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News Release
Commission Rolls Back PGE Rates for 2003
 
October 30, 2002 (2002 - 030)(UE 139)
 
Contacts:  Roy Hemmingway, Chairman, 503 378-6611; Joan H. Smith, Commissioner, 503 378-6611; Lee Beyer, Commissioner, 503 378-6611; Bob Valdez, Public Information Officer, 503 378-8962
 
Salem, OR – Today the Oregon Public Utility Commission directed an overall 12 percent rate reduction for customers of Portland General Electric (PGE). The decision will affect rates beginning January 1, 2003. Other rate changes expected to take effect at that time will offset some of the decrease.
 
The decision cut the company’s power costs beyond what the company had requested. Customers will get rate relief because PGE will pay significantly less for power it buys in the market for the coming year compared with the power costs that are included in the company’s current rates.
 
Residential customers will see smaller reductions than business and industrial customers because PGE’s power costs make up a smaller portion of residential bills. Residential customers are supplied in part by power obtained from the Bonneville Power Administration, and the costs of that power have not come down. The exact impact on rates will not be known until November 15 when PGE will make its final power cost adjustments for 2003. The power costs will be subject to review and approval by the Commission.
 
"This is a step in the right direction given the outrageously high rates customers are paying. I had hoped we could chop the rates further," Commissioner Lee Beyer said, "but this is at least a good start."
 
PGE had proposed an overall decrease of 10 percent. Based on arguments raised by Commission staff and parties to the case, the Commission reduced the company’s request by approximately $25.2 million.
 
The Citizens Utility Board (CUB) had recommended a reduction of $38 million. Industrial Customers of Northwest Utilities (ICNU) proposed a $36 million reduction, and Commission staff proposed a reduction of $28.8 million.
 
A significant portion of the overall reduction was related to four disputed power contracts the company entered into for 2003. The Commission order allowed the costs for January and February of 2003, but disallowed a portion of the costs for the remaining ten months of the year.
 
"While I acknowledge the company made its decisions to buy power during a very chaotic market, I believe we should not allow the company to pass along the entire cost of four disputed contracts for 2003 because the company failed to provide convincing evidence why it deviated from its past practice and policy," said Commissioner Beyer.
 
Commission Chairman Roy Hemmingway disagreed with the majority decision with respect to the disputed power contracts for 2003.
 
"Ratepayers should not be asked to shoulder costs imprudently incurred by the utility, but I believe that these power contracts were prudently signed with the intent of protecting customers from the high prices of the power markets that were much in evidence in 2001," the chairman said.
 
The Commission decided not to suspend the decision even though CUB had suggested publicly the Commission hold off until it is determined whether or not PGE had a hand in disrupting wholesale electricity markets and driving up prices over the last two years. The Commission noted CUB has not made such a request to the Commission, and secondly, the Commission fails to see the rationale for delaying rate relief pending the outcome of a possible investigation.
 
Chairman Hemmingway said the Commission is working closely with Oregon’s Attorney General and the Federal Energy Regulatory Commission to investigate possible misconduct. If the evidence proves misconduct, the Commission will act swiftly to lower rates.
 
The Commission order reduced PGE’s power cost filing in the following areas:
  • $14.65 million for the four disputed 2003 contracts
  • $8.5 million related to expected hydroelectric generation
  • $1.5 million unplanned outages at the Colstrip coal plant
  • $1.2 million revenue requirement reduction for plant depreciation
  • $0.5 million for unplanned power plant outages at the Beaver and Coyote Springs natural gas fired plants
 
The annual adjustment of the power cost component of customers’ rates was included in last year’s PGE’s rate case. Without this adjustment, customers would not benefit from declining power costs until PGE makes a general rate case filing.
 
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