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News Release
Commission Grants Direct Access For PGE's Industrial/Large Commercial Customers And Choices For The Company's Residential Customers
January 28, 1999 (1999-005)
Contacts: Ron Eachus, Commission Chair, 503 378-6611; Joan H. Smith, Roger Hamilton, Commissioners, 503 378-6611; Ron Karten, Public Information Officer, 503 378-8962
Order 99-033
Docket: UE 102

Not all of the Company’s Restructuring Plans Are Approved
Salem, Ore. – The Oregon Public Utility Commission (OPUC) announced today that it would allow all of Portland General Electric’s (PGE) industrial and large commercial customers direct access to energy service providers (ESPs), but offer a choice of options and a "safety net" to the company’s residential customers. At the same time, the Commission turned down the company’s proposal to sell its hydroelectric facilities.
"What we want," said the Commission in the 74-page order, "is restructuring that is likely to preserve most of the benefits of the present system and yet move significantly toward retail choice and the benefits it can bring."
Under PGE’s proposal, filed in December 1997, residential customers would have to choose a new ESP through direct access in a competitive market. The company would become a "poles and wires" company only, providing transmission and distribution services to ESPs that both obtain generation supplies and sell those supplies directly to the public. The PGE proposal also offered a limited number of so-called "portfolio" offerings from ESPs.
The Commission embraced portfolio options for residential customers but declined to allow direct access for residential customers and insisted that a cost-of-service option allow customers to continue to be served with regulated rates if they wished to do so.
The order "takes impetus and some specific elements from (the PGE) plan, as well as from the other proposals before us."
In deciding not to authorize mandatory direct access for residential customers as proposed in the PGE plan, the Commission expressed concern that absent a viable energy market for residential customers, these customers would be at risk with few ESP choices, potentially higher rates and a less stable marketplace.
In addition, the Commission said, selling the company’s hydroelectric generation facilities, which provide low-cost power, is not in customers’ interest. "We make this decision as a means of assuring that the maximum value of those assets goes to ratepayers," the order said. "Retention of these assets also reduces the risks that the federal relicensing process now underway …will be significantly impacted..."
The Commission was also concerned that PGE’s plan is irreversible. Once the generation assets are sold, there is no turning back no matter what happens to residential customers.
In today’s order, the Commission proposed a plan which:
Allows the company’s industrial and all but very small commercial customers direct access to ESPs;
Provides all customers the choice of a cost of service rate established by the Commission;
Offers an expanded portfolio of options for residential and small commercial customers, which allows them to choose between several electric service options, including a market rate, an environmentally benign rate and others that may be developed, with the possibility that these services could be transitional if markets evolve and direct access is in the public interest;
Allows the company to sell at auction all non-hydro generation resources;
Includes a mechanism that gives PGE an incentive to achieve the highest possible value for its assets and at the same time, allows it to recover at least 95% of the costs associated with the transition to a new structure;
Protects important public programs, including development of renewable resources, energy efficiency, and low-income weatherization through a 3% System Benefits Charge added to customer bills.
"We cannot justify changes in the system," the order notes, "unless we have been convinced that the new structure will be better than what we have."
Legislation will be needed for the Commission’s plan to be implemented. Once the Legislature acts, however, it will be up to PGE to file a new case to proceed with the restructuring that this order proposes. Since the matter involves an application by the company, the Commission’s plan is optional for the company.
"Throughout the proceeding, consumer concerns have been paramount to the Commission," said Ron Eachus, Commission Chairman. "The order gives the larger customers the benefits of direct access. The smaller customers will get more choices without giving up still needed protections. And all customers retain the benefits of the low-cost hydro system."
"We have learned from our retail access pilot projects that residential customers may be at risk if thrown to the mercy of today’s volatile electricity market," said Commissioner Roger Hamilton. "This order protects the small customer we represent while moving toward a more efficient competitive electricity market through the sale of PGE’s fossil fuel generation."
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