ESA: The Long and Winding Road

I have written several times about the Energy Supplier Assessment (ESA). We pay this assessment annually to fund Oregon’s Department of Energy (ODOE).

Quick recap: Many years ago, the legislature passed a bill that allowed the Department to assess a fee to energy suppliers such as Central Lincoln to fund projects assisting in siting energy generation plants. This was primarily focused on new nuclear plants. A generous cap was placed on the assessment as it wasn’t known how much funding these projects would require.

Initially, ODOE assessed little as there weren’t many projects. But ODOE officials realized that they had a lot more funding available. They also realized there were few restrictions on what the money could be used for. They began funding various projects and positions through the assessment, raising the amount we’re charged. Our current assessment is $106,696 per year. It has more than doubled since 2010.

Our state PUD association decided these costs were getting out of hand. We banded together with most utilities in the state and sued on the basis that this ‘assessment’ was a tax, and not a fee. As a tax, the assessment could only be altered by a 3/5ths vote of the legislature. The legislature negotiated a deal whereby the assessment cap would be lowered slightly, rules were enacted by which ODOE would have to engage in a public process on what the assessment would pay for. The lawsuit was then dropped.

The next year, ODOE flagrantly ignored the new rules and once again raised the assessment by over 35% without collaboration. So we banded back together and filed a new lawsuit. We had two main points:

  1. The assessment was a tax.
  2. We wanted our assessment refunded as the negotiated process was not being followed by ODOE. As the case wandered through the legal pathways, we again paid our assessments under protest each year.

State appealed—and its legal fees were being paid with assessment revenues! Finally, this past year, the Appeals Court came back with a verdict. The judges did not rule on the tax issue—they considered it moot. So, it stands as a tax. This means that the legislature could not raise the assessment above the current cap without 3/5 voting yes. Unfortunately, we are still well under the current cap, so increases can continue for quite some time.

The second issue—the refund—would have had some significant teeth and could actually lead to important reform, but was struck down by the court. Far be it for me to think that the court might be protecting the State by making sure a department’s funding wasn’t jeopardized, but here’s what they said: (Warning: Extreme legalese!)

“The intervening action of the 2015 legislature—a separate branch of government—meant that the 2016 ESA orders had to issue without regard to any flaw in the preceding process. The orders therefore are not a product of the 2014 process and any failure by ODOE to provide energy supplies with a “full accounting” as part of that process is not a basis for setting aside the 2016 ESA orders.”

Now keep in mind the Oregon Department of Energy was formed in the 1980’s primarily to deal with siting issues for nuclear plants. It has evolved into an agency that does virtually nothing for energy suppliers in Oregon. The department has been the architect of massive fraud by administering millions of dollars in state tax credits improperly. The legislature has had serious discussions about dismantling the department. And the department director’s position has been a revolving door the last few years. Yet this slush fund is protected, and we are all being taxed by the State to fund their incompetence.

Central Lincoln Board Member Curt Abbott, Assistant Treasurer
Subdivision 3: Mapleton, South Beach, Swisshome, Waldport, Yachats