File photo of the power lines at Bonneville Dam.
Bradley W. Parks / OPB
The Oregon Public Utility Commission has approved rate hike upon rate hike in recent years, and consumers are feeling the pinch. Currently, the list of requests for rate hikes includes those from Idaho Power, which serves about 20,000 customers in Oregon; Portland General Electric, which last had a rate case in 2023; and Northwest Natural and Pacific Power, which both last had a request before the PUC in 2022-2023.
Portland Mayor Ted Wheeler wrote the agency a formal letter of opposition to the latest Portland General Electric rate. It says that vulnerable residents are not in a position to handle further rate increases, and the impact on the city’s power costs would be unsustainable.
We talk to the Oregon PUC Acting Executive Director Nolan Moser to find out how these decisions are made and how the impact on customers is considered.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. We start today with rising energy bills. As many Oregonians know, rates have skyrocketed in the last few years, with some customers paying about 40% more for electricity since 2021. It’s up to the Oregon Public Utility Commission (PUC) to approve these hikes, and they currently have a long list of rate increase requests in front of them, including from PGE, Pacific Power, Idaho Power, and Northwest Natural. Nolan Moser is the acting executive director of the Oregon PUC. He joins us now to talk about how the commission assesses these requests and makes its decisions. It’s great to have you on the show.
Nolan Moser: Thank you so much for having me.
Miller: I think the most basic question that a lot of listeners have is how their rates could have gone up 40% since 2021. What’s behind these increases?
Moser: It’s a great question, and there’s a lot of factors. Starting in the pandemic, we saw really challenging supply chain and inflation issues. And there’s a bit of a lag in your utility rates, so it took some time for that to come into rates. We’re also seeing more extreme weather, more devastating storms. Obviously, we just had one in the Southeast. Any time we have extreme weather like that, utility infrastructure gets destroyed, needs to be rebuilt, [and] new steel needs to go on the ground – that’s expensive.
We also have a very old system. In certain parts, our system is 40 to 50, sometimes even older. And that has to be replaced, we have to modernize it. So a lot of investment going there. And then finally, I’ll mention wildfire. With climate change, we’ve seen our state dry out, we’ve seen increased incidents of wildfire. And there’s real risk that utilities have to mitigate against by hardening their system. And that creates a real need for additional investment.
Miller: Can the commission take into account the impact of a series of rate increases over a series of years on customers? Or does it have to focus on each rate case as it comes in a vacuum?
Moser: That’s also a good question. The commission can take into account the impact on customers. And really, our core mission is to balance the needs of customers, advocate for customers, and ensure the utility system has the resources it needs to operate and provide the service. So we can definitely take into account what has occurred in the past few years. And really, it goes into the level of scrutiny that our staff applies to the utility requests. Our staff does tremendous work digging into every aspect, ensuring that the costs put forward by the utilities are justified. And we almost always find significant savings that can take part of that charge off the top of that initial utility request.
Miller: That’s a key point here. So it’s not like you’re saying just “no” to a request. But you’re saying, in these 400 pages, in all these graphs, you asked in the end for a 10.7% increase. But we quibble with this and this and this, so we’re going to take it down to 10.3%. And then they come back to you and then you go back to them again … and this goes back and forth. But in the end, you’re talking about decimal points here and there?
Moser: Well, more than that. Sometimes the difference can be stark. We’ve had cases in the last 10 years where utilities have asked for an increase and the evidence has shown that we actually should have a decrease in rates. So we follow the evidence. We go through a full contested case. It’s a trial-like proceeding. The utility has to put on its case. It has to explain why and justify these cost increases. And consumers, our staff, will push back, and look at that, and really examine it. And if the evidence shows that the utility request is not justified, it won’t occur, the commission won’t approve it, or will approve a number that is different.
Miller: Do you have a sense for the resources and staff that goes into examining the rate cases put forward by these companies, on the public’s side, compared to what the companies themselves are putting forward in terms of resources to make their cases? I just wonder if it’s a fair fight, I guess is my question.
Moser: It’s a great question. And I think it’s not controversial to say that customer representatives are under-resourced as compared to a utility. They just don’t have the same legal department, they don’t have the same experts, they don’t have the same access to information. But it’s really important to know that we have invested pretty heavily in funding interveners, customer groups over the last few years. We have $500,000 every year for environmental justice and low-income communities. We have funding for CUB, our citizen utility advocate, which is essential for ensuring that customers are represented. So it’s really important that we hear from consumers and that we ensure that they have the resources to participate in our proceedings.
Miller: Portland Mayor Ted Wheeler wrote a letter to the commission about a month ago with concerns about PGE’s rate increase request. He wrote this: “This proposal places an undue burden on Portland’s residents, particularly our most vulnerable populations, as well as adding significant new costs for the city of Portland at a time when budget cuts are already impacting city services.” He added that he wants the commission to “find a balanced approach that supports necessary infrastructure improvements without placing an undue burden on ratepayers.”
How do you consider that balance? You’ve already said that this is your job, to figure out this balance … when you boil it down, is the whole point of the commission. But how do you do it when people, as the mayor is saying here and even the city itself, are already overburdened?
Moser: It’s a great question, and one our staff grapples with daily. I think that the most important thing that we can do as an agency is enforce discipline on the utilities, ensure that their spending is incredibly efficient, and only approve increases that are justified on the record, and our staff is working hard on that. I’ll also note that we have a responsibility to really dig into the real cost drivers around affordability, the real challenges we have, and see what we can do about them. There are options for consumers who are struggling with their bills, and our staff has worked hard over the last three years to put those in place.
Miller: Another thing that the mayor mentioned is that we’ve seen a rise in utility disconnections, with PGE reporting the highest number since records began in 2018. Kevin Spenst wrote on Instagram: “I’ve had more power outages in the last three years than the rest of my life combined. And they want more money? As far as I can tell, they haven’t used the last rate hike responsibly.”
How do you think about this aspect of it? These are two people saying we need more money so we can give you robust service, but the service itself has not been robust.
Moser: And I’m not gonna sit here and tell you that the utilities are operating perfectly. That’s not our role, to explicitly defend the utilities. I will note however that it’s really important that we scrutinize those costs. What are those funds being utilized [for]? Are they being utilized to effectively and efficiently harden the system? Make it more reliable? If they’re not, then it’s our responsibility to ensure that the utilities essentially get a disallowance for imprudent spending. And that’s what our staff is actively doing in the midst of these cases.
I’ll also note that we want to hear from consumers. We wanna hear from the folks you mentioned. Of course we want to hear from the mayor. Those comments are taken very seriously. In fact, we instituted new procedures to make them part of the evidentiary record. It used to be that they were just comments that the commission would take into consideration in general. Now, we have our staff analyze those comments, summarize them, put them in the record, put them in testimony so that our commissioners can explicitly review them.
Miller: Earlier this year, the Oregon Citizens Utility Board proposed that utilities couldn’t raise their rates more than 7% plus inflation, or 10% – whichever were lowest, every year. It seems to me like a kind of rent control style proposal for utility rate increases. Would you support that?
Moser: I can’t speak to that because it is an active question in the midst of our rate cases. Those proposals have been put forward in testimony. The commission is considering those, like judges, right now. And we’ll take them very seriously.
Miller: I’m just gonna ask the question again in a different way and see if I can get your own thoughts on it. Because I can imagine the argument being: “No, we need to have the freedom in case there is what we see as a legitimate need for safety and reliability. We have to have the flexibility to say it should be more than 10%.” But the broader point here of, you have to think about ratepayers, about customers, and this is a pretty clear mechanism to at least limit the rate increases.
I’m just wondering philosophically how you think about the idea of a kind of a governor on rate increases?
Moser: I can tell you just personally, speaking for myself, I consider my role as interim executive director to be customer focused. And that’s been my counsel to the whole team, that we really need to center the customer experience and everything we do and push much harder with the utilities. I do think there are options that are close to that but not quite an explicit limit. Things like multi-year rate planning, for example, where a utility comes in and says, “Alright, over the next five years, here’s the major investments we anticipate. Here’s the glide path.” It’s much smoother, it allows customers to anticipate those costs and results in less dramatic increases. I do think those are things that we can really tackle together.
Miller: How do you think about the profit margin for these companies? And I would say that the commission decides rate increase requests for both publicly and privately owned utilities. But for investor-owned utilities, the commission is in a sense saying, “Yes, we will make sure that your shareholders get X amount as a profit margin.” How do you think about that? That’s very different than saying, we need to make sure that the transmission lines are actually there so Oregonians will get their electricity.
Moser: This is a really important question. And I’ll just note that there is no guarantee of a profit margin. I think it’s really important to communicate that when we think about a profit margin for a utility, what we’re really doing is essentially compensating the utility for the risk it’s taking. And that risk is real. Right now, both PGE and PacifiCorp have reported earnings that are below their authorized rate of return. We set a rate of return in previous cases, but they’re not actually making that of these storms because of additional investments they had to make. It’s a trade off, and we recognize that. We compensate the utility, we build in a rate of return. But what the customer gets is they get that risk handled by the utility. So if the utility is out there and has to spend more, you’re not necessarily paying more. What’s happening is that the investors are absorbing a certain portion of that risk.
But it’s something we can’t take our eye off of. You can’t ask people to pay more for essentially a necessity. And you can’t explain to them that “well, we’ve got to do that because Wall Street needs a bit of extra return.” So it has to be heavily scrutinized. And our staff definitely does that.
Miller: You did mention that you welcome feedback from the public. What does the commission do specifically with comments it gets? If a thousand people say, “I can’t pay for utilities, this latest increase is too much on top of the ones that were already too big,” what does the commission do with that information?
Moser: There’s lots of things that the commission can do. Specifically, as I mentioned earlier, that actually now gets into the record. It didn’t before, but it gets in front of the commissioners explicitly.
It really helps us orient the agency. As I said earlier, we’re doing things in our agency that we’ve never done before to focus on customers. We have a whole unit that’s dedicated to developing customer lower income programs, income qualifying programs, focusing on disconnections, focusing on arrearages, which is essentially the precursor to a disconnection. So those comments matter, and they change how we operate.
Miller: Nolan Moser, thanks very much.
Moser: Thank you.
Miller: Nolan Moser is acting executive director of the Oregon Public Utility Commission.
Contact “Think Out Loud®”
If you’d like to comment on any of the topics in this show or suggest a topic of your own, please get in touch with us on Facebook, send an email to thinkoutloud@opb.org, or you can leave a voicemail for us at 503-293-1983. The call-in phone number during the noon hour is 888-665-5865.
