| stable and energy supplies are plentiful. It also
postponed the start of deregulation from its original date of October 1, 2001 to March 1,
2002, largely because the Bonneville Power Administration planned to (and did) impose a
rate hike on October 1, and legislators didn't want the public to blame deregulation for
the higher rates. Since March 1, 2002, large business
customers of Portland General Electric (PGE) and Pacific Power -- the state's two
investor-owned utilities -- have been allowed to buy electricity from competing energy
suppliers. Competition does not extend to the utilities' residential customers, but they
can choose from a portfolio of energy supply and rate options.
Both the legislature and the PUC made a concerted effort to incorporate consumer
protection and development of energy efficiency and renewable energy programs into the
Oregon deregulation plan. That commitment is evident in the "Basic Objectives of
Senate Bill 1149" posted on the PUC website:
To restructure the way rates are set to allow nonresidential
consumers the opportunity to buy your electricity supply from a supplier other than the
local utility, known as "Direct Access."
To provide the basis from which the state can make a gradual
transition to a more competitive market for electricity at both the wholesale and retail
level by establishing more efficient markets and opening the door to new products, new
services and new technologies.
To provide a buffer for consumers while the wholesale market
matures.
To give consumers more choices and more influence over the way
electricity is delivered and used.
To assure sufficient support for energy conservation and
development of new renewable energy through a stable funding source.
To protect consumers from undue cost shifts when other consumers
choose other suppliers under Direct Access.
Energy options portfolio
As required by the restructuring law, a 12-member portfolio advisory
committee representing utilities, local government, residential and small business
consumers, public/regional interests groups, the PUC, and the Oregon Office of Energy
reviewed and recommended a number of energy options, which were then approved by the PUC.
Residential consumers can now simply stay with their traditional
utility -- an option called Basic Service -- and pay regulated cost-of-service rates, or
they can sign up for one of the following options:
1. Time of Use. Consumers who use more energy during off-peak
hours pay lower rates. The cheapest time of day is between 10 p.m. and 6 a.m. The higher
peak usage rates are charged for use during weekday mornings and evenings. Customers who
sign up for this program pay for a special meter and sign on for 10 or 12 months
(depending on the utility).
2. Renewable Usage. Customers can sign up for wind- or
geothermal-generated power. Although they may not receive the actual electricity generated
from these renewable resources, PGE and Pacific Power will feed an equivalent amount of
that power into their transmission grids. Customers who sign up for this program will pay
an estimated $6 to $9 extra each month.
3. Fixed Renewable. Customers can buy electricity from PGE’s
Clean Wind program or Pacific Power’s Blue Sky program.
4. Habitat. Electricity used is billed at the Basic Service rate,
plus a monthly premium to support clean renewable energy and restore fish habitat. Pacific
Power customers pay a $2.50 monthly charge if they choose this option, while PGE customers
pay $1.90.
All residential customers of PGE and Pacific Power received
enrollment forms, allowing them to stay with their current service or pick an alternative
energy option.
As of September 2003, the following isues are of
importance to Oregon consumers:
Choice status
As of August 2003, 1.2 million PGE and Pacific Power customers were
eligible to choose portfolio options. Of these, 10,023 are signed up for fixed renewable,
20,575 for renewable usage, 6,953 for habitat, 3,393 for time-of-use, and 1,109 for
seasonal flux (PGE customers do not have the seasonal flux option). Thus, about 3.4
percent of eligible residential customers have signed up for alternative rate options.
Energy efficiency programs
Since March 1, 2002, utilities have been required to pay three
percent of their revenue into a public benefits fund to develop programs for energy
efficiency, new renewable energy sources, and low-income weatherization. Customers help
pay for these programs through a public purpose fee.
Eighty-seven percent of the fund will be used for energy
conservation and renewable energy programs. Energy
Trust of Oregon, a newly formed nonprofit organization, has a
contract with the PUC to oversee collection and administration of the fund. The remaining
17 percent of the public benefits fund goes to Oregon Housing and Human Services for new
and existing low-income weatherization programs. (Click here for more detailed information on Oregon's use of its public benefits
fund.)
The Energy Trust has an ambitious energy-use reduction goal. The
group is designing its programs to save 300 megawatts (MW) – enough to power a small
city – through a combination of programs to promote commercial and residential energy
efficiency and use of renewable power by 2012.
When it began operations in March 2002, the Energy Trust worked
with the two utilities to continue existing residential energy efficiency programs –
basically home audits and rebates for insulation and energy-efficient appliances. In March
2003, the organization unveiled a new residential program, one that combines traditional
energy efficiency measures with new services designed to reach households that have been
underserved by energy programs in the past.
The Energy Trust now offers energy efficiency services –
including weatherization measures, duct sealing, lighting, heating/cooling systems repair
and upgrades, and financing – to all eligible residential customers. The new program
may also offer additional services and/or incentives to certain target markets, including
"near low-income" households, multi-family housing and manufactured homes.
Soon after the Energy Trust opened its doors, Oregon’s major
natural gas utility – Northwest Natural Gas – decided to participate in the
Energy Trust’s energy efficiency programs. In September 2002, the company announced
that it would follow the model of the electric utilities and institute a small charge to
residential and commercial customers to fund a public purposes program for low-income bill
payment assistance, low-income weatherization assistance and enhanced energy efficiency
programs. Northwest Natural customers became eligible for Energy Trust programs in July
2003.
Public power versus Enron
PGE is one of bankrupt Enron Corporation’s few remaining assets, and the
utility’s future has become a huge issue in Oregon. Under Enron’s ownership,
PGE’s rates have increased by 47 percent since the late 1990s, according to Nancy
Newell, a legal intervener in a suit that tried to stop the PGE-Enron merger. As part of
current bankruptcy proceedings, the company could be sold to the highest bidder –
with unknown ramifications for the company’s customers. Public power advocates are
hoping that it can be taken over by a publicly owned utility if a referendum to form
public utility districts in the Portland area is passed in the November election.
Oregon has a number of public utility districts that have been
operating for decades. In August 2002, the Oregon Public Power Coalition began a petition
drive to form public utility districts in the counties served by PGE – Multnomah,
Clackamas, Yamhill, Washington and Marion/Polk. The Multnomah County PUD is on the ballot
for November, Yamhill County’s is scheduled for March, and signature gathering is
ongoing in the other counties.
Multnomah County includes the City of Portland and thus has the
highest number of PGE customers – around 600,000; the other counties have a total of
about 150,000 customers. If approved, the Multnomah PUD would have the power of eminent
domain. In cooperation with PUDs in counties also served by PGE, it could make an initial
offer for the utility, as the City of Portland did, for $2.2 billion, although that bid
failed. Under eminent domain, if the initial offer is refused, the matter is referred to a
jury of peers, selected using the same process as a civil court where a jury is selected
from the community and after agreement by both sides on which jurors they wish to have.
The court then starts the legal process of hearings. This group would use information from
an in-depth engineering and operating study to set a price by determining the depreciated
value of PGE’s assets.
In August, Republicans in the state legislature tried to stop the
move toward an Enron takeover by introducing a bill that would have prevented any city
with more than 500,000 people from forming a municipal utility district. The measure
passed the House, but Democrats killed it in the Senate.
Meanwhile, the Enron bankruptcy proceeds. The bankruptcy
reorganization plan proposed by Enron in July 2003 would allow it to split off PGE assets
and sell them individually or turn its stock over the creditors by 2005. The bankruptcy
judge has not yet made a decision on the plan. As of September 2003, no private bidders
have come forward, probably, Newell said, because they do not want to run the risk of
liabilities, including workers’ retirement settlements and a stockholder lawsuit, or
because of the prospect of a PUD takeover. However, she also noted that it is difficult to
tell because bankruptcy negotiations have not been open to the public.
Future role of competition
Although the Oregon legislature designed and passed an electric deregulation bill that
shields residential consumers from competition, it did not eliminate the possibility that
the state would choose a competitive retail market in the future. The 1999 law directed
the PUC to prepare a report by January 1, 2003 on whether residential electricity
consumers would benefit from direct access to electricity services.
Released in December 2002, the PUC report
concludes that residential consumers in Oregon would not profit at
this time from a choice of competing power suppliers for the following reasons:
• There likely would be few, if any, power suppliers
competing for residential consumers.
• Today, the cost of implementing a competitive power market
for residential consumers exceeds the likely benefits.
• Competitive power markets for residential consumers have
not been in place long enough in other states to learn from their experiences.
• Residential consumers are not well suited to assess or
manage the risks of a competitive retail power market that is just beginning to develop.
Further, consumer protection concerns remain.
• New utility rate options give residential consumers
meaningful choices without the risks of a competitive power market.
Below is a history of Oregon's residential electric rates since
1995:
| Oregon Average Annual Price per kWh
(nominal cents) |
| |
1995 |
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
2003* |
| Residential |
5.5 |
5.7 |
5.6 |
5.8 |
5.7 |
5.9 |
6.6 |
7.4 |
6.7 |
Source: Energy Information Administration
*Price as of May 2003 |
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