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| The Public Purpose Charge |
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What is the Public Purpose Charge?
The public purpose charge was established as part of Oregon´s electric industry restructuring legislation that went into effect March 1, 2002. PGE and Pacific Power are required to collect three percent of your total monthly bill, and pass it to state-designated nonprofit organizations and education service districts. The public purpose charge funds energy conservation in schools, homes and businesses. It also funds the development of new renewable energy resources and aids in the construction and rehabilitation of low-income housing.
The public purpose money collected is distributed to the following organizations:
· Energy Trust of Oregon 73.8 percent conservation & renewables
· Oregon Housing and Community Services 16.2 percent low income housing
· Various Education Service Districts 10 percent energy conservation - schools
Is this in addition to the rates I am already paying?
Pacific Power is currently charging customers about 3 percent on their bills for past conservation programs. The public purpose charge will increase Pacific Power bills by 3 percent for 18 months while payment continues for past conservation programs. After that, charges for past programs will be removed from your rates as prior conservation expenses are recovered.
The public purpose charge will increase Portland General Electric (PGE) bills by about 2 percent beginning March 1, 2002. Payment will continue for past conservation programs until October 2006. After that, those charges will be removed from PGE bills.
How will it show up?
As of March 1, 2002, Pacific Power electric bills include a line item called Public Purpose. By law, your utility collects 3 percent of your monthly electric bill, and passes it to state-designated nonprofit organizations and education service districts.
Am I eligible to "self-direct" some of this money?
You can be eligible to self-direct or invest a portion of your public purpose charge directly into your site energy efficiency projects and renewable power investments if your electric use is over 1 average megawatt (8,760,000 kWh total energy consumption) for the calendar year ending January 15 of the current year you apply. You may consolidate your electric usage for a "site" to meet this requirement if your buildings are less than 1000 feet apart.
How much money can be self-directed?
You can self-direct 56.7 percent of the 3 percent toward energy efficiency projects at your site that provide between a 1 and 10 year payback in electric savings. Your project must be complete and pre-certified prior to self-directing. You can also self-direct 17.1 percent of the 3 percent toward above market costs of new renewable energy you purchase.
What are my options as a large Oregon electric consumer?
You may either
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Pay the 3 percent public purpose charge and be eligible to receive program services such as energy study support, incentives and other services from programs administered by the Energy Trust of Oregon (currently the Energy Trust has contracted with PGE and Pacific Power to continue their existing energy efficiency programs during the transition),
or
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Certify your site for self-direction and submit energy efficiency projects and/or investments in new renewable power for certification so you can use energy efficiency project expenses and/or the above market costs of renewables as credits toward a portion of your public purpose charge. If you self-direct and you have additional energy efficiency projects, in 2002 you can request funding approval from the Energy Trust board for the additional projects.
If you have already implemented all electric energy efficiency measures with a payback of one to ten years, you may request an exemption from paying up to 54 percent of the public purpose charge. There is more on this option to follow.
What forms do I fill out to self-direct?
Start by going to the Department of Energy Web site on self direction. At this site you will find a description of the process and the required sign-up forms. Print out and complete the Site Certification form and return it to the Oregon Department of Energy. If you have questions, you may call the Department of Energy at 1-800-221-8035.
After submitting your Site Certification form, you will need to submit forms to certify a conservation project and/or a renewable energy purchase. These forms are available on the same Oregon Department of Energy self -direction Web page. Upon completing the submission and approval process, you will need to provide a Certified Public Accountant (CPA) certification of qualified expenditures for the conservation project and/or renewable energy purchase.
How does my bill change once I'm certified as a self-directing customer?
Customers are responsible for notifying Pacific Power that the Oregon Department of Energy has certified their site and project. After receiving your site and project certification notification, your utility will no longer bill the 3 percent public purpose charge.
You will be responsible to determine how much of the 3 percent you now owe, then you´ll send that amount to PGE/Pacific Power monthly. The Oregon Department of Energy Web site will assist you in determining the correct amounts you no longer have to pay (your self-directed amount) and how much you still owe. As stated above, the amount you still owe should be sent in monthly to your local utility with a break-down showing the portions of the public purpose charge you are paying by fund category (e.g. schools, low income housing, etc.).
If your conservation or renewable resource project receives a certificate of qualified expenditure from the Oregon Department of Energy in the middle of a utility billing period, you must provide the utility 10 business days to have public purpose charge removed from that month´s bill. When you submit the balance of public purpose charge owed you must prorate the eligible conservation credit for that month. You only receive credit or claim self-direction for the number of days in that meter read cycle that include and follow the date of the certification of the qualified expenditure. For this prorating all days are assumed to have equal cost for electrical service.
To facilitate the transition to self-direction, you can contact your utility when you have your site certified so they are ready once you have your project certified.
If I choose to self-direct, can I still be eligible for other energy efficiency incentives?
Your projects can still be eligible for Oregon Business Energy Tax Credits (BETC). In 2002, you will not be eligible to receive energy study support, incentives, or other services from utility energy efficiency programs or other programs funded by the Energy Trust of Oregon unless you pay the full amount of the conservation portion of your public purpose charge at least until you receive your incentive payment and/or program services. However, the Energy Trust agreed, at their January 30, 2002, board meeting, that those who participate in the self-direct/public purpose charge credit program but have additional projects, may request funding approval directly from the Energy Trust board in 2002 for their additional projects. The board will review each request individually.
What if I do nothing?
If you do not opt to self-direct a portion of your public purpose charge, you will continue to be billed 3 percent of your total monthly electric bill. You will be eligible to participate in programs funded by the Energy Trust of Oregon. In 2002 and during the transition, the Energy Trust has contracted with Pacific Power and PGE to continue their energy efficiency programs.
Can I request site certification for self-direction of renewables/energy conservation only?
If a site is certified for self-direction, it is certified for both energy conservation and renewable credits. However, if the site does not take public purpose charge credits for energy conservation expenditures, it is eligible to participate in utility transition or Energy Trust energy conservation programs.
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| Conservation Projects |
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How do I get an energy conservation project certified?
You need to fill out the conservation project form describing the project. The form is available at the Oregon Department of Energy Web site. If you´ve received any assistance from PGE/Pacific Power for this project, you are required to pay back any dollar amount received, including any amount spent by them on your behalf for an energy study, with interest. Your project must be complete before you can be relieved from the conservation portion of the public purpose charge. After March 1, 2002, projects must be pre-certified before being started.
What conservation projects are eligible?
The project must save electricity, and it must have a simple payback of one to 10 years. If the payback is greater than 10 years, contact the Oregon Department of Energy to discuss project eligibility.
What if I recently completed a conservation project?
Projects started as early as July, 23 1999, may be certified by the Oregon Department of Energy if:
- The energy conservation measure did not receive funding from Pacific Power/Portland General Electric,
or
- You repay Pacific Power/Portland General Electric any funds you received from them for energy studies or incentives, with interest, within 90 days.
February 1, 2002, the Attorney General ruled that projects started between July 23, 1999, and December 31, 1999, may be eligible for public purpose charge credits if they were pre-certified. A Business Energy Tax Credit pre-certification satisfies this requirement.
Projects started between January 1, 2000, and February 28, 2002, may be eligible for public purpose charge credits. Projects started after February 28, 2002 must be pre-certified prior to the start of the project. As per the Oregon Administrative Rules, "start of project" means that a contract has been executed to install or implement an energy conservation measure.
The intent of allowing "grandfathered" projects was so sites could begin taking public purpose charge credits effective March 1, 2002. The Oregon Department of Energy expects to update the Oregon Administrative Rules to add an end date for accepting "grandfathered" projects. Rulemaking begins in May 2002, and is open to the public.
When do I have to repay my utility?
If you sign up your site and certify a project before March 1, 2002, you need to repay any incentive and audit costs (with interest) associated with the project within 90 days of March 1. After March 1, 2002, you need to repay your utility within 90 days of when you request project certification
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Self-directing customers do not need to repay audit costs for energy conservation audits completed prior to January 1, 2000. The cost of an audit that identifies multiple energy conservation measures will be prorated among such measures.
Give me an example
Your site is certified by the Oregon Department of Energy and you completed an energy project in November 2001 that cost $100,000 to implement and provided a 5 year simple payback in electric savings. This project is submitted and approved by the Oregon Department of Energy. You now have a $100,000 "credit" which you can apply to your monthly energy conservation public purpose charge. Your March bill from Pacific Power/PGE is $70,000. Your self-directing amount for conservation is $70,000 X 0.03 X 0.567 = $1,190.70. Since your "credit" is greater than this amount, you don´t have to pay it and your credit is reduced to $100,000 - $1,190.70 = $98,809.30. You will still need to send in to PGE/Pacific Power the rest of what you do owe, which would be $70,000 X 0.03 X 0.433 = $909.30. The Oregon Department of Energy Web site will show the calculation and the disbursement into each of the required categories that need to be sent to PGE/Pacific Power.
What is meant by Simple Payback?
The payback is based on the total project cost and the electrical energy cost savings. The 1 to 10 year payback requirement is based only upon these factors. It is expected that there may be other cost savings due to reduced material waste, reduced labor, improved quality, or increased throughput. These items are not included in the payback calculations for this program.
Certified Project Cost - What is included? How much should I certify?
If I have a large electric energy efficiency project with a significant capital investment, how do I determine how much of the project cost I should certify? Should I certify the entire project cost, only a couple of the measures in the project, or only some portion of the project costs? If I only certify a portion of the project, how does that effect eligibility with regard to the conservation project simple payback criteria of one to ten years?
Large electricity consumers have a specific and limited amount of their public purpose charge that they may self-direct for investment in on-site energy conservation projects or new renewable resource purchases. For example, a site that uses 32,000,000 kWh each year and pays $.07/kWh would end up with an annual public purpose charge of $67,000. (32,000,000 x .07 x 3 percent public purpose charge) The amount that consumer could self-direct for conservation projects would be $38,102 (56.7 percent of the $67,000 public purpose charge). The law allows self-direction of public purpose charges until 2012. Therefore, over that ten year period it is likely that the maximum self-direction amount will be about $381,000. Of course, that assumes that the electric rates and energy use at the site remain the same.
For example, if this consumer invested $900,000 in refrigeration efficiency improvements that save 5,800,000 kilowatt hours per year, then the first year energy cost savings would be $406,000 (5,800,000 x $0.07 = $406,000). The simple payback for the project would be 2.2 years ($900,000/$406,000). However, the project cost is much more than the site's foreseeable amount of self-direction credits. You wouldn't likely want to have $900,000 certified by the Department of Energy if you expect your ten-year credit to only be $381,000.
However, if I certify the $381,000, and the first year energy cost savings is $406,000, then the simple payback is less than a year. Does that disqualify the project? The Oregon Department of Energy is required to determine that the electric energy savings projects at qualifying sites have a simple payback of greater than one year and less than ten years, based on the project cost. The certified cost may be less than the project cost that the Oregon Department of Energy uses to qualify the investment. In this case the Oregon Department of Energy would certify the project based on the total capital investment, and then only certify the amount requested by the consumer.
Typically large refrigeration projects include several measures (liquid refrigerant pump, expanded condenser area, evaporator fan drives, compressor sequencing controls, etc.). A couple of those measures, that fit the site's self-direction budget, could be submitted for Oregon Department of Energy certification. Looking at separable components of the larger energy project may allow you to limit the amount you request for certification and result in those components easily fitting within the simple payback criteria.
Certifying only the amount that you expect to self-direct over the ten year period will reduce your costs for project certification. The Oregon Department of Energy is required to charge the actual cost of administrative service for reviewing and certifying projects and the more expensive the project is, the more lengthy the technical review will be.
Are Efficiency Projects included?
There are projects that dramatically improve energy efficiency. However, they sometimes also increase production and, ultimately, electrical load. These kinds of projects may qualify for certification to receive public purpose charge credits. To determine energy savings, calculate the energy rate for the process (e.g. kWh per thousand parts, before and after). The kWh savings would then be calculated for a single production volume, before or after, whichever is appropriate for future production levels.
Can the Cost of Administrative Service be included in the Project Cost?
The cost of administrative service is considered an administrative cost of the program. However, it is not included when calculating the eligible project cost. After your site and projects are certified, the Oregon Department of Energy will give you credit for your administrative costs.
What if my site is certified but my conservation project isn't certified?
There are projects that dramatically improve energy efficiency. However, they sometimes also increase production and, ultimately, electrical load. These kinds of projects may qualify for certification to receive public purpose charge credits. To determine energy savings, calculate the energy rate for the process (e.g. kWh per thousand parts, before and after). The kWh savings would then be calculated for a single production volume, before or after, whichever is appropriate for future production levels.
How can I get an exemption from part of the charge for investments I already made in conservation?
You may request an exemption from paying up to 54 percent of the public purpose charge. To qualify, first get your site certified and then have an independent energy audit. The audit must determine that you´ve already done all electric conservation measures with a payback of one to 10 years. The Department of Energy must approve the auditor and review the audit results. When your audit is complete, submit the form Request for Exclusion from Payment of Public Purpose Charges.
If the audit determines that there are remaining conservation measures, you can complete them and then qualify for an exemption. Or, if you elect not to implement those measures, you must continue paying conservation public purpose charges until you've paid an amount equal to the estimated cost of those measures. Any public purpose charges paid before the date the Oregon Department of Energy approves your exemption cannot be used as credit toward this amount.
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| Renewable Resource Purch/Proj. |
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What renewable resource investments are eligible?
You can use the renewable resources portion of your charge to buy power from new renewable resources, including green tags, or to build and operate a renewable resource generation facility at your site. New renewable resources are generation facilities that began operation after July 23, 1999, the date Oregon´s restructuring bill became law. Resources may include wind, solar, geothermal, landfill and digester gas, low-emission nontoxic biomass based on solid organic fuels from wood, forest and field residues, and hydroelectric facilities located outside protected areas as defined by federal law in effect on July 23, 1999.
Only the above-market costs are eligible. Pacific Power offers their Blue Sky product to large business customers in Oregon, providing the option to buy fixed 100 kilowatt-hour increments (block) of 100percent new wind power at an above-market cost of $2.95 per block.
The entire cost you pay for green tags is the above-market cost. For renewable power contracts, the above-market cost is the price you pay for electricity from renewable resources minus the price of conventional power. If you want to invest in a generation facility at your site, call Mark Kendall or Marty Stipe at the Oregon Department of Energy for help calculating the above-market costs: 1-800-221-8035 (toll free in Oregon) or 503.378.4040.
Any electricity service supplier other than your utility must be certified by the Oregon Public Utility Commission. However, green tag suppliers do not need to be certified by the Commission. Green tags give the buyer the sole right to claim the environmental benefits of a specified amount of electricity from specified renewable resource generators. The power is sold separately to anyone at market rate, without any environmental claims. One transaction can purchase tags for multiple business sites.
How do I certify a renewable resource investment?
Submit two forms to the Department of Energy: a Site Eligibility Application and an Application for Renewable Energy Resource Precertification. (You need to complete a Site Eligibility Application only once per site, regardless of how many conservation or renewable resource projects you want to certify.) Include a contract that shows your intent to purchase electricity or green tags from qualifying renewable resources.
Can we build our own Renewable Energy Resource (RER)?
Yes. Go to the Oregon Department of Energy Web site and download the Application for Renewable Energy Resource Precertification. Please call the Oregon Department of Energy at 1-800-221-8035 to discuss the details for calculating the above-market cost of the new renewable energy resource project on-site.
When do I claim credit for a renewable resource investment?
When you receive a Certificate of Qualified Expenditures from the Oregon Department of Energy, you can immediately begin claiming a credit for up to 17.1 percent of the public purpose charge you owe each month. Credit may be carried forward until you've claimed credit for all the certified expenses of your investment, up to 10 years, until Feb. 28, 2012.
How will I get credit for my renewable resource investments?
Notify your utility once you have a certificate of qualified expenditures for renewable resources from the Oregon Department of Energy. The distribution utility will remove the 3 percent charge from your bills. You´ll be responsible for calculating monthly the public purpose charge you owe for each fund: schools and low-income households, plus any uncredited charges for conservation and renewable resources. The Oregon Department of Energy´s interactive internet based program to help you calculate, claim and track credits monthly.
You pay the public purpose charge you owe each month to Pacific Power/Portland General Electric and tell the utility the correct allocations for each fund. Based on the information you provide, the utility will forward the proper amounts to administering organizations. At the end of each year, you´ll provide the Department of Energy with documentation of your investments in renewable resources and public purpose payments to your utility.
What if I've already been buying new renewable power?
The Department of Energy cannot certify any prior investments in renewable resources. Only investments made after March 1, 2002, qualify.
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| Administrative Costs |
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What are the costs for site and project certification by the Oregon Department of Energy?
The Oregon Department of Energy is required by statute to recover its actual cost of services provided to large electricity consumers who participate in the self-direction of public purpose charges. In summary, to participate and claim a credit against public purpose charges owed for a conservation project a large electricity consumer must:
- qualify their site through application with the Oregon Department of Energy;
- have their project(s) pre-certified by the Department of Energy;
- have a Certified Public Accountant conduct a compilation of actual qualified costs for the installed project. They can self-direct once the project is installed, qualified expenditures are compiled and the project is certified by the Oregon Department of Energy. The Department of Energy requires a deposit against the costs for these services. Deposits are collected for "site" certification and conservation or renewable resource application review.
A "site" application deposit of $1,200 is an annual fee for site certification and annual administration of the account (monthly credits claimed and credit account balances). The Department of Energy will periodically reassess the need for, or amount of, this annual deposit. The Department of Energy tracks actual staff and other administrative costs per participating consumer. At the end of a year from the date of the deposit, the Department of Energy will account for actual cost of service provided for that consumer and invoice against deposits made. Any unexpended balance of the deposit will be either carried forward to continue administration for that account or be refunded to the consumer at their request. Carried forward amounts will reduce the annual "site" deposit for that site for the following year.
The deposit for a conservation project pre-certification or renewable resource pre-certification is 4 percent of the project cost in the application. The same accounting for actual cost of service provided will be conducted and the consumer notified of the deduction from their deposit. Applications to self-direct renewable resource monies for the above market price contracts or tradable certificates pay the 4 percent deposit as well.
The actual cost of service invoiced and deducted from deposits is added to the participating consumer's self-direction credit balance. So, they can recover all the costs incurred to implement these projects under self-direction.
What would my costs and payback be for a $100,000 electricity conservation project?
If a large electricity consumer with a qualified site pays $4,500 a month in public purpose charges, 56.7 percent of that amount or $2,551 would be eligible each month for self-direction to offset the cost of a conservation project. The portion they can self-direct for the above market cost of renewable resources is 17.1 percent or $770 a month. The annual self-direction amounts (amounts not paid to the distribution utility) would be $30,612 for conservation and another $9,240 for above market cost of renewable at that site.
If they precertify, install and verify qualified expenditures for a $100,000 conservation project, they may notify their distribution utility and energy service supplier that they want to begin self-direction of public purpose charges. The deposits they would have made at that point would sum $5,200 ($1,200 site and $4,000 for the 4percent deposit for conservation pre-certification).
That would make their first year investment $105,200. Their first year public purpose charge that they can self direct for conservation is $30,612. To administer that account for the three years that they self-direct public purpose charges (track monthly credits claimed against the qualified expenditure amount) the consumer would have to make two additional $1,200 deposits. The gross cost for the project would then be $107,600. That results in full cost recovery to the large electricity consumer in 3.5 years.
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| Other Incentives |
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The state Business Energy Tax Credit is for investments in conservation, renewable energy resources, recycling and less-polluting transportation fuels. The tax credit is 35 percent of eligible project costs. Businesses that invest the conservation or renewable resources portion of their public purpose charge in their own facilities are still eligible to take full advantage of this program.
The Energy Loan Program is operated by the Oregon Department of Energy. Low-interest financing with fixed-terms is available for projects costing as little as $30,000 and as much as $20 million. Loan terms are typically 10 or 15 years and recent rates are between 6.5 percent and 7.5 percent. The Department of Energy can approve completed applications within six weeks or less. Renewable resource and waste heat recovery projects enjoy tax exempt bond status and often have lower interest rates than commercial conservation projects. These loans require guarantees or collateral. The state sells bonds three or four times a year to finance projects. For smaller projects there may be funding on hand and for larger ones a letter of credit can be issued to allow for bridge financing until the bonds are sold. Bridge financing costs are eligible to be financed under the bond funding.
The Energy Trust of Oregon, a nonprofit organization, will administer public purpose funds for conservation and renewable resources. The Energy Trust is working with Portland General Electric and Pacific Power to continue conservation programs for commercial and industrial customers as administration of funds shifts from the utilities to the Energy Trust.
The Energy Trust expects to devote much of its funds toward the commercial and industrial sector. To build up its conservation programs, an outreach effort beginning in January will ask customers what programs it should offer and how to make them successful.
The Northwest Energy Efficiency Alliance is a non-profit group of electric utilities, state governments, public interest groups and industry representatives committed to bringing affordable, energy-efficient products and services to the marketplace.
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