May Newsletter by Oregon State Senator  Doug Whitsett, District 28, Herald and News 5/26/16

The Legislative Assembly frequently debated the proper role of Oregon government. Most lawmakers agree that one of the fundamental functions of government is to provide the basic infrastructure that enables all citizens to have access to shared services such as roads, public schools and clean, potable water. Arguably, those services should include access to electric and natural gas utilities.

During the 2015 session, the Legislature passed Senate Bill 32 by wide bipartisan margins. The bill states the Oregon Legislative Assembly finds that access to natural gas is in the public interest and the extension of pipelines to rural areas is necessary for communities to preserve and develop local economies and enlarge their tax bases. In addition, I believe the expansion of natural gas infrastructure and services also represents the most cost effective means of energy conservation.

SB 32 required the Public Utility Commission (PUC) to form a work group to study feasible ways to expand natural gas infrastructure to areas that are not currently served by public utilities. I was among those selected to serve on the work group that has already convened for several meetings.

One of my primary interests is the tremendous potential benefits the town of Lakeview could reap from the development of natural gas infrastructure. The picturesque city of about 2,300 people is the county seat and largest town located in Oregon’s third largest county. Like many other small rural Oregon towns, Lakeview has yet to experience the elusive “economic recovery” that is occurring in some of the more urban parts of the state.

I believe developing a natural gas utility in Lakeview would help to provide the kind of economic revitalization that could help carry its economy far into the future. Both the availability of natural gas and the potential cost of the distribution system are within reach.

The Ruby Pipeline, a 680-mile system extending from Wyoming to Oregon, provides natural gas supplies from the major Rocky Mountain basins to consumers in California, Nevada and the Pacific Northwest. The 42-inch pipeline passes about two miles south of Lakeview.

It has an already installed terminal, as well as a lateral pipeline, constructed to an industrial site near the south city limits. Only an adequate source of funding is preventing the construction of a natural gas distribution system to Lakeview’s potential residential, commercial and industrial users. One of the partners in the Ruby pipeline, the state's Oregon Solutions program, Avista Utilities, the Energy Trust of Oregon, and even the formation of a municipal gas district offer potential funding solutions.

The planned construction of the Pacific Connector pipeline from Malin to Jordan Cove could also result in Avista providing natural gas services to Merrill. The owners of the pipeline have reportedly agreed to provide access to the pipeline near the city, and Avista appears to be willing to install the distribution system.

There is precedence for the kind of infrastructure expansion that the Legislative Assembly is attempting to achieve through the work group.

The Rural Electrification Act of 1936 was signed into law by President Franklin Roosevelt for the purpose of providing federal loans to help install electricity infrastructure in rural areas of the United States. The Act resulted in the electrification of rural America by subsidizing the development of the needed utility infrastructure.

Likewise, the Communications Act of 1934 provided that all people in the United States shall have access to rapid, efficient, nationwide communications service with adequate facilities at reasonable charges. It created the Universal Service Fund that operated as a mechanism by which interstate long distance carriers were assessed to subsidize telephone service to low-income households and high-cost areas. The Telecommunications Act of 1996 expanded the traditional definition of universal service to include affordable, nationwide telephone service to rural health care providers, eligible schools and libraries, as well as other services.

Oregon also assesses a Universal Service Surcharge that helps to provide basic telephone service in high-cost areas, a Residential Service Protection Fundcharge that helps fund the telephone assistance and telecommunication device access programs, and an Emergency 911 Communications Tax that funds the state’s emergency reporting system. Each of these assessments, charges and taxes are billed as line items on our monthly telephone bills.

Currently, investor owned electric utility customers in Oregon pay a “public purpose charge” (PCC) that is equal to three percent of their monthly utility bill. Investor owned natural gas utility customers pay a little less.

That surcharge, included as a line item on ratepayers’ monthly utility bills, collects more than $150 million per year from investor owned utility ratepayers. More than $21 million per year is collected from natural gas utility customers.

The PPC was established by Senate Bill 1149 and became effective March 1, 2002. Nearly three-fourths of the ratepayer money collected is designated to be spent for energy conservation in homes and businesses, the building of renewable resource power plants and other renewable resource projects.

In 2007, Senate Bill 838 amended the PPC law by giving utilities the ability to ask the PUC for permission to include in rates the costs of implementing or funding additional cost-effective energy conservation measures. The PUC requires the utilities to assess the achievable cost-effective conservation potential in their service territories. Natural gas is certainly one of the most cost-effective sources of available energy.

By my calculations, during the past decade, as much as $200 million of the PPC proceeds have been spent largely on solar and wind energy projects. The return on investment has been extremely poor.

For instance, according to the Department of Energy, Oregon’s entire solar generation capacity currently amounts to only seven one-hundredths of one percent of the State’s annual total electricity generation. Solar energy’s contribution to our state’s electric generation capacity is hardly measurable, despite the huge investment of PPC dollars on solar generation projects. Oregon could provide natural gas infrastructure to serve many rural communities for a fraction of what is being spent on these inefficient renewable systems.

The fact of the matter is, it is not wind and solar energy development that is reducing United States and global greenhouse gas (GHG) emissions. The United States has an abundance of natural gas resources. The market-driven development of those resources has both driven down the cost of natural gas to historic lows and caused our national GHG emissions to plummet to mid-1990s levels.

In a newsletter I released last August, I described how the Bend-La Pine School District has been able to convert 40 percent of its bus fleet from diesel to liquid natural gas. Aside from the immediate cost savings of the fuel itself, the school district has also been able to reduce its hydrocarbon emissions by 80 percent. The environmental benefits of this conversion are apparent.

Lakeview has the distinction of being in an air inversion zone, and one of five Oregon towns struggling to attain Environmental Protection Agency air quality attainment goals. Because of that, the town struggles with how to preserve its air quality without further damage to its industrial and economic base. Like the other four towns, the wood stoves being used by many residents to heat their homes are often blamed for the air quality challenges.

The use of natural gas as an affordable home heating substitute could help solve this very difficult problem, as well as help spur the kind of private sector investment that any community needs in order to grow and thrive.

I will continue my efforts with members of the work group, as well as collaborating with other legislators and interested parties, to try and develop solutions for funding these natural gas infrastructure investments. Your ideas and recommendations are actively solicited.

The work group’s next meeting is scheduled for June 16 in Salem.

Please remember--if we do not stand up for rural Oregon, no one will.

Best Regards,

Doug Senate District 28

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