City puts out word on utility: We still want it
Regional civic leaders tout their support for publicly owned entity
Mayor Tom Potter and elected officials from around the region unveiled their plan Monday for how Portland would acquire, pay for and operate Portland General Electric.
'I enthusiastically support the purchase of PGE by a regional partnership,' Potter said. 'I believe it will protect Oregon jobs and create them as well.'
Joining Potter at a news conference were officials from Metro, Multnomah County and the cities of Lake Oswego, Milwaukie, Oregon City, Gresham and Woodburn.
The show of support also targeted another audience: the Oregon Public Utility Commission, which will decide in the weeks ahead the fate of Texas Pacific Group's $2.35 billion offer to buy PGE. Potter said he wanted the PUC to know there was a viable alternative to the Texas Pacific-backed deal before making its decision.
'All of the alternatives start with the PUC's rejection of the TPG deal,' Potter said.
PGE is owned by Enron Corp., the bankrupt Houston-based investment firm. Enron rebuffed an early offer from the city to buy PGE. After that, Texas Pacific offered to buy the utility. A U.S. bankruptcy judge approved the sale, which must be OK'd by the utility commission.
The news conference was held three days after the Oregon Department of Justice cleared Diana Goldschmidt of conflict of interest charges for her Oregon Investment Council vote to invest $300 million in Texas Pacific. The vote was controversial because Texas Pacific later named her husband, Neil, to head up its local purchase efforts.
The department report removes one of the obstacles standing in the way of the PUC vote.
The Texas-based investment firm created an Oregon company called Oregon Electric Utility Co. to own PGE. On Monday, Oregon Electric released a statement pointing out that its bid would end Enron's ownership of PGE, provide $43 million in rate credits to its customers and result in substantial investment in PGE's facilities.
'We simply request you evaluate the facts on their merits. And consider that our proposal's substantial benefits will evaporate if it is denied as urged. Certainly, one must weigh the loss of these benefits in determining what is in the best interest of Portland's citizens and businesses,' Oregon Electric's statement said.
Recently released internal Texas Pacific documents also show the firm expects to make a $1 billion profit over 10 years. Potter and the others said that money should be used to reduce electric rates for the utility's customers.
Potter was joined Monday by Commissioners Erik Sten and Randy Leonard, signaling that there already are enough votes on the five-member council to approve a purchase of PGE. Further, Leonard said if necessary he would support using the city's power of condemnation to acquire the utility, although Sten and Potter reserved judgment on the condemnation question.
Portland businessman John Russell, head of Russell Development Co., also appeared at the news conference to signal his support for the city purchase. Russell said he was speaking out to prove there is private support for a public takeover.
'This is not an issue of public vs. private or socialism vs. communism. A regulated monopoly is a long way from pure capitalism,' he said.
According to Potter and the others, a regional partnership of the six counties and 51 cities currently being served by PGE would be created to buy the utility from PGE. The city of Portland would make the actual purchase to speed the process along. A regional entity later would be created to buy PGE from Portland if the partners agree that makes better management sense, Potter said.
The public effort to buy PGE has been led for more than a year by Sten. Although Sten said the city's exact offer is confidential, he said it would not be any less than the $2.35 billion offer currently being considered by the PUC.
Leonard said city ownership would mean more stability.
'Ratepayers deserve more than being rolled every few years for profits,' he said. 'We need stability. We need ethics.'
Under the plan, the city would buy the utility with revenue bonds that would be repaid by utility payments. If the purchase was approved by the PUC, the city would retain PGE's existing employees and contract with a professional management firm to run the utility on a day-to-day basis. The city has received 23 offers from private companies interested in running PGE.
The council then would appoint an advisory committee from around the region, including elected officials, business leaders, representatives of consumer groups and other stakeholders. That board would nominate a management board to set policies and make decisions, such as future rate increases.
According to Potter and the others, public ownership of PGE would save ratepayers approximately $100 million over 10 years compared to private ownership. That is primarily because public utilities do not pay federal income taxes. Capital construction costs also would be $20 million to $60 million a year less, they said, because public utilities can issue revenue bonds at lower rates than private companies can find when borrowing money.
Russell said the Texas Pacific operation would take too much from local residential and business ratepayers.
'(The company) is in it to make a buck on the sale,' Russell said.
Echoing the sentiment was Carlotta Collette, a member of the Milwaukie City Council.
'If someone's going to make a huge amount of money on this utility,' she said, 'why not have it be the community.'