a way that protects consumers and generates more money.

HB 3672 – Residential Energy Tax Credit/Business Energy Tax Credit: An entire book could be written about the long, byzantine road this issue traveled over the past few years. And it probably will be. But for this report, suffice it to say that the tax credit policy frameworks and funding were preserved; but there is still more work to do.

The credit formerly known as BETC (Business Energy Tax Credit) was divided up into three different tax credits: manufacturing, energy conservation, and renewable energy generation credit. The manufacturing credit will be administered by the Oregon Department of Business Development, rather than the state Department of Energy. There are workable policy frameworks in place for both the energy conservation and renewable energy generation credits. Both those latter credits now operate under caps: $28 million for the conservation credit and $3 million for renewable generation. The amount for renewable energy generation is a severe reduction and will have an adverse effect on the development of renewable energy in Oregon. But, given that the program was slated for total elimination, the fact that it was preserved and funded was a victory for this session. The manufacturing credit is slated tosunset in 2016 and the other two credits were given sunsets of 2018.

The Residential Energy Tax Credit (RETC) emerged largely unchanged, with no program caps. The legislature did eliminate appliances from being included in the programs and put a funding cap on “third-party installed” systems, such as those being marketed by companies like SolarCity and Sun-Run. RETC was given a sunset in 2018. By and large, residential customers should see very little change in RETC in the coming few years.

HB 2690 - Cool Schools: This bill has been given a lot of media coverage because it was 1) an issue that Governor Kitzhaber campaigned on and 2) a bi-partisan bill in a session that was marked by a divided legislature. The bill uses no new money but simply authorizes better coordination between existing funds, including public purpose dollars, the state’s Small-Scale Energy Loan Fund, and federal Qualified Energy Community Bonds. The bill will enable schools to access these funds in a way that would have been previously more difficult. CUB was proud to be part of the broad coalition that supported the bill.

SB 863 - Low-Income Energy Assistance: The recent recession hit Oregonians hard and, even though the recession is officially over, many Oregonians are still struggling. Social service agencies across the state are seeing families who have never sought assistance before. These families need help paying their bills, including utility bills, because of now long-term unemployment or underemployment. In addition, it is likely Oregon is about to see a substantial drop in federal resources for energy assistance–as much as $20 million.

SB 863 adds to the existing $15 million program in Portland General Electric and PacifiCorp territories by allowing the PUC to increase the program by as much as $5 million a year for no more than two years. The PUC would consider an increase if requested by the Department of Housing and Community Services and if several criteria are met. Those criteria include poverty rates, unemployment rates, and the like.

The bill recognizes that adding more money will not completely resolve the situation, so it also authorizes discussions of how to use existing resources differently and more efficiently to help more people. Finally, it mandates seats on the Advisory Committee on Energy, which advises the Department of Housing and Community Services, for both the utilities and CUB so that we are assured of being able to keep tabs on consumers’ money.

Attacks on the Renewable Energy Standard Beat Back: Since the adoption of the state’s Renewable Energy Standard of 25% by 2025 in 2007, proposals for changes have been constant. Last session, we helped negotiate changes to allow some vintage biomass facilities. This session there were many proposed changes, but all were turned back and the standard escaped the 2011 session unscathed.

The most significant threat was brought by Umatilla Electric Co-operative, which is currently considered a “small” utility and thus is subject to a reduced standard. However, the utility is expecting a large server farm to be located in its service territory, which would significantly increase its load and eventually (in about 8 years) would make it a “large” utility, subject to the full standard. UEC wanted the legislature to declare that it would always be a small utility, no matter what happened to its load. Since the whole reason for the RES was to ensure that the state’s growing energy load was partially met by renewable energy, this proposal would start to water down the standard in a dangerous way. We will almost certainly see this proposal again, so CUB will be on guard to ensure that the balanced, effective standard we have now will be protected.

Public Purpose Funds Left Alone: As noted earlier, there was a significant budget deficit at the start of the session. In past sessions, this meant that the legislature would attempt to re-direct ratepayer funds dedicated to energy efficiency and renewable energy investment to other needs. CUB has always maintained that these ratepayer funds were not available to the legislature to be used for general budget purposes and it has taken a lot of work to protect these funds. We were sure that there would be a significant battle to protect the funds again this year, but that battle never developed. Perhaps all those years of defending the funds finally convinced legislators that the funds were too much trouble, or perhaps having a former PUC Chair, as a member of the state Senate, was helpful. But in the end, ratepayers’ public purpose funds are safe….at least for now.

Losses

Climate: There was a very straightforward bill–SB 706–that would have simply provided information for future policymaking efforts on reducing greenhouse gas emissions, but the bill only received an informational hearing. As such, the 2011 session did not make any significant advance on having Oregon deal constructively with climate change.

Bold Energy Efficiency Agenda: Although we did have some energy efficiency victories, we did start out with a much more ambitious efficiency agenda. We had hoped to see some sort of “energy performance score” system that would provide a “miles-per-gallon” type rating for residential and commercial buildings, or to see some kind of incentive for buildings built beyond the existing codes. We had also hoped to codify Oregon’s “efficiency first” regulatory policy to ensure that would always be the state’s policy. But, unfortunately, these proposals did not make it through the process.

To-Do

More EE: Energy efficiency will continue to be an important issue. It is truly non-partisan and benefits both residential and commercial customers. There will be future interest on continuing to build our capacity for efficiency and CUB will support those efforts.

More Protection of the RES: The renewable energy standard will continue to see proposals to incentivize new renewables. While that’s not necessarily a bad thing, we need to make sure that the very balanced and affordable policy we have now is not upended. We will also have to be watchful that efforts to water down the standard (see the UEC proposal above) are turned aside so we get the amount of renewable energy we actually expected with the standard’s passage back in 2007.

Tax Credit Rulemaking: We reported on the changes for energy tax credits above. We also said that residential customers shouldn’t see much difference in the RETC. That should be qualified by noting that there is still a lot of rulemaking to do. Depending on the rules adopted, the original intent of the legislative action might be changed completely. So CUB will be very involved in the rulemaking around the tax credits to ensure that residential customers can be well-served by utility incentives and tax incentives that are well-coordinated.

No legislative report is complete without saying that CUB’s success is always dependent on our members. We didn’t have to do a lot of alerts this session, but the ones we did do were very effective, and legislators and their staff recognized CUB as having members throughout the state who care about good energy policy and consumer protection. So, we can never say it enough: THANK YOU, CUB members, for your support in making CUB effective!

To keep up with CUB, like us on Facebook and follow us on Twitter!

• Share this post on Facebook.
• Share this post on LinkedIn.
• Share this post with email.

« Back