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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
House Bill 3540
Sponsored by Representative LEVY B; Representative BOICE
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced.The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: Provides for a single limit on the cost for a power company to comply with both an RPS
and the clean energy targets.(Flesch Readability Score: 62.1).
Provides for a single limit on the cost of compliance for an electric utility that is required to
comply with a renewable portfolio standard and the statutory clean energy targets. Applies to
compliance years beginning on or after the effective date of the Act.
A BILL FOR AN ACT
Relating to the costs of compliance with electric energy standards for electric utilities; creating new
provisions; and amending ORS 469A.100, 469A.180 and 469A.445.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 469A.100 is amended to read:
469A.100. (1)(a) An electric utility that is subject to a renewable portfolio standard and
the requirements in ORS 469A.400 to 469A.475 is not required to comply with the renewable
portfolio standard during a compliance year to the extent that the cost of compliance with
the renewable portfolio standard and ORS 469A.400 to 469A.475 exceeds the amount described
under ORS 469A.445.
(b) [Electric utilities are] An electric utility that is subject to a renewable portfolio standard
and is not subject to the requirements in ORS 469A.400 to 469A.475 is not required to comply
with [a] the renewable portfolio standard during a compliance year to the extent that the incre-
mental cost of compliance, the cost of unbundled renewable energy certificates and the cost of al-
ternative compliance payments under ORS 469A.180 exceeds four percent of the electric utility’s
annual revenue requirement for the compliance year as determined under subsections (2) to (6)
of this section.
(2) For each electric company, the Public Utility Commission shall establish the annual revenue
requirement for a compliance year no later than January 1 of the compliance year. For each
consumer-owned utility, the governing body of the consumer-owned utility shall establish the annual
revenue requirement for a compliance year.
(3) The annual revenue requirement for an electric utility shall be calculated based only on the
operations of the electric utility relating to electricity. The annual revenue requirement does not
include any amount expended by the electric utility for energy efficiency programs for customers
of the electric utility or for low income energy assistance, the incremental cost of compliance with
a renewable portfolio standard, the cost of unbundled renewable energy certificates or the cost of
alternative compliance payments under ORS 469A.180. The annual revenue requirement does in-
clude:
(a) The operating expenses of the electric utility during the compliance year, including depre-
NOTE:Matter in boldfaced type in an amended section is new; matter [italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 4094 HB3540
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ciation and taxes; and
(b) For electric companies, an amount equal to the total rate base of the electric company for
the compliance year multiplied by the rate of return established by the commission for debt and
equity of the electric company.
(4) For the purposes of this section, the incremental cost of compliance with a renewable port-
folio standard is the difference between the levelized annual delivered cost of the qualifying elec-
tricity and the levelized annual delivered cost of an equivalent amount of reasonably available
electricity that is not qualifying electricity. For the purpose of this subsection, the commission or
the governing body of a consumer-owned utility shall use the net present value of delivered cost,
including:
(a) Capital, operating and maintenance costs of generating facilities;
(b) Financing costs attributable to capital, operating and maintenance expenditures for gener-
atingfacilities;
(c) Transmission and substation costs;
(d) Load following and ancillary services costs; and
(e) Costs associated with using other assets, physical or financial, to integrate, firm or shape
renewable energy sources on a firm annual basis to meet retail electricity needs.
(5) For the purposes of this section, the governing body of a consumer-owned utility may include
in the incremental cost of compliance with a renewable portfolio standard all expenses associated
with research, development and demonstration projects related to the generation of qualifying elec-
tricity by the consumer-owned utility.
(6) The commission shall establish limits on the incremental cost of compliance with the
renewable portfolio standard for electricity service suppliers under ORS 469A.065 that are the
equivalent of the cost limits applicable to the electric companies that serve the territories in which
the electricity service supplier sells electricity to retail electricity consumers. If an electricity ser-
vice supplier sells electricity in territories served by more than one electric company, the commis-
sion may provide for an aggregate cost limit based on the amount of electricity sold by the
electricity service supplier in each territory. Pursuant to ORS 757.676, a consumer-owned utility may
establish limits on the cost of compliance with the renewable portfolio standard for electricity ser-
vice suppliers that sell electricity in the territory served by the consumer-owned utility.
SECTION 2. ORS 469A.180 is amended to read:
469A.180. (1) The Public Utility Commission shall establish an alternative compliance rate for
each compliance year for each electric company or electricity service supplier that is subject to a
renewable portfolio standard. The rate shall be expressed in dollars per megawatt-hour.
(2) The commission shall establish an alternative compliance rate based on the cost of qualifying
electricity, contracts that the electric company or electricity service supplier has acquired for future
delivery of qualifying electricity and the number of unbundled renewable energy certificates that the
company or supplier anticipates using in the compliance year to meet the renewable portfolio
standard applicable to the company or supplier. The commission shall also consider any determi-
nations made under ORS 469A.170 in reviewing the compliance report made by the electric company
or electricity service supplier for the previous compliance year. In establishing an alternative com-
pliance rate, the commission shall set the rate to provide adequate incentive for the electric com-
pany or electricity service supplier to purchase or generate qualifying electricity in lieu of using
alternative compliance payments to meet the renewable portfolio standard applicable to the company
orsupplier.
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(3) An electric company or electricity service supplier may elect to use, or may be required by
the commission to use, alternative compliance payments to comply with the renewable portfolio
standard applicable to the company or supplier. Any election by an electric company or electricity
service supplier to use alternative compliance payments is subject to review by the commission un-
der ORS 469A.170. An electric company or electricity service supplier may not be required to make
alternative compliance payments that would result in the company or supplier exceeding the cost
limitation established under ORS 469A.100 or 469A.445.
(4) The commission shall determine for each electric company the extent to which alternative
compliance payments may be recovered in the rates of the company. Each electric company shall
deposit any amounts recovered in the rates of the company for alternative compliance payments in
a holding account established by the company. Amounts in the holding account shall accrue interest
at the rate of return authorized by the commission for the electric company.
(5) Amounts in holding accounts established under subsection (4) of this section may be ex-
pended by an electric company only for costs of acquiring new generating capacity from renewable
energy sources, investments in efficiency upgrades to electricity generating facilities owned by the
company and energy conservation programs within the company’s service area. The commission
must approve expenditures by an electric company from a holding account established under sub-
section (4) of this section. Amounts that are collected from customers and spent by an electric
company under this subsection may not be included in the company’s rate base.
(6) The commission shall require electricity service suppliers to establish holding accounts and
make payments to those accounts on a substantially similar basis as provided for electric companies.
The commission must approve expenditures by an electricity service supplier from a holding account
established under this subsection. The commission may approve expenditures only for energy con-
servation programs for customers of the electricity service supplier.
SECTION 3. ORS 469A.445 is amended to read:
469A.445. (1) An electric company or an organization that represents broad customer interests
and that has a written agreement with an electric company pursuant to ORS 757.072 may request
that the Public Utility Commission open an investigation to provide accounting for investments
made, costs incurred or forecasted costs estimated by the electric company for the purpose of com-
pliance with any applicable renewable portfolio standard described in ORS 469A.052 or
469A.055 or established under ORS 469A.065 and 469A.400 to 469A.475. In making a request under
this section, the petitioner shall provide information regarding the investments or costs sufficient
to determine whether the investments or costs contribute to compliance with an applicable
renewable portfolio standard and ORS 469A.400 to 469A.475.
(2)(a) The commission shall provide parties to the proceeding with the procedural rights de-
scribed in ORS 756.500 to 756.610, including the opportunity to develop an evidentiary record, con-
duct discovery, introduce evidence, conduct cross-examination and submit written briefs and oral
arguments.
(b) The petitioner shall have the burden of showing, by a preponderance of the evidence, that
the investment or cost contributes to compliance with an applicable portfolio standard and ORS
469A.400 to 469A.475.
(c) The commission shall issue a written order with findings on the evidentiary record develop-
ment in the proceeding.
(d) Except as provided under ORS 756.610, a determination by the commission that an invest-
ment or cost contributes to compliance with an applicable portfolio standard and ORS 469A.400
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to 469A.475 is final and may not be reexamined.
(3) Upon determining that an investment or cost of an electric company contributes to compli-
ance with an applicable portfolio standard and ORS 469A.400 to 469A.475, the commission shall
determine the actual or anticipated rate impact for the investment or cost on the same basis and
with the same treatment for similarly situated investments or costs in the most recently approved
general rate case or other relevant rate making proceeding. The commission shall use the actual
or anticipated rate impact of each investment or cost to calculate the cumulative rate impact and
shall:
(a) Cumulatively calculate the rate impact caused by all investments or costs that have been the
subject of a proceeding pursuant to this section, and must be included in calculation for the time
period that the investment or cost would affect rates, as adjusted by any change in net costs ex-
pected or foreseeable at the time of inclusion;
(b) Make any adjustments to the cumulative rate impact if the initial rate treatment was cal-
culated on the basis of forecasted rate impact;
(c) Allow parties to the proceeding to propose alternative rate or accounting treatment of the
investment or cost to limit the potential rate impact of the investment or cost; and
(d) Utilize cost allocation methodologies for attributing rate impacts of investments or costs for
multistate electric companies.
(4) Upon a determination that the actual or anticipated cumulative rate impact calculated under
subsection (3) of this section exceeds six percent of the annual revenue requirement for a year, the
commission shall provide an exemption from further compliance with the applicable renewable
portfolio standard and requirements of ORS 469A.400 to 469A.475. An exemption must be:
(a) Narrowly tailored to otherwise give full force and effect to the applicable renewable port-
folio standard and requirements of ORS 469A.400 to 469A.475 that can be complied with without
regard to the cumulative rate impact; and
(b) Limited in duration to only such time as is necessary to allow for additional investments and
actual or forecasted costs to be made or incurred without exceeding the cumulative rate impact.
(5) A determination by the commission made under this section shall have no effect on and may
not be used as collateral or presumptive evidence in any other proceeding that determines rate re-
covery of the investment or cost, including in a general rate case or in a proceeding under ORS
469A.120.
(6) The commission may, on its own motion pursuant to ORS 756.515, open a proceeding under
this section and direct an electric company to make a filing described under subsection (1) of this
section.
SECTION 4. The amendments to ORS 469A.100, 469A.180 and 469A.445 by sections 1 to 3
of this 2025 Act apply to compliance years beginning on or after the effective date of this 2025
Act.
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