The Oregon Public Utility Commission approved new energy efficiency avoided cost data that was recommended by commission staff and affects utilities Northwest Natural Gas Co. and Portland General Electric Co.
The updated numbers, approved Dec. 9, will be used by the Energy Trust of Oregon in 2027 planning. They are expected to increase energy efficiency gas avoided costs by 61% and electric avoided costs by 17.6% compared to 2026.
The Oregon Public Utility Commission adopted its staff's recommendation of the approval of location-specific avoided costs that will be used in targeted energy efficiency planning by the Energy Trust and NW Natural for certain geographic areas (Docket No. UM 1893).
The Energy Trust is a nonprofit that provides "clean energy solutions," including cash incentives for energy system upgrades, in Oregon.
Avoided costs are funds that an energy utility does not have to spend to deliver gas and power services, whether through efficiency measures, demand management mechanisms, distributed energy or other means. Among other things, utilities can use avoided cost numbers in ratemaking cases to show how much money their investments will save. Under Oregon administrative rules, energy utilities must submit data for the calculation of energy efficiency avoided costs, and the Energy Trust must not use this data until it has been approved by the PUC. Commission staff said the updates were driven by integrated resource plans that consider the policies of Oregon House Bill 2021 compliance for electric utilities and Climate Protection Program compliance for gas utilities.
Gas costs
Peter Kernan, a utility analyst at the PUC who helped prepare the staff recommendations, said the primary driver of the change for gas utilities is higher emissions compliance avoided costs and the associated risk reduction. The PUC staff found that community climate investments, which include building electrification efforts, were more cost-effective than NW Natural's preferred plan to prioritize renewable natural gas investments to comply with state climate regulations, which the PUC rejected in 2023.
"Notably, NW Natural's supply capacity avoided cost reduces to zero after 2033, as IRP [integrated resource plan] modeling shows system peak day loads start to decline in 2034 through the end of the planning horizon," according to the staff report.
NW Natural said the fact that its supply capacity will drop does not mean there will be no further customer growth. "In fact, we do anticipate long-term customer growth as outlined in our IRP," a spokesperson said in an email. "We do, however, expect lower system throughput during that forecast horizon because of a number of advancements. As an example, we anticipate that energy efficiency will reduce total system throughput by almost 20%."
"As it relates to the commission's order, there is a modest adjustment to our avoided cost calculation that we proposed in our IRP, which can help us pursue additional energy efficiency," the spokesperson said. "We do appreciate staff's acknowledgement of the need for joint system planning, which we also advocate for in our IRP."
NW Natural said the electric power system is growing increasingly dependent on the gas system, and this requires enhanced coordination to reduce risks to the region's energy system.
Electric system
Portland General Electric (PGE) initially submitted a proposal for a 3.9% increase in electric avoided costs, but the commission preferred the staff's marginal avoided cost resource approach. The staff said this option represented a "steep 17.6 percent increase in overall avoided costs and emphasizes the role of energy efficiency as a least-regrets resource in a complex planning environment."
PGE said the utility is working with the PUC. "Energy efficiency programs, demand response and distributed energy resources are part of PGE's current and long-term plans to provide affordable, reliable and increasingly clean energy in Oregon," PGE spokesperson Ben Morris said. "We will continue working with the OPUC to determine the most cost-effective, least-risk policies to support this work."
