The Oregonian — Editorials
Improving the lie about PGE's liabilities
But on the off chance you've been fooled by the happy face they're presenting about PGE's future, let's review a few of the arguments they're making in full-page newspaper ads and behind the scenes.
Miller, PGE's executive vice president, is busily lobbying business leaders, telling them how "helpful" it would be if they "communicated their views to the City." In the package Miller is passing around, he notes, "There is much discussion of our potential liabilities and whether these could be passed on to our customers if local government does not step in.
"For many liabilities, this theory variously defies statute, logic, precedent, and official statements to the contrary, but appears to be driving local efforts."
The use of the word "many" is particularly clever. Similarly ingenious is Fowler's declaration in newspaper ads that "those advocating condemnation are trying to raise fears Enron will saddle PGE customers with its liabilities. In an interview last week with The Oregonian, Enron interim CEO Stephen Cooper clearly stated: 'Under no set of circumstances is Enron going to take Enron's liabilities or Enron debt and jam them down onto PGE.' "
Put aside, for a moment, that after lauding PGE's independence from Enron in recent months, Fowler -- the utility's CEO -- is asking ratepayers to trust the word of Enron's new top dog, however clearly stated.
What's so obnoxious and misleading about what remains is that we're not talking about Enron's liabilities. We're talking about PGE's liabilities.
And they are legion. PGE is being sued by anyone and everyone who bumped into them on the trading floor during the contrived energy crisis. The state of California has sued. So have Washington, Montana and the Port of Seattle. Under PGE's liabilities you can also find union grievances regarding pensions, class-action suits over Trojan, and four separate Federal Energy Regulatory Commission proceedings.
Putting a dollar figure on those liabilities is problematic, which is why it's been difficult for potential buyers to determine a fair market price for the utility. Many litigants are waiting for FERC to levy its fines before trying to establish damages.
But I think it's fairly clear that a regulated utility has only two sources to raise the money necessary to deal with those liabilities: cash flow and shareholders.
And guess what, boys and girls: The shareholders are bankrupt. That means PGE must rely on its cash flow . . . the cash that flows from its ratepayers.
Fowler and Miller insist this is no big deal. They want all of us to believe that whether PGE is sold (fat chance) or its stock is distributed to creditors, the ratepayers will be held harmless.
Even if that's not PGE's design, they argue, ratepayers will be protected by the Public Utility Commission. This presumes, of course, that the PUC could casually turn aside creditors bearing a court judgment that says PGE owes them sums that may easily total in the hundreds of millions.
I don't think so. But that is PGE's corporate message and they're sticking to it. They're selling it to business leaders and in letters to the editor from former PGE execs and current employees. Fowler and Miller also brought that message along when they tried to strong-arm city Commissioner Randy Leonard in a meeting on June 30.
Before the city of Portland can condemn PGE, it needs three votes on City Council. Knowing Leonard is the crucial swing vote, Fowler and Miller came to lobby him.
"I assumed the meeting would be to talk about the facts of the reorganization," Leonard said, "until they said they were beginning to consider changing tactics, from being polite to the city to rolling up their sleeves and punching the city.
"That shoved me over the edge."
Leonard heard a threat. "If you're going to take a swing at us, you better have both feet planted on the ground for the return volley," he said. "I responded to them. I said, 'You need to know that I consider Enron's tactics to be beneath contempt. They have adversely impacted ratepayers. They have ruined workers' pension accounts. And they've done everything they could to avoid having cash on hand so to avoid paying off the claims of linemen who've lost everything."
All that's true. But all that said, the city doesn't view condemnation proceedings as a return volley. They are, instead, a reflection of the city's belief that it is right to worry about PGE's liabilities and their long-range impact on utility rates and the utility's ratepayers.
Why is condemnation such an opportunistic solution? Because if the city condemns PGE, it snares its assets and leaves the liabilities behind.
On Enron's doorstep, I might add.
I don't blame Fowler and Miller for vigorously opposing this plan. Even as they crow about the "new PGE," they are doing Enron's work, following Enron's orders and cashing Enron's checks.
And surely they understand that a publicly owned utility would not be obliged to pay them the salaries they earned, according to FERC filings, in 2002. Including bonuses, Fowler earned $979,000 last year; Miller $541,000. Another dozen PGE execs received $250,000 or more.
I don't fault any of them the money. They do their jobs well. We simply need to remember that their job is to promote and protect the interests of dear old Enron, not yours or mine.
Reach Steve Duin at 503-221-8597, Steveduin[AT]aol.com or 1320 S.W. Broadway, Portland OR 97201.
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