Good News! The Oregon Public Utility Commission (PUC) recently delivered a significant victory for utility customers and the climate, requiring NW Natural Gas to end the charging of customers to subsidize fossil fuel expansion.
It’s no surprise to anyone reading this that utility bills have risen for the last couple of years. What may come as a shock is that your gas bills have been helping to subsidize the growth of fossil fuels in Oregon. Gas utilities have used customer dollars to subsidize their growth through gas expansion subsidies called Line Extension Allowances (LEAs). These gas expansion subsidies provide financial incentives to developers to hook up new buildings to the gas system. Not only does this drive up costs for existing customers in the short term, but it puts all customers on the hook for an increasing volume of expensive future-stranded assets.
To achieve the 2050 goal of net zero, Oregon needs to stop expanding fossil fuel infrastructure and instead invest in green infrastructure. These fossil fuel assets will need to be retired before the end of their lifespan.
In recent years, the PUC has called for the phasing down of these customer-funded subsidies. In 2023, Avista Gas was required to phase out its fossil fuel expansion subsidies. In 2022, NW Natural was also directed by the PUC to reduce its gas expansion subsidies. They were also ordered to stop charging customers for propaganda sent to Oregon school kids and some misleading advertising. Instead, NW Natural turned around less than two years later and proposed increasing its fossil fuel expansion subsidy in its 2024 proposed rate increase to the PUC. The gas company proposed a “first of its kind” plan to provide a higher subsidy to projects that use less gas, predominantly homes installing gas ranges and fireplaces. In practice, this could have meant that current gas customers are paying to subsidize “luxury” fossil fuel finishes in more expensive newly constructed homes to grow NW Natural’s market (and profit).
Adding insult to injury, the gas company also proposed that customers pay for their corporate lobbying efforts, including their fights against climate and health regulations.
Thankfully, after months of advocacy from Climate Solutions, environmental justice and community organizations, and customer advocates like CUB, and thanks to excellent legal representation by Green Energy Institute and EarthJustice, the PUC issued an order that requires NW Natural to completely phase out these fossil fuel subsidies by 2027. The PUC also removed $13.7 million in overcharges for infrastructure spending that the gas company tried to put into customers’ bills and reduced the amount of lobbying expenses that could be passed on to customers. The order also requires greater transparency from the gas company about their lobbying activities going forward.
This order is a major win for folks in Oregon and the climate. It demonstrates the critical role the PUC plays in protecting customers and ensuring a just and managed transition of regulated utilities as they decarbonize. Oregon now joins California, Washington, Colorado, and Connecticut in removing fossil fuel subsidies from customer rates. Climate Solutions will continue to show up and work through the PUC’s processes to ensure that all Oregonians have access to clean, safe, affordable energy. We will keep you updated on ways you can get involved to ensure Oregon’s regulators are making decisions in the best interest of the people and the climate, not utilities’ profit margins.
