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Rate increase on tap from Pacific Power customer

September 29, 2005 6:29 AM

SALEM – If you’re a Pacific Power customer your rates are going up, but not as high as the power company wanted.

The Oregon Public Utility Commission (OPUC) substantially scaled back a requested general rate increase for customers of PacifiCorp.

The company had asked for an overall 12.5% increase, however, following a close examination of the proposal by the OPUC and other groups, the Commission reduced annual revenues by $76 million resulting in an overall rate increase of 3.17% effective October 4, 2005.

PacifiCorp's last general rate increase, was 1.10% in 2003. A general rate case takes into account all business-related expenses of the utility.

The Commission order includes power cost adjustments, compensation for employees and other expenses and reductions in taxes to be included in customer rates.

"This is a modest rate increase and far less than the company requested," said Commission Chair Lee Beyer. "No one wants to see prices go higher, but unfortunately the cost of generating electricity, paying higher employee health insurance cost and other business costs are going up for utilities just like they are for everyone else."

The Commission order also addressed the implementation of recently enacted utility tax legislation--Senate Bill 408. The Commission reduced the amount of income taxes to be collected from customers by $16 million annually.

During the past year the treatment of utility taxes was a hot topic in the Legislature. Beyer said, "The Pacific rate case was our first opportunity to adjust rates and more closely reflect the Legislature's new policy. The tax amounts included in PacifiCorp's rates are a better estimate of what PacifiCorp will actually pay to governments. As required by the new law, beginning with 2006 tax payments, rates will be adjusted annually to reflect only the amount of taxes actually paid by the utility."

The 2005 legislature passed Senate Bill 408 to prevent utilities from collecting estimated taxes that never make their way to the coffers of federal, state and local taxing authorities. The bill left it up to the OPUC to ensure that ratepayers are not charged more for taxes than the utility or its affiliated group pays to government that is properly attributed to the regulated operations of the utility.

The Commission has adopted temporary rules to implement SB 408 and is working to adopt permanent rules early next year that will address the many uncertainties of the interpretation and application of the legislation.

For almost 50 years, PacifiCorp has served irrigators in the Klamath Basin under historic contracts that provide rates well below what PacifiCorp charges its other irrigation customers in the state. The Commission will issue an order on the Klamath Basin rates by April of 2006.

PacifiCorp serves about 517,000 customers in Oregon.