Utility panel provides no shield
- Dan Meek
- Portland Tribune - Opinion
The Tribune article 'Tough questions ahead for PUC' (Jan. 30), while more informative than other local media coverage, presents the false premise that in 1997 the Oregon Public Utility Commission was 'rigorous' or 'hard-nosed' in approving Enron Corp.'s takeover of Portland General Electric.
This is spin, not fact.
The so-called 'layers of protection around the utility' supposedly erected by the PUC did not protect ratepayers from the largest utility rate increase in Oregon history, the $400 million annual hike the PUC granted to Enron/PGE in 2001. This overall 42 percent rate increase was 'justified' by the chaos in West Coast energy markets that is now known to have been created by Enron's market manipulations, assisted by PGE's own energy traders.
In opposing the Enron takeover in 1997, I testified to the PUC that Enron would try 'manipulating the PGE assets it is acquiring, particularly PGE's 800-plus megawatt share of the Pacific Intertie transmission system between the Northwest and California.' I also noted that 'protecting Oregon ratepayers from complicated shell games will be an entirely new and more difficult task for the PUC.'
The PUC rejected my advice and approved the Enron takeover, thus subjecting PGE ratepayers to the huge rate increase when Enron/PGE did indeed manipulate the system.
The PUC also did nothing to protect Oregon ratepayers or taxpayers from the Enron/PGE income tax scam. Since the Enron takeover in 1997, PGE has charged us more than $625 million for 'federal and state income taxes' that neither PGE nor Enron actually paid to any government. The situation continues to this day. Last year, we ratepayers paid $92.6 million to PGE for 'federal and state income taxes' that PGE did not pay. The same is true for 2004.
According to the Oregon attorney general, in a federal court complaint filed in November, Enron drove up Oregon electricity rates by an additional $366 million through illegal market manipulation during the 'energy crisis' of 2000-01. The U.S. Bankruptcy Court rejected payment of this claim, however.
Beyond that, PGE extracted more than $400 million in profits for its sole shareholder, Enron, and sent Enron more than $80 million in dividends every year (until the bankruptcy). So, since 1997, we have paid Enron and PGE over $1.4 billion more than we should have, even if we disregard the following figures:
• More than $100 million lost by PGE employees in their 401k retirement plans, where they were required to hold Enron stock
• The $82 million that the attorney general says was lost by the Oregon Public Employees Retirement System when Enron's stock price collapsed in 2001
The Tribune's article offers only one concrete example of the PUC playing 'hardball' with Enron in 1997: The PUC required Enron to provide '$36 million in rate cuts and another $105 million to purchase PGE's trading floor.'
In fact, the $36 million one-year rate cut was overwhelmed by the $400 million per year rate hike in October 2001. And Enron never paid the $105 million obligation. Enron paid the first two installments, then went bankrupt in December 2001 and stopped paying. As of October 2003, Enron still owed $86 million of this amount Ñ with no payment in sight.
Whether it is a good idea to allow Texas Pacific Group to buy PGE is another question. But it is troubling to see PUC Commissioner Lee Beyer's statement that the PUC 'did a damned good job' by letting Enron buy PGE in 1997 Ñ with conditions that I said then were meaningless or unenforceable.
If he thinks the PUC did a good job in 1997, PGE ratepayers should expect a wild ride now.
Dan Meek is a public-interest attorney in private practice. He attended Stanford Law School and has been active in campaigns on behalf of people's utility districts. He lives in Southwest Portland.