Oregon: First State to Mandate Elimination of Coal-fired Power

On March 11, Oregon Governor Kate Brown took historic action to accelerate her state's transition to a clean energy economy by signing a bill that made Oregon the first state to commit to stop using coal-fired power. Currently, coal provides about one-third of the state's electricity, mostly through imports from neighboring states. The bill requires the elimination of imports of coal-fired electricity by 2035, while doubling the renewable portfolio standard to 50 percent by 2040. The move away from coal, combined with the state’s vast hydropower resources, would make Oregon's electricity supply at least 70 percent carbon-free by 2040, helping put the state on track to meet its goal of cutting carbon emissions 75 percent from 1990 levels by 2050. This effort also moves Oregon in line with a group of states with aggressive renewable energy targets, including California, Hawaii, New York, and Vermont.

The two largest utilities in the state, Portland General Electric and Pacific Power, provide electricity to meet around 70 percent of Oregon ratepayers’ needs. These two investor-owned utilities (IOUs) both supported the bill's passage, which was critical since the bill focuses exclusively on them. Customer-owned utilities and municipal utilities are exempt from the new requirements.

Apart from its energy targets, the bill also launches a community solar program whereby residential and small commercial customers can earn credits on their utility bills by buying a share of a solar project. The bill also requires that utilities begin programs to speed up transportation electrification, through efforts such as investing in electric vehicle infrastructure.

Environmentalists applauded the bill, saying it sends positive signals and sets a precedent for the mandated phase-out of aging and dirty coal-fired power plants. Oregon Sierra Club chapter director Andy Maggi said the law is a "win-win" for climate and clean energy in Oregon. Bob Jenks, the executive director of the Citizens' Utility Board of Oregon concurred, stating, "This is a solid win for Oregon ratepayers . . . Our wallets and our values have been protected."

However, there were also voices expressing concerns over how much the law will contribute to emissions reduction. The Oregonian published comments from the president of the National Association of Regulatory Agencies (NARUC), Travis Kavulla, who said that because the law only limits the import of coal-generated power, it does not actually reduce emissions. "Presumably those utilities will simply reallocate their coal plants to customers in other states or engage some swapping behavior so the conscience of Oregon can be clear," Kavulla said.

Noah Long, the legal director for the Western Energy Project at the Natural Resources Defense Council (NRDC), pointed out that those concerns were somewhat misleading. Long said that a similar bill in California that limited long-term investments in coal-fired generation, SB 1368, cut coal use in the region. In the western United States, population density and demand for electricity is highest along the coasts, so by closing off its markets to coal, Oregon will reduce demand for coal-powered generation in nearby states. "Technically, the power could be re-dispatched," Long wrote in a blog on NRDC's website. "Practically, it isn't."

Other criticisms of the law have been over its potential to raise rates for utility customers. Media outlet Oregon Live quoted John Savage, the longest-serving public utility commissioner in Oregon, who said the law is a "shell game that will result in . . . higher rates for Oregon customers." However, the law also extended a ratepayer protection clause that already exists in its Renewable Portfolio Standard (RPS). This clause puts a cap on the amount of incremental costs to utilities as they work to comply with the new law, limiting such costs to four percent of the utilities' annual revenue. Long commented that the law could in fact lead to cost savings for Oregonians, due to the low operating costs of renewable energy and ever-declining installation costs.

The passage of the bill reflects a model that other states could draw lessons from. The bill was developed in negotiations between the state government and stakeholders, including the two affected utilities, environmental groups and customer advocates. The success of the discussions showed a broad consensus on the necessary transition from aging coal to clean renewable energy.

Oregon's movement is only the latest, and this week, Maryland may join them. The Greenhouse Gas Reduction Act of 2016 passed the Maryland House and Senate and is now on Governor Larry Hogan's desk to be signed into law. If passed, the bill will require Maryland to cut its economy-wide greenhouse gas emissions by 40 percent below 2006 level, by 2030.

 

Authors: Taotao Luo and Laura Small