Oregon Public Utility Commission Approves Settlement with Avista to Phase Out Fossil Fuel Subsidies and Restrict Political Spending

Salem, OR —

The Oregon Public Utility Commission today approved a settlement in a contested rate case between Oregon’s second largest gas utility and intervening organizations. The settlement requires Avista to phase out fossil fuel subsidies known as line extension allowances (LEAs), dramatically expands low-income weatherization programs and restricts political spending by the gas company that undermines state climate law.

Climate and environmental groups, together with Avista and other parties, filed the settlement on Aug. 2. Following approval today by the Oregon Public Utility Commission, the settlement is now final and effective January 1, 2024.

“This is a big win for working Oregonians who will no longer have to pay for fossil fuel subsidies or political activities that prolong dependence on harmful methane gas,” said Jan Hasselman, senior attorney for Earthjustice. “This settlement supports Avista’s transition to clean energy and propels Oregon forward on the path to electrification.”

This settlement is the first in Oregon to phase out costly fossil fuel subsidies that unfairly promote the construction of new gas pipelines for use in homes. These subsidies, called line extension allowances, cut the cost for new residential customers to connect to gas utility service — but at a significant burden to ratepayers. An analysis by the Oregon Citizens’ Utility Board (CUB) found that Avista has charged ratepayers as much as $42,032 just to connect one house to gas utility service. These subsidies drive up rates for all customers, while promoting continued reliance on methane gas in homes — a major source of climate and air pollution. Phasing out the use of methane gas in homes and buildings is critical to meeting Oregon’s statewide climate goals, and advocates hope that this settlement will create a model that other utilities in the state can follow.

In a victory against gas industry tactics undermining the transition to clean energy, the settlement also prohibits Avista from charging ratepayers for its anti-climate litigation costs and political activities. As previously reported, Avista sought to recover $57,000 from ratepayers to fund its litigation to overturn the Oregon Climate Protection Program (CPP). The program is one of the state’s bedrock climate policies that requires gas utilities like Avista to significantly decarbonize by 2050. The settlement removes this cost from customer rates, and also deducts an additional $90,000 in costs associated with Avista’s participation in the American Gas Association (AGA) and NW Gas Association. These trade associations have sought to undermine climate action at the state and federal levels with misleading advertising, lobbying, and litigation. The cost of these political activities will no longer be borne by Avista ratepayers.

In a companion effort, a coalition of 17 environmental groups sent a letter to Avista and Puget Sound Energy in October, asking two of the largest electric and methane gas utilities in Oregon and Washington to end their membership in the AGA because of its political activities fighting climate change policies.

“It is completely unacceptable for an Oregon gas utility to charge customers for its efforts to roll back climate policy,” said Meredith Connolly, Oregon Director of Climate Solutions. “This settlement is a major step in the right direction to protect working families by redirecting funds from anti-climate political activities and fossil fuel expansion to weatherization programs that will reduce energy costs and slash pollution.”

Under the settlement, Avista must also consider non-pipeline alternatives to major investments in capacity expansion, including major supply-side contracts. This means prior to making such investments, Avista must take a hard look at whether it can meet increased demand through energy efficiency, electrification, or other alternatives to new gas pipelines. The settlement comes as the Ashland City Council considers ordinance language to require future homes to be constructed all electric, and on the same day that the City’s Climate and Environmental Policy Advisory Committee is holding a hearing about the proposed policy change.

Lastly, the settlement increases Avista’s low-income weatherization program budget from approximately $800,000 to $2 million. Improving access to home weatherization services will reduce energy costs for low-income ratepayers, helping them to keep the heat on in the winter while also reducing fuel use.

“While we celebrate this settlement for stopping the growth in fossil fuel infrastructure, it is just the beginning,” said Dylan Plummer, Senior Campaign Representative at Sierra Club. “Rapidly transitioning off of fossil fuels is essential to avoiding climate catastrophe and building resilience for our communities.”

Parties to this settlement included Avista, the Oregon Citizens’ Utility Board (CUB), Climate Solutions, Sierra Club, the Alliance for Western Energy Consumers, and staff of the Public Utility Commission.

The Earthjustice attorneys that litigated and settled this rate case include Jaimini Parekh, Noelia Gravotta, and Jan Hasselman.