PacifiCorp Rate Case Coming to a Close
Posted on August 16, 2005 by oregoncub
Tags, Utility Regulation
Pacificorp is Oregon’s 2nd largest electric utility, and under Scottish Power’s ownership, has been Oregon’s most aggressive utility with filing for rate increases. UE 170, Pacificorp’s current rate case, which will decide rates starting in October of this year, is wrapping up after months of work (CUB has put in close to 500 hours, with 2 rounds of expert testimony, settlement conferences, a hearing, three rounds of legal briefs, and oral argument just yesterday).
PacifiCorp, which ratepayers know by its operating name, Pacific Power, has asked for a $102 million increase, or about 12% above current rates. During settlement conferences, CUB and other customer groups were able to successfully knock off about half of the requested increase, down to $50 million. Two main issues remain to be decided:
1) Taxes: First and foremost is the question of whether the Commission will decide to set rates by looking at interest deductions likely to be filed by PacifiCorp’s holding company (PacifiCorp Holdings, Inc.), or whether to set rates “blindly” without taking into account known tax loopholes. Depending on how the Commission decides the tax issue, $15 million will either stay in the pockets of ratepayers or will go to enrich the shareholders of PHI.
2) RVM: Large industrial customers have more freedom than residential customers when it comes to choosing a power source. They can obtain “direct access” to the power they need, choosing to side-step their local utility provider and buy electricity on the open market. Because of this direct access program, PacifiCorp wants the right to re-evaluate their power costs each year (this is the Resource Valuation Mechanism or RVM), and - here’s the kicker - the Company wants to apply this yearly RVM to residential customers. This could mean small increases in power costs for residential ratepayers every year, even though the direct access the RVM serves does not even apply to residential ratepayers! CUB feels that this request is basically unfair. Our message on RVM is, “Do whatever you want with the RVM, but don’t raise our rates for a direct access system we can’t use.”
Of the two issues facing us in this case, the most important is the tax issue. Not only would winning the tax issue cut the requested increase down even farther, from the original 12% to about 4%, but it would also set a valuable context for upcoming legal challenges to SB 408, the Utility Tax Reform Bill which CUB helped get through the Legislature this session.
The Tax Reform Bill goes into effect January 1, 2006, but even independent of that bill, we feel that it’s important for the Commission to stand up to the practice of phantom taxation. Knowing that PacifiCorp’s holding company is eligible for certain interest-based tax deductions, we say that information should be included in the ratemaking process, so that customers don’t wind up paying taxes that PacifiCorp then keeps.
The surcharge from the 2001 power crisis has recently expired and customers have seen power bills going down by about 6%. This means that, should we win our case and hold PacifiCorp’s rate increase down to about 4%, your utility bill would still be lower than it was last year. Here’s hoping!
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03/10/17 | 0 Comments | PacifiCorp Rate Case Coming to a Close