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July 22, 2005

Wrapping up the options for PGE

Well, there's been action on many fronts in the past few days, most of it having to do with the future of Portland General Electric. Enron announced the end of discussion with the City of Portland regarding the City's proposal to purchase PGE (read articles here). This was a disappointment, since we at CUB felt that public power would have been the best outcome for the customers of PGE. Though this public power bid began as a long shot, through the hard work of many people (including CUB staff), this became a viable option. We hope the City will keep their eyes open and the work they did close at hand, since no one knows what changes will occur to PGE's ownership in the future.

Also this week, the Governor has vetoed SB 671, the Mutual Utility Bill, and says he plans to do the same with SB 1008, the Oregon Community Power Bill. We worked hard to help write SB 1008 and are disappointed also that this bill did not fulfill its promise to become a successful vehicle for a local and publicly-owned PGE. However, we understand that the Legislative process is one full of surprises, twists and turns that are in the control of no one particular group or even politician. We do appreciate Governor Kulongoski stepping up to veto bills not in the best interest of PGE customers.

The remaining option on the table is stock distribution, an outcome favored by Enron and many local businesspeople. We wish to send a cautionary note to those who want to see an independent, privately-owned PGE as the end result: the law that has regulated utility structure and protected consumers for 70 years, the Public Utility Holding Company Act (PUHCA), is on the verge of being repealed by our sitting Congress. When that happens, we expect to see a flurry of activity around investment in utility companies, investment of the sort that has been illegal for most of the past century. We think it very unlikely that any independent PGE resulting from stock distribution will last long without attempts being made once again to purchase our utility.

That said, we believe that of the many options discussed for PGE since Enron began the bankruptcy process 2 years ago, the worst would have been a purchase by Texas Pacific Group, and that was successfully challenged and defeated by CUB and others. The best would have been a well-structured and responsibly-governed public power version of PGE, but it seems clear that that will not be the result in this round of changes. The middle road is what we are left with.

We still have many unknown variables ahead, but this result is one we can live with, and of course CUB will stay engaged in the process of whatever happens to Oregon's largest electric utility company.

Posted by Oregon CUB at July 22, 2005 02:47 PM

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