Time to Consider Public Power in Portland (Again)
By John Heisler, Law and Policy Clerk
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| American Public Power Association |
“I therefore lay down the following principle: That where a community — a city or county or a district is not satisfied with the service rendered or the rates charged by the private utility, it has the undeniable basic right, as one of its functions of Government . . . to set up, after a fair referendum to its voters has been had, its own governmentally owned and operated service.”
–Franklin D. Roosevelt
FDR recognized the “undeniable basic right” for communities to establish publicly-owned power if they are dissatisfied with the service or rates offered by incumbent investor-owned utilities. He laid down this principle when he came to Portland, Oregon one month before he won the 1932 presidential election by a landslide. The Oregon Constitution also recognizes this principle in Article XI, sec. 12, which authorizes the establishment of publicly-owned power following a vote by the people.
Public power generally comes in two forms: municipal electric utilities and People’s Utility Districts (“PUDs”). Each type of publicly owned utility functions in a similar fashion and generally bestow the same benefits. Both PUDs and municipal utilities are operated by elected officials that are politically accountable to the residents that the utility serves, both are directed to establish rates that are appropriate for recovering the costs of providing service, and both have preferential access to low-cost power from the Bonneville Power Administration (“BPA”). BPA is a federal wholesale power marketer that operates a series of dams along the Columbia River and sells its non-emitting electricity at cost. BPA is statutorily required to meet the full load of any utility that requests power, giving priority to publicly-owned utilities over investor-owned utilities that make such a request.
The primary difference between PUDs and municipal utilities is the legal source that authorizes their formation. PUDs are authorized under ORS chapter 261, which allows a PUD to form following a successful vote within the relevant district and empowers PUDs to exercise eminent domain to acquire necessary distribution facilities, to establish rates to recover costs, and to issue bonds to finance the construction or acquisition of necessary facilities. Municipal utilities, on the other hand, find their authorization under ORS chapter 225, which allows municipal utilities to form if authorized by the relevant city charter. Article 1 of the Portland City Charter, for example, authorizes the formation of a municipal utility and empowers it to exercise eminent domain, to issue bonds to finance the construction or acquisition of necessary facilities, and to set rates to recover costs. Furthermore, municipal utilities are usually operated by the city council or members appointed by the city council, while PUDs are operated by a five-member board of local residents that are elected to the position.
Municipal utilities and PUDs offered, on average, rates that were more than 20% lower than their IOU counterparts in 2022. In addition to lower rates, publicly-owned utilities also secure nearly all of their power from BPA, which primarily supplies zero-carbon hydro power. Furthermore, if ratepayers are unhappy with how a publicly-owned utility is being operated, they are empowered to engage in the political process to get new board members appointed to correct course.
Contrast this with traditional investor-owned utilities (“IOUs”) such as PacifiCorp, which are privately owned by profit-seeking shareholders and operated by a board that is accountable to those shareholders. While publicly-owned power is operated by public servants that are accountable to ratepayers to provide reliable power at cost, IOUs seek to maximize profits and are not accountable to ratepayers.
FDR observed the “undeniable basic right” for communities to establish public power if they are dissatisfied with the rates and service provided by investor-owned utilities. Are Oregonians satisfied with the rates and service provided by our current IOUs? Consider PacifiCorp, one of the three major IOUs that operate in Oregon.
PacifiCorp raised its rates by 21% in 2023 and 11% in 2024. These enormous rate increases contributed to a record number of electricity and natural gas shut offs in April of this year when 8,715 Oregonian households were disconnected from power due to an inability to pay their utility bills. Following this crisis of disconnections, PacifiCorp now seeks to raise its rates by 14.9% in 2025.
The record number of shut offs came shortly after an extreme weather event, an ice storm, hit Oregon in January. This is notable because, while the ice storm of January 2024 might not be a direct result of climate change, more frequent and more extreme weather events akin to the January ice storm are expected to occur as the effects of climate change continue to materialize. Extreme weather conditions result in increased energy usage as people try to heat their homes in extreme low temperatures in the winter and try to cool their homes in extreme high temperatures during the summer, which results in higher electric bills and strain on the electric grid. Year over year, the planet is setting new records for the hottest global temperatures ever recorded and 2024 continued this trend.
As temperatures and extreme weather events are on the rise due to climate change, PacifiCorp shirks its legal responsibility to reduce greenhouse gas (“GHG”) emissions and plans to continue burning fossil fuels while attempting to pass along associated costs to its captive ratepayers through exorbitant rate increases. For example, in 2021, the Oregon Legislature passed HB 2021, which requires retail electricity providers, like PacifiCorp, to reduce their GHG emissions by 80% by 2030 and requires each utility to develop a Clean Energy Plan (“CEP”) that outlines how they will meet HB 2021 targets. In March, 2024, the Oregon Public Utility Commission (“OPUC”) rejected PacifiCorp’s 2023 CEP as deficient and directed the utility to provide an updated CEP that must demonstrate “continual progress” toward HB 2021 targets. On August 1, 2024, after evaluating PacifiCorp’s updated CEP, the OPUC Staff (“Staff”) recommended that the Commission should find that PacifiCorp “has not demonstrated continual progress toward meeting the goals of HB 2021” with their updated CEP. In PacifiCorp’s updated CEP, it proposed to rely more heavily on coal, “despite known coal supply issues driving power costs higher and increasing system-wide emissions.” PacifiCorp also proposed increased reliance on natural gas-fired power plants and planned to substantially rely on market purchases despite recognizing that these markets are growing more expensive and volatile. Indeed, Staff stated that PacifiCorp “effectively has no Clean Energy Plan in place to reduce emissions beyond ‘business as usual.’” On August 8, 2024, the OPUC unanimously voted to adopt Staff’s recommendations to “determine that PacifiCorp has not demonstrated continual progress on emission reductions.” However, following the Commission’s finding of no continual progress, PacifiCorp has sought to not only delay the remedy proceeding arising from the Commission’s finding, but the Company has also appealed the Commission’s no continual progress determination in state court, challenging the legal and factual basis for the Commission’s finding.
In addition to PacifiCorp seeking to increase its reliance on fossil fuels, contributing to climate change, it was at the same time attempting to escape liability for wildfires that juries found it directly caused and pass future wildfire expenses on to ratepayers. For example, PacifiCorp is currently seeking to increase customer rates so the utility can recover costs associated with increased insurance premiums that are going up because of risks associated with the utility’s wildfire liability. To be clear, burning fossil fuels contributes to climate change, which, in turn, leads to more frequent and intense wildfires because of increased temperatures and sustained hot and dry conditions. This year, 1.9 million acres of Oregon burned, an amount that is more than four times the average for our state at this time of year. Instead of addressing the root problem of climate change, however, PacifiCorp plans to continue doing business as usual and have ratepayers foot the bill.
Contrast this with public power utilities that, on average, have significantly lower rates than their IOU counterparts, operate more reliable grids than IOUs, and are more environmentally responsible. Public power utilities in the Pacific Northwest generally have lower rates than IOUs because they set rates at cost rather than setting rates to maximize profits and they have priority access to low-cost hydro power from the BPA. Furthermore, this priority access to non-emitting hydro power makes public power utilities more environmentally friendly than IOUs that seek to increase reliance on natural gas and coal. Finally, public power utilities, on average, have more uptime and fewer outages than their IOU counterparts, in part because public power utilities generally have local linemen that manage smaller service territories than IOUs, allowing them to prevent outages more effectively and respond to major events more quickly. For example, the publicly-owned Columbia Power Co-op in Eastern Oregon was able to keep the power on for all their customers despite wildfires threatening the grid because local linemen cleared brush away from power poles and extinguished poles that had already caught fire. Compare this with PacifiCorp, which announced that it would be “turning power off in areas experiencing hazardous weather conditions” when necessary. Public power utilities, on average, provide lower rates, more reliability, and more environmentally responsible power than their IOU counterparts. Meanwhile, PacifiCorp seeks exorbitant rate increases, sources their power from high-emitting energy sources that damage the environment and climate, and operates a less reliable grid than their public power counterparts.
So, are Oregonians satisfied with the service rendered and the rates charged by our investor-owned utilities like PacifiCorp? It may be time to consider an alternative. It may be time to consider publicly-owned power.
