AG’s office urges UTC to reject PacifiCorp sale, details potential costs to Washington customers
The Attorney General’s Office filed testimony on Tuesday with the Washington Utilities and Transportation Commission (UTC), urging it to reject Pacific Power and Light Company (PacifiCorp)’s proposed sale of its Washington service area to Portland General Electric. The sale would increase costs and could deprive Washington customers of access to one of the state’s significant sources of clean energy, the Lewis River Hydroelectric Facility. Under Washington law, the UTC can only approve acquisitions of utility companies if they provide a net benefit to the public.
“This sale would drive up energy costs and add uncertainty around how residents of central and southeast Washington will get their power,” said Attorney General Nick Brown. “Washingtonians deserve better than this flawed deal.”
PacifiCorp currently serves approximately 137,000 Washington customers across five counties located around Yakima, Kennewick, and Walla Walla. Under the proposed terms of the deal, they would sell off this service area and most of their power generation assets to Portland General Electric.
Currently, PacifiCorp generates power through natural gas facilities, wind facilities, and the Lewis River Hydroelectric Facility – a series of dams that produce enough clean electricity to power hundreds of thousands of homes. PacifiCorp then provides the power to its Washington customers.
Washington’s PacifiCorp customers would become customers of Gem, a subsidiary company Portland General Electric created to run its Washington operations. However, under this deal Gem—and by extension, Washington customers—would not have access to the Lewis River hydro facility. Instead, PacifiCorp would retain ownership and sell energy to Gem, at an increased cost for Gem’s customers.
At some point in the future, PacifiCorp could decide to stop selling energy to Gem, exposing customers to significant market risks. Without power from the hydro facility, Gem may be left without adequate energy generation to meet the needs of its Washington customers’ homes and businesses. PacifiCorp has transmission lines to send power from the Lewis River facility to Oregon.
If the UTC chooses not to reject the deal, the AG’s office suggests various ways to improve the deal for Washingtonians, including:
- PacifiCorp should give Gem an exclusive hydro contract for the Lewis River Hydroelectric Facility until 2058, giving Gem certainty for power generation and reducing risks around their climate obligations.
- Gem will need to contract their operational services from Portland General Electric for an unknown cost, with customers paying the bill. Portland General Electric should provide a reasonable, fixed-price contract for these services.
- Portland General Electric should increase its compensation to Washington ratepayers. Portland General Electric has agreed to give a net of $22.3 million in compensation to these customers, which is not nearly enough. For context, when PacifiCorp first entered the Washington market in 1988 via a merger, it estimated a total of $59 million ($166 million in today’s dollars) in total company merger benefits. Ratepayers were able to use this money to get a discount on their utility bills. In this sale, Portland General Electric should be giving Washington ratepayers an amount that is not only commensurate with what they received in 1988 but also that fairly compensate ratepayers for the hydro facilities not included in the transaction.
The AG’s office is not alone in our opposition. Major parties to the case such as UTC staff, The Energy Project (advocates for low-income ratepayers), the Confederated Tribes and Bands of the Yakama Nation, the Confederated Tribes of the Umatilla Indian Reservation, the Northwest Energy Coalition (a group of environmental organizations), and the Alliance for Western Energy Consumers (a group representing large commercial customers) raised concerns on the potential harms of the transaction.
The AG’s office will continue to advocate for lower costs and better utility service for Washingtonians.
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