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This page contains a single entry from the blog posted on December 8, 2005 10:16 AM. The previous post in this blog was Oldie but goodie. The next post in this blog is New look. Many more can be found on the main index page or by looking through the archives.



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Thursday, December 8, 2005

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The editorials in The Oregonian are often so odd as to be comical, but today's lead screamer is a real classic. It's a nasty, nasty, nasty one, wherein the local daily once again confirms its role as the Official Mouthpiece of the Portland Old Boy Network. The paper rips into the Portland City Council for having the nerve -- the nerve! -- to question the billing practices of Portland General Electric. Sure, they collected from customers hundreds of millions for taxes they never paid, but according to the O (which of course never noticed or said boo while they were doing it), no one at City Hall should dare be bothered with that.

No, no, the tenacious watchdogs down in Salem should be handling this. Governor Ted will protect the little people from getting ripped off by Big Money. You know, the way he and his predecessor have done so well for the last decade.

As if.

They must have been into some pretty strong eggnog at Broadway and Jefferson yesterday afternoon to knock out gems like this:

Commissioners Randy Leonard and Erik Sten seized on one line in the report suggesting that PGE itself retained more than $88 million in income taxes never paid to taxing authorities. Leonard and Sten claim that the report suggests for the first time that PGE improperly "kept" taxes for itself.

It's more likely that the commissioners don't know what they're talking about.

That's right. No story here, folks -- go back to your little Portland worlds. Hey! Meier & Frank Santa! Season of Giving! City Hall blog!

Trust the bright lights at the O, people. There's nothing to worry about. And they know an affair when they see one.

In the long history of the city's expensive, and so far fruitless, attempts to socialize electricity, the current proceedings about the PGE books are actually the first that make sense to me. Someone in the public sector should have been asking these questions long, long ago. And whether the O likes it or not, the city has the power under state law to set electricity rates if it wants to do so; therefore, it is well within its rights to call PGE to account for itself.

Electricity ratemaking is an ugly business, but it's not that hard to understand if you're willing to dig deep and pay attention for a long time. Rather than do that itself -- rather than spend the time and money it would take to educate us all, which I thought was its job -- our monopoly daily would just have us accept the assurances of the utility executives whose actions are being called into question.

Not only does the paper write its own little overheated editorial, but of course, in case you only read the odd-numbered pages, they've got a defensive op-ed piece from a PGE face card on the facing page in the same edition. See? Everything's fine. Really. Seriously.

When the Old Boys start screaming this loudly, you know you're on to something. I opposed the whole city takeover of PGE, but I'm loving what's happening now. May Sten and Leonard keep the spotlight and the pressure on for a good, long while. If there's really nothing to hide, then the Suits Who Brought You Trojan should have nothing to fear.

Comments (18)

What really rankles me about the emerging PGE tax avoidance story is their manipulation of the City and County Business Income Tax. If they've actually been doing what Randy says they've been doing, then all the small businesses have been paying more than their fair share. Those kinds of numbers could have gone a long way to relieving some of the tax on the little guys and perhaps prevented companies like ours from jumping the county line.

Watchdogs in Salem, eh?

The PUC haven't been worth the chairs they sit on since Ron Eachus left.

And that part where PGE (and now the Oregonian) tell the City Council condescendingly that the City Council have no idea of what they're doing and shouldn't go there anyway – just boggles me. They said it with a straight face!

Local governments just can't win for losing. Either you tax your citizens too well or thoroughly, unless you don't, which is because you're inept.

I mean, I've pretty much gotten used to the idea that Big Money wonders how it's money got into my pocket, but I think it's arrogant to just lord it like that.

Not only does the paper write its own little overheated editorial, but of course, in case you only read the odd-numbered pages, they've got a defensive op-ed piece from a PGE face card on the facing page in the same edition. See? Everything's fine. Really. Seriously.

Same stunt they pulled during the JTTF debate.

As soon as I saw that, I thought of you. Please come back!

"It's more likely that the commissioners don't know what they're talking about."

Wow. I'm thinking it's more likely that whoever's greasing the palms of the O's editorial staff doesn't WANT the commissioners to know what they're talking about. I mean, hell. City Hall taking a stab at rooting out corruption? I'm all for it. My taxpayer dollars may, in fact, be paying for someone to find out where my taxpayer dollars are really going? Hot damn.

How the hell do you rag on that sort of thing with a straight face? Amazing.

Newspapers come out with editorials like this, and then a week or so later manage to write one of those "why are people reading the irresponsible blogs rather than newspapers?" stories. It never fails, and they never fail to miss the connection.

I was actually impressed that the Oregonian finally got something right.

Dave says: Newspapers come out with editorials like this, and then a week or so later manage to write one of those "why are people reading the irresponsible blogs rather than newspapers?" stories. It never fails, and they never fail to miss the connection.

So true. So true.

Let us not forget that the entire story is still not out. Tax law is a complicated set of rules. Big money, like PGE and every other large firm in the state, understand how to work under the law to their advantage. That is not a crime and many would not even consider it unethical. But it should certainly make us push for some reforms. Just don't be so single minded to think that the utiltiy is the only firm in this state operating to best advantage under the law. Just consider how many tax attorneys there are "helping" individuals and firms out.

I'll tell you the real reason they wrote this editorial. If they argeed to the premise that City Council had not only the authority but the mental acuity to delve into these issues, they'd have backed themselves into a corner the next time they argued the City couldn't handle running a utility.

I'm not saying the two matters are comparable (they aren't). But I think the editorial board may be playing it safe with their rhetoric. If they oppose a City takeover of PGE because the City isn't smart enough to do so, it has to also argue the City isn't smart enough to look into any PGE-related issues at all.

Theo's editorial board isn't known for an appreciation of distinction and nuance. So they opt for a perverted sort of consistency.

A foolish sort, in fact. And we know what they say about foolish consistency.

I don't know, B!X. I think it's more likely they just plain bought the "it's too complicated" for "you" to understand.

They simply believed what the PGE folks told them. Their explanation of the "deferred taxes" dodge in the editorial is impossible to follow if one is trying to really understand the accounting in the issue. So, I'd bet -- they don't.

After all, if City Hall's attorney is not a utility tax expert -- you think the O's reporters are?

not sure Jack if you allow links, but try this re December 12 hearing at Multnomah County Courthouse to hear PGE motions to dismiss the class action lawsuit:

Fortunately, I think more of the O's readers trust Steve Duin, and identifiable person, than the faceless Oregon editorial board. And once Steve gets off this wierd central Oregon murder kick, he'll be on PGE's case.

Nigel Jaquiss already got the interesting stuff out last week, so let's see, the O should be getting around to it any day now...

So let me get this straight.

If PGE is owned by Oregon shareholders and pays federal income taxes, it's OK to charge the Oregon ratepayers enough to cover those taxes.

But if PGE is sold to an out of state corporation, say from Louisiana, which incurs losses from Hurricane Katrina which offset the profits from its PGE subsidiary, then the Oregon customers of PGE should get a rate cut?

Sorry, I just don't get it.

Your not alone, Bill.

Neither do the execs at PGE.

Fortunately, the vast majority of Oregonians do get it.

Dear Most Honourable Councilman Leonard:

Just because an idea is politically popular doesn't guarantee that it makes economic sense or is in the public interest. But you've obviously staked out a position that has traction with the general populace.

What's the downside? If you have your way, PGE will likely end up spun off as a separate entity, in which case the ratepayers will end up paying the taxes anyway. However, as a utility without the benefit of a geographically diversified customer base, it will end up with a higher cost of capital, which of course will be passed on to the ratepayers.

Taxes charged for but not paid by exploiting the tax code, albeit legally, is one thing.

Falsely attributing profits to Mult County for the purpose of charging the Mult County business income tax that PGE's internal emails reveal they never planned to pay to the county is quite another.

Only someone benefiting from that scheme would not condemn it.


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