Attorney General Hardy Myers today announced the distribution plan for the funds obtained from a settlement agreement with the Williams Companies, Inc. and the Williams Energy Marketing and Trading Company (Williams). In making the announcement, Myers was joined by Commissioner Roy Hemmingway, chair of the Public Utility Commission (PUC); Michael Grainey, Director of the Office of Energy; Bob Repine, Director of Oregon Housing and Community Services; and Jay Formick, Executive Director of Oregon HEAT.
The settlement, which pays Oregon $15 million over three years, is a result of the Attorney General's investigation of Williams' actions during the 2000-01 West Coast energy crisis. The terms of the settlement direct 6% of the proceeds towards the state's legal fees and administrative expenses. Today's announcement outlined the terms in which the remaining $14.1 million will be distributed.
"This distribution of the Williams Settlement addresses two critical objectives," Myers said. "First, we are reimbursing every Oregon ratepayer for damages that can be attributed to the actions of the Williams Companies during the outrageous energy price spikes of 2000 and 2001. Second, this settlement allows us to help create a safety net for low-income Oregonians who suffered a disproportionate harm during the same period."
The exact terms of the distribution are as follows: In 2003, the Department of Justice will distribute $8 million in refunds to energy consumers in Oregon on a pro rata basis based on each consumer's exposure to the volatility of the western wholesale electricity market. The Department's investigators determined that ratepayer losses attributable to this case are between $4 million and $8 million. Consequently, the $8 million repayment reflects the maximum harm endured by Oregon residential and commercial consumers related to this case.
The PUC will collect and analyze the data necessary to establish the wholesale market exposure of each Oregon utility. As determined by the PUC's calculations, a portion of the funds will be disseminated to the investor owned utilities (PGE, PacifiCorp and Idaho Power) on the condition that they place a one-time credit on consumers' monthly bills, adjusted to reflect each customer's usage. A similar allotment will go to public utilities (municipals, public utility districts and cooperatives) with the direction to use the refund for the benefit of the utilities' members.
In announcing the terms of the distribution, Hemmingway said, "These refunds are a small but important measure of justice for Oregon ratepayers based on the harm they incurred as a result of the unprecedented rise in energy costs."
In 2004, the state will receive $4.7 million from the settlement. Of this amount, $1.85 million will be used for bill paying assistance to low-income families. The distribution will be split between Oregon HEAT ($1.35 million) and Oregon Housing and Community Services ($500,000). Oregon HEAT is an independent nonprofit organization founded in 1989 to help low income Oregonians become more energy self-reliant. The allocation for Oregon HEAT will be used to direct assistance to customers within the service areas of the investor owned utilities. The allocation for OHCS will be used to provide low-income energy assistance to consumers in the public utility service areas. In particular, the program targets households that are in danger of having their electricity service disconnected. The combined bill assistance distribution to Oregon HEAT and OHCS will be fairly shared by consumers throughout Oregon, regardless of geographic location.
Another $1.85 million will be directed to the low-income weatherization/conservation program, which is also administered by OHCS. The final $1 million will be used to implement energy efficiency upgrades in Oregon public schools through a program implemented by the Oregon Office of Energy.
"The Williams settlement will provide critical resources to implement energy efficiency upgrades in Oregon schools. Some of these upgrades can cut school energy bills in half," Grainey said.
In 2005, the state will receive a final payment of $1.41 million. The distribution of the final payment will be $515,000 to Oregon HEAT, $189,000 to OHCS for low-income assistance, and $705,000 to OHCS for weatherization and conservation.
"These funds may be the difference between warm and cold or light and dark for thousands of low income Oregonians," Formick said. "With high unemployment and the continued challenges of our economy, this money could not come at a more critical time."
"The settlement proceeds offer a unique opportunity to provide short and long-term benefits to low-income Oregonians. We can help keep the lights on now with bill assistance, and begin paving a path to self-sufficiency through our weatherization and conservation programs," Repine noted in discussing the impact on OHCS.
The settlement traces its origin to January of 2001, when the attorneys general of Oregon, Washington and California initiated a coordinated investigation into allegations of price manipulation and antitrust violations in the Western power market. The Oregon Department of Justice, working in consultation with the Oregon Public Utility Commission and Oregon Office of Energy, previously identified unethical and likely unlawful market practices by various market participants that include purposefully congesting transmission lines, "wash" sales and other schemes designed to drive up the prices of wholesale electricity.
"This investigation is not over yet," Myers said. "There were a number of other players gambling with the people's money. I will do all I can to make sure they don't escape with their winnings."
Oregon Department of Justice
Terms of Distribution
$8,000,000 - To energy consumers in Oregon. The Oregon PUC will collect the data and perform the calculation to determine how much each utility will receive to distribute to its customers. Investor owned utilities ("IOUs": PGE, PacifiCorp and Idaho Power) will be directed to place a one-time credit on monthly utility bills for each consumer's pro-rata share of the refund. Public utilities (Municipals, PUDs and Coops) will receive the refund with the direction to use it for the benefit of the utilities' members.
$510,000 - To Department of Justice Consumer Protection and Education Revolving fund.
$1,353,090 - To Oregon HEAT for bill paying assistance to serve consumers in the IOU territories.
$496,910 - To Oregon Housing and Community Services ("OHCS") for bill paying assistance to serve consumers in the public utility territories.*
$1,850,000 - To OHCS for low-income weatherization/conservation programs statewide.
$1,000,000 - To the Oregon Office of Energy for energy efficiency upgrades to public schools statewide.
$300,000 - To Department of Justice Consumer Protection and Education Revolving fund.
$515,637 - Oregon HEAT.
$189,363 - OHCS for public territories.
$705,000 - OHCS for weatherization/conservation programs.
$90,000 - Department of Justice Consumer Protection and Education Revolving fund.
Williams Settlement Advisory Committee Membership
Jason Eisdorfer, Energy Program Director, Citizens' Utility Board
Robin Freeman, Executive Director, Oregon Public Utility District Association
Michael Grainey, Director, Office of Energy
Commissioner Lee Beyer, Oregon Public Utility Commission
Angus Duncan, Executive Director, Bonneville Environmental Foundation
Maureen Kirk, Executive Director, OSPIRG
Jim Origliosso, Chief Executive Officer, Eugene Water and Electric Board
Dick Roy, Northwest Earth Institute
David Tooze, Energy Program Manager, Office of Sustainable Development, City of Portland
Colin Yost, Assistant Attorney General, Department of Justice
Roger Hamilton, Governor's office
Tom O'Conner, Oregon Municipal Electric Utilities
Peter West, Energy Trust of Oregon
Sandy Flicker, Oregon Rural Electric Cooperative Association