Even
though the 2016 Oregon Legislative Assembly has adjourned, many of its
committees, task forces and work groups continue to meet in the interim between
sessions. Last week, I was back in Salem for three interim meetings that
covered a variety of topics of interest to residents throughout the state.
All
three are bicameral, bipartisan interim assignments made by Senate President
Peter Courtney (D-Salem). Each is designed or to help address some of the ongoing problems
with multiple agencies or to help formulate future legislation.
As
you may recall, Rep. Whitsett and I, along with several other Republican
legislators, asked for an
investigation of the Departments of Energy and Revenue regarding their
parts in the Business Energy Tax Credit (BETC) debacle. Partially in response
to that request, the Joint Interim
Committee on Department of Energy Oversight was created by House Speaker Tina
Kotek (D-Portland) and Senate President Courtney. Both Senator Alan Olsen (R-Canby)
and I have been assigned to that joint committee.
The
committee met for the second time on Monday, March
28.
That meeting began with a short history of the agency, followed by a panel of
representatives from energy stakeholders discussing how their interactions with
the Department of Energy (ODOE) have evolved.
ODOE
was created in 1975 in response to public outcry over long lines at the gas
pump resulting from the oil embargo and the anticipated growth of electrical
needs. At the time, utility companies were warning of shortages and concerns
about blackouts.
An
analyst from the nonpartisan Legislative Fiscal Office provided an
overview of the agency. Its legislatively adopted budget totaled $181 million
for the 2015-17 budget period, funding 105 full-time positions. That represents
a 21 percent reduction in expenditures from the 2013-15 budget largely due to the
scaling back of the struggling Small Energy Loan Program (SELP).
SELP
is in financial trouble due to several ill-advised, speculative loans made to
larger energy development companies. The agency’s current $73 million biennial
debt service is designed to be self-sustaining.
However,
several of the loans made in the late 2000s are in default and a number more
appear to be on life support. As the result, we know that approximately $15.3
million in general fund money will be needed to support the agency’s debt
service through 2034, and that number may increase significantly if other
existing loans are defaulted.
The
agency receives no general fund dollars because all of its programs are
designed to be supported by a total of 48 different fees. Those fees are most
paid by applicants for programs and loans.
Unfortunately,
a great deal of that fee revenue comes from an Energy Supplier Assessment (ESA).
The agency appears to be using revenue from the ESA to fund other programs. One
utility company representative stated that there is no real direct tie between
the ESA and the services provided to the company by the agency. Another
stakeholder representative testified that some members of his group has seen a
72 percent increase in the ESA over the past couple of years. Despite that, he
said his members are hard-pressed to say what exactly the agency is doing for
them.
This
conflict has resulted in a
lawsuit being brought by the energy suppliers against the agency.
ODOE
has five major program areas: planning, development, nuclear safety, facility
siting and administration.
The
meeting included a long presentation regarding nuclear safety, and primarily
focused on the decades-long nuclear waste problems at the Hanford site in
Eastern Washington. We were told the State of Washington has at least 70
employees on site working on nuclear cleanup activities. Only four ODOE
employees are involved in that endeavor, and none are stationed at
Hanford.
Testimony
from the stakeholder groups were variable. Some stated they work closely with
the ODOE in many areas such as permitting of facility siting, employing tax
credit programs to reduce the costs of solar energy infrastructure and
establishing governing rules for the Renewable Portfolio Standard. Others
expressed concern regarding the agency’s technical expertise and openly
questioned whether ODOE should be advocating for Oregon energy policy.
Several
stakeholders suggested the committee focus its efforts on the areas where ODOE
activities may be redundant and duplicative with work being done in other
agencies. It was suggested, for example, that the tax credit programs could be
run through the Department of Revenue, the Department of Environmental Quality
could assume nuclear and other functions, and the Public Utility Commission (PUC)
could oversee the Energy Facility Siting Council.
The
committee’s next meeting is scheduled for April 25. Its sole agenda item is a
discussion of the agency’s energy planning and innovation division.
On
Wednesday, the Joint Interim Task Force on Funding for Fish, Wildlife and
Related Outdoor Recreation and Education met at the
capitol.
That group is charged with investigating how to best address the ongoing budget
problems at the Oregon Department of Fish and Wildlife (ODFW).
Task
Force members are working to address several issues. For instance, the agency
needs to reduce costs by continuing to reorganize, and prioritize, its myriad
programs. It also need to identify broader-based, more sustainable sources of
revenue.
Traditionally,
the preponderance of ODFW funding has been generated from hunting and fishing
licenses, as well as related charges and fees. Those funding sources have not
kept up with ODFW expenses, causing a significant and growing budget deficit.
Repeated
increases in fees appear to be causing fewer hunters and fishers to buy
licenses. Moreover, degraded hunting and fishing opportunities are causing
diminished success rates and loss of interest in the sports. Participation is
being further curtailed by unnecessarily complicated and convoluted hunting and
fishing regulations. As the result, significantly fewer younger Oregonians are
choosing to become hunters and fishers.
I am
concerned that too many task force members may be focusing their efforts on how
to raise more money for the agency, rather than focusing on the problems that
are actually causing the budget shortfall. In my opinion, both issues must be
addressed if ODFW is to have a fiscally sustainable future.
The
task force will have its next meeting on April 26.
My
third and final meeting this week was for the Senate Bill 32 Work Group. SB 32 was enacted during
the 2015 legislative session to create a work group to explore ways for natural
gas utilities to expand their service areas into more rural communities. I
asked to be assigned to that work group because we want to expand natural gas
service into Lakeview from the nearby Ruby Pipeline.
That
work group met at the Oregon Public Utility Commission (PUC) office in Salem on
Thursday. The meeting began with a presentation on
successful efforts to bring natural gas to Coos Bay, a rural area that
has been economically depressed since the 1980s.
Planning
for that project began in 1999, and was funded through $27 million in local
bonds, $20 million in state bonds and $12 million from NW Natural. It involved
the construction of 64 miles of pipeline, and broke ground in July 2003. The
first customer was serviced by the project in January 2005, and the backbone of
that system was fully in place by the end of that year.
Representatives
from Avista gave a
presentation
on the feasibility of bringing such a project to Lakeview. The estimated costs
of the project total around $8 million, with other ongoing long-term costs
including staffing a local office to service customers. Avista’s contributions to
the project are limited through the PUC’s regulatory processes.
PUC
staff gave a
presentation
on the approaches taken by other states to develop natural gas infrastructure
to rural areas. They also provided their key
takeaways
on this very important topic.
They
pointed out that large and expensive projects are difficult without the use of
incentives or subsidies. There are state and federal grants and loans that can
be used for such projects. It’s also important that there be financial
commitment and buy-in from local governments whose constituents are serviced by
the infrastructure improvements.
Much
public good can come from rural natural gas based economic development. The $8
million needed to bring that kind of development to Lakeview is a drop in the
bucket compared to the massive amounts of money the state has spent on
inefficient and ineffective renewable energy projects over the years.
I
really want the work group to come up with the necessary recommendations to
make this project happen. Its next meeting is scheduled for May 5.
Please remember--if we do not stand up for rural Oregon, no one will.
Best Regards, Doug
Senate District 28
Email: Sen.DougWhitsett@state.or.us I Phone: 503-986-1728 Address: 900 Court St NE, S-311, Salem, OR 97301 Website: http://www.oregonlegislature.gov/whitsett
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