« April 2006 | Main | June 2006 »

May 22, 2006

CUB's Work on Tax Fairness Issue Makes News

On Friday we completed and submitted our Response Comments in the Public Utility Commission Rulemaking case on utility tax reform. We were slightly hot under the collar, having just spent months in workshops and other meetings, and having already written one round of Comments regarding said tax reform. This work was in addition to a battle CUB and others led in the Oregon Legislature last year over phantom taxes, a battle that resulted in the passage of SB 408, which was intended to address the gap that often exists between taxes paid to utilities and taxes paid to government.

It was beginning to seem like all this was wasted time, in light of the PUC Staff's decision to embrace a system that looks suspiciously like the one we are trying to move away from -- you know the one, where customers pay taxes to the utility and the utility gets to keep a big chunk of that money for its shareholders. We do note, however, that we were critical of the PUC Staff, not the Commissioners. The Commissioners themselves have the final say on tax rules, and we are hopeful that after reading the comments from all the parties, they will decide that a plan that replicates the status quo is just not acceptable.

The Oregonian was taking note of the process and wrote the following article (slightly abbreviated) on Saturday. We appreciate their taking time to follow this important issue, and hope you enjoy reading up on it.

Citizens' Utility Board blasts PUC in filing: Tax rules - The watchdog group accuses the Public Utility Commission of taking the easy way out

Saturday, May 20, 2006

TED SICKINGER

The Oregonian

The Citizens' Utility Board flayed staff of the Oregon Public Utility Commission on Friday, accusing them of taking the easy way out in a debate over a new utility tax law and siding with utilities at the expense of ratepayers and the law.

The citizens' board made its comments in a filing with the PUC on proposed rules to implement Senate Bill 408. The controversial bill, passed last year by the Legislature, was aimed at forcing utilities to match the taxes they collect from their customers in rates with what they ultimately pay to taxing authorities...

Ratepayer advocates, the utilities and staff at the commission have been wrestling with how to apply the law for more than a year. PUC commissioners are slated to adopt permanent rules this fall, which could mean the difference between hundreds of millions of dollars in rate cuts or utility profits over time.

The citizens board complained in its filing Friday that the rulemaking around the new law has failed because PUC "staff and utilities failed to participate meaningfully, while the customer groups made a one-sided attempt at exploring reasonable middle ground proposals."

The Citizens' Utility Board's reaction was fueled by the PUC staff's backing of a tax accounting proposal submitted by PacifiCorp, which has led the utility industry's fight against the new law.

At its heart, the debate boils down to whether the commission should calculate utilities' tax liabilities as if they were stand-alone companies -- as it has done traditionally -- or take account of their holding company structures and give ratepayers a share of the tax benefits that those entities generate.

Under proposals favored by utilities, and now endorsed by the PUC staff, the commission would essentially stick with the status quo, calculating utilities' tax collections as if they were stand-alone entities. That means they would make refunds to ratepayers only if a utility's holding company pays less in taxes than it collects from ratepayers or the utility enables some additional savings at the holding company.

That would address the problem PGE ratepayers experienced with Enron -- at least partially. But customer groups maintain that SB 408 contemplated a bigger change, not one that could potentially leave ratepayers on the hook for 100 percent of the consolidated tax liability.

In the opinion of the citizens board and the Industrial Customers of Northwest Utilities, ratepayers should only be liable for their fair share of the holding company's tax liability. Since that liability is based on its consolidated net income, they think ratepayers should only have to pay taxes based on their contribution to that consolidated net income.

The debate has been stuck at those poles since last fall, when an administrative law judge asked all parties to participate in a series of workshops and come up with a set of middle ground proposals that the commission could consider.

The board says PUC staff and utilities failed to participate in good faith. PUC staff submitted no proposal. And PacifiCorp's proposal was simply a reworked version of standalone attribution, the board said...

The commission will hold a hearing on the new proposals May 31, and customer groups are likely to set off some fireworks.

"We have before us an opportunity to create a better system," the citizens board wrote in its filing. "Unfortunately, staff and the utilities appear to be quite comfortable dragging the stand-alone attribution methodology out of the La Brea tar pits, hosing it off, and pretending it is something new."

Posted by Oregon CUB at 02:00 PM | Comments (0)

May 17, 2006

Politics Has No Place at the PUC

Almost six years ago to the day, CUB helped to write, and then-Governor John Kitzhaber signed, an Executive Order (No. EO-00-06) that explicitly forbids the Oregon Governor or his/her Staff from interfering with or exerting influence over the PUC decision-making process. Greatly abbreviated, the Order basically states: "WHEREAS, Oregon citizens are best served when the PUC decisions are based on sound policy rather than political favor... THERFORE, IT IS HEREBY ORDERED AND DIRECTED: That the Governor, the governor's staff and executive branch personnel will respect and encourage the commission and professional staff to independently fulfill their statutory and administrative duties..."

That makes sense, doesn't it? However, the temptation always exists, and arises anew every few years, for people to assume that the governor should be doing something more, with regard to some regulatory issue at the PUC (utility taxes comes to mind currently). CUB believes that this kind of gubernatorial influence is a slippery slope and should be avoided, and we would like to share with you why that is.

First, a little history. The late 1970s and early 1980s were a difficult time for utility ratepayers. Back then, the Public Utility Commission in Oregon had only one Commissioner, and that Commissioner was of course appointed by the Governor. A series of decisions were handed down that stirred people's interest and their ire, regarding the Commissioner's ideal role as an independent arbiter of ratemaking, and his actual role which was not living up to the ideal. It was felt that customers' voices were not being heard, and ratemaking was reflecting that.

And so in the mid-80s a few things changed. In 1984, Ballot Measure 3 passed, which created the Citizens' Utility Board of Oregon to be that much-needed voice for residential customers. Then, in 1986, through Ballot Measure 4, the Commission structure was changed so that three Commissioners (rather than only one) were now appointed by the Governor, and jointly handed down the decisions that regulate our utilities. The new PUC had a new emphasis, as well, on public process that discouraged backroom deal-making.

It was important in the early days of the new 3-Commissioner system to send a signal that a new day had dawned. This happened when then-Governor Neil Goldschmidt attempted to intercede with then-Commissioner Ron Eachus on a regulatory matter, off the record. At the very next public PUC meeting, Commissioner Eachus recounted the contact with the Governor's Office, putting it firmly on the record, where all such contacts should remain. It is this spirit of openness that CUB has tried to foster in the regulatory process, since that is how we feel the best decisions are made.

In political processes, the utilities often have more resources to wield undue influence over the outcome. In the PUC process, each party offers arguments that stand or fall based on their own merit, and everyone knows all the arguments being made (for example, here is a copy of CUB's Opening Comments regarding utility taxes). This process is therefore more like an open debate, and less like a slam dunk for those with power and huge economic resources. CUB does not win every argument, or every case, but we do feel that the PUC process as it currently exists is a successful process, because it is transparent.

Some have criticized the current Governor for staying out of the PUC process on utility tax issues. Having seen the dangers of a politicized PUC, we have a different viewpoint. We certainly understand people's desire to see the Governor work for a fairer system, but the truth is that in our experience, when a Governor weighs in, that weight is used far more frequently and vigorously to favor utility interests. Maintaining an open and independent process at the PUC is more important than any one case decision. We appreciate Governor Kulongoski's willingness to recognize and respect the importance of the Executive Order signed by his predecessor protecting that independence, and his willingness to not dive into the debates hotly swirling around the PUC public meeting rooms. We expect that same respect for the principles of Order No. EO-00-06 from whoever holds the Governor's office in the future.

We need openness, not influence; independence, not politics. That is how we achieve "fair, just, and reasonable" utility regulation.

Posted by Oregon CUB at 03:00 PM | Comments (0)

May 12, 2006

Act Now to Stop "Internet Tax"

Many of our traditional means of research and entertainment are being replaced by content provided on the World Wide Web. Though only a few decades old, the web has become deeply enmeshed in many aspects of our lives. And we have become accustomed to a level of equal access to the web. For example, when we consume content from the web, we expect that the material we're viewing or hearing will be provided to us at the same speed, no matter what the website, with the only limitation being the speed of our connection. Likewise, when we post information on the web, we expect that information to be equally available to anyone with an Internet connection, limited only by our ability to attract web surfers to our site.

However, legislation is quickly moving through Congress that would undermine the principle of equal access to online information. Recent committee votes have dealt a serious blow to the basic principle that for the last ten years has fueled the explosive growth of the Internet and powered economic and social innovation. That basic principle is known as Network Neutrality, a concept that guarantees that consumers of Internet services can select any Internet service provider (ISP), access any lawful content, and transmit any lawful information they choose by posting it to a website.

Today's Internet has flourished because government policy has prohibited telephone companies, who controlled the flow of information over their Internet dial-up connections, from interfering with services consumers were trying to reach. Now, telephone and cable companies want to bury this policy in a time capsule and abandon it for their high-speed networks. These powerful interests want to charge creators of websites and Internet services for the right to use the broadband network to deliver content, such as video and telephone service. Think of it as an "Internet Tax." Those who agree to pay up will pass the charges on to consumers in the form of higher prices. Those who can't pay the "tax" will see their websites or services downloaded more slowly and, therefore, get less browser traffic.

In this "pay for access" environment, it is unlikely that the next Google, Amazon.com or ebay would ever be able to get off the ground. Even more frightening, websites run by public interest organizations like CUB or a local social service agency will be at a disadvantage because they will be unable to afford to pay the "Internet Tax" to provide basic information at an acceptable delivery speed (or offer new services, such as video programming, that are still in their early stages). In short, consumers will have fewer choices.

But potential innovators and consumers of their services don't only have higher access fees to be concerned about. Because of Congress's failure to protect the Internet, the cable and telephone companies have every incentive to give preferential treatment to their own high-end services and slow down or block access to others.

The phone and cable companies already charge consumers who choose different Internet service speeds different prices; but once the consumer pays for the connection, s/he should be able to access any content without interference by the operator of the system over which the content travels. Network operators, the telephone and cable companies, should not be able to interfere based on your ability to pay a premium. Consumers -- not network operators -- should determine which Internet services will succeed.

There is a solution to this problem. Congress must restore rules that will ensure Network Neutrality so that we preserve the openness and vitality of the Internet that has transformed our economy and culture over the past few decades. The big telecommunications companies are pushing hard and the legislation is moving quickly. (We only wish consumer protection legislation moved so rapidly through the process!)

The time has come to push back. Don't let the telephone and cable companies destroy Net Neutrality, the quality that makes the Internet such a great resource. Contact your Congressperson and U.S. Senators and tell them to preserve "Net Neutrality." The Internet should remain a great resource for everyone.

Posted by Oregon CUB at 11:25 AM | Comments (0)

May 05, 2006

Rate Increase Open Houses Happening Around the State

From the Oregon Public Utility Commission:

Customers of Portland General Electric and PacifiCorp are invited to attend a series of Open House events around the state during May to provide comment and obtain information about general rate increase requests.

Open house meetings are very informal; people can come and go as they please, take information, ask questions, and make comments for the record. Members of Commission Staff, PGE, PacifiCorp, and customer groups will be available to answer questions from the public during these events.

DATE: Wednesday, May 10, 2006 (PacifiCorp)
TIME: 6:30 p.m. - 7:30 p.m.
PLACE: Anna Maria Creekside Retirement Resort Courtyard Hall
822 Golf View Drive
Medford, OR 97504

DATE: Wednesday, May 17, 2006 (PGE)
TIME: 6:30 - 7:30 p.m.
PLACE: Chemeketa Community College Gymnasium
4000 Lancaster Drive
Salem, Oregon 97305

DATE: Monday, May 22, 2006 (PacifiCorp)
TIME: 6:30 p.m. - 7:30 p.m.
PLACE: National Guard Armory Drill Floor
875 SW Simpson Avenue
Bend, OR 97702

DATE: Wednesday, May 24, 2006 (PGE and PacifiCorp)
TIME: 6:30 p.m. - 7:30 p.m.
PLACE: Ambridge Event Center Morrison Room
300 N.E. Multnomah St.
Portland, OR 97232

Posted by Oregon CUB at 01:45 PM | Comments (0)

May 04, 2006

PGE Tax Refund Coming to Customers

A four-page notice has gone out to Multnomah County customers of Portland General Electric, saying that the class action lawsuit on their behalf has been settled. The case was regarding money PGE collected for the Multnomah County Business Income Tax ("Tax"), but "that were above what PGE or its parent company ended up owing and paying in Tax to Multnomah County." The settlement states that PGE will pay $10 million, most of the money going to those people who purchased electricity service from PGE between 1999 and 2005, and who were therefore paying the Tax on their PGE bills.

The notice says, "Current customers of PGE (as of January 18, 2006) may be eligible for a credit on their electric bills, and they do not need to submit claims." So, if you are currently a PGE customer and were a PGE customer throughout some or all of the time period in question (1999-2005) you don't need to do a thing. Your credit will show up automatically on your bill, in an amount between a few dollars or up to about $17, depending on the length of time you have been a customer of PGE.

If you no longer live in the PGE service territory, but did at some time between 1999 and 2005, and would like to receive a refund, you can fill out the Former PGE Customer Claim Form that is attached to the back of your notice, or you can call 888-279-4337.

If you wish to opt out of the settlement, in hopes of going after PGE yourself in court, you may do that by sending a notice to PGE Class Action Processing, PO Box 3775, Portland, OR 97208-3775. The deadline for all objections and exclusions from the class is June 28, 2006, exactly one month before the date of the final hearing in this case, which will be held on July 28, 2006.

This lawsuit was filed by the Utility Reform Project and among the plaintiffs named as representing the class of customers was Sid Lezak, former U.S. Attorney for Oregon (read a tribute from the Oregonian here). His participation in this case was one of his final projects in a long and impressive life of activism on a number of fronts. He died April 24th at the age of 81.

Posted by Oregon CUB at 03:36 PM | Comments (0)