Utility Reform Project v. PUC

The PUC is not required to order a return of overpayment of taxes to ratepayers where the utility did not earn a reasonable return on investment.

Utility Reform Project (URP) sought judicial review of an order of the Public Utility Commission (PUC). PGE collected an extra $26.5 million in rates during a three month period in 2005 above the amount PGE was required to pay in income tax. As a public utility, PGE is allowed to build the amount it expects to pay in taxes into its rates. PUC denied URP's request to require PGE to amortize the excess taxes collected to refund ratepayers in accordance with Senate Bill 408. The PUC considered the deferral as compared to PGE’s earnings, and determined that requiring PGE to amortize would result in PGE’s return on investment much lower than a reasonable rate authorized by PUC. The Court rejected URP's argument that ORS 757.259(5) required PUC to force PGE to pay the excess money collected during the three month period. SB 408 created a mechanism to colleect unpaid revenue, however, this mechanism came into place in 2006. The Court also rejected URP’s argument that PUC impermissibly considered PGE’s earnings over a 12 month period instead of during the three month period at issue. The PUC has discretion to select the period of review of a utility’s earnings, so it can consider the deferral period in determining whether the deferred amounts were exceptional. It was not an abuse of discretion for PUC to refuse to refund overpayment of taxes to ratepayers. Affirmed.