Oregon Revised Statute 757.539 mandated the Oregon Public Utility Commission to “establish a voluntary emission reduction program for the purposes of incentivising public utilities that furnish natural gas to invest in projects that reduce emissions and provide benefits to customers of public utilities that furnish natural gas.” The Oregon Public Utility Commission governs the implementation of greenhouse gas emissions standards for electric companies, electricity service suppliers, and natural gas companies.
The Commission thus established eligibility criteria for projects, including the obligation of directly or indirectly reducing emissions. This was done through Oregon Administrative Rules Chapter 860 Division 85, which sets greenhouse gas emissions requirements for regulated entities. It defines that any local distribution company completing a project under the program must file an application with the Commission, including: estimated emissions reductions from the project; the date on which the project is expected to become operational; the projected amount of capital and operating costs necessary to develop the project; and a plan for monitoring emission reductions. By creating a mechanism for utilities to recover costs for proposed projects, this law creates an incentive for voluntary efforts to reduce greenhouse gas emissions, including methane.
The Commission is responsible for determining whether project applications fall under Tier-1 or Tier-2 classification:
• A Tier-1 project has costs that would be paid by the ratepayers equal to or less than $1 million, and has an overall project cost of less than $85 per metric ton of reduced emissions. In this case, the Commission must provide interested parties with an opportunity to comment on the proposed project and hold a public hearing on the proposed project.
• A Tier-2 project has projected costs that would be paid by the ratepayers that are greater than $1 million or has an overall project cost of equal to or greater than $85 per metric ton of reduced emissions. In this case, the Commission must provide interested parties with an opportunity to submit testimony in response to the proposed project and be heard.
Projected costs to ratepayers of all emission reduction projects cannot exceed 4% of the utility’s last approved retail revenue requirement. The Commission is allowed to grant incentive payments for a project, but the total costs of all incentives to ratepayers received by the utility cannot exceed 25% of the specified project cap.