Kilt Trip

[May 18th, 2005] The Nose felt sorta bad for jumping on Oregon Democrats and PacifiCorp last week. To refresh, PacifiCorp collected an extra $70 million from electric ratepayers for the purpose of paying taxes. But shuffling by Scottish Power, PacifiCorp's overseas parent, means PacifiCorp doesn't actually pay that $70 million in taxes.

And who lets this happen? Those sentinels of justice a.k.a. the Democrats in the Oregon Senate majority, who emasculated a bill that would have ended the utilities' game of three-card monte. (The Nose mentioned that PGE and its parent company, Enron, are up to the same tricks.)

But in fairness, the Nose hasn't given PacifiCorp its chance to speak, so here are excerpts from a colleague's interview with PacifiCorp VP Kevin Lynch:

WW: Should PacifiCorp be allowed to collect money from ratepayers for state and federal taxes if it doesn't pay those taxes?

Kevin Lynch: PacifiCorp should be allowed to collect taxes from customers [even] if the entity that files taxes on behalf of PacifiCorp and its affiliated businesses ends up without a tax liability.

What did you pay in state and federal taxes last year?

We don't disclose that information. I can tell you [the difference] between what the utility collected in taxes and what the holding company paid in taxes. It is somewhere more than 50 percent but not 100 percent.

Over what period of time?

The past eight years.

So over eight years, if you collected a dollar from Oregonians in federal and state income taxes, you paid back in fed and state income taxes how much?

Well, more than 50 cents.

Was it more than 70 cents?

It was in that range....

So somewhere around 30 cents of every dollar that you collected from ratepayers for federal and state income taxes was not paid back?

I suppose if you want to put a spin on it that way that, yes, the disparity between tax liabilities of the holding company and all of its attendant activities and the amount paid by the utility is somewhere in that range.

Can you understand that if you charge for taxes and don't pay those taxes, most Oregonians might have a problem with that?

There is a perception issue-there's not doubt about that. There is a perception that the utility plays a role as tax collector. And not a business. And that if a dollar is collected...and the company associated with the utility doesn't pay a dollar in income taxes there is a perception that there is a gap and that doesn't make sense.

There, PacifiCorp, you can put your petard away now. The Nose doesn't feel guilty anymore.