PORTLAND — Oregon regulators have approved lower electric rates for Pacific Power customers in 2021, thanks in part to cheaper fuel and tax credits from wind and solar energy, according to the utility.
That comes as welcome news for irrigators already struggling financially with the coronavirus pandemic and water shortages due to extreme drought.
Most of Pacific Power’s 615,000 Oregon customers will see a 5.2% rate reduction, including an estimated 3.5% reduction for agricultural pumping. The utility has 7,984 irrigation customers statewide, about half of whom are in the drought-stricken Klamath Basin.
Ben DuVal, power committee chairman for the Klamath Water Users Association, said the group is pleased with the outcome following months of deliberations.
“We appreciate Pacific Power’s constructive approach to negotiation and settlement,” DuVal said in a statement. “We were able to resolve irrigators’ most important issues efficiently, and cost-effectively.”
Given the company’s initial proposal, things could have turned out much differently.
Pacific Power submitted its request for a general rate revision to the Oregon Public Utility Commission in February 2020, asking for a 6% increase. For irrigators, the rate hike would have been 10%.
Rate increases were needed to help pay for more renewable energy and transmission upgrades while phasing out coal-fired power plants, the company argued.
In 2016, Oregon lawmakers passed the Clean Electricity and Coal Transition Act, directing the state’s two largest utilities — Pacific Power and Portland General Electric — to stop using coal by 2030 and double their renewable energy mandate by 2040.
The KWUA and Oregon Farm Bureau, among other organizations, contested Pacific Power’s rate case.
“Electricity is one of the most significant operating costs for agricultural customers who are highly dependent upon the use of pumping and sprinkler equipment to deliver water to their crops,” KWUA stated in an Oct. 12 filing.
Increasing electricity costs would exacerbate an already dire situation for farmers and ranchers reeling from drought, wildfires and COVID-19, the filing stated.
The PUC determined that Pacific Power cannot charge ratepayers for incremental decommissioning costs of its remaining coal plants — at least for now.
“We must ensure that PacifiCorp’s transition away from coal resources is fair to Oregon customers,” said Megan Decker, PUC chairwoman. “We need to improve Oregonians’ confidence in the cost estimates through additional PUC staff and stakeholder review before we include PacifiCorp’s projected costs in rates.”
The PUC also approved Pacific Power’s annual Transition Adjustment Mechanism, or TAM, that incorporates fuel costs and tax credits associated with multi-billion dollar investments in renewable energy.
Stefan Bird, president and CEO of Pacific Power, said the revised general rates and TAM combined should lower customers’ electric bills by an average of 5.2% in 2021.
“We kept our commitment to our customers in 2017 to keep rates flat for at least three years and we are pleased to now deliver these price reductions while simultaneously making big strides in decarbonization and network resilience,” Bird said.
DuVal, with the KWUA, said irrigators should see a 3.5% reduction with the new base rate and annual adjustments.
“Customers are getting economic benefit from smart investments that Pacific Power has made in meeting its renewable energy requirements in the state of Oregon,” he said.
But Decker, the PUC chairwoman, cautioned that rates may increase in 2022 after further evaluation of Pacific Power’s ongoing costs as it drops coal generation.
“While this case results in a rate decrease, we want to be clear that a significant portion of PacifiCorp’s requested costs will be recovered through customer rates in the near future, (following) additional processes that we decided were necessary to protect customers,” Decker said.