The Oregonian — Editorials
Carpe diem, Portland, and carpe PGE
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[AT]aol.com; 1320 S.W. Broadway, Portland OR 97201.
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