Oregon Commission Provides Large Customers New Option to Purchase Green Energy

On March 5, 2019, the Oregon Public Utility Commission (Oregon Commission) issued Order No. 19-075 approving the implementation of a voluntary renewable energy tariff (VRET) by Portland General Electric Company (PGE). PGE’s proposed VRET allows ratepayers to purchase additional or all renewable energy from either their utility or an independent power producer.   The proposal was filed pursuant to HB 4126, which was passed in 2014 and the Oregon Commission’s orders implementing the law in docket number UM 1690. HB 4126 directed the Oregon Commission to study voluntary renewable energy tariffs to customers. The legislation further directed the Oregon Commission to consider the results of the study in conjunction with several factors to determine whether, and under what conditions, it is reasonable and in the public interest to allow electric companies to provide VRETs to non-residential customers. Under a 2016 decision, Order No. 16-251, the Oregon Commission invited PGE and PacifiCorp to file draft VRETs for consideration, and stated that it would make its determination within the context of specific utility proposals. Core principles that were adopted were to protect PGE’s modestly successful direct access program for large commercial and industrial customers.

In 2018, PGE filed its VRET tariff, which was docketed as UM 1953. The Oregon Commission reviewed PGE’s submitted draft VRET in light of nine guidelines that were adopted to implement the statutory requirements. PGE’s draft VRET was ultimately approved contingent on PGE making several modifications that would mitigate negative impacts on “cost of service” customers and protect the overall competitiveness of electricity markets.

A key element of PGE’s approved VRET is that it does not allow for Customer Supply Option participants to receive incremental credits. This effectively bars participants from receiving lower than cost of service rates since a credit would not exceed participating customers supply costs. The Oregon Commission approved this provision as a means to equitably balance the risk of credit forecasting between participating customers and cost of service customers. Likewise, the Oregon Commission approved PGE’s risk adjustment charges issued to VRET participants, finding that they reasonably insulated cost of service customers from the risk of under-subscription.

The Oregon Commission also modified several provisions in PGE’s draft VRET. Specifically, it ordered PGE to revise its methodology for calculating capacity credits by adopting the same method from the utility’s integrated resource plan. This method models capacity of a resource using least cost planning assumptions. Given the size of projects in PGE’s VRET program, the Oregon Commission believed this method would yield the most accurate capacity values. Additionally, the Oregon Commission directed PGE to modify terms related to its Customer Supply Option. PGE’s PPA supply option is offered to large customers with loads of 10 aMW or greater. The Oregon Commission approved the participation limit but asked that PGE publish minimum standards for acceptable self-supplied PPAs.

There are still several unresolved issues regarding VRET’s impact on direct access, long-term credit calculation, the reassessment of previously adopted conditions, and whether ratepayers should be allowed to bring their own renewable PPA or if they have to use PGE’s program. These issues will be addressed in the second phase of the UM 1953 proceeding.

Blue Planet Energy Law and Sanger Law jointly represented the Northwest and Intermountain Power Producers Coalition.

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.