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City-state split puts PGE idea at risk

Foes of Portland's utility takeover bid focus on taxes, hydropower policy

State legislators, in a hearing Friday on legislation to bar the city of Portland from buying or taking over Portland General Electric, made it clear they want at least an oversight role in any city purchase.

'This does have state ramifications so it's appropriate,' said Rep. Betsy Close, R-Albany, chair of the House Business, Labor and Consumer Affairs Committee.

Close said that before seeking a vote the committee will discuss possible amendments to the bill, which was introduced a week ago by Rep. Greg Smith, R-Heppner, and taken up with lightning speed by Close's committee.

'I don't oppose a public takeover, but I have concerns,' Close said.

Close did concede that her membership in Oregonians for Jobs and Power, which is fighting the city's takeover of PGE and has been sponsoring television ads ridiculing the idea, 'makes it look as if I'm an advocate' of one side of the issue.

Opponents of the bill at the Salem hearing appeared to outnumber supporters, however. A half-dozen consumer and business groups spoke in opposition to Smith's bill.

PGE, which serves more than 740,000 electricity customers in northwest Oregon, is a subsidiary of the bankrupt Enron Corp. and one of the core assets Enron has been seeking to sell to help pay its creditors.

Portland has been exploring a purchase of PGE as a way to guarantee local control but has yet to make a formal offer. A plan that would have made the utility one of the crown jewels of a reorganized Enron appears to be dead, according to Enron's lead bankruptcy lawyer, Martin Bienenstock, making the liquidation of Enron more likely and enhancing the city's bargaining power.

City Commissioner Erik Sten, who is spearheading Portland's proposed acquisition, said Smith's bill could hamstring the city.

'We are the only government uniquely positioned to hypothetically negotiate with Enron,' Sten said. 'We believe there is risk in a public purchase. But there's greater risk in not being involved. We thought we had to get into this.'

Smith told Close's committee that the state needs to weigh the loss of an estimated $30 million in state tax revenues ÑÊan amount public power advocates say they doubt Enron ever paid.

'This is not an anti-urban, anti-Portland issue. We need to look at it and make sure it works for everyone,' Smith said.

Urban-rural tensions were evident, however, in the concerns legislators raised about whether a large municipal utility in Portland would overload the demand on already limited Columbia Basin hydropower that now goes to people's utility districts and rural cooperatives.

The Bonneville Power Administration, the federal power marketing agency, allots power on a preferred basis to PUDs and coops.

Gary Conkling, a consultant for Multnomah, Clackamas, Washington and Marion counties, said the preferred power issue can be addressed in the structure and governance of a public utility. The city has proposed hiring a private company to manage PGE along with a regional board of directors.

After questions were raised last week about whether Enron ever paid state taxes, the Utility Reform Project, made up of public power advocates seeking to take over PGE through a PUD, filed a petition Friday with the Oregon Public Utility Commission to investigate what happened to $73 million paid by PGE ratepayers over a five-year period for state income taxes. PGE sent the money to Enron as part of its consolidated tax statement. It was up to Enron to pay the bills.

Dan Meek, a leader of the project, alleges Enron kept the money. City officials last week made a similar claim. Enron officials could not be reached for comment.