Wildfire mitigation, market volatility drive 14% rate increase for Oregon customers

Image by Tumisu, from Pixabay

The Oregon Public Utility Commission (PUC) finalized rate increases for PacifiCorp (dba Pacific Power) customers effective January 1, 2023. The increase is a result of the annual adjustment for power costs, which are markedly higher due to market volatility, and non-energy related costs, including costs to mitigate wildfire risk. 

The average overall rate increase is 14.8 percent combined for all customer types. A typical residential customer using 900 kilowatt hours per month can expect monthly bills to increase from $91.89 to $111.34. The impact varies depending on different customer types. 

Significant increases in Pacific Power’s expected cost to purchase and produce electricity in 2023 are a primary driver of the increase, based on forecasts for both the higher cost of fuel (natural gas and coal) to produce electricity and the higher cost to purchase electricity in the market. Pacific Power cited global supply chain problems as one factor in reducing the supply and increasing the cost of electricity.

“Unfortunately, fuel cost increases and supply chain delays caused by global events, combined with increasing volatility in regional electricity markets, drive the price for utilities to produce and purchase electricity. Although the utilities cannot avoid all of the impacts of these higher prices in the short term, there may be options available for residential customers to help reduce the bottom line impact,” said Megan Decker, PUC Chair.

“We recognize that increasing rates at a time when Oregonians are already dealing with high inflation presents challenges for many customers,” she added.

Pacific Power recently launched a new program that offers 20-40% discounts on bills for customers making 60% of the state medium income. The utility also offers budgeting programs for customers including time-of-use (TOU) rates and equal pay billing options so customers can pay the same amount every year.

Additionally, in partnership with Energy Trust of Oregon, Pacific Power customers can also tap into information and rebates to help improve their energy efficiency and lower their bills.

Transition Adjustment Mechanism (TAM)

Pacific Power files an annual transition adjustment mechanism (TAM) to update customer rates to reflect the company’s actual costs to produce and purchase electricity. Due to volatility in the energy markets and increased costs to produce and purchase energy, customer rates will increase by a larger amount than earlier estimated starting January 1, 2023. In October 2022, the PUC adopted a settlement between Pacific Power, customer advocate groups, and the PUC Staff for a power cost increase of approximately $66.43 million after taking advantage of tax credits that provide shared benefits with Oregon customers. That expected increase was based on Pacific Power’s preliminary power costs estimates. Pacific Power’s final November 15, 2022 power cost forecast, however, showed a 20.3 percent increase in power cost rates over the preliminary forecast. 

General Rate Revision 

The PUC recently approved a $46.7 million, or 3.7 percent increase for non-energy costs in a general rate proceeding, a reduction from the original requested increase of $84.4 million. This increase, which will also go into effect January 1, is driven by numerous factors, including increases in wildfire mitigation and vegetation management spending, capital additions, and miscellaneous increases to the company’s revenue requirement. The PUC also approved an agreement by the parties preventing Pacific Power from filing a general rate case in Oregon with rates effective earlier than January 1, 2025.

PacifiCorp serves approximately 630,000 customers in Oregon, and approximately 2.0 million total retail customers in California, Idaho, Oregon, Utah, Washington, and Wyoming.

PGE Rate Increases

The Oregon PUC also finalized an increase in rates for Portland General Electric (PGE) customers as reflected in the company’s annual update tariff (AUT). The AUT is filed annually to update customer rates to reflect the company’s cost to produce and purchase electricity. 

PGE’s expected cost to purchase electricity and natural gas in the energy markets in 2023 has increased significantly over the prior year’s forecasts, which results in an increase to customer rates for 2023. Effective January 1, 2023, a typical residential customer using 780 kilowatt hours per month can expect monthly bills to increase from $114.54 to $122.60, which is about a 7.0 percent increase.

PGE also offers discounts for certain customers based on income and also offers TOU rates and equal billing.

PGE serves approximately 900,000 customers with a service area population of 2 million Oregonians in 51 cities.

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