Another Win on Pensions

A year ago, CUB announced that the Public Utility Commission (PUC) ruled in our favor and rejected a proposal by several Oregon utilities that would have raised rates by $20 million, so utility shareholders could earn a profit on their employee pensions. We recently won a second victory on pensions when the PUC rejected PGE’s request to charge customers more than $16 million to cover pension expenses from 2012 and 2013. According to the Company, the pension expenses that were forecast into rates were lower than the actual pension expenses that PGE incurred.

CUB argued that PGE was cherry picking two years where pension expense had been under-forecasted, but has systematically ignored all the years that pension expense has been over-forecasted and customers’ rates reflected higher pension expenses than the utility actually incurred. CUB pointed out that between 1997 and 2004, the Company overcharged customers for pension expense by $84 million.

CUB also argued that the cost was not appropriate. Generally utilities are not allowed to go back in time and retroactively recover a cost. Oregon law makes an exception, allowing utilities to defer certain costs and charge them to customers at a later date. CUB, along with the PUC staff and the industrial customers, argued that this expense did not qualify under the deferred accounting law.

Earlier this month, the PUC agreed with both arguments and rejected PGE’s request. It found that PGE failed to make the case that this expense qualified for deferred accounting and that the forecast error was “a natural variation” – forecasts are always higher or lower than actual costs – and was not substantial enough to allow the utility to add a surcharge to customers’ rates.

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