Oregon Commission Does Not Approve NW Natural’s CHP Program

On March 30, 2016, the Oregon Public Utility Commission (Oregon Commission) denied Northwest Natural Gas Company’s (NW Natural) proposed Combined Heat and Power greenhouse emission reduction program (CHP Program). While the CHP Program was not approved, the Oregon Commission indicated support for voluntary natural gas emission reduction programs and suggested an alternative program design that it would approve.  

The Oregon legislature passed SB 844 in 2013, which is an unique Oregon law designed to combat global warming. SB 844 which authorized natural gas utilities to propose projects or investments to reduce emissions that the utilities would not undertake in the ordinary course of business and benefit customers. Without the law, natural gas utilities cannot use ratepayer funds to develop programs whose primary purpose is to reduce anthropogenic greenhouse gas emissions.

NW Natural selected CHP as the first SB 844 program because it provided the greatest natural gas-related opportunity to reduce carbon emissions in Oregon. CHP is a form of distributed generation, which allows the end use consumer to produce energy on site rather than from the electric grid. CHP systems use natural gas or biomass to generate electricity, but then capture the heat that would otherwise be wasted to provide useful thermal energy for other purposes. CHP systems reduce carbon emissions over central station electric generation because they use a more energy efficient process to meet the end use customer’s energy needs.

The Oregon Commission rejected NW Natural’s proposed CHP program design because it believed that the costs were too high. The Oregon Commission, however, encouraged NW Natural to work more closely with interested stakeholders and re-file a more “reasonably priced” CHP program. The Oregon Commission also resolved and rejected a number of key objections to the program, and provided concrete and specific direction regarding the type of program that it would find acceptable. While suggesting an alternative program design, the Oregon Commission did not direct NW Natural to use any specific program design and emphasized that it will examine any proposal holistically to ensure it contains a proper balance between program benefits and costs.

Sanger Law represented NW Natural Gas Company.



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