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Utilities say coal transition plan would save over proposed ballot measures

Pacific Power's analysis of the Clean Electricity and Coal Transition Plan shows the bill would save $600 million over a proposed ballot measure.
George Plaven

East Oregonian

Published on January 28, 2016 12:01AM

Last changed on January 28, 2016 10:46PM

The Oregon Public Utility Commission will hold a special meeting Friday in Salem to discuss a major proposal that would phase out coal from the state’s two largest electric utilities.

House Bill 4036, or the Clean Electricity and Coal Transition Plan, would also require Pacific Power and Portland General Electric double their renewable energy mandate by 2040. The companies would stop using coal to serve Oregon customers by 2030.

The deal was negotiated with Pacific Power, PGE and a coalition of environmental groups that previously filed ballot measures to cut coal out of Oregon’s electricity mix. Both utilities say HB 4036 includes safeguards that will save ratepayers hundreds of millions of dollars, compared to Initiative 63.

On Wednesday, Pacific Power released its analysis of the plan, showing HB 4036 would save $600 million through 2030 versus the ballot measure. Customer rates would increase by less than 1 percent per year over that time, the analysis continues.

Pacific Power has roughly 17,847 customers in Umatilla County.

PGE conducted a similar analysis, with similar results: the company projects an overall savings of $220-$360 million, and a rate impact of 1.5 percent per year compared to business as usual.

Rick Link, director of origination for Pacific Power and lead analyst on HB 4036, said the primary difference between the bill and proposed ballot measure is how the utilities will be allowed to phase out their coal generation. A number of the company’s coal plants are expected to depreciate between 2024-2030, but Link said the bill gives them flexibility to adjust their depreciation schedule.

“It allows us to essentially take advantage of fully paying for coal resources after they’ve depreciated,” Link said.

Wind and solar energy have also become increasingly cost-competitive, even with historic lows in natural gas prices, Link said. Pacific Power forecasts show new wind and solar projects are about 20 percent less expensive than new natural gas plants.

Another key development, Link said, was the extension of federal tax credits for wind and solar energy. Both the Production Tax Credit and Investment Tax Credit received multi-year extensions with gradual phase-out periods that Link said should give greater certainty to investing in renewables.

“Irrespective of Oregon policy, this now provides opportunity for near-term renewable resources as the most cost-competitive alternative,” Link said.

HB 4036 also maintains a 4 percent incremental cost cap, meaning that Pacific Power and PGE won’t have to add renewables if the cost is more than 4 percent higher than developing non-renewable power.

Under the plan, Pacific Power says it will close or convert 2,800 megawatts of coal-fueled generation by 2034, and could build up to 600 megawatts of renewable energy projects in the near future. Its analysis shows the bill will reduce Oregon’s carbon emissions through 2040 by 35 million tons.

A number of environmental groups including the Oregon Environmental Council, League of Conservation Voters, Natural Resources Defense Council, Sierra Club and Climate Solutions collaborated on the bill. The Citizens’ Utility Board of Oregon, the state’s primary advocate for residential ratepayers, has also signed off on the plan.

“Oregonians from all walks of life and across the state that it is time to move to a cleaner energy future,” said Stefan Bird, president and CEO of Pacific Power. “Pacific Power has an obligation to achieve that shared objective in an affordable way. HB 4036 does that.”

The Public Utility Commission will meet at 9:30 a.m. to hear from Pacific Power and PGE on their analyses. A public hearing on the bill is scheduled for Feb. 2 in the legislature.


Contact George Plaven at gplaven@eastoregonian.com or 541-966-0825.

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