The Oregonian - Business News
State panel backs PGE settlement on trading
JEFF MANNING HILL
The Public Utility Commission favors returning to customers $1.3 million of the $8.5 million payout tied to the Enron scandal
The Oregon Public Utility Commission voted unanimously Wednesday to endorse Portland General Electric's tentative settlement of charges that the Portland utility engaged in fraudulent electricity trades with its parent company, Enron.
PGE has offered to pay about $8.5 million to settle the charges. The commission's vote clears the way for $1.3 million of the proposed PGE settlement to go to PGE customers. How the balance of the settlement will be allocated is unclear.
As a condition of their approval, the commissioners requested that Peggy Fowler, PGE's chief executive officer, inform them what management steps the utility has taken to address issues raised by the trading investigation.
The tentative agreement calls for $250,000 of the PGE money to go Industrial Customers of Northwest Utilities, a customer group; $250,000 to go to Blue Heron Paper, an Oregon City paper mill; and the remaining $800,000 to the commission, which eventually will distribute the money to business and residential ratepayers.
The Federal Energy Regulatory Commission did not make the details of the proposed PGE settlement public Wednesday. The deal is subject to approval by several other parties to the settlement, including the California attorney general and the city of Tacoma, which operates a municipal utility.
Federal energy regulators have been investigating wholesale electricity trades between Enron and PGE since August 2002. Federal investigators focused on 17 days of trading in May 2000 between the two operations.
PGE traders played a role in helping their Enron counterparts loop electricity from California into the Northwest and then back again -- creating false congestion on California's energy grid and the threat of electricity shortages. Enron collected payments from the California Independent System Operator for relieving congestion although lines were never overloaded.
It was one of a host of strategies employed by Enron that regulators claim worsened electricity shortages and helped lead to higher prices during the energy crisis of 2000-01.
PGE contends its traders played only an unwitting role in Enron's schemes. Plus, the volume of electricity involved in the trades was tiny, and PGE made very little money off them, PGE attorney Jay Dudley said.
Customer advocates argue, however, that PGE's role was crucial.
"I disagree with the assumption that what happened here was a minute, minor situation," said Jason Eisdorfer, an attorney for the Citizen's Utility Board. "This was the beginning of the energy crisis. They didn't pick up the phone and tell anyone that something funny was going on. We'll never know whether a call like that would have mitigated the crisis."
In signing onto the PGE settlement, the Oregon commission waives its rights to continue its own investigation. It could have initiated a mismanagement case against PGE and attempted to force a rate decrease on the utility.
In a June 12 report on PGE's trading, commission staffers concluded, "There is a . . . case that PGE mismanaged its trading activities."
On Wednesday, the commissioners opted to go with the $1.3 million on the table rather than roll the dice on an internal investigation. "If we were to go forward, there's no reassurance we'd come out any better," said Lee Beyer, the commission chairman.
Others echoed Beyer's sentiments that the proposed settlement is as good as they could hope for.
"We've been involved in this case for over a year," said Melinda Davison, a Portland lawyer representing the Industrial Customers. "We've carefully evaluated the evidence. Our view is that this settlement is a good result for ratepayers."
Jeff Manning: 503-294-7606; jmanning[AT]news.oregonian.com
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