Oregon Legislature Passes Sweeping Energy Bill

The Oregon Legislature on Wednesday passed a sweeping and contentious bill that signals significant changes for the state's energy industry.  Senate Bill 1547, the final home for the "Oregon Clean Electricity and Coal Transition Plan," touches many areas of the industry. The aspects of the legislation that are receiving the most press are the requirements for large electric companies in Oregon generally to phase out coal-fired resources from their electricity supply to Oregon retail consumes by 2030, and the bill's increases in the renewable portfolio standards (over time, to reach 50% by 2040 for the largest utilities).  But there are a host of other related -- and unrelated -- aspects of the legislation, including directions for the Public Utility Commission's role and oversight over the various provisions and programs at issue; revisions to the use of renewable energy certificates (“RECs”); a mandate for larger electrical companies to have 8% of their aggregate electrical capacity by 2025 come from small (under 20 MW) renewable energy projects or biomass combined heat and power facilities; the creation of community solar programs; and programs encouraging energy efficiency and transportation electrification.

At least during the early years of implementation, affected utilities will be able to satisfy their new renewable energy mandates through purchases of RECs in lieu of physical renewable energy (“Banking Renewable Energy Certificates”).  Once renewables acquisition commences in earnest, the looming issue of intermittent-resource-integration will need to be addressed.  Although this legislation could result in rising retail electric rates, the bill provides the Oregon PUC with non-specific authority to dampen the renewables mandate to the extent cost increases would otherwise result in rate increases beyond a threshold percentage.  Notably, the bill also restricts competition between IOUs and small consumer-owned utilities otherwise exempted from the renewables mandate.

The bill passed over significant Republican opposition in the Senate after a prior iteration (HB 4036) received more bipartisan support in the state House.  Critics question the legislation's costs to consumers and ultimate effectiveness, as well as the manner in which it was drafted and pushed through a short legislative session without more public analysis.   But the bill, which was a compromise publicly supported by PacifiCorp, PGE and a variety of environmental groups, also received substantial community support. News reports indicate that Governor Kate Brown intends to sign the legislation.

A copy of the bill can be found here: https://olis.leg.state.or.us/liz/2016R1/Measures/Overview/SB1547