With first bid rejected, city still eyes PGE
Amid hazy Enron endgame, utility official says discussions with potential buyers continue
While executives of Portland General Electric and city officials engaged in a public war of words last week over the fate of the Enron-owned utility, 'serious discussions' were continuing in private to sell the utility outright rather than parcel out its stock to creditors, according to one key insider.
There are 'serious discussions as we speak' with unnamed bidders, said Fred Miller, PGE's executive vice president for public policy and consumer services, on Saturday.
'I wouldn't bet against someone coming forward to buy us in the next couple of months, even the city,' he said.
Stephen Cooper, interim chief executive officer of Enron Corp., said Friday that the company still wants to sell PGE to generate cash to pay its debts Ñ if a new buyer emerges Ñ or to move ahead with a proposal to disperse 42.7 million shares of PGE's common stock to its creditors.
Martin Bienenstock, Enron's lead bankruptcy attorney, told the Tribune last week that the city's initial offer of $2.2 billion, and at least one other bid, for PGE had been rejected as inadequate.
The proposal to disperse PGE's stocks among some 2,000 creditors was spelled out in Enron Corp.'s massive reorganization plan, which was filed in federal bankruptcy court in New York on Friday.
Commissioner Erik Sten, who has been spearheading the city of Portland's effort to take over PGE, said city leaders are 'still very interested' in buying the utility.
'Things don't look settled at all,' he said. 'From our point of view, we need to have conversations with PGE and Enron, and with the (Oregon) public utility commission, to examine this. To call it a plan would really be misleading.
'This (Enron's reorganization plan) didn't close any doors for the city,' said Tommy Brooks, spokesman for Mayor Vera Katz. 'Nothing's different than it was before. No door was closed (Friday).'
Kathleen Gardipee, assistant to Sten, said the city couldn't comment on any negotiations because of its confidentiality agreement with Enron.
PGE considers relocating
Meanwhile, city and PGE officials engaged in an exchange of threats over possible consequences in the event of a negative outcome from their respective points of view.
PGE officials said they were looking into moving the utility's offices to Wilsonville or another metro location if:
• The city pursues condemnation proceedings to take over the utility, or
• Voters approve a November ballot initiative to create a Portland people's utility district that would give the PUD the power to condemn PGE.
If the utility were to lose its service area here, there would be no reason for it to stay, Miller said. A staff member has been asked to look into relocation from its downtown World Trade Center headquarters, he said.
'Why would you stay in a city where you're not wanted?' Miller said, adding that PacifiCorp, the parent company of Pacific Power, may later decide to do the same. 'If we were to lose service here, we would locate where our customers are.'
Both utilities could lose control of their Portland operations under a PUD, but backers of the PUD initiative say they have no intention of seeking a takeover of PacifiCorp. And PacifiCorp, which covers parts of Multnomah County, is not looking at relocation.
'We're pretty comfortable that our customers will decide that a PUD would be too costly for them,' said PacifiCorp spokeswoman Jan Mitchell.
Miller said he was disappointed when Multnomah County commissioners held a hearing on the proposed PUD, and that Jim Francesconi was the only city commissioner to send a note saying it was important to keep PGE here.
'You'd think if we were interested in economic development, they'd show some interest in keeping us,' Miller said.
PGE's saber rattling raised hackles in a city that has been struggling to retain corporate headquarters. Portland lost its
only Fortune 500 company when Willamette Industries Inc. was swallowed up in a hostile takeover by Weyerhaeuser Co.
City Commissioner Randy Leonard said the PGE threat to relocate is 'akin to bullying tactics. Anytime one party resorts to these tactics, it's time for the other side to take a breath and step away a bit. I hope they are not so influenced by Enron they begin behaving like them. So far, they haven't.'
Leonard, for his part, reiterated that 'we do have the power of condemnation in our toolbox.'
The Portland Business Alliance warned last year Ñ when city officials first raised the specter of condemnation against PGE Ñ that it could have a chilling effect on the business community and recruitment of new business.
Periodic threats of condemnation 'sends exactly the wrong message to the business community,' said Matt Wingard, executive director of Oregonians for Jobs and Power, a group that has been fighting the proposed PUD and had PGE as a supporter at one time. 'I don't believe PGE feels welcome in Portland anymore.'
Creditors await news
If Enron should proceed with its plan to disperse PGE stock to its creditors, it would take at least 1 1Ú2 years to complete, and the creditors would control membership of PGE's board of directors.
The plan, Sten said, 'demonstrates once again that Enron is calling all the shots.'
The city could seek to block the stock spinoff plan by filing an appeal to the New York bankruptcy court, or it could launch condemnation proceedings.
Several of the companies owed money by Enron Ñ mostly other utilities and energy companies Ñ said they weren't aware they would benefit from the distribution of PGE stock. Others, such as Credit Suisse First Boston, declined to comment because of pending litigation.
'We've not heard anything from the bankruptcy judge or seen anything,' said Faye Andersen, a spokeswoman for Sierra Pacific Co. of Reno, Nev.
Leonard said the city had concerns about Enron's timeline in the bankruptcy reorganization plan that would cut PGE free from its parent.
'This hasn't done anything to allay my concerns,' he said. 'Our sense was that there would be some efficacious distancing of PGE. I personally would like Enron divorced from PGE. We're a public entity, and our role is to protect the public. We're going to do what we have to do.'