Idaho Power Tax Order Very Disappointing

On November 12, 2013, an Oregon Public Utility Commission (OPUC) Order arrived that CUB had long anticipated We read, with great disappointment, that the Commission had determined that Oregon customers of Idaho Power Company would not be receiving a refund of any kind in relation to the one-time tax benefit received by Idaho Power as a result of tax changes agreed to by the IRS. For our Idaho Power members living in Eastern Oregon, this is disappointing. Your utility is getting a multimillion windfall and the PUC has determined that customers will not receive a share of that windfall. CUB fought this one tooth and nail and had hoped for a different outcome. This Order was a long time coming from the Commission so we knew they were struggling with what to do with the strange set of facts this case presented – Idaho Power had requested a tax status change that related back to 1987 and it had been granted by the IRS. This change resulted in a windfall to the Company. CUB felt the Company should share with their customers. But the Commission did not agree. The Commission said that even though Idaho Power got a one-time benefit in one year where it had done nothing to earn the benefit (and it was also a year in which the utility had excess earnings), its shareholders should benefit rather than customers. The Commission based this finding on the fact that Idaho Power had under-earned during most of the tax years in question and if an earnings test was applied to those years there was no need for a refund. The Commission stated that:

Given our conclusion that an earnings review is required by ORS 757.259(5), we decline to find the discretion to override the statute to effectuate an equitable remedy. Current ratepayers have no better equitable claim to the refunds than current shareholders.

The equity resides with the earlier ratepayers who were denied the benefit of the tax deductions in the derivation of their rates because Idaho Power did not claim all of its deductions when paying its taxes. Offsetting their equitable claim is the company’s earnings that were well below its authorized levels during that earlier period. (p.14)

CUB respectfully disagrees. This tax refund, which was worth more than $5 million, was received in 2011. CUB believes that the PUC should have look at the year the windfall was received. Idaho Power’s shareholders have changed since 1987 and its customers have changed. CUB believed that this windfall had three places it could go: current shareholders, current customers, or a mixture of the two. Rewarding former shareholders for poor earnings during the 1990s simply was not an option.

This is disappointing. The economy of Eastern Oregon lags behind most of the rest of the state and some relief in the form of refunds on electric bills would have been welcome. But we don’t win every battle; this will make us work even harder next time.

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