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Where and how Umatilla Electric Cooperative fits into the 2007 Oregon renewable portfolio standards law could cost its 14,000 customers in higher rates.

Whether that cost amounts to $15 million or $56 million over the next 20 years may depend on whether the Hermiston-based power company can change the law.

That law mandates percentages of renewable energy for “large” and “small” energy providers in the state. Large is anyone supplying more than 3 percent of Oregon’s electricity. Small is anything less than 3 percent.

Today Umatilla Electric fits in the small category, but with the influx of data centers in rural Oregon and increase in power demand, it worries it could be thrust into the large category.

In the small category, Umatilla Electric would be expected to obtain 10 percent of its energy from renewable sources by 2025. In the large category, that percentage jumps to 25 percent.

In the small category, costs to Umatilla Electric’s customers would be about $15 million over 20 years. In the large category, it would cost customers $56 million, the company said.

To avoid that high cost, the company is looking to add language to the law to allow an energy company to stay in the small category if its jump over 3 percent is due to a single large customer, such as a data center.

 Jan. 12, Umatilla Electric general manager Steve Eldrige obtained Umatilla County commissioners support for his company’s efforts in the Oregon Legislature.

Monday the company gave a similar presentation to the Association of Oregon Counties’ energy and environment steering committee, which is chaired by Umatilla County Commissioner Larry Givens.

Eldrige knows the 2012 Legislative session, which begins in February and only lasts 35 days, will likely not have time to address this issue, but he hopes to move it forward in future legislative sessions.

Umatilla Electric spokesman Nate Rivera said wording for the change comes in Legislative Concept Draft 28, but not yet a formal bill.

Ted Case, executive director of the Oregon Rural Electric Cooperative Association, said the 2007 law shouldn’t be set in stone, but should adjust as energy demands change.

“I think the main thing in the renewable portfolio standards, you’ve got to look at it from time to time,” he said. “There’s nothing sacrosanct about it.”

Unanticipated demand

The original wording of the renewable energy standards law does allow time for companies to grow into the 25-percent threshold, said Diana Enright, spokeswoman for the Oregon Department of Energy. For an energy company to officially become a large provider, it must stay over the 3-percent mark for three consecutive years. After that the 20-year clock starts to reach 25 percent. The company must provide 5 percent of its energy with renewables by the fourth year, 15 percent by the 10th year, 20 percent by the 15th year and 25 percent by the 20th year.

“The 2007 legislation did take into account the fact that some utilities would bump up to 3 precent,” she said. “It gave a long window in which to get there.”

But Steve Myers, another spokesman for Umatilla Electric, said time is not the issue.

“The law didn’t anticipate Internet data centers would be interested in rural Oregon,” he said in an email. “Those companies are making decisions now about whether to locate to rural Oregon and the law’s long-term impact on power rates is part of the discussion.”

That long-term impact, Umatilla Electric contends, is jobs. Because the costs of meeting the 25 percent mark would go straight to Umatilla Electric customers, businesses looking to locate in its coverage area would also be forced to endure those higher costs. That could stunt job growth, the company says, keeping jobs out of Eastern Oregon.

“We’re facing job losses now at the Umatilla Chemical Depot, and anticipate job losses in the coming years at the Boardman coal-fired plant,” Meyers’ email continued. “We want potential new businesses to feel as welcome as possible in rural Oregon.”

He called Umatilla Electric’s addition to the law a “small, targeted” modification.

Large vs. small

Larger energy companies don’t seemed threatened by this possible change to the law.

Tom Gauntt, spokesman for Pacific Power, said the original law was designed to affect large and small companies differently. According to numbers provided by Umatilla Electric, Pacific Power is the second largest power provider in Oregon, with 557,000 customers, making up 27.8 percent of the state, far above the 3 percent threshold. (Pacific Power is also known by the parent company name, PacifiCorp.)

The biggest provider, Portland General Electric, serves 820,000 customers, or 38.7 percent of the state. The third largest is Eugene Water and Electric, which serves 87,000 customers, or 5.25 percent.

Eldrige contended the 3 percent margin was chosen to put the Eugene company into the large category.

Enright said the amount was chosen by a consensus of those drafting the 2007 law.

Pacific Power, Gauntt said, has been investing in renewable energy since 2005. Since 2006 the company has invested $2 billion in Oregon, Wyoming and Utah wind farms. He said his company is the second largest utility owner of wind resources in the nation. That puts them well on the way toward reaching the 25-percent goal. Gauntt said having 20 years to reach it allows for that growth.

Case, with the Oregon Rural Electric Cooperative Association, said a vast difference separates the big companies’ ability to reach the 25-percent threshold, and Umatilla Electric’s ability.

“There’s a definable inequality in a utility like Umatilla to have to comply with the same threshold as PGE or PacifiCorp,” he said. “Umatilla is a lot different than those utilities — much, much smaller.”

Umatilla Electric, too, said it is different from the top three energy providers in Oregon. The original renewable energy law was meant to reflect that. Umatilla Electric contends the additions it wants to make to the law will ensure it continues to recognize that difference.

This story originally appeared in East Oregonian.