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Utility panel vacancies pose a political puzzle

• Governor hopes he finally has the two OPUC nominees who can gain Senate approval and help tackle a number of thorny energy issues

With the thorny issue of Portland General Electric's ownership looming on the Oregon Public Utility Commission's agenda, filling two vacancies on the three-member commission has become a matter of unusual urgency for Gov. Ted Kulongoski.

After shopping a number of names with legislative leaders, Kulongoski is expected this week to announce the appointments of Ray Baum of La Grande, who was Republican majority leader of the Oregon House in the mid-1990s, and John Savage, who currently is OPUC's utility program director and served under former Gov. John Kitzhaber as director of the state's energy office for seven years.

Because OPUC faces decisions on issues of more than usual complexity involving not only PGE's fate but rapidly rising natural gas prices and a fast-changing telecommunications industry, the prospect of the state's regulatory agency being led by a largely inexperienced commission was raising political concerns. Kulongoski was under pressure to move fast.

Kulongoski's candidates must be approved by the Senate, but not the House, said Mary Ellen Glynn, a spokeswoman for the governor. If the candidates pass muster, they would join the one remaining commissioner, Lee Beyer, a Democrat, who was named to the commission last year.

The two appointees would fill vacancies left by the retirement on May 1 of longtime commissioner Joan Smith and the departure of Roy Hemmingway, OPUC's chairman, who has announced he will leave Sept. 1. Kulongoski is required to replace Smith, a Republican, with another Republican.

Savage wasn't willing to talk about the appointment just yet. 'Until the governor announces, I don't know what I can say about this,' he said. Baum did not return the Tribune's phone calls.

There's a lot to learn

'Regardless of who is put in, there's a steep learning curve,' said Ken Canon, executive director of Industrial Customers of Northwest Utilities, which represents industrial customers. 'It takes a while for new commissioners to grasp the details of the issues.'

Close industry observers are pleased at the prospect of Savage's appointment.

'John has been associated with energy issues for years,' said Rachel Shimshak, director of the Portland-based Renewable Northwest Project. 'It's very important to have someone É who understands the regulatory process.'

Baum, although familiar to veteran legislators, is not as well-known in energy and telecommunications circles.

An attorney with Mautz, Baum & O'Hanlon in La Grande, Baum is close to U.S. Sen. Gordon Smith, R-Ore. He has been a registered agent of Smith's business, Smith Frozen Foods. He also is currently a member of the Oregon Liquor Control Commission.

Some industry sources say privately that they are worried it may be difficult for Baum to make objective decisions about PacifiCorp since his firm represented the utility in 2000 and 2001 when the city of Hermiston condemned some of PacifiCorp's assets there.

The condemnation of PGE is one of the options the city of Portland is considering to return control of the utility to local hands.

PGE questions remain

Finding candidates acceptable to an evenly divided Senate hasn't been easy for Kulongoski, sources in the industry say. Several of his candidates were rejected, they said. Three weeks ago, it appeared the governor was poised to unveil two candidates, but Senate Republicans opposed one of them.

The future disposition of PGE, Oregon's largest utility, is expected to present OPUC with the hottest potato it has handled in many years. Enron Corp., the utility's bankrupt owner, left PGE in limbo last month when it filed its reorganization plan with the New York bankruptcy court.

The plan said Enron would pursue one of two options: selling PGE outright or distributing its stock to Enron creditors. The city of Portland's offer to buy PGE, reportedly for $2.2 billion, was described by Enron's lead bankruptcy attorney as inadequate.

OPUC and its new commissioners will have the authority to reject or accept Enron's latest plan, said Melinda Davison, attorney for Industrial Customers of Northwest Utilities.

'We believe that a wholesale transfer of reissued stock requires OPUC review under the merger statute,' she said.