Towers and Powers All Falling Down

Things seemed to be falling all over the place last week, two of the most noteworthy falls being the falls of two icons: Trojan’s cooling tower, which was imploded on May 21, 2006; and the conviction of those powerful executives who led Enron to implosion. One of these falls was literal and physical; one was legal and financial. Both were connected to Portland General Electric, Oregon’s largest electricity-providing utility.

The Oregonian, in its coverage of the Trojan implosion (Nine seconds end Trojan era, 05/22/06), referred to “Oregon’s brief and troubled experience with nuclear power generation,” and, indeed, this description seems apt. Built by Bechtel in 1976, shortly before a 1980 ballot measure that prohibited further nuclear power generation facilities without an adequate nuclear waste disposal solution, Trojan was supposed to provide electric power to Oregonians for more than 30 years; however, it lasted only until 1993. Trojan had experienced an unusually high number of shutdowns and safety violations in those 17 years; for instance, CUB reported in 1990 that PGE had been fined, partially because “PGE personnel were signing surveillance forms for inspections that were not done…”

So things were not going well at Trojan. Ballot measures had been filed to close Trojan by concerned energy activists. The final straw came when the steam generator tubes broke, costing at least $135 million to replace, and an analysis by the Public Utility Commission showed that closing Trojan, and replacing that electricity with purchased power from the market, would be cheaper for customers in the long run.

There followed much legal and political wrangling: CUB filed and won a lawsuit against a PUC decision allowing PGE to keep making a profit on the closed nuclear plant. PGE then turned to the Legislature and got a bill passed into law that allowed utilities to keep collecting profits on closed power generating facilities. CUB then began collecting signatures to place this law on the ballot, giving citizens the chance to reject this corporate giveaway. PGE, seeing the writing on the wall, signed a settlement agreement in which they ended the collection of more profit on the defunct power plant.

And there the situation sat, until May 21st. On that day, after lighting a fuse to 2,792 pounds of dynamite, the long-closed nuclear tower “bowed slightly to the southeast ... and then sunk into itself and was gone.”

And then four days later came another fall, one that reverberated around the country from a Texas courtroom. From Newsweek’s June 5th edition: “Ken Lay was convicted on all 10 conspiracy and fraud charges the government brought against him, and Jeff Skilling ... was convicted of 19 of 28 counts.” How did the prosecution get these convictions? “They charged Lay and Skilling primarily with misleading investors, employees, and regulators…” Everyone has had their suspicions about Enron’s shady dealings, and this decision seems to confirm them, to prove that Enron really was rotten at its core.

Enron’s legacy in Oregon is twofold. First, they bought PGE in order to launch a radical deregulation plan in our energy market that would have sold all generation assets and forced customers to buy power from a retail market, a market that didn’t exist then and still doesn’t today. Based on what happened in the wholesale market, our estimation is that, if Enron had been successful, in 2001 rates would have risen from 6 cents per kilowatt hour (kWh) to more than 30 cents, costing customers at least $1 billion. Enron did get approval to buy PGE, but they got held up on that whole deregulation scheme: “There’s little question Enron will see to it that electricity deregulation takes hold in Oregon [ed. note: didn’t happen], but two guys you’ve never heard of are trying to make sure that consumers aren’t screwed in the process. The two are the bearded (and often barefoot [ed. note: not so much anymore]) Bob Jenks and his clean-cut cohort Jason Eisdorfer.” Willamette Week, 08-05-98.

The second legacy Enron left was, of course, the West Coast energy crisis of 2001. Their trading scams and deliberate power supply manipulations led to blackouts in California, and higher rates throughout the Northwest. Many utilities in the region were forced to raise rates 30-50% during this time, including PGE.

Customers of PGE in Oregon weren’t the only ones affected—so were PGE employees. Thousands of local PGE employees lost significant chunks of their retirement savings.

And so a tower implodes in a huge pile of steel and concrete. And convictions follow the day when “Enron imploded ... turning almost overnight from No. 7 in the Fortune 500 into a bankrupt hulk.” Both of these outcomes may be, at their base, more symbolic than final. Lay and Skilling will likely be free from jail for months or years while they appeal, and PGE customers will be paying to clean up the Trojan site and store the accumulated nuclear waste for years to come.

For those of us who believed Trojan was a nuclear lemon, and that Enron’s money-making machinations had to be illegal, we find a certain vindication in these conclusions, symbolic or not. However you look at it, feeling vindicated is nice, but with PGE asking for an 8.4% increase in rates while raising executive salaries, it’s time to get back to work.

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