Portland General Electric is asking for a 3.9 percent rate increase that would generate $99 million in new revenue to help fund a variety of projects primarily aimed at hardening the utility's grid, repowering an aging hydroelectric facility and paying for two-thirds of a renewable energy facility.
The utility is also looking for additional revenue to cover an enhanced wildfire mitigation program; accelerate the depreciation schedule on its 20 percent share of Colstrip units 3 and 4—moving the schedule from 2030 to 2027; and recover some costs of the Flexible Load Plan, a demonstration demand response program that the utility hopes to transition to a full program.
The proposed rate request comes from a pair of separate filings with the Oregon PUC. A general rate case, filed July 9, is asking for a 2.9 percent increase in base rates that would yield $59 million in additional revenue. The utility's annual power cost adjustment filing calls for a 2 percent rate increase that would add $40 million in new revenue [UE 391].
Those revenue increases are offset by a 0.9 percent decrease in supplemental schedules and a 0.1 percent decrease on a cycle billing basis, leaving an overall rate increase of 3.9 percent that would generate $99 million in new revenue.
The revenue requirement proposed in the general rate case filing asks for a 6.94 percent rate of return that includes a 9.5 percent return on average common equity in 2022.
"The investments reflected in this rate case will meaningfully contribute to the realization of our strategy to deliver a clean and smart energy future while they also deliver value for our customers by creating a more flexible, reliable, resilient, secure, and integrated grid," Maria Pope, president and CEO of PGE, said in testimony filed in the case.
The single largest revenue need in the general rate case is the $215 million Integrated Operations Center that will be the "nerve center of the smart grid" and allow PGE to control and monitor all elements of its grid in a single facility that is also hardened against natural disasters, as well as physical and cybersecurity threats.
The center will be located in Tualatin, and is on track to be operational in the fourth quarter of 2021, according to the rate case filing.
The general rate case also includes a new software platform, advanced distribution management system, "that will support a full suite of distribution management" to help with "optimization, including predicting, monitoring, controlling, optimizing, and safely operating all elements within a distribution system."
The utility is also seeking to recover $351 million for upgrades on several of the utility's substations in the rate case.
"This investment in our future means greater reliability for customers with fewer and shorter outages, as it provides the foundation for an integrated grid with greater visibility and operational control over our [transmission and distribution] system and the ability to support future technologies and innovations without disruption," Pope said in joint testimony filed with Brett Simms, VP of strategy, regulation and energy supply.
The utility is also looking to rate base a pair of renewable energy projects. These include the $119 million repowering and rebuilding of the utility's Faraday Powerhouse in the Clackamas River Hydroelectric Project. The original powerhouse was built in 1908 and was the utility's first hydroelectric investments.
The other project is the solar and battery components of the Wheatridge Renewable Energy facility. The project's 300 MW wind facility is already included in rates, and the utility wants to also rate base the 50 MW solar farm and 30 MW battery storage system.
The solar and wind components, expected to be operational by the end of 2021, are included in PGE's annual power cost filing. The utility's forecast shows net variable power costs in 2022 of $511.8 million, an increase of approximately $53.9 million, or 11.8 percent, over the final 2021 NVPC forecast. PGE points to a 78 aMW load increase plus higher costs associated with contract and market energy purchases and sales driving the NVPC increases.
The utility is also looking to increase its vegetation management program as part of its wildfire management mitigation efforts. The rate case calls for increasing vegetation management operations and maintenance funding for 2022 to $48.7 million, up from $22.6 million.
The rate case comes as Oregon's economy is slowly starting to recover from the economic hardships caused by the COVID-19 pandemic, something PGE was sensitive to and considered when delaying the filing, Pope said.
"We concluded that, while a rate case filing in 2021 is a practical necessity, we could—and did—minimize the price increase request, and we filed later in the year to allow recovery from the pandemic to begin and the economy to start to rebound," she said in testimony. "The decreased proposal reduces the immediate impact on customers, while the delay in filing until mid-year moves the effective date for a Commission-approved price change in 2022 further into what is anticipated will be the post-pandemic economic recovery (and out of the high bill season during the winter months)."
If approved, the power cost adjustment increase would go into effect in January, with any potential rate change from the general rate case arriving in May 2022, when residential customer loads are traditionally lower due to milder temperatures.
A decision on the power cost adjustment filing is expected in November, with an order in the general rate case coming in April 2022.