PGE: 1 billion in overcharges?

"They've collected a lot of money that appears to be inappropriate," said Leonard, who in September sponsored a City Council resolution authorizing an analysis of PGE's rates.

The apparent overcharges, primarily having to do with collections for the utility's estimated income taxes, are contained in a summary of the rate analysis that Leonard said he reviewed.

Commissioners will use the report to decide whether to dig further into PGE's rates. They could eventually attempt to set PGE rates on their own, acting on a state law that gives municipalities the authority to establish rates and charges a utility collects within city boundaries.

The report represents the city's latest effort to examine and possibly gain control of PGE rates, which are among the highest in the Northwest. Leonard has been particularly critical of the utility owned by bankrupt Enron Corp., which collapsed amid financial scandal in late 2001.

PGE officials on Tuesday said they had not seen the report and therefore could not respond to Leonard's claims regarding the summary.

"We can't comment until we've had a chance to review it," said Scott Simms, a PGE spokesman.

"We have followed all applicable laws in Oregon with the Public Utility Commission's oversight for how to set rates for all 765,000 customers we serve," Simms said.

The PUC is responsible for regulating and setting rates for Portland General Electric and PacifiCorp, the state's investor- owned utilities.

The state law that gives cities the ability to establish rates on their own has never been used before, Leonard said. Under Oregon Revised Statute 221.420, the council would vote on setting its own rates, which then would be forwarded to the PUC. The commission would have 90 days to review them. If it objected, Portland voters would weigh in on the change.

Leonard said that after the report is presented to fellow commissioners, he probably will recommend that the city hold a forum to allow PGE to respond to the findings. The forum would allow other interested parties, such as consumer groups, to present their own evidence regarding rates and potential overcharges.

"What may seem obvious and up front at first sometimes can be explained," Leonard said. "I'm very interested to see how that would happen in this case."

PGE's rates have become a touchy subject in recent years, particularly since the utility increased rates by about 30 percent for residential ratepayers and 50 percent for businesses in late 2001.

Much of the controversy focuses on PGE's collection from ratepayers of $80 million to $90 million annually to cover income taxes, most of which never reached federal and state authorities because of Enron's tax strategies.

Leonard said he was surprised by the degree of possible overcharges.

"I honestly didn't expect the numbers to be so striking," he said. "It's greater than anyone has reported to date. Much greater."

PGE serves customers in 52 cities and parts of six counties. Portland accounts for roughly 25 percent of the utility's electricity consumption.