The Oregonian — Editorials
Carpe diem, Portland, and carpe PGE
06/19/03
Condemn Portland General Electric? I don't know if it's the perfect solution in the city's
quest to protect the public interest and this very public utility, but it's finally time
to set the play in motion.
What is the city waiting for? What's riskier, starting down the legal road to condemnation or waiting for PGE's bankrupt parent to do the right thing?
This is Enron we're talking about. This is a company that collected $463 million from PGE
ratepayers to cover its federal and state income tax bills, and kept virtually every dime
of it in Houston. This is a company facing over $35 billion in creditor lawsuits, not a company
you can trust to negotiate with Oregon's interests in mind.
Two weeks shy of a bankruptcy restructuring deadline that's 14 months overdue, Enron --
and its loyalists at PGE -- continue to play out the charade that a fresh, new beginning
for PGE is in the works.
Most observers agree Enron hasn't come close to selling the utility to a third party. The
biggest barrier to selling now is that any buyer is going to say they don't want to get stuck
with a legal nightmare, said Will Nelson, a California-based energy consultant. Dan Meek,
one of the main engines of the Utility Reform Project, argues Enron's creditors think they
will get a much better price for PGE if they delay the sale while continuing to jack up local
energy rates.
Nor does the "reorganization" of PGE
-- lauded by the retention bonus babies on the old management team -- offer Oregon much
of value. In this scenario, Enron will satisfy
its creditors by dispersing the 43 million shares of PGE it controls.
Enron, critics argue, will drag that dispersal
process out for two or three years, all the while looking for another buyer. "If you're searching for stability, you're not going
to get it through reorganization and transfer to the creditors," said Ron Eachus, former
chairman of the Oregon Public Utility Commission.
What's the city to do? "Two things," Eachus said: "You
keep negotiating. If it's a matter of money, you put more money on the table. Secondly,
if you don't get it,
you look at condemnation as an option."
The process of condemning -- and taking control of -- the utility through the city's powers
of eminent domain would begin with the city determining if the move is in the public interest,
a conclusion Enron is free to challenge.
The next step would be a formal appraisal of the seized asset. If either the city or Enron's
creditors disagree with that appraisal, they go to court to negotiate a price.
On the council, Commissioner Erik Sten is sounding
the most bullish on the city playing its hole card. "We've been working with Enron's process. That's about to end," he
said. "Enron is looking to get as much money out of the ratepayers as possible. It's
our job to make sure the public interest is represented."
Commissioner Jim Francesconi is opposed to condemnation,
arguing the city would lose "control" of
the negotiations and that a jury would decide on a price for PGE that might not result in
significant savings for the ratepayer.
That second part may be true . . . but it would be an Oregon jury, not a federal bankruptcy
court.
Peggy Fowler, PGE's chief exec, said Enron's bankruptcy has given the usual gang of public-power
advocates a chance to pursue the same tired agenda.
"I believe certain businesses are run better in private hands," Fowler
said.
As do I. But the evidence -- $463 million in misdirected
taxes, the feds' investigation of PGE's involvement in Enron's "Death Star" scam,
and the huge boost in energy rates -- suggests this may not be one of them.
What's attractive about condemnation, Nelson said,
is "you get a future that's visible.
You get accountability. Public review. Governance. You will have more power over cost control
than if you're thrown into today's market environment."
Thus, it's in the public's interest to start down condemnation alley. The road may have
some wicked, contentious turns, but the city has every reason to believe it leads away from
disaster, and not into its wicked teeth.
Steve Duin: 503-221-8597; Steveduin@aol.com; 1320 S.W. Broadway, Portland OR 97201.
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