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Electricity Ratepayers need tax relief now-cm

Electricity Ratepayers Need Tax Relief Now

December 3, 2020

FOR IMMEDIATE RELEASE

Media Contacts:
John A. Charles, Jr.
Office: (503) 242-0900
Mobile: (503) 459-3727
john@cascadepolicy.org

Rachel Dawson
Office: (503) 242-0900
Mobile: (971) 221-3810
rachel@cascadepolicy.org

Today, Cascade Policy Institute released an analysis of Oregon’s Public Purpose Charge (PPC), recommending that the tax be repealed as soon as possible. The report, Oregon’s “Public Purpose” Energy Tax: Mission Accomplished, or Mission Creep?, was authored by John A. Charles, Jr. and Rachel Dawson.

The PPC is a 3% tax enacted by the Oregon Legislature in 1999. The tax applies to ratepayers of Portland General Electric and PacifiCorp; most natural gas consumers also pay a similar tax that was imposed after 1999 by the Oregon Public Utility Commission. 

The PPC went into effect in 2002, and it was supposed to end in 2012. In 2007 the legislature extended it to 2026.

The legislature directed that 56% of PPC revenue would pay for energy conservation; 17% for funding the above-market costs of renewable energy; 12% for low-income weatherization; 10% for energy conservation in schools; and 5% for construction of low-income housing. Since 2002, the PPC has collected more than $1 billion from electricity ratepayers.

The Energy Trust of Oregon receives 74% of PPC funds, for programs addressing energy conservation, renewable energy, and “market transformation.” Remaining funds are transferred to Oregon public schools within the service territories of the two electric utilities, and the Oregon Housing and Community Services (OHCS).

According to independent reports filed every two years with the legislature, the most cost-effective PPC programs were completed in the early years. In the 2003-04 biennium, PPC administrators spent $91.4 million to acquire 1.7 million British Thermal Units (BTU) of saved or generated energy. During the 2017-19 biennium, PPC expenditures had grown to $159 million, but the energy savings were still 1.7 million BTU. This represented a 73% increase in costs.

Trends in Cost-Effectiveness for PPC Expenditures by Energy Trust, OHCS and Public Schools

YearsPPC ExpendituresClaimed savings or energy generated (MBTU)Expenditure per MBTU
2003-04$91,396,4761,710,36453.4
2005-06$121,070,4762,021,51860.3
2007-08$142,413,4174,355,77332.7
2009-10$176,725,2481,751,822100.8
2011-12$179,486,7731,816,40798.8
2013-14$157,980,2411,914,42482.5
2015-16$188,633,4131,762,673107.0
7/17-6/19$159,277,6931,724,10392.4

During the 2019 Oregon legislative session, a bill was introduced to extend the PPC to 2036. That bill was never voted on but likely will be introduced again in 2021. The purpose of the Cascade study is to help inform state legislators about what has been accomplished with PPC funds since 2002.

Based on nearly a decade of research, the Cascade paper concludes that the original, ten-year mission of the PPC has been met, and the tax should not be extended again. If possible, it should be repealed prior to 2026. Ratepayers are reeling from the effects of COVID-19, and eliminating a costly sales tax would provide immediate relief. PGE reports that customer accounts in arrears (31 days or more past due) are up 41% this year.

If the legislature is unwilling to sunset the PPC program, then Cascade recommends that ratepayers be given a chance to opt out of the tax, since many of them will never benefit directly from PPC programs.

According to Cascade Policy Institute President and CEO John A. Charles, Jr.:

The Public Purpose Charge was enacted as a ten-year program to help fund energy conservation programs and subsidize the renewable energy industry so it could become market-competitive. That mission has been accomplished; the cost of installing solar energy – the most popular offering of the Energy Trust of Oregon – has dropped by 76% since the PPC was enacted. Clearly the renewables sector can stand on its own without further subsidization by tens of thousands of renters and low-income ratepayers who will never own solar energy systems.

The Cascade research paper, Oregon’s “Public Purpose” Energy Tax: Mission Accomplished, or Mission Creep?, can be downloaded here.

Founded in 1991, Cascade Policy Institute is Oregon’s free-market public policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity. For more information, visit cascadepolicy.org.

One Comment

  • Eric Garland

    Good grief Charlie Brown! These energy savings are calculated on things like your energy efficient clothes washer…that now lasts 3-5-7 years….because its engineered to save a little energy…and now we get to re-purchase these somewhat expensive appliances far too often. Same with fridges and freezers. The article talks about how electric utility customers are being taken advantage of by the 3% tax, but if you also have NWN gas at your home, you get to pay another 3% tax. Don’t forget the Energy Trust of Oregon employees, and all the contractors they utilize (many Oregon dollars are going out of state) for calculating rebate payments, brain-storming new ways to save energy, while enjoying catered lunches that the ratepayers are funding. Now that everyone knows that solar power and wind power have far too many disadvantages and environmental hazards attached to them, perhaps we can be honest and dump this fad, this social trend. Gas and oil are cheap and effective; abandoning them will plunge the USA to 2nd or 3rd world status. The Chinese and the Russians are not so stupid as to de-industrialize their nations…why should we?

    The last time I looked, and that was around 2014 or 2015, the Energy Trust of Oregon was sucking up approx. $150M (much more now I’m sure) per year from this tax. They have little incentive to produce real and meaningful results, to be productive, to actually deliver something that the free market sees a need for. Its Grifting 101 that they’ve managed to excel at and the ratepayers of Oregon should not be held to this piracy.

    • 7:14 pm - December 4, 2020

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