Testimony Before the Senate Business and Transportation Committee in Support of SB 656, SB 657, and SB 659

Testimony of John A. Charles, Jr.

President & CEO, Cascade Policy Institute

Before the Senate Business and Transportation Committee

In support of SB 656, SB 657, and SB 659

April 3, 2017

The Public Purpose Charge (PPC) was originally authorized by the legislature to run for 10 years: from March 2002-March 2012. It was anticipated that subsidies for conservation, renewables, and market transformation would no longer be necessary after that time.

The chart below shows that the original forecast was correct. PPC administrators are running out of things to do. The low-hanging fruit for retrofits has been picked, and newer homes have been built to stringent energy codes. The mission has largely been accomplished.

Therefore reducing the PPC from 3% to 2%, as called for in SB 657, is appropriate. In 2019 you should drop it by another percent, and then phase it out entirely in 2021.

Keep in mind that the Energy Trust receives additional ratepayer funding through the “increment” allowed under SB 838. During 2017, that increment will more than double the amount of money that ETO will receive from the basic PPC. Therefore, the Trust would continue to have significant funding regardless of what you do with these bills.

Ratio of Energy Benefits (kWh saved or generated) to Expenditures

All PPC Administrators

2003-2004 2005-2006 2007-2008 2009-2010 2011-2012 2013-2014 2015-6/2016 % change, 2003-6/2016
ETO Conservation 5.7 6.6 6.7 4.4 4.5 5.3 3.4 -40%
ETO Renewables 13.8 4.0 33.5 1.6 1.4 2.0 1.6 -88%
School   districts 0.8 0.6 1.0 0.5 0.5 0.3 0.4 -50%
OHCS low-income 1.3 0.9 0.7 0.5 0.8 0.4 0.6 -54%
Self-direct (conservation) 7.2 3.2 4.3 5.2 3.0 2.5 3.8 -47%

Source: Biennial reports to the Legislative Assembly on PPC expenditures, all years. 

Since the PPC was first authorized in 1999, it has escaped scrutiny by the legislature. The oversight called for in these bills is long overdue and I encourage your support.


John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

SunShot Makes Solar Energy a Long Shot

President Obama’s Fiscal Year 2013 budget includes $310 million for an ongoing energy research program called SunShot. The goal of the program is to use taxpayer subsidies to reduce the total installed cost of solar energy by 75% by the end of this decade, making it cost-competitive with other sources.

This is an admirable goal, but linking it to ongoing subsidies virtually guarantees that it won’t be met. There is no reason for private companies to develop inexpensive technology when politicians keep giving away money each year for research.

We’ve already seen this approach fail in Oregon. In 1999, the state legislature passed a law requiring that most consumers pay a three percent surcharge on their monthly electric bills to subsidize “market transformation” for renewable energy. Legislators and lobbyists agreed that the tax – which came to be known as the “Public Purpose Charge” – would go away after ten years, at which time green power was expected to be cost-competitive with coal and natural gas.

The ten-year anniversary of the Public Purpose tax will arrive on March 1, and solar energy is still wildly uncompetitive with other sources. And not surprisingly, politicians have reneged on the promise to end the tax; it was quietly extended five years ago to 2026 by the legislature, with no public discussion. This will cost consumers billions of dollars.

Politicians never seem to learn: Subsidizing failure simply begets more failure.