PGE and Income Tax

In an order mailed to the parties on October 24, 2003, the Oregon Public Utility Commission (OPUC) ruled that Portland General Electric Co. (PGE) can continue to charge Oregon ratepayers $93 million per year for state and federal income taxes that PGE is not paying to any government. Instead, PGE is sending the money to Enron, which also is not paying any income taxes to any government.

“This has been going on now since 1997,” said Dan Meek, attorney for the Utility Reform Project, which filed the complaint raising this issue. Since Enron took over PGE, PGE has charged Oregon ratepayers to cover its alleged “cost” of “state income taxes” and “federal income taxes.” But, in 1997, 1998, 1999, 2000, 2001, 2003 and 2004, PGE was corporately consolidated with Enron for income tax purposes and thus did not pay any income taxes. Instead, it sent the money to Enron, which also paid no net income taxes during those years, either to Oregon or to the federal government.

In 2002, PGE was temporarily de-consolidated from Enron for tax purposes. That year, PGE earned net income of $66 million and did file its own tax returns. It paid $10 (ten dollars) to the State of Oregon and $221,000 to the federal government for income taxes.

Thus, in the 7 years that Enron has owned PGE, PGE has charged Oregon ratepayers over $600 million in phony income taxes, while actually paying only $221,010.

The Utility Reform Project filed a complaint in March 2003 to halt this practice and obtain a refund of these amounts charged in the past. But the Commission ruled that, even if these charges were the result of fraud, the Commission cannot do anything about it. On July 9, the Commission issued an order stating it could not order refunds or otherwise protect ratepayers, “even if the rates were based on fraudulent representations.” In the new order mailed October 24, the Commission reaffirms this conclusion and dismisses the URP complaint.

“This shows to what extent ratepayers can trust the OPUC to protect them from fraud by Enron and PGE,” said Meek. “This is a $600 million fraud that is growing at a rate of almost $2 million per week, which is what PGE ratepayers continue to pay for PGE’s phony income taxes that are never paid to government. It amounts to a 7% surcharge on our electric bills, with all the money flowing to Enron and not to the government.”

To read more about Enron/PGE taxes, visit here.

Webmaster note: The $600 million was through October 2003. It increases by $93 million annually.