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July 29, 2005

Energy Bill and Idaho Power -- A Mixed Bag

The news on energy and utility issues is usually a mixed bag and today is certainly no exception. In Washington D.C., the U.S. Senate has just passed the worst Energy Bill in recent history, one that repeals the consumer protections of PUHCA, reneges on renewable investments, and gives away the store to oil, gas, coal, and nuclear power producers. We appreciate the votes in opposition to this bill from Senator Ron Wyden, Rep. Earl Blumenauer, Rep. Darlene Hooley, Rep. David Wu, and Rep. Peter DeFazio.

Locally, however, the news is good. The Public Utility Commission of Oregon has decided UE 167, Idaho Power's first rate case in a few years. Idaho Power, which serves residents of Eastern Oregon, was asking for a 17.5% rate increase and a seasonal rate surcharge during the summer months. CUB argued that the rate increase was too high and that seasonal rates based on summer peaks made no sense in the Eastern Oregon Idaho Power service territory, where peaks tend to occur in the winter months.

The bottom line is that Idaho Power's rate increase was reduced to 2.4%, a net increase of about $600,000. That is a more than 86% reduction in the requested increase in rates CUB successfully won for Eastern Oregon ratepayers.

And that, while it doesn't balance out the effects of national energy policy, at least makes the day's news a bit brighter and proves the point that customers need advocates who can take on big utilities -- and win!

Posted by Oregon CUB at 02:05 PM | Comments (0)

July 28, 2005

Tax Bill Finally Going to the House Floor

It has been a long and winding road for Senate Bill 408, the utility tax reform bill CUB and others helped write and move through the halls of the Capitol. Finally, however, after several revisions and much political wrangling, it looks as though the bill, which already passed the Senate, will have a floor vote in the Oregon House of Representatives. We expect the vote to occur sometime Saturday.

The Salem Statesman Journal ran this inset to a larger article (found on our Current News page) yesterday:

Big utilities are reimbursed for their tax obligation but avoid actually paying those taxes. In five years, PGE, Pacific Power and NW Natural have collected almost $1 billion from Oregon customers to defray the taxes they don't pay.

Supporters say: The bill should lower energy bills for ratepayers. By keeping that money in Oregon and lowering employer costs, the bill also should create jobs.

We hope to be back here next week, telling you that the bill passed and Oregon ratepayers will no longer be paying a surcharge on their bills, a cost that was supposed to be a valid tax, but was never passed along to the taxing government entity.

Posted by Oregon CUB at 03:27 PM | Comments (0)

July 27, 2005

Bad Energy Bill on the Move in Congress

Congress is closer than ever to voting on the Energy Bill, in its current incarnation a terrible piece of federal legislation that promotes more oil, gas, coal and even nuclear power than it does renewable energy. And, much to CUB's dismay, this bill would repeal PUHCA, a crucial law for protecting electric utility company customers. Many organizations are speaking out about it.

We include some other groups' analysis here, in hopes that CUB members will contact Senators Wyden (503-326-7525 or 202-224-5244) and Smith (503-326-3386 or 202-224-3753), saying vote NO on this Energy Bill, and then pass the email along. There is hope that, if we cannot vote the bill down, we might at least be able to delay the vote for a few months, giving opponents the chance to keep working on alternatives.

From Campaign for America's Future

The energy bill -- slated for a vote in the House and Senate this week -- is a fundamental insult to Americans. It puts the interests of big oil over the national interest in matters vital to our nation's security, our economy and our children's health.

This big oil energy bill:
* Gives billions in tax incentives to big oil, gas and nuclear conglomerates.
* Eliminates the requirement that utilities provide 10% of their energy from renewable sources.
* Strips a provision to make even a modest reduction in American oil consumption -- 1 million barrels of oil per day by 2015, representing a mere 4% of our projected oil consumption.
* Rolls back oversight on utilities and consumer protections [PUHCA] - which would allow companies to structure Enron-like deals and exploit the energy grid.

Please write your member of Congress and tell them that we need a real plan for plan for energy independence, not a grab bag of corporate giveaways.

From OSPIRG

This energy bill fails on all counts, and would move the nation deeper into dependence on dirty fossil fuels and dangerous nukes. It includes billions of dollars in subsidies for the oil, coal, and nuclear industries. It fails to reduce our dependence on oil, and won't cut gas prices. It doesn't even include the one bright spot - a renewable energy standard -- that the Senate version of the bill did. This bill also would allow, for the first time in 20 years, an inventory of oil and gas resources off the Oregon coast, setting the stage for drilling.

Please take a moment to call Senator Smith today at 877-762-8762, or 202-224-3121, and ask him to do everything in his power to stop this energy bill from passing the Senate. Then, please ask your friends to help by forwarding them this email.

From The Sierra Club

TAKE ACTION: Tell Congress to Reject the Polluting Energy Bill In the next two days, Congress will take its final vote on a polluting energy bill. Instead of putting proven clean energy solutions to work, this destructive bill weakens key environmental safeguards, puts America's coastlines and other public lands at risk, and funnels billions of dollars to the energy industry. It's time for Congress to start over with a forward looking energy policy that actually solves America's energy problems.

Click here to send a message to your members of Congress telling them to reject this polluting energy bill!

Posted by Oregon CUB at 02:35 PM | Comments (0)

July 25, 2005

Where things now stand with PGE

How can a bankrupt company have that much say over how their assets are distributed?

A CUB member who's been paying attention to the saga of Portland General Electric in transition sent us the above question, in regard to Enron's decision to end negotiations with the City of Portland over a purchase of PGE. We thought it was an excellent opening for a general discussion of where things now stand.

Enron Corporation, which purchased PGE back in July 1997 (exactly 8 years ago) no longer exists as an independent going concern. Enron filed for bankruptcy 3-1/2 years ago and is now subject to a reorganization plan approved by a U.S. bankruptcy court in New York. Stephen Forbes Cooper is a professional specializing in bankruptcy management hired by the Enron estate, who represents Enron and makes decisions on behalf of Enron (the estate) without having been an employee of Enron Corporation. Enron now exists to distribute its assets to its creditors.

Currently, the value of the creditors' claims against the Enron estate is higher than the value of Enron's assets. Creditors have been told to expect to receive between 15% and 30% of their claims. Since PGE is one of Enron's remaining valuable assets (estimated net book value of slightly over $2 billion), there is much focus on both maximizing its value for creditors and also distributing that value to creditors as soon as possible. These goals, of course, played a significant role in the decision by Cooper to end discussion with the City of Portland over the purchase of PGE. Cooper and the rest of the group managing this bankruptcy have decided that stock distribution holds less risk than a potential City of Portland purchase. (The City being unwilling or unable to pay a $50 million surety on the deal was apparently one deciding factor in the end of negotiations.)

Within the next 6 months or so Enron will apply to the Securities & Exchange Commission (SEC) for permission to issue new common stock for PGE, equaling about 62 million shares. Once approved by the SEC, PGE will then issue those shares and will become an independently traded company on the stock exchange. It is expected that about 30% of the shares will be distributed directly to the creditors; the remaining 70% will be held in a Reserve to be overseen by Cooper for the settlement of remaining unresolved liabilities. Shares will continue to be released to creditors in chunks until the process is complete. As long as Cooper, as the Agent of Enron, holds a majority of stock, he also will have a majority voice in shareholder votes made on behalf of Enron and its creditors. This would include voting for Board Members and decisions regarding the sale of PGE to a third party, but not the day-to-day management decisions regarding PGE operations. By 2008, Cooper is expected to have distributed 70% of the shares and hold only 30% in Reserve, which would diminish his majority power but still remain a significant influence. The entire process could therefore go on for years, although the possibility exists for an entity to purchase PGE before the distribution is complete.

In the short term, we expect to see a turnover in the sitting Board of Directors for PGE by April 2006, concurrent with the stock issuance. This change in leadership offers an opportunity for either stabilizing current directions in PGE operations and management, or for making large changes.

The bigger issue surrounding the future of PGE and its effects on customers is the upcoming repeal by Congress of the Public Utility Holding Company Act. PUHCA creates protections for customers against high-risk utility owners. When those protections are no longer in place, we expect a consolidation of electric utilities (as we have seen in the telecommunications industry), and this would likely mean the loss of PGE as a stand-alone, Oregon-headquartered company. If PUHCA is repealed, then PGE will probably be acquired by a larger entity and may become part of someone's electric utility empire -- not a healthy situation for the industry that is the backbone of our economy, since there could be a falling domino effect should the parent company get into financial trouble. Larger utility structures also exacerbate an already-existing problem of making utility companies pay attention to local issues like rates, quality of service and long-term energy policy.

Our options for the future of PGE are now fairly limited, at least in the short term. Enron has filed a request with the Oregon Public Utility Commission for approval of their stock distribution plan, hoping to sell shares on the open stock market. Beyond this proceeding, any buyer of more than 5% of PGE's shares would have to file a separate application for approval; in this way, no one entity can gain a deciding interest in our utility without undergoing PUC scrutiny.

The PUC approval process is based upon looking at the benefits and risks to customers of any particular change of control in utility ownership. We take the law's "net benefit" standard very seriously, and we will examine Enron's filing looking for both risks and benefits. We will work to make sure that the final Commission order will further both the customers' and the public's best interest.

Posted by Oregon CUB at 02:36 PM | Comments (0)

July 22, 2005

Wrapping up the options for PGE

Well, there's been action on many fronts in the past few days, most of it having to do with the future of Portland General Electric. Enron announced the end of discussion with the City of Portland regarding the City's proposal to purchase PGE (read articles here). This was a disappointment, since we at CUB felt that public power would have been the best outcome for the customers of PGE. Though this public power bid began as a long shot, through the hard work of many people (including CUB staff), this became a viable option. We hope the City will keep their eyes open and the work they did close at hand, since no one knows what changes will occur to PGE's ownership in the future.

Also this week, the Governor has vetoed SB 671, the Mutual Utility Bill, and says he plans to do the same with SB 1008, the Oregon Community Power Bill. We worked hard to help write SB 1008 and are disappointed also that this bill did not fulfill its promise to become a successful vehicle for a local and publicly-owned PGE. However, we understand that the Legislative process is one full of surprises, twists and turns that are in the control of no one particular group or even politician. We do appreciate Governor Kulongoski stepping up to veto bills not in the best interest of PGE customers.

The remaining option on the table is stock distribution, an outcome favored by Enron and many local businesspeople. We wish to send a cautionary note to those who want to see an independent, privately-owned PGE as the end result: the law that has regulated utility structure and protected consumers for 70 years, the Public Utility Holding Company Act (PUHCA), is on the verge of being repealed by our sitting Congress. When that happens, we expect to see a flurry of activity around investment in utility companies, investment of the sort that has been illegal for most of the past century. We think it very unlikely that any independent PGE resulting from stock distribution will last long without attempts being made once again to purchase our utility.

That said, we believe that of the many options discussed for PGE since Enron began the bankruptcy process 2 years ago, the worst would have been a purchase by Texas Pacific Group, and that was successfully challenged and defeated by CUB and others. The best would have been a well-structured and responsibly-governed public power version of PGE, but it seems clear that that will not be the result in this round of changes. The middle road is what we are left with.

We still have many unknown variables ahead, but this result is one we can live with, and of course CUB will stay engaged in the process of whatever happens to Oregon's largest electric utility company.

Posted by Oregon CUB at 02:47 PM | Comments (0)

July 20, 2005

Governor Vetoes the Mutual Utility Bill

Governor Kulongoski today used the power of the pen to veto SB 671, the Mutual Utility Bill. CUB has been strongly opposed to the Mutual Utility Bill, and is relieved that this utility model, which left much of its regulation and governance structure unexplained, will not be foisted upon Oregon ratepayers.

We appreciate the Governor's strong stand for customers and hope that he will look with an equally critical eye upon SB 1008, the Oregon Community Power Bill, another bill which legislators passed, despite its containing a provision that harms residential customers in the PGE service territory. (See below.)

Thank you to all the CUB supporters who have contacted the Governor during the past few weeks. Your voices were heard!

Posted by Oregon CUB at 04:20 PM | Comments (0)

Politics and the Future of Oregon Community Power

Back at the beginning of the 2005 Legislative Session, CUB was excited about the prospect of a State-led purchase of Portland General Electric. We participated in the development of Oregon Community Power, even helping write the bill, SB 1008. And we think it's all there: strong structure, responsible ratemaking, good governance.

Unfortunately, existing public power districts, led by the State's co-ops, opposed federal hydropower benefits for Oregon Community Power. They inserted language into the bill that would take away even existing levels of benefits, resulting in a potential 15% power cost rate hike for PGE customers. This bill passed the Senate, passed the House, and received a concurrence vote from the Senate today.

We had hopes of fixing the language in 1008 that hurts customers. In fact, we were assured by its sponsor that we would have a chance to fix the rate hike language when the bill was discussed in the House. Well, we were denied that chance, which is a blow to PGE customers and proponents of public power.

PGE customers should receive the hydropower benefits they currently get. Otherwise, the public power benefits of the bill could be offset by a significant rate hike. We had hoped that the bill would be revised in the Senate to remove the rate hike, but Senators today did not make this happen, and so we will ask the Governor to veto it. As always, you are welcome to add your voices to ours (Governor Kulongoski's number is 503-378-4582).

With the mutant utility bill already on the Governor's desk (yes, this is our second time this session to ask Governor Kulongoski to veto a bad bill), and the tax reform bill still struggling in the House, this could go down as the most anti-utility-consumer session in history. It just goes to show us how very much we need our utilities under stable ownership, providing the best-cost power available, with an eye to Oregon's energy future.

Posted by Oregon CUB at 03:57 PM | Comments (0)

July 15, 2005

CUB Letter to Governor Asking for Veto of SB 671

Here is the letter we sent to Governor Kulongoski (one of many customer group letters) this week asking him to veto SB 671, the Mutual Utility Bill.

Posted by Oregon CUB at 04:01 PM | Comments (0)

July 11, 2005

Oregon House Passes SB 671 -- CUB Hopes for Governor's Veto

The Oregon House of Representatives voted late yesterday to pass the business-backed proposal to turn PGE into a "hybrid" utility, the first of its kind. CUB has expressed concern about the bill over the past few months, due in large part to the backers' inability or unwillingness to answer detailed questions about what input customers would truly have over what is being called (see quote below) a "customer-owned utility."

Dozens of CUB members responded to our requests last week for messages and calls to their Representatives in the House and to Governor Kulongoski. Well, as they say, it ain't over yet. Keep those calls flowing to the Governor -- we think a veto is still well within reach. But he needs to know people are watching this issue! Governor Kulongoski can be reached at (503) 378-4582 or Write the Governor.

We aren't the only consumer advocacy group up in arms about this bill. OSPIRG is also weighing in, and we're glad to have them fighting alongside us on this issue. (See OSPIRG's blog entry here.)

PGE bill on way to governor: Legislation designed to help business interests buy PGE and convert it to a hybrid public-private utility passes the House

Oregonian, Monday, July 11, 2005

SALEM -- With legislative leaders continuing to negotiate a final budget deal, the Oregon House met Sunday evening to approve a short list of bills, including one that could aid the conversion of Portland General Electric to a consumer-owned utility...

In its first floor session in four days, the House's most significant vote was to approve Senate Bill 671, which would set up a financing method for a group of investors to buy PGE and convert it to a customer-owned utility...

House members expressed reservations about the financing method, saying they worried it could increase PGE customers' rates. They also noted that a variety of consumer and industry groups opposed the legislation.

"SB671 is risky business, and I ask you not to gamble with Oregon's future," said Rep. Chip Shields, D-Portland.

Kudos to Rep. Shields for recognizing a risk when he sees one. We sincerely hope the Governor is also looking at the details of this deal.

Posted by Oregon CUB at 11:35 AM | Comments (0)

July 06, 2005

ACTION ALERT! Call Today To Stop SB 671!

Senate Bill 671, the Oregon Mutual Utility Bill, has passed the Senate and passed out of House Committee. We expect it to be scheduled for a floor vote in the Oregon House of Representatives later this week.

This is unfortunate, because SB 671 plays fast and loose with the fundamentals of Oregon utility regulation. It would permanently redefine the powers of the Public Utility Commission, it would open the door for any other entity to use ratepayer dollars to purchase PGE, and it leaves unanswered a long list of questions about governance, cost structures and accountability to customers.

The purpose of SB 671 is simple. Some businessmen want to purchase PGE, but need ratepayer money to do so. They claim that they will give us a say in running the company, but have refused to answer our questions about how this would work. This lack of disclosure, despite our repeated calls for details, suggests that these businessmen don't know what the answers are, or don't want us to know. Either way, it can't be good.

The success of their bill in the State Senate is a testament to the power of influential lobbyists at the expense of good public policy. While the 3 major residential, commercial and industrial utility consumer groups have all opposed this bill, 2 lobbyists recently cited by the Oregonian ("High rollers win the Salem game" 07/05/05) as being top donors to last year's legislative campaigns have been hired as proponents of the bill. The campaign finance reform mantra, "follow the money," has never been more appropriate than in the movement of SB 671.

We ask that all CUB members call their Representative in the Oregon House today or tomorrow, telling them to Vote NO on SB 671 (503-986-1000), and that you call Governor Kulongoski asking him to veto the bill if it reaches his desk (503-378-4582). Then forward this web address to three friends who live and pay utility bills in Oregon.

This Oregon Mutual Utility Bill -- which we have called a mutant utility bill, combining the worst risks of different utility company models -- must not become law. If it does, any future profit-seekers such as Enron or Texas Pacific could use the framework in this bill to get their hands on our utility.

No on Senate Bill 671!

It does NOT provide regulation;
It does NOT offer enough financial benefits;
It does NOT adequately represent customers; and
It makes FUNDAMENTAL CHANGES to our state regulatory structure with unforeseen consequences.

Oregon House of Representatives
503-986-1000
Write your Legislator

Governor Ted Kulongoski
503-378-4582
Write the Governor

Posted by Oregon CUB at 02:37 PM | Comments (0)

July 05, 2005

Unanswered Questions About Mutual Utility

Below are a list of questions we sent to backers of the Oregon Mutual Utility Bill, Senate Bill (SB) 671, on April 13, 2005. We have not yet received answers to these questions, and are therefore asking our members and all Oregon ratepayers to call their Representative (503-986-1000) telling them to Vote No on SB 671, and call Governor Kulongoski asking him to veto the bill if it reaches his desk (503-378-4582).

Questions As To The Application Of The Mutual Utility Construct

Regulation
1. What exactly would the PUC regulate, and how would it enforce its regulation?
2. What role would the Board have in approving any filing to the PUC? Because the PUC can't disallow costs, this would seem to be the critical step in setting the utility's policies and rates. Would customers and members of the public have access to this process?

Governance
3. You have already selected five board members.
a. Who was involved in selecting these five board members?
b. What is the rationale for having the initial self-selected board members picking the rest of the Board and this Board choosing new nominees to the Board? How does this foster a true election process? How does this support diversity of representation?
c. Are all 9 members subject to an election by customers?
d. Will board elections be contested (i.e., will customers have a choice of more than one candidate)?
e. Will customers separately elect each board member or will they be presented with a slate for the entire board that is currently up for election?
f. You state that, "customers will have the opportunity to propose alternative names" for the board. Would they make these recommendations to the nominating committee? How and by whom would these nominees be evaluated?
g. According to your Governance description, the governance structure is designed to represent the interests of all stakeholders. How is the governance structure designed to represent the interests of all stakeholders?
h. How will the nominating and corporate governance committee, which recruits and proposes board members, represent the interests of all stakeholders?
4. Could the board decide to forgo member elections or member nominations?
5. Would OMU be subject to the open meetings law and/or the public disclosure law?

Taxes
6. Your response to the Governor's task force says that you would not pay "federal income tax on retail sales to customers."
a. Are you saying that this entity would be tax-exempt? If not, what does this statement mean?
b. How would OMU be treated under the federal tax code and what sections of the tax code would apply to a mutual utility?
7. OMU claims that it will pay $12.3 million per year in state income taxes.
a. What is the basis for this figure?
b. What is the legal rationale for paying little or no federal taxes but significant state taxes?
c. Are there other entities that pay significant state income taxes but little or no federal taxes?

Rates
8. In your response to the Governor's task force you state that, "[b]ased on PGE's performance and conditions in 2004, OMU anticipates that after the transition to mutual ownership, the utility's refunds to its customers should be equal to or greater than the anticipated acquisition charge."
a. What analysis supports this statement?
b. 2004 was a reasonably good year for PGE, would your conclusion hold true in a year that PGE did not have a strong financial performance?
9. In your response to the Governor's Task Force you state that, "under mutual ownership PGE may reinvest net income in its system to ensure safe, reliable, low-cost power, and make refunds to its customer-owners. OMU anticipates these decisions will be made through a collaborative process involving PGE, its customer-owners and the OPUC."
a. What are the details of this collaborative process?
b. What would be the role of the PUC Staff, the PUC Commissioners, and the mutual utility's board of directors?
10. You state that, "each member's interest in refunds is based upon the customers' size as determined by the customer's actual usage, related to the cost of generation and distribution less fuel costs and purchased power."
a. What is meant by a customer's actual usage, and how would you determine a customer's actual usage related to distribution?
b. Based on this concept, what would be the expected division of any refunds between residential, commercial, and industrial customers?
11. You state that the PUC will set rates. When the PUC sets rates, what it actually does is determine which costs in a utility's budgets can be recovered from customers and which costs must be borne by shareholders.
a. What does PUC rate-setting mean for a utility without shareholders, where customers must absorb all the costs and risks, regardless?
b. If the PUC thought an expense was not justified, what action could it take?
c. Under current law, could the PUC approve rates that include costs that it did not believe were prudent?
d. The current statutes that provide the PUC with its regulatory power deal with issues like prudence and balancing the interests of shareholders and customers. What changes in PUC regulatory authority would be necessary to allow it to regulate a mutual utility?
12. You state that the cost of interim financing can be avoided if the legislation is approved allowing for the use of securitization before OMU's purchase is finalized. You also state that once the enabling legislation is completed, OMU will issue the securitization bonds to repay interim investors.
a. With interim financing, when will customers begin paying for the securitized bonds? Without securitized financing, when will customers begin paying for the securitized bonds?
b. Are there circumstances under which customers would begin paying for the securitized bonds, before the deal is fully approved? If yes, what would the rate impact likely be?
13. Your materials state that you are, "developing a cost-of-service model so we can fairly share costs and savings among industrial, commercial and residential customers... One group of customers should not subsidize others; cost of service should be the primary determinant of prices charged."
a. Who is developing this cost-of-service model? What is its current status? Who will approve the model?
b. If cost of service is the primary determinant, what are the other determinants? How heavily will they be weighted?

Ownership
14. Under this model, could PGE be sold to another entity? If so, who would make this decision?
15. In one information piece, Financing the Purchase of PGE, it states, "as the securitization bonds are repaid, customers' ownership interest in PGE continues to grow," yet in another piece, Acquisition Financing Strategy, it states that commencing "with the first monthly customer payment... PGE becomes a mutual company owned by its customers." When do customers become owners and what does ownership mean?
16. If a portion of PGE were to form a PUD or a municipality, what would happen to those customers' portion of the acquisition debt?

Financing
17. How does the cost of debt associated with securitized financing compare to the cost of financing the mutual utility without securitization or financing an acquisition with municipal bonds? How does it compare to tax-exempt financing?
18. Our understanding is that these bonds are securitized, and therefore the responsibility of PGE customers, not OMU; what bond covenants does OMU anticipate and whose responsibility would these be?
19. In your response to the Governor's task force, you state that, "[b]ased on OMU’s analysis to date, it does not anticipate the acquisition should affect factors such as PGE's credit rating, and capital structure requirement."
a. Who has done this analysis?
b. Has OMU discussed the mutual utility construct with any rating agencies and/or gotten any feedback from them?
20. Which of the following costs would be backed by securitized bonds:
a. The revenue that would go to Enron as part of the purchase?
b. The cost and profit to be paid to you and others who are involved in putting together this purchase?
c. The cost of the regulatory processes that are necessary to approve the proposal?
d. The cost and profit to be paid to the lobbyists that are pursuing your securitization legislation?
21. What are the start-up costs that you expect to implement the mutual utility construct, and what actions have you and those working with you taken to minimize those costs?
22. Would your legislation allow securitization of any costs beyond the original acquisition?
23. What are the details of the interim financing, and how will the transition from interim financing to securitization proceed?
24. What are the transactional costs associated with interim financing?
25. What are the transactional costs associated with securitized financing?

Investing In New Power Supply
26. With regards to the mechanism for financing new resource acquisitions OMU states, "PGE will continue to have the same access to capital markets for resource acquisition that it has historically enjoyed. A portion of revenues (representing customer-ownership patronage) may be retained to provide a source of equity capital for such expenditures and to maintain PGE capital structure. The acquisition will not change this requirement, although such retained funds will not constitute 'income' for federal income taxes and will be obtained 'pre-tax.'"
a. Will this be sufficient to fund new resources?
b. Will further securitization be required?
c. In addition, to retaining earnings, PGE and other utilities regularly look to new equity issuance to maintain their capital structure. How would OMU maintain its capital structure without new equity?
d. If net income is not sufficient to maintain and invest in the utility, how will new investments be financed and what effect would such financing have on the utilities credit rating?

Accountability
27. Who are the individuals currently involved in this proposal who expect to be paid if the deal is approved?
28. What is the estimated amount each expects to be paid?
29. How would the reasonableness of such payments be determined?
30. Would anyone have the authority to decline payment to any of these individuals?
31. Why was the decision made to offer legislation on securitization without tying that securitization to ownership by customers, election of the board of directors, or any other aspect of this deal?

Proposed Legislation
32. Does Section 6 (1) violate the constitutional prohibition against binding future commissions?
33. In Section 5(4)(b), what happens if the PUC identifies acquisition costs that are not just and reasonable to recover from ratepayers? Who would be responsible for paying those costs?
34. If the mutual utility is not successful in acquiring PGE, what is the practical result of having changed the PUC's general authority? What other proposals could make use of this new law?

Posted by Oregon CUB at 03:54 PM | Comments (0)

July 01, 2005

Oregonian Op-Ed Fails to Note Conflict of Interest

In an op-ed in today's Oregonian, former Oregon Public Utility Commissioner Joan Smith takes issue with the goals and mechanisms in SB 408, the utility tax reform bill that CUB has been involved in writing and promoting. (To read more about the tax issues SB 408 addresses, click here.)

We disagree with Ms. Smith's interpretation of the bill, most importantly the fact that she seems to misunderstand the timeline of its changes, which would go forward in time and rates only, not retroactively. She also implies that the bill deals with more costs than just taxes.

But we also feel it's important to point out that Ms. Smith is not only a former PUC Commissioner, she is currently a compensated member of the Board of Directors of IdaCorp, the holding company of Idaho Power. Idaho Power is one of the investor-owned utilties serving Oregon ratepayers with a stake in maintaining the status quo. We think this link should have been disclosed to Oregonians, since it significantly alters the context of her opinion.

The fundamental issue remains that customer rates should reflect actual taxes expected to be paid by utilities and their holding companies. If the taxes probably won't be paid, they should not be collected in rates.

To read Ms. Smith's op-ed, click here.

Posted by Oregon CUB at 10:49 AM | Comments (0)