Public hearing – March 12
Sponsors – Sen. Pham, Golden; Rep. Gamba, Sosa
Includes -5 Amendment
Oregon’s Public Utility Commission (OPUC) presently regulates for-profit electric companies using a “cost of service” framework, which incentivizes them to build new infrastructure and to invest their own capital in new projects. This approach has been useful in the past, but many experts now think that it no longer works well to manage the challenges that the renewable energy transition is bringing to the electricity industry.
This bill allows OPUC to develop and adopt a different framework known as “performance-based regulation.” In this approach, OPUC would offer incentives and impose penalties to induce electric companies to meet metrics important to Oregon citizens. These include minimizing greenhouse gas emissions, improving resilience and reliability in response to climate change, and expanding the use of small-scale distributed energy resources such as community solar projects,
neighborhood microgrids and demand response programs. A key goal is to reduce utilities’ costs while passing some of the savings on to ratepayers.
Performance-based regulation is very complex and must be tailored to the specific circumstances of the utility. This bill does not provide many details for how OPUC should apply this general framework to regulate utilities such as PGE and PacificCorp. Instead, it offers only general guidelines.
These guidelines include the development of performance metrics that are clear, objective, verifiable and achievable for measuring an electric company’s performance. Criteria that OPUC may consider include (i) describing how the performance standards and metrics are to be carried out; (ii) identifying actions and mechanisms that a company may carry out to meet performance
standards; (iii) providing incentives or penalties to electric companies based on their performance.
An appropriation of $500,000 is made to OPUC, to develop the framework called for in this bill.