Environmental advocates and Oregon’s two largest utilities have reached consensus on a radical overhaul to the state’s electricity supply, agreeing to double the renewable energy mandate by 2040 and eliminate the use of coal by 2035.
They plan to offer a bill in the 2016 Legislative session including those policy changes and a host of others. If the proposal becomes law, environmental groups have agreed to drop proposed ballot measures that include even more drastic changes.
If implemented, such policies would be a coup for renewable developers and climate advocates. The requirement for Portland General Electric and PacifiCorp to meet 50 percent of their customers’ electricity demand with resources like wind and solar by 2040 is double the current standard of 25 percent by 2025. The new requirement would step up incrementally between 2027 and 2040.
The plan would also be a boon for utilities and their shareholders. The companies would need to invest billions of dollars in new sources of power to meet the mandates and replace the power they get from existing coal plants. PacifiCorp’s coal-fired plants, for example, supply 60 percent of its customers’ electricity today.
The proposal has not been independently vetted and comes with no cost estimates. In practice, it isn’t technically feasible today without undermining the reliability of the grid with too many intermittent sources of power. Achieving it would lean heavily on the development of new energy-storage technologies and a more unified transmission system that would allow utilities to freely share power resources as needed.
But advocates of the agreement – and the coalition is broad – say the plan is consistent with the direction Oregon customers have been saying they want to go – away from coal and toward more low-carbon electricity. They contend the plan includes a sufficient time frame and adequate safety valves to preserve grid reliability, shield customers from big price increases and put the state on a path to achieve its goal of reducing carbon emissions 75 percent below 1990 levels in the next 35 years.
“This gives us the time and flexibility to transition the system in a way that is going to be very respectful of customers,” said Scott Bolton, vice president of external affairs at PacifiCorp. “We wouldn’t have come to this agreement if we didn’t feel like we could do it cost effectively. And the last thing we would do is compromise the reliability of the grid.”
The agreement was negotiated behind closed doors between utilities and the backers of Renew Oregon, a non-profit formed to back the ballot measures proposed for November. The effort was launched with funding from the Seattle-based environmental group, Climate Solutions, and builds on the efforts of the Sierra Club’s successful Beyond Coal Campaign. It has attracted strong backing from Oregon’s environmental community.
Neither Gov. Kate Bown’s energy advisor nor state utility regulators were part of the discussion leading to the agreement. Susan Ackerman, the chair of the Oregon Public Utility Commission, said Wednesday that she had been asked by the governor’s office not to discuss the proposal.
The governor’s office declined to make her energy advisor available for specific questions, but issued a statement from Brown: “Oregon’s special quality of life is threatened by climate change … Expanding the availability of renewable energy in Oregon is one way to make a meaningful impact. As I’ve said before, future generations will rightly judge this generation not by the fact of climate change, but how we responded. Let’s do it the Oregon way, by working together.”
The Citizens Utility Board, the state’s residential ratepayer advocacy group, has signed onto the bill. The group’s executive director, Bob Jenks, says it is a more measured approach to reducing carbon emissions than would have been contained in the ballot measures, though his group supported those as well.
“The transition from coal to cleaner energy is happening, and the question becomes what’s the responsible way to get there,” Jenks said. “The ballot measures are out there. This bill is a compromise, and we think it’s a good compromise.”
For lawmakers, it comes with short notice and no independent analysis. Their short Legislative session begins next month, and it’s one in which they’ve already said they don’t have enough time to consider complicated bills like a transportation-funding package.
Only a handful of lawmakers have any understanding of the electricity industry. They will be hearing from a powerful coalition of lobbyists backing the bill, including PGE and PacifiCorp, the NW Energy Coalition, the Oregon Environmental Council, the Oregon League of Conservation Voters, the Natural Resources Defense Council, Renewable Northwest and the Sierra Club.
In addition to the elimination of coal and increased renewable mandates, the proposal includes a number of sweeteners for utilities. They include flexibility in how the utilities use existing renewable-energy credits; the ability to deploy electric charging stations and build those investments into rates; and a poison pill to block any entity, such as a municipal utility, from acquiring service territory or customers from PGE and PacifiCorp without their consent.
The bill has a cost cap that would allow utilities to avoid new investments in renewables if they are more than 4 percent pricier than an alternative resource. There is also a provision that would allow regulators to temporarily suspend the requirement for a utility to meet renewables requirements if it would compromise grid reliability.
Sunny Radcliffe, director of government affairs for PGE, acknowledged that the timing of the proposal may not be ideal for the Legislature, but said it was preferable to make the changes in the legislature than to fight it out at the ballot box.
“We can tweak it over time,” she said. “If we’ve missed something here, we would anticipate folks would be back in making whatever changes are necessary. We want this to be workable – workable in the sense of being doable, and workable in the sense of being affordable.”
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