Utah Public Service Commission Rejects PacifiCorp's Latest Proposal to Undermine Independent Renewable Energy Development
The growth in competitively priced clean energy is a boon for local economies, customers' pocketbooks and the environment. But for Warren Buffett's sprawling network of utility companies under Berkshire Hathaway Energy, the rise of independent renewable power production is a threat to its monopoly that must be stopped. Last month, Berkshire Hathaway Energy's Nevada subsidiary, NV Energy, convinced the Nevada Public Utilities Commission to gut its successful net metering program, costing the state thousands of solar jobs and ending the state's growth in rooftop solar. NV Energy scored a knockout blow against clean energy with the decision, which forced its three largest competitors from the rooftop solar leasing industry to abandon operations in the state.
In addition to the highly publicized battles raging over rooftop solar generation, Berkshire Hathaway Energy has also quietly set its sights on utility-scale renewables through attacks on the Public Utility REgulatory Policies Act (PURPA), a federal law that has been around since the 1970s. PURPA promotes domestic energy independence through conservation and a greater use of renewable energy. The law creates a market for independent renewable energy projects to sell their power by forcing monopoly utilities to accept contracts that are offered at a cost that beats out what the utility would otherwise pay on its own. Berkshire Hathaway Energy hates PURPA because it infringes on its monopoly power over the whole electric supply by forcing the company to purchase clean energy from lower cost providers. Berkshire's lobbyists have been pushing hard at the federal level trying to convince Congress to overturn the law.
They have also taken the fight to the states. Earlier in 2015, PacifiCorp, another Berkshire Hathaway Energy utility, scored a victory when the Idaho Public Service Commission issued an order cutting PURPA contracts with independent renewable producers from twenty years to two years. While PacifiCorp knew that an outright request to eliminate the must-purchase obligation under PURPA would be struck down as a violation of federal law, it successfully exploited an ambiguity in the law that it argued allows states to determine specific PURPA contract provisions, including the length of the contract term. The massive reduction in contract terms approved in Idaho will effectively stop new renewable energy PURPA developments in the state because investors are unwilling to forward the significant upfront capital required to build projects that only have a 2- or 3-year revenue stream in place.
Across Berkshire Hathaway Energy's service territory, 2015 was a bad year for competition and fair prices. But on January 7th of this year, the Utah Public Service Commission snapped Berkshire Hathaway Energy's protectionist winning streak by rejecting PacifiCorp's attempt to mimic the Idaho PURPA decision in Utah. The Utah Commission's decision was far from perfect (it reduced the contract term from 20 years to 15 and included some troubling language suggesting that further reductions may be considered in the future), but the overall result will most likely preserve the availability of developers to seek long-term contracts in Utah without having to go through PacifiCorp.
The victory for clean energy in Utah will help ensure that local renewable energy projects continue to provide jobs and low cost energy for Utahns in the coming years. The decision is also a welcome setback for Berkshire Hathaway Energy's monopoly, whose large holdings in coal and natural gas power plants will now face continued competition from increasingly cost-effective wind and solar resources. The focus now turns to Oregon, where PacifiCorp's similar request before the Oregon Public Utility Commission goes to administrative hearings on January 21st with a decision expected later this year.