A special public meeting of the Oregon Public Utility Commission last week illustrated the complexity of issues and interests at play for utility regulators charged with putting a state decarbonization plan into practice.

The PUC convened an online meeting Thursday to hear stakeholder comments on a raft of draft work plans to implement portions of Executive Order 20-04, which Gov. Kate Brown issued in March to direct state agencies to take measures to reduce and regulate Oregon’s greenhouse gas emissions.

Brown’s order aligns with an Oregon law that requires the state to reduce GHG emissions to 45% below the 1990 level by 2035 and at least 80% by 2045.

More than 120 people tuned into Thursday’s meeting, including representatives of electric and natural gas utilities, renewable and environmental advocacy groups, labor organizations and Native American tribes. “You may notice from the number of participants in this webinar that this is a topic that a lot of people care about,” PUC Chair Megan Decker said in opening the meeting.

The draft work plans, developed by PUC staff and still subject to commission approval, cover three broad themes.

The first theme, “GHG Reduction Activities,” is broken down into three subsets: Utility Planning, Utility Services and Activities, and Transportation Electrification. The objective of the Utility Planning work plan, according to a PUC document, is “to identify, prioritize and deploy strategies to enhance and refine our existing least-cost, least-risk framework to ensure energy utilities are focusing their systemwide resource strategies on making rapid, large-scale and sustained progress to meet GHG reduction goals.”

The Utility Planning work plan, slated for adoption in the second quarter of 2021, contains a number of ambitious first-year priorities, including:

• Updating utility integrated resource plan guidelines to include GHG costs and risks. Existing guidelines state that IRPs “must be consistent with the long-run public interest as expressed in Oregon and federal energy policies.” The changes would include having IRPs reflect utilities’ risks and costs of missing EO 20-24 targets and requiring IRPs to comprehensively assess the use of carbon-free resources — including on the distribution grid — in portfolio analysis.
• Incorporating the social cost of carbon (SCC) into future IRPs.
• Identifying and exploring approaches to carbon pricing.
• Incorporating the SCC — or a carbon price — into utility avoided-cost filings, including those regarding energy efficiency and Public Utility Regulatory Policies Act resources.
• Considering GHG-related risks in the utility procurement process.
• Evaluating the effectiveness of a current voluntary program, established under a 2013 state law, to reduce GHG emissions from natural gas utilities. No projects have been developed under the program.

‘New Area for the PUC’

The Utility Services and Activities work plan seeks to “prioritize actions that streamline and modernize safe, reliable methods to connect clean resources — from renewables to demand-side management, to the electric and natural gas systems — and appropriately value their system contributions, especially when deployed to support low- to moderate-income customers.”

The plan also promotes the use of community-wide “green tariffs” to assist communities in their efforts to exceed the state’s renewable portfolio standard and use 100% renewable energy.

The Transportation Electrification (TE) work plan establishes near-term objectives for conducting research and enacting policies to underpin a new investment framework for utilities and other stakeholders.

The plan seeks to:

• prioritize TE investments within distribution planning;
• collaborate on new rate schedules and tariffs that encourage TE and efficient charging of electrical vehicles, and that benefit all ratepayers, including “impacted” communities;
• engage stakeholders to improve the PUC’s TE planning guidelines to streamline utility processes and clarify cost-recovery standards; and
• commence “a new robust data collection process into market transformation indicators to be tracked by the utilities and shared annually with the OPUC.”

“This plan really emphasizes consistent development of an investment approach,” Sarah Hall, the PUC’s resource and programs development manager, said during Thursday’s meeting.

“Just as an overall philosophy, this is a new area for the PUC, and we have to be open to a lot of learning and flexibility around new ideas,” Chair Decker said.

‘All About Inclusiveness’

The second theme, “Impacted Communities,” looks to address the “disproportionate effect” of climate change on communities that have been historically underrepresented in public processes. The objective of the work plan is to go beyond protecting those communities and ensure they are engaged in measures to reduce GHGs — and actually derive benefit from those measures.

PUC Director of Policy Robin Freeman said a “major component” of the work plan is the hiring of a new diversity, equity and inclusion (DEI) program director to give the PUC a point of contact with those communities. The commission expects to fill the position in December.

The position is part of the work plan’s broader objective to transform the PUC’s structure and operations, including expansion of a recently formed “low-income roundtable” to help increase staff awareness of issues affecting vulnerable ratepayers. The plan would also see the PUC create new tools to quantify the energy burden of Oregon residents and improve utility reporting of disconnections. It will additionally strive to fulfill Gov. Brown’s objective to engage electricity customers and communities to ensure that GHG reduction goals provide widespread benefits.

“I’m starting to see that equity is part of everything that we’re doing,” Decker said.

In its current iteration, the Wildfire Prevention and Mitigation work plan — which falls under the third theme — is less detailed than the other plans. Lori Koho, the PUC’s utility safety, reliability and security division administrator, said that in light of the wildfires that ravaged Oregon in early September, staff wanted to defer rulemaking until it could engage the broader community.

“We wanted that process to be open, and so, that’s a key part of what we’ve tried to put in our work plan — is to make sure there are steps all along the way for different parties to provide input and be a part of this because communication is so key,” Koho said.

The work plan envisions the PUC holding a series of workshops and town hall meetings to discuss requirements for utility wildfire mitigation plans. It also foresees further development of the Oregon Wildfire and Electric Collaborative to share best practices on mitigation.

“It’s all about inclusiveness,” Koho said.

‘Elephant in the Room’

Stakeholders speaking at Thursday’s meeting praised PUC staff for the level of detail in the draft work plans. But a number of them pointed to what they called one shortcoming: an unclear picture of the future of natural gas use in Oregon — despite the inclusion in the work plan of a fact-finding effort related to decarbonization of the gas sector.

Bob Jenks, executive director of the Oregon Citizens’ Utility Board (CUB) said that under EO 20-24’s cap-and-reduce program, natural gas emissions must decline by about 50% from 2017 levels by 2035. Instead, they are currently rising.

“I sort of look at the gap between the growing line of emissions we’re on right now and the declining line that we need to be on as a financial risk to customers,” Jenks said.

“I think the elephant in the room is the future role of natural gas — which is more accurately known as fossil gas — in our electricity grid and in the direct use of our homes,” said Meredith Connolly, Oregon director with Climate Solutions.

Connolly noted that a recent biennial report from the Oregon Department of Energy showed that combined natural gas use in electricity generation and buildings is now the second biggest source of the state’s GHG emissions behind transportation fuels.

“We see these rapidly accelerating building electrification trends in California and Washington and Vancouver, B.C. — those are coming to Oregon, and they’re going to happen very quickly here, and that’s a good thing for our health and climate and people’s pocketbooks,” Connolly said.

Max Greene, regulatory and policy director at Renewable Northwest, also encouraged the PUC to look at the costs and risks of using natural gas for electricity generation and home use.

Zachary Kravitz, director of rates and regulatory affairs at NW Natural, Oregon’s largest gas utility, said that while his company understands the PUC’s desire for the fact-finding mission around gas, “we support a data-driven effort that considers costs, resource adequacy and customer choice in that fact-finding.”

Kravitz also said that direct use of natural gas accounts for about 6% of Oregon’s total GHG emissions. Normalized for weather, those emissions have grown less than 1% per year on average over the last 20 years, while use per customer has “fallen significantly,” he said.

“And now that we’re moving forward under [Oregon Senate Bill] 98 to secure renewable natural gas and hopefully hydrogen, we expect our emissions to start decreasing, and this is before considering the impacts of this executive order,” Kravitz said. (See Initiative Seeks to Fuel Use of Green Hydrogen in West.)

Commissioner Letha Tawney said the comments about natural gas made her think about the course the commission previously charted around the risks related to utility ownership of coal-fired generation.

“I think CUB in many ways started us down that path, and we see them again raising the important question, echoed by many other stakeholders, around long-term risk, and I hear the tension you’re articulating, and I would encourage us not to discount what happens when you begin to really engage around those risks,” Tawney said.

Workforce Impact

Two commenters pointed to the deep implications of decarbonization for sections of the state’s workforce. Chris Hewitt, political director with the Oregon and Southern Idaho District Council of Laborers, spoke on behalf of the group’s 4,000 members who perform skilled work throughout the construction industry, including working for contractors on “traditional” energy projects such as gas pipeline construction and transmission upgrades.

“Our members live in the communities where they work, and they reflect the increasing diversity of our region, and for decades Oregon has relied on laborers and other trades workers to perform high-quality, safe work on projects that provide vital family-wage jobs,” many of which are located in rural areas, Hewitt said.

Many of those jobs enjoy negotiated wage packages that exceed $45/hour, Hewitt said. “By contrast, when we look at construction labor wage rates we’ve seen advertised for renewable projects today, those are commonly advertised between $12 and $18/hour, which is a significant difference.”

Hewitt said his group appreciates the ongoing efforts to mitigate climate effects, but “a rapid energy transition has really too often left workers behind and resulted in economic dislocation” without providing workforce transition plans or “explicit standards” for jobs in the expanding renewables sector.

“Unfortunately, it doesn’t seem that this work plan today as drafted includes much reference to that, and we hope that there’s room for that in the conversation. We also hope that this process can recognize workers who build and maintain our energy sector as an impacted community and as a stakeholder moving forward.”

Ranfis Villatoro, Oregon state policy coordinator with the Blue-Green Alliance, agreed that workers should be considered “impacted communities” under the work plans and emphasized the importance of aligning work standards with climate goals.

Villatoro said that on the path to decarbonization, “there’s always the potential for workers to be displaced and with a lack of clarity of how workers are retrained or transitioned into new workspaces, but it doesn’t have to be that way.”

“I think there’s more work for us to think about in the labor questions,” Tawney said.

Utility Response

Oregon’s two investor-owned electric utilities threw their support behind the work plans.

“We think the plans and the work ahead of us fits well with our corporate strategy to accelerate decarbonization in our own operations and in our role offering customers products and services that help attain the state’s goals and assist customers in achieving theirs for transportation electrification and clean, green energy to power their homes and businesses,” said Karla Wenzel, manager of regulatory policy and strategy at Portland General Electric.

Wenzel said PGE looks forward to “working with and learning from” the PUC’s new DEI program director “as we support more inclusive engagement and more intentionality in including impacted communities.”

She cautioned that the work plans “are ambitious and a heavy lift,” with “aggressive” schedules that warrant flexibility, “given limited resources and the need to balance existing and growing regulatory work.”

“We appreciate the fact that these are not detailed plans and will require refinement of the actions and activities and potentially resetting of priorities,” Wenzel said.

Etta Lockey, vice president of regulation at PacifiCorp, agreed that work plans are “a lot to tackle” but appreciated that the plans acknowledged the potential need to refine processes “as we go.”

“Oregon is not alone in grappling with many of these issues,” Lockey said. “PacifiCorp is having similar conversations in many of its jurisdictions, particularly around issues of impacted and underserved communities. We’re very interested in how this discussion plays out in Oregon, and we’re very encouraged by the commission’s pursuit of somebody dedicated within the commission to work on these issues, and we look forward to engaging with that new role and the workstreams associated with it.”

Mark Petrie, vice chair of the Confederated Tribes of the Coos, Lower Umpqua and Siuslaw Indians, spoke on behalf of Oregon’s most historically underserved communities. He noted that he had recently worked with the tribe to pass a resolution supporting research into offshore wind energy.

“I just wanted to highlight two goals we have with that resolution and to emphasize that it’s essential that this new use of ocean energy be developed in such a way as to minimize any potential effects on cultural and natural resources to the tribe ocean environment and its other responsible ocean users,” Petrie said. “The tribe wishes to ensure that offshore wind projects and benefits thereof are coordinated with tribal, state and local leadership and priorities to maximize the benefits from this sector.”

Wrapping up the meeting, Commissioner Mark Thompson expressed excitement at the number of new people he has not worked with previously as a member of the PUC.

“Sometimes we can probably kid ourselves and say our work is so complex that you have to be almost an expert to be able to engage in it and be understood. But I think some of the comments today — well, all of them — really prove that’s not the case,” Thompson said.