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Bill

Bill

SB 688

Relating to performance-based regulation of electric utilities.

2025 Regular Session Introduced by Tom Andersen and 12 co-sponsors

Oregon shifts electric utility regulation from guaranteed profits to performance-based earnings tied to reliability, decarbonization, and customer service metrics, effective January 2026.

Effective date, January 1, 2026.
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Bill Summary · SB 688

Legislative bill overview

SB 688 establishes a performance-based regulation framework for Oregon's electric utilities, shifting from traditional cost-of-service regulation to a system that ties utility earnings to meeting specific performance metrics and policy goals. The bill became law in July 2025 and takes effect January 1, 2026, requiring utilities to demonstrate achievement in areas such as reliability, customer service, decarbonization, and grid modernization to earn authorized returns.

Why is this important

This represents a fundamental restructuring of how Oregon compensates electric utilities and incentivizes their behavior. Rather than automatically recovering costs plus a guaranteed profit margin, utilities now must balance financial returns with meeting environmental, reliability, and equity objectives—directly influencing electricity rates, infrastructure investment priorities, and Oregon's clean energy transition timeline.

Potential points of contention

  • Investor concerns: Utilities may view performance metrics as uncertain revenue threats, potentially requiring rate increases to offset perceived financial risk or reduced incentive to invest in less-profitable rural/low-income service areas
  • Metric definition disputes: Disagreement over which specific performance measures are achievable, how they're measured, and whether penalties/rewards are proportionate could create ongoing regulatory conflicts
  • Consumer impact ambiguity: Unclear whether performance incentives will lower rates through efficiency gains or raise them through utility risk premiums and compliance costs

Compiled from official sources — confirm details with the bill’s official record.

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