Clean-energy bill sails through Oregon House

The Oregonian, May 24, 2007

A controversial renewable energy bill blew away the opposition Wednesday with a 41 to 18 House vote that saw many Republicans join the majority Democrats in landing Gov. Ted Kulongoski a big environmental win.

Kulongoski, a second-term Democrat, had made Senate Bill 838 the centerpiece of his energy agenda, touting it as a way to green-up Oregon's image and make the state a leader in clean-energy technologies, such as wind and solar power.

"This bill continues the Oregon legacy of innovation and environmental stewardship and represents the single most important action we can take to accelerate our transition to a renewable energy market," Kulongoski said immediately after the vote.

The final count masked furious last-minute lobbying by some Republicans and businesses who warned that electricity rates could rise and force the economy to stumble.

Under Senate Bill 838, renewable energies such as wind, solar and geothermal power must account for 25 percent of a utility's electricity sales by 2025. Wind energy is expected to dominate utility acquisitions because it's the cheapest and most advanced renewable resource available. Several large wind farms are already operating or under development in the Columbia River Gorge.

Oregon's biggest utilities -- Pacific Power, Portland General Electric and the Eugene Water and Electric Board -- must meet the mandates. Smaller utilities will face lesser goals.

The Senate passed a similar version of the bill last month. It is expected to concur with the House's changes, then send the bill to Kulongoski for his signature.

Twenty-three other states have passed clean-energy requirements of one form or another. But Oregon's will be one of the most demanding.

"It's an ambitious standard to meet," said Rep. Jackie Dingfelder, D-Portland, who shepherded the bill through sometimes sharp committee debate and on to the House floor for Wednesday's vote. "But Oregon is an ambitious state."

The high standards worry some businesses, particularly large manufacturers, which count energy costs as major business expenses.

"It might be a green vote for the Legislature," said Julie Brandis, a lobbyist for Associated Oregon Industries, the state's largest business lobby. "But it's not the Legislature that will bear the risks. It's the commercial businesses."

No one knows whether the mandates will cause rates to go up, and, if so, by how much. Proponents concede that rates might rise slightly in the near term, but should stabilize, even drop, as technologies improve and costs associated with coal, natural gas and other traditional resources rise.

Critics say markets, not mandates, should determine the pace of renewable energy development. And they worry that sudden demands for wind power and solar energy will cause prices to spike.

The bill allows utilities to suspend renewable purchases and pay into an account if compliance in any given year proves too costly, as defined by the bill. The squirrel-away money would be earmarked for future renewable purchases or for conservation projects.

Rep. Chuck Burley, R-Bend, one of the bill's most vocal opponents, tried unsuccessfully to steer the legislation back to the energy committee for amendments that would further limit potential rate increases.

"I just want a backstop for ratepayers," he said.

Despite the opposition, arguments about the need for cleaner energy, homegrown resources and a brushed-up environmental image proved more persuasive.

"This is the biggest win for the Oregon environment in a very long time," said Jeremiah Baumann, an advocate with the newly formed Environment Oregon.

Kulongoski and other bill proponents have emphasized that the mandates are as much about urban and rural jobs as they are about the environment.

"Whether it's wind and solar energy in eastern Oregon, wave energy for coastal communities, biomass energy in forested communities or manufacturing jobs in the Willamette Valley, a renewable energy future will benefit every Oregonian," Dingfelder said.

Rural public officials and farmers are among the bill's most avid supporters. Property tax and related payments from wind farms in Sherman County account for 10 percent of the local budget. And a wind farm under development in Union County represents the single largest business investment in the county ever.

"Often we feel ignored," said John Lamoreau, a former Union County commissioner. "This time, we feel that urban Oregon is reaching out across the urban-rural divide."

Don Coats, a Sherman County farmer, said he has talked to at least four companies in recent weeks interested in putting up wind turbines on his property. "It was all in anticipation of this bill," he said. "It will make it happen."

The Willamette Valley could draw other types of investment, such as companies with renewable technologies, Kulongoski said. Examples include SolarWorld Group, which has announced plans to manufacture solar cells and wafers at a plant in Hillsboro, and Vestas Wind Systems, a wind turbine manufacturer with U.S. headquarters in Portland.

Yet, established Oregon manufacturers such as Intel and Weyerhaeuser caution that the new growth could come at their expense if electricity rates jump.

"To think you can hamstring (existing) manufacturing and woo new manufacturing is a bit of a fool's errand," said Intel lobbyist Jonathan Williams in the weeks leading up to the House vote.

Gail Kinsey Hill: 503-221-8590; gailhill@news.oregonian.com