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Oregon to allow some customers to avoid transition charges

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Oregon to allow some customers to avoid transition charges

Oregon utility regulators will propose rules designed to allow large new electric customers to avoid having to pay stranded utility costs if they arrange to buy power from independent producers.

The Oregon Public Utility Commission said it will issue a notice of proposed rulemaking for "new load direct access," so that new customers with loads of 10 average megawatts or more who obtain their power from independent producers will not have to pay transition charges, because utilities will not expand their systems and incur costs to serve those new customers.

Existing utility customers must pay stranded cost charges, referred to as a transition adjustment, in order to leave the electricity service of their utility. However, the Northwest and Intermountain Power Producers Coalition and the Alliance of Western Energy Consumers, which represents large industrial customers in the region, have long argued that utilities should not incur the costs of serving new customers who make it clear from the outset that they do not plan to take supply services from utilities.

They took their case to the state legislature, but lawmakers referred the matter to the PUC, saying the regulators should write direct-access rules that treat new customers differently than existing customers.

Portland General Electric Co. and Berkshire Hathaway Energy subsidiary PacifiCorp attempted to limit the distinction, saying that new customers should be defined as those who have no other business in Oregon, that only those seeking renewable energy from independent producers should be considered or that only the largest new customers should qualify for lower transition charges.

The PUC decided it would first consider setting rules only for new customers of at least 10 MW in an initial phase of the proceeding, and would address smaller customers in a second phase. That decision came despite protests from the Northwest and Intermountain Power Producers Coalition that a 10 average-MW threshold is equivalent to rejecting the new load direct-access program outright. QTS Realty Trust, a data center services provider, said that level would restrict access so only the very largest customers would qualify.

"This outcome would be discriminatory to almost all other business customers, such as QTS, that are the backbone of Oregon's economy and are actively expanding our businesses and hiring new employees," QTS said.

Calpine Energy Solutions LLC, a subsidiary of Calpine Corp. that provides retail natural gas, power and risk-management services to customers in deregulated markets, said the primary barriers to direct access are the transition charges and the limited time available during enrollment windows for eligible customers to notify utilities of their desire to move to market-based pricing with electric service providers. These barriers should not exist for new customers who elect to purchase generation directly from the market from day one, Calpine said.

Oregon has had limited direct access since 2002.