Pacific Power is asking Oregon regulators to sharply limit the length of contracts electric utilities must pay for small-scale renewable energy under federal law.
The company claims shorter purchase agreements with eligible projects will ensure fair rates for customers, though opponents argue it would cripple financing for new wind and solar development.
At the root of the issue is a 37-year-old policy known as the Public Utility Regulatory Policies Act, or PURPA, which requires utilities like Pacific Power to buy renewable energy from “qualifying facilities” of 80 megawatts or less — so long as the projects can offer a price that is at or below what it would cost the utility to generate that power on its own.
Currently in Oregon, PURPA contracts run for a length of 15 years. Pacific Power wants to shorten that commitment to three years, which it says would minimize risk for customers.
An application was submitted May 21 to the Oregon Public Utility Commission, and a final order isn’t expected until March 2016. Idaho regulators already approved a similar request last month, limiting PURPA contracts from 20 years to two years.
In its ruling, the Idaho Public Utilities Commission determined 20-year contracts overestimated future development costs, which were passed on to utilities and, consequently, their customers.
The same principle is now being argued by Pacific Power in Oregon.
“If we had to sign contracts under the existing terms, the price of buying solar would quadruple while the price of production is falling,” said utility spokesman Ry Schwark. “We’re trying to move this to a negotiated tariff so our customers can capture some of these savings.”
But renewable energy developers and environmental groups sense a more sinister motive from Pacific Power: they say the company wants to shorten contracts in order to make financing projects more difficult, if not impossible.
Travis Ritchie, an attorney with the Sierra Club, said major utilities don’t like that they have to buy renewable energy under PURPA, and are looking for ways to thwart development in order to continue reaping profits off their own energy facilities.
“PacifiCorp, in particular, has a giant fossil fuel fleet and they’ve shown very little interest in developing a renewable energy portfolio,” Ritchie said.
David Brown, owner of Obsidian Renewables in Lake Oswego, said shortening contracts under PURPA would keep developers from being able to secure long-term loans needed to build their projects.
“Nobody is going to loan you money on a 15-year loan if you only have a three-year purchase agreement,” Brown said. “I think it would be an end to PURPA projects.”
PacifiCorp claims it has experienced a surge of PURPA requests since 2014, threatening to flood its system with power it doesn’t need and driving rates up for customers. In Oregon, Pacific Power has brought 338 megawatts of projects online with another 587 megawatts in active requests.
Those combined contracts would be enough to supply 56 percent of the company’s average retail load statewide, according to testimony before the Public Utility Commission. Meanwhile, the company’s long-range resource plan shows no new additional generation is needed until 2028.
Schwark said the complaints about shorter contracts are largely crocodile tears coming from hedge fund developers trying to make money on development off the backs of Pacific Power customers — including 17,847 customers in Umatilla County.
“Painting us as the bad guy is the convenient way to avoid the issue that our customers deserve a fair price for the energy they’re buying,” he said.
Contact George Plaven at firstname.lastname@example.org or 541-966-0825.