Utility Reform Project
Daniel Meek, attorney
10949 S.W. 4th Avenue
Portland, OR 97219
COUNTY CIRCUIT COURT
REFUNDS OF TROJAN
NEW CORPORATE OWNER WOULD ALSO OWE THE REFUNDS
an order issued November 7, the Marion County Circuit Court ruled that
PGE must refund to ratepayers “the full amount of all excessive
and unlawful charges collected by the utility for a return on its Trojan
investment as previously determined to be improper by both this Court
and the Court of Appeals.”
The full order is available via an FTP client or a web browser at ftp://ftp.voters.net/urp/trojan
After going to an FTP site with your web browser, you may have to hit
Refresh or Reload to make the list of files appear.
The plaintiffs in the case, led by Utility Reform Project, calculate these
refunds at over $300 million. If Enron sells PGE before this refund is
paid to customers, the new owner will still owe the refunds to customers.
Judge Paul Lipscomb did not mince words in describing the flawed positions
of PGE and the Oregon Public Utility Commission (OPUC). He stated:
Moreover, in the form urged
by PGE and adopted by the OPUC, the filed rate doctrine would, in
practice, become a powerful prescription which
would immunize the utility from any meaningful judicial review. Clearly
at least a potential source of mischief, adoption of the filed rate
doctrine in the form urged by PGE could well encourage increasingly
perhaps even deceitful utility rate proposals. Once approved by the
OPUC, the full financial benefit of all rates collected, no matter
warranted and justified, would be permanently locked in and would never
become refundable even when finally determined to be unlawful after
years of successive court appeals. In short, Defendants’ version of the
filed rate doctrine has more in keeping with the satiric scenarios of Joseph
Heller’s Catch 22 and Lewis Carrol’s Through
the Looking Glass than with responsible utility rate regulation.
In 1978, Oregon voters adopted by a vote of 69 to 21% a ballot measure
(Measure 9) to prohibit utilities from charging ratepayers any cost of
plants not currently providing utility service to customers. Lloyd Marbet
and other activists worked on this measure.
In 1992, PGE spent over $5.5 million to defeat a statewide ballot measure
to close Trojan in what is still the most expensive statewide ballot measure
campaign in Oregon history. Then, within a week, the Trojan plant suffered
yet another steam generator tube leak of radioactive water and shut down
We said that the 1978 ballot measure then required that PGE no longer
charge ratepayers to earn a profit on Trojan or to get back its investment
in Trojan. At that time the investment in Trojan was about $250 million.
In 1995, the OPUC allowed PGE to continue to charge ratepayers both for
return of the investment over the original expected 35-year life of Trojan
and to charge ratepayers to receive a profit on Trojan of over 13% before
taxes, for a total of $251 million of Trojan investment and $304 million
for profit over the next 17 years (see table below). This is in addition
to another $300 million in Trojan decommissioning costs over the next 17
years as well, all of which is being paid by PGE ratepayers.
The Utility Reform Project,
Lloyd K. Marbet, and CUB appealed this decision to the courts. In June
1998, the Oregon Court of Appeals agreed that allowing
the $304 million in profit was a violation of Ballot Measure 9 of 1978.
The utilities then substantially increased their contributions to candidates
for the Oregon Legislature running in November 1998. As soon as the Legislature
convened in January 1999, Enron/PGE had Rep. Jim Hill of Hillsboro introduce
a bill to overturn the decision of the Court of Appeals. Jim Hill was quoted
in the paper as saying that he was "carrying water for the utilities." After
the Legislature passed the bill and Governor Kitzhaber signed it, we waited
for the end of the 1999 session and then collected over 60,000 signatures
within 90 days to place this bill on the November 2000 ballot as a referendum,
Measure 90. We won by over 88% of the vote and received more votes that
any side on any Ballot Measure in Oregon history, over 1.2 million.
In the meantime, however, CUB
in September 2000 entered into a Settlement Agreement with Enron/PGE,
under which CUB withdrew from all of the lawsuits
and supported a deal for PGE to collect from ratepayers either the same
amount as before or even more. In return, PGE agreed to pay CUB $227,000
in attorney fees. Under the PGE-Cub “Stipulation,” PGE got
to keep all of the profits on Trojan it had collected from ratepayers,
The Utility Reform Project (URP) immediately filed a complaint at the
OPUC challenging this deal as illegal under Ballot Measure 9 of 1978 and
the 1998 Court of Appeals opinion.
Our expert witness concluded that, for ratepayers, the Settlement was
worse than losing the lawsuits that we had been winning. PGE ratepayers
have already paid to PGE more than the full investment of Trojan, plus
$186 million more, as of October 1, 2001. The Settlement took away all
of that money and far more. It took away:
$161.9 million in
credits owed to ratepayers when PGE sold itself to Enron in 1996 and
power contracts to California
million in NEIL (nuclear industry insurance) distributions
also imposed upon ratepayers an additional cost of $36.7 million (present
value) cost in the form
of a "new Regulatory Asset." "Offsetting" this
admitted $214 million (present value) cost to ratepayers is a "Customer
Credit" of $2.5 million, leaving ratepayers with a net cost of $211.5
million (present value) from the "CUB Stipulation". This is on
top of everything ratepayers had already paid. So the CUB Stipulation gave
up over $300 million that should have been credited to ratepayers over
the next 10 years.
PGE and the OPUC staff admitted, under oath, that the Settlement actually
increased PGE's rates by $25.7 million as of October 1, 2001, and further
increased PGE's rates by $15.7 million per year for the 2 years starting
October 1, 2002.
The OPUC again approved the PGE-CUB Stipulation deal in April 2002 (OPUC
Order No 02-227), and URP again appealed to the courts. Judge Paul Lipscomb
of the Marion County Circuit Court on November 7, 2003, issued his decision
that OPUC Order 02-227 was unlawful and that ratepayers were entitled to
refunds. He stated:
The challenged OPUC’s
order, No. 02-227, is reversed and remanded to the Commission with
directions to immediately revise and reduce the
existing rate structure so as to fully and promptly offset and recover
all past improperly calculated and unlawfully collected rates, or alternatively,
to order PGE to immediately issue refunds for the full amount of all
excessive and unlawful charges collected by the utility for a return
on its Trojan
investment as previously determined to be improper by both this Court
and the Court of Appeals.
URP believes that the amount of the refund should exceed $300 million.
Calculation of that sum is shown on the attached table.