Oregon Commission Leaves Competitive Bidding up to PGE Management, But Promises to Scrutinize PGE’s Decisions During Cost Recovery

On August 13, 2018, the Oregon Public Utility Commission (OPUC) adopted a Stipulation capping the size of each of PGE’s five proposed energy storage projects and resolving the one litigated issue—whether PGE should be required to allow third-party bidding during the request for proposals (RFP) for its utility- scale storage project at the Coffee Creek substation. While the OPUC declined to require PGE to allow third-party ownership options, it confirmed that PGE must address the ownership issues as part of its future filings on the Coffee Creek project and warned that it planned to review PGE’s decisions carefully in any future rate proceeding.  

PGE’s storage proposals were filed on November 1, 2017 pursuant to OPUC Order Nos. 16-504, 17-118 and 17-291 and House Bill 2193 from the 2015 legislative session. Parties quickly stipulated to cap the costs of PGE’s five energy storage projects at $44.2 million in overnight capital costs (PGE’s proposal initially called for between $55.8 and $97.8 million in overnight capital), but the parties were divided as to whether PGE must open up the bidding for the Coffee Creek project to allow different ownership structures. The Coffee Creek project costs represented the vast majority of PGE’s proposal (capped at $30.1 million) and parties argued that opening up the bidding to non-utility ownership models could provide significant cost savings for PGE’s captive customers. PGE argued that allowing third-party access to its utility-owned property at the substation exposed the company to too much risk.

The Commission ultimately declined to require PGE to expand the RFP to allow third party owned and operated projects, but required PGE to address the feasibility of third-party ownership and operations at alternative locations. The Commission noted that the location for the Coffee Creek project had not yet been justified by PGE and that other sites exist that could make PGE’s concerns about providing access to its utility-owned property at the Coffee Creek substation irrelevant. The Commission also explained its expectation that PGE would “justify any future decision to limit its RFP with a concrete review of reasons for the decision to exclude third-party bids that explains why the cited reasons cannot be addressed by contract in a third-party owned arrangement.”

 

 

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