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Alliance frowns on citys bid for PGE

West-side group fears higher electricity costs and less efficiency

The Westside Economic Alliance, a public policy voice for some of the state's largest private employers, has reservations about Portland's proposal to buy Portland General Electric, according to Mike Schmid, the group's new leader.

Members of the alliance, which represents nearly 150 companies, are concerned that a public takeover of PGE might reduce the company's efficiency and further increase the cost of electricity.

Schmid, a partner at Portland-based kpff Consulting Engineers, said he's 'not sure they (city officials) have the right business sense about running it (PGE).'

Enron Inc., PGE's parent company, is not expected to make a decision on selling PGE for at least a month. Some private suitors reportedly are showing interest, most notably the New York leveraged buyout firm Kohlberg Kravis Roberts.

PGE's hike in electricity rates last year raised costs by as much as 53 percent for industrial and commercial users. The increased rates became an acute problem for such alliance members as Intel Corp. and Nike Inc., whose monthly power bills run into the millions. PGE has since reduced rates by 9 percent to 13 percent.

Through its membership in the consumer group Industrial Customers of NW Utilities, Intel has made clear its discomfort with the rate increases, which were imposed at a time when the slumping semiconductor industry was at its lowest point.

The jump in power costs 'took away the competitive edge Oregon once held, especially in manufacturing,' said Diana Daggett, Intel public affairs manager.

Schmid, who replaced Melvin Mark Cos. President James Mark as alliance president, said the west-side group will lead the effort to reduce power costs and reform the rate-making process, now overseen by the Oregon Public Utility Commission.

Rising taxes and fees are another primary concern for the alliance, which is based in Hillsboro but has members as far away as Wilsonville.

Schmid said the alliance is opposed to TriMet's proposed one-tenth of a percentage point increase in payroll taxes and plans to meet with TriMet's board to talk about it.

Alliance members, in general, 'are ticked off' at taxes, Schmid said. 'I do know they get frustrated with politics and policy. People think they're getting hammered.'

While he knew of no west-side company considering a move out of Oregon, he said 'sometimes we don't realize how easy (it) would be for someone like Intel to leave.'

Though his office is in Portland, Schmid has long been steeped in west-side issues. He served as a board chairman for the Tualatin Valley Economic Development Corp., which later merged with the Sunset Corridor Association to become the Westside Economic Alliance.

Oregon's two U.S. senators, Ron Wyden and Gordon Smith, attend alliance meetings regularly. Other regulars include the mayors of Hillsboro, Beaverton and Cornelius.

'We have the ear of the state,' Schmid said. 'We've seen the alliance gain more force and influence.'

That influence was in evidence last year when the group sponsored the pathbreaking Westside Economic Summit, which focused on the region's economic plight and served as something of a model for the larger statewide economic summit last December.

'We're at a pretty critical point in our local economy,' said Jack Orchard, a partner at Ball Janik LLP and the alliance's secretary. 'This is the time for people to put their self-focused agendas to the side and cooperate to generate jobs.'

Intel's Daggett agreed, saying the disparate companies 'are far better off on a common vision' for the region.

Although job growth on the west side at the pace seen during the high-tech boom of the '90s isn't likely to be repeated soon, the Oregon Employment Department predicts that the electronics and instrument sector will grow by 6,800 jobs between 2000 and 2010.

Schmid doesn't see the west side Ñ Aloha, Beaverton, Hillsboro, Cornelius and North Plains Ñ as the sole beneficiary of that growth.

'Our primary focus is to strengthen the economy on the stagnant west side, but not at the expense of the region,' he said.

The west side is 'strongly attempting to be more collaborative,' Schmid said, citing the alliance's stance on expansion of the urban growth boundary. When it came time for Metro to add industrial land into the growth boundary, he said, the alliance supported adding it to the east as well on the west side.