PacifiCorp’s Oregon Avoided Cost Rate Reduction Rejected

On March 22, 2016, the Oregon Public Utility Commission (Oregon Commission) issued an order rejecting PacifiCorp’s avoided cost rate reduction. PacifiCorp claimed not to need new renewable resources, which the Oregon Commission did not believe because the recent amendments to the Oregon renewable portfolio standard will double the utility’s need to acquire new renewable resources. The Commission directed PacifiCorp to work with staff, and other interested parties to establish a process to review PacifiCorp’s avoided cost rates.  

PacifiCorp proposed a 43% reduction in its renewable avoided cost rates that would be paid to renewable energy generators, and a 16% reduction in its rates paid to non-renewable energy generators. PacifiCorp proposed the rate decrease as part of its post-Integrated Resource Plan (IRP) avoided cost rate update. PacifiCorp is allowed to update its avoided cost rates after the acknowledgement of its IRP; however, parties are allowed to challenge the inputs and assumptions.

PacifiCorp assumed in its IRP that it would not build a new thermal plant until 2028 and that it would not build a new renewable resource until more than twenty years. Renewable energy and independent power producers argued that PacifiCorp is planning to acquire or build new renewable resources now, given the changes in Oregon’s renewable portfolio standard. SB 1547 requires PacifiCorp to remove the costs of coal from Oregon rates by 2030 and increase its new renewable resources to 50% by 2040, including heavy incentives for acquisition of renewable resources constructed in the next five years. The renewable energy and independent power producers argued that the changes in the renewable portfolio standard should result in PacifiCorp acquiring significant amounts of new renewable resources in the next few years and not two decades from now. In addition, some parties argued that PacifiCorp is also likely to build a new thermal resource sooner given the same law, as well as other regulatory requirements, like the Clean Power Plan.

The Commission agreed that SB 1547 would likely increase avoided cost rates, and rejected PacifiCorp’s filing using extremely strong language. Commission Chair Susan Ackerman stated that PacifiCorp was “disingenuous and cynical” and was simply attempting to hurt the utility’s competitors. The Commission specifically directed PacifiCorp, Staff, and other interested parties to develop an expedited way to review PacifiCorp’s avoided cost rates and the timing of their new resource acquisition.

A news article regarding the hearing can be found Here

The Commission’s hearing can be viewed Here

To watch the PacifiCorp hearing, click on the agenda item 3 “PACIFIC POWER: (Docket No. UM 1729(1)) Updates Qualifying Facilities Avoided Cost Payments, Schedule 37.”

The Commission’s order can be read Here

 

 

Disclaimer
These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.