Demand for electricity in the Northwest is expected to grow at its fastest pace in decades. Demand in Oregon is being driven by an influx of large data centers in the region. (Robert Zullo/States Newsroom)
Editor's note: The Capital Chronicle has launched a $10,000 end-of-year fundraising campaign to help us continue our first-class coverage next year. A lot is at stake, and there's a long legislative session in 2025. We're completely dependent on donor dollars, which are tax deductible. Please contribute to us if you can.
Most Oregonians in 2025 will see residential electricity rates nearly 50% higher than they were just five years ago.
The state's Public Utilities Commission -- a three-person governor-appointed group charged with regulating the rates of privately owned utilities in Oregon -- approved Thursday a nearly 10% increase in residential electricity rates for customers of Pacific Power and, on Friday, a 5.5% increase for residential customers of Portland General Electric, or PGE. Both rate increases will take effect Jan. 1 and bring overall rates for residential customers of both utilities up about 50% since 2020, more than twice the rate of inflation during that same period.
The rates are lower than the companies requested: Pacific Power sought to increase rates by nearly 18% earlier this year, and PGE by 7.4%.
The two companies are investor owned and collectively serve more than 1.4 million customers in Oregon. Across every kind of customer, including small and medium-size businesses and industrial users, Pacific Power's electricity rates will rise on average by about 8.5% and PGE's rates will rise about 6% in 2025.
"We definitely understand the frustration customers feel, and I want to assure customers of how hard we have worked to scrutinize the issues and hold utilities accountable," commission chair Megan Decker said.
The commission reviewed 60 different issues that both companies raised to justify rate increases, according to Decker.
"We have severely reined in PGE expense growth, and we have cut something in the nature of 50% out of requests that they made," Decker said.
Bob Jenks, director of the Citizens' Utility Board, a watchdog group established by Oregon voters in 1984 to represent the interests of utility consumers, said the PUC is overdue for permanent changes to how and when rate increases are approved.
"Electricity is an essential service and there is no reason why we should be pricing it like it is a luxury," Jenks said in a statement.
The Commission rejected a proposal by the citizens' board to cap annual residential rate increases at 10% and to move rate case hearings to April, rather than January, so utilities aren't raising prices in the dead of winter.
Rate increases in recent years, according to the companies, have been due to rising inflation, infrastructure build outs for more clean energy generation and storage, rising costs of buying power, higher insurance costs and meeting new customer demand. Demand for PGE's industrial customers, including new data centers and semiconductor manufacturers like Intel, is up more than 34% in the last five years, while residential demand is up 5%.
Concerned that residential customers are subsidizing growing energy needs of data centers, Oregon's U.S. Sen. Ron Wyden in November questioned PGE CEO Maria Pope over what was behind rising prices that are leading to record power disconnections for Oregonians struggling to keep up with bills.
Both utilities set personal records in 2024 for disconnecting customers from power for nonpayment. From January to October, Pacific Power disconnected more than 20,000 households, up from 8,000 during the same period in 2023, according to the Citizens' Utility Board. PGE disconnected about 32,000 customers at some point in 2024 -- 4,800 more than in 2023. These record shut-offs occurred during a year when residential Pacific Power customer rates went up 11% and PGE residential rates went up 21%.
In response, the Public Utilities Commission will prohibit the companies from disconnecting low-income customers who are enrolled in bill discount programs between Jan. 1 and April 1 so people are not left without power during the coldest months of the year.
People in the lowest income level -- meaning individuals making $36,800 or less annually and a four-person household with annual income of about $71,000 or less -- will be eligible for up to an 80% bill discount each month, an increase from a 60% discount previously required by the commission.
The commission will also require new large industrial customers of the utilities -- such as data centers -- to forecast their energy needs for the year with 95% accuracy and pay a penalty for miscalculation.
When it comes to wildfire costs, the commission will allow Pacific Power to raise rates to cover $25 million worth of restoration work following the 2020 Labor Day fires. The company had originally sought rate increases that would cover twice that amount.
The company was found liable for several of the 2020 Labor Day megafires that burned thousands of structures and took nine lives. The company has spent nearly $2.7 billion on lawsuits since, according to a recent report submitted to the U.S. Securities and Exchange Commission. On Thursday, the federal government was added to the list of plaintiffs. The U.S. Attorney General's Office is seeking reimbursement for costs and damages federal agencies incurred fighting the Archie Creek Fire near Roseburg in 2020. The company has used wildfire costs as a reason it's needed to raise rates in recent years.
Pacific Power is owned by PacifiCorp, a subsidiary of Warren Buffet's Berkshire Hathaway, a multinational conglomerate. PacificCorp is worth $10.7 billion, according to its attorneys, while the Oregon Department of Revenue and Oregon Tax Court calculate its worth more than $19 billion.
Prior to the 2020 labor day fires, PacificCorp sent anywhere from $600 million to $875 million in dividends -- or earnings -- annually to Berkshire shareholders, according to filings with the Securities and Exchange Commission.