Oregon Supreme Court Affirms OPUC Decision on Trojan Refunds

On October 4, 2014, the Oregon Supreme Court issued a decision that affirmed an order by the Oregon Public Utility Commission (Oregon Commission) requiring Portland General Electric Company (PGE) to refund amounts to its customers.  Some of PGE’s customers and ratepayer advocates challenged the Oregon Commission’s decision on the grounds that the refunds to customers were insufficient. 

The case has a long and complex history with numerous trips to the Oregon courts and the Oregon Commission.  In 1993, PGE decided to close its trouble Trojan nuclear power plant early.  The Oregon Commission allowed PGE to continue to recover both the costs of, as well as a return on its investment on, the plant.  Customer advocates challenged the Oregon Commission’s decision, and the Oregon Court of Appeals concluded that PGE could recover Trojan’s costs, but could not cover a return on its investment. The Oregon Commission ultimately decided that PGE did not collect excessive amounts from ratepayers from 1995 to 2000, but that PGE should refund customers $33 million for amounts unlawfully collected after 2000.  The Oregon Supreme Court affirmed this order on October 4, 2014.

The Supreme Court made a number of important decisions that will have long-term impacts on Oregon utility and regulatory law.  The Court concluded that the Oregon Commission has the authority to require a utility to refund amounts that were collected pursuant to an order that is subsequently found to be unlawful.  This affirmed the Oregon Commission’s order requiring PGE to refund $33 million to its customers.

The Court recognized that many states have adopted the rule against retroactive ratemaking, in which an agency cannot alter past rates to account for unexpected or actual utility profits or losses.  The Court concluded that it was unnecessary to precisely define the contours of the retroactive ratemaking rule or decide whether Oregon accepts the rule in all circumstances.  The Court explained, however, that the rule against retroactive ratemaking does not preclude the Oregon Commission from ordering refunds to be paid in this case.  This is because the Court found that the Oregon Commission did not alter PGE’s rates retroactively.  Instead, the Court concluded that the Oregon Commission used ratemaking principles to calculate the rates that the commission would have authorized PGE to charge if the utility had not improperly included a return on the Trojan investment.

In the end, it was appropriate for the Oregon Commission to reexamine and reset the rates that were based on an unlawful order.  The practical result was that the Oregon Commission reviewed the past rates and determined that PGE did not collect more than it was entitled from customers during 1995 to 2000, but that refunds were owed for the time period after 2000.  The Court made other findings, including that the Oregon Commission had the authority to allow PGE to recover interest from customers, and that the order was supported by substantial evidence.


Trojan Decision decision can be found HERE



These materials are intended to as informational and are not to be considered legal advice or legal opinion, nor do they create a lawyer-client relationship. Information included about previous case results does not assure a similar future result.