The Oregon Senate is set to vote on a bill that aims to mitigate the impact of rising energy costs on consumers by prohibiting residential rate increases during the winter and requiring utilities and regulators to analyze consumer affordability when setting rates.
Oregon lawmakers have passed a bill that aims to mitigate the impact of rising energy costs on consumers by prohibiting residential rate increases during the winter and requiring energy companies and regulators to analyze consumer affordability when setting rates.
The state Senate voted 20-9 to approve House Bill 3179, also known as the FAIR Energy Act, on June 24, following its passage in the House on a 35-8 vote. The bill now advances to the desk of Gov. Tina Kotek for signature.
“Oregonians are struggling with unpredictable, poorly explained utility rate hikes that strain family budgets,” Sen. Janeen Sollman (D) said in a statement after the vote. “House Bill 3179, the FAIR Energy Act, fixes this by requiring real-world impact assessments before rate increases, banning winter hikes and ensuring clearer billing — delivering the affordability, fairness and transparency our constituents need.”
“I have heard repeatedly from my constituents how frustrated they are with the dramatic and repeated increases in their utility bills,” Rep. Nathan Sosa (D) said. “This bill will prevent the historic price shocks we have seen in recent years.”
The FAIR Energy Act directs the Oregon Public Utility Commission to consider the economic impact of a proposed residential rate hike on consumers. It allows the commission to adjust rates to mitigate an increase “if the increase would affect the ability of customers to maintain adequate utility services.”
The bill also requires electric or natural gas companies to file an analysis of economic impacts on the company’s residential ratepayers “if the company’s return on equity is subject to review and modification.”
The bill also will impose a freeze on residential rate increases from Nov. 1 to March 31 and would require companies to establish a multiyear rate plan that is no less than three and no more than seven years long. The bill also prohibits increases within 18 months of a previous hike until Jan. 2, 2027, or when the PUC adopts new rules on multiyear rate plans.
Utilities also must share a visual breakdown to inform customers what they are paying for.
Subject to PUC approval, the bill allows a public utility to issue bonds and securitize debt to cover costs associated with capital investments or other expenses.
“We’ve seen a huge response from customers who are fed up with constant energy bill increases,” Jennifer Hill-Hart, policy and program director at the Oregon Citizens’ Utility Board, said in an email to RTO Insider ahead of the vote.
“Last year, nearly 5,000 Oregonians wrote to the Public Utility Commission about rate hikes. Before 2024, we would see maybe 200 public comments a year,” Hill-Hart said. “We are pleased to see lawmakers listening to the needs of communities.”
Since its introduction in January, the bill has undergone several amendments, including updating the timeline for when utilities can increase rates and clarifying what data should be included in the rate analysis of the economic impact on consumers.
In the first version of the bill, the PUC would have determined whether the proposed rate is fair by first assessing if it would result in the public utility’s revenue increasing by 2.5% or more. That requirement was removed from the final bill.
‘Major Change’ to Ratemaking
“There is optimism HB 3179 can not only help smooth customer rates but also offer utilities a constructive/improved ratemaking process,” investment bank Jefferies noted in a June 23 newsletter.
Simon Gutierrez, a spokesperson for PacifiCorp, told RTO Insider ahead of the bill’s passage that Western utilities and the industry face “broad affordability challenges” because of inflation and wildfire risk.
“We understand price increases can be a burden to Oregon families, and we remain steadfast in our commitment to customers and communities and will continue seeking new ways to reduce impacts to customer bills,” Gutierrez said. “With HB 3179 now in the final stages of consideration by Oregon lawmakers, Pacific Power commends the legislative and stakeholder efforts to help mitigate the potential impacts included in this bill.”
“If it becomes law, HB 3179B will mark a major change to regulated utility ratemaking in Oregon and will provide the OPUC with new tools to manage utility bill affordability for our customers,” Portland General Electric spokesperson John Farmer said before the June 24 vote. “We look forward to working with stakeholders and the OPUC to implement this bill.”
Garrett Martin, policy adviser at the Oregon PUC, said in addition to freezing rate increases during the winter months, “HB 3179 also includes provisions that will allow the commission to proactively schedule rate cases and multiyear rate plans rather than only react to utility filings covering a single future year.”
“This shift will allow the OPUC to create more predictable rate changes and manage regulatory workloads so investigations can rigorously focus on affordability,” Martin said. “HB 3179, if enacted, will also aid the OPUC in considering additional factors when determining utility rates and provide additional clarity for the commission and utility customers about how utilities spend customer dollars.”
