The Oregon legislature voted in July to require utilities to reduce rates if they end up not paying the full taxes that were included in rates.

Utilities would have to submit annual reports to the state showing the actual taxes they paid. A utility would be treated as having paid one of the following two amounts in taxes: the taxes the utility would have paid on a standalone basis if it did not join in filing a consolidated tax return with other, affiliated companies or, if less, the total taxes paid by the consolidated group. This calculation could force utilities to share tax benefits with ratepayers that their affiliates receive — for example, from investing in wind farms.

The governor is expected to sign the bill in September.

The move comes on the heels of disclosures that the taxes for which Portland General received reimbursement in rates during the period Enron owned the utility were not actually paid. The utility’s taxable income was offset by losses elsewhere in the Enron consolidated return.

Keith Martin