Oregon PUC Affirms PacifiCorp Power Costs

On December 20, 2016, the Oregon Public Utility Commission (Oregon Commission) approved PacifiCorp’s transition adjustment mechanism (TAM) filing, which sets its annual power costs and direct access stranded cost exit fees on customers that choose to purchase power from third party electricity service suppliers (ESS). The Oregon Commission essentially agreed with PacifiCorp on all major issues, rejecting recommendations by its Staff, industrial and residential customers, and an ESS.  

PacifiCorp’s TAM has been used as an annual power cost rate case since 2001. In both this and last year, Staff and industrial and residential customers have raised a significant number of issues and adjustments opposing PacifiCorp’s proposed power cost rates. In the 2015 TAM, parties raised about twenty modeling issues. In this year’s TAM, Staff and customers opposed the utility’s coal costs (much of which was purchased from affiliated companies), and proposed changes regarding how the company estimated the costs and benefits of system balancing, qualifying facilities, the lost wind energy resulting protecting birds, and the participation in the energy imbalance market. The only issue the Oregon Commission ruled against PacifiCorp on was a minor $65,000 adjustment to remove from Oregon rates the costs associated with lost energy from avian protection measures.

In an unusual step, the Oregon Commission also appeared to express frustration with the quality of the evidence presented by Staff, customers, and ESS. The Oregon Commission directed PacifiCorp to hold a number of workshops to “facilitate the parties’ deeper understanding” about how its power cost model works and sets rates, direct access exit fees.

The Commission also rejected a proposal by an ESS (Calpine Solutions) to credit direct access customers for the value of renewable energy credits by departing customers and make other changes to PacifiCorp’s five-year opt-out direct access program. PacifiCorp’s main direct access program allows customers to elect to purchase power from a third party for one year and then return to cost of service rates. Customers can also pay exit fees for five-years, and then permanently purchase power from a third party ESS. Since 1999, when Oregon passed SB 1149 in which large customers were provided the legal right to purchase power from third parties, direct access issues have been litigated at the Oregon Commission on an almost annual basis. The Oregon Commission has invariably ruled in favor of PacifiCorp rejecting all proposals by end use consumers and third party power suppliers to change the program. Despite significant interest by large customers to have a choice of power suppliers, the end result is that PacifiCorp has high exit fees that result in more than 96% of eligible customers remaining with the utility.




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.