CUB Files Testimony in PGE Rate Case, Calls for 1% Reduction in Costs
Posted on July 10, 2008 by oregoncub
Tags, Utility Regulation
Yesterday CUB filed testimony in the current Portland General Electric rate case, a case that we have determined, after months of poring over data requests and the Company’s filing, ought never to have been filed in the first place.
For starters, it’s not as if PGE is suffering financially; in fact, they are earning above their authorized rate of return (ROR), which the Commission set last year at 10.1%. There are no new large capital investments, the most common reason for filing a general rate case. PGE has added up a bunch of smaller costs into a rate case, and asked for an increase in customers’ rates of about 9%. (Note: in a separate docket dealing only with fuel and power costs, we expect PGE to announce a new large rate hike tomorrow.)
PGE, HELLOOO! Oregon’s largest—and most expensive—electric utility shouldn’t have to be reminded of a few basic facts: that we are in the midst of a recession, that prices are increasing on most of our daily essentials; that fuel costs are rising and will have to be incorporated into the Company’s electricity rates in yet another PUC docket; and that, basically, its customers are not made of money.
We have spent several months looking over the filing and have found that most of the specific items PGE listed as reasons for this rate increase were unconvincing, and the financial analysis behind them was spotty, flawed, or nonexistent. Part of the cost PGE wants recovered through customer rates is a Customer Focus Initiative that is attempting to shift the corporate culture in a post-Enron world. That is all well and good, but their corporate culture doesn’t seem to focus at all on efficiency and controlling costs, which is an aspect of customer service we feel should be fundamental.
As a result of our analysis, we made a recommendation to the Public Utility Commission that they should require PGE to implement a reduction in costs equal to 1% of the Company’s total annual revenue ($1.7 billion), which would be a $17 million reduction. The Commission has ordered this kind of cost reduction before; and after the Western Energy Crisis in 2001 when PGE was serious about controlling costs, PGE was able to cut costs above and beyond that requirement. We found numerous places where inefficiency exists, so we believe they can find those reductions again.
We also recommended to the Commission that PGE eliminate the 25% employee discount they offer to employees on their electric bills, for several reasons: 1) customers shouldn’t have to pay for PGE employees’ electricity usage, especially since the average wage of eligible PGE employees is twice that of the average per capita wage in Oregon; 2) this benefit doesn’t apply to all employees and is not a form of compensation necessary to draw good employees and provide good customer service; and 3) the people who are in charge of finding efficiencies and keeping rates affordable should not be insulated from the effects of rising electricity rates when those efficiencies are not found. In other words: those that raise them should pay them.
We spent a lot of time and effort on this case, and much of it felt unnecessary. We hope to see PGE held accountable by the PUC for some of its poor decision-making in the filing of this rate case. We also hope to see PGE take the issue of affordability and efficiency more seriously in the future.
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03/10/17 | 0 Comments | CUB Files Testimony in PGE Rate Case, Calls for 1% Reduction in Costs