Energy Law Alert: Oregon Set to Adopt Renewable Portfolio Standard of 25 Percent by 2025
5/23/2007
The Oregon Legislature has sent a strong signal that Oregon is serious about being a leader in renewable energy by passing one of the most ambitious renewable energy laws in the nation, the Oregon Renewable Energy Act (OREA). Governor Ted Kulongoski, the driving force behind the OREA, is expected to soon sign the legislation. The OREA requires large utilities to provide at least 25 percent of their electricity from renewable energy sources by 2025. These requirements will be phased in, beginning at 5 percent in 2011. All utilities with retail electricity sales equal to or greater than 3 percent of the statewide total load are subject to the "25 by 25" requirements. Smaller utilities will be subject to more relaxed standards for renewable energy sales. Electricity service suppliers (ESSes) must comply with the requirements applicable to the utilities where the ESS's customers are located.
Utilities can meet these new requirements by selling energy generated from qualifying renewable energy sources or by making alternative compliance payments. In addition, utilities can supplement renewable energy sales by acquiring "unbundled" renewable energy certificates, which are sold separately from the underlying electricity. Qualifying renewable energy sources include wind, solar, ocean, tidal, geothermal, hydrogen, some types of biomass, and some hydroelectric facilities, but not petroleum, coal, natural gas, or nuclear power. Electricity from a source that the Bonneville Power Administration (BPA) designates as environmentally preferred can also be used to meet the OREA's requirements.
Under the OREA, utilities must provide annual compliance reports to the Oregon Public Utility Commission, which is authorized to assess penalties for noncompliance. However, a utility is not required to comply with the OREA to the extent that the various costs of compliance exceed 4 percent of the utility's revenue requirement for the compliance year. Utilities can also avoid complying with the OREA to the extent that compliance would require acquiring energy beyond the utility's load, would displace non-fossil fuel energy sources, or would displace electricity from certain existing contracts for power from the mid-Columbia dams. In addition, consumer-owned utilities are not required to comply with the OREA's renewable portfolio standards to the extent that compliance would displace firm energy commitments for electricity from BPA.
The OREA also requires utilities to offer a green power rate to retail consumers of electricity.
For more information on OREA's requirements, please contact:
This is a publication of the Stoel Rives Energy Group for the benefit and information of clients and friends. This bulletin is not legal advice or a legal opinion on specific facts or circumstances. The contents are intended for informational purposes only. Copyright 2007 Stoel Rives LLP.