Two Oregon utilities reach deal to phase out coal-fired power by 2035

The Oregon Citizens’ Utility Board said Jan. 6 that several environmental groups have reached an agreement with PacifiCorp d/b/a Pacific Power and Portland General Electric (PGE) 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.

Highlights of this agreement include:

  • The agreement ends Oregon’s use of investor-owned coal-fired generation with all but one plant being phased out by 2030 and the remaining plant, which is PGE’s share of the Colstrip plant in Montana, by 2035 at the latest.
  • It builds on Oregon’s 2007 Renewable Energy Standard (RES) – which says that large utilities must generate 25% of their energy through renewables by 2025 – by extending a sustained, orderly development of new, renewable resources with predictable stair-steps to attain a 50% RES by 2040 for PGE and Pacific Power, the utilities most affected by a transition away from coal.
  • The agreement offers certainty, both in terms of how PGE and Pacific Power handle their coal plants and how those coal plants will be replaced. With this agreement, coal will be largely replaced with energy efficiency (which is acknowledged as the priority) and renewable energy.
  • Like the original RES, consumers are protected in a number of ways to ensure that costs associated with these changes are kept under control.
  • The agreement enacts a Community Solar program to allow residential and small commercial customers of investor-owned utilities to participate in the ownership of solar projects and receive the benefits as if they had solar on their own roof.
  • It puts into state policy the importance of transitioning transportation vehicles to electricity, laying out requirements for the building of both public and private infrastructure to sustain this change.

Stakeholders in this deal in addition to CUB include: Climate Solutions, NW Energy Coalition, Oregon Environmental Council, Oregon League of Conservation Voters, Natural Resources Defense Council, Pacific Power, Portland General Electric, Renewable Northwest and the Sierra Club.

The proposal would also:

  • Direct the Oregon PUC to establish accounting for production tax credits to ensure there is an effective annual balance between the credits actually generated and customer prices.
  • Direct the PUC to investigate accounting for variable costs in rates and to consider changes to its current policy on balancing variable costs of new, renewable resources and customer prices.
  • Allow energy storage projects to be included under the Renewable Adjustment Clause mechanism established by the PUC.
  • Give utilities flexibility in seeking recovery of new investments to better manage impacts on prices.
  • Direct the PUC to establish procedures to consider the long-term customer value of access to and use of the facility, site or resource when procuring renewable resources.

Notable is that there is only one coal-fired plant in Oregon, PGE’s Boardman facility, which is already slated to shut around 2020 for clean-air reasons. So this deal only relates to out-of-state coal plants that supply power into the Oregon market, like Colstrip and several PacifiCorp coal plants.

Said Portland General Electric in a statement posted to its website: “PGE has joined with Pacific Power, Citizens’ Utility Board of Oregon and several environmental groups to craft a 2016 legislative proposal that balances the needs of our stakeholders while helping Oregon meet its greenhouse gas reduction goals. This proposal will be introduced to the Oregon Legislature for consideration in the 2016 legislative session. The proposal would transition Oregon off coal-fired generation by 2035 and double PGE’s commitment to qualifying renewable energy generation in our portfolio by 2040. It also reaffirms the state’s commitment to energy-efficiency programs, encourages transportation electrification and increases access to solar energy for more Oregonians. The proposal gives PGE flexibility to achieve these goals while working with the Oregon Public Utility Commission to ensure the reliability and affordability of electricity for our customers.”

PGE added: “Passage of this legislation will lead to withdrawal of a ballot measure in November, which would have required similar carbon reduction measures but did not include the key protections outlined in the collaborative plan.”

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.