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10/28/03 — Oregon PUC says PGE can keep collecting income taxes not paid to government [1] [2]

Contact the OPUC
Commissioners Lee Beyer (chairman); Ray Baum and John Savage

"Utility panel provides no shield" by Dan Meek, public-interest attorney

PGE Goes to Court to Stop Fraud Investigation by Oregon's Department of Justice [1] [2]

The Daily Astorian — Wake Up, PUC [link]

The Oregon Public Utility Commission's
Questionable Record

The anti-PUD forces have made numerous statements indicating that it's a bad thing that publicly-owned utilities are not regulated by the Oregon Public Utility Commission (OPUC). But is it?

The Oregonian reported on September 25, 2003 that the OPUC "voted unanimously Wednesday to endorse Portland General Electric's tentative settlement of charges that the Portland utility engaged in fraudulent electricity trades with its parent company, Enron."

Of the $8.5 million that PGE has "offered" to pay, only $1.3 million will go to business and residential customers. Of this amount, $250,000 will be given to Industrial Customers of Northwest Utilities, a customer group, and $250,000 will be given to Blue Heron Paper, an Oregon City paper mill. The California Department of Water Resources will receive $6.1 million. Tacoma, which led the PGE investigation along with the California attorney general's office, will receive $1.1 million.

The remaining $800,000 will be shared between PGE's 755,000 customers. Even if this refund was divided equally, it would amount to only $1.07 per ratepayer. In all likelihood, it will be paid over several months or years.

As part of the settlement with PGE, the Oregon Public Utility Commission waived its right to continue investigating PGE for wrongdoing. This may also end Federal Energy Regulatory Commission (FERC) investigations.

In October 2001, the OPUC allowed PGE to raise rates 41% overall, 53% for businesses. Every year since, PGE has collected an additional $400 million from ratepayers. It's now known that the increase was caused, in part, by energy market manipulation. Enron, PGE's owner, played the leading role in this fraud. When energy prices were near or at their highest, PGE signed long-term energy contracts with Enron and others. PGE ratepayers will continue to pay the cost of these contracts for years, perhaps paying a few billion dollars in inflated rates. A PUD will save ratepayers from this rate overcharge.

In a three-part series on the power trading scandal in 2002, Oregon Public Broadcasting reported that PGE employees knew or suspected that some of their energy trading transactions were at least questionable and probably illegal yet they failed to report their concerns to regulators. By law, PGE was required to report suspicious activity and had they done so it's very possible energy prices would not have risen dramatically. PGE has been sued by the states of Washington, California, and Montana, by the Port of Seattle along with others for fraud.

PGE was ordered to provide transcripts of telephone conversations to federal regulators. An April 2000 transcript included Enron trader John Forney describing to a PGE transmission employee a plan to send power from California to Oregon and then back into California. The practice was part of what was known as 'Forney's Perpetual Loop', which was used to take advantage of the California Market." It was reported that a PGE employee told a colleague at another energy trading company "This is a scam and you know it." The OPB report pointed out other questionable actions by PGE yet The Oregonian recently reported, "PGE contends its traders played only an unwitting role in Enron's schemes."

Each year, PGE charges ratepayers approximately $15.6 million for state income taxes and $77 million for federal income taxes yet very little has been paid to government. It amounts to a 7% surcharge on electric bills. Since 1997, the year Enron bought PGE, through May 2005, the utility received approximately $750 million from ratepayers. The amount increases by $7,750,000 each and every month. Yet during these eight years, a total of $221,000 (2002) has been paid in federal income taxes and a total of $10 (2002) in state income taxes.

The Oregon Public Utility Commission has ruled that PGE can continue charging customers for these taxes that aren't paid to any government. [1] [2]

Read dozens of quotes, including several about PGE's role in energy trading fraud.


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