The Oregon Public Utility Commission (OPUC) today ordered Portland
General Electric (PGE) (NYSE:POR) to refund $33.1 million to customers.
The refund relates to amounts PGE collected under OPUC-approved prices
on the unrecovered balance of the utility’s
investment in the Trojan Power Plant.
“I can appreciate what a tough, incredibly
complex challenge the commission faced in sorting out 13 years of
multiple regulatory proceedings and lawsuits,”
PGE CEO and President Peggy Fowler said. “Throughout
this process PGE has followed the OPUC’s
orders for Trojan cost recovery, and we’re
pleased that they’ve determined the company’s
rates were just and reasonable. However, the refund order is
disappointing. PGE and its investors have already written off $42
million of the Trojan investment and our customers benefited both from
reduced power costs after we shut Trojan down and from the commission’s
1995 decision to spread cost recovery over a period of years.”
With OPUC approval, PGE decided to shut down the Trojan plant in 1993
after a least-cost planning analysis determined that the cost to
customers of closing the plant and recovering the utility’s
investment would be less than the cost of continued operation of the
plant for the remainder of its planned lifespan.
In 1995 the OPUC ordered PGE to write off $37 million (after tax) of its
remaining investment in the Trojan plant, but determined that the law
allowed PGE to recover the balance of the investment. To maintain price
stability, the commission ordered PGE to collect the balance as part of
the utility’s prices over the remainder of
Trojan’s planned lifespan, with an end-date
of 2011, and allowed the company to collect a return on the unrecovered
balance. Customer advocates appealed the decision in court, and a
settlement between PGE, commission staff and the Citizens’
Utility Board, approved by the OPUC in 2000, removed the rest of the
Trojan balance from the company’s books. Part
of the settlement required PGE to write off an additional $5 million
(after tax).
Later court decisions said that while recovery of the Trojan investment
was legal, it was not legal for the OPUC to authorize collection of a
return on the unrecovered balance.
