History of Energy Efficiency in Oregon

By Caitlin Lynch, Development Associate at Citizens' Utility Board of Oregon

As you may know, Oregon has some of the most aggressive policies and standards related to energy efficiency in the country. In the past 10 years, while the national average for household electricity usage has increased by 20%, Oregonians have used 12% less electricity. Residents and businesses alike are eager to try new technologies and programs that reduce their utility bills. But these changes did not occur overnight: there is a long history of energy efficiency advocates who have worked to make sure our state has some of the most innovative and forward-thinking energy policies that both protect the environment and offer savings for residents.

Setting the Stage for Efficiency

So how did we get here? Back in the 1970s, as the population was growing, the Northwest began to see the limits of our hydropower system.  The initial response, depending on the utility, was to invest in coal plants, nuclear power plants, or both. However, both coal and nuclear power plants were expensive, and those investments caused rates to increase. PGE and PacifiCorp saw their electricity rates double between 1974 and 1980.

As demand for electricity grew, utilities added more and more generation facilities. It soon became clear that following this status quo would lead only to more and more costly power plants. And so was born an alternative idea: energy efficiency. Energy efficiency, broadly defined, is the effort to reduce the amount of energy needed to power our communities. And efficiency suggested an answer to the growing consumption challenges: What if, instead of building more costly conventional power plants, widespread energy efficiency policies were implemented, providing more customers with access to this resource? In other words, what if we could do more with less, and keep energy rates low? And thus the era of energy efficiency dawned.

Although several studies proved the efficacy of energy efficiency, the topic remained controversial and concerns arose around cost-effectiveness. By 1978, Oregon had established energy building codes for both residential and commercial construction, making it one of the first states to implement such standards. Soon after, Washington followed suit and the Northwest became an influential model for national energy building codes, a role it continues to fulfill to this day.

This innovative move set the stage for the passage of the Pacific Northwest Electric Power Planning and Conservation Act (often referred to as the Northwest Power Act) in 1980. In response to several environmental and economic factors, one of the main goals of the Power Act was to establish energy efficiency as a cost-effective priority and mandate. The Power Act required the Bonneville Power Administration to acquire conservation based sources of energy before purchasing any new sources of energy from conventional (at the time) nuclear plants.

Back then this was a fairly new idea. Additionally, the Act authorized the Northwest Power and Conservation Council to oversee and prioritize all power purchases from Bonneville and to provide environmental impact mitigation. Energy efficiency and environmental protection began to be seen hand in hand.

Energy Efficiency: A Brief History in Oregon

With the innovative leadership of industry, public interest policymakers, and utilities, energy efficiency programs hit the market in Oregon in the 1980s with great success. The Pacific Northwest became a national leader in designing programs that help customers reduce their usage of electricity. In the three decades between 1980 and 2007, a total of 32,823,720 megawatt-hours were acquired through energy efficiency.

Unfortunately, by the early 1990s, much of the momentum of these early programs began to fade. The huge price hikes associated with the construction of nuclear power plants led to a reduction in demand, which, combined with the effects of conservation programs, left utilities worried about a loss of customer load. Oregon tried various efforts to provide incentives for utilities to invest in efficiency, but increasingly saw utilities slash many energy conservation programs and invest in poorly-designed programs that did little to reduce power usage (such as promoting electric lawn mowers).

One major new innovative program began in the 1990s. The Northwest Energy Efficiency Alliance (NEEA), established in 1996, took a major role in facilitating the integration of efficient appliances and incentives into the market and onto residents’ radar. The most notable, widespread and successful of these programs was the integration of compact fluorescent light (CFL) bulbs across the state, which was adopted at a strikingly high level. Three times as many bulbs were purchased in Oregon and Washington than in neighboring California. NEEA also took a major role in overcoming funding barriers and developing incentives for utilities to support energy efficiency programs.

The other kick start to energy efficiency programs throughout the state came from the restructuring of electric utilities through Senate Bill 1149, which was adopted in 1999 and became effective in 2002. SB 1149 came about as a result of the radical deregulation plan proposed by Enron for Oregon’s electric system that was ultimately rejected.  In place of the Enron plan, Oregon instead adopted CUB’s Fair and Clean Energy Plan.

This landmark policy required Oregon’s largest utilities to invest in energy efficiency and renewable energy at a consistent level (at least 3 percent of a utility’s revenues collected through a “public purpose charge”) and allowed for the creation of the Energy Trust of Oregon. This meant that rather than having utilities manage efficiency programs (which they weren’t very good at anyway), an independent non-profit organization would serve that role.  It also meant a better use of ratepayer dollars because all of these services would be done by one organization instead of separate efficiency operations within each utility.  In addition, as it has become clear that greater levels of energy efficiency are cost effective, utility spending on energy efficiency has increased above the 3% levels.  Oregon utilities now spend more on energy efficiency then any utilities we know of and are getting results that are greater than anyone else in the country.

This year, the Energy Trust of Oregon celebrates 10 years of success on behalf of Oregon ratepayers.  It has brought innovative savings programs to residents all over the state, saving customers over $1 billion in costs and much more in indirect economic impacts related to business and job development.

What’s Next for Oregon and Energy Efficiency?

Energy efficiency in Oregon has showcased innovation and success, and as much as CUB wishes to applaud the programs and policies our partners and stakeholders throughout the state have achieved, we know we can do more. Governor Kitzhaber released a draft of the 10-year Energy Plan this May, which requires all new load growth in Oregon to come from energy efficiency. This challenge is one that we at CUB welcome as not only a way to bring new ideas into reality, but also to continue bringing savings to customers while actively protecting the environment. It is in this context that we find ourselves on the brink of a new era of energy efficiency and CUB intends to continue to be a leader in establishing energy efficiency policy.

If you are interested participating in this energy efficiency conversation, please consider attending the CUB Policy Center’s fall policy conference, Energy Efficiency: The Next Generation, on October 26, 2012. To register, please visit: http://www.cubpolicycenter.org/conference