Oregon regulators last Tuesday granted a consumer advocate’s request for deferred accounting treatment of an estimated $20 million in federal and state taxes collected in retail rates during the last three months of 2005 by Portland General Electric (PGE).

The Oregon Public Utility Commission (PUC) denied a separate related complaint against PGE from the Utility Reform Project (URP) and individual consumer Ken Lewis.

Daniel Meek, an attorney who represents URP and Lewis, on Aug. 15 released a written statement claiming a belated victory in attempting to force the utility to return $20 million to its ratepayers as an amount collected in rates between Oct. 5, 2005 and Dec. 31, 2005 for federal/state taxes. The utility taxes collected were never paid as they were offset by write-offs at the holding company level. It is alleged that none of the $20 million was ever paid by PGE’s parent company at the time, bankrupt Enron Corp.

Meek noted that there is no assurance the PUC eventually will order the monies returned, but Meek said if it fails to do so the case will be appealed to the Oregon courts.

The PUC action orders PGE to create a deferred account to hold the disputed funds. The money could be returned to ratepayers depending upon a future decision, which is currently scheduled for June 1, 2008.

“The commission agreed with us that [Oregon’s utility tax law] SB 408, passed by the legislature in 2005, took effect Sept. 5, 2005,” Meek said. “That law bans utilities from charging ratepayers for income taxes that are not actually paid. PGE continued to charge ratepayers at least $7 million/month in 2005 for federal/state income taxes that were never paid to any government.”

There is also a continuing disagreement between Meek’s consumers and the PUC over the start of the clock on the deferral. They argue it should start Sept. 5, 2005 when SB 408 became effective, and the PUC said it could not set it earlier than Oct. 5, 2005, the date the URP and Lewis filed with the PUC.

Earlier this year, PGE drew the ire of Meek, utility tax watchdogs and Oregon PUC staff for allegedly attempting to circumvent SB 408. PGE filed in late April with the PUC what tax advocates fear might be the prelude to a legal challenge of the law. SB 408 would force the regulated utilities to file an annual tax report with the Oregon PUC, stating how much was actually paid in income taxes by the utility or by its consolidated tax group.

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