New Oregon Avoided Cost Rates and Contracts

The Oregon Public Utility Commission (Oregon Commission) has approved new standard contracts and rates for qualifying facilities (QFs) that sell their power to Portland General Electric Company (PGE), PacifiCorp, and Idaho Power Company (Idaho Power).  These new rates and contracts are only available to QFs that have the right to sell power to utilities under the Oregon and federal Public Utility Regulatory Policies Act (PURPA) and that have a maximum output of 10 megawatts (MW) or lower.  PGE’s new contracts and rates were approved on December 16, 2014, while PacifiCorp’s and Idaho Power’s were allowed to go into effect in August 2014.  PGE’s and PacifiCorp’s avoided cost rates and contracts provide new options for eligible renewable energy QFs to sell their electricity to these utilities.  

In February 2014, the Oregon Commission issued an order in its investigation into its PURPA policies that reaffirmed its intention to require PGE and PacifiCorp to pay different rates to eligible renewable resources.  An eligible renewable QF has the choice of selling power at “standard” avoided cost rates and keeping their renewable energy certificates (RECs), or selling both their power and RECs so that they can obtain a “renewable” avoided cost rate.  There are also different rates for baseload (geothermal, biomass and hydro), solar and wind QFs as well as for generators within and outside of the utility’s system.  The different rates and contracts have increased both the options available to renewable QFs and the complexity of implementing PURPA in Oregon.  PGE’s rates are generally higher than PacifiCorp’s and represent a more realistic option for most QFs.

The Oregon Commission is continuing to investigate issues related to PURPA, including the new rates and contracts available to renewable QFs.  Resolution of these issues will have a major impact upon the continued viability of existing QFs, and the development of renewable energy in Oregon.  Some of the specific issues the Oregon Commission is likely to resolve include the methodology for calculating renewable rates, whether QFs are sufficiently compensated for the capacity value they provide to utilities, a number of controversial contracting provisions, and when a QF can enter into a legally enforceable obligation with a utility. 



