The Oregon Public Utility Commission has ruled against Pacific Power’s request to shorten the length of federally mandated contracts with small-scale renewable energy projects.
Advocates of wind and solar power hailed the decision, arguing that shorter contracts would undercut financing for developers. Pacific Power, however, says the longer fixed-price contracts leave ratepayers on the hook as green energy becomes cheaper to produce.
The issue stems from a law enacted in 1978 known as the Public Utility Regulatory Policies Act, or PURPA. The law requires utilities like Pacific Power to purchase renewable energy from qualifying facilities, so long as the price being offered is at or below what it would cost to generate that same power on its own.
Qualifying facilities vary from state to state. Oregon regulators previously capped the size of eligible wind and solar projects at 10 megawatts. Developers then enter into standard contracts with utilities for 20 years, including 15 years of fixed pricing.
Pacific Power wanted to limit PURPA contracts to two years in Oregon. Spokesman Ry Schwark said the reason has to do with the falling prices of renewables; as it becomes cheaper to produce wind and solar, the long-term fixed contracts prevent customers from being able to capitalize on those savings on their energy bills, Schwark said.
“Our position has been that we like renewables just fine. What we don’t like is our customers being overcharged for those renewables,” Schwark said. “We need more flexibility in PURPA to reflect continually falling prices of renewables, so customers can benefit from those falling prices and not just Wall Street bankers.”
The Oregon PUC issued its ruling March 29, denying Pacific Power’s request and stating the current setup of 20-year contracts “continues to have merit.”
A variety of renewable energy and environmental groups intervened in the case with a different view of Pacific Power’s intentions. They maintain shortening contracts would have made it much more difficult, if not impossible, to get financing for community-sized wind and solar farms, effectively stifling development.
Oregon’s two Democratic senators, Ron Wyden and Jeff Merkley, wrote to the PUC in February expressing their concerns of the proposal and asking for the commission to consider “the need for contractual certainty for community-scale energy development.”
“At the federal level, we are working to maintain PURPA as an effective tool to put clean energy on the grid and create jobs and infrastructure in rural communities,” the senators wrote. “PURPA is an important component to our renewable energy strategy for both the state and the nation.”
Amy Hojnowski, senior representative for the Sierra Club’s Beyond Coal campaign, said the PUC decision will help spur more homegrown renewable energy projects – which will be crucial in the coming years, since Oregon lawmakers recently passed a bill that commits Pacific Power and Portland General Electric to provide half its energy generation in the state from renewable sources by 2040. Existing hydroelectric power doesn’t qualify as a renewable source under state rules.
“We will continue to work to ensure that clean energy solutions are protected for all Oregonians to enjoy,” Hojnowski said in a prepared statement.
The PUC did grant one concession to Pacific Power in its ruling, lowering the cap on qualifying solar facilities under PURPA to 3 megawatts, instead of 10. That determination came on the heels of “unprecedented growth” in qualifying facilities within PacifiCorp’s service territory. Last year, one developer entered into five contracts for 36.5 megawatts of solar energy in a single day.
“Although the vast majority of the projects were for 5 megawatts and above, and most were 10 megawatts, there were three that were 3 megawatts or less. This indicates that (qualifying) projects located in PacifiCorp’s service area as small as 3 megawatts can be viable,” the ruling states.
The Oregon Department of Energy supported the use of 3 megawatts as a breakpoint for solar contracts under PURPA. The cap on wind farms remains 10 megawatts.
Schwark said Pacific Power will continue to advocate for fair pricing for customers, but there are no immediate plans following the PUC’s ruling.
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