Increased Electricity Demand
Over the last 20 years, U.S. electricity demand has grown at a relatively flat rate (about 1% annually). However, with the rapid rise of electrification, data center loads, A.I., and industrial development, load growth is expected to increase by as much as 4.7% annually in the next 5 years. This new era of load growth, primarily driven by the largest utility customers, requires regulators to address an array of new challenges for transmission planning, generation resource planning, and cost allocation among other issues. These topics are at the forefront of multiple Oregon Public Utility Commission investigations related to large customers described below.
UE 424: Pacific Power Line Extension Allowance Tariff
The Commission recently approved Pacific Power’s proposal to eliminate the majority of the “line extension allowance” available to new customers seeking service over 25 MW. This requires very large customers to pay a higher share of the upfront investments that the utility makes to serve them, compared to other customer types that seek new service.
UE 430: Investigation into PGE’s New Load Connection Costs
The Commission will review proposals to update PGE’s tariff for connecting large customers to ensure that PGE fairly assign the risks and costs of this level of demand. This investigation may consider changes to policies such as line extension allowance and refund approaches, minimum load or billing agreements, electing to take service at distribution transmission voltage, and other policies that can avoid stranded assets and fairly assign investment costs, while also adding value to the grid in the form of resiliency, flexibility, or efficiency.
UE 433: Pacific Power’s General Rate Revision
The Commission is reviewing Pacific Power’s proposal to establish an “Excess Demand Charge and a Capacity Reservation Charge” that ensures that costs caused by inaccurate forecasting of large customer demand are not spread to other customers. In addition to these new charges, Pacific Power is proposing to lower the customer size at which a customer must pay their full line extension advance up front from 25 MW to 1 MW. The Company is also proposing provisions that allow Pacific Power to deny requests for service to new very large customers.
UE 435: PGE’s General Rate Revision
The Commission is reviewing PGE’s proposal to decrease the share of system costs that its very largest customers pay. PGE proposes this reduction in cost responsibility to reflect a benefit that the Company believes very large customers with flat, stable demand provide to the system. The Commission is also considering whether these very large, flat customers should be required to have time-varying rates like other commercial customer classes.
UM 2024: Investigation into Long-Term Direct Access Programs
The Commission’s investigation into the structure of Oregon’s Direct Access Program, which allows very large customers to contract with third part energy service suppliers (ESSs), will evaluate program changes needed to adapt to the evolving energy landscape in the region and prevent unwarranted cost shifting between Direct Access customers and all other utility customers. Very large new customers have the option to participate in Direct Access and the outcomes in UM 2024 may impact how Oregon addresses their load growth. Key topics are whether the programs will remain capped at a specific capacity level, what charges Direct Access customers should pay to prevent cost and risk shifting to other utility customers, how to make Direct Access Customers curtailable to mitigate reliability and load service risks, and how customers transition between a regulated