Oregon Outlaws Coal

Published April 13, 2016

Oregon Gov. Kate Brown (D) signed into law a controversial bill on March 11 that will ban the use of coal to generate electricity, beginning in 2030, making Oregon the first state in nation to outlaw using coal to produce electricity.

The law also mandates 50 percent of Oregon’s electricity come from renewables by 2040.

Opponents of the sweeping legislation, from policy experts to the state’s own Public Utility Commission, say the new law will raise rates for Oregon customers without reducing carbon emissions.

One-third of Oregon’s electricity comes from coal, primarily from out-of-state coal plants, which will continue to operate, although they will no longer sell their power to Oregon utilities.

Ratepayers Can Expect Higher Costs

PacifiCorp, which backed the new law, issued a report estimating price increases for ratepayers will be less than 1 percent through 2030.

John Charles, president of the Cascade Policy Institute, says the “heavy lifting” starts between 2030 and 2040, years not addressed in the utility’s cost projections.

Charles says e-mails obtained through a public records request indicated Brown’s office kept the state’s Public Utility Commission (PUC), the regulatory body charged with protecting ratepayers, out of negotiations over the proposal. In one e-mail, a commissioner called the bill “a shell game that will result in no actual emissions reductions and higher rates for Oregon customers.” The PUC’s attempts to discuss its concerns with Brown’s office were stonewalled.

“[PUC was] not part of the secret negotiations,” said Charles. “They did not testify in the House hearings, [but] in their rather meek testimony before the Senate hearings, the chairman of the commission did say this will have no environmental benefit, but it will cost ratepayers money.”

The Renewable Mandate

Requiring half of Oregon’s power to come from renewable sources by 2040 is an ambitious goal. The state currently mandates 15 percent of its energy come from approved renewable sources, yet only 6.2 percent of it currently does.

“If you define ‘hydropower’ as renewable, we’d already be meeting the 50 percent standard,” Charles said.

The bill includes provisions allowing PUC to suspend compliance with the law if reliability is threatened or consumer costs become too high. It also provides for the purchase of renewable energy credits (RECs)—tradeable credits representing the value of renewable energy—which can be used to meet the mandate.

Charles says RECs are “escape hatches” and are evidence the law is “designed to fail.”

“So, by design they know this will increase costs, will decrease reliability of the grid, and will have goals for utilities so unrealistic that they have to meet 20 percent of the requirement with counterfeit electricity,” said Charles, who testified before the Oregon Senate’s Business and Transportation Committee (BTC) on the bill in February.

“As I told [BTC], if you’re already designing a system with three escape hatches, you know it’s already going in the wrong direction,” said Charles.

“This is like a public pension crisis,” said Charles. “Legislators have their victory party now, and they pin their merit badge on their chest, saying, ‘Look at us, we’re great,’ and the costs are all back loaded. [When] it all explodes in 15 years and it’s a disaster, where will the legislators be?”

Ann N. Purvis ([email protected]) writes from Dallas, Texas.