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News Release
Commission Seeks Court Direction in Trojan Refund Case
February 19, 2004 (2004 - 002)
Contacts: Lee Beyer, Chairman, 503 378-6611; John Savage, Commissioner, 503 378-6611; Ray Baum, Commissioner, 503 378-6611; Bob Valdez, Public Information Officer, 503 378-8962
Salem, OR – The Oregon Public Utility Commission filed an appeal today to seek clarification of its authority to order refunds. The issue came to light from a local court decision that overturned a long-standing rate setting law known as the filed rate doctrine. The court case grew out of a challenge to the rates set in 1995 to cover Portland General Electric's (PGE) investment in the closed-down Trojan Nuclear Plant.
The decision issued last year in Marion County Circuit Court ordered PGE to reduce rates or make refunds for the money they collected from customers to pay for interest on the company's investment in Trojan between 1995 and 2000. Oregon courts have ruled that PGE cannot collect interest on its investment in Trojan. In 2000, the Commission approved a settlement that removed Trojan investment costs, including interest and depreciation, from customer rates. The Commission decision was challenged because it did not order PGE to pay back the interest on Trojan it collected through rates before 2000.
"PGE customers aren't paying for the company's investment in Trojan, and they haven't since 2000," noted Commission Chairman Lee Beyer. "The issue is whether PGE should pay back the interest it collected before then. Under the filed rate doctrine, the answer is no. But the local judge disagreed."
Under the "filed rate doctrine," rates approved by the Commission are effective until changed on a going forward basis. The legal doctrine protects customers because it means that the Commission cannot retroactively raise rates or impose a surcharge if a utility challenges, and a court agrees, that the Commission set past rates too low. The doctrine also prevents the Commission from requiring a utility to reduce rates or issue refunds to make up for past rates that a court determined were too high.
"This is a tough call," said Chairman Beyer. "The Commission has been working hard to push rates back down. But, in this instance, the Attorney General doubts that the Commission has the legal authority to do what the local judge is directing. The Attorney General has recommended an appeal so that the Commission will clearly know whether it has the authority to order rebates or not."
"Without the filed rate doctrine, every major rate order may well be challenged by both sides, leading to lengthy, expensive court proceedings and uncertainty for customers," said Chairman Beyer said. "Given the uncertainty of the Commission's authority, we need clear direction from a court of record on our ability to abandon a long-standing rate setting doctrine that on balance makes sense for customers," Beyer said.
"We stand ready to quickly direct PGE to refund the interest collected on its Trojan investment if that’s what the courts finally decide", Beyer said.
The filed rate doctrine is important to customers because it provides predictability about the rates they pay. Customers can make decisions about how they use energy (such as whether to increase production at a factory) without worrying that their utility will come back later and ask them to pay more. It allows rate changes only on a going forward basis. That allows customers to adjust their usage in response to the new rates.
Parties challenging a Commission rate order do not have to wait for the final court decision to seek relief, however. They can ask the court to "stay" the new rates while the lawsuit is pending. No party in the Trojan case requested a stay when the Commission made its original decision in 1995.
The Commission will apply the filed rate doctrine until it has a ruling from a court of record, such as the Oregon Court of Appeals or Oregon Supreme Court. While court action is pending, any amounts owed to customers in the Trojan cases will earn interest at PGE’s authorized rate of return.