PGE Will Repay $20 Million to Ratepayers

Oregon PUC Orders PGE to Sequester $20 Million in Unpaid 2005 Income Taxes for Return to Ratepayers in 2008.

It's payback time for PGE Image courtesy: sie.arizona.edu

(PORTLAND, Ore.) - Yesterday, the Oregon Public Utility Commission (OPUC) granted the Application for Deferred Accounting filed nearly two years ago by the Utility Reform Project (URP) and Kenneth Lewis to compel PGE to give back to ratepayers the $20 million in federal and state income taxes PGE charged ratepayers during the last 3 months of 2005 but never paid to the government.

In granting the URP/Lewis application, the OPUC ordered PGE to create a deferred account and place into it the amounts that PGE charged to ratepayers for federal and state income taxes during the nearly 3-month period from October 5, 2005, through the end of 2005.

PGE charged ratepayers about $20 million for federal and state income taxes during that period, but none of that amount was paid to the federal or state governments, because PGE was owned then by the bankrupt Enron Corporation.

The Commission stated that it will then have the opportunity to return this money to PGE ratepayers in a decision "currently scheduled for June 1st, 2008."

"The Commission agreed with us that SB 408, passed by the Legislature in 2005, took effect on September 5, 2005," said Dan Meek, attorney for URP and Lewis.

"That law bans utilities from charging ratepayers for income taxes that are not actually paid. PGE continued to charge ratepayers at least $7 million per month in 2005 for federal and state income taxes that were never paid to any government."

The Commission's action does not necessarily mean that the Commission will later order PGE to return the $20 million overcharge to ratepayers, noted Meek.

"We argue that these charges are completely illegal, but it is possible that the OPUC next year might let PGE keep the money. If so, the case will go to the courts."

The Commission said it could not start the deferred account earlier than October 5, 2005, because that was the date that the URP/Lewis application was filed.

As for the additional $7 million in unpaid income taxes PGE charged to ratepayers during September 2005, "we will have to go to court to get that back," said Meek. The deferred account ends with the close of 2005, because the Commission in yesterday's order promised to return all of the unpaid income taxes charged to ratepayers on or after January 1, 2006, by means of an "automatic adjustment clause."

"SB 408 required the Commission to establish the automatic adjustment clauses by June of 2006," said retired business executive Ken Lewis. "They are ignoring the legal deadlines in the statute. Ratepayers should be getting back the unpaid taxes from 2006 and 2007 now, not in late 2008 or later."

SB 408 was introduced and driven through the 2005 Legislature by Senators Vicki Walker and Rick Metsger.

The PUC's order is available at apps.puc.state.or.us/edockets/orders.asp?ordernumber=07-351