PGE tries to neutralize tax law, CUB holds the line.
Posted on May 16, 2007 by oregoncub
Tags, Utility Regulation
Oregon utilities were about fit to be tied when the Oregon Legislature passed SB 408 in 2005, prohibiting them from using unregulated or affiliate losses to justify retaining tax payments made by customers. The Legislature said tax payments go to the government or should be refunded to customers. There went millions of dollars of windfall shareholder profits (Enron kept close to $100 million of customer tax payments PER YEAR during its ownership of PGE).
The law is written but the fight for those dollars is far from over, though on a smaller scale. Now the fight is over single-digit millions: $4.8 million to be exact. In UM 1271, PGE has filed an application asking the Public Utility Commission for permission to open a deferred account, offsetting the amount of money they owe customers (again, $4.8 million) on an unregulated business venture gone bad. PGE purchased a gas turbine in 2001, hoping to sell the power it generated on the open market (not to its regulated utility customers), but the plan didn’t work out and they sold the turbine in 2006 at a $12 million loss. Now the company wants customers to pay for some of that speculative business loss by allowing the company to retain the tax dollars paid by customers. The case itself may only be worth a few million dollars, but if PGE wins, it would overturn the core purpose of SB 408, putting many more millions of dollars of customers’ money at risk.
CUB’s Opening Brief in the case had this to say in response to the request: “What PGE is asking for here is extraordinary. While admitting that, under the law, customers are entitled to a refund of the amount of taxes that they overpaid, PGE argues that this refund is unfair and the Commission should violate the law and authorize the Company to establish a deferred account of $4.8 million in order to ‘neutralize the tax effect of the loss associated with the sale of the turbine.’”
The Legislature clearly intended that customers no longer subsidize unregulated portions of corporate utility business. The Legislature clearly intended that the law go into effect January 1, 2006, which makes the sale of the turbine fall within the effective time frame of the new law. The Legislature spelled out that utilities could not collect more for taxes than “The utility pays to units of government and that is properly attributed to the regulated operations of the utility.” We assume the Legislature would prefer the laws they pass not be “neutralized” out of existence. End of story.
Except that it’s not. PGE’s most recent argument is that SB 408, at its core, is unconstitutional. We don’t think that argument is going to fly either. CUB will submit a Reply Brief tomorrow, responding to issues of constitutionality, etc. We don’t mind defending this law—it’s a good law (if we do say so ourselves). We hope the issue will be “neutralized” by the Summer of 2007, when the Commission will decide on the case.
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03/10/17 | 0 Comments | PGE tries to neutralize tax law, CUB holds the line.