Enron buys its way to charging ratepayers
another $300 million for Trojan profits
Excerpt from Enron Corruption: The Special Oregon Connection.
In 1978, Oregon voters adopted by a vote of 69 to 21% a ballot measure 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 million to defeat a statewide ballot measure to close Trojan in what is still the most expensive 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 permanently.
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. This is in addition to another $300 million in Trojan decommissioning costs over the next 17 years as well, all of which are being paid by 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 (R) of Hillsboro introduce a bill to overturn the decision of the Court of Appeals. [Note: This is not the Jim Hill who served as Treasurer of Oregon.] 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 than any side on any Ballot Measure in Oregon history, over 1.2 million.
In the meantime, however, CUB 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 than before. CUB got a payment from PGE of $227,000 from PGE as part of the deal. The Utility Reform Project (URP) filed a complaint at the OPUC challenging this deal as illegal under Ballot Measure 9 of 1978 and the 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 sold long-term power contracts to California
- $15.4 million in NEIL (nuclear industry insurance) distributions
It 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 it gives up $400 million (present value) that would otherwise 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, of this year and will further increase PGE's rates by $15.7 million as each of the next two Octobers roll around.
The OPUC again approved this deal in April 2002, and URP will again appeal to the courts.
This episode again shows that Enron's approach of buying off politicians and public interest groups has cost Oregon ratepayers huge dollars, over and over and over.