|
||||||
|
« August 2005 | Main | October 2005 » September 29, 2005PacifiCorp rate case decision good for customersGreat news for Pacific Power customers! The PUC yesterday accepted CUB's recommendation to stop the over-collection of taxes by the utility (and its parent company, PacifiCorp) in their upcoming year's rates. This change in PUC precedent chopped $16 million off the company's proposed rate increase and made the final increase, at $26 million or 3.2%, a fraction of their original request of $102 million or 12%. According to PUC Chairman Lee Beyer, "The tax amounts included in PacifiCorp's rates are a better estimate of what PacifiCorp will actually pay to governments." CUB fought hard on the tax issue, both during this rate case and in the Legislature for SB408, the Utility Tax Reform Bill, on which the Commission based part of their decision. We are particularly pleased in light of the recent removal of the electric power surcharge customers had been paying since the 2001 energy crisis. With that surcharge removed, and even counting the 3.2% increase, Pacific Power customers can still expect their electric bills to be lower this winter than last winter. Bob Jenks was quoted in the Oregonian today regarding this decision, saying, "This is a sign we have fundamentally changed the way we collect taxes in rates, and it will result in lower rates for customers." (Read full article here.) The PUC decision also accepted CUB's proposal to change the billing structure for Pacific Power's residential customers. As we reported in CUB Online on June 28th, (See Alert CUB Member tips us off to billing cycle problem) the company overcharged customers in the winter by extending the billing periods. This practice will now be eliminated. If your electric company is Pacific Power, now would be a great time to give them a call (800-769-3717) and change some of your power over to a renewable power option. Rates are reasonable, and you will have the satisfaction of contributing to an increasing market for sustainable power options that will put Oregon on the right course for the future. Posted by Oregon CUB at 12:59 PM | Comments (0) September 23, 2005Regulated Stock Distribution A Good Step Above Texas PacificBelow is a letter to the editor of the Willamette Week, in response to their article (9/14/05, found on our Current News page) which suggested that the PGE stock distribution agreement was a worse deal than that offered by Texas Pacific. Although Willamette Week decided not to publish the letter, saying it was too long for their LTE space, we offer it up here for the record. The Citizens' Utility Board of Oregon shares Willamette Week's concerns over PGE rates and the future of PGE. However, we were shocked by Nigel Jaquiss's claim that the plan to distribute PGE stock and return PGE to an independent publicly-traded company is worse than Texas Pacific Group's (TPG) attempt to purchase PGE. This suggests a serious memory problem. Our analysis of the TPG deal, which included hundreds of pages of testimony, exhibits, and briefs to the PUC, demonstrated that ownership by TPG was far worse than creating an independent utility through the stock distribution plan. The PUC's order heavily cites CUB's analysis to support its decision to deny TPG ownership of PGE. TPG planned to purchase PGE primarily with debt. This would have weakened PGE's financial condition. The magnitude of the debt and the need to make payments on the debt could have had significant adverse affects on PGE and its customers including increased financing costs when PGE makes investments in infrastructure, and pressure on PGE to slash jobs and reduce maintenance of equipment. The stock redistribution plan, on the other hand, will strengthen the financial position of PGE by removing it from its bankrupt parent, Enron. This will likely reduce financing costs and improve the ability of the company to make necessary investments in its system. The article makes an issue of the fact that the stock distribution plan does not contain the Enron liability protections offered to TPG. In fact, Enron has indemnified PGE against tax and pension liabilities. As for the rest, the PUC found TPG's protections had "little value" because CUB pointed out that liabilities based on wrongdoing cannot be passed to customers, but instead should be borne by shareholders. Oregon uses a net benefits standard to evaluate changes in utility ownership. To meet this test, the PUC must compare an independent PGE to a PGE owned by Enron. There is a great deal of uncertainty and risk associated with turning down this application. Enron would then face two choices: sell PGE to someone else or ask federal bankruptcy court to preempt Oregon and allow the stock distribution without any protections. Compared to this, a regulated stock distribution has much less uncertainty and risk. The article discusses rates and rate credits without noting that there are currently three open dockets at the PUC dealing directly with PGE's rates. CUB has intervened in all of them, is working to reduce rates, and has won millions of dollars in rate reductions in those cases. The article cites PGE's projections for 2007 profits but fails to note that those are less than the $1 billion plus that TPG intended to suck out of PGE in just five years. We are skeptical of these profit projections, because we plan to fight against excess profits. PGE will have a general rate case in 2006 which will allow CUB, the PUC staff, and any parties worried about PGE rates to look under every rock, and examine and challenge every cost, with a goal of ensuring that 2007 rates are well below PGE's forecasts. Finally, it is important to note that we are very disappointed that the negotiations between the City of Portland and Enron failed to result in the sale of PGE to Portland. Our analysis showed that the City's plan had the greatest likelihood of reducing rates significantly over the long term. But that disappointment doesn't change the fact that the stock redistribution plan is still better than allowing Enron to sell PGE to Texas Pacific, Warren Buffett, Sempra Energy, Shell Oil, Halliburton or any other wild-card corporate investor no longer hampered by the consumer protections of PUHCA. Posted by Oregon CUB at 11:56 AM | Comments (0) September 22, 2005Hurricanes, Natural Gas, and the Future of Energy PolicyToday the city of Houston is embroiled in the task of evacuating and protecting its 4 million inhabitants as Hurricane Rita moves in toward the Texas coastline. "Rita is poised to severely hobble oil and natural gas production in the Western Gulf of Mexico, coming just three weeks after Hurricane Katrina disrupted activity offshore and onshore Louisiana." Breaking News from NGI's Daily Gas Price Index posted Sep 21st. Skies are clear here in Oregon, but today is also the day the PUC is poised to approve large rate increases for the three major natural gas companies serving Oregon, NW Natural (16.6%), Cascade (14.2%), and Avista (a whopping 23.8%). These increases, one might assume, were directly linked to the crisis occurring down in the Gulf, where the gas for much of the nation is produced. However, there is no direct link between today's gas price increases and Katrina; Oregon's natural gas companies purchased most of their winter supply of gas earlier this year. They have contracts, they have gas in storage, they are prepared for the short term. The increases we are seeing primarily reflect the increase in the cost of natural gas on the wholesale market, pre-Katrina! If you, like CUB, are looking ahead to the next few years, this doesn't bode well for gas customers, those of us reliant on gas to heat our homes, in the post-Katrina market. Based on rising wholesale natural gas prices, one of Oregon's large electric companies, PacifiCorp, and the company, MidAmerican, which would like to purchase PacifiCorp, are both discussing a move away from generating electricity using natural gas and toward generation based on -- you guessed it -- coal (as if coal and natural gas were the only two options). This is a problem. Hurricanes and extreme weather patterns in general have been exacerbated by the effects of global warming (See Higher Ground: After Katrina or Global Warming is Expected to Raise Hurricane Intensity). There is little doubt that global warming is being intensified every time we burn fossil fuels. One of the most intensive greenhouse-gas emitting fuels in use currently is coal. The situation is a costly self-perpetuating cycle, a dead-end spiral. What can you do to help shift the momentum away from this destructive spiral? Here are a few suggestions from CUB: Get an energy audit of your home. A well-insulated, smartly-heated home can save you significant amounts of money and cut back our national reliance on greenhouse gases by simply using less. If NW Natural, PGE or PacifiCorp supplies your energy, you can call the Energy Trust (503-445-7605) for a free energy audit; if Cascade or Avista is your utility, call the customer service number listed on your bill and they should be able to set up a free energy audit for your home. If you have another utility, call them and ask what energy efficiency programs are available in your area. Contact your members of Congress. Tell them it's time to push for a serious energy policy that recognizes global warming and takes steps to create a new economy based on renewable energy sources, as opposed to the recent energy bill which poured tax dollars into the mouths of greenhouse-gas emitting industries. And for your own benefit: If you are living without a wide financial margin, get on an Equal Pay Program with your gas company. This evens out the amount of your monthly gas payments so you don't get hit with a huge gas bill just around or after the Holidays (ouch!). Our high gas bills are a burden, but a small one compared to the devastation and death the Gulf region has seen in recent weeks. The good news is that we can and should be addressing multiple sides of this issue at once. Global warming, by its very nature, is not just a regional concern, not just an environmental concern, not just an economic concern. We all have a stake and we all need to take action in the ways that we are able. CUB welcomes your comments and suggestions about other ways to address energy policy and global warming issues. Posted by Oregon CUB at 04:16 PM | Comments (0) September 16, 2005Autumn brings movement in utility ownershipPGE Stock Distribution and Rate Reduction As the summer ends, CUB is wrapping up a PGE RVM (resource valuation mechanism) case, UE 172, in which we won a reduction for PGE customers of $3.75 million for 2006. This case contained some hard issues involving Company attempts to charge customers twice for the same cost, to apply to residential customers costs that should apply only to industrial customers, and a general attempt to push rates up beyond what we felt was reasonable. We are pleased with this reduction in rates for the coming year and hope that you are, too. As temperatures outside start to drop, the tenor of utility purchase negotiations is heating up. After months of research and negotiation, CUB signed the Agreement for PGE's Stock Distribution Application, UM 1206 (talking points here). The application, which awaits PUC approval, would pave the way for PGE to become an independent, publicly traded utility once again. We fought for, and received, conditions that improved the terms of the stock distribution, and feel that the outcome yields a better risk/benefit position than sending PGE back to Enron and the bankruptcy court. While we would have preferred that PGE be sold to the City of Portland, that deal was rejected by Enron's bankruptcy management team. Since that rejection, the stock distribution is the best of the options left open to us. After running a fairly comprehensive series of articles regarding the Texas Pacific purchase attempt of PGE, Portland-based Willamette Week ran a rather disappointing cover story this week on the current stock distribution case. The author's insistence that this deal is worse than that offered by Texas Pacific only goes to show that people have already forgotten how bad the Texas Pacific proposal truly was. It also indicates a lack of clarity on the legal restrictions of the regulatory process. CUB takes every opportunity that actually exists to fight for customers' access to better service at a better price, and the reason we are so successful in this advocacy is because we understand and respect the process, both its real opportunities and its real limitations. Look for CUB's more complete response to the WW cover story next week.
Another high profile case, the MidAmerican proposal to purchase PacifiCorp, is also getting ready to take off. Several meetings have been scheduled for public comments: If you have a chance to attend one of these meetings, please do. The more people turn out to see what's really going on with their utility, the better the chance that that utility won't be caught in a bad bargain. Posted by Oregon CUB at 09:55 AM | Comments (0) September 12, 2005PGE Stock Distribution: "You go to the PUC with the Utility you have..."The Citizens' Utility Board of Oregon has been active over the course of the past few years in helping chart the best possible course for the future of PGE, from the perspective of the residential ratepayers it is our job to represent. Given the facts before us, the acceptance of the Portland General Electric application for stock distribution was the best possible outcome at this time. As CUB Executive Director Bob Jenks says, "You go to the PUC with the utility you have, not the utility you wish you had." Further talking points about this case include the following: 1. While CUB continues to believe that ownership of PGE by the City of Portland would provide customer benefits, this docket was not about that. This docket was wholly concerned with whether Enron will "spin off" PGE (by means of a stock distribution) which could result in an independent utility once again, or whether to tell Enron they must find another buyer for PGE. With the repeal of PUHCA, there are significant risks to asking Enron to make a new attempt to sell PGE. The PUC cannot tell Enron to sell it to Portland, they can only say, "Don't spin it off, you must sell it to someone." 2. CUB successfully opposed the sale of PGE to Texas Pacific Group. During that case we argued that either a sale to the City of Portland or a stock spin-off to an independent utility were preferable to ownership by Texas Pacific. By working to defeat that proposed sale (which we felt to be not in the best interests of customers), we helped create the opportunity for negotiations between the City of Portland and Enron, and we are disappointed that these negotiations failed. With the failure of that option, the spin-off to an independent PGE is the best option available. During this process, the City has done a great deal of work exploring how best it could govern such a utility. We hope the City will retain its planning, and continue to remain a possible purchaser if PGE is put up for sale in the future. 3. We continue to be concerned that, with PUHCA repeal, there will be a consolidation of the electric industry and PGE may not remain an independent locally-headquartered company. But that is also the consequence of denying the application to spin off PGE. If it is sent back to Enron (which is itself in a state of bankruptcy and dissolution), they cannot keep PGE, so they would be forced to sell it to someone. 4. The spin-off does not involve rate reductions and rate credits. In the past such credits have been granted for one of two reasons: 1) To guarantee to customers that the anticipated savings resulting from the reduction in costs associated with two utilities merging (synergies) will actually happen and will actually flow to customers; or 2) to offset the risks associated with a transfer in ownership, including the risk of imprudent cost-cutting, the risk of new management not understanding Oregon energy policy, and the financial risk associated with the debt that is used to finance the purchase of a utility company. This application does not involve either synergies or new risks. In fact, because there are significant risks associated with the uncertainty of staying with Enron and having it dispose of PGE in some other manner, this application will reduce risk. 5. CUB has continued to work for rate reductions within the dockets where it is appropriate and possible to do so. For example, in PGE's current rate case, UE 172, we have successfully lowered next year's rates by $3.75 million. It is in this arena, of dockets before the PUC dealing with rate regulation, that CUB can make a difference in protecting customers' pocketbooks, not in this Stock Distribution Application Docket. 6. The new utility tax policy (SB 408) reduces the likelihood that someone will come in and buy PGE as a means of acquiring a tax loophole. Under the old policy, an Oregon utility was more valuable as a piece of a larger company than as an independent stand-alone utility, because the large owner could take advantage of the tax loopholes allowed by Oregon to earn significantly above the state-authorized rate of return. Under the new policy, this loophole is closed. This means the value of PGE to independent shareholders should be equivalent to its value as a piece of a larger company and will reduce the likelihood that someone will offer a premium to purchase it from PGE shareholders. 7. CUB wishes we could guarantee that PGE's spin-off into an independent, Portland-headquartered company was an end-state. Unfortunately, we cannot. In the final analysis, there is greater uncertainty associated with denying this application than there is with accepting it. Posted by Oregon CUB at 03:14 PM | Comments (0) September 06, 2005Oregonian Runs CUB Opinion Editorial on MidAmerican ProposalYesterday, the Oregonian ran CUB Utility Analyst Lowrey Brown's Op-Ed piece on the upcoming MidAmerican PacifiCorp merger proposal, "PacifiCorp acquisition shouldn't be rubber-stamped." The piece outlines some of CUB's concerns regarding the proposed deal, emphasizing that, unlike other industries in which Warren Buffett has invested, utility customers do not have full freedom of the market: "[T]hey're captive. Electricity... is a basic necessity of daily life." The centrality and importance of this basic service is underlined by this past week's devastation in Louisiana and Mississippi, where lack of electricity services intensified an already very dangerous situation. Please take a look at the article, either at the direct link above, or through our website, www.oregoncub.org/currentnews. Also, don't forget that tonight is the night Al Gore is coming to town. He'll be discussing global warming in a multimedia presentation at Portland's Convention Center. See below for details. Posted by Oregon CUB at 12:43 PM | Comments (0) September 02, 2005Al Gore to Speak in Portland About Global WarmingSpecial Note: Our Thoughts Go Out to the Victims of Hurricane Katrina and Those With Family or Friends in the Area. In May of this year, the CUB Board of Governors adopted a resolution on global warming, which you can read here (look toward the bottom for the Climate Change piece). The board felt this was important, since our work advocating for ratepayers has us increasingly involved in debating the long-term cost benefits of "clean" coal, natural gas plants to generate electricity or increased investment in renewable resources. The board felt it was important to outline principles for CUB to follow as we work to balance fair rates and environmental impact. With the resolution, CUB also wants to keep our members informed on information related to global warming. To that end, there is a unique opportunity for folks living in the Portland metro area next week that we wanted you to know about. The information about date, time and location follows.
"Straight Talk - A Real Look at Global Warming"
Tuesday September 6, 2005
This is a unique opportunity to see Al Gore present on an issue of vital local, national, and international importance. Background: Throughout his nearly twenty-five years in public service, former Vice President Al Gore has been an outspoken environmental advocate. His thoughts on a wide range of environmental issues, especially global warming, were outlined in his bestselling book "Earth in the Balance: Ecology and the Human Spirit." In Congress and the White House, he was the leader of a wide range of environmental initiatives. Global warming is affecting the world we live in, including here in Oregon, where sea levels on the coast are rising and snowpack in the Cascades has declined by 50 percent. Vice President Gore is traveling the world delivering a compelling multimedia presentation on the global environmental crisis and issuing a ringing call to action. On Tuesday September 6, 2005 at 6:30 pm, the former Vice President will be delivering his multimedia presentation on global warming and the environment at the Oregon Convention Center in Portland. The former Vice President's presentation on global warming and the environment will teach, enlighten, inform and entertain. Doors to the ballroom (rooms 201 and 202) at the Oregon Convention Center, 777 NE Martin Luther Kind Blvd. in Portland, will open at 6:00 pm. Admission is free, and tickets are not required. Seating is limited. Questions: please call the Oregon League of Conservation Voters at 503-224-4011 or email at olcv@olcv.org. Just a note to say that the event was very well attended: approximately 3000 people turned up after only 4 days' publicity around the event. After hundreds of people were locked out of the 6:30 presentation, organizers promised a second presentation at 8:30. Former Vice President Gore gave a strong speech about the dangers facing us and the many possibilities for positive change that are available, if we find the political will to make them happen. In a speech given later that week, Mr. Gore stated that "in our democracy, political will is a renewable resource." Posted by Oregon CUB at 04:05 PM | Comments (2) |
|
||||
©2005 Citizens' Utility Board of
Oregon |
||||||
Maybe
it's time to put your number on the national Do Not Call list.