Pacific Power says Oregon bill a cheaper way to a clean energy future

PacifiCorp d/b/a Pacific Power said Jan. 27 that its analysis of legislation that would advance Oregon’s clean energy goals finds that House Bill 4036 would result in cost savings of up to $600 million through 2030 versus the cost of the proposed ballot measures.

Relative to current Oregon policy, HB 4036 results in an average annual cost increase of less than 1% between now and 2030. HB 4036 ends Oregon customers paying for coal by 2030, and doubles renewable energy used to serve Oregon’s customers by 2040. The legislation is a negotiated compromise in lieu of ballot measures that would otherwise be on the November 2016 ballot.

“Oregonians from all walks of life and across the state agree that it is time to move to a cleaner energy future,” said Stefan Bird, president and CEO of Pacific Power. “We do too. But, Pacific Power has an obligation to achieve that shared objective in an affordable way. HB 4036 does that. It meaningfully moves Oregon towards a cleaner energy future in a way that is both doable and affordable, and does so in a far better way for customers than ballot measure alternatives.”

“Even in an era of historically low natural gas prices, our analysis shows that renewable generation is the less expensive option and that additional renewable resources can be added while maintaining grid reliability,” said Rick Link, director of origination at Pacific Power and lead analyst on HB 4036.

Key factors influencing the analysis include:

  • Natural gas is at historically low prices. Future increases in natural gas prices would make renewable generation even less expensive in comparison. Because renewables use no fuel, renewable generation protects customers from volatile fuel prices that are hard to project many years in the future.
  • Recently Congress extended, with a phase-out period, production tax credits (PTC) and investment tax credits (ITC). The benefits of these credits are passed along to customers and dramatically reduce the cost of new renewables before those tax policies fully sunset.
  • Costs to build renewable generation have declined substantially in recent years with advancements in mass production and technology improvements.

Among the key findings are:

  • Removing coal-fueled generation from Oregon rates by 2030, under the bill provisions, will have no impact on customer rates through 2030 when compared to current Oregon policy. Incremental renewable resources may have a modest impact on costs, with an annual average cost increase of less than 1% between now and 2030.
  • When compared to HB 4036, the ballot measure initiatives would cost Oregon customers up to an incremental $600 million through 2030.
  • Compared to current Oregon policy, HB 4036 reduces Oregon associated carbon emissions through 2040 by 35 million tons.
  • Analysis shows that today new renewable resources (both wind and solar) are about 20% lower cost than new natural gas alternatives, making renewable resources the economically preferred choice. The difference would be even greater if natural gas prices rise off historical lows. These differences are also driven by the extended, but sun-setting PTCs and ITCs.
  • HB 4036 allows more flexibility in moving from coal-fueled to renewable sources than the ballot measures. This flexibility positions Pacific Power to take advantage of low-cost, near-term renewable resource opportunities. Flexibility provisions also maintain the company’s ability to use existing transmission capacity opened up by retiring coal plants. Pacific Power’s long-term plan currently anticipates closing or converting 2,800 MW of coal-fueled generation by 2034.
  • HB 4036, by encouraging early action, combined with the sun-setting federal tax credits, may result in approximately 600 megawatts of renewables being constructed in the near term.

The Oregon Citizens’ Utility Board had announced on Jan. 6 that several environmental groups had reached a deal with Pacific Power and Portland General Electric on a legislative proposal that, if approved by state legislators, would end coal-fired power in the state.

“Often, when stakeholders like investor-owned utilities and environmental groups come together, there is nothing but posturing and stalemate,” said CUB in the Jan. 6 statement. “Fortunately, because CUB has years of experience finding workable solutions for utility ratepayers, we were able to guide conversations and facilitate agreements. Believe it or not, the utilities and the environmentalists have agreed on legislation that everyone can support and that will avoid an expensive and time consuming ballot measure battle.”

CUB said it is hoping that this legislation will become law before the end of Oregon’s 2016 short session. The proposal applies only to Pacific Power and Portland General Electric, who together serve about 70% of Oregon’s electricity needs. It does not change existing requirements on consumer-owned utilities.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.