NCPA - National Center for Policy Analysis

Economic Effect of Oregon's Renewable Portfolio Standard

March 25, 2011

In 2007, Oregon passed Senate Bill 838 (SB 838) which established a state renewable portfolio standard (RPS).  The RPS mandates large utilities (those providing 3 percent or more of the state's electricity load) to supply a minimum percentage of electricity sold to retail customers derived from new renewable resources.  Specifically, SB 838 requires that Oregon's public electric utilities increase the percentage of electricity generated from new renewable energy sources, say researchers at the Cascade Policy Institute and the Beacon Hill Institute.

Since renewable energy generally costs more than conventional energy, many have voiced concerns about higher electricity rates.  Moreover, since Oregon has a limited ability to generate new renewable energy, the state will start from a low power generation base.  In addition, some renewable energy sources (wind and solar power in particular) require the installation of conventional backup generation capacity for cloudy, windless days.  The need for this backup further boosts the cost of renewable energy.

  • In the aggregate, the state's electricity consumers will pay $992 million in 2025.
  • Oregon's electricity prices will increase by an average of 1.73 cents per kilowatt-hour (kWh), or 23.9 percent, in 2025.
  • By 2025 the Oregon economy will lose an average of 17,530 jobs, within a range of between 10,025 jobs under the low-cost scenario and 24,630 jobs under the high-cost scenario.
  • In 2025, the RPS mandate will reduce annual wages by an average of $275 per worker, within a range of between $157 per worker $385 per worker.

Source: David G. Tuerck, Michael Head, and Paul Bachman, "Economic Impact of Oregon's Renewable Portfolio Standard," Cascade Policy Institute/Beacon Hill Institute, March 2011.

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