Portland General Electric receives approval for 17% hike in residential electricity prices - KATU

PGE customers to see 17% increase in cost of utilities, here's why | KATU

PORTLAND, Ore. — Portland General Electric (PGE) residential customers will see a significant rate hike starting next year as the utility received approval for residential electricity cost increases of an estimated 17.2% starting in January 2024.

The utility company, which services 44% of Oregonians, requested a general rate hike of 14% in February.

That number ultimately went down slightly as PGE reached various settlements with residential and corporate utility boards. The 17% is a result of the sum of the general rate increase (for PGE's increased operating expenses) and the increase in the wholesale cost of power.

The Public Utility Commission held a public comment meeting in May where it heard from customers and consumer advocates that urged the governor-appointed three-member board to deny the increase.

"The proposed rate increase that PGE is suggesting would be disastrous for the low-income community in Portland. Low-income families are already struggling to make ends meet," said John Maddalena, the energy program manager for youth services nonprofit, Self Enhancement Inc. "Low-income families are more likely to live in older and poorly insulated homes. Those require a lot more energy to heat and cool. A rate increase like this would disproportionally impact these families."

The 17.2% is still an estimate. While most of the rate-increase case has been adjudicated already, PGE is still in the process of settling smaller portions of the case. Once those are finalized and once the wholesale cost of power is finalized, PGE will publish the final increase amount sometime in December.

Bob Jenks, director of the Citizen's Utility Board, said the residential consumer advocating agency, along with groups representing commercial and industrial interests, fought to stop PGE from handing roughly $34 million more costs off to consumers.

"The cuts were things like they had asked for a higher profit margin and ended up agreeing that they weren't going to get a higher profit margin. We got them to take a hit on the Biglow Wind Facility," he said referring to a windfarm in Biglow Canyon that saw a blade fall from one of the windmills in August of 2022. "We looked into it, concluded that it was because of poor maintenance practices and customers shouldn't pay for the cost of that."

Cost increases to residential consumers will be considerably more than the increase in cost to commercial and industrial consumers. Jenks said the main reason is that distribution costs, for example, getting power lines to properties, are considerably more for residential costumers than they are for commercial and industrial.

PGE claims that the pricing increases are due to upgrades to their systems.

"We are making investments in things like wildfire resilience. Installing more fire-resistant poles, expanding our tree-trimming efforts, and monitoring the weather so that we have a better understanding of what might be coming our way. We are also investing in things like protecting our facilities from both physical and cybersecurity threats," said Allison Dobscha, a PGE spokesperson.

PGE's press release and comments during interviews failed to mention that a portion of the cost increase is a result of a modernization project on the Faraday Hydroelectric Dam on the Clackamas River near Estacada. The project began in 2019 and was completed in January of 2023. According to Jenks, the project represented a sizeable portion of the rate increase.

When asked what percentage of the rate increase was due to the project, Dobscha would not provide an answer. She also would not provide a total price tag for the project.

When asked the same question, the Public Utilities Commission chief administrative law judge, Nolan Moser, deferred to PGE.

Moser said the commission does not have a say in what projects utilities can invest in.

"The way ratemaking in general works is that we don't as an agency, in most cases, get to tell the companies what to do before they do it," he said, noting that the commission is, however, able to verify that the cost to consumers is due to an actual expense and not the result of poor management practices.

"We are not allowing the company to charge customers for a really bad decision or an investment that is not prudent," he said as an example.

Utility companies are only allowed to request rate changes for new projects when those projects are operational. Because the dam did not become operational until the beginning of 2023, it's too soon to say whether that investment has panned out for consumers.

"It's something that can be examined in a future rate case but for the time being we got off of the information we have today," Moser said.

House Bill 2475 (2021) allowed the commission to set differentiated rates for low-income customers starting in August 2022. As a result of that bill, PGE will offer the following discounted rates for these lower income brackets.

For a two-person household, that translates to the following income levels: