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Panel backs SB 688 to let PUC pilot performance-based regulation for electric utilities
Summary
The Natural Resources subcommittee voted to adopt an amendment and move Senate Bill 688 to the full Ways and Means committee. The bill authorizes the Public Utility Commission to develop a performance-based regulation framework for investor‑owned electric utilities and funds staff and consulting support.
The Natural Resources subcommittee voted June 11 to adopt an amendment and forward Senate Bill 688, which would authorize the Oregon Public Utility Commission to implement a performance‑based regulation framework for electric companies that are not consumer‑owned utilities.
The bill would allow the PUC to use incentives or penalties to align utility performance with policy goals such as reducing emissions, improving reliability, supporting low‑income customers and controlling costs. The PUC would hire one permanent full‑time utility analyst 3 and be provided a onetime consulting expenditure limitation of $750,000; the amendment adopted (dash A7) adds $974,013 in other‑fund expenditure limitation to the PUC budget for the 2025–27 biennium, paid from assessed annual fees on regulated utilities, Legislative Fiscal Office staff said.
Why it matters: supporters said the existing regulatory model primarily rewards capital investment and can discourage customer‑centered actions like energy efficiency. Jennifer Hillhart, policy and program director of the Oregon Citizens’ Utility Board, told the committee performance‑based regulation shifts incentives so utilities can be rewarded for outcomes such as energy efficiency and customer affordability.
"Right now, our regulatory model incentivizes capital investments," Hillhart said. "With performance based regulation, we can ... create incentives for utilities to make more customer‑centered investments like energy efficiency."
The committee adopted the A7 amendment on a voice vote and then moved the bill to the Ways and Means full committee with a due‑pass recommendation. A roll call conducted after the motion showed the measure advanced with a majority of members present.
Discussion and limits: Hillhart and committee members stressed the approach requires careful design and outside expertise to avoid creating perverse incentives. The Legislative Fiscal Office recommended adoption of the amendment and noted the additional expenditure limitation would be covered by assessed fees on regulated utilities.
Next steps: SB 688 as amended will be considered by the Ways and Means full committee; the committee record shows staff and LFO will monitor implementation funding and the PUC’s use of consultants as rulemaking and pilot design proceed.
