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In its purchase offer for PGE, Texas Pacific provides almost no reduction in rates.
It does add $707 million in new debt to the $1.1 billion of existing debt.

Oregon PERS money may total 71% of the $419 million invested by the Texans, pitting ratepayers against retirees in a Enron Part II.

Texas Pacific buys distressed companies and then sells them a few years later for a profit ranging from 20 to 40 percent.
"Generally speaking, you like to dance with the girl that brung you, and if you can't sometimes you have to shoot her." - David Bonderman, Texas Pacific chief, commenting about corporate buyouts.
Neil Goldschmidt's wife Diana was a member of the Oregon Investment Council. It waived the normal $200 million cap for a single investment and gave Texas Pacific $300 million. This occured just days, they claim, before Neil Goldschmidt was brought into deal.

Texas Pacific Group

The PUC denied Texas Pacific Group’s proposal to acquire PGE. Read the 5-page Conclusion and Order section here or view the 77-page decision here (346KB).
KATU: Texas Pacific Group's Bid For PGE Is Denied | Gov. Kulongoski's statement
Oregon Public Utility Commission: Portland General Electric Sale (updated to include decision)
The Oregonian/AP: Regulators deny Enron subsidiary purchase
Portland Mayor Tom Potter: Talking Points regarding PUC denial
Utility Reform Project: City of Portland Should Aquire PGE Now

Willamette Week: The PGE Papers (What Texas Pacific Doesn't Want Oregonians to See)
Portland Tribune: Legal eagle eyes PGE deal
Steve Duin of the Oregonian: Focus on public interest, not 'net benefit'
New York Times: Secrecy Stripped From Oregon Utility Sale
The Oregonian: Documents hint at plans for PGE
KGW: PGE sale has different twist in confidential memo or
Parish & Company: Reference list with analysis and commentary
BlueOregon: Discussion on Texas Pacific, PGE, and Project Tahoe


Update: Since written, Goldschmidt has resigned and Texas Pacific Group has offered a miniscule $43 million in rate relief to customers. Oregon's Department of Justice investigated Diana Goldschmidt and the Oregon Investment Council on its additional $300 million investment with Texas Pacific. The "limited" investigation found little wrong. In addition, previously secret papers revealed that Texas Pacific expected to make a $1 billion profit (as much as 38.4 percent a year) if it held onto PGE for five years. On 3/10/2005, the Oregon PUC rejected the Texas Pacific purchase of PGE as not being in the public interest.


Texas Pacific Group & Neil Goldschmidt

Texas Pacific Group, based in Fort Worth, Texas, announced on November 18, 2003 that it had reached an agreement with Enron to buy PGE for $2.35 billion, including $1.1 billion in debt costs/liabilities. Enron paid $3.1 billion for PGE in 1997.

Texas Pacific Group is a private company, exempt from SEC or any other regulatory scrutiny. The company buys distressed companies and then sells them a few years later for a profit ranging from 20 to 40 percent. Ratepayers can expect more uncertainty in the future. What steps will Texas Pacific undertake to maximize its profit during its short-term ownership? One thing is certain, PGE will experience"revolving door" owners with no guarentee that a future owner won't be as corrupt as Enron. History shows that the Oregon PUC won't or can't protect ratepayers.

TPG made no mention of electricity rate cuts during its November 18 news conference announcing its offer. Bankruptcy Court approval, along with federal and state regulatory approval, should take until late 2004 or early 2005 and it's very possible the deal won't go through.

Neil Goldschmidt, a former Oregon governor, is the most well known public figurehead in the TPG offer. In Texas Pacific's Oregon Public Utility Commission filing to buy PGE, it stated that Neil Goldschmidt and Tom Walsh of Oregon, and Gary Grinstein of Washington will invest $2.5 million in the venture BUT control 95% of the voting stock. At the very least, the three will more than double their investment in a few years when Texas Pacific sells Portland General. There's a stategic reason for the three's control over voting stock, that being that Oregon PERS, who is investing at least $300 million (71 percent of Texas Pacific's total investment) will have almost no say in what the company does.

In addition, the three Northwesterners will profit in other ways through the companies they own or control. That could be the big payoff for them in the long run. Goldschmidt is already on Texas Pacific's payroll. Tom Walsh owns a construction company and Gary Grinstein controls numerous businesses.

Goldschmidt is a lobbyist and senior partner in the firm Goldschmidt Imeson Carter. Whenever a major business deal occurs in Oregon, there's a good likelihood Goldschmidt or his firm is involved in some way. He helped facilitate the sale of Oregon's Willamette Industries to Weyerhaeuser, an out-of-state company, at a cost of at least 500 Oregon jobs. Goldschmidt also headed a commission for Energy Northwest to find buyers for electricity that could be produced by the mothballed Hanford. Will the Trojan Nuclear Plant be resurrected?

In early 2003, Goldschmidt was hired to co-chair a national airline industry coalition to push a bill in Congress that would ban the right of airline unions to strike.

Oregon's quasi-public State Accident Insurance Fund (SAIF) disclosed in November 2003 that they hired Goldschmidt in 1996 as a consultant. He was first paid hourly, then given a contract valued at $5,000 a month, and eventually received $20,000 a month. Goldschmidt received at least $1.1 million as SAIF's consultant/lobbyist. The insurer has acknowledged that it did not follow normal procedures for state contracts.

Sen. Vicki Walker, D-Eugene, filed an ethics complaint on December 5, 2003 over the contracts with the state Government Standards and Practices Commission. Walker’s complaint alleges that the payments to Goldschmidt and Larry Campbell, another lobbyist, were over $1 million more than what SAIF previously reported. Goldschmidt canceled his contract with SAIF on the same day the complaint was filed. As SAIF and Goldschmidt have admitted there's no written work product (what he did to receive such an enormous payoff) we may never know the extent of his activities against the best interests of Oregon workers.

While governor in 2000, Goldschmidt was a driving force behind inactment of Senate Bill 1197, a major workers' compensation system overhaul. The major provision of the bill, exclusive remedy, was found unconstitutional in 1995. SB 1197 provided negligent employers immunity from civil claims even when injury claims were denied completely by the workers' compensation system.

Neil Goldschmidt's wife Diana is a member of the Oregon Investment Council. It decides where the Oregon Public Employees Retirement Fund and other state funds are invested. Just days before Goldschmidt became involved with the Texas group according to statements he's made, the Council approved an additional $300 million to be invested with Texas Pacific Group. Diana Goldschmidt voted to approve the amount, $100 million over the normal cap for a single investment. Oregon now has $950 million invested with the Texas group. Oregon PERS lost $80 million due to Enron's bankruptcy, caused in large part by company fraud.

Because Goldschmidt carries so much power in political circles and will have a personal economic stake in maximizing profits, ratepayers can expect to be gouged once again as they were by PGE's 41 percent rate increase in October 2001, the result of energy trading fraud.

This page will expand in detail over time. In the meantime, please read the following.

Willamette Week: Power Grab;
Willamette Week: PGE : A Dog that don't hunt?
Willamette Week: From Enron to Endrun
Willamette Week: Information Blackout
Portland Tribune: Will new owners revive PGE or direct 'Enron, Part II'?;
Portland Tribune: Behind the scenes of the big power deal;
Portland Tribune: Ex-guv's new job anything but certain
The Oregonian's Steve Duin: Once more, Goldschmidt into the breach;
The Oregonian: The power broker;
The Oregonian: Texas firm's bid for PGE generates talk of rate cuts.
NW Labor Press: IBEW 125 reacts to Enron’s proposed sale of PGE

 

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