## Facts

- Portland General Electric Company (PGE) owned and operated an electrical distribution system containing approximately 235,000 wooden power poles of widely varying ages.
- PGE depreciated its poles as a group for tax and accounting purposes over a projected useful life of 37 years, although many poles remained in service beyond that period.
- PGE inspected and treated poles on a seven-year cycle and replaced poles only as needed; there was no market for used poles and no salvage value.
- Until July 1, 1993, when a pole was negligently destroyed, PGE billed third parties using an “undepreciated cost” method (original cost minus accumulated depreciation).
- After July 1, 1993, PGE adopted a “full replacement cost” method, billing third parties for the full cost of a new pole; when fully reimbursed by a third party, PGE did not depreciate the new pole for accounting and tax purposes.
- In 1994, Harry Taber’s truck struck and destroyed a PGE wooden distribution pole installed in 1934 (approximately 60 years old at the time of loss).
- Taber agreed to pay PGE’s removal and replacement labor costs but disputed PGE’s claim for the full purchase price of a new replacement pole.
- Farmers Insurance Company intervened because the same damages issue affected another pole-damage dispute.
- The parties filed cross-motions for summary judgment on the legal measure of damages; the trial court limited recovery for the pole to its undepreciated value, and PGE appealed.

## Issues

1. What is the proper measure of damages when a motorist negligently destroys a utility’s wooden power pole with no used-pole market: the pole’s undepreciated cost or the full replacement cost of a new pole?

## Decision

- The Oregon Court of Appeals affirmed the summary judgment for Taber and Farmers.
- The court held that, on the undisputed record, PGE’s recovery for the destroyed pole was limited to the pole’s undepreciated cost rather than the full cost of a new replacement pole.
- The court reasoned that full replacement cost would systematically overcompensate PGE by providing a new asset in place of an old, depreciated one and shifting depreciation burdens to tortfeasors.
- The court concluded that undepreciated cost, based on PGE’s own depreciation schedule, most closely approximated PGE’s remaining investment in the destroyed pole on this record.

## Legal Principles

- Property-damage awards in tort are compensatory and should restore the injured party to the position it would have occupied absent the wrong, not provide a better position.
- When a destroyed item is a depreciable capital asset and there is no meaningful market value, a factfinder may use a reasonable proxy for value that best reflects actual loss.
- A utility’s established depreciation practices and useful-life assumptions may be treated as persuasive evidence of the asset’s remaining value for purposes of measuring tort damages.
- Full replacement cost may be rejected where it would produce systematic overcompensation by replacing depreciated assets with new ones at a tortfeasor’s expense, especially when the owner’s accounting treatment would further eliminate depreciation on the replacement.

## Conclusion

The court limited damages for destruction of PGE’s pole to the pole’s undepreciated cost, holding that awarding full replacement cost would overcompensate the utility and that PGE’s own depreciation schedule provided the most supportable valuation proxy on the summary-judgment record.


Portland General Electric Co. v. Taber, 146 Or. App. 735 (1997)