PGE responds to OPUC order on Trojan costs

The Oregon Public Utility Commission (OPUC) ordered Portland General Electric (PGE) to refund $33.1 million to customers. The refund relates to amounts PGE collected under OPUC-approved prices on the unrecovered balance of the utilityÂ’s investment in the Trojan Power Plant.

“I can appreciate what a tough, incredibly complex challenge the commission faced in sorting out 13 years of multiple regulatory proceedings and lawsuits,” PGE CEO and President Peggy Fowler said. “Throughout this process PGE has followed the OPUC’s orders for Trojan cost recovery, and we’re pleased that they’ve determined the company’s rates were just and reasonable.

“However, the refund order is disappointing. PGE and its investors have already written off $42 million of the Trojan investment and our customers benefited both from reduced power costs after we shut Trojan down and from the commission’s 1995 decision to spread cost recovery over a period of years.”

With OPUC approval, PGE decided to shut down the Trojan plant in 1993 after a least-cost planning analysis determined that the cost to customers of closing the plant and recovering the utilityÂ’s investment would be less than the cost of continued operation of the plant for the remainder of its planned lifespan.

In 1995 the OPUC ordered PGE to write off $37 million (after tax) of its remaining investment in the Trojan plant, but determined that the law allowed PGE to recover the balance of the investment. To maintain price stability, the commission ordered PGE to collect the balance as part of the utilityÂ’s prices over the remainder of TrojanÂ’s planned lifespan, with an end-date of 2011, and allowed the company to collect a return on the unrecovered balance.

Customer advocates appealed the decision in court, and a settlement between PGE, commission staff and the CitizensÂ’ Utility Board, approved by the OPUC in 2000, removed the rest of the Trojan balance from the companyÂ’s books. Part of the settlement required PGE to write off an additional $5 million (after tax).

Later court decisions said that while recovery of the Trojan investment was legal, it was not legal for the OPUC to authorize collection of a return on the unrecovered balance. The courts sent the issue back to the OPUC to determine if the prices customers paid for electricity were too high as a result of the commission’s previous decisions, and if so what – if anything – needed to be done to fix the problem.