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PGE fraudulently billed customers $665 million

An owner, like Enron, that can earn the 10.5 percent profit on investment set by utility regulators and then pocket the tax money as well could earn more than 20 percent annually on its investment in a utility.
PORTLAND - A state judge has ordered a regulatory hearing into whether Portland General Electric, a unit of Enron, fraudulently collected more than $665 million from ratepayers to cover corporate income taxes that Enron never paid.

Because utilities are legal monopolies, the prices they charge are set by state utility regulatory boards. Federal and state corporate income taxes are some of the expenses to be included in rates paid by customers. Historically, the regulators assumed that whatever taxes were included in electric rates would then actually be paid by the utility or its parent, though the rise of tax shelters and changes in federal tax law have raised questions about whether that assumption remains valid.

The judge's order, made on Friday, comes as a group of Texas investors is trying to buy Portland General Electric under terms that would allow it to collect $92 million a year for taxes that it would not necessarily have to pay to the federal and state governments. The intended buyer, the Texas Pacific Group, has said that it will not promise to return to ratepayers any taxes it collects but does not have to pay.

An owner, like Enron, that can earn the 10.5 percent profit on investment set by utility regulators and then pocket the tax money as well could earn more than 20 percent annually on its investment in a utility.

Pamela Lesh, Portland General Electric's vice president for regulatory affairs, said state law entitled the company to collect money to cover the corporate income taxes that it would owe as a stand-alone company even if those taxes were never paid by its parent company.

The judge ruled in a case brought by Dan Meek, a lawyer who runs the Utility Reform Project, a local watchdog group. Meek said he expected the Oregon Public Utility Commission to find that PGE could be required to pay for taxes that the government may not collect.

homepage: homepage: http://www.registerguard.com/news/2004/06/10/b3.bz.enron.0610.html


Enron insider speaks in Olympia, WA 10.Jun.2004 20:01

Chris Clough cpclough@olympia.gannett.com

"We're thrilled and very fortunate to have someone of Lynn's caliber. And with recent events, it couldn't be more timely. KEN LAY was an ADVISER to the BUSH/CHENEY group, and the dealings at Enron might have implications on what happens in the presidential race."

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Lynn Brewer, a former mid- level Enron executive and author of "House of Cards: Confessions Of An Enron Executive," was the featured speaker at a fund-raiser for the National Association of Professional Mortgage Women -- Olympia.

"You could say I was a firsthand eyewitness to the off-the-balance-sheet partnerships," Brewer said. "I discovered bank fraud to the tune of a quarter- billion dollars. When I went to my supervisor, she said 'just leave it out of your brief.' " . . .

. . . Brewer blew the whistle and, after several setbacks, her message got out.

"I have a background in accounting and realized a shell game was going on," she said. "There were 264 trading violations at Enron in the first six months of 2000, and nobody was fired. Those violations were as high as $150 million, and there was no discipline taken. It's at the heart of Enron." . . .


questions 11.Jun.2004 12:34

strongbad

I posted this on a related story a few days ago but no one responded. Does anyone know, if since I pay my bill plus tax to PGE every month, PGE sends those taxes to Enron (still !), and then Enron doesn't actually pay the government those taxes...Can I stop paying the tax to PGE and send that tax money directly to the government? Is this legal? Where would I send it? Does anyone know?????