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Commission Approves PGE Pilot Tariff In Response To High Energy Costs And Threat Of Blackouts
June 30, 2000 (2000-033)
Contacts: Ron Eachus, Chairman, 503 378-6611; Roger Hamilton, Commissioner, 503 378-6611; Joan H. Smith, Commissioner, 503 378-6611; Bob Valdez, Public Information Officer, 503 378-8962
Salem, OR - The Oregon Public Utility Commission today approved a Portland General Electric pilot tariff designed to respond to unusually high prices for electricity and increased demand by giving the company's larger customers incentive to cutback usage, reducing the chances of blackouts and trimming the utility's cost of buying power.
The tariff takes effect July 1 and is available to large electricity consumers such as industrial customers and the City of Portland. PGE originally asked for a July 10 effective date, but asked the Commission to move the date forward because market prices had reached much higher than anticipated heights much much earlier than expected.
PGE originally anticipated that electric prices would fluctuate in the $35 to $80 per megawatt hour (mWh) range, as has happened the last two years. However, prices have dramatically skyrocketed to more than ten times what was expected, and this occurred well before August when prices are usually at their highest levels.
"A certain amount of price spike is anticipated but prices this high are hard to explain and I think policy makers will need to investigate what's been happening." Commission Chairman Ron Eachus said. "In the meantime, this is an innovative tariff that provides a tool for the customer and the company when we have periods of excessively high prices."
Under the tariff, during periods when the market prices are high, PGE can ask large users of electricity to voluntarily reduce their electricity loads. In exchange PGE will reward the customer for reduced usage by paying the customer a price that is less than it would otherwise cost PGE to buy power and serve that customer. This reduces the prospect of shortages during times of peak demand, such as unusually hot or cold weather.
Earlier this week Energy Secretary Bill Richardson warned Congress parts of the Northwest face the threat of rolling blackouts. A "rolling blackout" occurs when electricity is sequentially cut off to selected users or segments of customers.
Commissioner Roger Hamilton applauded the request by PGE and its large industrial customers. "This makes consumers, particularly the largest users part of the solution. It just makes good sense to compensate customers for voluntarily reducing usage when the supply is tight rather than involuntarily interrupting all customers."
The Commission is hopeful PGE will also gain useful information on the degree to which customers reduce load when eligible for incentives.
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