What About Stock Distribution for PGE?

In all the discussion of what will happen with PGE, one of the likely outcomes, stock distribution, has not yet been discussed here on the CUB site. If none of the purchase proposals currently on the table (City of Portland Public Purchase, Oregon Community Power Public Purchase, or Oregon Mutual Utility Purchase) goes through, then it is very likely that Enron will begin the process of distributing PGE stock to their creditors, who then most likely will sell that stock on the stock market, bringing PGE back to its status as a publicly-traded company.

CUB argued during the Texas Pacific attempt to purchase TPG that distribution of PGE’s stock would be preferable to the business model that Texas Pacific was proposing. This does not mean, however, that stock distribution would be CUB’s first choice or that we believe ratepayers would benefit the most from that sort of future for PGE. Here’s why:

1) Lengthy Process with an Unknown Completion Date: As part of Enron’s bankruptcy proceeding, distribution of PGE’s stock would happen in stages over a long period of time. Bankruptcy proceedings can easily take longer than a decade to complete, especially large and complex ones such as the Enron bankruptcy.

2) Control Remains with Enron: During most of the stock distribution process, control of PGE would remain with Enron, its creditors, and the Disputed Claims Reserve (DCR) Overseers. We have no way of knowing who will be appointed by Enron to oversee the PGE distribution process or even to sit on the PGE board during these years.

3) No Guarantees for Public Status: At the end of this long and complex distribution process, PGE could be a publicly traded, stand-alone company still headquartered in Portland. But no one can guarantee this, since Enron officials or those they appoint could decide to sell PGE, either whole or in large percentages of shares, at any point.

4) Takeover Purchase Could Happen Again: If indeed, PGE did make it intact through the long process of stock distribution to become a publicly-traded company again, there is always the possibility that another corporation could manage a takeover purchase, as Enron did in the late ‘90s, with an equally uncertain outcome.

In addition to these drawbacks of the bankruptcy proceedings themselves, stock distribution would by its very nature lack the advantages of a public power purchase by the City or State: low-cost financing, tax-exempt status, and a board appointed by elected leaders to look out for ratepayers.

We therefore say again, that stock distribution, while preferable to purchase by a corporation looking for short-term profits, is not the preferred option for Oregon ratepayers. Given the available options, CUB supports a publicly-owned utility that would provide long-term stability, lower rates, and community-oriented leadership for the future of PGE.

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