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Utility Reform Project

Daniel Meek, attorney
10949 S.W. 4th Avenue
Portland, OR 97219
(503) 293-9021


March 15, 2006

New York Times Features Enron/PGE in Oregon
as "Pioneer in turning Taxes into Profit"

Oregon PUC still allowing Oregon utilities to charge ratepayers over $100 million of phony “taxes” per year, despite law banning this

Today, the New York Times featured Enron and Portland General Electric Co. (PGE) as pioneers “in turning taxes into profit.” The article, by David Cay Johnston (noted author and repeat Pulitzer Prize winner), states:

Since 1997 the company, now in bankruptcy, has collected nearly $900 million from customers of a utility it acquired, Portland General Electric, to cover income taxes. But none of that money reached the federal government from Enron, and only a quirk in the law forced Portland G.E. to pay about $800,000 in income taxes, of which $20 went to the state of Oregon.

Enron could keep the tax money because it created 881 subsidiaries in the Cayman Islands, Bermuda and other tax havens, tax shelters that on paper generated losses for the parent.

“The charging of these phony taxes to ratepayers is one of the practices that the staff of the Oregon Public Utility Commission (OPUC) recently defended,” said attorney Dan Meek. “And those practices are continuing to this day. The electric and gas utilities regulated by the Oregon PUC are still charging Oregon ratepayers at a rate of well over $100 million per year in phony income taxes.”

The Oregon Legislature in 2005 enacted SB 408, which bans utilities from charging ratepayers for income taxes that are not actually paid to government by the utilities or on their behalf by their corporate parents, such as Enron or Scottish Power or MidAmerican Holdings. The law requires the Commission to do this by setting up “automatic adjustment” accounts, effective January 1, 2006. But the Commission has not done so. Instead, at the urging of the utilities, it is engaged in a lengthy rulemaking proceeding that is not expected to produce any results until September at the earliest. The Commission did make a an adjustment to the rates of Pacific Power & Light Company (PP&L) to partially remove the charges for nonpaid taxes but then granted the utility’s request for reconsideration of that decision.

“The utilities are filibustering at the PUC, so they can pump up their huge political campaign contributions in legislative races and then go to the Legislature in 2007 to repeal the law protecting ratepayers,” said Meek.

The New York Times article is at: http://www.nytimes.com/2006/03/15/business/15utility.html?_r=1&oref=slogin