Powerlines in Hood River County above the Columbia River move electricity from the Bonneville Dam to customers across the region on July 25, 2024. (Photo by
Jordan Gale/Oregon Capital Chronicle)
A bill that aims to ensure Oregon ratepayers are not paying for utilities’ lobbying and advertising expenses could provide transparency and some relief from high energy bills for Oregon ratepayers.
On Monday, the state Senate Committee on Energy and Environment heard Senate Bill 88, labeled the “Get the Junk out of our Rates” bill by advocates.
Natural gas rates and electric rates are set through a process that allows utilities to charge rates that cover the cost of doing business, and then to turn a profit.
The bill would essentially create more clarity around utility spending and when it must come out of those allowed profits. If they spend on advertising, political influence, litigation, or pay for trade associations or membership fees and fines, that spending would not be allowed to push up rates — it would have to be taken from profits instead.
Some of the state’s largest private utilities and their trade groups have opposed the bill, arguing that inflation, safety repairs and compliance with regulatory mandates are what drive rates higher — and that the proposed legislation is not necessary, because their allowable spending is already regulated.
Sen. Janeen Sollman, D-Hillsboro, said the bill is about transparency and will allow Oregonians to better understand what can and cannot be included when rates are set. But she warned that ratepayers may not see a significant decrease on their energy bills with this proposed legislation.
“I want to be really clear with folks too, just so they have kind of a level setting is — You’re not going to see a big difference on your utility bill with this bill,” she said. “This isn’t the bill that I’ve seen that people are saying, ‘Oh, they’re going to save me money,’ so I want to really make sure that people understand.”
The bill would require utilities to submit a report to the Oregon Public Utility Commission on spending that is nonrecoverable from ratepayers.
Senate Bill 88 comes at a time when many Oregonians are paying 50% more on their energy bills than they did five years ago. Although lawmakers say the legislation would not provide much relief on energy bills, it would create more transparency.
It would also help streamline the utilities’ rate case process, which is the regulatory process in which the Public Utility Commission and intervenors, like nonprofit consumer advocacy groups, vet and question utility rates. Senate Bill 88 would ensure that shareholders profits are reduced to pay for costs related to advertising or lawyer fees or political influence — and that spending can’t be baked into rate structures.
Sarah Wochele is the policy associate with Oregon Citizens’ Utility Board, or CUB, a nonprofit utility watchdog group created by voters in 1984. She said during a general rate setting process, intervenors comb through hundreds of pages of testimony.
Because it can be a tedious task, Wochele said, the current process favors trying to keep rates down by going after higher costs. That sometimes leads to not discussing smaller utility spending choices.
“These are things such as costs related to advertising, activity related to supporting advertising, costs from travel, lodging, entertainment, food for utilities boards of directors,” she said. “CUB has seen utilities try to include Blazer basketball tickets and Oregon Ducks football tickets in rates. Another utility once tried to include baby pigs for a 4-H program in eastern Washington.”
Nearly three years ago, dozens of organizations and some lawmakers called on an investigation into what they claimed was NW Natural’s “misleading advertisement” to the public and in school work books. At the time, Oregon CUB became aware of the alleged misuse of funds during NW Natural’s general rate case. Avista Natural Gas has also been found to use ratepayer funds to fight state climate action regulation.
Carra Sahler, director and staff attorney of the Green Energy Institute at Lewis and Clark Law School, said Oregonians are tightening their belts and this bill would help utilities do the same.
“The proposal is intended to provide a bright line direction about what is recoverable from ratepayers and what isn’t,” she said. “The point of the bill is to cut out the needless back and forth between ratepayers advocates like the Citizens Utility Board, other intervenors, staff at the public utility commission, and the utilities themselves.”
Similar bills have been passed in other parts of the country, like Colorado, Connecticut and Maine.
Stephanie Chase is the research and communications manager for the Energy and Policy Institute, a watchdog organization that counters misinformation by fossil fuel and utility interests.
She said those states passed similar legislation in 2023 and ratepayers are already seeing benefits. For example, a recent analysis from her organization found that since the law went into effect in Connecticut, the state’s investor-owned utilities have disclosed over $9.7 million that was spent on costs that are not allowed to be recovered from ratepayers.
“In Colorado, the Public Utility Commission disallowed more than $775,000 in annual costs for lobbying fees, trade association dues, and investor relations that one utility at Xcel Energy had tried to recover,” she said.
Overall, she said, among the immediate benefits Senate Bill 88 would be “bright lines” around certain costs and expenses, that make it easier to highlight during the general rate case process and save the PUC and intervenors’ time during the settlement process. Those bright lines are found in other states.
But utilities like Cascade Natural Gas, Northwest Natural and the Northwest Gas Association oppose the bill claiming it’s redundant with what already exists in current law and with the Public Utility Commission’s orders on reviewing costs to determine if they are appropriate to recover from ratepayers.
“It’s already within the PUC’s power and means to impose penalties for violation of rule, law and order,” Cascade Natural Gas external affairs manager Alyn Spector said.
For example, PUC allows utilities to recover 75% of their trade association fees, and are permitted to engage in “just and reasonable” promotional activities.
The utilities’ also say the bill does not address energy affordability, is not clear on what type of community engagement would be allowed as an expense, and would require utilities to spend additional resources on providing an additional annual report.
“As written, we’re afraid that the bill would stifle innovation by punishing utilities who attempt to recover costs on overly broad definitions of advertising and political influence activity. We do try to be good stewards of ratepayer dollars.”
This story was originally published by Oregon Public Broadcasting.
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