Oregon PUC Supports Competitive Markets in Revamping PGE’s New Load Direct Access Program

On January 7, 2020, the Oregon Public Utility Commission (Oregon Commission) ordered the Portland General Electric Company (PGE) to submit new tariffs that implement its Large New Load Direct Access (NLDA) program (Order No. 20-002). The new tariffs will go into effect on February 6, 2020. 

In Oregon, industrial and commercial ratepayers (but not residential ones) have the right to “direct access,” which means they can purchase electricity from a third-party electricity service supplier (ESS) rather than their regulated utility (PGE, in this case). The regulated utility still manages the delivery of power to customers who choose to purchase from ESS (i.e., direct access customers). Comparatively few eligible customers opt for direct access, due to regulatory hurdles.

While Oregon’s direct access law dates from 1999, only recently have questions arisen as to how to treat “new load” direct access customers. Existing customers that opt for direct access must pay a transition charge to the utility to reflect the investments the utility had made in order to serve that customer’s load. However, when a customer (or its load) is new, many if not all of those investments have not yet been made. The Oregon Commission has decided that the transition charge, if any, that new direct access customers pay should differ significantly from the transition charge for existing direct access customers. The Oregon legislature considered a bill in 2017 that would have eliminated transition charges for NLDA customers (SB 979). However, legislators did not pass the bill but chose instead to defer to a new Oregon Commission proceeding.

The Oregon Commission began exploring program design for NLDA customers in May 2017 (Order No. 17-171). To expedite the launch of a new offering, the Oregon Commission split implementation into two phases, the first for “large” NLDA customers whose loads exceed ten average megawatts (MW). In September 2018, OPUC adopted new administrative rules for large NLDA programs which both PacifiCorp and PGE must offer (Order No. 18-341).

PacifiCorp filed proposed tariffs in December 2018 and provided clarifications in February 2019. No one opposed the filings, and they went into effect March 2019.

PGE filed proposed tariffs in February 2019, which the Commission suspended pending an investigation (Order No. 19-103). Unlike PacifiCorp, PGE proposed several new elements to its Large NLDA program, which were not contemplated in the Oregon Commission proceeding nor in the Oregon Commission’s new administrative rules.

Among other things, PGE proposed to introduce new fees for NLDA customers, called the Resource Adequacy Charge (RAD) and the Resource Intermittency Charge (RIC), and to offer individually negotiated agreements as so-called “standard” offers. PGE argued that the RAD and RIC fees were necessary to ensure system reliability and resource adequacy and that if further review of the charges was needed, then OPUC should postpone implementation of PGE’s Large NLDA program.

This was not the first time that PGE sought to increase charges on direct access customers. As we have previously reported, OPUC issued an order in December 2018 rejecting cost increases to PGE’s existing direct access customers (Order No. 18-464).

Blue Planet Energy Law, with the assistance of Sanger Law, represented the Northwest and Intermountain Power Producers Coalition (NIPPC) in drafting SB 979 and as an intervening party in the NLDA proceeding. NIPPC represents electricity market participants in the Pacific Northwest, including independent power producers, electricity service suppliers and transmission companies. NIPPC is committed to facilitating cost effective electricity sales, offering consumers choice in their energy supply and advancing fair, competitive power markets. NIPPC has a long history of promoting Oregon’s direct access programs, before both Oregon Commission and the legislature.

NIPPC argued that: 1) PGE’s delay tactics should not prevent OPUC’s efforts to expedite implementation of Large NLDA programs, 2) the proposed RIC and RAD were in contravention of state law and commission policy and posed unnecessary and duplicative cost burdens on NLDA customers, 3) the so-called “standard” offer proposal amounted to invalid special contracts in violation of OPUC rules that would inappropriately consume space under the program’s limited eligibility cap; and therefore 4) OPUC should order PGE to submit a new filing for immediate implementation of a Large NLDA program without the RIC and RAD or the “standard” offer.

The Oregon Commission agreed with NIPPC and other parties who opposed PGE’s original filing. OPUC ordered PGE to submit a new tariff filing for immediate implementation that, among other things, does not contain the proposed RAD, RIC, or “standard” offer language (Order No. 20-002). The Oregon Commission also recognized broader market concerns, recognized that resource adequacy is an obligation of all system participants, including ESSs, and recognized that market-based solutions for RA were preferable to monopolistic utility offerings. The Oregon Commission also resolved to continue addressing resource adequacy in a separate ongoing investigation (Docket No. UM 2024).





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