The Public Service Commission this week declined to throw out a request by the Committee of Consumer Services that it review the way the power company handled its income taxes to determine if its customers were treated fairly.

"We weren't surprised that the PSC declined to grant our motion to dismiss, but we were a little surprised that we didn't at least get a hearing," Utah Power attorney Tim Hunter said, adding the company is eager for state regulators to review the entire case.

The PSC's ruling means hearings probably will be scheduled for April or May 2006.

At issue is whether Oregon-based PacifiCorp, which was acquired by Scottish Power in 1999 and does business here as Utah Power, collected the right amount of taxes from its customers from the three-year period ended in 2003.

The consumer committee, which represents the interests of Utah residential and small business customers, contends that PacifiCorp used a clever income tax accounting maneuver to overcharge its customers by $328 million. It wants the PSC to review the matter and if necessary order the company to give back Utah Power's share, estimated at $50 million, or about $25 per household.

The committee's request is based on a 2003-2004 audit of Scottish Power's holding company, which controls the Glasgow-based conglomerate's U.S. business interests.

Utah Power contends that it followed long-standing accounting rules established by the PSC and IRS.

Those rules allowed Scottish Power's subsidiaries based in the United States, including PacifiCorp, to estimate their tax burdens as if they were stand-alone businesses. The parent company, however, was permitted to consolidate the filings of its various subsidiaries and pay a lot less in taxes than its subsidiaries' collected.

The PSC ruling paves the way for the consumer committee's staff to begin reviewing PacifiCorp's tax records in closer detail.

"The next step is to get our tax expert out to review the company's confidential state and federal tax filings to determine what was collected in rates and what was actually paid in taxes," committee director Leslie Reberg said.

steve@sltrib.com