Agency Oversight, ODFW Funding and Rural Natural Gas

Doug Whitsett

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,

Senate District 28


Email: I Phone: 503-986-1728
Address: 900 Court St NE, S-311, Salem, OR 97301


subscribe here