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Paying for Oregon's Transition to Renewable Energy, July 2011

In the 2011 Oregon legislative session that just ended, Oregonians for Renewable Energy Policy (OREP) made the difficult decision to support the continued use of state energy tax credits for renewable energy production on a temporary basis in order not to lose the public investment Oregonians have already made in creating a renewable energy infrastructure in our state. OREP's support was conditional on the rapid replacement of tax credits for renewable energy with a funding mechanism that does not rely on taxpayer dollars. Instead, Oregonians should pay for clean energy the way we currently pay for dirty energy, through electric rates that pay only for each kWh produced (See OREP's letter to Legislators, June 2011).

As a funding source for renewable energy production Oregon's current energy tax credits have numerous drawbacks.

If tax credits were a cost effective method for developing new energy sources, they would have been used historically to develop energy from fossil fuels.  When an Oregon utility has needed to build a new coal plant or gas turbine, the capital and fuel costs have been assessed in rates and are paid for over time by electricity customers (i.e., rate-payers not tax-payers).

A funding mechanism that uses ratepayer dollars to pay for clean energy is a feed-in tariff (aka guaranteed pricing structure) for renewables. Feed-In Tariffs guarantee all producers of renewable energy a fixed price per kWh over a set contract period. To date, FITs are responsible for 75% of the world’s solar and 45% of global wind power. FITs are preferable to tax credits in many ways.

Thanks to the far-sighted investments in renewable hydropower made by our predecessors in the last century, today’s Oregonians benefit from some of the lowest-cost clean energy in the U.S. Oregon’s current energy mix comprises 60% hydropower. The sooner we convert the remaining 40% fossil fuels to renewables, the sooner Oregon ratepayers will benefit from these essentially free fuel sources.

The long-term fixed price contracts that are the hallmark of effective feed-in tariff programs hold the greatest potential to help Oregon rapidly reach that goal. We should move quickly to develop a comprehensive FIT program for all renewables and all Oregonians both to rapidly generate more renewable energy and create green jobs.


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