PORTLAND, Ore. - A city review of taxes paid by Portland General Electric suggests the utility overcharged ratepayers by nearly $1 billion since it was purchased by Enron Corp. in 1997.

City Commissioner Randy Leonard told The Oregonian the overcharge "appears to be inappropriate."

In a separate story on the overcharge, Willamette Week reported Wednesday it had documents that indicated the tax strategy was a deliberate effort to boost revenue and executive bonuses.

Leonard, who authorized the review, said a full report is expected to be made to the Portland City Council next week.

The city report and the documents obtained by Willamette Week support claims repeatedly made by Dan Meek, attorney for the Utility Reform Project, a watchdog group founded in 1984.

Meek declined comment Wednesday, citing a pending lawsuit he has filed against PGE. But he told The Associated Press earlier this year that he estimated PGE was earning more than double the allowed rate with the tax strategy.

Willamette Week obtained financial and tax records from PGE under a public records request after the city requested the records. The weekly newspaper also obtained internal PGE e-mail that was turned over to Meek in the lawsuit he filed against the utility.

The documents show PGE collected more than $671 million from ratepayers for state and federal taxes from 1997 through 2005.

But what PGE failed to disclose was that it kept $96 million - despite repeated public suggestions that all the money had been paid to Enron.

By comparison, PGE earned only $58 million in profits in 2003 and expects to earn less than $100 million in 2005.

The total cost to PGE ratepayers is estimated at more than $900 million - the $671 million in state and federal taxes pocketed by Enron and PGE and $243 million in Enron debt that was forgiven as part of the bankruptcy.

Meek has estimated it could be more than $1 billion, including dividends Enron paid with revenue from the utility.

The latest tax dispute is part of the long battle between the city and Enron, marked by a scandal that forced former Gov. Neil Goldschmidt to resign from his role in a failed effort by an investment firm, Texas Pacific Group, to buy PGE from Enron.

The city made its own bid for the utility after the state Public Utility Commission rejected Texas Pacific last year.

But Enron interim CEO Stephen Cooper rebuffed the city proposal to convert PGE to a municipal utility. Instead, Cooper supports Enron's plan to hand over ownership of PGE to its creditors with a stock distribution approved by a federal bankruptcy judge in New York.

If the state PUC approves - with a decision expected late this month - the distribution plan could take many years and will leave current PGE management in place.

Erik Sten, the Portland city commissioner who led the city bid, said the documents uncovered by Meek and Willamette Week show that PGE has been trying to blame Enron for any problems while taking advantage of the bankruptcy.

"Every comment PGE has ever made leads you to believe all the taxes were sent to Enron," Sten said Wednesday. "It turns out that close to 15 percent of the taxes stayed in PGE's bank account."

Sten accused Cooper of declining the city bid in order to keep control and "milk" the company of profits while the stock distribution is made.

"We're going to scrutinize every bit of it, and we're going to get to bottom of why, if this is such a lucrative business, they wouldn't sell it to our citizens for top dollar," Sten said.

He noted the city since has considered a little-used state law to take control of PGE rates, which rank among the highest in the Northwest. Sten also called on the Oregon Public Utility Commission to investigate.

Bob Valdez, spokesman for the state PUC, said regulators will question PGE officials.

"It's premature to say whether there will be investigation," Valdez said, "but if there are any illegalities we potentially see, we will investigate."

A spokeswoman for Cooper in New York could not immediately be reached for comment.

PGE spokesman Scott Simms told Willamette Week the utility did nothing improper and the money is being held as deferred taxes that will come due in a future tax year.

He said the deferred taxes actually "benefit customers because they represent a reduction in our rate base and are essentially an interest-free loan from the government."

Simms and other PGE officials did not immediately return calls from The Associated Press.

But Phillip Gildan, a Florida utility lawyer who has analyzed PGE, disputed Simms.

"The source of the 'loan' is customers, not the government," Gildan told Willamette Week. "PGE may or may not pay those taxes in the future, but in the meantime they, not the customers, benefit."

The weekly said the documents it obtained also showed PGE kept tax dollars earmarked for Multnomah County, with the largest population in the state.

It is the only Oregon county to levy a business income tax on all companies that generate revenue within its borders. Between 1997 and 2005, the company collected about $7 million from county residents, according to company figures reviewed by Willamette Week.

But PGE kept about $2.5 million after passing along the bulk to Enron, the documents said.

The e-mail Meek obtained also shows that PGE executives rejiggered calculations on the share of wholesale profits allocated to Multnomah County in order to collect more money from residents.

Willamette Week noted that PGE executives get bonuses pegged to profits.

In March, PGE announced the 2004 bonus for CEO, Peggy Fowler was $377,000 plus her $350,000 salary, an increase of 57 percent from 2003.

Bill Parish, a Portland investment adviser and former CPA who reviewed the e-mail for Willamette Week, told the weekly they undermine the utility's claim that it was a victim of Enron, just like ratepayers and investors.

"It's startling to see a respected utility pilfering county taxes from ratepayers," Parish told Willamette Week.

(Copyright 2005 by The Associated Press. All Rights Reserved