Commission OKs electricity rate hike

PacifiCorp gets 14.5 percent hike to buy wind power, relicense dams, retrofit plants

By MITCH LIES

Capital Press

December 23, 2010

Oregon customers of PacifiCorp will see a nearly 15 percent increase in their electricity rates come Jan. 1, while rates for Portland General Electric customers will increase nearly 4 percent.

The Oregon Public Utility Commission approved the rate increases of 14.5 percent for PacifiCorp and 3.9 percent for PGE on Dec. 17.

PacifiCorp originally sought a 20 percent increase; PGE requested a 9.2 percent increase.

PUC Public Affairs Specialist Bob Valdez said PacifiCorp needs additional funds to add wind resources, relicense hydroelectric dams and add pollution control measures to coal plants.

The projects are expensive on the front end, "but they are something customers will be using for the next decade," Valdez said.

"This also gives PacifiCorp a leg up on the looming renewable resources requirements" imposed by the 2007 Legislature, Valdez said.

Senate Bill 838, which lawmakers passed in 2007, requires Oregon utilities meet 25 percent of their retail electricity needs with renewable energy resources by 2025. The renewable requirements ratchet up in intervals.

Also driving up costs is a transmission project PacifiCorp is developing in Utah. Oregon customers are paying a small percentage of that cost, Valdez said, as part of an agreement the six-state utility operates under.

Also driving up PacifiCorp costs is a decrease in the value of wholesale power. PacifiCorp, which produces roughly 90 percent of the power it supplies, sells power on the wholesale market when prices are high to help offset costs.

The drop in the wholesale energy prices helped PGE reduce costs this past year, Valdez said.

"PGE was able to take advantage of low prices on the wholesale market for electricity and natural gas," Valdez said.

Also under the rate increases approved last week, energy rates for PacifiCorp industrial customers will rise 17 percent, and large commercial customer rates will increase 17.6 percent.

During the most recent quarter, PacifiCorp reported earnings of $231 million on revenues of $1.2 billion, according to Berkshire Hathaway's most recent Securities and Exchange Commission filings. PacifiCorp is owned by Berkshire Hathaway, a conglomerate controlled by Warren Buffett.