Proponents of Oregon’s recently implemented “feed-in tariff” for microgenerators have questioned the failing grade given it by the World Future Council (WFC) in its recent report.
The draft WFC report was circulated in mid-January, 2010 and was based on Oregon 3039 signed into law in 2009.
The WFC grading report was circulated publicly on May 26, 2010. The document remained essentially unchanged from the draft in mid-January.
On February 12, 2010 Oregon passed a revised “feed-in tariff” bill, Oregon 3690. The Governor signed the bill March 18, 2010. Subsequently, Oregon’s Public Utility Commission issued its order on May 28, 2010 implementing the law. These actions occurred after the WFC report was written.
However, the 2010 amendments to the 2009 law would not have changed the grade or Oregon’s rank among states and provinces with feed-in tariffs. Oregon would still have flunked.
Critics of the WFC report note the unusual features of the Oregon PUC’s implementation of the statute. Specifically, they charge that the law does not base the tariffs on the value of the electricity, but instead base the tariffs on the “cost of generation”.
The confusion could be based on imprecise language used in the bill. Oregon 3690 could have been written more clearly.
Here are several sections or paragraphs that stand out.
Section 2.
757.365
(1) The term of art used is “volumetric incentive rate” not feed-in tariffs. Payment is “for the electricity or the “nonenergy attributes of electricity, or both”. Worldwide, such a formulation refers to payment for the “value of energy”. If the bill’s drafters intended for the bill to base the tariffs on the cost of generation, this was the place to state so clearly and unequivocally.
(3) The commission may establish incentive rates . . . to enable the most “efficient solar photovoltaic energy systems.” Again, this is an odd formulation and does not give the utility commission clear guidance on the bill’s intent. And there is no mention that the “incentive rates” must be based on the cost of generation.
Feed-in tariffs based on the cost of generation are not “incentives.” They are simply payment for cost plus profit, a formulation used by legislators and regulators in North America for decades.
(4) . . . The consumer thereafter . . . may receive payments based upon electricity generated. . . “at a rate equal to the resource value”. Again, this is a clear reference to the “value of the electricity” not its “cost” as stated explicitly in the definitions [Section 1 (4)], though this passage is in reference to the period after the contract term has expired.
(5) “The commission may adjust the tariff schedule as needed . . . for the purpose of meeting the goal” of the program. While the commission may set whatever rates it wants by whatever means it wants, it is not required to set the rate based on the cost of generation.
One can only conclude that Oregon law stipulates that the tariffs should be based on the value of the electricity and its benefits. The only exception is if the state is in danger of missing its target. That the utility commission realized it would never meet its target with value-based tariffs, is good fortune, not good law.
The WFC grade remains valid.
If Oregon had indeed a tariff based on the cost of generation, it would alter the WFC’s numeric score, but the grade and ranking of Oregon at the bottom of the list would remain the same.
- Oregon 3690 2010
- Oregon 3039 2009
- Oregon’s New Solar Law Not a Good FIT by Jennifer Gleason–Contrary to what some commentators are saying, Oregon did not just adopt a feed-in tariff (FIT). ELAW has been working diligently to ensure that Oregon adopts a FIT because FITs have been proven to be the most effective and efficient means of moving renewables onto the grid. Sadly, Oregon’s program falls far short of the mark. . .
