The Oregonian

Judge orders Trojan refund or rate cut

DAVE HOGAN

PGE customers could be due $300 million, but an appeal is likely in the lengthy dispute about the closed nuclear plant

11/08/03

Portland General Electric must reduce its rates or refund money that it improperly collected from ratepayers for its dismantled Trojan Nuclear Plant, a judge ruled Friday.

Consumer advocates say the order could lead to more than $300 million in refunds or rate reductions for PGE customers. The ruling is likely to be appealed, however, so the ultimate outcome of the long, complex series of litigation is unclear.

"The bottom line is this opinion will be appealed, and the Court of Appeals will weigh in," said Bob Jenks, executive director of the Citizens Utility Board. "Customers shouldn't be waiting for checks in the mail as the result of this decision."

Friday's ruling is the latest in a dizzying, decade-long series of court cases and political developments around the issue of whether PGE can recover a return on its Trojan investment as part of its rates after the plant closed in 1993.

The ruling came in a case brought by the Utility Reform Project, a nonprofit that represents utility ratepayers before the state's Public Utility Commission and in the courts. The group challenged an order by the commission adopting a settlement among its staff, PGE and the Citizens Utility Board.

But Marion County Circuit Judge Paul Lipscomb agreed with the nonprofit's attorneys that PGE's rates, as approved by the commission, were inconsistent with an earlier court ruling that said the utility could not recover any return on its Trojan investment as part of its rate structure after the nuclear plant was shut down.

Lipscomb directed the PUC "to immediately revise and reduce the existing rate structure so as to fully and promptly offset and recover all past improperly calculated and unlawfully collected rates." Or, alternatively, the utility commission must "order PGE to immediately issue refunds for the full amount of all excessive and unlawful charges collected by the utility for a return on its Trojan investment."

Lipscomb used no dollar figures in his order. Dan Meek, an attorney for the Utility Reform Project, estimated that the potential refunds or rate reductions could total more than $300 million.

PGE and the state argued that law prevents the commission from considering improperly calculated past rates when setting new rates and said the commission's actions complied with state law in all other respects.

But Lipscomb blasted the idea that the utility commission cannot consider rate calculations adopted in the past, saying it would "become a powerful prescription which would immunize the utility from any meaningful judicial review."

In short, Lipscomb said, that version "has more in keeping with the satiric scenarios of Joseph Heller's "Catch-22" and Lewis Carroll's "Through the Looking Glass" than with responsible utility rate regulation."

PGE disappointed with decision "We're disappointed and don't agree with the judge's decision," said Kregg Arntson, a PGE spokesman. The company, which has about 750,000 customers, probably will decide by next week whether to appeal, he said.

"To retroactively go back and question past decisions sets a dangerous precedent for the sanctity of the ratemaking process," Arntson said.

PGE had no estimate of how much it might owe ratepayers. "It's impossible to tell from the judge's decision," Arntson said. "There's no time frame for recovery or anything."

The background of the case winds back 25 years. Oregon voters approved a law in 1978 that prohibited utilities from charging ratepayers for property not being used to provide service to customers. After the nuclear plant, just east of Rainier on the Columbia River, closed, the utility commission allowed PGE to recover decommissioning costs as well as another $250 million to cover 87 percent of its undepreciated investment in the power plant.

First lawsuit in 1994 Consumer advocates first sued the PUC in 1994, claiming it violated the law. They won in a trial court, and the Oregon Court of Appeals upheld the decision in 1998.

The Oregon Supreme Court declined to review that ruling. But in 1999, legislators passed a bill that would have overturned the appeals court decision. Consumer advocates responded by collecting enough signatures to force a statewide vote, and voters rejected the new legislation by a wide margin in 2000.

Before the vote took place, PGE, the Citizens Utility Board and state regulators agreed to settle the litigation regarding Trojan investments in PGE's rates. The Utility Reform Project challenged the settlement with the PUC, and the commission held a contested case hearing before signing off on the settlement's provisions last year.

The challenge of that decision is what brought the case to Lipscomb's court.

Kevin Neely, a spokesman for the attorney general's office, said lawyers representing the state have not had a chance to study Friday's opinion.

"Our attorneys haven't had an opportunity to talk to the PUC about it, and we will take a closer look at it Monday and decide what our course of action will be," he said. Gail Kinsey Hill and Jeff Mapes of The Oregonian staff contributed to this report.

Dave Hogan: 503-221-8531, davehogan@news.oregonian.com