Pacific Power 2024 Rate Increase

This year, Pacific Power is trying to raise rates by 21.6% for Oregon households. A typical household could see an average increase of $29.47 each month. This amount would be much higher during the winter months and summer months when heaters or air conditioners are turned on.

Pacific Power’s proposed increase is largely from wildfire-related costs. After the court ruled the company was grossly negligent in the 2020 Labor Day fires, Pacific Power has consistently made moves to pass liability costs onto customers. The Oregon Citizens Utility Board (CUB) will be closely analyzing this request to ensure the company is held financially responsible for wildfire liability.

Utility customers across the state are feeling the impacts of higher energy bills. CUB is working hard in this case to make some big changes to how regulators handle these requests from utility companies.

Utility Prices Are Already Too High

We’re seeing a troubling trend in Oregon utilities: companies are asking for more money more often. As utility bills in Oregon continue to rise in 2024, CUB is asking tough questions from state regulators and demanding action on affordability. We’re also calling for a cap in how much utility companies can raise rates each year.

This is the Third Year of Major Increases for Pacific Power

Pacific Power customers saw rates increase by 11% on January 1, 2024. This increase was largely due to an increased price of natural gas (methane) used to generate electricity.

At the beginning of 2023, Pacific Power raised rates by 21%. This increase was primarily due to high natural gas (methane) and wildfire mitigation costs. Although this was a large increase, CUB’s advocacy helped lower the impact on Oregon households.

We Need a Cap on Rate Increases

Over the last four years, we have seen a troubling trend of utilities raising rates more often and in higher amounts. With utilities asking for multiple increases each year, it can be challenging to know how much of an increase customers are facing.

We saw this with PGE’s increase in January 2024. While PGE’s original ask was a rate increase of 14%, multiple requests ended up pushing rates up by 18%. The final numbers were not calculated until mid-December 2023 before showing up on customer bills on January 1, 2024. This trend extends to Pacific Power and other electric customers, as well as gas customers.

To combat this, CUB is proposing a new way of regulating how utilities can increase bills. CUB is proposing that the Oregon Public Utility Commission put a cap on rate increases. We are asking the Commission to limit rate increases to 7% plus inflation or to 10%, whichever is lowest. This cap would apply to the cumulative increase customers see over a year. Any requests over that cap would be pushed into the next year or beyond.

In normal circumstances, it should be rare for utilities to increase rates by more than 10%. Unfortunately, we have seen a growing pattern of Oregon’s for-profit utilities asking for 15-20% increases nearly every year for the last four years. This is a call to Oregon regulators to implement a cap for all for-profit utilities, not just Pacific Power.

Pacific Power Isn’t Addressing Root Problems

Pacific Power has a lot of issues it needs to address in the coming years. It needs to clean up its fossil fuel-heavy system to meet climate regulations. It needs to harden its system to help prevent wildfires in the future. And it needs to provide service that customers can afford.

It is clear from this proposed rate increase that Pacific Power is not adequately addressing the root cause of these problems.

Reducing Emissions: Instead of investing in more renewable energy, Pacific Power is doubling down on fossil fuels by converting coal plants to natural gas (methane). And while it is not addressing climate change, it is attempting to avoid responsibility for wildfires by claiming that they are a climate inevitability.

Wildfire Costs: Pacific Power is attempting to pass on as much of its wildfire costs to customers as possible. Instead of looking at solutions that protect affordability, it is leaning into amassing billions of dollars to cover its wildfire liability.  The company continues to invest in the systems that are worsening climate change that makes wildfire risk even bigger in Oregon.

Affordability: This is the third year in a row that Pacific Power has asked for double-digit rate increases. If this increase is approved, Pacific Power customers could be paying 63% more for electricity in 2025 than in 2022.

What’s Included in This Increase?

Pacific Power is trying to raise rates by 21.6% for Oregon households. A typical household could see an average increase of $29.47 each month.

Pacific Power’s request to increase bills is mainly coming from wildfire-related costs. Of the $322 million request, $165 million is related to wildfire liability costs, insurance, and mitigation. CUB is working to ensure customers are not held responsible for the gross negligence of Pacific Power.

Higher Profits and System Investments

Pacific Power is asking for money for transmission projects ($737 million), renewable energy projects (starting at $27 million), and transitioning a coal power plant to run on methane ($9.3 million). Pacific Power is also asking for higher profits, which would add tens of millions of dollars for customers each year.

Transmission Projects
Pacific Power needs to update its system to deliver reliable electricity to more customers. Transmission lines are responsible for transporting energy across long distances from power plants to areas where customers live and work.

Renewable Energy Projects
Pacific Power is asking for money for two wind generation projects. One wind project is new while the other is a revamp of an existing project.

Coal to Methane Project
Pacific Power is still providing electricity to customers with an energy mix that is 50% coal. These coal plants operate outside of Oregon in places like Wyoming and Utah. To lower emissions and expenses, Pacific Power is transitioning some of these coal plants to natural gas (methane). Regulators gave this project the green light in 2022.

CUB is strongly opposed to this emissions reduction strategy. Regulators agree, ruling in 2023 against Pacific Power’s clean energy plan that sought to transition more of these coal plants to gas. Because of Oregon’s 100% Clean Electricity law, now these gas plants also will have to be replaced with renewable energy in the 2030s. Customers do not need to be paying for reducing fossil fuel emissions twice.

Wildfire Mitigation, Liability, and Catastrophic Fire Fund

Pacific Power is asking for money for wildfire mitigation, increased liability insurance costs, and a fund for future wildfire damages. CUB believes investments in wildfire protection are important, but they also must be smart.

Of the $322 million, over half is for wildfire issues:

  • Wildfire mitigation: $21.2 million
  • Corporate liability insurance: $66 million
  • Catastrophic Fire Fund: $77.7 million

CUB is not convinced that Pacific Power’s proposal for dealing with wildfire liability is fair to customers. While it is important for utilities to have a plan for managing liability costs, Pacific Power is requesting too much from customers. Asking customers to foot the bill for the company’s wildfire liability is not the only option.

Wildfire Mitigation ($21.1 million)
Each year, electric utilities must file a plan to handle wildfire danger in their service areas. These plans include identifying wildfire risks where they are delivering electricity. Utilities also must identify risks around where they are moving electricity across distances. (e.g. power lines).

CUB has pushed back against Pacific Power’s requests to significantly raise rates for wildfire mitigation. In 2022, the utility asked the PUC to approve a $19.9 million rate increase for wildfire protection investments and costs. CUB believes investments in wildfire protection are important, but they also must be smart. We will continue to push for wildfire mitigation that is fair and reasonable.

Corporate Liability Insurance ($66 million)
After seeing mounting liability costs from the 2020 Labor Day fires, Pacific Power is seeing increased insurance costs. The utility is asking customers to pick up the cost of these more expensive premiums. Corporate liability insurance is used to ensure companies can pay out liability claims.

Additionally, Pacific Power is asking customers to effectively become the utility’s insurance company—but without the financial benefit to customers. When insurance companies back a company, they receive money from the company in exchange. Pacific Power is asking customers to pay into a fund for liability costs with no financial benefit in return.

The utility is asking to create a “self insurance” fund that is collected from customers. While this is spun as a form of insurance, it is not comparable to coverage from an insurance broker. This is “self insurance” in the same way that paying out of pocket for a doctor is “self insurance.” 

Catastrophic Wildfire Fund
On top of asking customers to fund a liability fund (“self insurance”), Pacific Power is attempting to amass between $2-3 billion for wildfire liability costs from the six states it serves. For Oregon, the goal is $77.7 million. These funds would be a backup in case liability costs exceed the insurance coverage. CUB has some major concerns about this fund.

While shareholders are being asked to pay some amount, customers are primarily responsible. In a best-case scenario, customers would be responsible for 80% of these costs. Because of the convoluted division of costs, the models show Oregonians could end up paying even more.

Pacific Power has not made it clear who would be able to receive these funds and how this money would be collected.

What could these funds be used for? Could these funds be used to pay for the company’s gross negligence? What happens if other states refuse to pay into the fund? Will the company make up the difference? How does this interact with legislation in other states that have created wildfire funds already?

Considering the size of the proposed fund, these are questions that need to be answered.

Customers and Advocates Can Join the Process

While CUB is hard at work digging into NW Natural’s request, we cannot do this alone. This March, customers and advocates will have the opportunity to share their stories with regulators. Regulators must hear how an increase this large would impact real people.

Public Hearing

There will be a virtual public hearing:
6 pm - April 30, 2024
Join via Zoom

At these hearings, regulators at the Public Utility Commission will hold space for community members to weigh in. For more information on what to expect at these hearings, check out CUB’s blog: Speaking Up on Utility Issues: Public Comment Hearings

If you are interested in receiving updates and more information like testimony guides, you can sign up with CUB.

Written Comments

Whether or not you can make the public hearings, written comments can also go a long way. The Public Utility Commission is accepting public comments via email, phone, or mail now through April 24.

Submit written testimony!

By email  [email protected]
By Mail - Oregon Public Utility Commission, Attn: Public Comment, PO Box 1088, Salem OR 97308-1088
By Phone - at 503-378-6600 or 800-522-2404 or TTY 800-648-3458 on weekdays from 8 a.m. - 5 p.m.

Learn more at the Oregon Citizens Utility Board Website