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Steve Duin of The Oregonian

Lobbyists and lackeys cripple the Legislature

Sunday, May 15, 2005

The fate of Portland General Electric -- and the bogus tax collections by PGE and other Oregon utilities -- remain so intentionally murky that one can't help but think some folks are benefiting from the chaos, misinformation and legislative incompetence.

Well, of course they are. Hundreds of millions of dollars are in play. The greed and ambition that got Neil Goldschmidt and his posse involved and brought Texas Pacific to our door hasn't dissipated in the least.

That brings us to the numbing idiocy that is Senate Bill 171.

It's foolish, I know, to complain that most of what moves through the Capitol is scripted by lobbyists and industry lackeys, then approved by legislators who are thrilled when someone tells them what to do. For all I know, SB 171 is no more compromised or cynical than most of what is being championed in Salem.

The bill was introduced because the Texas Pacific fiasco highlighted a riotous tax scam. With the loving approval of the toothless guard dogs at the Public Utility Commission, the regulated utilities in Oregon are billing ratepayers $180 million per year in state and federal income taxes that are never forwarded to the state and federal governments.

PGE, of course, is the worst offender, collecting $92 million in said taxes and shipping the booty to Enron, but PacifiCorp and Northwest Natural Gas are doing their best to keep up. Dan Meek, one of several attorneys in this state who will not let this matter rest, estimates those utilities charge ratepayers $75 million more each year than they pay to the taxing authorities.

Senate Bill 171 was heralded as an attempt to change all this. Unfortunately, the heralds were the utility shills at the PUC, and they made sure the bill was a gutless piece of legislation.

A serious attempt to end this tax dodge -- and one proposed by Sen. Vicki Walker, D-Eugene -- would simply mandate to the utilities that any and all portion of their rates designated as "taxes" must be paid to the proper taxing authority. Obviously, this would apply to both state and federal taxes because the issue is utility rates, not taxes.

SB 171 has a different aim: It only prohibits public utilities from filing consolidated state returns, which -- notes Portland attorney Ken Lewis -- they don't do anyway. There's nary a word about the inclusion of bogus tax charges in the utility rates. "By not saying expressly that the practice shouldn't continue," says Ann Fisher, who counsels the Business Owners and Managers Association, "the Legislature is tacitly encouraging it to continue."

Small wonder, Sen. Rick Metsger, D-Welches, says, that every time he looks up, he sees "utility lobbyists smiling in the back of the room." This is the perennial imbalance in Salem: Industry lobbyists are better at their job, funneling profits to their bosses, than legislators are at theirs, protecting our interests.

Because those lobbyists also control campaign contributions, most legislators don't mind playing the gracious loser.

That said, this tax scheme "is a watershed issue," Metsger says. "You're talking hundred of millions of dollars. When you start messing with something they (the utilities) count as a cash-cow revenue stream, they're going to push and push very hard. But I still believe we can do this. We need to make a commitment, a commitment that we're going to end this scam."

To that end, Metsger has scheduled a meeting Monday with some creative thinkers, including Meek and Jason Eisdorfer of the Citizens' Utility Board, to pound out a "strategy to deal with state and federal utility tax collections and payments that better protect ratepayers from abuse."

He has purposely not invited the PUC or those giggling utility lobbyists.

What conclusion should we draw if such an effort collapses? "The conclusion," says Walker, "is that we didn't get our job done. This really is a travesty on Oregonians. It's a complete rip-off. We need to fix it. That's what we're sent here to do, to fix these problems."

Over the lobby's dead body, of course.

Steve Duin: 503-221-8597; Steveduin@aol.com; 1320 S.W. Broadway, Portland, OR 97201