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Deregulate Energy? Not in Oregon!
The debate over whether states should deregulate or otherwise
restructure their electricity systems has been raging for years. In Oregon, this debate was resolved in a restructuring plan, Senate Bill 1149, that was passed in 1999. Of course, no one wants what happened in California to happen here, but what exactly is happening here?
To understand Oregon's energy policy, it is important to understand changes occurring at the federal level. In 1992, Congress passed the Energy Policy Act, which created a wholesale market for energy. Rather than just
having utility companies produce and sell power, independent power
producers were also allowed into the energy game.
This made it necessary for states to adjust their energy policies. Why? The new wholesale market provided competition for utility-built power plants, and suddenly utilities didn't simply build more plants if they needed more power, because they could buy needed power from the wholesale market. So utilities slowed or stopped building new plants. At the same time, independent power producers did not want their new power plants to be put into direct
competition with non-profit or publicly supported rate-based plants whose costs had already been amortized, and they insisted that utilities be privatized, promising that the "free market" would lower costs and profits for all.
In response, most states passed laws that said they would depend either wholly or mostly on the wholesale market in a classic deregulation model. This meant that local utilities were often required to sell their power plants, and all consumers--both residential and business--were thrown into the retail energy market. Some, like California, did not even try to negotiate long-term contracts, expecting the new spot market to offer them unlimited energy at a bargain rate.
Here in Oregon, consumer and environmental advocates looked at what was happening in other states and advocated a different path. They formed the Fair and Clean Energy Coalition, bringing together over 120 consumer, environmental and human service organizations in hopes of protecting the public interest in Oregon's electricity restructuring debate. They set out three
principles that any energy policy for Oregon had to include 1) consumer
protection had to be guaranteed; 2) the environment had to be preserved; and
3) affordable electricity had to be available to all Oregonians. But the real
question was whether or not the public interest community could play a role in developing a state energy policy that made sense for Oregon?
Coalition members were successful in negotiating a policy with the state and with private industry that met each of its principles. The policy, passed as Senate Bill 1149, does several things. First, it guarantees residential customers a regulated rate system, like they have today, even though commercial and
industrial customers are allowed to buy power from anybody they choose. Second, it guarantees that any "direct access" customer (a non-residential customer buying power from a non-utility energy provider) must help pay the
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