The PUC’s Role
When deciding whether to approve a proposed rate adjustment, Commissioners must ensure the change is fair and reasonable for utility customers while also allowing the utility service provider the opportunity to recover reasonable costs and earn a reasonable return on its investments. The Oregon Public Utility Commission (PUC) uses a quasi-judicial investigation to examine a utility's operating expenses, investments, and capital costs. Once new rates are set, the utility is obligated to charge only the rates approved by the PUC, unless changed by the PUC. This ensures the PUC alone is empowered to judge the reasonableness of rates and prohibits price discrimination by ensuring all 'similarly situated customers' are subject to the same rates, terms, and conditions.
Electric, Natural Gas & Water Utilities
The PUC approves rates that investor-owned electric, natural gas, and water utilities charge their customers. All regulated electric and natural gas utilities must seek PUC approval for all rate and service schedules, or tariffs. Of the small number of water utilities regulated by the PUC, some are regulated for service only, while others are regulated for rates and service. Rate regulated water utilities must also seek PUC approval for all tariffs.
Telecommunication Services
The PUC also regulates certain landline telecommunication service providers for some rates and services, but does not regulate cell phones or services provided over the internet. The rates for the majority of landline telecommunication customers are set under an alternative form of regulation (a Price Plan) that, once approved by the PUC, gives the company latitude, within certain thresholds, to adjust rates without additional approvals from the PUC.
Companies with less than 50,000 access lines not covered by Price Plans must notify their customers of any price increase at least 45 days prior to the proposed effective date. If at least 10 percent or 500 customers (whichever is less) file petitions with the PUC regarding that increase, the PUC will open a proceeding to determine the appropriate price level.
Rate Adjustments
General Rate Case – Electric, Natural Gas & Water Utilities
Under Oregon law, a regulated utility may propose to change rates for service with the PUC at any time. This filing must clearly define the effects and justification for the proposed change.
For a general rate proceeding (that proposes a change in all rates), the PUC will conduct up to a year-long investigation into the filing to determine if any changes in rates are warranted by evaluating many components of the proposed cost – such as the cost of labor, purchased energy, and the cost of capital. Commissioners base their decision on the analysis and information provided, and evidence brought forth in the evidentiary hearing process.
In most major rate cases, the Commission holds two types of public hearings:
- Evidentiary Hearings – the utility, PUC staff, and intervenors are permitted to provide testimony and cross-examine witnesses in the case. The Oregon Citizen’s Utility Board (CUB), an established intervenor, acts on behalf of residential customers, while the Alliance of Western Energy Consumers (AWEC) represents large energy users in Oregon, Washington, and Idaho.
- Public Comment Hearings – this event provides the opportunity for utility customers to comment on a proposed rate change before the Commissioners. Customers may also submit comments by email.
Annual Cost Adjustments – Electric & Natural Gas
The PUC has established mechanisms to require the regulated electricity and natural gas utility service providers to annually adjust their rates (increase or decrease) to reflect changes in the actual cost of wholesale energy. Electric utilities do this with an annual Power Cost Adjustment, while natural gas utilities file a
Purchased Gas Adjustment. These adjustments are designed to ensure the customer pays only actual commodity costs, with no mark-up or profit for the utility service provider.
Tariffs – Electric & Natural Gas
Utilities are required to charge PUC-approved tariffs to all customers in a non-discriminatory manner. These tariffs can only be changed by PUC order.
View the tariffs for each regulated utility and large telecommunication service providers below: