In compliance with rules adopted by the state’s Department of Environmental Quality (DEQ), NW Natural recently filed a request with the Oregon Public Utility Commission requesting an adjustment to natural gas rates in order to recover costs from the company’s implementation of Oregon’s Climate Protection Program (CPP).
What is the Climate Protection Program?
DEQ has established the Climate Protection Program (CPP) with the objective of reducing greenhouse gas emissions (GHG) across the state. The program was developed in response to Governor Kate Brown’s 2020 executive order (EO 20-04) requiring state agencies to design a program to achieve a 45% reduction in emissions by 2035 and an 80% reduction by 2050, based on from 1990 emissions. As a result, it will impact every energy user in Oregon.
How does it work?
Under the CPP, natural gas distributors, including NW Natural, transportation (vehicle) fuel suppliers and large stationary sources are required to reduce GHG emissions in line with limits set by DEQ that decrease aggressively over time using a specified set of allowed compliance tools.
One of the CPP’s compliance options are “Community Climate Investments” (CCI) which serve as a form of an emissions offset. As designed by DEQ, CCIs are intended to fund GHG reducing projects that must be administered by DEQ pre-approved non-profits (501c3) and reduce emissions by an average of at least one metric ton CO2e per CCI credit. CCI credits cannot make up the full compliance obligations (10% of compliance obligations from 2022-2024, 15% from 2025-2027 and 20% from 2028 and beyond).
Other allowed compliance options include energy efficiency, renewable natural gas, clean and renewable hydrogen.
How will customers’ bills change as a result of the CPP?
Under the Purchased Gas Adjustment (PGA) filing submitted by NW Natural in September 2023, residential and small commercial customers will – in the short term – still be paying less on their bills due primarily to lower wholesale gas prices, even with new additional costs for the company to comply with the CPP.
In the current filing request and immediate term, it’s our largest customers who are bearing significant cost burdens from the CPP.