Consumer advocacy group looks to change how utilities' rates are regulated in Oregon
PORTLAND, Ore. (KATU) — Utility affordability in Oregon is on the decline, according to a state-by-state comparison published by the national Citizen's Utility Commission (CUB).
The consumer advocacy group published a state-by-state utility comparison in 2021 and one in 2022. The review placed Oregon in fourth place nationwide for affordability in 2021, dropping it to ninth place in 2022.
Rates for all companies serving the state have either already seen historic increases this year or have historically high rate increase proposals pending.
"Idaho Power is proposing a 27% rate increase; we have PacifiCorp proposing a 22% rate increase; PGE just did an 18% one and is following that up with a 7% rate increase. Our customers can't afford this. We do have an affordability problem," said Bob Jenks, executive director for Oregon CUB.
Oregon CUB is authorized to intervene in rate increase cases, which are adjudicated by the Public Utilities Commission (PUC), which, in the absence of a competitive free market when it comes to utilities, is tasked with assuring rate increases are "just" and "reasonable."
Jenks believes that definition should include an affordability consideration and says PUC should implement stopgap measures to mitigate impacts to consumers when rate increases are above a certain percentage.
"There is a series of things the commission can do to lower these increases that will make a big difference to customers, including things like phasing in some of that rate increase over a couple of years. One of the big things the commission can do is simply move these rate cases out of the wind," he said.
The effective date for PGE's rate increase was Jan. 1, which coincided with some of the lowest temperatures of the year so far, and bill spikes that were considerably high for some customers.
"There is no reason why Jan. 1 has to be the standard time when all of these rate cases go into effect. We can get through the winter and then raise rates in the spring," Jenks said, adding that the commission also has the ability to push the utilities profit margin to the lowest allowable amount in order to mitigate costs to consumers when rate increases are exceedingly high.
He said CUB is asking the commission to put stopgap measures in place if rates go up any more than 7% plus inflation or 10% overall.
PUC was not immediately available for an interview but sent a written statement.
"Recently many questions have been asked about the role of the Oregon Public Utility Commission (PUC) in ensuring that electricity rates remain affordable for customers," it reads in part. "As we previously noted in a report to the legislature, under the agency’s existing authority, the PUC’s legal mandate is to set “just and reasonable” rates that reflect utility operating costs and the opportunity for a fair return on capital investments. Although subject to regulation, investor-owned utilities remain private enterprises. Governmental regulation has implied limits that preserve the private rights of these businesses."
Jenks said CUB's proposals to PUC will be made in individual rate increase cases. If those proposals are not implemented, he said they will take the issue up with the Legislature ahead of the 2025 legislative session.
Members of the public who want to let PUC know how they feel about this issue and about individual rate increase cases can comment in writing or during public comment sections of PUC's meetings.
You can find those here.
PUC's full statement below:
"Recently many questions have been asked about the role of the Oregon Public Utility Commission (PUC) in ensuring that electricity rates remain affordable for customers. As we previously noted in a report to the legislature, under the agency’s existing authority, the PUC’s legal mandate is to set “just and reasonable” rates that reflect utility operating costs and the opportunity for a fair return on capital investments. Although subject to regulation, investor-owned utilities remain private enterprises. Governmental regulation has implied limits that preserve the private rights of these businesses.
The PUC has many regulatory mechanisms to ensure that utilities use a least-cost, least-risk approach to operating and investing in the system and promotes other mechanisms (like energy efficiency incentives) to help customers reduce their electricity bills. The PUC’s approach to regulation may seek to produce low rates and bills, but the PUC's core legal mandate is to set rates that are “just and reasonable,” not to make sure rates remain at a certain level or have an equal affordability impact on all customers. For more information, please see SB 978 Report to the Legislature (2018)
In that report, the PUC recommended legislative action to address affordability. In 2021, the legislature passed HB 2475 to provide the PUC new authority to set differentiated rates for low income and energy burdened customers. That bill allows the PUC to consider “differential energy burdens on low-income customers and other economic, social equity or environmental justice factors that affect affordability for certain classes of utility customers.” Under this new authority, the PUC has approved interim differential rates for five of the six energy utilities (PGE, PacifiCorp, NW Natural, Cascade Natural Gas, and Avista), and is currently working with Idaho Power on a proposal to provide interim low-income relief to its Oregon customers. The PUC is also working with stakeholders and utilities to develop long-term rates to address differential energy burden and factors that affect affordability for certain classes of utility customers."