[CFR-Clips] Steve Duin Column in Oregonian Re Utilities Charging Ratepayers for Phony Taxes

[Dan Meek]

  Meanwhile, who's watching the PUC?

*Steve Duin*
Sunday, March 08, 2009
*The Oregonian*

I t's been awhile since I've bothered Dan Meek and, once again, he 
doesn't want the attention. The Portland attorney does his best work -- 
legal briefs for the Utility Reform Project -- in the dead of night, and 
he considers the courtroom a much more comfortable forum than this column.

But the truth remains that few people -- not the Oregon Legislature, not 
the governor, and certainly not the Oregon Public Utility Commission -- 
are working as hard as Meek and Melinda Davison, the attorney 
representing industrial consumers, to (a) save customers of Portland 
General Electric and PacifiCorp money, and (b) highlight the PUC 
decisions that are costing ratepayers dearly.

Several years back, Meek -- along with Davison, Ken Lewis and Sens. 
Vicki Walker, D-Eugene and Rick Metsger, D-Welches, among others -- 
sought to end the utilities' habit of charging customers for state and 
federal taxes the utilities do not pay.

Before Enron imploded, PGE shipped $750 million in those phantom taxes 
to its parent company. That practice supposedly ended when the 
Legislature passed Senate Bill 408 in 2005.

But the architects of that reform continue to protest the way the bill 
has been put into practice by the gatekeepers at the PUC.

Davison has taken two concerns of the Industrial Customers of Northwest 
Utilities to Oregon's Court of Appeals. She is protesting the PUC ruling 
that allows PacifiCorp -- now a subsidiary of Berkshire Hathaway -- to 
keep its tax documents in a "safe room" at its attorneys' office and 
severely restrict access for those who want to check the math.

"We don't believe it's proper for the commission to put in a requirement 
that the tax documents only reside in a safe room, and we can only look 
at those documents by going into the lawyers' office at PacifiCorp while 
being monitored by a PacifiCorp employee," Davison said.

ICNU's tax expert, she added, is not allowed to copy the documents or 
remove them from the room: "We think that's outrageous. A 'safe room' 
does not allow for meaningful participation in the process."

Davison and ICNU also charge that the PUC's rules for implementing SB408 
are legally flawed because those rules do not calculate the amount of 
"actual taxes paid" as required by the bill. As a result, they believe 
PGE's 2007 tax report should be thrown out and PGE should not collect an 
additional $17.3 million in income taxes from ratepayers.

Meek has a different argument as to why that proposed $17.3 million 
surcharge should be rejected.

In the last three months of 2005, Meek said, "PGE admittedly charged 
ratepayers $26.5 million more for income taxes than PGE paid." When Meek 
argued ratepayers deserved a refund, the PUC staff reasoned that because 
the utility failed to make its authorized rate of return on investment, 
no refunds were necessary.

In 2007, Meek notes, PGE had net operating revenue of $180 million, or 
$37 million more than its authorized rate of return. And the utility and 
PUC staff now want to bill ratepayers for the income taxes it paid on 
those excess earnings.

PGE and PUC can't have it both ways, Meek argues. If an earnings test 
relieves the utility of repaying income taxes when it doesn't make its 
authorized rate of return, a similar earnings test should relieve 
ratepayers of further bills when PGE walks off with a surplus.

"The way the PUC is calculating taxes, it seems that PGE never has to 
pay money back," Sen. Walker said. "Whether PGE is making money or 
losing money, it's always ratepayers who are on the book."

Thanks to the PUC, Meek said, "It's heads the utility wins, and tails 
the ratepayers lose."

Steve Duin: 503-221-8597; 1320 S.W. Broadway, Portland, OR 97201 
steveduin at news.oregonian.com http://blog.oregonlive.com/steveduin


©2009 Oregonian

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