Utility misconduct is a serious charge, one that lingers long after the headlines fade.
For PacifiCorp, Utah's largest electric utility, the allegation is especially stinging, coming from the state's utility watchdog, the Committee of Consumer Services, which last month accused the Portland-based company of improperly collecting through customer utility rates more money than it needed to pay its federal income taxes.
This week PacifiCorp, which operates in Utah as Utah Power, went on the offensive, calling the committee's charges "fallacious" and "improper" and asking state regulators to dismiss a committee request that the company refund $50 million to Utah customers.
"You would have to have a conspiracy," Rich Walje, Utah Power president, told the Deseret Morning News earlier this week. "At the personal level that's pretty offensive. There could be no one person that could do something like this."
That something centers around the interpretation of a 2004 audit report by the U.S. Securities and Exchange Commission.
The consumer committee charges that PacifiCorp Holding Inc. — a holding company set up by Scottish Power, the parent company of PacifiCorp — wrongfully collected roughly $229 million to pay income tax costs that exceeded the utility's actual tax liability.
In its report, the SEC directed that PHI distribute back roughly $229 million to PacifiCorp. The committee claims roughly $50 million of that amount was taken from Utah ratepayers.
In a filing to state regulators, PacifiCorp called the purported violations "purely procedural."
In fact, the company said, the SEC allowed a $150 million capital contribution to PacifiCorp by Scottish Power as a credit against the $229 million. In addition, PHI agreed to forego the $79 million difference, money earmarked for dividend payments.
"The SEC approved these actions as a complete remedy to the purported defect," PacifiCorp said in its filing. "Contrary to the assertions, there simply was no SEC finding that PacifiCorp 'unlawfully provided' or that PHI 'unlawfully appropriated' tax payments properly belonging to PacifiCorp."
In addition, PacifiCorp maintains that nowhere in the SEC audit "does the SEC claim that PacifiCorp engaged in unlawful or illegal conduct as the committee alleges."
PacifiCorp points out that the committee was fully aware of the SEC audit findings, yet has signed off that past rates "were lawful, just and reasonable and in the public interest," including current rates.
"In 2004, the issue was front and square in the rate case," Doug Larson, PacifiCorp's vice president of regulatory affairs, said. "The SEC audit was finished in 2004, and they were provided information. If they were that concerned, they should have never settled the rate case. They should have taken it to the (Public Service) Commission and said the company is doing something wrong."
Not only did they not do it then, Larson added, the committee had a second opportunity in February to raise the issue during a separate rate case.
Larson said the committee's allegations amount to a last ditch attempt to squeeze something out of Scottish Power before it finalizes the sale of PacifiCorp to MidAmerican Energy Holdings Co., which in May said it would acquire PacifiCorp in a $9.4 billion deal.
"If Scottish Power were still continuing to be here, would the issue of wrongdoing and illegality be brought up?" Larson asked. "Or would they just deal with it again in the next general rate case like they've done in 2004 and 2005?"
E-mail: danderton@desnews.com