The Oregonian - Business
Oregon's investigations of PGE trading will continue
Attorney General Hardy Myers will try to pressure the utility to cooperate through filings with state and federal courts
GAIL KINSEY HILL
Oregon Attorney General Hardy Myers said Monday he will vigorously pursue an investigation into Portland General Electric's controversial trading practices, despite the utility's resistance.
Myers planned to submit filings to state and federal courts today in an effort to pressure PGE to cooperate with the investigation, which zeroes in on wholesale electricity trades made during the 2000-01 energy crisis.
The federal filing, in U.S. District Court, will challenge PGE's assertion that the state lacks jurisdiction to investigate the trading activity.
The state filing will ask the Multnomah County Circuit Court to compel PGE to release detailed information about the transactions, which involved electricity sales throughout the Northwest and California.
"We're trying to determine with certainty whether, and to what extent, PGE was involved in any illegal conduct in the marketplace," Myers said. "We believe we have a duty under Oregon law to determine exactly what happened."
PGE maintains that the Federal Energy Regulatory Commission already has thoroughly investigated the transactions. Under a tentative agreement reached in September, PGE agreed to pay $8.5 million -- including $1.3 million to Oregon -- to settle the case. The utility admitted no wrongdoing.
FERC is expected to approve the settlement Wednesday at its regularly scheduled meeting.
"We feel that another investigation is redundant to what FERC already has conducted," said Kregg Arntson, a PGE spokesman
The state's legal action pits the attorney general against Oregon's largest utility and re-energizes a controversy that PGE and its parent, bankrupt Enron, had hoped to put behind them.
Houston-based Enron, collapsed into bankruptcy in December 2001, pummeled by financial and trading scandals. The once-giant energy trader recently agreed to sell PGE to investment firm Texas Pacific Group for $2.35 billion. The deal is pending before the U.S. Bankruptcy Court.
The federal investigation, initiated more that a year ago, focused on trades that PGE made with Enron's power trading arm. Regulators questioned the transactions, not only because they involved deals between affiliated companies, but also because they may have allowed Enron to illegally manipulate wholesale markets.
The federal inquiry was part of a sweeping review of energy companies and merchant traders that may have participated in bogus trades, exacerbating electricity shortages and forcing up wholesale prices.
PGE acknowledged that it may have unwittingly allowed Enron to complete a market-rigging strategy known to Enron insiders as "Death Star," but that it never knowingly participated in the scheme.
The FERC settlement included a sign-off from the Oregon Public Utility Commission, which regulates investor-owned utilities and the retail rates they charge consumers.
$1.1 million to Tacoma Other parties in the case included the California Department of Water Resources, which buys electricity for the state, and the city of Tacoma, which operates a municipal utility. Under the settlement, PGE paid California $6.1 million and Tacoma $1.1 million. The $1.3 million for Oregon will go to residential and industrial ratepayers.
Myers said the state Department of Justice neither signed onto the settlement nor did it succeed in reaching an agreement of its own with PGE.
Myers said he is intent on investigating all the trades that PGE conducted during the 2000-01 period, not just the Enron-related deals targeted by the federal commission.
"It goes to activities beyond those particular transactions," he said.
The investigation is searching for possible violations to the Oregon's unfair trade practices and antiracketeering statutes, Myers said, laws that FERC does not pre-empt.
PGE officials counter that the Federal Power Act gives the federal commission "exclusive authority" to regulate wholesale power trades. On Nov. 26, they filed a complaint in U.S. District Court -- in response to an investigative subpoena from the state -- outlining their argument.
Today's filing by the attorney general will ask the court to dismiss that complaint.
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