PGE's Taxing Story

[December 14th, 2005] Portland General Electric and its amen chorus have had a busy two weeks since WW reported that the utility joined with parent-company Enron to pocket income taxes rather than pass them on to federal, state and local governments.

The total taxes collected from Oregonians by PGE since its acquisition by Enron in 1997: nearly $700 million. Previously, PGE said whatever happened to that money was Enron's fault. But documents the utility recently provided to the City of Portland now appear to show PGE kept between $70 million and $270 million in state and federal taxes—not to mention $7 million more in Multnomah County taxes (see "Pants on Fire," WW, Nov. 30, 2005).

Over the past two weeks, City Hall has blasted the utility and called for hearings next year. PGE, for its part, has issued a series of denials. Here's an attempt to cut through some of the recent back-and-forth:

WW's story said PGE kept Oregonians' tax money. What does PGE now say?

It's not news that PGE collected taxes from ratepayers and passed them on to Enron, which never paid them to various governments. The development WW reported two weeks ago is that PGE itself also held on to some of Oregonians' taxes, contradicting its claims that it had nothing to do with the tax dodge and simply passed on all the money to Enron.

PGE's response—in press releases, City Hall testimony last week and an Oregonian op-ed—has been consistent: "PGE paid all taxes due and did not retain any taxes for profit that were collected from customers through rates."

This statement seems to suggest that the funds haven't been retained for "profit" because PGE will, someday, pay those taxes. When? Nobody knows.

The Oregonian editorialized last week in PGE's favor, blasting City Hall for ignorance of basic accounting. The paper told the city to butt out and let the Oregon Public Utility Commission protect the public interest. Should the public feel safe?

The O's lead editorial last Thursday was unambiguous: "If there are serious new questions about PGE's tax accounting, they ought to be investigated and answered by the PUC, not the city or its hired consultants."

With all due respect to the state's largest and most influential media organization, the PUC's oversight of PGE hasn't exactly been stellar.

The regulatory commission in recent years has allowed PGE to collect hundreds of millions of dollars in charges for the Trojan nuke plant after it shut down ("The Nuclear Option," WW, Sept. 7, 2005) and has regularly permitted PGE to earn profits far in excess of the maximum set by the commission ("PGE's Windfall," WW, Feb. 9, 2005). And one last note: When the Utility Reform Project, a watchdog group, asked the PUC in 2003 to determine whether taxes PGE collected had gone to taxing authorities, the commission dismissed the question as "irrelevant."

Part of WW's Nov. 30 story focused on the Multnomah County business income tax and emails suggesting that PGE retroactively altered its accounting to show more revenue in Multnomah County, thus allowing it to collect more in taxes from county residents. Yet PGE never paid those taxes. How does PGE explain that?

Since 1997, according to data PGE provided the city, the utility has collected about $7 million in county business income taxes from ratepayers—and paid less than $4,000 to the county.

(Interestingly, PGE contributed $10,000 to the 2003 political campaign that resulted in a $380 million income-tax surcharge over the past three years on county residents.)

PGE's response has been twofold. On KGW's Newsmakers program last Sunday, PGE spokesman Scott Simms said, "We really stand by the fact that we have not done anything unethical.... We're a transparent company."

But earlier, on Nov. 2, under pressure from a lawsuit filed by the Utility Reform Project, PGE announced it would stop collecting the county business income tax—which it has every right to collect—and determine how much of its previous collections it should refund.

PGE declined to comment for this story.