Blocking Out the Sun The State's Second-Largest Energy Provider Is at War with Solar Power

OREGON'S SECOND-LARGEST power provider is an addict.

Pacific Power supplies electricity to more than half a million Oregonians and still draws nearly two-thirds of that power from coal—the dirtiest major source of energy. But at a time when the pope and president are taking historic stances on climate change, Pacific's biggest concern isn't trying to kick its carbon-spewing habit.

Instead, the energy giant's working to stymie far cleaner sources of power.

Right now, Pacific—one of several subsidiaries of Portland-based PacifiCorp—is pushing hard for new state regulations that many worry would stop Oregon's fragile solar power industry in its tracks. Like anything involving utility regulation, the battle's complicated, and it's playing out in relative obscurity. But the outcome, observers say, may well dictate what Oregon's energy landscape looks like decades into the future.

The stakes are high enough that the City of Portland is considering jumping into the fray. On Wednesday, September 2, Portland City Council's scheduled to decide whether the city attorney's office should intervene in Pacific's request before Oregon's Public Utility Commission (PUC)—just as renewable energy advocates and solar developers have done in recent months.

Like those advocates, city officials worry rules like those that Pacific's clamoring for could "constrain" its ability to develop renewable energy projects—a proposed solar development on city land in Boring, for instance—just as Portland's recently revamped Climate Action Plan pushes clean power harder than ever.

"The proposal undermines the city's ability to meet the goals of the Climate Action Plan, its ability to support rural economic development, and its ability to support the Oregon solar industry," reads a document city staff wrote for city council. "The proposal is also detrimental to city livability, as it slows the transition from fossil fuels as a source of electricity."

In Portland, Pacific Power supplies electricity to most of the city east of I-5 and north of I-84. If you live in that region, this latest fight means your power company's essentially battling renewable energy, and using you as an excuse.

Here's how. Since the 1970s, federal law has dictated that US power companies must buy renewable energy from qualified small-scale solar, wind, and hydroelectric projects—a policy aimed at encouraging efficiency and conservation. It's a national law, but the feds have left it up to individual states to set the rules for what those deals look like.

In the case it filed before Oregon's three-member Public Utility Commission in May, Pacific Power is asking for two important changes to those rules.

First, the company wants to slash the duration of the contracts it has to sign with qualified renewable projects from 15 years to three years—a move which would allow the energy company to more-nimbly change the rates it pays for that clean power, but which advocates say would make it extremely difficult for new solar projects to find up front funding.

Pacific's also seeking more leverage in negotiating those contracts, by making only the tiniest solar and wind projects eligible to get a guaranteed "standard" price for their power. Other projects of even modest size would be forced to haggle at length with the energy giant—whether they've got the resources to do so or not.

In tandem, renewable energy boosters say the changes would kill solar and wind generation in Oregon before it even gets off the ground.

"The utilities are talking about their concerns about climate and then turning around and basically trying to restrain one of the most important programs we've got," says Fred Heutte, a senior policy associate with the Northwest Energy Coalition, which is fighting Pacific's request.

To make its case, Pacific is relying on some misleading numbers. The company notes that it's been inundated with proposals for new solar projects that want to sell it power lately—the result of falling prices for solar panels and generous tax credits. If all of the projects are built and the PUC declines to change its policies, Pacific warns, it will "pose significant price risk and harm" to customers, who might have to pay more for solar power than cheap, dirty coal.

"When we purchase that power, the cost gets embedded into rates," says Pacific Power spokesperson Ry Schwark. "The people paying for this are customers, and we have to advocate for them in this process."

There's a problem with this argument, though. Proposed solar facilities and completed solar facilities are two very different things. The vast majority of projects that are proposed ultimately fall through.

In truth, Pacific isn't currently being forced to purchase even a single watt of solar power due to the rules it's trying to change, despite those rules being in place for decades. It grudgingly acknowledged this point in a filing with the PUC after being called out by David Brown, a Lake Oswego-based solar developer. But despite this, Pacific says it thinks 75 percent of currently proposed projects are going to be built.

"Their claim is, 'all these horrible solar developers want to build these solar projects and we've never been more terrified,'" says Brown. But for new projects, "there's a 90 percent failure rate."

Pacific power does pay a number of wind facilities for their power, and tells the Mercury its Oregon customers overpaid for that power by $7 million dollars last year, compared to the price of cheaper power like coal—an average of about $12.50 per customer.

The company's tried this tack before. In 2012, Pacific joined with Portland General Electric and Idaho Power to ask the PUC for some of the very same changes it's advocating for today. The commission declined that request last year, so Pacific is asking again (Idaho Power, which operates in Eastern Oregon, also is pushing for changes in a separate case).

Brown worries the commission will accept this time around.

"They're doing this in hurry-up fashion," he says of the PUC. "They're just jamming it through."

Brown has reason to fight Pacific here. He's at work building what he says will be the first solar facility in the state that a utility—Pacific Power, in this case—will be forced to purchase from under federal law. As solar and wind power technology grow cheaper, that decades-old policy is becoming more workable than ever in Oregon.

But huge hurdles remain. Energy is cheap right now, thanks to fossil fuels, which makes it difficult for solar projects to compete even with their falling costs. That could change as the energy market does, but advocates say it might not matter if the PUC grants Pacific Power's (or Idaho Power's) request.

Oregon is far from the only battleground in this fight. Pacific and its brethren have pushed similar changes in a host of Western states. They got an early victory in August, when Idaho's Public Utilities Commission agreed to modify its regulations in much the same way Pacific is seeking here.

The Snake River Alliance, a clean energy advocacy group in the state, called the decision "tantamount to killing utility-scale solar developments in Idaho."

Whether or not that happens in Oregon may not be decided for months or years, but the PUC is already helping Pacific out. In mid-August, the commission granted the power company's request to temporarily limit the kinds of new solar and wind projects eligible for guaranteed rates. That decision would be reversed if the PUC ultimately decides against Pacific. It would be bolstered if the body agrees.

"Oregon needs to get back in the seat as a leader in renewable energy," says Heutte, of the Northwest Energy Coalition. "Here's an opportunity to do that. Everybody knows we have to deal with the climate."