Spring 2002 Issue

Energy Trust Will Pursue Conservation, Renewables in Oregon

In March, Oregon's ambitious new energy conservation effort got under way, financed through a small portion of the revenues of the two largest electric utilities in the state and administered by a new agency, the Energy Trust of Oregon.

Under an energy restructuring law that went into effect March 1, the Oregon Public Utility Commission will collect an amount of money equal to 3 percent of the gross revenues of the two investor-owned utilities it regulates, Portland General Electric Company and PacifiCorp, and distribute the money for public purposes, which include energy conservation and renewable energy, low-income weatherization and housing, and energy conservation in schools.

The largest share, 74 percent, will go to the Energy Trust of Oregon, which in turn will spend the money on energy conservation and renewable energy efforts that directly benefit Oregonians in the service territories of the two utilities. The Energy Trust is expected to have about $50 million to work with annually, depending on revenues of the two utilities.

In consultation with a 10-member board of directors, Executive Director Margie Harris and her small staff will solicit applications for funding energy conservation and renewable energy projects, review the proposals and then award contracts for the work. Before agreeing to head the Trust, Harris operated a management and communications consulting firm in Portland and, before that, was executive director of marketing communications at Tri-Met, Portland's public transit system. Earlier, she held positions with the Oregon Department of Energy and the Western Solar Utilization Network.

The Energy Trust of Oregon is planning a smooth startup, communications and marketing director Jan Schaeffer said.

"At the outset, we are negotiating a transition with the utilities so their conservation programs continue," she said. "Between March 1 and the end of the year, money will go to PGE and PacifiCorp to sustain their core conservation programs. In the meantime, we are looking at all types of energy conservation and renewable power projects ? especially projects that will have good results quickly or are innovative and different."

Publicly owned electric utilities, such as municipal utilities, peoples utility districts and electric cooperatives, are regulated by their own elected commissions and so are not affected by the law that created the Energy Trust. However, in Oregon as elsewhere in the Northwest, public utilities purchase some or all of their electricity from the Bonneville Power Administration, and the federal power marketing agency is offering a discount on its wholesale rates to its utility customers that operate qualifying conservation and renewables programs.

Oregon's Energy Trust is unique in the Northwest. Montana, for example, also has a system benefits charge established as part of its energy restructuring legislation. It is funded at the rate of 2.4 percent of utility revenues, but investments are administered by individual utilities and can be used for conservation, low-income weatherization, low-income power bill assistance and renewable energy projects. Montana public utilities that purchase power from Bonneville can use the portion of their Bonneville charges attributable to debt service on past conservation investments as an offset to the system benefits charge. This has the effect of reducing the amount available for new conservation investment. In Washington and Idaho, there is no overall system benefits charge, and utilities, both public and private, are pursuing efficiency improvements at different rates. Some utilities have been very aggressive, and others have not.

To provide direction for project solicitation and selection, the Energy Trust of Oregon developed an interim strategic plan. The Trust is working on a long-term strategy. For now, the Trust has identified the following key goals and strategies:

• Save 300 megawatts of electricity through cost-effective energy conservation investments by 2012.

• Diversify Oregon's power supply so that renewable resources account for 15 percent by 2012.

• Expand the market for energy-efficient products and services and renewable resources.

• Develop innovative products to support energy efficiency and renewable resources.

The history of the Energy Trust could be said to date to the National Energy Policy Act of 1992, in which Congress authorized a transition for the nation's electricity industry from regulation to competition. This transition developed over several years, and in 1996 the governors of Idaho, Montana, Oregon and Washington convened the Comprehensive Review of the Northwest Energy System to investigate the risks and opportunities of the transition to competition for the region's unique energy system, dominated by hydropower ? most of it federally owned.

In December 1996, the 20-member Comprehensive Review Steering Committee, which included energy policy experts from around the region, issued its report. Among the committee's recommendations was a proposal that 3 percent of the revenues from the sale of electricity be dedicated to sustaining investments in cost-effective conservation, renewable resource development and home weatherization for low-income citizens. Three percent of revenues, which would have amounted to $210 million regionwide in 1995, was approximately 65 percent of what was spent for those purposes by the region's utilities and Bonneville that year.

Oregon's Legislature responded to this challenge with energy restructuring legislation that included a 3 percent "public purposes" charge to the rates of the two largest investor-owned utilities operating in the state, PacifiCorp and Portland General Electric. The Oregon Public Utility Commission encouraged the creation of a nonprofit organization to administer the money collected through the charge, and the Energy Trust of Oregon was the result. The Trust board of directors organized in March 2001, and Harris was hired in November. Oregon's restructuring law became effective in March 2002, and the Trust begins receiving revenues from the public purposes charge in April.

Under contract with the Public Utility Commission, the Trust will implement programs to invest the public purposes money in energy efficiency and renewable resources, consistent with the Legislature's intent and the recommendations of the Comprehensive Review. Conservation programs, which will be designed to be cost-effective, will be independently monitored and evaluated to ensure they are effective. Renewable energy projects must produce electricity at competitive prices.

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