Oregon Court Reverses Utility Commission's Cost Exclusion

The Oregon Court of Appeals recently reversed a decision made by the Public Utility Commission of Oregon (PUC) regarding electricity rates for customers of PacifiCorp. The ruling, filed on August 12, 2026, affects how costs related to compliance with Washington's Climate Commitment Act (CCA) are allocated. This decision is significant for both PacifiCorp and its customers in Oregon, as it may change the way certain costs are reflected in their electricity bills.

In this case, PacifiCorp, which operates as Pacific Power, challenged the PUC's order that excluded costs associated with the CCA from electricity rates in Oregon. The PUC had determined that these costs should be assigned entirely to Washington, where the compliance requirements originated. This ruling could impact how utilities across state lines manage their costs and set rates for consumers.

The dispute began when PacifiCorp sought judicial review of the PUC's final order, which was based on the interpretation of an agreement known as the 2020 PacifiCorp Inter-Jurisdictional Allocation Protocol. This protocol outlines how costs and benefits are allocated among different states for resources used in electricity generation. The case was filed under docket number A183803 and was argued in court on October 2, 2025.

PacifiCorp argued that the PUC misinterpreted the protocol, claiming that the costs of CCA compliance should be treated as generation-related dispatch costs rather than being assigned solely to Washington. The company contended that these costs should be allocated according to a different section of the protocol, which would allow for a more equitable distribution among the states involved.

The court's ruling was delivered by Presiding Judge Aoyagi, who stated, "The PUC’s interpretation of the Protocol is not plausible, such that the disposition would not be affected by resolving that issue." The court found that the PUC's decision to exclude the CCA compliance costs from Oregon rates was based on a misinterpretation of the protocol. The ruling reversed the PUC's order and remanded the case for reconsideration.

In its opinion, the court highlighted that the PUC's reliance on section 3.1.2.1 of the protocol was legally erroneous. The court noted that the Chehalis power plant, where the costs originated, was acquired long before the CCA was enacted, making it unreasonable to classify these costs under a state-specific initiative. The judge emphasized that the PUC must address whether deviating from the allocation provided by the protocol is necessary to achieve fair and reasonable rates for consumers.

This ruling has significant implications for PacifiCorp and its customers. If the PUC decides to allocate the CCA compliance costs differently, it could lead to changes in electricity rates for Oregon customers. The decision also sets a precedent regarding how utility commissions interpret cost allocation protocols and their authority to impose costs on consumers.

Going forward, the PUC will need to reconsider its previous order and determine how to fairly allocate the costs associated with the CCA compliance. This case underscores the importance of clear communication and interpretation of agreements between utilities and regulatory bodies.

As for what’s next, the PUC has the option to appeal the court's ruling, but details were not available in the court filing. The outcome of this case could also influence similar disputes regarding cost allocations in other states, especially those with climate-related initiatives.