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The Oregonian

Editorial erred: PUDs in Oregon pay property taxes

Friday, April 30, 2004
Tom Civiletti

IN RESPONSE Tom Civiletti

Clackamas County voters will decide in the May primary on establishing a people's utility district. Extravagant funding of the anti-PUD campaign by Portland General Electric/Enron makes it difficult for voters to get balanced information. A recent editorial in The Oregonian ("Public power fails the test," April 27) makes matters worse with factual error and characterization that echoes the utility campaign.

The editorial claims that Clackamas PUD would take utility property off tax rolls. Oregon law clearly requires PUDs to pay all property tax. Since the PUD headquarters would be in Clackamas County, local government would actually receive more property tax. The PUD, being nonprofit, wouldn't charge for income taxes. But remember, PGE and Enron have kept 99.97 percent of the income tax money they continue to collect (about $650 million since 1997).

Another misconception is perpetuated by the editorial's use of "uncertainties" and "no guarantees" when discussing the PUD. This is straight from the PGE lexicon. PUD creation is a multiple-step process. May's election forms a board to direct the engineer's study that determines rate savings and settles uncertainties. Voters then decide in a second election if savings warrant authorizing bonds to buy assets and construct infrastructure.

Because PGE's rhetoric seeks to short-circuit this process, we commissioned a feasibility study by D Hittle & Associates, electrical engineers and consultants with 35 years experience (www.dhittle.com). Its in-depth findings are very encouraging.

Ratepayers can expect to save $860 million over 10 years, with rate savings of more than 10 percent immediately, increasing to 32.7 percent in year 10. These significant savings account for all PUD costs: paying principle and interest on bonds used to purchase PGE assets, establishing all services, separating systems, ensuring reliability, paying legal costs and supplying power. The Clackamas PUD feasibility study (available at www.cheappower.org) confirms sufficient power availability from the Bonneville Power Administration to serve customer needs at the indicated savings.

The study confirms its calculated value of PGE assets in Clackamas County by comparison with the Texas Pacific offer of $2.35 billion for all of PGE. That offer, accepted by Enron, clearly establishes fair market value. If the PUD does not acquire in-district hydropower generation, savings will still be more than $720 million for 10 years; but we are confident the hydropower will become part of Clackamas PUD.

Fortunately, the editorial did not reinforce PGE's attempt to hide behind its employees. The PUD director candidates value PGE workers highly and would seek to hire them for their experience and knowledge of Clackamas County, even if Oregon law did not require the PUD to offer employment to local PGE workers and to honor their contracts. In short, PGE employees are protected.

I know of no development or program being implemented or planned that can offer such enormous economic benefit to Clackamas County as does the PUD. Families will have more spending money, businesses will see improved bottom lines, schools will have more money to put teachers in classrooms, and governments will have more to maintain programs.

Compared with Texas Pacific's bid, which offers no rate reduction and means another owner in five to seven years (according to the group's top executive), Clackamas PUD offers financial reward, stability and local control.

Tom Civiletti of Oak Grove is coordinator for Clackamas Public Power, the group working to form a PUD in Clackamas County.

 

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