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State PBF/ USF History, Legislation, Implementation

Oregon
Last updated: June 2009

Oregon's restructuring legislation provided for about $18 million in new funding for low-income energy assistance and weatherization programs. Signed into law in July 1999, SB 1149 established a $60 million Public Purpose Charge (PPC) of which about 12 percent, about $7.5 million yearly, is earmarked for low-income weatherization.

The PPC is equal to three percent of the total revenues collected by participating electric utilities and funds "new cost-effective local energy conservation, new market transformation efforts, the above market costs of new renewable energy resources and new low-income weatherization." It will be collected through 2026 by the state's two investor-owned utilities—Portland General Electric (PGE) and PacifiCorp—which serve 80 percent of the state's electric customers.

The measure also authorized collection of money for low-income electric rate assistance through a meters charge on residential and commercial/industrial customers of PGE and PacifiCorp. From late 2001 through 2007 the meters charge collected about $10 million annually, the amount was an attempt to bring the state's total bill assistance funding up to the peak level of LIHEAP funding in 1985; Oregon received about $20 million for LIHEAP rate assistance that year.

Through the passage of SB 461 by the Oregon Legislature in 2007, the amount collected through the meters charge was increased from $10 million annually to $15 million, effective January 1, 2008. The law also allows that amount to change each year in accordance with the percentage change in the number of residential customers and certain business electricity sales. The monthly meters charge is currently $0.50 per meter for residential customers and not more than $500 for commercial/industrial customers.

The law stipulates that the Oregon Department of Housing and Community Services (DHCS), the LIHEAP and weatherization grantee, administer both low-income funding sources. DHCS distributes the funds through the community action agencies that operate LIHEAP and the WAP, but energy assistance is under a separate program called Oregon Energy Assistance (OEAP). The law requires that priority assistance be directed to low-income electricity consumers in danger of having their electricity service disconnected. It also stipulates that bill payment and crisis assistance include programs "that effectively reduce service disconnections and related costs to retail electricity consumers and electric utilities."

The funds must be expended solely for low-income electric bills in the service area of the electric company from which the funds are collected. Income eligibility for the electric assistance funds is the same as for LIHEAP—60 percent of state median income. The program served 29,510 households in FY 2008 with an average benefit of $403 and a funding level of $12.9 million. Because the increased meters charge was not in effect until January 1, 2008, OEAP didn’t receive the full $15 million for that year.

An evaluation of the program was completed in January 2003.

Additionally, legislation enacted in 2001 allows natural gas companies to collect funds through a meters charge for bill payment assistance; as a result, three gas utilities collect these funds. The largest, NW Natural Gas, imposes a monthly charge of 25 cents per residential customer for a bill payment assistance program called Oregon Low Income Gas Assistance, which it administers. During 2008, NW Natural spent about $2 million through assistance payments to over 4,000 households; that amount was doubled for 2009; for that year only the utility allocated money to energy assistance that had been earmarked for weatherization. NW Natural also collects public purpose funds based on a percentage of revenues amounting to about $5 million yearly, of which at least $1.5 million is normally spent for low-income weatherization, helping about 350 households yearly.

Oregon's two smaller natural gas companies, Cascade and Avista, have similar programs. The Avista Low-Income Rate Assistance Program is a ratepayer-funded program that collects around $230,000 per year, while spending between $210,00 and $240,000 for energy assistance.

Consumer-owned utilities (public utility districts and municipal utilities) can choose whether to participate in restructuring. If they do participate, they are also obligated to collect the three percent public purpose charge from their customers. While a section of the law requires consumer-owned utilities to have bill assistance programs, it has no other guidelines or specifications. However, it does override an existing Oregon law that prohibited utilities from establishing reduced rates or other bill payment assistance for low-income customers based on the rationale that these rates are discriminatory.

According to the 2008 “Oregon Low-Income Energy Assistance Snapshot,” published each January by the Community Action Partnership of Oregon, each of the state’s 37 consumer-owned utilities provides assistance to their low-income customers. The report describes three forms of assistance: utility funded programs (using funds provided by ratepayers), voluntary contribution programs (using funds provided on a voluntary basis) and rate discount programs that are funded as a part of utility operations.

Together these utilities provide around $3 million per year for their low-income programs, according to the Snapshot. However, between 50 to 60 percent of this total is accounted for by a single utility, the Eugene Water & Electric Board, which serves about 18 percent of the consumer-owned utility customer base.

Low-income Weatherization Program

Collection of the low-income portion of the PPC began on March 1, 2002. These monies are distributed through DHCS and, in addition to low-income housing programs, they fund two separate weatherization programs. One is for energy efficiency for low-income households and is administered through the community action network, the second is designed to reduce the energy usage and utility costs of lower income tenants in multi-family rentals. All expenditures must be for customers of PGE and PacifiCorp.

According to a 2009 report on the PPC, during the period from January 2007 through December 2008, about $11.3 million was collected from PGE and $6.5 million from PacifiCorp and allocated to DHCS for the two low-income weatherization programs.

Through the largest program, called Energy Conservation Helping Oregonians (ECHO), low-income households that use electricity as their primary heat source can receive weatherization measures such as insulation, energy-related minor home repairs, air infiltration reduction, furnace repair and replacement, as well as baseload measures, including lighting and refrigerator replacement, and educational services. (About 70 percent of Oregon's low-income households use electricity for heat.) Other households may receive education and baseload measures.

During the two-year period, ECHO weatherized 3,947 homes with a combined estimated electricity savings of over 15 million kWh yearly, spending about $14 million. The majority of households served included elderly and disabled members and young children; these households are given priority for service.

The second program, for multi-family rental housing, provides grants for the construction or rehabilitation of affordable rental housing. At least 50 percent of the units in the project must be rented to households whose income is at or below 60 percent of the area median income. Projects receiving funds must also remain affordable for at least 10 years. Program resources may be used for weatherization measures such as windows, doors, and insulation, as well as baseload measures, including energy-efficient appliances and lighting. Around $2.4 million was committed to about 39 projects during the two-year period.

The overriding principle of the both programs is that 1 kWh must be saved for every dollar spent, and their effectiveness is evaluated according to that measure.

Additionally, DHCS receives and administers PPC funds for low-income housing. A total of 4.5 percent of the PPC funds are dedicated to low-income housing development projects, either construction of new housing or rehabilitation of existing housing for low-income families through the DHCS Housing Trust Fund.

Oregon is the first Northwest state to follow the recommendations of the 1996 "Comprehensive Review of the Northwest Energy System," a report generated by a committee convened by the governors of Montana, Idaho, Oregon and Washington to reach consensus on how to restructure the region's electric utilities. The Committee's report recommended that three percent of the revenues from the sale of electricity services in the region be set aside for public purpose programs. Montana's 1997 restructuring legislation set aside 2.4 percent; the other two states have not enacted restructuring legislation.

For more information on the low-income public purpose funds, see the following:

Chapter 757, the latest version of the law authorizing the public purpose charge.

Report to Legislative Assembly on Public Purpose Expenditures, released in April 2009 by ECONorthwest.

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Page Last Updated: January 27, 2010